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IN BRIEF
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*** A number of Russian metals and mining companies this week announced they would either waive or significantly reduce dividend payments for 2008 after the second half of the year adversely affected the sector. Shareholders in Polymetal, Russia's biggest silver producer, voted to waive dividends for 2008 and shareholders in Russia's TMK, one of the world's top-three oil and gas industry pipe producers, voted at to waive the dividend of 1.44 rubles per share recommended by the board. Russian diamond miner Alrosa's Severalmaz subsidiary also decided it will not pay dividends for 2008 due to the losses it posted for the year. Shareholders in Mechel voted to accept dividends down 71% on last year's and shareholders in VSMPO-Avisma, the world's biggest titanium producer accepted a dividend payout less than half of last year's figure. Bucking the trend was gold miner GV Gold, which will boost 2008 dividends 86% thanks to a share split intended to optimize capital structure and corporate governance at the beginning of this year.
*** Alisher Usmanov's Metalloinvest said this week that it has paid in full for a license to develop the Udokan copper field as of July 1. The agreement has been registered by the Russian Geological Fund. Full payment for the license must be made within 30 days after registration, but Metalloinvest has promised to start payments immediately after the license is registered and that the license would be paid for in full at the price announced before the onset of the global financial crisis - 15 billion rubles. Metalloinvest is also believed to have reached an understanding with Rosnedra on the possibility of adjusting the timeframe for the project.
*** Russian uranium mining holding Atomredmetzoloto expects to boost uranium output 23% this year to 4,500 tonnes, partly by stepping up operations in Kazakhstan, the company this week, up from an initial 12% estimate. ARMZ, the world's fifth biggest uranium miner, revised the forecast up after recently acquiring stakes in two Kazakhstan-based uranium mining joint ventures, in doing so consolidating all of Russia's Kazakhstan-based uranium mining assets. ARMZ plans to swap its stake in one of the miners, Karatau, for 16.6% of shares in Canadian miner Uranium One. ARMZ said in its annual report that world uranium production was expected to rise 11% to 48,200 tonnes in 2009.
*** Russia's State Precious Metals and Gemstones Repository - Gokhran - will buy rough diamonds totaling about 12 billion rubles from Alrosa in 2009, it was revealed this week. The amount includes the 3.69 billion rubles per year provided for in Gokhran's operations plan for 2008-2010. Yakutia-based diamond monopoly Alrosa sold diamonds worth that amount to Gokhran at the beginning of 2009. About 8.4 billion rubles was allocated for the additional purchases, of which 7.1 billion rubles for the diamonds and 1.3 billion rubles for VAT). Alrosa sold those diamonds to Gokhran in June after stopping selling diamonds on the market in December.
*** Suleiman Kerimov's Nafta Moskva could close the acquisition of shares in No. 1 Russian gold producer Polyus Gold from Interros without having to wait for approval from the Federal Antimonopoly Service (FAS). The government's commission on foreign investment's approval for the Nafta Moskva deal does not carry any additional requirements for the investor, meaning it could close the deal with further regulatory process. Nafta has already got four representatives elected to Polyus board.
*** Cyprus-registered Mastercroft Limited this week received clearance from the Ukrainian Anti-monopoly Committee to acquire more than 50% of the shares in Russia-based OJSC Vanadii-Tula, one of the world's largest vanadium compounds producers, for the Evraz Group. Evraz had been seen looking for vanadium assests after the Group's South Africa-based Highveld agreed to transfer a 26% stake in Mapochs Mine Limited to local partners at the end of April in compliance with a South African government incentive program for the indigenous population in a deal worth $59.8 million.
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Metalloinvest fully pays for license to develop Udokan copper field
MOSCOW. (Interfax) - Alisher Usmanov's Metalloinvest had paid in full for a license to develop the Udokan copper field as of July 1, the company said in a statement.
The payment was made in accordance with an agreement signed on May 25 by Metalloinvest and Russia's subsurface management agency Rosnedra on the development of Udokan. The agreement has been registered by the Russian Geological Fund.
Full payment for the license must be made within 30 days after registration, but Metalloinvest has promised to start payments immediately after the license is registered.
Usmanov said following the signing of the agreement that the license would be paid for in full at the price announced before the onset of the global financial crisis.
Metalloinvest originally paid 4.5 billion rubles towards the 15 billion rubles it is due to pay for the license but then received a six-month deferral on outstanding payments for the license to field. The holding resumed those payments in April.
The statement does not indicate if Metalloinvest used borrowed funds to pay for the license. The Russian Technologies state corporation, which will also develop the field as part of an alliance with Metalloinvest, declined comment on this issue.
After signing the agreement with Rosnedra last week, Usmanov said the company had reached an understanding with the agency on the possibility of adjusting the timeframe for the Udokan project. "We've signed an agreement that keeps the original timeframe intact. But we have an understanding with Rosnedra that we will submit our estimates for adjusting the timeframe, taking the latest tendencies on the base metals market into consideration," Usmanov said.
Metalloinvest had planned to start building the Udokan mine in 2010. Planned investment in the project exceeds 100 billion rubles. Usmanov has since said the timing of the construction and other terms of the license must be changed due to the financial crisis.
Metalloinvest is planning, according to the current terms, to start building a hydrometallurgical plant in the Chita region in 2010 and the first stage of the plant, capacity 150,000 tonnes of cathode copper or 12 million tonnes of concentrate per year, should be commissioned in 2014. Full design capacity of 474,000 tonnes cathode copper per year (36 million tonnes concentrate) should be achieved in 2016.
Rosnedra has said that as of January 1, 2008, Udokan contained B+C1 reserves of 14.43 million tonnes copper and C2 reserves of 5.52 million tonnes. The ores have a Cu content of 1.56%.
PRECIOUS METALS
Nafta Moskva could buy Polyus Gold shares without regulatory approval
MOSCOW. (Interfax) - Suleiman Kerimov's Nafta Moskva could close the acquisition of shares in No. 1 Russian gold producer Polyus Gold from Interros without having to wait for approval from the Federal Antimonopoly Service (FAS), a FAS source told Interfax.
The government's commission on foreign investment on June 8 approved a request by an offshore firm controlled by Nafta Moskva to buy a block of shares in Polyus Gold. Usually, investors have to sign special agreements that are endorsed by the FAS following such approval. De Beers obtained approval from the commission to buy 49.99% of Arkhangelskgeoldobycha (AGD) from Lukoil, but the deal fell through in January because the parties could not agree the terms of the special agreement. This was the first such deal to be approved by the commission, which is chaired by Russian Prime Minister Vladimir Putin.
But the commission's approval for the Nafta Moskva deal does not carry any additional requirements for the investor. "There are no additional terms. There's nothing to sign and nothing needs signing," the FAS source said. The minutes of the governmental commission's meeting did not contain instructions to discus the terms of the deal further with the FAS.
Officially, De Beers was unable to sign the special agreement with the FAS concerning the AGD share acquisition because it did not agree to the terms for diamond sales. But a source close to the governmental commission said the deal was called off because De Beers did not want to buy a diamond field, where production is due to start in 2017, in times of crisis.
Interros and Nafta Moskva were not available for comment.
The FAS received Nafta Moskva's request for clearance to buy the Polyus Gold shares at the beginning of the year.
Nafta already got four representatives elected to Polyus Gold's board of directors, in May, while Vladimir Potanin's Interros is not represented on the board. Mikhail Prokhorov's Onexim got three candidates on the board. One independent director and Yevgeny Ivanov, the gold producer's CEO, were also elected.
Media reports have said Interros sold 37% of Polyus Gold to Kerimov in two blocks in the spring. The deals were conducted by overseas entities, despite the FAS not having endorsed them.
Onexim has in the past officially confirmed it owns 30% of Polyus Gold, while reports talked about 35%.
PRECIOUS METALS
Polymetal plans to place 5 bln rubles in bonds
MOSCOW. (Interfax) - The board of directors of Russia's top silver producer Polymetal has approved placement of three-year bonds totaling 5 billion rubles, the company said in a statement.
Polymetal plans to sell the 5 million 1,000-ruble bonds in an open placement.
The proceeds will be used to pay off short-term debt on bank loans.
The coupon rate will be decided during marketing for the bonds. The bonds will carry a call and/or put option.
The directors also decided to go ahead with a private placement of 84.375 million new shares for transaction purposes.
Polymetal currently has 315 million issued shares, and the new issue represents 26.8% of this.
The company is placing 7.5 million shares to consolidate a 100% stake in Artel Ayax, a company holding the mining license for the Goltsovoye silver deposit, and 10 million shares to acquire Rudnik Kvartsevyi, a Russian company holding the mining license for the Sopka Kvartsevaya. The board proposed placing the remaining 66.875 million shares in favor of subsidiary Polymetal Management Company as well as among shareholders as part of their preemptive buyout rights.
Polymetal plans to submit documents to register the issue with the Federal Financial Markets Service before the end of June. The registration process will take at least 30 days after the documents are submitted, after which the board will determine the placement price. The company plans to complete the placement in November 2009.
Since the start of the year, Polymetal has announced several asset purchases for which company stock could be used as payment. In particular, Polymetal acquired Ayaks from Ovoca Gold in January 2009. Under the terms of the acquisition, Polymetal received 4,166 shares in Ayaks (10.4% of charter capital) and a third party received 35,934 shares (89.6%). In exchange for this stake, Polymetal plans to place 7.5 million supplementary shares.
The company has also agreed to acquire the Sopka Kvartsevaya gold-silver deposit from Lev Levaev's group of companies for 10 million ordinary shares. In addition, Polymetal has acquired a 9% stake in Gold Ore Company Mayskoye LLC from a subsidiary of Highland Gold and could purchase the remaining 91% stake in exchange for either $95.55 million or 15.925 million of its shares.
A source at the company said earlier that the shares acquired by Polymetal Management Company during the additional placement could subsequently be sold to the market.
PRECIOUS METALS
Polymetal to pass...
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