"Fincraft Resources" JSC announces the conclusion of a transaction to consolidate 22% of Petropavlovsk PLC's shares and its bonds through Fincraft Holdings LTD structure

November 27, 2018

"Fincraft Resources" JSC, one of the major mining and metallurgical holdings of the Republic of Kazakhstan, previously known as JSC SAT & Company (hereinafter referred to as Fincraft Resources), announced the conclusion of a deal to consolidate 22% of the shares of Petropavlovsk PLC and its bonds through the purchase of the structure of Fincraft Holdings LTD.

Commenting on the deal, the chairman of the board of directors of Fincraft Resources JSC and a large shareholder of both structures, Kees Rakishev, stated the following:

“It is no secret that in the last 5 years, all the major players in the extractive industry have experienced certain difficulties associated with both unfavorable conditions on foreign markets and strong price fluctuations for many types of raw materials. These changes prompted us to revise the long-term development strategy and the desire to streamline the portfolio of its own assets. This transaction is a consistent and logical step in the desire of Fincraft Resources to cut off non-core and non-profitable directions, concentrating the main efforts on potential points of growth. As a promising direction, we have identified for ourselves the gold mining sector and the base metals sector. Since last year, the company has sold a number of ferroalloy assets, which significantly improved the company's financial performance. In addition, we have begun the active development of the Gornostayevskoe nickel-cobalt deposit in our portfolio located in the East Kazakhstan region of the Republic of Kazakhstan. Here, we managed to attract a new partner-investor, with whom we have already begun to implement a pilot project on underground well leaching of nickel-cobalt ore. This technology has long been known in the uranium industry, but has not yet been widely applied to nickel. If successful, this will be a project with one of the lowest production costs of nickel in the world. The consolidation within the framework of Fincraft Recources of a large block of shares and bonds of Petropavlovsk PLC, which is among the top 5 largest Russian mining and gold mining enterprises, will certainly ensure the presence of pearls in the company's asset portfolio. ”

In turn, the chairman of the board of Fincraft Resources, Alken Quanbay, said:

“The consolidation of shares and bonds of Petropavlovsk PLC is an important milestone in the transformation of Fincraft Resources into one of the leaders of the mining and metallurgical industry of Kazakhstan, opening up new development prospects. In recent years, metal markets have experienced not easy times, which could not but affect the development of the company. However, in recent years, the company has done an excellent job, which should be noted:

The sale of ferroalloy assets, which made it possible to completely reduce the group's debt burden to second-tier banks for a total of $ 107 million.

Fincraft Resources all these years regularly fulfilled its obligations under the bond program with a nominal value of 13 billion tenge. Total coupon payments under the bond program for the period from 2009 to 2018 amounted to 10.5 billion tenge.

Payments on preferred shares for the period from 2011 to 2018. amounted to 2.1 billion tenge.

Equity of the company amounted to more than 20 billion tenge

This Deal and the new focused strategy, in my opinion, will ensure the sustainable development of the company in the foreseeable future. ”

Summary of Petropavlovsk PLC

One of the largest Russian gold mining companies, as well as one of the most famous and most experienced, vertically integrated gold producers in the Far East of Russia. All mining assets are located in the Amur Region, where they have been operating since 1994. The company's headquarters is in London.

Petropavlovsk shares are traded on the London Stock Exchange, at the Main Market (Main Market) premium listing (Premium Equity Commercial Companies, Ticker: POG).

Significant reserves and resources of Petropavlovsk gold (resources: 20.9 million ounces / 650 tons of gold; reserves: 8.15 million ounces / 253 tons of gold).

Annual gold production is 440 ounces per year.

Annual revenue and EBITDA are $ 587 million and $ 197 million, respectively, based on 2017 results.