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Polymetal shares climb on Russian joint venture

Pecious metals mining company, Polymetal (LON:POLY), watched its shares rally on Tuesday following its announcement that it had entered a new joint venture.

The deal sees the company invest an initial $0.5 million in exchange for a junior holding in the exploration licence, and a 35% stake in the mining of the Pekinskaya area, Taimyr Peninsula, Russia.

Polymetal says the project adjoins the existing joint venture site, and it has the option to acquire a 70% interest in Pekinskaya, in exchange for funding $2.3 million in cash of three stages of exploration expenditures.

The first stage is a $0.5 million investment for an initial 35% stake in the joint venture. Stage two increases the stake to 63%, in exchange for $1.1 million in newly issued share capital, by March 2021. Step three increases the stake to 70% for $0.6 million in newly issued share capital, by March 2022.

Polymetal added that it may provide loans to the joint venture, to fund extra exploration costs at stages two and three, and finance three additional field seasons post 2022. The company continued, saying it has been granted a call option exercisable between 2023 and 2026, to acquire the remaining interest in the joint venture.

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Speaking on the joint venture, Group CEO, Vitaly Nesis, commented:”Through this new joint venture Polymetal has expanded its footprint in the highly prospective Taimyr region with the potential to discover a significant copper-gold porphyry mineralisation”

“We continue to be committed to further development of our exploration portfolio through partnerships with juniors in the regions of our presence”.

Following the update, Polymetal shares rallied by 4.80%, to 1,637.00p apiece. This current price is below its post-pandemic high of 2,050p, as well as analysts’ consensus target of 1,719p.

Analysts currently have a consensus ‘Buy’ stance on the stock, while the Marketbeat community gives it a 64.08% ‘underperform’ rating. The company has a p/e ratio of 11.00 and a dividend yield of 3.92%.