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Meridian in non-binding agreement to acquire some assets of pre-production Russian gold company

Australia’s Meridian has entered into a non-binding agreement to acquire a 75% interest in the non-alluvial assets of Russian gold company ZAO ZRK Omchak, from UK listed Petropavlovsk PLC. The agreement has an exclusivity period ending 11 May and the transaction is for a consideration of US$40 million.

Omchak’s assets include the Verkhne-Aliinskoe gold deposit which has an identified Exploration Target Range of 3.3-3.0 million tons of gold. The target assets will exclude the alluvial assets owned by Omchak and its subsidiaries, which it is anticipated will be transferred to Petropavlovsk prior to completion of the proposed acquisition.

Pre-production capital costs for the development of the Aliya underground gold mine has been estimated at US$76 million and will be funded 75% by Meridian and 25% by Petropavlovsk PLC. Meridian is currently considering its capital raising options to fund the acquisition and the pre-production capital costs.

The Aliya Gold Project is situated in Eastern Russia, 310km from the regional centre of the city of Chita, with good access to road, rail and power, ensuring lower capital expenditure requirements. Omchak’s assets will include four exploration projects, Kulinskoe, Bukhtinskoe, Birusinski and Kauchak, which have a number of untested quality exploration targets which warrant drill testing.

Meridian’s Managing Director, Jeremy Read, said that the opportunity to agree on the purchase of a 75% interest in Omchak offers tremendous potential for Meridian as it will give the Company access to a high-grade gold deposit with an approved mine plan and a clear path to production within an 18 month time period.

According to him, the Aliya Gold Project gives Meridian the opportunity to work in a highly gold mineralized part of eastern Russia in conjunction with Petropavlovsk which already has an established operational track record in Russia.

Bringing Omchak and the Aliya Gold Project into Meridian’s portfolio strengthens Meridian’s pipeline of development projects and is consistent with the Company’s strategy of owning a range of projects at various stages of development, Read said.

The currently defined mineralized veins at Aliya are open at depth and along strike. Therefore, there is significant potential to increase the size of the total mineralized system at Aliya through further brown field exploration drilling, said Dimension. Meridian will look to secure interests in other gold deposits when they are put up for purchase via a tender system, read a statement sent to the ASX.

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