REG-Polymetal International plc Polymetal: VTB invests in Veduga to streamline ownership structure and advance project development

Polymetal International PKAnnouncement

17/04/2020 07:05

============

   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 has  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
                                  Polymetal
                                              1 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
                          7425
   Morgan Stanley & Co.   8000
   International plc
                                  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.

    

    

   ══════════════════════════════════════════════════════════════════════════

   ISIN:          JE00B6T5S470
   Category Code: AGR
   TIDM:          POLY
   Sequence No.:  58755
   EQS News ID:   1023581


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

    2 fncls.ssp?fn=show_t_gif&application_id=1023581&application_name=news&site_id=refinitiv2

References

   Visible links
   1. mailto:ir@polymetalinternational.com


============