Xiwang could acquire 60% of Chaarat Gold for $250 mln
MOSCOW. May 17 (Interfax) - Chaarat Gold is in talks with Xiwang International Company Limited regarding investment of $250 million, with a letter of intent signed.
Chaarat said in a press release that it planned to issue shares in favor Xiwang at 20 pence per share, way above the last closing price on the LSE of 8.83 pence. Chaarat's share price soared to 16.1 pence immediately following the announcement but the corrected down slightly.
The deal would make Xiwang the controlling shareholder in Chaarat with 60% and entitle it to nominate two candidates for the board of directors.
The Investment would be used to develop Chaarat's organic pipeline and external growth through value-added acquisitions.
The letter of intent is not binding and there is no certainty at this stage that the proposed Investment will be completed, Chaarat said. Chaarat and Xiwang expect to agree the terms of a preliminary investment agreement by the end of May and enter into a formal investment agreement with completion by July 30. Conditions precedent to completing the Investment would include completion of all remaining due diligence.
As a British Virgin Islands incorporated company, Chaarat is not directly subject to any restrictions on takeover offers such as those which exist in the United Kingdom. Chaarat's articles of association include provisions dealing with takeover bids, squeeze-out and sell-out. Should the Investment be completed it is not anticipated that the Chaarat board will exercise its right to request an extension of the offer to all other shareholders.
Xiwang International Company Ltd is an investment company incorporated in the British Virgin Islands. As part of its long-term strategic investment plan, Xiwang is looking to create a significant portfolio of mining assets and resources on a global basis by partnering with and providing funding to listed public operating companies with strong governance, focused on disciplined capital allocation and shareholder value creation.
Chaarat Gold's assets include the Chaarat hard rock gold project in Kyrgyzstan and the operating Kapan gold and polymetallic ore mine in Armenia. The company's largest shareholder is Brunswick Group cofounder Martin Andersson, who together with Labro Investments controls about 45.8%.