Translated material
Silver Price Mirror
Polymetal valued itself at $2-3 billion
Polymetal has announced the price range for its shares, which will be offered during the IPO in early February, at $7.25-$9.5 per share. Thus, the company, whose authorized capital is 319 million shares, valued itself at 2.3-3 billion dollars. This is close to the values put forward by experts - from 2.5 to 3.5 billion dollars. However, some analysts consider it overpriced: Vladimir Katunin from Aton believes that Polymetal’s assessment of itself is “relatively aggressive.” At the same time, he believes that Polymetal shares will be “sufficiently liquid” and their trading will reflect the dynamics of silver prices. However, they are more likely to attract "investors with a longer-term view."Polymetal intends to offer up to 30% of its shares during the IPO, of which, as previously reported, about half are new shares of the company issued during an additional issue, and the same package can also be placed by the main shareholder of Polymetal - controlled by the entrepreneur Suleiman Kerimov “Nafta Moscow”. About 25% of shares can be placed on the main floor of the London Stock Exchange and approximately 5% on the RTS and MICEX (this has already received permission from the Federal Financial Markets Service). BlackRock Investment Management, the British division of one of the largest investment management firms in the United States, has already announced its readiness to buy shares during the IPO for $100 million. The placement organizers, Deutsche Bank AG, will have an additional option to buy another 15% of the placed volume. , Merrill Lynch International and UBS Ltd.
If Polymetal does not decide to reduce the volume of its offering (and experts doubt that this will happen), the company could raise $694-909 million as a result of the IPO. The memorandum prepared for the placement states that from the proceeds Polymetal “plans to use $300 million to pay off accounts payable, which currently total about $400 million; he intends to spend another $12 million on developing joint activities within the framework of a strategic alliance with the South African gold mining company Anglo Gold Ashanti. About $20 million is planned to be allocated to pay off the debt to the American PanAmerican Silver for its share in the Dukat gold-silver project, which was purchased by Polymetal a year and a half ago.
After the IPO, Polymetal promises to become the second Russian blue chip among precious metals producers after Polyus-Gold. At the same time, it is very important for investors that, unlike Polyus, it specializes in the production of silver - this fact will only spur interest in the securities of Polymetal (silver has risen in price by 1.5 times over the year, yesterday’s fixing in London was 13. $15 per ounce). According to Mr. Katunin from Aton, even if we consider the price per share of Polymetal as a little overpriced, we should expect that investors will still buy the shares of this company precisely because of its unique profile. After all, over the past few years of operation, it has successfully commissioned several mines, while “other companies cannot boast of this.” The main expectations of investors buying Polymetal shares, according to him, are stable, albeit not very large, growth in production, skillful management and further growth in prices for gold and silver.
However, experts also draw attention to the risks associated with the purchase of Polymetal securities. In particular, Prospekt Investment Group notes the likelihood of a large stake in the company being bought out by its strategic partner, AngloGold Ashanti, which will seriously increase Polymetal’s corporate risks. At the same time, Prospect believes that “the value of the company after the placement will have some “margin of safety” and, perhaps, will show an increase of 5-10% in the first days.”