23rd Sep 2019 18:58
(Alliance News) - Petropavlovsk PLC on Monday issued an update on its option agreement to acquire the remaining 25% interest in TEMI LLC from Agestinia Trading Ltd.
The Russian gold producer first announced the deal, which involves payment of a USD13.0 million option price to Agestinia in order to acquire a 25% stake in Petropavlovsk subsidiary TEMI, in its half year results on September 10.
TEMI holds the licences for the Elginskoye ore field and Afanasievskaya prospective ore area and is already 75% owned by Petropavlovsk.
"Whilst there is currently no production occurring on the licences at the Elginskoye and Unglichikanskoye deposits they hold a substantial amount of non-refractory reserves and resources which are suitable for processing at the company's resin-in-pulp plant at Albyn," said Petropavlovsk.
Petropavlovsk has so far paid USD7.0 million of the option price, back in May 2019, with the remaining USD6 million to be paid by November 18. The remainder can be paid in cash or in shares at 8.26 pence per share.
Once the option price has been paid, Petropavlovsk then has the option to acquire the 25% interest at an option price of USD60 million - or USD53.5 million if the option is exercised before May 2020. This may be paid in cash or Petropavlovsk shares.
Given that Agestinia is a substantial shareholder in a Petropavlovsk subsidiary, this deal would likely constitute a related party transaction and require shareholder approval.
Shares in Petropavlovsk closed down 0.5% at 9.90 pence in London on Monday.
By Anna Farley; [email protected]
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