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Polymetal acquisition of Dundee Kapan mine is a win win

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Polymetal believes that the acquisition of the Kapan mine will result in the development of a profitable regional processing hub with sizable production which will provide a strong operating platform to pursue further opportunities in Armenia.

Dundee Precious Metals Inc announced that it has entered into a definitive agreement with Polymetal International Plc  for the sale of its interest in the Kapan mine located in Armenia through the disposition of all of the issued and outstanding shares of Dundee Precious Metals Kapan CJSC .

“We are pleased to announce the sale of Kapan to Polymetal,” stated Rick Howes, President and CEO. “The proceeds from the sale will serve to strengthen our balance sheet and reduce future capital requirements, which can be utilized to support the future growth of our business, and allows us to focus on our remaining core assets. We would also like to thank the community of Kapan and our employees for their support since we acquired the asset in 2006 and will do our utmost to ensure a smooth transition to the new owner,” added Mr. Howes.

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“Polymetal believes that the acquisition of the Kapan mine will result in the development of a profitable regional processing hub with sizable production which will provide a strong operating platform to pursue further opportunities in Armenia,” said Vitaly Nesis, Group CEO of Polymetal.

Under the Proposed Transaction, DPM, or a subsidiary thereof, will receive consideration consisting of (i) US$10 million in cash from the buyer (subject to a working capital adjustment following closing), (ii) US$15 million in Polymetal ordinary shares, and (iii) a 2% net smelter royalty on future production from the Kapan property capped at US$25 million. DPM will continue to maintain a presence in Armenia through joint venture arrangements in respect of certain exploration assets in the central part of the country. The number of ordinary shares of Polymetal to be issued in the Proposed Transaction will be determined based on the average market price for such shares on the London Stock Exchange for the five trading days ending two trading days prior to closing of the Proposed Transaction.

The definitive agreement is subject to various representations, warranties, covenants and indemnities as are expected for a transaction of this nature. The Proposed Transaction is also subject to, among other conditions, (i) the Company obtaining its lenders’ consent, release and discharge in respect of their security interest over the shares of DPMK under the Company’s senior secured credit facilities, and (ii) the parties obtaining all regulatory approvals, including the approval of the State Commission for the Protection of Economic Competition of the Republic of Armenia to transfer the DPMK shares. Closing of the Proposed Transaction is expected to occur in the second quarter of 2016, but in any event, must occur prior to June 30, 2016.

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