Fosun turns to Russian gold with Polyus stake

A consortium of investors led by Chinese conglomerate Fosun International is set to buy a 10% stake in Russia’s top gold producer Polyus for $887m (at $70.6 a share), it announced yesterday, the day before the start of the St Petersburg International Economic Forum (SPIEF).
It is Fosun’s first overseas foray since Wang Qunbin took over as CEO  last month and represents a coup for Polyus which has been looking for investments from Russia’s Asian neighbours ever since the West imposed sanctions on Moscow due to its role in the Ukraine crisis and the annexation the Crimean peninsula in 2014.
Under the terms of the deal, Fosun will nominate two directors to the company’s board, which will increase from nine to eleven members, with three independent directors. The deal also includes an option for the consortium to acquire up to an additional 5% percent in the company at $77.7 a share by the end of May 2018. 
In January, Polyus  won an auction for the giant Sukhoi Log gold deposit in the Irkutsk region of Russia. which  contains 62.4m ounces of gold with an estimated grade of 2 to 2.45 grams a tonne, according to analysts at Berenberg in London and that success, as well as increased gold output at Polyus’s existing mines, prompted the company’s owner Said Kerimov to alter his plan of selling 25 % of the group plus one share to the Chinese group.
Moscow-listed Polyus delisted from the London Stock Exchange in 2015 at a time when Russia was encouraging its companies to return home following a deterioration in relations with the west over the conflict in Ukraine.  But the company, which raised $800m in a Eurobond in January, is close to finalising details of a secondary listing, which would increase its free float to 10% of the company’s stock, according to the Financial Times.
China is the world’s top consumer, producer and importer of gold and Chinese companies have been targeting gold mine acquisitions.

Source: reuters