Polymetal International plc (POLY)
Polymetal: VTB invests in Veduga to streamline ownership structure and
advance project development
17-Apr-2020 / 09:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY
Date 17 April 2020
Polymetal International plc
VTB invests in Veduga to streamline ownership structure and advance project
development
VTB Bank (VTB), one of the Russia's largest banks, will invest US$ 71
million in exchange for a 40.6% stake in Veduga, a gold deposit in the
Krasnoyarsk region. Polymetal will retain 59.4% ownership and has been
granted a call option to acquire VTB's stake in the future.
"This deal hands Polymetal full operational control of the asset and unlocks
further project development. The creative transaction structure allows us to
benefit from the financial strength of VTB without straining our own balance
sheet. Crucially, Polymetal now has a clear path to 100% ownership", said
Vitaly Nesis, Group CEO of Polymetal.
"VTB ha s a long-standing partnership with Polymetal - one of Russia's
leading mining companies. We are fully committed to developing an innovative
financing and advisory offering which will allow Polymetal to advance its
long-term strategy. We believe that this arrangement will enable the fast
tracking of the Veduga development, which is beneficial for both
shareholders and the region", said Dmitry Snesar, Head of Client Coverage,
Senior Vice President of VTB.
TRANSACTION DETAILS
? VTB will initially acquire a 25.7% stake in Amikan LLC (Amikan), the
owner of Veduga gold project ("Project"), from the existing minority
shareholders for cash consideration of US$ 36 million. The implied Amikan
equity transaction value is US$ 140 million.
? VTB will invest a further US$ 35 million in cash in exchange for newly
issued Amikan share capital resulting in VTB holding a 40.6% stake in the
asset. These cash-in proceeds will be used to fund the Project's ongoing
exploration and development costs.
? VTB has been granted a put option to sell its stake in Amikan to
Polymetal during the two-year option window between the 3rd and the 5th
anniversary following signing at a fixed implied rate of return for VTB
(subject to market conditions) with a customary cap in place.
? Polymetal has been granted a call option to acquire VTB's stake in
Amikan any time during the 4 years and 9 months following signing at a
fixed implied rate of return for VTB (subject to market conditions).
? Both put and call options are to be settled in Polymetal shares.
? Completion of the transaction is expected to occur before the end of
April but in any event no later than 13 October 2020.
? Upon completion of the transaction, Polymetal's stake in Amikan will
amount to 59.4%. Polymetal will maintain full operational control over the
asset.
? VTB Capital, VTB's investment banking arm, acts as financial advisor to
Polymetal in connection with the transaction.
STRATEGIC RATIONALE FOR THE TRANSACTION
Following more than a two-fold reserve increase at Veduga in 2019, Polymetal
re-assessed the asset as core and discontinued the formal divestiture
process.
The transaction brings significant advantages for the Group:
? Buyout of minority shareholders enabling further development of the
asset with streamlined decision-making process and full shareholder
alignment.
? Attractive valuation of US$ 56/oz gold reserves. This compares favorably
with the current valuation of Polymetal at US$ 412/oz GE reserves.
? Decreased leverage and availability of funds for further exploration and
project development.
? Limited value dilution compared to conventional equity financing due to
capped rate of return for the financial partner.
ABOUT VEDUGA
Veduga is a high-grade refractory gold deposit located in the prolific
Northern Yenisey gold belt in the Krasnoyarsk Region, the top gold producing
region of Russia. The project comprises 4 license plots with the total area
of 18 sq.km. The property is accessible by an all-year road and has direct
access to the federal power grid.
In 2019, Polymetal more than doubled the deposit's Ore Reserves to 2.8 Moz
of gold at an average grade of 4.6 g/t with further significant potential
exploration upside.
Currently, mining at Veduga focuses on high-grade open pit with ore
processed at other Polymetal's assets and concentrate subsequently treated
at the Amursk POX.
The conceptual project timeline assumes a further reserve and resource
upgrade in Q3 2021 which will enable potential investment decision in Q4
2021.
About VTB
JSC VTB Bank, its subsidiary banks and financial organisations (VTB Group)
is an international financial group, offering a wide range of financial and
banking services and products in Russia, the CIS, and select countries of
Europe, Asia, and Africa. As of 31 December 2019, the Group was the second
largest financial group in Russia by assets and by customer accounts. The
Government of the Russian Federation is VTB Group's main shareholder and
owns 60.9% of the voting shares through the Federal Property Management
Agency.
About Polymetal
Polymetal International plc (together with its subsidiaries - "Polymetal",
the "Company", or the "Group") is a top-10 global gold producer and top-5
global silver producer with assets in Russia and Kazakhstan. The Company
combines strong growth with a robust dividend yield.
Enquiries
Media Investor Relations
FTI +44 20 3727 Polymetal ir@polymetalinternational.com
Consulting 1000
Evgeny +44 20 7887 1475 (UK)
Leonid Fink Monakhov
Viktor Timofey
Pomichal Kulakov
+7 812 334 3666 (Russia)
Kirill
Kuznetsov
Joint Corporate Brokers
Morgan +44 20 7425 RBC +44 20 7653 4000
Stanley & 8000 Europe
Co. Limited
Internationa
l plc
Marcus
Jackson
Andrew
Foster
Jamil
Miah
Richard
Brown
Panmure
Gordon
+44 20 7886
2500
James
Stearns
Forward-looking statements
This release may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements speak only as
at the date of this release. These forward-looking statements can be
identified by the use of forward-looking terminology, including the words
"targets", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "would", "could" or "should" or similar expressions or, in
each case their negative or other variations or by discussion of strategies,
plans, objectives, goals, future events or intentions. These forward-looking
statements all include matters that are not historical facts. By their
nature, such forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the company's control that
could cause the actual results, performance or achievements of the company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions regarding the
company's present and future business strategies and the environment in
which the company will operate in the future. Forward-looking statements are
not guarantees of future performance. There are many factors that could
cause the company's actual results, performance or achievements to differ
materially from those expressed in such forward-looking statements. The
company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements
are based.
ISIN: JE00B6T5SXXX
Category Code: AGR
TIDM: POLY
Sequence No.: 58755
EQS News ID: 1023581
End of Announcement EQS News Service
(END) Dow Jones Newswires
April 17, 2020 02:00 ET (06:00 GMT)
© 2020 Dow Jones News
