Research Notes

Polymetal plans to offer up to 30% of its sharesd to investors in an upcoming IPO. In our opinion, the flotation of the Russian precious metals' producer will enjoy keen investor demand.

Polymetal will list its Global depositary receipts (GDRs) on the main board of the London Stock Exchange during its IPO. Furthermore, the company plans to have its shares listed on MICEX and in RTS.

All of Polymetal's stock is currently held by its sole shareholder Nafta-Moscow owned by Russian entrepreneur and State Duma member Suleiman Kerimov.

The precious metals company plans to float shares worth up to 30% of its charter capital, including an additional share issue valued at 16% of the company's charter capital and raise proceeds of some $500 mln. Polymetal aims to place 2/3 of the offering abroad and 1/3 in Russia.

The proceeds of Polymetall's share sale will be used to help the company deleverage, build new mines and look for new precious metals deposits in Russia (as part of an exploration JV with AngloGold Ashanti of South Africa), as well as to issue more shares to be floated in secondary offerings and used as the currency for M&A dealmaking.

As we noted earlier in our research notes, the current situation on the gold and silver markets has created favorable IPO conditions However, there are quite a few listed precious metals companies. We believe that this factor will most likely boost investor interest in the share sale of Polymetal, Russia's largest silver producer and second-largest gold manufacturer.

According to our estimates, Polymetal's value is currently in the range of Rub 2– 2.4 bln, or $7.3-9 per share.

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Nataly Kocheshkova

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