TIDMPOG
RNS Number : 9262H
Petropavlovsk PLC
27 March 2020
27 March 2020
Petropavlovsk PLC
("Petropavlovsk", the "Group", or the "Company")
PROPOSED EXERCISE OF AN OPTION TO PURCHASE 25 PERCENT OF TEMI
LLC
PUBLICATION OF CIRCULAR
The Board of Petropavlovsk has today publish ed a circular to
shareholders (the " Circular ") in order to convene a general
meeting of the Company to be held at 8:30 am BST on 16 April 2020
(the " General Meeting ") in connection with the proposed exercise
of an option to acquire 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 (the " TEMI Licences ") (the " Option Exercise
"), and granting authority to in respect of the allotment of New
Ordinary Shares.
The Option Exercise will constitute a related party transaction
for the purposes of the Listing Rules of the Financial Conduct
Authority (the " Related Party Transaction "). Consequently, the
Option Exercise is subject to, and conditional upon, the approval
of Ordinary Shareholders at the General Meeting.
Background to and reasons for the Related Party Transaction
In the Company's half year report issued on 10 September 2019
and in a separate announcement by the Company on 23 September 2019
(the " 23 September Announcement "), the Company disclosed that it
had entered into an option agreement with Agestinia Trading Limited
(" Agestinia ") on 22 May 2019 (the " Option Agreement ").
Agestinia holds a 25 per cent. interest in TEMI, a 75 per cent.
owned subsidiary of Petropavlovsk. The Option grants the Company a
discretionary right to purchase Agestinia's shares in TEMI (the "
Option "). The licences at the Elginskoye and Unglichikanskoye
deposits 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 " Albyn Plant ").
The option price was US$13 million (the " Option Price "),
US$7.0 million of which was paid by the Company to Agestinia in
cash on 29 May 2019 and the remaining US$6.0 million was paid in
cash on 12 November 2019. As announced by the Company on 5 December
2019, following Agestinia's confirmation that the Company has
satisfied its obligations in respect of the Option Agreement and
approval from the Russian Federal Antimonopoly Authority that the
Company can acquire the Option Shares, the Company now has the
option to acquire the Option Shares (the " Option Exercise ").
The exercise price of the Option is US$60.0 million (the "
Exercise Price ") or US$53.5 million if the Company exercises the
Option on or before 20 May 2020 (the " Reduced Exercise Price ").
The Company intends to exercise the Option prior to 20 May 2020 and
therefore pay the Reduced Exercise Price. However, the Company
retains the discretion to exercise the Option after this date at
the Exercise Price.
If Shareholders approve the Option Exercise and the Company
exercises the Option, the Company will have complete control over
TEMI and the TEMI Licences. This will enable the Company to develop
the TEMI Licences or pursue other opportunities in respect of these
assets as the Board considers in the best interests of the
Company.
Pursuant to a deed of amendment executed on 25 March 2020 and as
outlined in the Company's announcement on 25 March 2020, the
Exercise Price or the Reduced Exercise Price (as applicable) may be
paid in whole or in part in the Company's ordinary share capital .
Upon notarisation of the amendment, if the Company exercises the
Option and elects to satisfy the Reduced Exercise Price in full in
ordinary shares, 226,323,400 fully paid shares in the Company
(being the New Ordinary Shares) will be issued and allotted to
Agestinia in full satisfaction of the payment of the Reduced
Exercise Price . Under the Option, the Company may, at its
election, satisfy the Exercise Price, or Reduced Exercise Price, as
applicable, in cash or in ordinary shares. Any cash consideration
would be likely to be funded using balance sheet cash, new debt
facilities or an equity placing. The C ompany intends to exercise
the allotment a uthority in respect of the allotment of the New
Ordinary Shares and only where the issue price of a New Ordinary
Share is equal to or greater than GBP0.179 per New Ordinary Share
.
Shareholders are being asked to vote in relation to the Option
Exercise as it is with a related party under the Listing Rules. As
Agestinia is a substantial shareholder (owning 25 per cent. of the
shares) in TEMI, a subsidiary undertaking of the Company, it is
considered a related party of the Company for the purpose of the
Listing Rules and the Option Exercise is therefore considered a
Related Party Transaction. Agestinia is not a related party for any
other reason.
The TEMI Licences are of strategic importance to the future
operations of the Albyn Plant. The Albyn Plant is expected to
become one of the core producing assets of the Group contributing
at least 20 percent to the Group's overall production output during
the next five years. The ongoing exploration works at the TEMI
Licences area may yield a further increase in Reserves &
Resources of the asset, which may, in turn, increase the value of
the TEMI Licences to the Group. The Option Exercise will ensure
that the TEMI Licences are wholly within the control of the
Company. In the event that Shareholder approval is not obtained and
the Option is not exercised, Agestinia may sell its 25 percent
shareholding in TEMI to a third party, an event that the Company
considers to be possible . This could indirectly impact the
Company's ability to operate the TEMI Licences in accordance with
its strategic plan as such third party acquiring a minority
interest in TEMI would obtain certain rights as a minority
shareholder of TEMI, such as the ability to block share capital
increases or request an independent audit of TEMI. This may affect
TEMI's ability to raise further capital if required to fund the
exploration works under the TEMI Licences and also may prove to be
time consuming for management as the Company would have to consult
with such third party on matters relating to TEMI, who would not be
as familiar with the TEMI Licences as Agestinia.
Information on TEMI and the TEMI Licences
As outlined above, TEMI holds the TEMI Licences. Although 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 Albyn Plant.
As stated in the 23 September Announcement, the 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, including 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 c.30km all-season road to the existing
processing facilities at Albyn. The Company announced in its 2019
half year report that 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 commenced in February 2020. The
Company anticipates that gold production from Elginskoye should
reach approximately 30koz in 2020, benefitting from the shallow
nature of the orebody and low stripping ratio. Production is
expected to increase to approximately 142koz in 2021.
In the longer term, Elginskoye is considered highly prospective
with recent drilling on the periphery of the known JORC resource
model hitting attractive intersections. 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
5km. Unglichikanskoye is also amenable to development and the
Company expects that it will be in production from 2028.
In addition, there are number of promising prospects of which
Afanasevskoye, Ulgen, Yasnoye and Leniskoye are the most
significant.
As at 30 June 2019, TEMI's gross assets amounted to US$ 77.1
million and the profits before tax (loss) for the year ended 31
December 2018 was (US$ 0.45 million) adjusted for foreign exchange
gain on inter-company loans.
General Meeting
A notice convening the General Meeting to vote on the
Resolutions to approve the Option Exercise, whether at the Exercise
Price or the Reduced Exercise Price, and grant the Directors
authority to allot shares to be held at 8:30am BST on 16 April 2020
at Apartment 1, Hill House, Portsmouth Road, Esher, Surrey KT10 9LN
is set out in the Circular.
Recommendation and Voting Intentions
The Board, having been so advised by the Sponsor, considers the
Option Exercise , whether at the Exercise Price or the Reduced
Exercise Price, to be fair and reasonable as far as the
Shareholders are concerned. In providing advice to the Board, the
Sponsor has taken into account the Directors' commercial assessment
of the Option Exercise.
The Board also considers that the passing of each of the
Resolutions is in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Board unanimously
recommends that Shareholders vote in favour of the Resolutions and
the Directors that hold Ordinary Shares intend to vote in favour of
the Resolutions at the General Meeting in respect of their own
shares to which they are legally and beneficially entitled.
Agestinia is not a shareholder of the Company and will therefore
not vote on the Resolutions. Agestinia has taken all reasonable
steps to ensure that its associates will not vote on the
Resolutions.
Publication of Circular
The Company announces that the shareholder circular (the
"Circular") relating to the proposed Option Exercise has been
approved by the Financial Conduct Authority. Copies of the Circular
are being posted to Petropavlovsk's shareholders. The Option
Exercise is subject to the approval of Petropavlovsk's
shareholders, and accordingly, the Circular contains a notice
convening a general meeting of Petropavlovsk's shareholders, which
is to be held at 8.30 am BST on 16 April 2020 at Apartment 1, Hill
House, Portsmouth Road, Esher, Surrey KT10 9LN . Shareholders may
appoint a proxy by completing the form of proxy enclosed with the
Circular. Alternatively, proxy appointments may be completed
electronically. The procedures and timings for the appointment of a
proxy are set out in the notes to the notice of the general meeting
at the back of the Circular.
COVID-19
The board takes its responsibility to safeguard the health of
its shareholders, stakeholders and employees very seriously and so
the following measures will be put in place for the General Meeting
in response to the COVID-19 pandemic and the current measures being
implemented by the Government in the United Kingdom, which may
continue until after the date of the General Meeting.
The formal business of the General Meeting will only be to
consider and vote upon the two resolutions set out in the notice of
meeting. The holding of the meeting will be kept under review in
line with Public Health England guidance. However, based on current
measures implemented by the Government in the United Kingdom
attendance at the meeting will be limited to two persons, which
will be sufficient to make it a quorate meeting. The meeting will
not be attended by other Directors of the Company and other
officers and professional advisers will not be in attendance.
Shareholders are actively discouraged from attending the General
Meeting given the current measures being implemented by the
Government in the United Kingdom. The Company is taking these
precautionary measures to safeguard its shareholders',
stakeholders' and employees' health and make the General Meeting as
safe and efficient as possible.
Shareholders wishing to vote on any of the matters of business
are urged to do so through completion of a proxy form which can be
completed and submitted in accordance with the instructions
thereon. It is emphasised that any proxy forms being returned via a
postal service should be submitted as soon as possible to allow for
any delays to or suspensions of postal services in the United
Kingdom as a result of measures being implemented by the Government
of the United Kingdom. It is strongly recommended that the Chairman
of the meeting is appointed as proxy as it is unlikely that any
other persons will be admitted to the meeting based on the current
measures being implemented by the Government in the United Kingdom.
The completion and return of a form of proxy will not preclude a
shareholder from attending in person at the meeting and voting
should the shareholder wish to do so, subject to the measures
implemented by the Government in the United Kingdom at the time in
force and any applicable Public Health Guidance.
In line with corporate governance best practice, the Company's
practice at recent meetings and in order that any proxy votes of
those shareholders who choose to not attend and vote in person are
fully reflected in the voting on the resolutions, the chair of the
meeting will direct that voting on all resolutions set out in the
notice of meeting will take place by way of a poll. However, it is
emphasised that given that attendance at the meeting will be
limited in accordance with measures being implemented by the
Government of the United Kingdom, shareholders should consider
whether their attendance is necessary. Under the Company's
Articles, votes on a poll may be given personally, by a corporate
representative or by proxy. Every shareholder who is present in
person or by a corporate representative or by proxy shall have one
vote for each share held by them.
In accordance with Public Health England guidance, a shareholder
still wishing to attend the meeting in person should not do so if
they or someone living in the same household feels unwell or has
been in contact with anyone who has the virus or who feels unwell.
In accordance with the Company's Articles, the board will put in
place security arrangements and to gain entrance to the meeting,
any shareholder or their proxy will be required to sign a
certificate to confirm that this is the case. In addition, based on
the measures currently being implemented by the Government of the
United Kingdom it is likely that only one person, other than the
Chairman of the meeting will be admitted to the meeting, These
requirements and confirmations are subject to change to reflect
measures implemented by the Government of the United Kingdom and
Public Health England guidance at the time of the meeting.
Petropavlovsk will continue to monitor the impact of COVID-19.
Any relevant updates regarding the General Meeting will be
available on the Company's website.
Announcements will be made should the measures being implemented
by the United Kingdom Government or Public Health England guidance
prevent the holding of the meeting in accordance with the notice
set out at the end of this document.
A copy of the Circular will be submitted to the National Storage
Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/NSM. In addition, a copy of the Circular
will shortly be available on the Company's website at
www.petropavlovsk.net/ .
Expected Timetable
Event Time and/or Date
-------------------------------------------- ------------------
Publication of Circular and notice 27 March 2020
of General Meeting
Latest time and date for receipt of
Forms of Proxy or CREST Proxy Instructions 8:30 a.m. BST on
for the General Meeting 14 April 2020
General Meeting 8:30 a.m. BST on
1 6 April 2020
Enquiries
For more information, please visit www.petropavlovsk.net or contact:
Petropavlovsk PLC Buchanan
Patrick Pittaway Bobby Morse
Max Zaltsman Kelsey Traynor
+44 (0) 20 7201 8900 +44 (0) 207 466 5000
TeamIR@petropavlovsk.net POG@buchanan.uk.com
Peel Hunt LLP (Sponsor and Corporate
Broker)
Ross Allister
David McKeown
+44 (0) 20 7418 8900
Important Notices
This announcement has been issued by and is the sole
responsibility of the Company. This announcement is not a circular
or a prospectus. The information contained in this announcement is
for background purposes only and does not purport to be full or
complete. The information in this announcement is subject to
change. No representation or warranty, express or implied, is or
will be made by, or in relation to, and no responsibility or
liability is or will be accepted by any adviser to the Company or
by any of their affiliates or agents as to or in relation to the
accuracy or completeness of this announcement or any other written
or oral information made available to or publicly available to any
interested party or its advisers, and any responsibility or
liability therefore is expressly disclaimed.
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to sell or issue, or any solicitation of an offer to
purchase, subscribe for or otherwise acquire, any securities in any
jurisdiction. Overseas Shareholders may be affected by the laws of
other jurisdictions in relation to the distribution of this
announcement. Persons who are not resident in the United Kingdom
and into whose possession this document comes should inform
themselves about and observe any applicable restrictions and legal,
exchange control or regulatory requirements in relation to the
transaction and the distribution of this document. Any failure to
comply with such restrictions or requirements may constitute a
violation of the securities laws of any such jurisdiction.
Peel Hunt LLP ("Peel Hunt"), which is authorised by the
Financial Conduct Authority (the "FCA"), is acting for the Company
and for no one else in connection with the transaction, the content
of this announcement, publication of the Circular and other matters
described in this announcement and will not regard any other person
as a client and will not be responsible to anyone other than the
Company for providing the protections afforded to their respective
clients, nor for providing advice in connection with the
transaction, the content of this announcement publication of the
Circular or any other matter, transaction or arrangement referred
to in this announcement.
Save for the responsibilities and liabilities, if any, of Peel
Hunt under the Financial Services and Markets Act 2000, as amended,
or the regulatory regime established thereunder, Peel Hunt assumes
no responsibility whatsoever and makes no representations or
warranties, express or implied, in relation to the contents of this
announcement, including its accuracy, completeness or verification
or for any other statement made or purported to be made by the
Company, or on the Company's behalf, or by Peel Hunt or on Peel
Hunt's behalf and nothing contained in this announcement is, or
shall be, relied on as a promise or representation in this respect,
whether as to the past or the future, in connection with the
Company or the transaction. Peel Hunt disclaims to the fullest
extent permitted by law all and any responsibility and liability
whether arising in tort, contract or otherwise which it might
otherwise be found to have in respect of this announcement or any
such statement.
No person has been authorised to give any information or to make
any representations other than those contained in this announcement
and, when published, the Circular and, if given or made, such
information or representations must not be relied on as having been
authorised by the Company or Peel Hunt. Subject to the Listing
Rules, the Prospectus Rules and the Disclosure Guidance and
Transparency Rules of the FCA, the issue of this announcement shall
not, in any circumstances, create any implication that there has
been no change in the affairs of the Company since the date of this
announcement or that the information in it is correct as at any
subsequent date.
This announcement contains certain forecasts, projections and
other forward-looking statements (i.e., all statements other than
statements of historical fact) in relation to, or in respect of the
financial condition, operations or businesses of the Group and/or
Petropavlovsk. Statements containing the words "expect",
"anticipate", "intends", "plan", "estimate", "aim", "forecast",
"project" and similar expressions (or their negative) identify
certain of these forward-looking statements. Any such statements
involve risk and uncertainty because they relate to future events
and circumstances and are based on current assumptions and depend
on circumstances that may or may not occur in the future and may
cause the actual results, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. There are many factors that could cause
actual results or developments to differ materially from those
expressed or implied by any such forward looking statements,
including, but not limited to, matters of a political, economic,
business, competitive or reputational nature. Past performance
should not be taken as an indication or guarantee of future
results, and no representation or warranty, express or implied, is
made regarding future performance. No statement in this
announcement should be construed as a profit estimate or profit
forecast. Neither the Company nor any other person undertakes any
obligation to update or revise any forward looking statement to
reflect any change in circumstances or expectations.
Capitalised terms used in this Important Notices section and not
otherwise defined in this announcement shall be ascribed the
meaning given thereto in the Circular.
DEFINITIONS
The following definitions apply throughout this Announcement
unless the context otherwise requires:
Agestinia Agestinia Trading Ltd, a company
registered in accordance with the
laws of the Republic of Cyprus with
registration number HE 219424 whose
registered office is at 40 Kimonos,
3095, Limassol, Cyprus
Board the board of Directors of the Company
FCA the UK Financial Conduct Authority
FSMA the Financial Services and Markets
Act 2000
General Meeting the general meeting of the Company
to be held at Apartment 1, Hill
House, Portsmouth Road, Esher, Surrey
KT10 9LN at 8:30 am BST on 16 April
2020 (and any adjournment thereof)
for the purposes of considering
and, if thought fit, approving the
Resolutions
Listing Rules the listing rules made by the FCA
under section 73A of FSMA
London Stock Exchange the London Stock Exchange Group
plc
New Ordinary Shares the new Ordinary Shares to be issued
to Agestinia in fulfilment of the
payment of the Exercise Price or
Reduced Exercise Price (as applicable)
Notice of General Meeting the notice of the General Meeting
or Notice contained in the Circular
Ordinary Shares ordinary shares of GBP0.01 each
in the capital of the Company
Related Party Transaction a related party transaction as defined
in Listing Rule 11.1.5 being the
Option Exercise
Resolutions the ordinary resolutions proposed
at the General Meeting for Shareholder
approval in respect of the proposed
Option Exercise , whether at the
Exercise Price or the Reduced Exercise
Price , and allotment of the New
Ordinary Shares (and set out in
the Notice of General Meeting)
Sponsor or Peel Hunt Peel Hunt LLP a limited liability
partnership incorporated in England
and Wales with registered number
OC357088, whose registered office
is Moor House, 120 London Wall,
London, United Kingdom, EC2Y 5ET
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.7.6Moz 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 committed to implementing international best
practices across all areas of sustainable development and is one of
the region's largest employers and contributors to the local
economy.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
CIRJRMATMTJTBPM
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March 27, 2020 11:44 ET (15:44 GMT)
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