Russian gold miner Uzhuralzoloto sets price range for Moscow IPO

Moscow — Russian gold miner Uzhuralzoloto said on Monday it had set the price range for its Moscow Exchange initial public offering (IPO) at 0.55-0.60 roubles per share, equating to pre-money share capital of 110- billion-120-billion roubles ($1.19bn-$1.30bn).

UGC, Russia’s fourth-largest gold miner, said last week it would offer up to 5% of its capital in new shares in its IPO, shrugging off British sanctions on its owner, Konstantin Strukov, announced on November 8, to push ahead with the offering.

Russian share listings have been few and far between since President Vladimir Putin sent troops into Ukraine in February 2022, and are generally characterised by small volumes and dependent on Russian investors after an exodus of Western capital.

Three financial market sources said last month that UGC was planning the IPO and gave it a preliminary valuation of 120-billion roubles.

The valuation implies a 15%-20% discount to Russia’s largest gold miner Polyuz, CFO Artem Kletskin said on the My Investments Telegram channel on Monday.

UGC’s offer consists solely of an additional share issue. Funds will be used for debt reduction and general corporate purposes, it said.

"We have already received a number of indicative bids from large institutional investors in a volume exceeding half of the planned deal," Kletskin said in a statement.

"We expect that our investment case will also attract the attention of retail investors, who are currently the main driving force of the Russian stock market."

Trading is expected to start on November 22, UGC said.

Britain imposed sanctions on 29 individuals and entities in Russia’s gold and oil sectors last week, including Strukov and two of Russia’s largest gold producers, Nord Gold and Highland Gold Mining, but not UGC itself.

New markets

UGC said individual sanctions would not affect its work, operations or exports. The company said its operations were not exposed to geopolitical fallout as it does not rely on Western-made equipment.

The London Bullion Market Association banned Russian gold bars made from March 7 2022, and many Western countries later banned imports of Russian bullion. But Russian gold producers quickly found new markets in countries that had not imposed sanctions on Moscow, such as the United Arab Emirates, Turkey and China.

Kletskin on Monday said UGC’s main buyers — China, India and Turkey — were "waiting for gold" from Russia.

UGC expects to increase production by more than 60% by 2026 and become one of Russia’s top three gold miners.

Reuters