30th Oct 2018 08:42
LONDON (Alliance News) - Chaarat Gold Holdings Ltd on Tuesday said it has agreed to buy the Kapan mine from FTSE 250 member Polymetal International PLC.
The Kapan polymetallic mine is in Armenia and is being bought by Chaarat for USD55 million.
Chaarat is paying in cash, though USD5 million of the total consideration could be paid via convertible notes.
It is to fund the cash portion through new debt facilities, existing cash, and through its previously announced USD17.6 million convertible debt placement. The original target for the convertible debt placement was USD100 million, which subsequently was lowered to USD50 million.
Chaarat Chief Executive Artem Volynets said: "This acquisition is expected to be an excellent addition to Chaarat's portfolio and accelerates our strategic aim of building a leading emerging markets gold company.
"It turns the company cash flow-generative in a single step, and demonstrates Chaarat's ability to execute deals quickly, diligently and on accretive terms. M&A is a vital component of our growth strategy and we are delighted to be in the process of securing this asset at what management believe is a very attractive price for Chaarat and its shareholders."
Polymetal and Chaarat had said on Friday they were in talks over a deal, in response to press reports. At the end of August, Chaarat had said it had signed a non-binding term sheet over a polymetallic asset but did not name it.
Kapan started producing in 2003, and its current life-of-mine runs to 2023, but Chaarat said the conversion of current inferred resources to reserves, as well as further exploration, should extend this until around 2029.
In 2017, the mine produced approximately 50,000 ounces of gold equivalent, generating pretax profit of USD2 million.
Polymetal, which bought Kapan for USD38 million in April 2016, said the sale is part of its policy to focus on larger, longer-life projects.
Polymetal shares were trading flat on Tuesday at 717.40 pence, while Chaarat's shares are currently suspended from trading on AIM as the deal is considered a reverse takeover.
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