Russian miner Petropavlovsk announced on Friday that it had reached an important step in concluding the refinancing of a $240-million facility that Hong Kong-based IRC, in which it is a large shareholder, has with the Industrial and Commercial Bank of China (ICBC).

Petropavlovsk is the guarantor of the facility between IRC subsidiary Kimkano-Sutarsky Mining and Beneficiation (K&S) and ICBC.

Petropavlovsk said that K&S and Gazprombank had entered into proposed guarantees, wherein Gazprombank would provide K&S with a $240-million facility, for the purposes of repaying in full the outstanding project finance facility K&S has with Industrial and Commercial Bank of China (ICBC) and repaying the bridge loans provided by Petropavlovsk to IRC.

Gazprombank will also guarantee the obligations of K&S up to an initial amount of about $160-million through a series of five guarantees over the life of the Gazprombank facility.

The facility will provide a $63-million aggregate cash flow benefit to Russian miner Petropavlovsk through the repayment by IRC to Petropavlovsk of about $57-million as full repayment of the two bridge loans and the payment by IRC to Petropavlovsk of the outstanding $6-million guarantee.

These payments will be made following the repayment of the ICBC facility in full.

Overall, the facility agreements are on terms more favourable to Petropavlovsk, IRC and K&S compared to the ICBC facility.

In particular, the company said that the repayment schedule pursuant to the facility agreements aligned with the proposed ramp-up of the K&S mine and the revenues that are anticipated to be generated by it.

Petropavlovsk CEO Dr Pavel Maslovskiy said that the new facility “not only represents a significant de-risking milestone in the Petropavlovsk investment case, but will also serve as a step forward in delivering on our strategy of shareholder value creation”.