Polymetal swops Chaarat convertibles for stock
London-listed, Russia-focused gold miner Polymetal has agreed to exchange its $10-million of convertible notes received from fellow-listed Chaarat Gold as part of an original consideration for the Kapan mine, in Armenia, into equity.
Polymetal, which sold Kapan to Chaarat in January this year, will receive 14 638 020 newly issued shares in Chaarat, representing 3.5% of the enlarged issued share capital of the miner.
As a part of this arrangement Chaarat agreed to release Polymetal from warranties and indemnities under the sale and purchase agreement on acquisition of Kapan, except for a limited number of reserved matters.
The deal also settled the post-completion working capital adjustment between the parties.
"Exchange of convertibles into Chaarat stock, working capital settlement, and release of warranties and indemnities ensure Polymetal's direct exposure to Chaarat's performance while limiting legacy jurisdictional risks," said Polymetal CEO Vitaly Nesis.
Chaarat also agreed to waive its exclusivity right and right of first refusal for Lichkvaz – Polymetal's remaining asset in Armenia, which would pave the way for involving other interested parties into the ongoing sale process for Lichkvaz.
On Monday, Chaarat reported that the Kapan mine had not performed as it had hoped in the first five months under its ownership, with profitability falling short of expectations, mostly owing to lower grades in the ore. However, it remains hopeful to achieve it targeted operational results in the third quarter.
The mine’s target for the year is to produce 65 000 gold-equivalent ounces.
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