15th Feb 2019 10:38
LONDON (Alliance News) - Petropavlovsk PLC on Friday asked its shareholders to vote in favour of a proposed guarantee that the miner agreed to provide for a loan to minority-owned iron ore producer IRC Ltd.
Kimkano-Sutarsky Mining & Beneficiation Plant LLC, a unit of IRC Ltd, inked a USD240 million loan facility agreement with Gazprombank to repay in full its outstanding project finance facility with Industrial & Commercial Bank of China Ltd and bridge loans provided by Petropavlovsk to IRC.
Under the Gazprombank loan, Petropavlovsk - which owns a 31% stake in IRC - is to guarantee the obligations of Kimkano-Sutarsky Mining up to an initial amount of around USD160 million.
The Russia-focused gold miner said the Gazprombank loan is on more favourable terms to the company, IRC and Kimkano-Sutarsky Mining compared to the Industrial & Commercial Bank of China loan facility. Particularly, the repayment schedule aligns with the proposed ramp up of the Kimkano-Sutarsky mine and the revenue that is anticipated to be generated.
"The facility agreements provide an improvement on the terms previously agreed with ICBC, removing financial uncertainty whilst simultaneously retaining a significant upside for Petropavlovsk with the ongoing ramp up of iron ore production from the K&S mine. Under the Gazprombank facility, the extension of the repayment terms, the reduction in scheduled repayments, as well as the cash injection of USD63 million onto the company's balance sheet, will further strengthen our financial position as we continue to increase production from our assets, including refractory gold ounces from the successfully commissioned Pressure Oxidation Hub," said Petropavlovsk Chief Executive Pavel Maslovskiy.
The company is scheduled to hold a general meeting on March 12 to seek approval for the loan guarantee.
Shares in Petropavlovsk were trading 0.4% higher at 8.25 pence each on Friday morning.
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