OAO MNPO Polymetal, Russia's biggest silver-mining company, plans to raise as much as $960 million from an initial public offering in London and Moscow.
Polymetal will offer 44 million new and 44 million existing shares for $7.25 to $9.50 and the price will be set February 7, the St. Petersburg, Russia-based company said in a Regulatory News Statement today. „I don't think any other region of the world has more growth potential in precious metals than Russia,” said Graham Birch, who helps manage $8.5 billion in precious-metals equities at BlackRock Investment Management in London. BlackRock plans to spend $100 million on the Polymetal offering, he said. Polymetal, which is wholly owned by billionaire Suleiman Kerimov's Nafta Moscow holding company, the biggest investor in the Russian stock market, will use the funds to boost silver and gold output, reduce debt and finance a gold mining venture with Johannesburg-based AngloGold Ashanti Ltd., the world's third-largest gold producer.
Silver supply has fallen short of demand since 1988, helping to attract investors including billionaires Warren Buffett and Bill Gates. Investors poured $1.5 billion in a silver fund since April last year, helping to send prices up 46% in 2006, the biggest annual advance in 27 years. Deutsche Bank AG, Merrill Lynch & Co. and UBS AG, which are arranging the sale, have an option to buy additional shares equivalent to as much as 15% of those sold to investors. Part of the funds from the IPO will be used to pay $300 million of debt to banks and $20 million owed to Pan American Silver Corp. for a stake in the Dukat silver mine, according to a marketing document sent to investors by the banks. Polymetal's gold-mining costs rose 25% to $299 an ounce in the first nine months of 2006 from the year before, the documents showed. Silver mining costs climbed 21% to $4.70 an ounce. (Bloomberg)