Polyus Gold, one of Russia's leading gold producers, has agreed to sell production assets from its subsidiary KazakhGold to the Asaubayev family for $509 million, settling a long-running dispute between the two sides, Polyus Gold said on Wednesday.
Both sides will drop legal proceedings as part of the deal, and Kazakhstan will reinstate approval for Polyus Gold's previously proposed merger with London-listed Kazakh Gold.
Polyus shares in Moscow rose to a two and a half year high on news of the deal, whilst KazakhGold stock in London rose 15 percent.
AltynGroup, controlled by the Asaubayevs, will acquire 65% of Kazakhaltyn, 65% of Romaltyn Mining S.R.L., Romaltyn Exploration S.R.L. and 43.3% of Talas Gold, all belonging to KazakhGold, before March 11, 2011 for $331 million, Polyus Gold said in a statement.
At the same time, KazakhGold's $31.025 million debt to Gold Lion Holdings Limited, whose former directors are Asaubayev family members, will be offset.
AltynGroup will also provide funds to KazakhGold to repay its $52.669 million debt to Jenington International Inc., part of Polyus Gold group.
At a later stage, AltynGroup will buy holding companies which own remaining stakes in Kazakhaltyn, Romaltyn Mining S.R.L., Romaltyn Exploration S.R.L. and Talas Gold for $178 million.
That may be partially paid with KazakhGold's shares belonging to Gold Lion Holdings Limited.
AltynGroup will unconditionally guarantee repayment of KazakhGold's $200 million Eurobond issue with a maturity in 2013.
Polyus Gold bought 50.1 percent of KazakhGold from the Asaubayevs 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 Asaubayevs 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.
MOSCOW, December 8 (RIA Novosti)
