Chaarat Gold Holdings Ltd. extended the anticipated closing date of its acquisition of the Kapan gold mine in southern Armenia to Jan. 31 from Jan. 15 due to the extended winter holiday season in Armenia and Russia, the company reported in a Jan. 16 news release.
Russian gold miner Polymetal International PLC agreed to sell Kapan in October 2018 for US$55 million, and the terms were subsequently amended in Chaarat's favor to allow it to cover US$10 million of the bill with convertible notes, as opposed to the previously agreed US$5 million.
Chaarat also said Jan. 15 that it granted a pledge over the shares it has acquired in Kapan, pending Polymetal receiving the outstanding US$40 million for the mine near Armenia's border with Azerbaijan.
Polymetal has the right to unwind the deal and to a US$10 million termination fee if it does not receive the payment within 10 working days of the transaction's deadline.
Kapan produced 50,000 gold equivalent ounces in 2017, with total cash costs of US$871/oz of gold equivalent, according to FTSE 250-listed Polymetal, which paid US$38 million for the Armenian mine in 2016.
"We are shrinking the quantity of assets and focus on quality," Polymetal CEO Vitaly Nesis said in November 2018. "We are not so much in need of additional funds, we have a rather strong free cash flow. But we have too many assets in the portfolio, and the management's focus gets scattered on them all."