Russia-Kazakhstan gold producer Polymetal International has entered into binding agreements with Sumeru Gold B.V. and Sumeru LLP for the acquisition of Altynalmas Gold Ltd., the holding company for the Kyzyl gold project in northeast Kazakhstan. The Kyzl project comprises the Bakyrchik and Bolshevik gold deposits and has 6.7 million oz of JORC-compliant gold reserves at Bakyrchik at a grade of 7.5 g/mt.

The acquisition will increase Polymetal’s gold equivalent reserves by approximately 50% with a single, large, high-grade property.

Initial consideration for the transaction is $318.5 million in cash and the issue of new Polymetal shares with an aggregate value of $300 million. Deferred additional cash consideration could reach up to an agreed cap of $500 million, contingent on certain conditions being met and dependent on the relative dynamics of the gold price and the price of Polymetal’s shares over up to the next seven years.

Polymetal envisages the following development timeline for the Kyzyl project: 1) revised feasibility study with updated reserve estimate, fourth quarter 2015; 2) start of construction, first quarter of 2016; and 3) first production, 2018, to be confirmed upon completion of the revised feasibility study.