MINEX Forum

Tag: Polymetal

  • Meeting of the Chairman of the Committee with the delegation of the “Polymetal International plc” company of the Republic of Kazakhstan

    Meeting of the Chairman of the Committee with the delegation of the “Polymetal International plc” company of the Republic of Kazakhstan

    On January 15, 2024, a meeting between the Chairman of the State Committee on Investment and State Property Management and a member of the board of directors of «Polymetal International plc» Vitaly Nesis was held in the State Committee on Investment and State Property Management.
    At the meeting, the Chairman of the Committee provided detailed information about the country’s investment opportunities. The parties discussed the establishment of mutually beneficial relations in the mining and trade sectors. During the meeting, the delegation of «Polymetal International plc» expressed interest in investing in the country’s mineral extraction.
    In conclusion, company representatives were invited to contribute to the implementation of investment and commercial projects and expressed interest in creating joint ventures.
  • Polymetal: direct access to the Shanghai Gold Exchange is still limited

    Polymetal: direct access to the Shanghai Gold Exchange is still limited

    Direct access to the Shanghai Gold Exchange remains limited for foreign companies. This is stated in the response of the gold mining company Polymetal, registered in the AIFC, to a request from an inbusiness.kz correspondent .

    “The generally accepted global price benchmark for gold is still the LBMA price (London Bullion Market Association –  London Bullion Market Association – Note) . At the same time, direct access to the Shanghai Exchange for foreign companies is limited and associated with significant difficulties. Polymetal is guided precisely for the London fixing due to its availability, the company’s membership on the exchange, and the fact that the National Bank of Kazakhstan and other key counterparties use it in their contracts. The National Bank has the priority right to purchase refined gold in Kazakhstan. Polymetal does not export metal bypassing priority right of the National Bank,” a  representative of the gold mining company wrote in an email.

    At the beginning of November, our publication wrote that Chinese banks had stopped participating in gold pricing in London. The withdrawal of Chinese banks from LBMA price auctions in the gold market has raised questions about the impact on trading liquidity and their determination of prices for the precious metal, as they no longer reflect the supply and demand for gold from China, which is its largest producer, importer and consumer. .

    “Perhaps the absence of Chinese banks from London auctions is one of the reasons why the Shanghai Gold Exchange premium has deviated so much above the LBMA gold price recently,” the publication noted.

    In 2016, the Kazakh delegation from the AIFC, led by Kairat Kelimbetov,  visited  the Shanghai Gold Exchange. Then, issues of cooperation in the gold market within the framework of the “One Belt, One Road” project were discussed with the Chinese side. Currently, the AIFC does not have any common projects with the Shanghai Gold Exchange.

    Let us recall that in September, gold mining enterprises in Kazakhstan, through their association,  asked  to liberalize the export of gold so that they could export it abroad independently.

    “The Dragmet Association appealed to the National Bank of the Republic of Kazakhstan with a request to consider the possibility of waiving the right of pre-emption to purchase refined gold produced in some cases and providing subsoil users with permission to export refined gold for sale to foreign buyers. Today, the National Bank is studying ways to resolve this issue,” – our publication reported.

    The National Bank has not yet made any decision on Dragmet’s proposal, according to its response to a request from inbusiness.kz via the e-otinish platform.

    “Concerning the issue of liberalizing the export of refined gold through the practice of partial implementation of the state’s priority right to replenish assets in precious metals, we inform you that the issue requires careful analysis taking into account the goals and objectives of the monetary policy of the National Bank of the Republic of Kazakhstan. Based on the results of studying the issue, this proposal will be submitted for discussion with participants in the precious metals market on the site of the ALE “Republican Association of Precious Metals Producers,” the letter  states.

    In June, the Altynalmas company proposed to abandon the National Bank’s priority purchases of gold mined and refined in Kazakhstan, due to the fact that “on average, the gold mining industry loses more than $8 million per month due to the difference between the best spot price for gold on London Stock Exchange and the cost of purchasing gold by the National Bank according to the current formula (quotation period is a month),” wrote Kursiv.

    The National Bank explains that “in accordance with paragraph 18 of the rules, the price of refined gold is determined in tenge based on the official exchange rate of the tenge to the US dollar on the date of the transaction and the average value of the morning and evening fixing (price quotes) for gold of the London Bullion Market Association market association), averaged over the entire month of delivery and discount.”

  • The head of Polymetal commented on ArcelorMittal’s departure from Kazakhstan

    The head of Polymetal commented on ArcelorMittal’s departure from Kazakhstan

    Gold mining company Polymetal has made a firm commitment to sell its Russian assets, which are subject to U.S. sanctions, no later than the first quarter of next year. The CEO of the company, Vitaly Nesis, informed investors about this during a conference call on the production results for the third quarter last week.

    “When we relocated to Kazakhstan in August, we signed an official commitment stating that the company will sell its sanctioned Russian subsidiary, which is listed on the Specially Designated Nationals and Blocked Persons List, within nine months. This document serves as a preliminary condition for changing jurisdiction. While we cannot be excluded from the Moscow Exchange, we believe that this commitment represents a contractual obligation for us. Violating this obligation would have serious consequences for the company,” said Nesis.

    In September, Nesis predicted that the Russian division of Polymetal International would be sold within the next 6-9 months.

    Nesis also highlighted that if the deal is not completed within the required timeframe, there may be significant consequences.

    “If we fail to meet the deadline, we will lose a substantial amount of political capital in Kazakhstan. Political capital is crucial in the mining sector. I don’t want to draw any inappropriate parallels, but it’s worth considering what happened to ArcelorMittal in Kazakhstan after multiple security failures. While we hope to avoid such a scenario, it is evident that managing potential problems arising from the loss of political reputation is of utmost importance,” he noted in response to a question about the potential issues that may arise if the company’s Russian assets are not sold within the promised period.

    According to Nesis, obtaining official approval from Russian authorities for the planned deal is unlikely to be necessary. However, repatriating the proceeds from the sale to Kazakhstan may face challenges due to currency restrictions imposed in Russia. This is particularly relevant as some of the current shareholders of Polymetal, who may benefit from the sale through dividends, are residents of countries considered unfriendly by the Russian government. The decision on dividend payments for this year will depend on the progress of the sale of Russian assets. If the deal with the Russian subsidiary cannot be completed, the company may consider the previously discussed option of establishing a separate entity in Kazakhstan, although this could have tax implications.

    One of the conditions for finalizing the deal, as discussed with potential buyers, is Polymetal’s requirement for strong assurances that toll processing of low-carbon concentrate from the Bakyrchik deposit in Kazakhstan at the Amursk hydrometallurgical plant will continue. The matter of preserving these supplies from the Kazakh mine is still under discussion with the Office for Foreign Assets Control (OFAC) of the U.S. Treasury’s Foreign Assets Control.

  • Polymetal did not find enough gold in the Shekara area

    Polymetal did not find enough gold in the Shekara area

    The mineral exploration activities in the Shekara area of the Kostanay region in Kazakhstan have yielded disappointing results, according to a written response from Polymetal, a gold mining company registered with the Ministry of Finance and Economy of Kazakhstan. The company has determined that the area does not contain economically viable reserves for large-scale development. As a result, the contract territory is being returned to the state, and the accumulated geological data will be transferred to the state geological fund.

    Polymetal had been conducting work in the Shekara area, as mentioned in their earlier press service statements. However, it appears that a decision to halt these activities has been made in recent months. The exploration work in the area began several years ago, with Kazgeology conducting aerogeophysical surveys at the request of Polymetal to assess the potential for gold-silver and copper deposits. A joint venture named “Shekara” was established, with the national geology company holding a 25% stake. Polymetal’s subsidiary, the Kostanay company “Varvarinskoye,” also held shares in the project.

    In March 2021, the national company transferred the mining rights in Shekara to the joint venture. Geological exploration for gold, copper, and polymetallic ores covered an area of 213 square kilometers. The state invested 602 million tenge from 2017 to 2019 for geological exploration, and an additional 21 million tenge was spent from 2018 to 2021, according to Kazgeology’s report.

    It is worth noting that Polymetal is now focusing on assessing reserves in the promising Bakys area in the North Kazakhstan region. The company recently increased its stake to 75% in this gold-copper project, with “Kazgeology” holding the remaining share. Polymetal is evaluating the reserves and plans to consider production in the area after placing them on the state balance sheet. The company’s CEO, Vitaliy Nesis, mentioned the possibility of buying out the junior partner’s stake in the project in a recent interview.

    Active geological exploration in Kazakhstan is crucial for Polymetal, as their Komarovsky gold deposit in the Kostanay region is expected to be depleted by 2028. The ore extracted from Komarovsky is processed at Polymetal’s Varvarinskoye hub, which will continue operating at its current volume. The company is preparing to exploit a new deposit to sustain production as mining operations decline at Komarovsky.

    Furthermore, Polymetal is collaborating with a junior partner in the Northern Balkhash region to search for copper and polymetallic deposits. These projects in Central Kazakhstan aim to establish another processing center and involve exploration in various areas.

    Overall, Polymetal’s exploration efforts in Kazakhstan are focused on identifying new deposits to ensure continuous production and maintain their presence in the region’s mining industry.
    Meanwhile, on the tender page of LLC “TD Polymetal” on the website b2b-center.ru, it is indicated that in 2021, the company solicited proposals for tunnelling works on five licensed areas in Northern Balkhash for the requirements of TOO “Zhana Mys.” It is noteworthy that the latter was among the subsoil users who recently surrendered their license. As per the subsoil users register published in June, this company held nine licenses issued by the Ministry of Industry. Its sole founder is K.M. Dosmukametov, presumably referring to Kanat Dosmukametov, the CEO of “Polymetal Eurasia.”

    As it is known, Polymetal’s primary mining project in Kazakhstan is currently the Kyzyl project in the Abai region, which encompasses the development of the Bakyrchik deposit. It can be considered the largest gold mine in the country in terms of reserves. According to the company’s website, at the time of assessment, its reserves amounted to 9.8 million ounces in gold equivalent, exceeding 304 tons according to inbusiness.kz estimates. In comparison, the once largest Vasilkovskoye deposit in the Akmola region, known as Kaztsink, experienced a decline in reserves and resources from approximately 370 tons to 74-86 tons over the years, as reported by our publication. It is highly likely that with the complete depletion of Vasilkovskoye in the coming years, Polymetal will surpass it as the leading gold miner in the country.

    As previously reported, due to the National Bank’s priority purchase of domestically refined gold, Polymetal refrains from selling the gold it produces abroad, except for a small quantity of refractory gold in high-carbon concentrate from Kyzyl. The low-carbon concentrate from the project is transported to the company’s autoclave plant in Amursk and then returned to Kazakhstan in a processed form. Recently, Polymetal has encountered logistical challenges in delivering gold-bearing raw materials from Kyzyl to the Far Eastern ports.

    “The delivery of concentrate to the Far Eastern ports is currently facing difficulties. Russian railways are not approving applications for transporting concentrate there via covered wagons. There are no transportation issues to Amursk. Hence, we are compelled to transport the concentrate by rail to Amursk and then deliver it to the ports by road for further shipment to China. While we had a one-time experience of shipping concentrate from Kyzyl to the ports by road, it is more efficient to transport it by rail,” confirmed the company.

    Polymetal also provided comments regarding CEO Vitaliy Nesis’s recent statement to Bloomberg regarding the possibility of relisting the gold miner’s shares in London after selling its Russian division. Previously, the company’s CEO stated in a comment to inbusiness.kz that they planned to work closely over the next two years to enhance the liquidity of their shares on the AIX exchange in Astana. This decision came after the re-registration in the Ministry of Finance and Economy of the Republic of Kazakhstan, subsequent to their departure from the Jersey jurisdiction.

    “Unlocking potential on AIX and returning to LSE are not contradictory. AIX will continue to serve as the primary trading platform, while LSE can provide additional liquidity, but only after the sale of Russian assets,” clarified Polymetal.

  • Gold miner may revive London listing after Russian asset sale

    Gold miner may revive London listing after Russian asset sale

    Polymetal International’s CEO, Vitaly Nesis, has expressed the possibility of reviving the company’s London listing once its sanctioned Russian unit has been sold. Polymetal, a gold miner that derives approximately 70% of its sales from Russia and the remaining from Kazakhstan, recently re-domiciled from Jersey to Astana as a preliminary step towards spinning off its Russian business in compliance with Moscow’s restrictions. This move, however, made it impossible to maintain its London listing. Nevertheless, the Russian unit was put up for sale after being included in a US sanctions list in May. Once the sale is finalized, Polymetal will reconsider listing alternatives.

    Nesis revealed that there has been significant interest in the Russian business from over ten potential buyers, including investors from China who are willing to take on sanctions risks. At present, the two parts of the company operate as separate entities, with independent funding and management decisions. Nesis, as the CEO, receives periodic reports on the activities of the Russian unit. While sales in Russia were temporarily halted due to sanctions, they have now resumed.

    Due to restrictions on developing Russian assets, Polymetal is exploring alternative options. Nesis mentioned that they are evaluating opportunities in Uzbekistan and Kyrgyzstan, considering potential acquisitions in those regions.

    Regarding the company’s future listing, Nesis stated that once the Russian assets are divested, they may consider a London listing over Dubai or Abu Dhabi. This decision reflects their strategic considerations and aligns with their future plans.

  • The company Polymetal has become a resident of Kazakhstan

    The company Polymetal has become a resident of Kazakhstan

    In a historic move, Polymetal, one of the world’s leading gold mining companies, has officially relocated its operations to Kazakhstan. This decision marks a significant milestone for the country’s stock market, as it is the first instance of a company making such a move. Furthermore, Polymetal has also shifted its primary trading platform from the London Stock Exchange to the Kazakhstan Stock Exchange. The reverberations of this decision within the stock market are examined in a report by a correspondent from “Habar 24.”

    Polymetal has successfully transitioned its jurisdiction and now stands as a proud resident of Kazakhstan. Already, approximately 4,000 shareholders from the United Kingdom, the United States, and Europe have transferred their shares to the AIX Exchange, signaling the beginning of a promising new chapter.

    Vitaly Nesis, the CEO of Polymetal International, expressed his satisfaction with the extensive efforts made over the past nine months. During this period, the company engaged in meetings with over 500 institutional and retail investors. Nesis believes that these interactions played a pivotal role in shifting sentiment. Ultimately, when the final vote on sequential listing and delisting from London took place, more than 90 percent of voting shareholders supported these decisions.

    Within the Astana International Financial Centre (AIFC), there is a shared anticipation that the influx of large investors brought about by Polymetal’s relocation will create fresh opportunities for other Kazakhstani companies.

    Renat Bekturov, the Managing Director of the AIFC, emphasized that Polymetal has not only moved its operations but has also established itself as a resident and a Kazakhstani company within the AIFC. With substantial assets in Kazakhstan, including the two largest gold mining companies in the country, Polymetal’s transition to the jurisdiction of the AIFC also involved transferring its primary trading platform from the London Stock Exchange to AIX, situated within the AIFC. Consequently, global custodians have recognized AIX as a platform and regard Kazakhstan as an attractive investment market.

    Over the next two years, Polymetal aims to enhance its liquidity indicators. Although meticulous work lies ahead, the company has already made strides, with the average daily trading volume for the month reaching approximately $150,000 USD

  • Baksy conducts estimations of reserves in the gold-copper area

    Baksy conducts estimations of reserves in the gold-copper area

    The company Polymetal, in partnership with “Kazgeology,” is currently in the process of calculating the reserves in the gold-copper area of Baksy in the North Kazakhstan Region. The CEO of Polymetal International plc, Vitaly Nesis, provided this information during a press approach at the “Transfer of the Initial Listing to the AIX Exchange and Redomiciliation to the AIFC” ceremony with inbusiness.kz.

    Nesis expressed satisfaction with the partnership with “Kazgeology” and mentioned that discussions regarding future steps will be more meaningful after the reserves are placed on the state balance sheet. Polymetal recently increased its stake in Baksy to 75% and is considering a decision on production at the site for the upcoming year. It’s worth noting that “Kazgeology” is now under the control of the national mining company “Tau-Ken Samruk.”

    During discussions with reporters, Nesis also mentioned the planned sale of Polymetal’s Russian division within the next 6-9 months. The company is exploring opportunities not only in Kazakhstan but also in Central Asian countries.

    The CEO addressed the topic of a potential increase in the tax burden on businesses in Kazakhstan, emphasizing that the recent increase in the mineral extraction tax (MET) was justified given the favorable external conditions. He expressed hope that the final decisions on tax code amendments would consider the capital-intensive nature of the mining industry and maintain its investment attractiveness.

    Furthermore, Polymetal aims to increase the liquidity of its shares on the AIX exchange in Astana over the next two years. The company recently transferred its primary listing from the London Stock Exchange to the AIX exchange, and Nesis emphasized that the domicile in the AIFC is permanent. There are no plans for an additional listing in Abu Dhabi or any other platform at this time.

    The relocation of Polymetal to the AIX exchange is expected to enhance liquidity on the platform and attract global investors. Renat Bekturov, the head of the AIFC, highlighted the positive impact on the Kazakh stock market and the increased participation of renowned investment companies.

    Regarding the proposed merger of the AIFC trading platform with the Kazakhstan Stock Exchange (KASE), Nesis mentioned ongoing discussions on how to combine liquidity between the two entities, considering their respective minority shareholders.

    In conclusion, Polymetal’s collaboration with “Kazgeology” in calculating reserves, its strategic plans for the future, and its involvement in the AIX exchange demonstrate the company’s commitment to growth and development in the mining sector.

    Regarding the potential merger between the AIFC trading platform and the Kazakhstan Stock Exchange (KASE), Nesis commented on the consideration of KASE’s Russian shareholders.

    “Both KASE and Polymetal have minority shareholders. MOEX, the Moscow Exchange, along with local banks and brokers, are shareholders of KASE. On the other hand, the AIFC exchange has notable shareholders such as the Shanghai Stock Exchange, NASDAQ, and the Silk Road Fund. Currently, no decision has been made, and our discussions primarily revolve around how to combine our liquidity, in what form it will take, whether there will be changes in the legal structure, and if so, what those changes will entail. The next step involves negotiations with the existing shareholders to determine their future involvement, whether they will continue as shareholders, or if a new structure will be established. These matters remain open and under discussion,” Bekturov elaborated.

    Furthermore, Bekturov addressed the question of measures planned to enhance the liquidity of Russian issuers like “Rusagro” or Ozon on the AIX.

    “These issuers are relatively new, and their global depositary receipts (GDRs) are listed and traded on our exchange. The challenge lies with the global depository, Euroclear, as they are currently working on segregating the accounts of shareholders due to the situation at hand. Once Euroclear resolves this matter and market-making brokers willing to provide liquidity are identified, the issue will be resolved. We are actively working with the issuers to address this matter,” Bekturov affirmed.