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Hogan Lovells advises London-listed Polymetal on acquisition in Armenia

10 March2016

Moscow, 10 March 2016 – Hogan Lovells assisted Polymetal International Plc ("Polymetal"), major LSE-listed gold-mining group operating in Russia and Kazakhstan in signing a binding agreement for acquisition of the Kapan mine in Armenia from a TSX-listed Canadian international gold mining group Dundee Precious Metals Inc. ("DPM") (the "Transaction").  The Transaction was structured through sale of shares in the Armenian company Dundee Precious Metals Kapan CJSC ("DPMK").


                                                                                                                        
The consideration payable for the shares in DPMK will consist of (i) US$10 million in cash from , (ii) US$15 million in Polymetal shares, and (iii) a 2% net smelter royalty on future production from the Kapan mine capped at US$25 million.

Hogan Lovells advised Polymetal on the entirety of the transaction documents including share purchase agreement and net smelter return royalty agreement. The share purchase agreement is subject to various representations, warranties, covenants and indemnities which are expected for a transaction of this nature. The Transaction is also subject to (i) DPM obtaining its lenders' consent, release and discharge in respect of their security interest over the shares of DPMK and (ii) the parties obtaining all regulatory approvals, including the approval of the State Commission for the Protection of Economic Competition of the Republic of Armenia to transfer the DPMK shares.

Closing of the Transaction is expected to take place in the second quarter of 2016.

"Polymetal believes that the acquisition of the Kapan mine will result in the development of a profitable regional processing hub with sizable production which will provide a strong operating platform to pursue further opportunities in Armenia," said Vitaly Nesis, Group CEO of Polymetal.

Managing partner and Head of Corporate Practice of the Moscow office Oxana Balayan says "It is a fantastic piece of work for Polymetal which follows our recent work with Polymetal team on establishment of their production joint venture with Russian No 1 gold producer Polyus Gold in Yakutia, Russia in December 2015.  It is great to see such transaction happening now despite hard economic and political times for the Russian business. Polymetal team in Russia and Armenia is a pleasure to work with." 

The Hogan Lovells team on the Transaction was led by Managing partner of the Moscow office Oxana Balayan with support from counsel Maria Baeva, and consisted of associates Maria Kazakova and Denis Shakhov.



 
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