The unprofitable "Bast" requested a loan from the Development Bank of Kazakhstan

The unprofitable “Bast” requested a loan from the Development Bank of Kazakhstan

24/10/2023

Image source: pixelied.com / pixabay.com

The company “Bast,” engaged in the development of the Maxut deposit in the Abay region, has approached the Development Bank of Kazakhstan for debt financing for its project, as reported by inbusiness.kz. This loan was requested for the “expansion of the ore processing plant for the production of copper and nickel concentrates.” Currently, an “indicative analysis” of the project is being conducted, as indicated in the “projects under consideration” section on the BRK website.

The primary shareholder of “Bast” is the businessman Timur Turlov, who owns 74.18% of the company’s shares, with an additional 8.14% belonging to the affiliated Freedom Finance Global Plc, as stated on the Kazakhstan Stock Exchange website. As of the end of the previous year, Turlov controlled 75.4% of “Bast” shares, while the share held by Freedom Finance Global Plc was minimal, with just 1 share, according to annual reports. Additionally, at the end of 2022, the liquidation commission of Bank Astana retained a noticeable stake in the company, amounting to 5.26%. It’s possible that this share has been reduced at the beginning of this year, as information about it is no longer published in stock summaries.

The initial public offering of “Bast” shares on the Kazakhstan Stock Exchange took place in 2014, as stated on the company’s website. In 2018, an ore processing plant was put into operation at the Maxut deposit for the production of copper and nickel concentrate. Despite this, “Bast” remained unprofitable over the last two years. According to the financial report for the past year, during that period, the company’s losses exceeded 494 million tenge, despite revenue of 6.3 billion tenge. However, this is half the losses recorded in 2021, which were 1.2 billion tenge.

Over the past five years, the company attracted small loans from Turlov and other individuals, mainly of a short-term nature. Interestingly, “Bast” also received $2 million as an advance payment from the trader Trafigura for the delivery of copper concentrate, to be repaid by the end of July this year. It’s worth noting that the company had no revenue from the sale of nickel concentrate with a discount last year.

In 2021, the company was involved in a legal dispute with TO “Service Company “Semey” regarding the recognition, acceptance of work performed, and the recovery of a debt in favor of TO “Service Company “Semey” in the amount of 66,573 thousand tenge. The company had its bank account in AO DB “Sberbank Kazakhstan” frozen in the amount of $156,780 USD (equivalent in tenge as of December 31, 2021 – 67,677 thousand tenge) as part of the execution of a decision by the specialized interdistrict economic court of Almaty. The company filed an appellate complaint for a review of the first-instance decision. In June 2022, the court ruled to uphold the decision of the specialized interdistrict economic court of Almaty and dismissed the company’s appeal. As of December 31, 2022, the company’s obligation has been fully settled through repayment. There were no frozen funds on the company’s account as of December 31, 2022, as noted in the 2022 annual report.

In total, there were reserves of 112 thousand tons of copper and 79 thousand tons of nickel at Maxut, with the potential for an increase, as mentioned in the financial report. The subsoil use contract for “Bast” was extended last December until May 2042. From 2028, the company will begin using a new metal extraction technology that will reduce operational costs by 25%, as stated in the financial documentation.

It’s worth noting that the expansion of “Bast” is not the only project involving Timur Turlov that has recently come to the attention of BRK. According to the “projects under consideration” section, the public company AKASHI Data Center PLC has applied for bank financing for the project “Construction of a Tier IV data center with 4,000 racks,” which is currently at the “business proposal” stage.

Additionally, TO “Production Company “Cement Plant Semey” expressed its desire to attract borrowed funds from BRK for pre-export financing in the amount of 1.2 billion tenge. This application, with Timur Turlov listed as one of the beneficiaries, is currently in the “bank expertise” stage.