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Petropavlovsk to grant US$30M loan to IRC to pay down Chinese bank credit line

Gold miner Petropavlovsk PLC agreed to pay a bridge loan of US$29.75 million to iron ore producer IRC Ltd. to help the company meet with its credit obligations with the Industrial and Commercial Bank of China.

In a June 13 press release, Petropavlovsk said the deal will enable IRC to make a US$35.2 million payment due under the ICBC facility June 20.

Negotiations are underway to refinance IRC's US$340 million facility with ICBC with a major Russian bank, said the gold miner, which holds a 31.10% stake in IRC.

"IRC and Petropavlosk are in the final stages of agreeing a waiver with ICBC in respect of IRC's obligations to comply with certain financial covenants and maintain certain cash deposits with ICBC," said Petropavlovsk, adding that if the waiver is obtained, it will prevent the risk that all of IRC's debt arrangements could become repayable on demand.

The bridge loan has an interest rate of 12% and is to be repaid as soon as the ICBC facility refinancing is complete.

In addition to the loan announcement, Petropavlovsk said it entered into four gold sales agreements with Russian Sberbank for a total volume of 96,000 ounces and for advance payment for up to 12 months. The company noted that these agreements are separate from the Gazprombank gold sales agreement March 27.

Meanwhile, the gold miner started the commissioning process at the Malomir flotation plant at the beginning of June, while the commissioning of the Pokrovskiy POX hub is expected in the fourth quarter.

Petropavlovsk is embroiled in a dispute with dissident shareholders who are pushing for the removal of the board at the company's next annual general meeting at the end of June. Shareholders CABS Platform Ltd. and Slevin Ltd., which hold a 9.11% interest in the gold miner, have requisitioned for the return of former board members Pavel Maslovskiy, Roderic Lyne and Robert Jenkins.

Petropavlovsk has voiced concerns over the lack of transparency surrounding the requisition as the ultimate owners of CABS and Slevin remain unknown.