Polymetal hopes for Russian asset sale within six months
Polymetal International plans to sell its Russian business within the next six months, with mining groups from the country and Chinese investors among the potential suitors.
Once one of the world’s most profitable gold miners, the company is looking to carve out its Russian business despite a Kremlin-backed clampdown on asset sales and stringent Western sanctions.
It follows the miner’s relocation of its domicile from Jersey to Kazakhstan this month, a country categorised by Moscow as “friendly”.
Vitaly Nesis, chief executive of Polymetal, told The Financial Times that an “inevitable” discount on the sale of its Russian assets would not be “catastrophic”.
“If we had remained in Jersey, the risks of losing the Russian business’s value would have been exceptionally high. And now I am optimistic that Polymetal International will be able to reap significant benefits from its sale,” he said.
The group holds eight gold and silver mines in Russia, and two in Kazakhstan.
While Russia accounts for just over three-quarters of Polymetal’s production volumes, the Kazakh unit made up more than half of the group’s net profit and provided all of the cash flow in 2022 – due to US sanctions against the Russian company in May.
Following Russia’s invasion of Ukraine, President Vladimir Putin banned the sale of Russian strategic assets including gold mines owned by “unfriendly” countries – including the UK.
Nesis aims to finalise the sale within the next six months, bidding to obtain approval from Russia’s Federal Antimonopoly Service.
The group intends to use the proceeds from the sale in Russia to enhance its mining operations in Kazakhstan, while the Astana listing (AIX) will also enable Polymetal’s Russian unit to pay out dividends.
Meanwhile, London Stock Exchange shareholders will have either to sell their shares or open an account at AIX and transfer them to Kazakhstan.
The company’s share price dropped 80 per cent following the invasion, and have since been suspended.
Trading will not resume as the group plans to delist from the London Stock Exchange by the end of August.
“This has been a painful process, especially for shareholders in the retail sector, we acknowledge that,” Nesis said.