Severstal will get rich

The company will hold an IPO of its division before the end of the year

One of the largest steel companies in Russia, Severstal, owned by Alexei Mordashov, plans to hold an IPO of its gold mining division on the London stock exchange before the end of this year, placing at least 25% of the shares, the Financial Times reported yesterday. The organizers of the transaction will be Morgan Stanley, Credit Suisse and Troika Dialog. A successful placement will be helped by high gold prices, thanks to which the company could be valued at $4-5 billion. Yesterday, gold prices reached a new record - $1.3 thousand per ounce.

Previously, the company had never commented on the prospects of a possible “golden” IPO. Mr. Mordashov only noted that all possible options for the development of the division are being considered, including an IPO. Yesterday, a company representative also declined to comment. According to FT, Severstal's share in the new company after the IPO will be 65-70%. Severstal began creating a gold mining division in 2007. In 2009, the Severstal-Gold company was created, the sole shareholder of which is Severstal Gold NV, registered in Holland. The company is headed by Nikolai Zelensky, who oversees the gold mining direction at Severstal. In 2009, the company's gold mining enterprises produced about 530 thousand troy ounces of gold. Today, Severstal's gold assets include the operating mines Aprelkovo (Trans-Baikal Territory), Neryungri-metallik (Yakutia), Suzdal, Zherek and Balazhal (Eastern Kazakhstan), as well as a number of geological exploration projects in these regions and in the Irkutsk region. Severstal also owns over 70% of the shares of High River Gold Mines, which includes the underground mines Irokinda and Kholbinsky (part of Buryatzoloto), the Berezitovy mines (Amur region) and Taparko (Burkina). Faso), as well as 50% in the company that owns the right to geological exploration at the Prognoz silver deposit in Yakutia. The latest acquisition of Mr. Mordashov's company is Crew Gold, which mines gold in Guinea and is registered in Canada. However, yesterday it became known that Severstal-Gold is planning to purchase the Canadian Sacre-Coeur Minerals, which owns exploration licenses for gold in Guyana. The entire company is valued by Severstal at about $60 million. The deal has already been approved by the board of directors of Sacre-Coeur. It must also be approved by at least 66% of shareholders at an extraordinary meeting to be held in November (if approval is received, the deal will close within three days). In the meantime, as previously reported, in 2010 the gold mining segment of Severstal expects production of 640-670 thousand troy ounces, and over the next three years it expects to increase production to 1 million ounces.

“Severstal initially acquired not very good gold assets, but the rise in gold prices and the efforts of the company itself led to the fact that costs were reduced, and EBITDA margin became almost one of the best in the industry,” noted Unicredit Securities analyst Marat Gabitov. Gold prices are not expected to fall this year, and therefore the IPO should be successful, the expert says.

Irina TSYRULEVA