Ovoca Gold climbed as much as 25% on news that it would sell its high grade Goltsovoye silver deposit in Russia for cash and shares. The transaction will see Ovoca dispose of its 100% owned subsidiary, Ayax which in turn holds 100% of the Goltsovoye project.
JSC Polymetal will pay Ovoca US$11 million in cash and issue 7.5 million shares currently trading at around US$2.67 per share. Ovoca will also receive an additional cash payment for other ancillary assets and machinery at book value.
Ovoca said it would use the proceeds to advance the Pellapakh molybdenum-copper prospect and Oleninskoye gold project, both located in the Kola Peninsula in Russia.
The Goltsovoye Project hosts a measured and indicated silver resource of 1.5Mt of ore at an average grade of 993 grams per tonne for 47.2 million ounces of contained silver. Inferred resources are currently reported as 0.9 million tonnes at 738 grams per tonne silver for 21.8 million ounces contained silver.
JSC Polymetal said it envisaged a 120-170Ktpa mechanized underground mine at Goltsovoye with crushed ore being trucked to its nearby Dukat processing plant for blending with Dukat Ore.
JSC Polymetal added that it believed there was “substantial exploration potential” at Goltsovoye.
"Goltsovoye represents a unique opportunity to add high-grade silver resources literally in Dukat's backyard and thus leverage 90%-complete expansion of Dukat processing plant in the nearest future," said Vitaly Nesis, CEO of Polymetal. "We are particularly pleased that this transaction has a great potential to become strongly accretive on resource-per-share and, in the future, reserve-per-share and cash flow-per-share basis. It demonstrates Polymetal's continued focus on M&A opportunities that create substantial value for shareholders through easy-to-understand synergies".