Polymetal has exchanged US$10mln worth of convertible loan notes in Chaarat Gold Holdings (LON:CGH) for just over 14.6mln shares.
The convertible was issued as part of the deal whereby Chaarat acquired the Kapan mine in Armenia.
Following conversion, Polymetal will own 3.5% of Charaat’s shares.
The new shares are subject to a twelve month lock-up and Polymetal shall grant a right of first refusal to Chaarat effective from the end of the lock-up arrangement for six months in the event of a sale.
"We are delighted to welcome this experienced operator on to our shareholder register,” said Chaarat chief executive Artem Volynets.
“Polymetal's decision to exchange its debt for shares in Chaarat is an endorsement of our strategy and prospects, implies a premium to our current market value, and reduces our debt levels."
Separately though, Chaarat also revealed that an agreement with a new investor for the subscription of US$15mln in convertible bonds, entered into in April and subsequently adjusted in May, has run into trouble.
The investor has failed to deliver the subscription cash proceeds within the timeframe agreed upon by both parties. As a result, Chaarat is exploring legal recourse on the matter.
Chaarat is now exploring alternative fundraising options, and has already put a new US$500,000 secured convertible in place.
Following the agreement with Polymetal, Chaarat now has US$19.,68mln outstanding in convertible loans.