Precious Metals


Following two failed attempts to come to an agreement on purchasing Centerra’s Kumtor mine, Chaarat has pulled its C$2-billion offer.

Chaarat Gold (LSE:CGH) withdrew its C$2-billion offer to purchase Centerra Gold’s (TSX:CG) Kumtor mine, following the Canadian firm turning away a second proposal from the company last month, the miner announced on Wednesday (October 31).

Chaarat noted that it made an all-cash offer to purchase Centerra in September, after it failed to impress Centerra with a proposed three-way transaction between the companies and the Kyrgyz State consortium Kyrgyzaltyn in April.

“Chaarat was hoping to reach an amicable and mutually beneficial agreement with Centerra on either of its two proposals, which would have created meaningful value for Centerra’s investors and stakeholders, including the Kyrgyz Republic,” the company noted in a press release.

“However, Centerra’s Board and management have continually declined to engage with Chaarat,” the company added.

The miner stated that it had offered to buy Centerra at a premium of at least 35 percent above its prevailing share price of C$5.48 a share at the time of the proposal.

The company’s stock closed at C$4.95 a share on Tuesday (October 30).

“The ultimate objective of this proposal was to combine the operations of Chaarat and the Kumtor mine, as part of Chaarat’s corporate strategy to participate in consolidation in the gold mining industry,” the company revealed.

Due to the multiple proposal rejections from Centerra and its “unwillingness” to engage with Chaarat, the miner stated that it would no longer be pursuing either transactions and thus it was backing out from its offer.

Recently, Chaarat has been getting in the habit of buying mines in order to become a meaningful gold player in the Commonwealth of Independent States. On Tuesday (October 30), the company announced a US$55-million acquisition of the Kapan polymetallic mine, in Armenia, from Polymetal International.

“This acquisition is expected to be an excellent addition to Chaarat’s portfolio and accelerates our strategic aim of building a leading emerging markets gold company,” stated Artem Volynets, CEO of Chaarat.

“It turns the company cashflow-generative in a single step, and demonstrates Chaarat’s ability to execute deals quickly, diligently and on accretive terms,” he added.

As of 11:55 a.m. EST, Chaarat was trading at GBX 24.08.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.



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