Chaarat Gold Holdings Limited, the AIM-listed exploration company registered in the British Virgin Islands, made the proposal in relation to the acquisition of the Kumtor mine from Centerra Gold Inc. The mine is valued by the previous owner at US$800mln. It is proposed that the consideration will be funded by US$400mln in cash from Chaarat. Also, it is proposed that subject to the Kyrgyz government’s approval US$400mln of Centerra shares currently held by Kyrgyzaltyn will be transferred to Centerra and cancelled in exchange for 50 per cent of direct preferred interest in the Kumtor mine.
As a result of the transaction, the BVI holding will own all of the common equity of Kumtor, and control over management and operations of the mine. Kyrgyzaltyn will own all of the preferred equity of Kumtor, and be entitled to 50 per cent of the economic benefits of the mine.
Chaarat will fund the cash component of the offer through a mixture of debt and equity, backed by two major international financial institutions.
There is no certainty at the moment about the completion of this acquisition, as Chaarat has yet to receive an engagement with respect to its proposal.
