REG-Polymetal International plc Polymetal: Investment to gain 9.1% stake in Tomtor

Polymetal International PKAnnouncement

19/03/2020 07:05

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   Polymetal International plc (POLY)
   Polymetal: Investment to gain 9.1% stake in Tomtor

   19-March-2020 / 10:00 MSK
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   Release time IMMEDIATE                      LSE, MOEX, AIX: POLY / ADR:
                AUCOY
   Date         19 March 2020

    

    

   Polymetal International plc

   Investment to gain 9.1% stake in Tomtor

   Polymetal is  pleased to  announce  that it  has  entered into  a  legally
   binding agreement to invest US$20 million in exchange for a 9.1% stake  in
   ThreeArc Mining Ltd.  (ThreeArc). ThreeArc  owns 100%  of the  world-class
   Tomtor niobium and rare-earth metals project (Tomtor).

   TRANSACTION DETAILS

     • Polymetal to  acquire a  9.1% stake  in ThreeArc,  100% owner  of  the
       Tomtor project, through a  US$ 20 million  cash investment into  newly
       issued share capital.
     • The pre-money enterprise value is estimated at US$ 259 million.
     • The proceeds will be used to complete the Tomtor Pre-Feasibility Study
       and initial JORC-compliant Ore Reserve and Mineral Resource Estimate.
     • Pursuant to FCA Listing Rule  11.1.10R this transaction is  classified
       as a smaller related  party transaction as ICT  Holding Ltd. (ICT),  a
       substantial shareholder of  Polymetal International plc,  is also  the
       majority  owner  of  ThreeArc,  and  this  announcement  is  made   in
       accordance with Listing Rule 11.1.10R (2)(c).
     • The completion of the transaction  will take place upon the  statutory
       registration procedure, which is expected  to occur before the end  of
       March.

   "Investment in Tomtor provides us with  a high-quality exposure to the  EV
   revolution by establishing strategic beachhead in the Nb and REE  markets.
   Our capital injection and our engineering expertise will be key in driving
   the project forward.  We intend to consider any further potential steps of
   Polymetal's  engagement   with  the   asset   after  the   completion   of
   JORC-compliant  reserve  estimate",  said  Vitaly  Nesis,  Group  CEO   of
   Polymetal.

   ABOUT TOMTOR

   Tomtor is located in the north-west of  Yakutia. It is one of the  largest
   and highest  grade  rare  earth  elements (REE)  projects  in  Russia  and
   considered to be the highest grade development stage niobium (Nb)  project
   globally. The  deposit  was  discovered in  1977  with  initial  statutory
   reserves approved  in  1999.  In  2013,  ICT  established  ThreeArc  which
   acquired the  Tomtor  license subsequently.  In  2018, statutory  PFS  and
   updated GKZ  reserves were  approved  totalling 30.5  Mt  of ore  at  4.0%
   Nb2O5 1  1 +10.6% REO 2  2  grade containing 1.2 Mt of Nb2O5 and 3.2 Mt of
   REO.

   The project  is comprised  of  the Tomtor  open-pittable deposit  and  the
   Krasnokamensk Hydromet Facility (KHF) which will be built near the town of
   Krasnokamensk.  Krasnokamensk, located in  South-Eastern Siberia close  to
   the border with China,  is the location of  Russia's largest uranium  mine
   and associated processing and tailings storage infrastructure.

   STRATEGIC RATIONALE FOR THE TRANSACTION

   The project envisions the  following advantages which  fits well with  the
   Company's strategy:

     • High-grade
     • Large
     • Long-lived
     • Exposure to green technology with significant potential to  contribute
       to active climate change management
     • Leveraging   Polymetal's    leading    technical    capabilities    in
       hydrometallurgy and already established regional presence in Yakutia

   NIOBIUM AND REE MARKET

   Niobium is a  soft, rare, transition  metal. Nearly 90%  of the Nb  demand
   structure is represented by high-strength low-alloy steel (HSLA) which  is
   mostly used  in construction  as  a strengthening  sustainable  component,
   automotive industry to strengthen and reduce weight of a car elements  and
   aerospace and defense sector to offer creep strength in super alloys.

   Niobium is a relatively scarce resource  and there are only three  primary
   niobium mines in the  world today, two  in Brazil and  one in Canada,  but
   growing demand  has created  a global  market  value of  more than  US$  2
   billion 3  3 . World reserves of Nb are estimated at over 9 Mt. Nb  prices
   are far less volatile than most  REEs' which are mostly produced in  China
   and have been exposed to supply constraints during the last 10 years while
   Nb has been stable.

   The global rare earth elements market was valued at US$ 2.2  billion 4  3 
   in 2019 with  the most of  the value coming  from NdPr. NdPr  are used  in
   high-strength magnets in  motors in electric  vehicles, wind turbines  and
   electronic devices and autocatalysts.

   Tomtor is expected to become an alternative source of FeNb and rare  earth
   elements for the growing markets of high-strength steel, permanent magnets
   and electronics, all critical  for modern green-tech technology.  Domestic
   demand for  FeNb  is expected  to  demonstrate robust  growth,  thanks  to
   Russia's growing  steel production,  while since  domestic REE  demand  is
   limited, Tomtor should become a significant supplier of REEs to the global
   market.

   About Polymetal 

   Polymetal International Plc (LSE, MOEX:  POLY, ADR: AUCOY) (together  with
   its subsidiaries - "Polymetal", the "Company", or the "Group") is a top-20
   global gold producer  and a top-5  global silver producer  with assets  in
   Russia and Kazakhstan. The  Company combines strong  growth with a  robust
   dividend yield.

   About Morgan Stanley 

   Morgan Stanley & Co. International plc acted as sole sponsor and financial
   advisor to Polymetal and to no one else. In connection with such  matters,
   Morgan Stanley  and their  respective directors,  officers, employees  and
   agents will not  regard any other  person as  its client, nor  will it  be
   responsible to anyone other than  Polymetal for providing the  protections
   afforded to their clients or for  providing advice in connection with  the
   matters described in this announcement or any matter referred to herein.

   Enquiries

       Media                          Investor Relations
                                  Polymetal
                                              5 ir@polymetalinternational.com
   FTI Consulting                 Evgeny
                          +44 20  Monakhov   +44 20 7887 1475 (UK)
   Leonid Fink            3727
                          1000    Timofey     
   Viktor Pomichal                Kulakov
                                             +7 812 334 3666 (Russia)
                                  Kirill
                                  Kuznetsov
       Joint Corporate Brokers         
                          +44 20
   Morgan Stanley & Co.   7425
   International plc      8000
                                  RBC Europe
   Andrew Foster                  Limited

   Richard Brown                  Marcus     +44 20 7653 4000
                                  Jackson
   Panmure Gordon          
                                  Jamil Miah
   James Stearns          +44 20
                          7886
                          2500

   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.

    

    

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    6  1  Niobium oxide

    7  2  Rare earth oxides. Mainly NdPr Oxides: Pr6O11 (Praseodymium oxide)
   and Nd2O3 (Neodymium oxide)

    8  3  As per Roskill

    

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   ISIN:          JE00B6T5S470
   Category Code: MSCM
   TIDM:          POLY
   Sequence No.:  53287
   EQS News ID:   1001289


    
   End of Announcement EQS News Service

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