Polymetal agrees to sell the Kapan mine
IMMEDIATE LSE, MOEX: POLY / ADR: AUCOY
30 October 2018
Polymetal International plc
Polymetal agrees to sell the Kapan mine in Armenia
Polymetal International plc has entered into a legally binding agreement with Chaarat Gold Holdings Limited (AIM:CGH) (together with its subsidiaries - "Chaarat") for the sale of the Kapan mine in the Republic of Armenia ("Kapan") for a total consideration of US$ 55 million (the "Transaction").
"The sale of Kapan is a step towards shrinking Polymetal's asset base to focus on large long-life projects", said Vitaly Nesis, Group CEO of Polymetal. "The transaction will have immediate benefits as it is expected to improve our cost position and reduce leverage. On behalf of Polymetal, I would like to thank the team at Kapan for their hard work and dedication and wish them all the best going forward."
The principal terms of the Transaction are as follows:
- The total consideration payable for Kapan will be US$ 55 million, subject to working capital and other customary adjustments. This represents US$ 99 per ounce of gold equivalent (GE) Ore Reserves.
- The consideration will be payable in cash upon closing of the Transaction, with an option for Chaarat to elect to satisfy up to US$ 5 million of the consideration in Chaarat's 2021 Convertible Notes.
- The Transaction is conditional upon Chaarat obtaining financing to satisfy the purchase consideration and certain regulatory approvals, including anti-monopoly approval from the Republic of Armenia. Completion of the Transaction is expected to take place in Q1 2019 but in any event no later than 15 February 2019.
- A termination fee of US$10 million will be payable to Polymetal in the event that the Transaction is not completed by 15 February 2019 as a result of any conditions not being satisfied. US$ 5 million of this fee is to be deposited within 10 working days from signing of the sale and purchase agreement.
- Polymetal will grant Chaarat an exclusive right for a period of 6 months from completion and a right of first refusal for a period of 12 months upon expiry of the exclusivity period in relation to Polymetal's other interests in Armenia, including the Lichkvaz deposit.
The sale of Kapan advances the Company's strategy of focusing on large-scale and long-life operations.
Kapan is the smallest and highest-cost mine in Polymetal's portfolio, representing:
- 3% of the Group's Ore Reserves as at 1 January 2018 (0.5 Moz of GE)
- 3% of the Group's LTM production ending 30 September 2018 (51 Koz GE) and 5% of the Group's expected 2019 production (90 Koz GE) including feed from Lichkvaz
- 3% of Group's LTM adjusted EBITDA1 ending 30 June 2018 (US$ 22 million)
- 7% of Company's workforce as of 30 September 2018.
In 2017, Kapan's TCC1 of US$ 871/oz and AISC of US$ 1,292/oz were above Polymetal's average of US$ 650/oz and US$ 877/oz (excluding Kapan).
Polymetal acquired Kapan in April 2016 for US$ 38 million including US$ 9 million fair value of the Net Smelter Return royalty on future gold production. The transaction is expected to result in a US$ 3 million accounting profit for the Company. Polymetal plans to use proceeds from the Transaction to reduce debt.
Scotiabank Europe plc acted as financial advisor to Polymetal.
Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is a top-20 global gold producer and top-5 global silver producer with assets in Russia, Kazakhstan and Armenia. The Company combines strong growth with a robust dividend yield.
1 The alternative performance measures disclosed to compliment measures that are defined or specified under International Financial Reporting Standards (IFRS) and reported by the Group in the IFRS consolidated financial accounts.
| || |
+44 20 3727 1000
+44 20 7016 9505 (UK)
+7 812 334 3666 (Russia)
Joint Corporate Brokers
+44 20 7425 8000
+44 20 7886 2500
RBC Europe Limited
+44 20 7653 4000
THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
Quick facts: Polymetal International PLC
Market Cap: £5.48 billion
NO INVESTMENT ADVICE
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...FOR OUR FULL DISCLAIMER CLICK HERE