FTSE 250 miner Polymetal (LON:POLY) shares nudged higher in early deals as it entered a joint venture agreement concerning the fourth largest gold deposit in Russia.
The deal is with OJCS Polyus Gold, under which Polymetal will take part in advancing the development of the Nezhdaninskoye gold deposit in Yakutia.
Polymetal can acquire up to 50% in the joint venture entity, which holds 100% of JSC South-Verkhoyansk Mining Company through an earn-in mechanism.
The operation was placed on care and maintenance in 2005 after in 1975 a 180,000 tonne per year underground mine and concentrator was commissioned and over 2mln tonnes of ore was mined and processed at an average gold grade of 7.6 g/t.
Vitaly Nesis, Polymetal's group chief executive, told investors: "We believe Nezhdaninskoye fits perfectly with Polymetal's core competencies in remote asset development, selective underground mining, and refractory ore processing.
"The size of the deposit underscores significant potential for a high-grade mine with a very long mine-life."
During the first stage, Polymetal will gain a 15.3% interest in the venture and the total Polymetal's investment will be US$ 18 million in cash, of which US$ 10 million will be ultimately paid to Polyus Gold and US$ 8 million1 will be invested in SVMC and used to fund exploration activities and expenses of SVMC during the first 15 months.
When that is completed, Polymetal will have an option to participate in the second stage through an earn-in deal, which will allow Polymetal to increase its share in the venture to 50%.
Polymetal shares added 1.15% to 569.5p.