Alexei Mordashov controlled mining company Nord Gold, recently started trading on the LSE, is considering to increase its share in the Canadian High River Gold (HRG) to 100% from the current 75%. This will enable Nord Gold to significantly increase its own free float and improve liquidity. But first, Mr. Mordashov will need to talk to the minority shareholders a transaction HRG, who expect a higher valuation of the company.
The fact that the Nord Gold is considering the consolidation of 100% subsidiary of High River Gold, "Kommersant" said CEO Nicholas Nord Gold Zelensky. Structurally, the transaction may be issued in the form of exchange of shares of HRG on the new securities of the parent company. The question, however, until the stage of development, the timing and rates of exchange have not yet identified, said Mr. Zelensky.
HRG is registered in Canada, is listed in Toronto, 75.1% are owned by Nord Gold.HRG brings together four of the eight production assets of the parent company.At HRG accounts for about half of production Nord Gold (in 2011 - 754 million ounces) and nearly one-third of the resource base (total - 22.6 million ounces).
Nord Gold - subsidiary company "Severstal" Mordashov, is currently in phase transfer to shareholders of the holding company. The deal is in the form of exchange of shares of the parent company for securities of a subsidiary, its beginning, it was announced November 30, 2011. January 18 the first stage - sharing with minority shareholders, "Severstal". They got 10,6% Nord Gold. The rest will depart Mr Mordashov structures. This part of the deal should be closed before the end of February. Earlier this year, Nord Gold was listed on the London Stock Exchange (LSE; bidding started January 19), and soon announced plans to increase the free float to increase the liquidity of the shares. Consolidation of HRG - one of these options, said Nikolai Zelenski.
According to estimates from Valentina Bogomolova "Uralsib", based on different scenarios for assessment of Nord Gold and High River Gold for the transaction, the exchange rate can be offered in the range of 6-8 shares of High River Gold per share Nord Gold. Thus, in her words, minorities HRG can get 8-9% of shares in Nord Gold. According to the calculations of Peter and Paul Oleg BCS - 8.7%, and the new free float will amount to 19.3%. Offered additionally a further 6%, the company can expect to receive a premium listing, as was recently done and Evraz "Polymetal".
However, before the consolidation of HRG, Alexei Mordashov would first have to persuade its minority shareholders on the deal. According to one of them, if the exchange coefficients are calculated on the basis of current market quotations of the two companies, the shareholders of HRG is not satisfied because "the company is undervalued by the market for at least 30%" (yesterday, the company was worth about $ 1 billion). But then, the Nord Gold will need to assess a fair price, said Oleg Peter and Paul, in this case, the estimate will grow from the current $ 2.7 billion to $ 3.7 billion
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