A prominent Kazakh businessman has called for a shake-up of Petropavlovsk (POG) after acquiring a 22.4 per cent stake in the Russian gold miner at the end of December 2017.
Kenges Rakishev, a director of Central Asia Metals (CAML) and a former majority shareholder in Kazakhstan’s largest bank, met with the board of Petropavlovsk for the first time this week to agitate for several strategic shifts in the wake of a boardroom coup that led to the ousting of chairman Peter Hambro, and the subsequent resignation of co-founder and chief executive Pavel Maslovskiy.
Chief among these goals is to broker the return of Mr Maslovskiy, who the oligarch believes is the only person able to successfully oversee the construction of a key pressure oxidation (POX) plant in Pokrovskity, Russia. According to Mr Rakishev, the former chief executive has said he would return with the board’s backing, although as of October Petropavlovsk said the POX Hub development was “progressing on schedule and on budget”, ahead of first production later this year.
The board has also been pressed to dump its 31.1 per cent stake in IRC, the Hong Kong-listed iron ore miner chaired by the son of Mr Hambro. Instead, Mr Rakishev thinks the group should be solely exposed to gold, and would benefit by acquiring gold miners in Russia and Kazakhstan whose owners are keen for a back-door listing in London.
The oligarch has also asked the directors of Petropavlovsk – a portmanteau of the founders’ first names – to consider re-branding the company, and has asked for a non-executive seat on the board.
Mr Rakishev declined to comment on the size of his investment, although it also included the purchase of convertible bonds worth $28.8m (£20.4m) from asset manager Renova, which was at the forefront of last year’s coup. At the time of the deal on 27 December, a 30 per cent premium to the stock’s three-month moving average would equate to 10.1p a share, or £75m for a 22.4 per cent holding.
Asked why he bought into the London-listed gold miner, Mr Rakishev said he was positive on the fundamentals for precious metals, and believes Petropavlovsk is significantly undervalued against peers such as Polymetal International (POLY). FTSE 250 constituent Polymetal, which has total debts of $1.7bn and is expected to generate pre-tax profits of $595m this year, sits on a price/forward earnings multiple of 11. Meanwhile, Petropavlovsk has a forward earnings multiple of six, total debts of $654m and forecast pre-tax profits of $100m for 2018. “It’s not fair,” said Mr Rakishev.
Petropavlovsk declined to comment.
