Chaarat Gold Holdings Ltd (LON:CGH) expects its shares to resume trading on AIM early next week after completing the US$55mln acquisition of Kapan Mining and Processing Company from precious metals giant Polymetal International PLC (LON:POLY).
AIM-quoted Chaarat had already paid a US$5mln deposit, while it has also issued US$10mln worth of convertible loan notes as part of the payment.
The remaining US$40mln is payable in cash within the next ten days. Until it receives the money, expected to be Friday (1 February), Polymetal has a pledge over the Kapan shares which it will release upon receipt of the payment.
READ: Chaarat agrees to buy polymetallic mine in Armenia for US$55mln
“As a result, trading in the company's shares has been suspended with immediate effect with re-admission to AIM expected to take place on 4-5 February 2019,” read a brief stock exchange announcement on Wednesday morning.
Kapan Mining and Processing Company owns the Kapan polymetallic mine in Armenia and its acquisition is an important step for Chaarat as it looks to achieve its stated goal of building a larger scale gold company with an initial focus on Central Asia and the Former Soviet Union.
The deal will take Chaarat’s anticipated gold equivalent production to 65,000 ounces per year.
Boss ‘very pleased’ to complete deal
Production at Kapan began in 2003 and the current reserve life extends to 2023, although conversion of current inferred resources to reserves and new exploration success is likely to extend the mine life. Chaarat’s internal modelling assumes production will continue until 2029.
For the year ended December 2017, the mine produced around 50,000 ounces of gold equivalent, generating earnings of over US$20mln and profits of US$2mln.
“We are very pleased to announce the completion of the Kapan transaction,” said chief executive Arterm Volynets.
“Securing this high-quality, cash-generative asset under attractive terms bears testament to the strength of our M&A consolidation strategy.”
He added: “This acquisition is an excellent and complementary addition to Chaarat's portfolio, transforming the company from a developer to producer with three solid assets in two jurisdictions.”
Prior to their suspension earlier this morning, Chaarat shares were trading at 26.7p.