The saga of Petropavlovsk continues

In late April, Petropavlovsk Plc announced two transactions - the purchase of Amur Zoloto and establishment of a joint venture with the Krasnoyarsk company GMD Gold for the construction of an autoclave plant.

Both deals are not cheap - the assessment Amur Zoloto in terms of production volumes is about 2-3 times higher than the current evaluation of Petropavlovsk. GMD Gold will receive 51% in the joint venture for $120 million for the completion of the autoclave plant construction, while Petropavlovsk to get its 49% transfers assets, in which $198 million have already been invested, in the joint venture.

Both events will allow it to increase the production on the horizon of the next 3-5 years, however, won’t solve the short-term problem - the repayment of the debt in the amount of $260 million in 2016. In addition, the question of participation of Renova in updated Petropavlovsk is still open. Today Renova owns 16.2% of the company, but after the dilution as a result of the purchase of Amur Zoloto, the share could fall to 11%. In mid-June, Renova proposed to revise the terms of the deal with Amur Zoloto, to include in it the purchase of the gold mining assets of Renova in Kamchatka. Petropavlovsk found the proposal interesting and worthy of further study.