International "Astana Mining & Metallurgy" Congress
18-19 June 2020
Nur-Sultan, Kazakhstan

KAZ Minerals announces the completion of the acquisition of a deposit in Chukotka

Kazakhstan's KAZ Minerals announced the initial completion of a deal to acquire the Baimsky copper-gold deposit in Chukotka. According to the company, the completion of the transaction occurred after regulatory approvals and satisfaction of other suspense conditions in accordance with the agreement, which the group reported on August 2, 2018.

The remuneration due on initial completion consists of $436 million in cash and the issue of the initial promotional remuneration consisting of 22.344 million new shares of KAZ Minerals. The shares constituting the initial share award were placed and issued to the seller and are identical to the existing issued shares of KAZ Minerals in all respects.

The initial share remuneration is expected to be listed on the official list and admitted to trading on the main market of the London Stock Exchange on January 24, 2019 and will be subject to a three-year implementation ban, which will end on the third anniversary of the initial completion of the transaction. After the release of the initial share award, the total number of issued shares of KAZ Minerals is 480.723 million, including 10.133 million shares held in treasury.

Thus, the total issued share capital of KAZ Minerals, which has voting rights, is 470.59 million shares. During 2019, the group intends to move forward with the banking feasibility study of the project. Fluor was appointed general contractor for the feasibility study, work has already begun.

The results of the feasibility study, including planned figures for the capital expenditure schedule, production volumes, operating costs and capital costs for maintaining production, are expected to be announced in the first half of 2020. In parallel with the feasibility study, the group will continue to negotiate with banks about financing the construction phase and assess the possibility of a potential partnership.

State-financed infrastructure projects to provide the Baimskoye field with energy supply are being implemented as expected. The construction of a 110 kV transmission line from Bilibino will be completed on schedule by the end of 2019. This line will be enough to provide the project with electricity during the construction phase. The existing territory of advanced socio-economic development in the Chukotka Autonomous Region has been expanded to include the Baim license area. KAZ Minerals will submit a formal application for obtaining the status of a resident in accordance with the existing procedures.

As reported, the KAZ Minerals group concluded an agreement on the purchase of the Baimsky copper project owned by Roman Abramovich’s structure and its partners in the Chukotka Autonomous Region for $900 million in cash and shares in August 2018. The amount includes a remuneration of $675 million including $436 million and 22.3 million new shares of KAZ Minerals for 75% and a deferred payment of $225 million in shares or in money, depending on the project for the remaining share. KAZ Minerals is one of the leading producers of copper in Kazakhstan, also produces zinc, silver and gold as by-products.

The group includes several enterprises in Kazakhstan, as well as a gold and copper mine in Kyrgyzstan. The largest co-owners of KAZ Minerals as of July 1, 2018 were the Kazakhstani billionaire, co-owner of the Kazakhmys corporation Vladimir Kim, through Cuprum Holding Limited owned 29.66%, as well as Kazakhstani businessmen Vladislav Kim at 6.88% and Oleg Novachuk through Harper Finance Limited owns 6.48%.

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