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Russia's Petropavlovsk to buy small gold miner Amur Zoloto

Reuters - UK Focus

(Adds detail, quotes)

MOSCOW, April 28 (Reuters) - Russia-focused gold miner Petropavlovsk (LSE: POG.L - news) has agreed to buy niche operator Amur Zoloto in a $144 million all-share deal, it said on Thursday after reporting a net loss for 2015.

Amur Zoloto, which has gold mining operations in Russia's far eastern Khabarovsk region, is being sold by businessman Musa Bazhaev, who will receive 30 percent of Petropavlovsk.

Petropavlovsk is issuing new shares worth $144 million to cover the transaction and will also assume $16 million of Amur Zoloto net debt.

"This transaction has significant strategic value for us and brings an attractive portfolio of assets into the Petropavlovsk Group," Chairman Peter Hambro said in a statement.

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Shares (Berlin: DI6.BE - news) in London-listed Petropavlovsk rose 4 percent to 8.24 pence ($0.10) on Thursday and are up 26 percent this year on the back of higher gold prices.

Amur Zoloto expects 2016 output of 38,000 ounces, rising steadily to 127,000 ounces in 2020. It (Other OTC: ITGL - news) made a $200,000 pretax profit in 2015, Petropavlovsk added in a statement.

Petropavlovsk's earlier reported a net loss of $297.5 million for 2015, narrowing from the previous year's loss of $347.7 million. Its 2015 revenue fell 31 percent to $600 million.

The company reduced net debt by $300 million to $610 million and said it is seeking to negotiate better terms with its lenders.

Petropavlovsk added that its 2016 gold output is expected to reach between 460,000 ounces and 500,000 ounces, with net debt declining to $570 million excluding the Amur Zoloto acquisition. ($1 = 0.6870 pounds) (Reporting by Polina Devitt; Editing by David Goodman)