Russian Gold Miner Mulls IPO to Raise $200 M

Russian gold miner OAO Uzhuralzoloto Group of Companies is planning to sell 25 per cent of its shares through an initial public offering (IPO) at the London Stock Exchange in order to raise $200 million funds this spring.

"We are absolutely ready (for the IPO), we have complied with all requirements and wait for a favorable moment," the Russian business daily Kommersant quoted Konstantin Strukov, Board Chairman of the OAO Uzhuralzoloto Group of Companies as saying on Thursday. The specific purpose of the eyed$200 million funds was not detailed, however.

An IPO is a corporation's first sale of common shares to investors on a public stock exchange. An IPO's main purpose is usually to raise capital for the corporation. IPOs are effective instruments at raising capital. However, because it is listed on a public stock exchange, the concerned company should ensure to comply with heavy regulatory compliance and reporting requirements.

Strukov said the OAO Uzhuralzoloto Group of Companieshas not chosen a lead manager yet to undertake the IPO. But the Russian banking industry believed the company's IPO might be led by Renaissance Capital, Kommersant reported.

An IPO, being a company's first public issuance of shares, assumes the said company is big and successful enough, as well as has the required track record to raise capital in the public equity market.

However, an investment banker asked by the paper said the company's IPO might not work favorably as per expectations primarily because investors currently seek high liquidity given the unstable world fiscal conditions.

The OAO Uzhuralzoloto Group of Companies had tried to hold an IPO for three times from 2008 to 2011, but all did not push through. The same could happen again for this 2012 IPO.

OAO Uzhuralzoloto Group of Companies is one Russia's major gold mining companies in terms of production volume, the group said in its website.

The company has 10 major gold mines in Russia, including the Svetlinskoye, Kochkarskoye, Вereznyakovskoye, Southern and Western Kurasan in the Chelyabinsk region; the Darasunskoye mine in the Zaitsevskoye, Zabaikalskiy territory; the Drazhny in the Krasnoyarsk territory; and the Kommunarovskoye mine in Khakassiya Republic. The Svetlinskoye and Darasunskoye sites are among Russia's largest 15 gold deposits.

The company owns gold deposits with overall reserves at about 12.5 million ounces. The Group employs over 3,000 people.