Polymetal prepares to shift listing from London to Kazakhstan

Polymetal is preparing to relocate its domicile from Jersey to Kazakhstan, so that the Anglo-Russian gold miner can carve out its Russian business in the wake of sanctions and war.

Until recently one of the most profitable gold miners in the world and a FTSE 100 company until last year, Polymetal has become emblematic of the difficulties in navigating mounting sanctions against Russia, despite not being targeted itself.

By redomiciling to Kazakhstan, the company could be allowed by Moscow to split its assets, carving out its Kazakh and Russian mines into separate entities.

Russia has banned asset sales by gold miners domiciled in “unfriendly” places such as Polymetal’s current choice of the Channel Islands.

“This would allow for the restoration of shareholder value, because the Kazakh business would re-emerge without being under the shadow of sanctions,” chief executive Vitaly Nesis told the Financial Times.

The redomiciling could be accomplished by the third quarter of this year, allowing for the split to take place potentially in the first quarter of 2024, he added.

By separating the assets, shareholders in the Kazakh mines — which accounted for more than half the company’s profits last year — could enjoy a more favourable valuation, Nesis said. The structure would also allow shareholders in the Russian mines to receive their normal dividends, which are currently blocked.

The group has eight gold and silver mines in Russia, and two in Kazakhstan. Its main holding company is incorporated in Cyprus and is owned by a Jersey-domiciled entity listed on the London Stock Exchange.

Polymetal last year produced 1.7mn ounces of gold equivalent, 2 per cent higher than in 2021, and has forecast similar production levels this year.

Sales of gold — which had temporarily fallen as sanctions forced the company to find new buyers for its Russian-produced metal — recovered by the end of the year, partly because of a surge in buying by Russian retail investors.

The Astana International Exchange (AIX) does not have arrangements in place that allow proxy voting for remote shareholders, but Nesis said Polymetal was working with AIX to make sure the infrastructure for this was put in place.

He said that while he would like to remain listed in London, this would probably be impossible once the redomiciling was complete. Polymetal’s efforts to list depository interests in London had been “denied” by service providers that “refused to deal with us”, he added.

The EU’s ninth sanctions package, adopted in December, prohibit new investment in the Russian mining sector.

The company’s share price dropped 10 per cent at market open on Wednesday before recovering some of its fall to trade 3 per cent down by late morning.