Polymetal finds way out of its geopolitical headache
Miner will exit Russia, but without much to show for it
Gold miner Polymetal is selling off its Russian assets at a bargain price, to avoid the threat of nationalisation.
The miner, which was previously listed in London, has been caught in a geopolitical bind, facing pressure of US sanctions on one side, and the threat of expropriation in Russia on the other.
Shareholders will vote on an offer from Mangazeya Mining next month, meaning the deal could close in March of this year.
The exit from Russia was driven by the rising risk of "nationalisation or other form of property expropriation," Polymetal said.
The company has been looking to sell its Russian assets since they were placed under US sanctions in 2023 in response to Moscow sending troops into Ukraine in February 2022.
The transaction values Polymetal's Russian business at about $3.69bn, 5.3 times its earnings before interest, tax, depreciation and amortisation for 2023.
Once an intragroup debt to the Russian Business has been paid off, and accounting for net debt held by the segment, Polymetal expects to receive around US$300 million from the deal, which is intended to be used to finance the Ertis POX development project in Kazakhstan, as well as increase liquidity.
The relatively low valuation of deal reflects the difficulty of exiting from Russian businesses, and specifically in finding a sanctions-compliant buyer.
Polymetal will now focus on its Kazakh assets, after relocating its headquarters to that country last year.
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