Norilsk May Lose Controlling Stake in Stillwater After Sale of New Shares

OAO GMK Norilsk Nickel, Russia’s largest mining company, may lose its controlling stake in Stillwater Mining Co. after the U.S. palladium producer issues new shares to acquire Canada’s Marathon PGM Corp.

Stillwater said yesterday it agreed to pay C$62 million ($59 million) and issue 3.9 million new shares to acquire Marathon PGM as it seeks to increase production of platinum group metals by 40 percent in three years.

Norilsk’s ownership of Stillwater would be diluted by about 2 percent as a result, Frank McAllister, Stillwater’s chief executive officer, said yesterday on a conference call. Norilsk currently owns 51.7 percent of the palladium company, according to its annual report.

The Moscow-based nickel producer has previously indicated it may dispose of its Stillwater holding. CEO Vladimir Strzhalkovsky said in June he had a “shortlist” of potential bidders and sought a market price plus a premium for the asset.

Norilsk is still considering its options with regard to Stillwater, the company said today in an e-mail. The acquisition of Marathon PGM will be “positive” for Stillwater, it said.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net.

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