Polymetal: VTB invests in Veduga to streamline ...

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 FTI Consulting Leonid Fink Viktor Pomichal [phone] Polymetal Evgeny Monakhov Timofey Kulakov Kirill Kuznetsov [e-mail] [phone] (UK) [phone] (Russia) Joint Corporate Brokers   Morgan Stanley & Co. International plc Andrew Foster Richard Brown Panmure Gordon James Stearns [phone] [phone] RBC Europe Limited Marcus Jackson Jamil Miah [phone] 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