Sector: Metals
At a meeting devoted to the Magadan region’s development, Russian President Dmitry Medvedev criticized the position adopted by Polyus Gold management after it had complained of the difficulties incurred in developing the Natalka deposit, which holds 56% of the company’s proven reserves. According to our estimates, the criticism expressed by the president is unlikely to negatively impact the company’s market value, while the wide response drawn by the argument may speed up state approval of the project.
On September 24, at a meeting devoted to development of the Magadan region, Russian President Dmitry Medvedev criticized the stance adopted by Polyus Gold management after they complained of difficulties in developing the Natalka deposit. The president threatened to revoke the company’s license.
The Natalka deposit holds roughly 56% of the company’s proven reserves and revocation of the license would have adversely affected its fundamental value. However, we believe that such a turn of events is unlikely. To efficiently develop the deposit, the company needs at least USD 3 billion, which would be used to develop transport and energy infrastructure. The state plans to get involved in financing the project.
We do not believe that the criticism expressed by the president will negatively impact the company’s market value, while the wide response drawn by the argument may speed up state and local government approval of the project. Our estimates put the fair price of Polyus Gold common shares at USD 39.7 per share, which implies an upside potential of 85%. Vladimir Sergievskiy
Other comments of the day
|
Polyus Gold
Capitalization: $3 587 614 198,54
Common shares:
Price: $18,82
Delta week: 11,1%
Delta month: -16,2%
Delta year: -56,4%
|
0.569
0.073
