TIDMPOG
RNS Number : 3122N
Petropavlovsk PLC
23 September 2019
23 September 2019
Petropavlovsk PLC
Smaller Related Party Transaction
In accordance with Listing Rule 11.1.10R(c), Petropavlovsk PLC
("Petropavlovsk" or the "Company") announces that as disclosed in
the Company's Half Year Report issued on 10 September 2019, it has
entered into an option agreement with Agestinia Trading Limited
("Agestinia"). Agestinia holds a 25 per cent. interest in TEMI LLC
("TEMI"), a 75 per cent. owned subsidiary of Petropavlovsk which in
turn holds licences for the Elginskoye Ore Field and Afanasievskaya
Prospective Ore Area. 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.
The option agreement entitles Petropavlovsk to purchase, at the
Company's discretion, Agestinia's 25 per cent. interest in TEMI.
The option price is US$13.0 million to be paid by 18 November 2019
(the 'Option Price') and upon payment of the Option Price
Petropavlovsk will have the option to acquire Agestinia's interest,
conditional upon any regulatory consents or approvals being
received (the 'Option'). US$7.0 million of the Option Price was
paid to Agestinia on 29 May 2019. At Petropavlovsk's election, the
remainder of the Option Price (US$6 million) may be paid in cash or
Petropavlovsk Ordinary Shares at a fixed price of 8.26 pence per
Ordinary Share.
Subject to payment of the Option Price, the exercise period for
the Option is 730 days from 22 May 2019.
The exercise price of the Option will be:
-- US$60.0 million; or
-- US$53.5 million if the Company exercises its Option on or before 20 May 2020.
The exercise price for the Option may be paid in whole or in
part in Petropavlovsk Ordinary Shares using a monthly average
price.
As Agestinia is a substantial shareholder in a subsidiary
undertaking of Petropavlovsk, it is considered a related party of
the Company for the purposes of Listing Rule 11.1. The entry into
the option agreement is a transaction which falls within Listing
Rule 11.1.10R (modified requirements for smaller related party
transactions) and this announcement is made in accordance with
Listing Rule 11.1.10R(c). Should Petropavlovsk determine to
exercise the option, it is likely that the transaction would
constitute a Related Party Transaction under Listing Rule 11.1 and,
if it does, it would require, inter alia, shareholder approval.
As at 30 June 2019, the Company recognised a US$9.2 million fair
value gain on the Option, based on a valuation undertaken by an
Independent Expert.
The combined TEMI licences cover an area of 1,013km(2) where
extensive alluvial gold deposits have historically been exploited.
As at 31 December 2018, TEMI's JORC Measured, Indicated and
Inferred Mineral Resources amounted to 4.00Moz of gold contained in
hard rock. This includes 1.95Moz of JORC Proved and Probable Ore
Reserves, of which 1.53Moz are classed as non-refractory. The
Company expects production to commence at Elginskoye in 2020 to
coincide with the depletion of ore currently mined from the main
pit at Albyn. Ore mined at Elginskoye will be transported by truck
along a recently completed c.30km all-season road to the existing
processing facilities at Albyn. As announced in the Company's Half
Year Report, an in-fill drilling programme has been completed which
focussed on the Phase 1 pit to increase the accuracy of near and
mid-term mining plans. Waste stripping followed by initial ore
mining is expected to commence in Q4 2019 and the Company
anticipates that gold production from Elginskoye will reach 156koz
in 2020, benefitting from the shallow nature of the orebody and low
stripping ratio.
Longer term, Elginskoye is considered highly prospective with
recent drilling on the periphery of the known JORC resource model
hitting attractive intersections and the orebody remains open in
all directions. Unglichikanskoye accounts for 0.58Moz of the total
TEMI JORC Resources and 0.46Moz of total non-refractory Reserves
and is also considered highly prospective, comprising of a series
of sub-parallel, relatively narrow, steeply dipping zones, which
are proven over a strike length in excess of 5.2km.
Unglichikanskoye is also amenable to rapid development and the
Company considers that it could be in production from 2022.
In addition, there are number of promising prospects of which
Afanasevskoye, Ulgen, Yasnoye, Leniskoye and Pridorozhnoye are the
most significant.
About Petropavlovsk
With a Premium Listing on the London Stock Exchange,
Petropavlovsk (LSE: POG) is a major integrated Russian gold
producer with JORC Resources of 20.52Moz Au which include Reserves
of 8.21Moz Au.
The Company's key operating mines (Pioneer, Malomir and Albyn)
are in the Amur Region in the Russian Far East and the Company has
produced a total of c.7.3Moz of gold since operations began in
1994. Petropavlovsk has a strong track record of mine development,
expansion and asset optimisation.
The Group recently entered a new era of growth following the
successful commissioning and start-up of its flagship asset, the
Pressure Oxidation (POX) Hub at Pokrovskiy, which enables the
processing of the Company's abundant refractory reserves and
resources.
Petropavlovsk is one of the region's largest employers and one
of the largest contributors to the sustainable development of the
local economy.
For more information
Please visit www.petropavlovsk.net or contact:
Petropavlovsk PLC +44 (0) 20 7201 8900
Patrick Pittaway / Max Zaltsman / Viktoriya TeamIR@petropavlovsk.net
Kim
Peel Hunt LLP
Ross Allister / James Bavister / David
McKeown +44 (0) 20 7418 8900
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor / James Asensio +44 (0) 20 7523 8000
Buchanan +44 (0) 20 7466 5000
Bobby Morse / Ariadna Peretz POG@buchanan.uk.com
Cautionary note on forward-looking statements
This release may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
release and include, but are not limited to, statements regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, the future price of gold, the Group's results
of operations, financial position, liquidity, prospects, growth,
estimation of mineral reserves and resources and strategies, and
exchange rates and the expectations of the industry. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances outside the
control of the Group. Forward-looking statements are not guarantees
of future performance and the development of the markets and the
industry in which the Group operates may differ materially from
those described in, or suggested by, any forward-looking statements
contained in this release. In addition, even if the development of
the markets and the industry in which the Group operates are
consistent with the forward looking statements contained in this
release, those developments may not be indicative of developments
in subsequent periods. A number of factors could cause results
and/or developments to differ materially from those expressed or
implied by the forward-looking statements including, without
limitation, general economic and business conditions, demand,
supply and prices for gold and other long-term commodity price
assumptions (and their effect on the timing and feasibility of
future projects and developments), trends in the gold mining
industry and conditions of the international gold markets,
competition, actions and activities of governmental authorities
(including changes in laws, regulations or taxation), currency
fluctuations (including as between the US Dollar and Rouble), the
Group's ability to recover its reserves or develop new reserves,
changes in its business strategy, any litigation, and political and
economic uncertainty. Except as required by applicable law, rule or
regulation (including the Listing and Disclosure Guidance and
Transparency Rules), the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Past
performance cannot be relied on as a guide to future performance.
The content of websites referred to in this announcement does not
form part of this announcement.
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END
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