* Polymetal to buy Kazakh goldmines for $619 mln
* First company's large buy in more than 4 years
* Hopes to boost its reserves by 50%
(Adds company's comments, details throughout)
MOSCOW, May 22 Russian gold and silver miner
Polymetal plans to increase output by a third in five
years after signing a deal to buy a gold project in neighbouring
Kazakhstan for $618.5 million, the company said on Thursday.
The deal with a firm belonging to Kazakh President Nursultan
Nazarbayev's billionaire son-in-law Timur Kulibayev will be
Polymetal's first large acquisition in more than four years.
Polymetal, the largest silver miner in Russia, signed the
agreement with Kulibayev's Sumeru to buy the Kyzyl gold project,
which comprises two goldmines with gold reserves of around 6.7
The London-listed company hopes to close the deal, half of
which it plans to fund with new shares, in the fourth quarter of
2014, Pavel Danilin, deputy chief executive for strategic
development, told Reuters by telephone.
Polymetal, part-owned by Russian tycoon Alexander Nesis,
initially agreed to pay $318.5 million in cash and $300 million
in new shares. It could pay more cash if gold prices or
Polymetal's shares change significantly, but no more than $500
million, a statement from the company said.
The deal, under negotiation for two years, needs approval
from Kazakh regulators and Polymetal's shareholders, Polymetal
Chief Executive Vitaly Nesis, Alexander's brother, said during a
conference call after releasing the statement.
The Kyzyl project comprises two goldmines, Bakyrchik and
Bolshevik in northeastern Kazakhstan, which Polymetal hopes will
boost its reserves by 50 percent.
"Bakyrchik will increase Polymetal's annual production by
2019 by roughly 30 percent, so we address the issue of the
decline in our production from the existing base", Vitaly Nesis
The company plans to start building production facilities in
the first quarter of 2016 and see the first gold in 2018.
Polymetal acquired its first project in Kazakhstan in 2009 -
a gold and copper mine Varvara.
"This is an environment, which we understand very well ... a
jurisdiction with relatively stable and transparent rules of the
game", Vitaly Nesis said.
The company produced a 1.28 million troy ounces of gold
equivalent in 2013 and plans to increase this to 1.30 million
ounces and 2014.
(Reporting by Andrey Kuzmin, editing by Elizabeth Piper)