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Saracen to Restart Idled Norilsk Mines in A$40 Million Deal

Saracen Mineral Holdings Ltd., an Australian gold producer, will seek to restart mines acquired from OAO GMK Norilsk Nickel in 18 months after completing the deal worth as much as A$40 million ($35 million).

The Thunderbox operations in Western Australia include two gold mines and a processing facility that have been on care and maintenance since 2007 and a nickel mine idled in 2008, Perth-based Saracen said today in a statement.

“Saracen can bring highly credentialed technical and operational knowledge, coupled with extensive experience in the Western Australia goldfields, to maximize the potential of the Thunderbox operations,” Managing Director Raleigh Finlayson said in the statement.

Norilsk, the world’s biggest nickel producer, acquired the mines through the $6.4 billion takeover of LionOre Mining International Ltd. in 2007. It idled some mines in Australia on low prices and high production costs.

Saracen will pay A$20 million in cash and A$3 million when production resumes, or if the gold price in Australian dollar terms rises above A$1,550 an ounce. The company may also pay potential royalties of as much as A$17 million under the deal, it said in the statement.

Norilsk estimates the economic effect of the deal at A$100 million, Deputy Chief Executive Officer Pavel Fedorov said by phone today. That includes the A$40 million in cash and the value of ecological obligation that Norilsk won’t need to fulfill due to the sale, he said.

The sale is expected to close in the first half and has a total aggregate value of as much as A$40 million, Norilsk said in a separate statement.

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