TIDMPOG
RNS Number : 3206R
Petropavlovsk PLC
13 June 2018
13 June 2018
Petropavlovsk PLC
Company Update
Petropavlovsk PLC ("Petropavlovsk" or the "Company", and
together with its subsidiaries, the "Group") is pleased to announce
a number of strategic and operational developments:
-- Negotiations to refinance IRC Limited's facility with the
Industrial and Commercial Bank of China ("ICBC") in relation to the
US$340 million project finance facility between Kimkano-Sutarsky
Mining and Beneficiation Plant LLC ("K&S", a wholly owned
subsidiary of IRC) and ICBC (the "ICBC Facility") are at an
advanced stage with a major Russian bank.
-- The Group has entered into a bridge loan facility agreement
(the "Bridge Loan") with IRC in order to help K&S meet the
payment due under the ICBC Facility on 20 June 2018 (the "20 June
Payment").
-- The Bridge Loan is for a Rouble amount equivalent to US$29.75
million at an interest rate of 12% per annum, and is expected to be
repaid as soon as the refinancing of the ICBC Facility is
completed.
-- IRC and Petropavlosk are in the final stages of agreeing a
waiver with ICBC in respect of IRC's obligations to comply with
certain financial covenants and maintain certain cash deposits with
ICBC. If the waiver is obtained and the 20 June Payment is made,
the good standing of the ICBC Facility will be maintained.
-- The Group has entered into four gold sales agreements with
Sberbank for a total volume of 96koz and with an option for advance
payment for up to 12 months;
o The sales agreements will provide additional liquidity during
a period of planned high cash outflows, the majority of which are
associated with POX-related capital expenditure, thus de-risking
it.
-- The commissioning process at the Malomir flotation plant, a
key step in the development of the Company's flagship pressure
oxidisation project ("POX"), is under way after being launched on
schedule at the beginning of June 2018.
IRC Refinancing and Bridge Loan
Following Petropavlovsk's announcement on 23 May 2018, the
Company continues to monitor the situation with regards to IRC's
capacity to make the 20 June Payment and otherwise maintain the
ICBC Facility in good standing. The Company, in light of its role
as guarantor of the ICBC Facility, is assisting in the progression
of refinancing negotiations, which are at an advanced stage with a
major Russian bank.
As a precautionary measure, the Group has entered into the
Bridge Loan for the Rouble equivalent of US$29.75 million with IRC
to help K&S to make the 20 June Payment, which is for US$35.16
million. In addition, IRC and Petropavlovsk are in the final stages
of agreeing a waiver with ICBC in respect of IRC's obligations
under the ICBC Facility to comply with certain financial covenants
and maintain certain cash deposits with ICBC. Whilst the Company is
highly confident of obtaining the waiver, there is no guarantee
that it will be provided by ICBC. If the waiver is obtained by 20
June 2018 and the 20 June Payment is made, this will prevent the
defaults that would have arisen under the ICBC Facility, and will
prevent the risk that, through cross-defaults and
cross-accelerations, all of the Group's debt arrangements could
become repayable on demand.
Malomir Flotation Plant
The commissioning process began at Petropavlovsk's Stage 1,
3.6Mtpa Malomir flotation plant on schedule at the beginning of
June 2018.
The flotation plant is key to Petropavlovsk's flagship POX
project, which will enable the Group to process its c.4Moz of
refractory gold reserves.
The POX Hub itself remains on track to be commissioned in Q4
2018.
The second stage of the flotation plant development, to increase
its capacity to 5.4Mtpa, is expected to be completed and
commissioned in 2019.
Gold Sales Agreements
The Group has entered into four gold sales agreements with
Sberbank, for a total volume of 96koz and for advance payment for
up to 12 months. Advances will be settled using proceeds at the
prevailing gold price at the date of the shipment. The sales
agreements provide additional headroom, if required, during the
commissioning phase of the POX hub.
These agreements are separate to the Gazprombank gold sales
agreement announced on 27 March 2018.
Roman Deniskin, Chief Executive comments:
"We are focused on resolving the situation that we inherited
from the previous board regarding IRC by helping IRC to refinance
their ICBC loan facility so we can eventually monetize our equity
stake in this non-core business. Together with IRC, we have been
pursuing various refinancing alternatives, and we are making good
progress with a major Russian bank. In the meantime, as a matter of
last-resort, Petropavlovsk is making a short-term bridge loan
facility available to IRC so that it can meet its ICBC loan payment
obligations on 20 June 2018.
The gold sales agreements are another positive development that
provide the Group with optionality to access additional liquidity,
if required, over the course of the year as we build a strong
platform for long term sustainable growth."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
About Petropavlovsk
Petropavlovsk is one of Russia's leading gold mining companies.
As at 31 March 2018, the Company had
produced approximately 6.9Moz of gold.
At this time, Petropavlovsk is in the construction phase of a
state of the art pressure oxidation facility to process the
Company's substantial refractory resource base. The Company's
combined 3,430km(2) license holding has untapped resource
potential. The Company is a leading employer and contributor to the
development of the local economy in the Amur region, Russian Far
East, where it has operated since 1994.
Petropavlovsk is a shareholder (31.1%) of IRC Limited and is the
guarantor of the US$340 million project finance facility (US$234
million principal outstanding as at 31 March 2018). IRC is a
vertically integrated iron ore producer and developer in the
Russian Far East and North-eastern China. IRC is listed on the Hong
Kong Stock Exchange (ticker: 1029.HK).
Petropavlovsk is listed on the Main Market of the London Stock
Exchange (ticker: POG:LN).
Enquiries
For more information, please visit www.petropavlovsk.net and
www.ircgroup.com.hk or contact:
Petropavlovsk PLC Buchanan
Alya Samokhvalova Bobby Morse
Grace Hanratty Anna Michniewicz
+44 (0) 20 7201 8900 +44 (0) 207 466 5000
TeamIR@petropavlovsk.net POG@buchanan.uk.com
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END
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