Polymetal exchanges convertible notes from Kapan sale to Chaarat shares
Polymetal announced on Tuesday that, following the sale of the Kapan mine in January to Chaarat Gold Holdings, it agreed to exchange the $10m of Chaarat's convertible notes received as part of the original consideration, as well as factoring in working capital settlement under the sale and purchase agreement, for 14,638,020 newly issued ordinary shares in Chaarat.
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The FTSE 250 company said they would represent 3.5% of the enlarged issued share capital of Chaarat post-allotment.
It said the new shares would be subject to a 12-month lock-up arrangement, and Chaarat would have a right of first refusal in the event of the sale of those new shares.
As a part of the arrangement, Chaarat Gold International - a wholly owned subsidiary of Chaarat - had 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.
Chaarat also agreed to waive its exclusivity right and its right of first refusal for Lichkvaz - Polymetal's remaining asset in Armenia.
That would pave the way for involving other interested parties into the ongoing sale process for Lichkvaz, the Polymetal board explained.
“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 group chief executive officer Vitaly Nesis.