TIDMPOG
RNS Number : 8870X
Petropavlovsk PLC
27 February 2017
27 February 2017
Petropavlovsk PLC
IRC Update
Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together
with its subsidiaries, the "Group") is a significant shareholder in
IRC Limited ("IRC"), the iron ore producer and developer, which
today announced a repayment restructuring of IRC's US$340 million
Project Finance Facility with Industrial and Commercial Bank of
China Ltd ("ICBC").
IRC Corporate Highlights
ICBC Repayment Restructure, subject to fulfilment of certain
conditions precedent:
-- Project Finance Facility: US$234 million principal
outstanding.
-- 2017 deferral of both principal repayment instalments,
originally due 20 June 2017 and 20 December 2017 for an aggregate
amount of US$42,500,000 (approximately HK$330 million).
-- The five subsequent repayment instalments are rebalanced to
account for the deferred 2017 payments. Each principal repayment
instalment to be increased by US$8,500,000 (approximately HK$65.9
million) to US$29,750,000 (approximately HK$231 million), with the
aggregate amount of the increase equal to US$42,500,000
(approximately HK$330 million).
-- The repayment restructure will be effective upon fulfilment
of the conditions precedent and will continue to be effective until
20 June 2020, subject to the ongoing satisfaction of certain
conditions. Thereafter, the principal repayment schedule will
return to the original bi-annual payments of US$21,250,000. The
2022 maturity of the Project Finance Facility remains
unchanged.
Commissioning
-- K&S is in the final stages of production testing. The
plant continues to make solid progress, currently operating at
close to 50% of capacity. For the month of January 2017, K&S
produced 100kt of iron ore products.
-- Despite a technical incident with the ball mill lubrication
system, K&S plant engineers have adapted the technological
process to operate three out of four ball mills, allowing K&S
to continue its commissioning program. Spare parts necessary for
all ball mills to be operational are expected to be delivered to
site soon.
-- Full commercial production remains scheduled for H1 2017.
Strategic Investor
-- Secured a new core investor, Tiger Capital Fund, with a
member appointed to the Board.
-- Tiger Capital Fund invested US$25 million for 13.22% of the
issued share capital.
Legal Settlement
-- Amicable settlement of legal and technical dispute with lead
construction contractor at K&S, resulting in cash compensation
to IRC of US$4.5 million in Dec 2016.
-- Outstanding construction payment liability reduced by US$3.9
million while reserving the rights to claim for further penalties
from the contractor.
Peter Hambro, Chairman of Petropavlovsk, comments: "We
congratulate IRC on its recent operational progress and improved
financial stability. It is encouraging to note the strength of
relations between IRC, its debt provider, ICBC, and its insurer,
Sinosure. The 2017 debt repayment deferral in turn defers
Petropavlovsk's 2017 contingent liability as the guarantor. This
represents a significant reduction of our risk profile and comes as
Petropavlovsk enters a phase of transformational growth.
Furthermore, it allows the IRC team to remain focused on
successfully delivering the ramp up of the K&S plant.
Throughout the current phase of commissioning IRC has continued
to create shareholder value. This has been further supported by an
improving iron ore market, with current spot iron ore of $90/t (62%
Fe). With IRC projected cash costs of US$34/t, margins are robust
even against the 2017 iron ore consensus of US$80/t.
Once the K&S plant reaches full commercial production and
thereby becomes cash flow positive, the strategy remains for IRC to
assess competitive refinancing alternatives, including retiring the
Petropavlovsk guarantee.
As at market close on 24 February 2017, Petropavlovsk's 31.10%
equity holding has a market value of HK$927 million (US$119
million, assuming a foreign exchange rate of HKD:USD 0.13)."
About Petropavlovsk
Petropavlovsk is one of Russia's leading fully integrated gold
mining companies, operating some of the largest gold mines in
Russia in terms of gold production, processing capacity and
resource base. As at 31 December 2016, the Company had produced
approximately 6.4Moz of gold.
Petropavlovsk is in the construction phase of a state of the art
pressure oxidation facility to process the Company's substantial
refractory resource base. The Company's combined 3,600km(2) license
holding has untapped resource potential. The Company is a leading
employer and contributor to the development of the local economy in
the Amur region, Russian Far East, where it has operated since
1994.
Petropavlovsk is a shareholder (31.10%) of IRC Limited and is
the guarantor of the US$340 million project finance facility
(US$234 million principal outstanding, as at 31 December 2016). IRC
is an iron ore producer and developer in the Russian Far East and
North Eastern China. IRC is listed on the Hong Kong Stock Exchange
(Ticker: 1029.HK).
Petropavlovsk is listed on the Main Market of the London Stock
Exchange (Ticker POG:LN)
Enquiries
For more information, please visit www.petropavlovsk.net and
www.ircgroup.com.hk or contact:
Petropavlovsk PLC Maitland
Alexandra Carse Neil Bennett
Grace Hanratty James Isola
+44 (0) 20 7201 8900 +44 (0) 20 7379 5151
TeamIR@petropavlovsk.net Petropavlovsk-Maitland@maitland.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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