PJSC Polyus (LSE, MOEX — PLZL), the largest gold producer in Russia, announced that a 100% subsidiary of the Company, JSC Polyus Krasnoyarsk, has entered into a number of option agreements («Additional Options») with LLC «RT Business Development» («RT»), a wholly owned subsidiary of Russian State Corporation Rostec, to acquire an additional 25,1% participation interest in SL Gold Limited Liability Company («SL Gold»), a holder of the Sukhoi Log deposit license.
Total consideration for the additional 25,1% participation interest is fixed at $145,9 million and will be payable in Polyus’ shares within the next five years in five tranches, with Polyus having the right to accelerate. The number of Polyus’ shares subject to transfer to RT in exchange for its 25,1% participation interest in SL Gold will be determined by dividing the USD amount of the consideration for each tranche by the average of daily weighted average price of Polyus’ ordinary shares on the Moscow Exchange (converted in USD at the official exchange rate set by the Central Bank of Russia for each trading day) for a period of 90 days preceding the date of the respective option exercise notice.
The first tranche (a 3,8% stake in SL Gold for approx. $21,9 million) is expected to be paid using the Company’s existing treasury shares within 30 business days from July 11, 2017. Using the 90-day average price this corresponds to 290,049 shares of the Company (i.e., approximately a 0,22% stake in the Company post the offering of its shares and global depositary shares on the London Stock Exchange and the Moscow Exchange priced June 30, 2017 («Offering»)). The relevant portion of Polyus’ shares used as consideration will be subject to a lock up until January 1, 2018 (inclusive), which corresponds to the remainder of the 180-days lock-up period agreed to by the Company in connection with the Offering.
The remaining four tranches are excercisable in 2019—2022.
As previously announced, on December 16, 2016, JSC Polyus Krasnoyarsk, which held 50,1% in SL Gold, entered into cash option agreements with RT to acquire a 23,9% stake in SL Gold («Initial Options») for the total consideration of approximately $139 million to be exercised during 2017—2022. The first option was exercised in May 2017, increasing JSC Polyus Krasnoyarsk’s stake in SL Gold to 54,6%.
Taken together, entry into and the subsequent exercise of the Initial Options entered into in December 2016 and the Additional Options entered into in July 2017 will enable Polyus to consolidate 100% participation interest in SL Gold, the holder of the Sukhoi Log deposit license. Polyus intends to exercise these options.
Polyus group’s principal operations are located in Krasnoyarsk, Irkutsk and Magadan regions and the Sakha Republic (Yakutia).