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Kazakh copper miner KAZ Minerals plans $3 bil delisting to pursue high-risk growth

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Kazakh copper miner KAZ Minerals plans $3 bil delisting to pursue high-risk growth

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London — KAZ Minerals chairman Oleg Novachuk and non-executive director Vladimir Kim, which together own 39.4% of Kazakhstan's largest copper producer, plan to buy the remaining shareholding in order to pursue a high-risk, capital-intensive strategy that they see as incompatible with the company's listed status.

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Nova Resources, which is affiliated to the businessmen, has reached agreement to pay $3 billion to acquire the entire issued and to be issued share capital of KAZ Minerals, excluding 186,079,209 shares (equivalent to 39.39%) already owned by Novachuk and Kim, the KAZ Minerals said Oct. 28.

The cash consideration payable to KAZ Minerals shareholders values the company at a double-digit percentage premium to its share price on Oct. 27 and will be financed with a facility provided by Russia's VTB Bank.

Acquisition rationale

The deal, expected to complete in H1 2021, will see KAZ Minerals delist from the London Stock Exchange and become a private company, which Novachuk and Kim see as better suited to pursue a higher-risk, capital-intensive strategy.

"KAZ Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005. However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that KAZ Minerals' long-term interests would be best served as a private company," Novachuk said.

"We remain confident the execution of a higher-risk, capital-intensive strategy remains the optimal long-term path for KAZ Minerals, but we recognize that our risk appetite may be misaligned with the preference of many investors in the mining sector," he added.

So far, KAZ Minerals' focus on developing and operating large-scale, low-cost copper mines in Kazakhstan and the CIS region has enabled it to progress a pipeline of growth projects, including its largest assets in Kazakhstan -- Aktogay and Bozshakol. The company's production has grown from 85,000 mt of copper in 2015 to 311,000 mt in 2019.

In the long term, the biggest boost to its output will come from the Baimskaya deposit in Russia's Chukotka. KAZ Minerals has committed to spending $150 million on it in 2020 alone, mainly to carry out a feasibility study.

The project, which the company acquired in 2019, contains Peschanka, one of the world's most significant undeveloped copper assets with JORC resources estimated at 9.5 million mt.