POG.L Regulatory News (POG)

23 May 2018

Update on Negotiations Regarding IRC's ICBC Facility

Further to Petropavlovsk PLC's ("Petropavlovsk", "the Company" or "the Group") statement in its 2017 full year announcement on 28 March 2018, the Company today provides an update on the negotiations involving the Company, IRC Limited ("IRC") and the Industrial and Commercial Bank of China ("ICBC") in relation to the US$340 million project finance facility dated 13 December 2010 between Kimkano-Sutarsky Mining and Beneficiation Plant LLC ("K&S", a wholly owned subsidiary of IRC) and ICBC (the "ICBC Facility"). Petropavlovsk has guaranteed the outstanding amounts K&S owes to ICBC, with total loan principal as at 31 March 2018 amounting to US$234 million.

Under the ICBC Facility, a payment of US$35.16m, including principal and interest, is due from K&S to ICBC on 20 June 2018. As previously announced, IRC, together with Petropavlovsk, have approached ICBC to request an amendment of the repayment schedule and to obtain waivers in respect of obligations to comply with certain financial covenants. IRC has also requested ICBC to waive the obligation to maintain certain cash deposits with ICBC. The negotiations with ICBC are continuing.

As no agreement has yet been reached with ICBC, both IRC and Petropavlovsk are pursuing a number of options to ensure the continued good standing of the ICBC Facility. These options include our previously announced discussions regarding the full refinancing of the ICBC facility with a leading Russian lender, which are now well progressed. The Company is also exploring a potential short-term advance to IRC to fund a portion of the June debt obligations if necessary. The primary objective of these discussions, as well as our pursuit of other options to ensure the continued good standing of the ICBC Facility, is to protect the value of our investment in IRC in the interests of all of Petropavlovsk's stakeholders.

As previously announced, if a missed repayment under debt or guarantee obligations in respect of the ICBC Facility occurs, or covenant requirements are not met, this would result in a default under the ICBC Facility which, through cross-defaults and cross-accelerations, could cause all of the Group's debt arrangements to become repayable on demand.

The Company will continue to update the market in due course.

Enquiries

For more information, please visit www.petropavlovsk.net and www.ircgroup.com.hk or contact:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Cautionary note on forward-looking statements

This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward- looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the future price of gold, the Group's results of operations, financial position, liquidity, prospects, growth, estimation of mineral reserves and resources and strategies, and exchange rates and the expectations of the industry.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances outside the control of the Group. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward- looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause results and/or developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, demand, supply and prices for gold and other long-term commodity price assumptions (and their effect on the timing and feasibility of future projects and developments), trends in the gold mining industry and conditions of the international gold markets, competition, actions and activities of governmental authorities (including changes in laws, regulations or taxation), currency fluctuations (including as between the US Dollar and Rouble), the Group's ability to recover its reserves or develop new reserves, changes in its business strategy, any litigation, and political and economic uncertainty. Except as required by applicable law, rule or regulation (including the Listing and Disclosure Guidance and Transparency Rules), the Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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