Miners with belongings in Russia’s far east are getting picked off the London Inventory Change like youngsters in a horror movie. First was Highland Gold Mining final yr, then the provide got here in for Kaz Minerals (KAZ) – which has the Baimskaya copper challenge in Russia’s Chukotka area – and now Trans-Siberian Gold (TSG) shareholders are being supplied 118p a share for his or her holdings within the firm.
Vladislav Sviblov, who additionally took over Highland, pays simply over £100m for the 40,000 ounce (oz) a yr gold miner, and has already sewn up over 50 per cent of the shares by way of an settlement with Trans-Siberian’s main shareholder UFG Asset Administration and two administrators who’ve labored for UFG.
Trans-Siberian’s low free float means it has by no means had excessive buying and selling volumes, however this deal indicators a pattern that shareholders have to control. London has a fraction of the mining shares listed elsewhere, though they’re higher high quality general than Toronto’s enterprise change chancers and Australia’s life-style explorers.
There’s a hyperlink between these offers apart from the geography: Russia’s second largest financial institution, VTB. Whereas it might appear apparent such a big establishment would work with loads of mining firms, these offers are being executed by way of its London workplace.
Who may very well be subsequent?
With the gold worth nicely adrift of final yr’s highs, one mid-tier London-listed gold miner is buying and selling a 3rd decrease than in September. This firm additionally operates in Russia’s east and has just a few acquainted faces concerned: Petropavlovsk (POG).
Petropavlovsk is now run by former Highland boss Denis Alexandrov, who took over in December. Sviblov was a minor shareholder till final yr, however the apparent purchaser is fellow gold miner Uzhuralzoloto Group of Firms (UGC), which was instrumental in rolling the board final yr and has an present relationship with VTB.
VTB’s involvement in London’s earlier mining transactions was vital. It served as adviser for Sviblov’s firm Fortiana when he purchased Highland and for the Trans-Siberian provide, and lent the Kaz patrons $three.5bn.
The 2 key London-based bankers behind the latest offers didn’t reply to a query on whether or not they’re at the moment working with UGC.
There are some elements that make Petropavlovsk much less seemingly a goal than Highland or Trans-Siberian, nevertheless. It has just a few extra combative shareholders, as seen within the battle over the board final yr, the place UGC and mixed 12 per cent shareholders Everest Alliance and Slevin voted out beforehand resurrected chief government Pavel Maslovskiy.
The corporate additionally carries a one-third stake in iron ore mining group IRC (HK:1029), which it has been unable to dump. The miner additionally added a Moscow itemizing just lately, though this course of started underneath the earlier administration. A smaller firm just like the non-public GV Gold may very well be a better goal, or greater participant Nordgold may very well be a think about any mergers. Nordgold, owned by Severstal chairman Alexey Mordashov has just lately regarded outdoors Russia for belongings, nevertheless.
Roadblocks apart, Petropavlovsk does have the lusted-after stress oxidation plant (POX) that unlocks beforehand unrefineable refractory gold ore. UGC proved it was extra than simply all for holding the corporate as quickly because it took the 22 per cent stake final yr (now 24 per cent, says FactSet), and Maslovskiy stated a merger was doable.
Fellow shareholder Prosperity Capital and former deputy chief government Alya Samokhvalova claimed the transfer was made so UGC might take over Petropavlovsk with out paying for it.
Given VTB backed the in-progress Kaz Minerals takeover – and the potential payday which may come its manner in elevating $8bn to construct a brand new mine – financing a Petropavlovsk takeover may breeze by way of the chance committee.