UK-listed and Russia-focused gold miner Highland Gold Mining Ltd (LON:HGM) said on Tuesday it had acquired sector firm Bazovye Metally CJSC for USD212m (EUR165m) in cash.
Bazovye Metally has the mining and exploration rights to the Kekura gold deposit in the Chukotka region, northeastern Russia. Currently, a plant with annual production capacity of 150,000 tonnes is being built at the site, with commissioning scheduled for the second half of the year. It will operate through to the end of construction and commissioning of the main processing facility, supposedly by 2017.
In addition to the initial consideration, Highland Gold will also pay USD11m in the second half of 2013 to a contractor once the pilot plant is finished. The company intends to fund the entire transaction through a new debt facility of USD250m. The rest of the funding will be used for additional group operational working capital.
Russia’s anti-monopoly authorities have already cleared the acquisition.
According to Highland’s chairman Eugene Shvidler Kekura’s resource base will add to the long-term production profile of the company and is a strong foundation for its further growth.