Chaarat Gold Holdings Ltd (LON:CGH) has confirmed that the recent proposal it made in relation to the potential acquisition of the Kumtor mine from Centerra Gold Inc (TSE:CG) values Kumtor at US$800mln.
The Kumtor mine currently produces around half a million ounces of gold a year, and is one of Kyrgyzstan’s biggest.
READ: Chaarat updates on potential acquisition of Kumtor, restarts drilling at Tulkubash
It is currently proposed that the consideration will be funded by US$400mln in cash from Chaarat. It is also proposed that subject to the Kyrgyz government's approval, US$400mln of Centerra shares currently held by government investment vehicle Kyrgyzaltyn will be transferred to Centerra and cancelled in exchange for a 50% direct preferred economic interest in the Kumtor mine.
As a result, Chaarat will own all of the common equity of Kumtor, as well as control over management and operations of the mine. Kyrgyzaltyn will own all of the preferred equity of Kumtor, and be entitled to 50% of the economic benefits from the mine.
WATCH: Chaarat Gold outlines terms of its offer for the Kumtor mine in Kyrgyzstan
Chaarat will fund the cash component of the offer through a mixture of debt and equity, backed by two major international financial institutions, which have made private indications of support for the transaction to the parties concerned. The names of these institutions have been confidentially disclosed to Centerra.
Chaarat has also undertaken to to invest up to US$600mln into other projects in the country's mining sector over the next five to seven years.
Separately, the company has also started drilling on its Tulkubash gold project, also in Kyrgyzstan, and a visual inspection of the core produced so far has indicated that mineralisation has already been intersected.