Settlement of claims against the Assaubayev family

RNS Number : 6991G

KazakhGold Group Ltd

16 May 2011

 



For immediate release

16 May 2011

Settlement of claims against the Assaubayev family

Following the announcement by KazakhGold Group Limited ("KazakhGold") on 11 April 2011 that it had entered into a settlement deed in connection with the conditional settlement of the proceedings brought by KazakhGold against members of the Assaubayev family and certain of their affiliates (the "Settlement Deed") and the Restated and Amended Principal Agreement with AltynGroup Kazakhstan LLP ("AltynGroup") (the "RAPA"), the Board of Directors of KazakhGold announces that:

·          the conditions to the effectiveness of the Settlement Deed have been satisfied, including amongst others the issuance to KazakhGold of an irrevocable documentary letter of credit in the amount of US$100,000,000 (as described below) (the "LOC") and the receipt of the approval from the Ministry of Industry and New Technologies of the Republic of Kazakhstan ("MINT") to the proposed combination of KazakhGold with OJSC Polyus Gold ("Polyus Gold"); and

·          MINT has granted its approval for the sale by KazakhGold's subsidiary, Romanshorn LC AG, of 100% of the shares in Kazakhaltyn MMC JSC to Altyngroup Holdings K.F.T., an acquisition vehicle of AltynGroup.

Letter of Credit ("LOC")

The LOC, which was issued in favour of KazakhGold by an independent bank in the amount of US$100,000,000 is available to be drawn in accordance with the terms and conditions of the RAPA (which were described in the announcement made by KazakhGold on 11 April 2011).   In particular, subject to certain conditions, the US$100,000,000 may be drawn to partially fund the consideration due at the First Tranche Completion of the sale of the shares in KazakhGold's subsidiaries to AltynGroup (or its nominee) (the "First Tranche Completion"), by no later than 12 September 2011 (the "First Tranche Cut-Off Date"), or, to the extent the First Tranche Completion does not occur, depending on which conditions to First Tranche Completion are not satisfied, KazakhGold will be able to draw on the LOC and apply the proceeds as follows:

·          following 12 September 2011 US$100,000,000 may be drawn and applied, together with the release of the Gold Lion Loans as described in the announcement of 11 April 2011, towards the acquisition by AltynGroup (or its nominee) of 18,977,653 KazakhGold shares at a price per share of US$6.530; or

·          at any time after 11 November 2011, and subject to no demand having been made by KazakhGold under the LOC in accordance with the above, if any one or more of certain specified conditions to the First Tranche Completion are not met, then KazakhGold may draw amounts  up to the total amount of the LOC as partial consideration for the entry by KazakhGold into the Settlement Deed.

MINT Approvals

MINT has granted its approval to the proposed combination of KazakhGold and Polyus Gold and to the sale of 100% of the shares in Kazakhaltyn MMC JSC to Altyngroup Holdings K.F.T.  MINT has also revoked its previous letters, which annulled the waiver obtained for the partial offer by Jenington International Inc. for 50.1% of shares in KazakhGold, which was completed in August 2009, and the waivers obtained in June 2010 for the proposed combination between Polyus Gold and KazakhGold and the US$100 million equity placing completed by KazakhGold on 1 July 2010.

The receipt of the approval from MINT to the proposed combination of KazakhGold with Polyus Gold, along with the revocation of the MINT letters that revoked prior waivers and approvals, will permit KazakhGold to continue its preparations for a possible combination between the two groups.

Termination of criminal investigation with respect to certain KazakhGold directors

In addition, further to the announcement made on 3 August 2010, the Board of KazakhGold is pleased to announce that the criminal investigation by the Agency on Economic and Corruption Crimes of the Republic of Kazakhstan ("AECC") against three members of KazakhGold's Board of Directors (Mr. Evgeny Ivanov, Mr. German Pikhoya and Mr. Alexey Teksler) has been terminated due to the proven absence of any wrongdoing on the part of the three directors.  The Board of Directors of KazakhGold has always strongly refuted the allegations made against the three directors, which it believed to be without factual or legal basis.

Enquiries:

KazakhGold

Alexey V. Chernushkin, Director, Capital Markets and IR       [phone]

Forward looking statements

This announcement, including any information included or incorporated by reference, may contain "forward-looking statements" concerning Polyus Gold and KazakhGold. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Polyus Gold and KazakhGold operations and potential synergies resulting from the proposed combination; and (iii) the effects of government regulation on Polyus Gold and KazakhGold's businesses. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Each of Polyus Gold and KazakhGold assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.

 

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