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Polymetal pondering hiving off non-Russia business as hedge funds buy in


It is too early to say that shares in the Anglo-Russian gold and silver miner Polymetal (LON:POLY) are staging a comeback after being beaten into pulp after a wave of sanctions against Russia, but now that they have fallen to bargain-basement prices they are starting to attract the interest of some UK fund managers and retail buyers.

The company operates mines and processing plants in Russia’s Far East, the Urals and in Kazakhstan and all of its operations remain unaffected by sanctions. Also, Russia’s central bank has already pledged to buy the company’s gold production this year at a fixed price of $1,800 an ounce.

Shortly after the start of the war in Ukraine most of Polymetal’s London-based board members resigned but within two weeks the company filled the empty board seats with six new independent non-executive directors.

The reason why it was relatively easy for Polymetal to fill its board is because the company has very little links either with Moscow or with the conflict in Ukraine. In contrast, Russian steel maker Evraz was completely suspended from trading in early March after the UK imposed sanctions on its majority shareholder Roman Abramovich, owner of the Chelsea football club.

Polymetal has a strong ESG record

Unlike many other miners, Polymetal operates at a gold standard of mining and has a strong ESG record. It has a better ESG rating than many US and large global miners.

Earlier this month The Mail on Sunday reported that hedge fund manager Crispin Odey of Odey Asset Management had bought the stock when it reached £1.40. Odey Asset Management has since rebranded some of its funds to Brook Asset Management after Odey had to face sexual assault allegations in court.

In an attempt to engage with investors and shore up some interest in its projects in the current heavily anti-Russian climate the company will run its analyst and investor day on 25 April. As part of it chief executive Vitaly Nesis and chief financial officer Maxim Nazimok will update on the company’s plans to split its Kazakh business from its main Russian mining and processing activities and thus insulate its operations outside of Russia from the negative impact of sanctions and the anti-Russia sentiment which has led to shares losing 75% of their value and being expelled from the FTSE 100 index. One option would be to list Russian and Kazakh businesses as two different entities.

In a short official response, the company said, “Polymetal is evaluating various options that could maximise shareholder value. Such options, among others, include potential modification of asset holding structure which would ensure distinct ownership in various jurisdictions in which the Company operates. Early-stage deliberations are ongoing and accordingly, there can be no certainty as to the outcome. A further announcement will be made as and when appropriate.”

Polymetal’s largest shareholder is the company’s founder Alexander Nesis, brother of chief executive Vitaly Nesis, while other key shareholders include BlackRock which owns a 10% stake. Norway’s sovereign wealth fund also used to be a shareholder but pulled out after the start of the war in Ukraine.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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