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Prosperity Calls on Shareholders to VOTE TO KEEP PETROPAVLOVSK INDEPENDENT

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Prosperity Capital Management (“Prosperity”) is a leading Russia-focused asset manager that controls approximately 20 per cent of the outstanding share capital of Petropavlovsk PLC (“the Company”), a successful Russian gold mining company with great growth prospects. Prosperity is calling on shareholders to preserve the Petropavlovsk Board of Directors’ independence by voting FOR its six highly qualified director candidates at the Company’s extraordinary general meeting (“the EGM”) on 10 August 2020.

Prosperity seeks to, and has a track record of, constructively engaging with companies in which it invests to create long-term value for the benefit of all shareholders. It believes that a group of self-interested shareholders, which includes Everest Alliance Limited (“Everest”), are working behind the scenes to take over the Company without making an offer to other shareholders as required by law. It is understood that these shareholders act in concert with one of Petropavlovsk’s main competitors – and its single largest shareholder – JSC Uzhuralzoloto Group of Companies (“UGC”).

UGC has reportedly expressed interest in merging with Petropavlovsk and has recently announced its intention to increase its equity stake in the Company to 27 per cent through a bond conversion. Once this conversion is completed, Everest, UGC, and other related parties will own around 40 per cent of Petropavlovsk’s shares and are attempting to disenfranchise minority shareholders by taking control of the Company without making a formal bid at a premium price or engaging properly with a fully independent Board.

UGC’s indication prior to the Company's Annual General Meeting on 30 June 2020 that it wished to maintain the existing board and management, along with the resultant low voter turnout, meant that this group was able to capitalise on its deception and remove seven existing directors – including more senior directors and the Company’s co-founder and CEO, under whose combined leadership the Company has created tremendous value over recent years, achieving sales and production growth while reducing net debt and improving cash flow. In their place, Everest and UGCinstalled their own hand-picked directors and one directly affiliated representative, creating a sympathetic Board designed to give control of the Company to them and at the same time putting Petropavlovsk’s Premium Listing status at risk.

Further, faced with the possibility of losing control of the Board at the EGM rather than tightening its hold on it, Everest has cynically proposed Resolution 18. If passed, this resolution would immediately remove all of the director nominees that we have proposed if they are elected at the EGM. Resolution 18 is plainly dangerous for other shareholders and perversely designed to obfuscate and frustrate the will of the majority of shareholders by creating an almost unimaginable scenario in which one could vote for the appointment of a director and their removal in the same meeting. This is further evidence of Everest’s efforts to subordinate other shareholders. The Interim Board strongly cautioned shareholders about the deceptive implications of Resolution 18, and it is critical that shareholders vote AGAINST it at the EGM in addition to voting AGAINST Resolutions 7 and 8 proposing the election of Everest’s nominees.

Through their actions, Everest, UGC, and affiliates have undermined the independence of Petropavlovsk’s Board, which has been materially weakened, and they are seeking to confuse or trick shareholders into maintaining this state by proposing disingenuous resolutions at the EGM. In so doing, they are creating significant risks for the future of the Company and its shareholders.

PRESERVE THE BOARD’S INDEPENDENCE — VOTE FOR RESOLUTIONS 1 – 6 AND VOTE AGAINST RESOLUTIONS 7, 8 AND 18 AT THE EGM

It is critical that Petropavlovsk has a diverse and independent Board to provide strong corporate governance and create shareholder value. Permanent independent directors must be added to the Board to protect the rights of all shareholders and preserve future value creation.

In order to do so, Prosperity has called the EGM to elect six highly qualified directors to add balance to the Board and protect shareholders’ interests. These candidates have been vetted by the Professional Investor Association and will bring a wealth of relevant knowledge and skill to the Company.

Adding these directors will stabilise, strengthen and improve the Board’s independence while providing continuity so that management can create value for all shareholders

Alexander Branis CFA, Chief Investment Adviser at Prosperity Capital Management, commented:

“The true ownership of Petropavlovsk is at stake. We cannot cede control of the Board to directors hand-picked by and beholden to the interests of the self-interested Everest and UGC. These concert parties are clearly trying to take over the Company by stealth. We cannot risk a repeat of the AGM where a present minority outvotes an absent majority. It is critical to the future of Petropavlovsk that shareholders vote to preserve the Company’s independence by supporting our slate of highly qualified director nominees to join the Board, and crucially voting against Resolutions 7, 8 and 18 at the EGM on 10 August. It will probably be a close call. Every vote counts!”

Prosperity urges shareholders to vote FOR Resolutions 1 - 6 and vote AGAINST Resolutions 7, 8 and 18 at the 10 August EGM.

For more information, including instructions on how to vote your shares, please visit www.Stop-Takeover-Of-POG.com.

About Prosperity Capital Management

Founded in 1996, Prosperity Capital Management is a leading Russia-focused asset manager controlling assets of around USD 4 billion on behalf of pension funds, endowments, foundations, family offices, sovereign wealth funds and high net worth individuals from across Europe, North America, Middle East and Australasia. The firm employs a long-term, fundamental value, active and engaged shareholder approach to access the public equity investment opportunity amongst Russian and Former Soviet Union companies.

Contact information

Investor contact

Georgeson

Nicholas Laugier Nicholas.Laugier1@georgeson.com

Nina Atkinson nina.atkinson@georgeson.com

Media contact

Kepler Communications

Charlotte Balbirnie CBalbirnie@keplercomms.com
+44 7989 528421

Michael Henson MHenson@keplercomms.com
+44 7551 720441

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