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Article Excerpt
IN BRIEF
Editor's Choice
*** Russia's Polyus Gold this week poured its first gold at the giant Natalka gold field in the Magadan region. The coutnry's No. 1 gold miner said it had poured a three-kilogram ingot of gold in the form of Dore, consisting of three parts gold and one part silver. Natalka, one of the world's biggest gold deposits, should go commercially on stream in 2013 and a pilot recovery plant could recover 50 kg of gold from 30,000 tonnes of ore this year. Polyus also said this week that it had signed a contract with PeterGORproyekt, a St Petersburg-based R&D institute, to draw up the blueprints for the Natalka mining complex. Under the contract, the paperwork must be ready, and approved by the government agencies, by May 2010. Other Russian and foreign organizations could be involved in the work.
*** Britain's Peter Hambro Mining boosted gold production in Russia 72% year-on-year in the first quarter of 2009 to 107,400 oz, the company announced this week. PHM's flagship Pokrovskiy mine in the Amur region raised production 12% to 40,800 oz and the newer Pioneer mine quadrupled output to 66,600 oz after the first stage of its recovery plant reached capacity. The second stage of the Pioneer mill should enter into service in September after equipment has been delivered in July. PHM sold 99,053 oz of gold in Q1 2009, or twice as much as in the same period of last year. The average realized sale price of gold was $910/oz, up slightly from $909/oz a year previously.
*** The Kupol gold mine in Russia's Chukotka region made a substantial contribution to production growth by Canada's Kinross Gold in the first quarter of 2009. Kinross, a top-five global gold miner rumored to be teaming up with Russian no. 1 producer Polyus Gold to develop the Nezhdaninskoye field in Yakutia, saw worldwide gold production rose 59% year-on-year in Q1 to 526,888 oz gold equivalent. The Kupol mine, commissioned in July last year, produced 192,842 oz gold equivalent, including 169,292 oz gold and 1.697 million oz silver.
*** Russian steelmaker Severstal, the first Russian steel major to enter the North American market has this week been reported to be touting its North American businesses to potential buyers. Debt has been put forward as the key reason behind the move, as Severstal faces $1.868 billion in debt payments in 2009 and another $900 million in 2010. The steelmaker is not believed to be facing immediate liquidity problems, but is eager to quickly pull out from the North American continent.
*** The Evraz Group this week announced plans to restart the only idled blast furnace at steelmaker ZSMK (Zapsib) in June 2009. The furnace, N3, has capacity to produce 6,500 tonnes a day and was shut down in November as demand on foreign and domestic markets plummeted. However, rising demand for metal in China prompted the decision to restart the furnace, with the company saying a recent modernization program allowed it to be able to compete on price with Chinese producers. After an absence from the Chinese market of more than five years, exports to China accounted for more than 25% of Evraz's total exports in the first quarter of 2009.
*** Russian pipe producer TMK saw net profit under International Financial Reporting Standards (IFRS) fall 60.8% to $198.5 million in 2008, the company announced this week. Sales revenue rose 36.2% last year and net debt increased 120% to $3.063 billion because of TMK's acquisition of U.S. steel producer IPSCO. TMK, one of the world's top three oil and gas industry pipe producers, is also examining a number of options to refinance $300 million in LPN that come due in September. TMK needs to refinance roughly $1 billion in debt in 2009.
PRECIOUS METALS
Polyus Gold, KazakhGold could unveil new takeover terms in May
MOSCOW. (Interfax) - Polyus Gold and KazakhGold are again reviewing the terms for the No. 1 Russian gold producer's takeover of the Kazakh gold miner and could unveil the new terms by the end of this month.
The companies announced the deal back in September and already revised the terms in December. KazakhGold said in a statement that gold production had declined more than planned since December and that it needed funding, so the terms of the takeover as announced on December 29 were no longer valid. However talks between the companies regarding the new terms are ongoing, it said.
Polyus said back in the autumn that it planned to buy 50% plus one share in KazakhGold. The Russian company had offered 0.298 Polyus shares and $7.95 per share. Based on the closing price of Polyus shares of 570 rubles on the MICEX on September 25, the overall offer amounted to $14.73 per share in KazakhGold. So the whole deal would have cost Polyus around $390 million, including a cash consideration of approximately $210 million, under the original terms.
But the Polyus board in December revised the terms and said it planned to offer 0.423 Polyus shares for each KazakhGold share. That valued the KazakhGold shares at $11.59, going by the value of Polyus Gold's own shares on December 26, at the Central Bank's then exchange rate of 28.6735 rubles/$1.
Polyus plans to buy the Kazakh company with the treasury shares held by its subsidiary Jenington.
The holders of Eurobonds issued by KazakhGold voted in January to waive the rights to early redemption of the bonds the event of a takeover by Polyus Gold.
The Polyus board has also said it would be feasible to purchase a supplementary issue of KazakhGold shares for $100 million if the takeover goes through.
A source close to Polyus Gold's shareholders told Interfax last week that "the core shareholders in Polyus back the deal, and the company is working on the legal paperwork and plans to close soon."
The source said the terms of the deal are subject to approval by the board of directors, and that the new board to be elected at the AGM in May would likely do this.
The source said the deal had taken a while because "this is the first time in practice that an international transaction is being paid in shares in a Russian company."
KazakhGold also said trading in its Global Depositary Receipts (GDR) had been suspended on the London Stock exchange since May 1 due to delays with publishing financial results for 2008.
KazakhGold floated 25% of its stock as GDR on the LSE at the end of 2005. It offered 11.7 million shares in the IPO. One GDR represents one share.
PRECIOUS METALS
Polyus pours first gold at Natalka field
MOSCOW. (Interfax) - Polyus Gold has poured its first gold at the giant Natalka gold field in the Magadan region.
The No. 1 Russian gold miner said on May 7 it had poured a three-kilogram ingot of gold in the form of Dore, consisting of three parts gold and one part silver.
A pilot recovery plant, throughput capacity 120,000-130,000 tonnes of ore per year, was put into operation at Natalka in July 2008. The plant could recover 50 kg of gold from 30,000 tonnes of ore this year.
Natalka, one of the world's biggest gold deposits, should go commercially on stream in 2013.
Polyus Gold this week said it had signed a contract with PeterGORproyekt, a St Petersburg-based R&D institute, to draw up the blueprints for Natalka mining complex. Under the contract, the paperwork must be ready, and approved by the government agencies, by May 2010. Other Russian and foreign organizations could be involved in the work.
The Polyus board on March 26 approved a feasibility study for the development of the Natalka gold deposit, with proven and probable reserves of 40.8 million ounces, or 1,270 tonnes with an average grading of 1.13 g/t and cut-off grade of 0.3 g/t. The company plans to launch the gold recovery mill at the deposit in 2013.
Throughput will initially be 10 million tpa of ore, rising to 20 million tpa by 2018 and 40 million tpa in 2020.Ggold production could peak at 40 tonnes per year.
Investment in the project is currently estimated at $1.1 billion, with the recovery plant generating approximately the same amount after it has been launched. The project's budget assumes gold trades at $700/oz, that the exchange rate averages at 32 rubles/$1 and that the refinancing rate is 15%.
PRECIOUS METALS
Six Nafta representatives nominated for Polyus board, five each from Interros, Onexim
MOSCOW. (Interfax) - A total of 21 candidates have been nominated for nine seats on the Polyus Gold board of directors, which shareholders are to elect at an annual general meeting on May 15, the company said in a statement last week.
The nominees include six representatives of Suleiman Kerimov's Nafta Moskva, five representatives from Vladimir Potanin's Interros Holding, five from Mikhail Prokhorov's Onexim Group, four independent directors and Polyus Gold general director Yevgeny Ivanov.
The existing board recommended that shareholders support the election of Ivanov to the new board as well as the four independent directors and two Onexim representatives.
The Nafta Moskva nominees include managing directors from the company's representative office Nafta Moskva (Cyprus) Limited, Anton Averin, Pavel Grachev, Andrei Rodionov and Zumrud Rustamova, as well as Oleg Lipatov, head of the representative office and a member of the Nafta Moskva LLC board of directors, and Alexander Mosiozhnik, chairman of the Nafta Moskva LLC board of directors.
The Onexim nominees are President Mikhail Prokhorov, investment director Valery Senko, deputy financial director Yekaterina Salnikova, Intergeo general director Maxim Finsky and Onexim Group Management deputy general director Christophe Charlier.
The Interros nominees are Eduard Yeremian, deputy director of the holding's legal department; Marianna Zakharova, director of the legal department; Andrei Lebedyev, head of the corporate finances division of the financial department; Alexander Romanov, head of the operations and financial analysis department; and Anton Chyorny, deputy general director of investment.
The independent nominees are Lord Patrick Gillford, a partner and founder of The Policy Partnership Limited; Valery Braiko, head of the Gold Industrialists Union; Valery Rudakov, chairman of the Committee to Support Entrepreneurship in Precious Metals and Gems; and Robert Buchan, head of Allied Nevada.
The board of directors recommended that shareholders support all the independent directors in addition to Ivanov, Prokhorov and Salnikova.
Polyus Gold said in materials that the list of candidates was signed on February 27, 2009. The register for the AGM closed on March 27.
Media reports surfaced in early March that Interros had sold Kerimov a roughly 20% stake in Polyus. In April, reports said Potanin sold Kerimov another 15%. Interros, Nafta Moskva, Onexim and Polyus have not officially confirmed the changes to the gold company's shareholder structure.
Onexim, which controls Polyus by virtue of a majority on the board of directors, claims to own about 30% of shares. Vedomosti reports its stake is actually 35%. Interros has also said officially that it owns about 30%, but media reports claim the stake is closer to 35%-37%.
The existing Polyus board of directors includes Interros representatives Andrei Klishas, a vice president, and Yevgeny Yarovikov, an Interros employee, Onexim representatives Prokhorov and Salnikova, four independent directors and Ivanov.
PRECIOUS METALS
Polymetal narrows net loss 31% in 2008
MOSCOW. (Interfax) - Russia's top silver producer Polymetal narrowed its 2008 net loss 31.1% compared with 2007 to $15.7 million under US GAAP, the company said in a May 6 statement.
Revenue rose 63% to a record $502.7 million "with healthy sales volume growth supplementing significant increases in average realized metal prices," Polymetal said. Average realized gold price rose 24% to $871/oz. Average realized silver price rose 67% to...
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