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Chaarat Gold improves Kapan acquisition terms; shares resume trading lower

Chaarat Gold Holdings Ltd. shares resumed trading on the London Stock Exchange's AIM submarket but fell steadily Dec. 14 as the company secured better terms for the acquisition of the Kapan gold mine in Armenia from Polymetal International PLC.

Chaarat shares resumed trading at 11:30 a.m. local time and promptly fell 17.2% to 20 pence apiece, having been suspended pending the publication of an admission document for the Kapan acquisition, as required by the AIM.

The Kyrgyzstan-focused gold miner's shares were suspended from trading April 24 as the company attempted to acquire the Kumtor gold mine from Centerra Gold Inc. The shares last traded at 24.15 pence apiece.

Chaarat gave up its pursuit of the high-altitude, open pit mine in October after Centerra refused to engage with proposals, which included an all-cash offer for the entire company, and struck a deal for underground Kapan instead, which Polymetal bought for US$38 million in 2016.

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 has operations in Russia and Kazakhstan.

Polymetal subsidiary PTML Holding Ltd. agreed to receive US$10 million of the US$55 million consideration for Kapan in convertible notes, increasing from the previously agreed US$5 million, Chaarat said in a news release.

The company also announced various board changes, including appointing current board member Gordon Wylie as deputy chairman and senior independent director.

Chaarat appointed Hussein Barma as a nonexecutive director, Dorian Nicol is stepping down as technical director and head of exploration to join the executive team as senior vice president of exploration, and Richard Rae resigned as a nonexecutive director. The company plans to appoint another independent nonexecutive director.

"We are shrinking the quantity of assets and focus on quality," Polymetal CEO Vitaly Nesis said in November. "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."

Polymetal had been looking to increase output in Central Asia through acquisitions.