Polyus Makes Formal Offer to Buy 50.1% Stake in KazakhGold

July 10. Bloomberg

By Yuriy Humber and Maria Kolesnikova

Polyus Makes Formal Offer to Buy 50.1% Stake in KazakhGoldOAO Polyus Gold, Russia’s biggest producer of the metal, offered to buy a 50.1 percent stake in KazakhGold Group Ltd. to boost output right away while it develops projects in Siberia and the Far East.

Polyus will pay $7.18 in cash and 0.064 of its common shares, which are listed in Moscow, for each KazakhGold share, Polyus said late yesterday in a statement on its Web site. KazakhGold shareholders must approve the offer at an annual meeting on July 15 and can tender shares for two calendar weeks from July 30.

Moscow-based Polyus will accept tendered shares on a pro- rata basis so that it buys only 50.1 percent of Kazakhstan’s biggest gold producer. Troika Dialog, Moscow’s oldest brokerage, said in a note to investors today it expects between 85 percent and 90 percent of KazakhGold shareholders to tender their equity.

KazakhGold rose 35 cents, or 6 percent, to $6.15 at 11 a.m. in London trading, boosting the company’s market value to $325 million. Polyus dropped 56.29 rubles, or 5 percent, to 1,067.02 rubles in Moscow.

The bid follows 10 months of talks and two previous informal offers. Polyus has delayed commissioning its biggest project, Natalka, the world’s third-largest untapped gold deposit, because of the global economic crisis and concern about infrastructure costs. Full capacity at Natalka may be stalled until at least 2022 from the prior goal of 2013, Polyus said in February. Polyus also cut Natalka spending to $1.9 billion through 2041 from $2.5 billion.

Natalka, with expected annual production of about 1.41 million ounces, contains two-thirds of Polyus’s reserves.

Polyus said today that its biggest shareholder is billionaire Suleiman Kerimov with a 36.9 percent stake, while Chairman Mikhail Prokhorov, Russia’s richest man, has 26.35 percent with an option for another 3.64 percent currently held by Renaissance Capital, a bank of which Prokhorov owns 50 percent.