The Russian miner Petropavlovsk PLC (Petropavlovsk), previously known as Peter Hambro Mining, on Monday, June 7, announced that it has agreed terms for a $60 million equity investment in its non-precious metals division by Hong Kong-based investors.
Accordingly, Asia Resources Fund, a subsidiary of General Enterprise Management Services Limited (GEMS), and CEF Holdings Limited (CEF) have agreed to invest $50 million and $10 million respectively in the non-precious metals division of Petropavlovsk in return for an equity stake in a new holding company for the division. This investment values the equity in the non-precious metals division of Petropavlovsk at $860 million following the investment. The company continues to explore strategic options including a possible listing on the Hong Kong Stock Exchange.
"We are extremely pleased to have GEMS and CEF committing capital to our non-precious metals business and their participation in our growth story is testimony to the underlying confidence in the opportunities in the iron ore market in China. Our potentially world-class iron ore business is focused on the nearby Chinese market with considerable economic advantages in both geography and transport costs over most other major iron ore suppliers to the Chinese market - we are around 19,000 kilometers closer to China than our Brazilian competitors," Petropavlovsk's CE Peter Hambro stated.
Petropavlovsk also says advanced debt finance discussions to fund stage 1 of its Kimkano-Sutarskiy iron ore mining operation are progressing well with Industrial and Commercial Bank of China and Sinosure, the Chinese state export credit agency. As SteelOrbis previously reported, the ten-year loan is currently estimated at about $400 million, and with a total limit of $500 million.
Meanwhile, Petropavlovsk's first iron ore operation, Kuranakh, is ramping up its output following the successful commissioning of its processing plant in May 2010.