18th Mar 2020 09:58
(Alliance News) - Russian gold miner Petropavlovsk PLC on Wednesday announced the sale of most of its stake in IRC Ltd.
IRC is a Hong Kong-based iron ore miner which operates in the Russian Far East. Petropavlovsk currently holds 31.1% of IRC but has signed a preliminary agreement to sell 29.9% of this for USD10 million in cash.
The buyer is Stocken Board AG, a Luxembourg-incorporated investment company.
Petropavlovsk needs the consent of Gazprombank to sell the stake. The sale is conditional on GPB releasing Petropavlovsk from all loan guarantees under agreements signed between the lender and IRC in December 2018.
Petropavlovsk confirmed it would hold an approximate 1.2% stake in IRC were the sale to Stocken to go ahead.
Chief Executive Pavel Maslovsky said: "We are very pleased to announce that we have agreed to terms for what would be the first stage of a potential transaction which is one of a number of opportunities we have been exploring to relieve the company from the loans it currently guarantees on IRC's behalf, while realising a fair and reasonable value for our shareholding.
"The guarantee has a negative impact on our credit rating which increases the cost of our debt. We expect the release from the guarantee would improve the company's credit profile and assist the ongoing momentum of Petropavlovsk's equity and debt re-rating."
"As a result, we believe the USD10 million cash consideration proposed represents a fair and reasonable value for our holding in IRC given it would enable us to relinquish the guarantees and enable us to focus on the successful implementation of our strategy which is to consolidate our position as a leading Russian gold miner with the ability to process a wide range of refractory gold ores," Maslovsky continued.
Shares were 1.3% higher in London on Wednesday morning at 15.79 pence each.
On Tuesday, Petropavlovsk said Covid-19 has not yet had any impact on operations in the Amur region in the Far East of Russia.
By George Collard; [email protected]
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