High River Gold Mines Ltd HRIVF

IPO Valuation

[comquati]

ST. LOUIS(MineFund.com) -- It was expected that Severstal [RU:CHMF] might look to Hong Kong for the listing of its gold assets. However, Bloomberg Newsis reporting that it will spin off Nord Gold in London.
Nord Gold is apparently looking to raise $1 billion from the IPO, and would have a market capitalization of between $4-5 billion. It would be the fourth major gold producer available to London investors alongside Randgold Resources [UK:RRS], African Barrick Gold [UK:ABG], and Petropavlovsk [UK:POG].
At that value Nord Gold would rank around 18th in the world where it would be competing with OZ Minerals [AU:OZL], Harmony Gold [ZA:HAR] and Centerra Gold [CA:CG].
Severstal’s eponymous gold division focuses on emerging markets, and is Russia’s second largest gold producer . It has eight producing mines, two development projects, five advanced exploration projects and a portfolio of early exploration projects and licenses located in Guinea and Burkina Faso, Kazakhstan and Russia.
Severstal Gold expects to produce 640,000-670,000 ounces gold this year, up from 528,700 ounces in 2009. It produced 259,993 ounces in the half year to end June, a 16% increase over 2009.
It is aiming to become a million ounce a year producer in 2013, which would place it ninth in the world depending on how much further Harmony Gold’s production slides.
On its current production track it would be fighting for 14th place globally against fellow London gold listing Petropavlovsk, and would face African Barrick Gold as the next hurdle. Petropavlovsk and African Barrick both sport market caps below $4 billion after a lackluster year where they have failed to capitalize on rising bullion prices.
Nord Gold has been on something of a buying spree to bulk up its growth profile.
It recently agreed to acquire Sacre-Coeur Minerals for $65 million. Sacre-Coeur has projects in Guyana. Severstal also increased its interest in High River Gold [CA:HRG] to 73% and will take full control over the company via an off-market transaction.
In the largest recent transaction Severstal is finally closing out the long-running tussle with Endeavour Mining [CA:EDV] for control of Crew Cold. In September Severstal bought 43% of Crew to take its interest to 93%. It agreed yesterday to buy the remaining shares for US$4.65 per share for an implied full valuation of $497.2 million.
Nord Gold has an estimated 15 million ounces of gold reserves including recent transactions.
The company is expected to continue its acquisitive pattern and the London listing will likely give it the muscle to do a large-scale deal.
Petropavlovsk is an obvious target if the principal shareholders can be persuaded. African Barrick Gold may be an easier target that would vault Nord Gold into the top ranks of the global gold industry.
Likewise Polymetal must be on radar, as would Centerra Gold; Centamin Egypt [UK:CEY], Golden Star Resources [CA:GSC], and SEMAFO [CA:SMF].
However, it may be more inclined to roll up some of the smaller prospects in the currently hot West African sector. That would be the likes of Resolute [AU:RSG], Perseus [AU:PRU], Ampella [AU:AMX] and Gryphon [AU:GRY]

[grafikspeak]

An interesting quote in this one... "increased its interest in High River Gold [CA:HRG] to 73% and will take full control over the company via an off-market transaction." Any ideas?

[topoftheridge]

somebody, anybody, tell me that is a "typo!"Severstal would need 140 million shares, where are they gonna get them?I'd be fine if the price was $2.25, but please tell me we're not gonna get screwed....P.s. the anti spam characters are start with KY, foreboding???

[NaturalCurrency]

Could it mean that they will take full control via an off market transaction post IPO (give us Nord Gold shares instead)?Does anybody have the most recent list of block shareholders? We would need ~90M shares to make sure that they don't get to 90% mark. 

[missouriminer]

   We need to find out if Severstal acquires 90% of shares through a private placement is Severstal  required to pay remaining shareholders the amount given per share that gave them the 90%. That is the only thing that I can think of. Lets not forget that we have the most leverage we have had since the start. I'm not in favor of this avenue but if it goes down in an unsavory way

[Tomwhitford]

From what I gather, the offline transaction would be a conversion of shares in the IPO which are esitmated to be triple the value of HRG, and imo they wont screw us over because of bad publicity and wont fair well with there IPO.  But this is stuff we already know. Im not selling any of my shares but we might have to do a swap, which at the estimated IPO value is more then worth it.

[missouriminer]

   I agree Tom however with the recent speculation of the Nord IPO coming before the New Year (as early as the end of the month according to the last article) how do we judge a fair swap with Bissa results unknown, Prognoz yet unknown and some others. I'm here till the end as I know most of us are. Not trying to be argumentative just brainstorming with you.

[comquati]

The Manager built a relatively sizeable stake in Toronto Stock Exchange listed High River Gold Mining (HRG), which became one of PVF's top 10 holdings and came to account for 2.6% of the Fund by the end of June, rising to 2.8% by August. HRG is one of the cheapest gold companies globally and trades at a 5x 2010 P/E. Its main shareholder -Severstal - has attempted a couple of times to buy out