Gold miner Polymetal International said Monday it has struck a deal to sell its entire Russian mining business for $3.69 billion, aiming to exit the Russian Federation entirely due to combined threats of Western sanctions and nationalization by Putin's government.
If approved by shareholders, Polymetal will sell the company to Russian mining company JSC Mangazeya Plus, with the aim of refocusing its operations towards Kazakhstan where it currently operates two mines representing around a third of its total production.
The Anglo-Russian gold miner, founded in St. Petersburg in 1998, said the sanctions-compliant deal would see JSC Mangazeya Plus pay it $1.48 billion in cash, and also agree to settle the Russian sector's $2.21 billion debt.
Polymetal International shares fell 6% on Monday in Moscow, having lost 11% of their value over the past 12 months and 66% of their value since the Russian invasion of Ukraine began in early 2022.
In August 2023, the company abandoned its London listing and moved its headquarters from Jersey to Astana, the capital of Kazakhstan, aiming to avoid Russia imposing rules that had designated Jersey an “unfriendly jurisdiction” in response to Western sanctions.
Polymetal said it would allow shareholders to vote on the agreement at its next annual general meeting on March 7, with the company saying the sale would help avoid risks including those posed by operations seized or nationalized by the Russian government.
Polymetal said in a statement that it believes the deal to sell its Russian operations “represents the most feasible opportunity for the group to recover shareholder value by eliminating or significantly mitigating critical political, legal, financial and operational risks.”
The conclusion of the deal marks the end of an arduous process that Polymetal faced in finding a sanctions-compliant buyer for its operations in Russia, after it pledged to exit that country after the outbreak of war.
Polymetal's push to exit Russia became more urgent following the US State Department's decision to impose sanctions on its Russian subsidiary in May 2023, which barred US citizens from interacting with that unit.
The process of selling its Russian assets has been made more difficult by the strict rules imposed by authorities in both Moscow and Washington on any company looking to exit Russia.
Polymetal said it had received confirmation from the US Office of Foreign Assets Control (OFAC) that those involved in the sale to JSC Mangazeya would not be subject to sanctions, and made clear that any payments would be made via sanctions-compliant financial institutions.
JSC Mangazeya Plus is the mining company of the Mangazeya Commodities Group, controlled by Russian billionaire Sergei Yanshukov, who started his career as an oil trader in Ukraine.
If completed, the deal will see Polymetal retain its position as the second-largest gold miner in Kazakhstan, controlling two mines holding an estimated 11.3 million ounces of gold.
