BlackRock-Backed Gold Miner May Join Rush of Russian IPOs

(Bloomberg) -- GV Gold PJSC, a Russian miner backed by BlackRock Inc., plans an initial public offering in Moscow this year after first doubling its output in a possible acquisition, according to the miner’s chief.

“Our shareholders want an IPO to get a market valuation of the business and have their holdings liquid after many years of investment," Chief Executive Officer German Pikhoya said in interview in Moscow. The miner has already held preliminary talks with banks, he said.

The plans come as Russian IPOs, which slumped amid international sanctions and the collapse in commodity prices, come bouncing back, driven by a rally in crude oil that’s breathed life back into the economy. Last year, Russian companies racked up $2.8 billion in IPOs in Moscow and London, the most since 2011.

GV Gold, also known as Vysochaishy, mines at several deposits in Siberia and is controlled by the owners of Lanta-Bank, a small Moscow-based lender. BlackRock holds about 18 percent in the miner after a deal in 2007 that valued the company at $500 million.

Before going public, GV Gold hopes to conclude a deal to increase output, according to Pikhoya. He declined to name specific targets, saying only that there are “not so many.”

Possible Deal

GV Gold may buy billionaire Viktor Vekselberg’s precious-metal producer Kamchatka Gold for more than $500 million including debt, RBC newspaper reported last month, citing unidentified people familiar with the deal’s terms.

“If GV Gold were able to buy a similar-sized rival, the whole company’s valuation would be at least $1 billion,” Boris Krasnojenov, head of research at Alfa Bank, said by phone. “Gold is very interesting for investors now, and GV Gold is a decent business.”

Bullion has climbed 10 percent in the past year to above $1,300 an ounce and should be able to reach $1,400 in 2018, Krasnojenov said.

GV Gold produced over 6.7 metric tons (215,410 ounces) in 2017, compared with 5 tons a year earlier, according to the CEO. Pikhoya said he wants to increase that to 10 to 15 tons a year.

Pikhoya was previously was CEO at Polyus Gold, Russia’s biggest gold miner, and led that company to a primary listing in London in 2012.

GV Gold may have its IPO in the first half of 2018 if it succeeds in making a suitable acquisition and the market is good, Pikhoya said. “If not, we are prepared to wait until the window in autumn.”

--With assistance from Ksenia Galouchko

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Alex Devine, Nicholas Larkin

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