Director of Equity Financing, FINAM Investment Company, Moscow
There is a lot of material on the Internet about Russia's gold mining industry and different ways to invest in it. Here at Russia Blog, I would like to present one example of a Russian company that is mulling an IPO later this year on the London Stock Exchange (LON:LSE) Alternative Investment Market or Canada's Toronto Stock Exchange (TSE:X). This mining operation is not large, but it shows the potential for greater investment in Russian gold mining. Renaissance Capital's Pre-IPO Fund has already bought equity in the company. (RosBusinessConsulting recently wrote an article about RenCap's pre-IPO fund which you can read here).
Location of Khabarovsk Krai - near the Chinese border in Russia's Far East
Golden League Limited was founded in the summer of 2006 by the former CEO of Highland Gold Mining (SEA:HGM) for the purpose of exploring and developing gold deposits in Russia's Far Eastern Khabarovsk region. The current management is former a Highland Mining employee and the shareholders include the UK-based mining company Flemings Family & Partners. Golden League Ltd. is currently developing the gold project, which consist of a 4.8 square kilometer deposit and the surrounding ore field (348.2 sq km), located 366 miles east of Khabarovsk.
As I mentioned above, Renaissance Capital's pre-IPO Fund invested $5 million and is now the largest financial investor. This purchase price implies an estimated company valuation of 4 x EV/EBITDA 2008. The current round of financing will be used to finalize payment for the company, which acquired a new license ($1.5 million) and is continuing exploration work on the edge of the old and new licensed plots.
Source: Renaissance Capital
Another round of financing will be needed to continue exploration in a new plot and to conduct a feasibility study for a ore processing facility. However, if the result of the reclassification is not sufficient to reach the target capitalization expected for the IPO, shareholders may choose to raise private funds and postpone the public offering for one more year.
The Company has identified its "market niche," as exploring quality, lesser-known deposits that are available for acquisition. Once acquired, the Company's team has the experience necessary to plan and execute phased exploration programs designed to economically evaluate the full geological potential of each project.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and are reproduced here solely for educational purposes. To read more Russia Blog posts about Russian capital markets, click on the finance section or type www.russiablog.org/finance in your web browser.