Polyus Gold, Assaubayevs revise deal to sell KazakhGold assets

April 11. RIA Novosti. MOSCOW

Polyus Gold, Assaubayevs revise deal to sell KazakhGold assetsRussia’s top gold miner Polyus Gold and the Assaubayev family, former owners of KazakhGold, have revised the terms of a $509 million deal to transfer KazakhGold’s producing assets back under control of the Assaubayevs and agreed to end all legal proceedings, Polyus Gold said on Monday.

In March, KazakhGold said a deal to sell its production assets in Kazakhstan to the Assaubayev family was put on hold because the Assaubayevs had failed to raise $331 million to finance the first stage of the transaction.

“KazakhGold Group Limited has signed new legally binding deals with AltynGroup Kazakhstan, controlled by the Assaubayev family, to sell its operating companies and to settle legal proceedings,” Polyus Gold said in a statement. “The total price for all the shares sold under the deal amounts to $509 million. The sum fully compensates all earlier expenses of Polyus Gold and takes into account the interests of all minority stakeholders of KazakhGold.”

Under the new agreement, KazakhGold will have to get permission from Kazakhstan’s authorities to carry out a reverse takeover with Polyus Gold, the Assaubayevs will terminate all legal proceedings against KazakhGold’s top management and AltynGroup, controlled by the Assaubayevs, will open an irrevocable $100 million credit in favor of KazakhGold before May 14.

After that the Assaubayevs will receive a preemptive right to buy controlling stakes in all KazakhGold’s producing companies within four months for $260 million.

Initially, the Assaubayevs will have to buy 51% in Kazakhaltyn, 51% in Romaltyn Mining S.R.L., 51% in Romaltyn Exploration S.R.L., 51% in Norox Mining Company Limited and 34% in Talas Gold Mining Company from KazakhGold before September 12.

If AltynGroup fails to finance the first stage before September, the reserve irrevocable credit will be used to buy KazakhGold’s shares at $6.53 per share and AltynGroup will become a minority stakeholder in KazakhGold.

The Assaubayevs have to provide good guarantees to buy the remaining stakes in the companies and to agree terms for joint asset management with KazakhGold also before September 12.

In the second stage, AltynGroup will buy all KazakhGold’s holding companies which own stakes in the operating firms before December 31, 2012.

Polyus Gold bought 50.1 percent of KazakhGold from the Assaubayevs for $269 million in 2009. It later increased its stake to 65 percent to carry out a reverse takeover, under which KazakhGold was supposed to acquire its parent company Polyus Gold.

The merged company was expected to become one the world’s leading gold mining companies traded on the London Stock Exchange.

In June, Kazakhaltyn and Jenington International Inc., controlled by Polyus, initiated a trial at the Royal Court of Justice in London against the Assaubayevs in relation to a violation of several contract terms and alleged fund embezzlement.

In response, the Kazakh authorities launched a process aimed at terminating the reverse acquisition of Polyus Gold by KazakhGold.