Petropavlovsk Plc ( “Petropavlovsk” Group) is about to return to the discussion of deals of M&A with the owners of “Amur Gold” (part of “Russian platinum”) and “Zoloto Kamchatki” (Kamgold, part of “Renova”), according to the chief executive of the company P.Maslovsky.
“We considered the possibility of merging with “Amur Gold”. I can see a great synergy in this deal. I like the asset, the area is close to the Amur region, adjacent to us. I think it is an interesting asset. We will return to talks at some stage,” P.Maslovsky asserted in an interview to PRIME Agency.
According to him, production synergy with Kamchatka assets is less possible because of the long distance. But spokesmen for “Renova” prepare their materials to continue the conversation.
“But so far, we believe, as well as the majority of shareholders, it is not the best time for a purely paper deals (payment in shares). We are now undervalued, although the assets we have are very good. First, it is necessary to raise capitalization of the company,” CEO of Petropavlovsk says.
“Petropavlovsk” leaves open the possibility of withdraw from the company IRC Ltd (31.1% owned), iron ore producer in the Far East. “To offer a share in uncompleted facility or end one, which generates cash flow and is self-sustainable, are two totally different things as the saying runs. IRC was put into operation and reaches full production capacity. The process there starts at full speed just now. So, we do not actively look into the matter now, though it is one of variants to raise capital. We will discuss this idea later,” Maslovsky says.
Petropavlovsk Plc is among the first five Russian companies on gold production. It's key assets are focused in the Amur region, where four mining-hydrometallurgical combines “Pokrovsky Mine”, “Pioneer”, “Malomyr” and “Albyn” operate. It reduced gold production by 17.4% to 416.3 thousand ounces (12.95 tons) in 2016. They plan to produce 420-460 thousand ounces in 2017.