High River Gold Mines Ltd HRIVF

Russian gold unit Severstal eyes flotation

[espressostretto]

https://www.thisismoney.co.uk/markets/article.html?in_article_id=505046&in_page_id=3

Russian gold unit Severstal eyes flotation
By Mark Foxwell
23 May 2010, 1:52pm

Severstal, Russia's biggest steelmaker, is holding a beauty parade of advisers to help it list its gold unit in London later this year in a move that could raise £1bn.
The firm, controlled by oligarch Alexey Mordashov, is already in talks with investment banks JPMorgan and Russia's Renaissance Capital and it will meet Deloitte this week.
Severstal, one of the few steelmakers to have gold assets in its portfolio, is taking advantage of the metal's soaring price as it finds favour with investors in troubled times.
A source close to the company said a float would help to reduce Severstal's £5.4bn debt in the short term and allow it to pursue acquisitions.
The company's gold business accounts for more than half of its earnings with an output of six tons a year. When the unit was launched in 2007, Mordashov said he would look to float it at a future date.

[bart_dc]

I received a mail from a friend (co-investor) who sent me the news link.This is good news.Let's make an estimate from that PR to put a very conservative value on HRG.Severstahl wants to receive 1 billion pounds when it floats it's unit.1 billion pounds equals about 1.5 billion CADLet's assume that Severstahl wants to keep control and only floats 49% of the entire gold entity.This means

[katchum]

Why isn't HRG at 1.50 already!

[bart_dc]

I think there are a few reasons why we are still below our fair and conservative value:1. High River might still be associated with the liquidity crisis that almost made it go bankrupt.     Investors who are unwilling to take a closer look, have no interest in buying 2. We dropped out of a gold index because our market cap became so low after the crisis, hence no analysts and &

[Mongoose123]

A reasonable interpretation from a high level standpoint  Bart!  And you are correct that Severstal will want to maintain control after an IPO - Mordashov already controls over 80% of Severstal through his direct share ownership. Not likely that he would want to lose control of his most profitable division. His extreme debt situation clearly works in our favour.  It