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Polymetals Mining Acquires Lansdowne Resources, Early Gold And Base Metals Production

Polymetals Mining (ASX: PLY) has inked an agreement to acquire 100% of Lansdowne Resources, the associated rights to earn into a 75% share of the Turner River Gold and Base Metals Joint Venture and the option to purchase a 75% interest in the Wingina Well gold resource.

The Turner River Project is located around 60 kilometres south of Port Hedland within a granite-greenstone terrane of the Archaean-Proterozoic Pilbara Craton of Western Australia.

These assets offer Polymetals near-term production potential from the existing 6.72 million tonnes at 1.38 grams per tonne (g/t) for 298,000 gold ounce resource at the gold project, and the base metals project resource of 3.1 million tonnes at 2.36% zinc, 0.97% lead, 82g/t silver and 0.65g/t gold.

Importantly, there is an extensive technical data base enabling an immediate focus on expanding the existing proven resource at both the gold and base metal projects.

The Turner River Project is considered highly prospective for additions to the existing resources and discovery of additional resources in several geochemical and geophysical target areas within the tenement package.

Resources at the Wingina Well project have been estimated at 5.1 million tonnes at 1.34g/t for 220,000 ounces of gold, and will be the initial focus of exploration with the objective to rapidly progress the project to a development decision.

Frank Terranova, chief executive officer, commented: "Polymetals is committed to seeking growth opportunities that benefit from the company's proven skills in developing projects quickly and economically.

"The Turner River project is one such opportunity and we are excited about its potential."

Gold project

The Turner River Gold tenements straddle the Mt Dove-Tabba Tabba Shear Zone and the Mallina Shear which is a well-known host to gold mineralisation in the area.

Previous drilling at Wingina Well has indicated at least three relatively high grade, parallel gold zones contained within lower grade envelopes.

Potential exists for both shallow open pit and deeper selective underground mining of the estimated resource that is open along strike and at depth.

Metallurgical testwork to date on gold mineralised material from Wingina Well indicated that the gold is fine-grained and free-milling.

Carbon in leach testwork achieved gold recoveries up to 93% with low reagent consumption and easy grinding of the weathered material that forms the bulk of the currently estimated resource at Wingina Well.

Results from drilling at Mt Berghaus have also demonstrated the existence of high grade zones that require definition by follow up drilling.

Base metals project

The tenements of the Turner River Base Metals project lie 5.3 kilometres northeast of the gold project tenements.

A high grade gold intersection of 6 metres at 37.2g/t gold from 193 metres north of Orchard Tank has been tested by two drill holes only and warrants additional drilling.

Metallurgical testwork on transitional and sulphidic material from the Orchard Tank deposit returned high recoveries and concentrate grades from standard flotation techniques.

To date only the outcropping or geochemically anomalous zones have been tested by bedrock drilling.

Mineralisation at Discovery and Orchard Tank has been drilled over strike lengths of around 280 metres and 350 metres respectively, over a potentially mineralised horizon extending for some 20 kilometres of strike within the tenement area.

Consideration

To settle the acquisition of Landsdowne, Polymetals will make an upfront payment of A$500,000 cash and $750,000 worth of shares, followed by a further $500,000 worth of shares or cash at the seller's election nine months from the date of acquisition.

Milestone payments will also be made, including $750,000 worth of shares or cash at Polymetals' election upon a decision to mine, and $750,000 worth of shares or cash at Polymetals' election upon first production.

The following milestone payments will be made to the sellers upon the development of a Base Metals Project:

- $1 million worth of shares or cash at the sellers' election upon definition of a 750,000 ounce gold equivalent resource; and
- $1 million worth of shares or cash at the sellers' election upon a decision to mine.

Joint Venture arrangement

Tenements comprising the Turner River Gold and Base Metals projects are the subject of a farm-out and joint venture agreement with De Grey Mining (ASX: DEG), under which Lansdowne may earn a 75% interest in the project by funding exploration expenditure of $2 million and $1.5 million respectively over three years.

Exploration expenditure by Lansdowne to date is about $1.1 million, meaning Polymetals' will need to spend a further $2.4 million by May 2014 to earn into the Turner River Projects.

Upon Polymetals earning its interest, a 75:25 joint venture will be formed and Polymetals would continue to fund all expenditures up to a decision to mine.

Once a decision to mine has been made, a mining joint venture area will be declared and mine development expenditures will be funded by De Grey and Polymetals in proportion to their joint venture interests.

De Grey's free carried interest continues in respect of project areas outside of the mining joint venture area.

Once Polymetals has earned into the Gold Project joint venture, the company then has the option to purchase a 75% interest in the Wingina Well gold resource by making a milestone payment of $4.1 million to De Grey.

Exploration plan

Drilling of the Wingina Well project is expected to begin within the next two months and will continue until the start of the wet season.

As well as exploration for resource extensions, samples for metallurgical testing and geotechnical assessment will be taken to rapidly progress project Scoping Studies.

Analysis

The full acquisition of Landsdowne provides Polymetals with the opportunity to earn a 75% interest in near-term production potential assets within the prospective granite-greenstone terrane of the Archaean-Proterozoic Pilbara Craton of Western Australia.

These assets already contain an existing 6.72 million tonnes at 1.38 grams per tonne (g/t) for 298,000 gold ounce resource at the gold project, and the base metals project resource of 3.1 million tonnes at 2.36% zinc, 0.97% lead, 82g/t silver and 0.65g/t gold.

Importantly, there is an extensive technical data base enabling an immediate focus on expanding the existing proven resource at both the gold and base metal projects.

Resources at the Wingina Well project have been estimated at 5.1 million tonnes at 1.34g/t for 220,000 ounces of gold, and will be the initial focus of exploration with the objective to rapidly progress the project to a development decision.

The acquisition will allow Polymetals to hit the ground running on the exploration front, as well as fast track towards a decision to mine.

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