For the first time in Armenia a strategic foreign investor, Chaarat Gold Holdings Ltd, acquired an Armenian mining company through joint financing of three local banks.
Chaarat, which is registered in the British Virgin Islands, headquartered in London and listed on the Alternative Investment Market (AIM), acquired 100% of shares of Armenia's Kapan Mining & Processing Co CJSC from PMTL Holding Ltd, a subsidiary of FTSE 250 member Polymetal, one of Russia’s largest gold and silver producers, for USD 55 million.
The deal is part of Chaarat's intention of becoming a major regional player in Central Asia through organic growth and selective M&A. The acquisition finance was arranged by Ameriabank, the first investment bank in Armenia, with successful syndication with HSBC Bank Armenia and Ararat Bank.
The three banks extended a USD 40M loan of which USD 32M was issued by Ameriabank.
(Graph Source: Chaarat Gold Holdings)
“This deal proved to the international financial community that Armenian banks are quite capable to close complicated deals successfully and to consolidate local financial resources for financing of international deals. It also shows that the Armenian economy is attractive for international capital and investments”, Gagik Sahakyan, Corporate and Investment Banking Director at Ameriabank said in a statement.
For his part, Artem Volynets, Chief Executive Officer of Chaarat, said: “We are delighted to be the first major foreign investor in Armenia since the revolution. Environmental, social and corporate governance is core to our culture, strategy and execution. Those values sit well with Armenia’s newly found commitment to transparency – it’s a great country for a company like ours to do business.”
Kapan polymetallic mine is located in the town of Kapan in south-eastern Armenia, about 320 km south of the capital city of Yerevan.
Production at the Kapan mine began in 2003 and its current life-of-mine runs to 2023. In April 2016, Polymetal, which operates in Russia, Kazakhstan and Armenia, bought Kapan for $38 million. It was the Russian producer’s smallest and highest-cost mine.
Chaarat’s internal modelling assumes production will continue until 2029. For the year ended December 2017, the Kapan mine produced around 50,000 ounces of gold equivalent, generating more than USD 20m EBITDA, with gross assets of USD 96m.
Ameriabank is the leading bank in Armenia as measured by all key financial indicators (assets, liabilities, loans portfolio, net profit and equity) according to the 2018 year reportable data.
The lender has been providing a large package of innovative banking services since 2007.