KAZ Minerals has pirated Roman Abramovich and his partners

Kazakhstan's KAZ Minerals company will buy out a "paper" Baim copper project in Kamchatka for $ 900 million. The cost of developing this field is more than 5.5 billion dollars.
KAZ Minerals will receive a controlling stake and the possibility of a full buyout of the project to develop a large Baim copper deposit in Chukotka, owned by Roman Abramovich, Alexander Abramov and partners. KAZ Minerals competed for the asset primarily with MMC Norilsk Nickel (Mr Abramovich and Abramov - minority shareholders of MMC), but offered the best conditions: $ 900 million in cash and in shares. The deal should be closed in the spring of 2019 after approval by the authorities and regulators. Analysts note that Norilsk Nickel already has development projects in Taimyr, and for KAZ Minerals Baimka will be a serious challenge.

Kazakhstan's KAZ Minerals, whose largest shareholders are Vladimir Kim, president of the company (33.4% at the end of 2017) and head of its board of directors Oleg Novachuk (7.8%), buy 75% of the project to develop a large Baim copper-porphyry deposit in Chukotka ( Peschanka) from Roman Abramovich, Alexander Abramov and partners for $ 675 million ($ 436 million in cash, the rest in shares - about 5% of the current share capital) and get an opportunity to buy out the remaining 25% of the project for $ 225 million in cash or shares if the project receives infrastructure and tax benefits from the state until March 31, 2029, otherwise the payment will be made in cash).

Resources throughout the Baim area - 23 million tons of copper and 2 thousand tons of gold (64.3 million ounces), was disclosed earlier. The license for Peschanka with reserves of 7.1 million tons of copper is owned by the Baimsky GDK until 2033, co-owned by Roman Abramovich (about 25%), Alexander Abramov and other businessmen (details are not disclosed). The KAZ Minerals report says that the resources of the Gerbils by JORC are 9.5 million tons of copper and 16.5 million ounces of gold.

Investments in the project are estimated at $ 5.5 billion. Baimsky GOK should produce 476,000 tons of copper concentrate (148,000 tons of copper) and 276,500 ounces of gold per year, the launch is scheduled for 2024-2025. At the same time, in the first ten years the output should be 250 thousand tons of copper per year and 400 thousand ounces of gold.

The fact that KAZ Minerals is close to the deal on Baimskaya, "Kommersant" reported on June 1. Then the sources of Kommersant said that the Kazakh company offered the most favorable conditions, and in addition to MMC Norilsk Nickel, which had long considered the prospects of entering the project, but could not agree on the deal (including because of the newly flared up joint-stock conflict "Interros" "Vladimir Potanin and" Rusal "Oleg Deripaska), there were some new" Russian investors ". Vladimir Potanin offered to buy Baimka in installments for $ 750 million, including using Interros as an intermediary. Before that, in 2012, 75% of Baimka was planning to buy out BHP Billiton for about $ 1 billion, but the deal was not closed.

Oleg Novachuk said that the acquisition of Baimskaya would allow the company to continue its growth strategy, while the copper market is projected to enter a period of significant supply shortages.

President of investment company Invest AG Alexander Abramov, who manages Baimskoy, Sergey Bratukhin told Kommersant that the works carried out in recent years, including the preparation of the Pre-Feasibility Study in accordance with international standards, allowed Baimskaya out of the "prospective ore manifestation" to be one of the largest copper projects world scale. "The project has repeatedly successfully passed due diligence from potential strategic and financial partners, which confirms its quality and potential," the top manager noted. He recalled that the involvement of the strategic industrial partner "has always been part of the strategy for the development of the project," and KAZ Minerals was chosen "in the competitive process, which also involved Russian and foreign companies." Millhouse Roman Abramovich was added to Kommersant that KAZ Minerals "is capable of bringing the project to the next stage, and it will be good for the development of Chukotka."

Since Baimskaya belongs to federal subsoil plots (over 500,000 tons of copper and 50 tons of gold), while KAZ Minerals is a foreign investor, closing the deal requires the approval of a government commission on foreign investment.

The parties plan to receive it in the first quarter of 2019 and close the deal by 75% in the first half of the year. In "Norilsk Nickel" they refused to comment.

Andrei Lobazov from Aton says that the amount of about $ 1 billion is "not that much money for Norilsk Nickel", but the market is now closely following the level of net debt of the company that influences the amount of dividends, and in addition, Baimskaya requires large-scale investment, which would also affect the payments to shareholders in the future. The MMC has many promising projects in the region of its presence, including a joint venture with Russian Platinum, so Baimskaya was more of an option, but not an obligatory project, the analyst believes.

Oleg Petropavlovski from BCS agrees that, given the large joint project with Russian Platinum and the ongoing modernization of Norilsk Nickel, it would be hard to deal with the Baim project. The main thing is that now KAZ Minerals, which has not yet worked with such large-scale projects, has dealt with it, he says, noting also the difficult weather and navigation conditions in Chukotka.