Soaring gold prices tempt Polyus back to market

Encouraged by an 11% rise in global gold prices this year and by a separate $887m deal to sell 10% of the company to a Chinese consortium led by Fosun International, Russia’s top gold producer Polyus is preparing to offer new and existing shares in a secondary share offering in both London and Moscow, it said on Monday, in a deal that will test investor appetite for Russian assets.
Polyus delisted from the London Stock Exchange in late 2015 after Western sanctions over Moscow’s role in the Ukraine crisis began to bite for Russian companies. As part of its  new secondary share offering for 7% of the company’s equity, Polyus expects to raise $400m from the sale of new shares. Further proceeds from existing equity will go the company’s controlling shareholder, the family of Russian tycoon Suleiman Kerimov.
The company, which is listed on the Moscow Exchange with a market capitalisation of $9.9bn and a free float of 6.76%, plans to use the proceeds from the planned share sale to repay some of its debt and finance projects. High on its list of priorities will be the Natalka gold mine in Russia’s Far Eastern Magadan oblast, one of the largest in the world with  estimated reserves of 59.7 million oz of gold and where Polyus won a production licence in January.
The announcement comes as the decision by a number of Arab countries to sever ties with Qatar helped push the  gold price close to its highest levels for ten years, raising the possibility it could top $1,300 an ounce as overall political uncertainty linked to the UK, Europe and the US mounts.
Other large Russian companies will be watching the Polyus offering with interest, hoping to gauge the likelihood of a robust return of investors that took flight after Moscow annexed Crimea from Ukraine in 2014. En+ Group (which manages Russian tycoon Oleg Deripaska’s aluminium and hydropower businesses) and the state-owned shipping company Sovcomflot could follow soon.

Source: reuters