Hogan Lovells has assisted Polymetal International Plc, a major LSE-listed gold-mining group operating in Russia and Kazakhstan, on signing a binding agreement for acquisition of the Kapan mine in Armenia from TSX-listed Canadian international gold mining group Dundee Precious Metals Inc. (“DPM”). The Toronto office of Cassels Brock advised DPM on the transaction, which was structured through a sale of shares in the Armenian company Dundee Precious Metals Kapan CJSC (“DPMK”).
The consideration payable for the shares in DPMK will consist of: (i) USD 10 million in cash, (ii) USD 15 million in Polymetal shares, and (iii) a 2% net smelter royalty on future production from the Kapan mine capped at USD 25 million.
Hogan Lovells advised Polymetal on the entirety of the transaction documents including the share purchase agreement and net smelter return royalty agreement. The share purchase agreement is subject to various representations, warranties, covenants, and indemnities. The transaction is also subject to: (i) DPM obtaining its lenders’ consent, release, and discharge in respect of their security interest over the shares of DPMK; and (ii) the parties obtaining all regulatory approvals, including the approval of the State Commission for the Protection of Economic Competition of the Republic of Armenia to the transfer of DPMK shares.
Closing of the Transaction is expected to take place in the second quarter of 2016.
“Polymetal believes that the acquisition of the Kapan mine will result in the development of a profitable regional processing hub with sizable production which will provide a strong operating platform to pursue further opportunities in Armenia,” said Vitaly Nesis, Group CEO of Polymetal.
Hogan Lovells Managing Partner and Head of Corporate Practice of the Moscow office Oxana Balayan said of the deal that: “It is a fantastic piece of work for Polymetal which follows our recent work with Polymetal team on establishment of their production joint venture with Russian No 1 gold producer Polyus Gold in Yakutia, Russia in December 2015. It is great to see such transaction happening now despite hard economic and political times for the Russian business. The Polymetal team in Russia and Armenia is a pleasure to work with.”
Balayan led the firm’s team on the deal, with support from Counsel Maria Baeva, and the assistance of Associates Maria Kazakova and Denis Shakhov.
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