Petropavlovsk delays deal to buy 25% in Elginskoye gold field

MOSCOW, Apr 29 (PRIME) -- The shareholders of Russian gold producer Petropfvlovsk Plc have not approved an agreement to buy 25% in Temi LLC that owns the license for development of the Elginskoye gold field, the company said in a statement on Wednesday.

Petropavlovsk owns the remaining 75% in Temi, and Agestinia Limited was to sell the 25% stake to the gold producer. The sum of the deal was preliminary set at U.S. $53.5 million, and the option should have been used before May 20. Petropavlovsk was to pay for the stake with money or with shares in the company.

But market conditions have changed significantly since the deal’s approval due to the COVID-19 pandemic, and the price of shares of Petropavlovsk exceed the price that was initially coordinated with Agestinia by 40%.

“In these changed circumstances the board of directors understands the lack of majority support from shareholders for the exercise of the option agreement on its current terms. The board accordingly announced at today’s general meeting that it was withdrawing the two resolutions,” the statement read.

The board of directors will review the possibility of exercising the option until May 21, 2021 taking into account market conditions and interests of shareholders, the company said.

The Elginskoye gold field was discovered in 2016 near another asset of Petropavlovsk, the Albyn mine and processing facility. Resources of the field stand at 2.8 million ounces under the JORC Code, including 1.5 million ounces of reserves with the average grade of 1.1 grams per tonne.

End