Nova Resources has submitted a final, sweetened offer for Kaz Minreals, valuing the company at around £4.1 billion, the company said on its website on March 26. Nova Resources has submitted a sweetened offer for Kaz Minreals, valuing the company at 869 pence per share.
Nova Resources, a consortium formed by Oleg Novachuk, Kaz's chairman of the board, and Vladimir Kim, Kaz's president and director, controls 39.5% of Kaz's shares.
The privatisation proposal was first made on 28 October 2020 at 640p per share;
Since then, Nova has proposed a substantial increase to 780 pence on February 4th, due to strong opposition from some minority shareholders.
On March 24, Kaz announced that NOVA Resources had received all external regulatory approvals to privatize Kaz.
After the increase, the consideration is 850p a share plus a special dividend of 27 cents, for a total of 869p.
The deadline for bids is April 9.
About the plate KAZ
Kaz develops and operates copper mines in Kazakhstan and Kyrgyzstan, including the Bozshakol open pit copper mine, Aktogay open pit copper mine and the Bozymchak open pit copper mine in Kyrgyzstan.
Its electrolytic copper and copper concentrate products are mainly sold to China.
The large capital expenditure requirements of Kaz's existing projects are the main reason for the proposed privatisation.
The Aktogay expansion project, expected to come on stream by the end of this year, is expected to cost $1.2 billion, while Russia's Baimskaya copper project, acquired in 2019, is expected to cost $8 billion.
It is worth mentioning that the infrastructure and sulphide ore concentrator of Aktogay Phase I were contracted by Sinochrome for a contract share of US $560 million.
In March 2019, CSC also invested 70 million yuan to acquire a 19.6% stake in Koksay Project, another project of Kaz.
Baimskaya, a large copper project in the Russian Far East
The project was acquired by Kaz in January 2019 for $900 million in stock and cash.
Baimskaya is said to be one of the largest undeveloped copper deposits in the world, with about 23 million tons of copper and 2,000 tons of gold.
The Peschanka copper deposit within the scope of the project has a copper resource of 9.5 million tons (average grade of 0.43%) and a gold resource of 470 tons (average grade of 0.23 g/t). The mine life is about 25 years, with an average production of 250,000 tons of copper and 400,000 ounces of gold in the first 10 years. The estimated operating cost is in the top quart of copper projects in the world.
The project was acquired with an estimated development investment of US $5.5 billion. Updated feasibility studies last year are expected to reach US $7 billion. The total investment, including infrastructure and tailings ponds, is likely to reach US $8 billion.
Last year, the Russian government drew up a package of infrastructure development plans around the mine, including the construction of ports, gas power stations, transmission lines, roads and so on, which has given the project a positive boost.
Even so, considering that the project infrastructure will last 7-8 years, the company will face significant cash flow pressure.
Kaz will produce 306,000 tonnes of copper and 196,000 ounces of gold in 2020.
Free cash flow reached $690 million.
Even if copper prices hold up, however, the company's current cash flow won't be enough to support the Baimskaya project's huge capital expenditure requirements.
Vladimir Kim is worth $4.7 billion and is ranked by Forbes as the 494 richest person in the world.
Kaz said the Baimskaya project financing feasibility study is expected to be completed in the first half of 2021.
This project is a noteworthy project for Chinese mining investors, EPC engineering companies and bank funds.
Kaz started listing Hong Kong as a secondary listing in 2011, but chose to delist because of poor trading volumes.
Compared with a few years ago, Hong Kong's mining capital market is significantly active, not only the southbound capital is fierce, but also began to attract the attention of international mining investment funds.
After the listing of KAZ in London, instead of considering the introduction of Chinese capital, will KAZ choose to re-list in Hong Kong?
Kaz has not yet set up an office in China, and it is expected that such work will be on the agenda once privatisation is completed.
