Polimetall intends to issue global depositary receipts (GDRs) and float them on the main trading platform of LSE. In addition, the company will obtain listings on RTS and MICEX.
In the course of the flotation, Polimetall plans to offer investors up to 30% of its charter capital, taking into account additionally issued shares (16% of charter capital) and raise around $500 mln. Two thirds of this amount will be floated abroad and one third on the Russian stock market. The media reported that the placement is scheduled for February 7, 2007.
The proceeds from the offering are to be used to reduce accounts payable, boost investments in exploration (including as part of a strategic alliance with AngloGold Ashanti), develop new facilities (in particular, a JV in Mongolia with Mongolrostsvetmet) and use future shares as currency for acquisition.
The timeframe for the placement is favorable from the standpoint of market trends. Based on industry multiples, we estimate Polimetall in the range of $2-2.6 bln. Taking into account that Polyus Gold is the only precious metal producer listed on the Russian stock market, we believe that market participants will take interest in the new company’s offering (fifth largest worldwide in terms of silver production). However, this will also depend on the price range in the course of the placement.
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