Russia Richest Man Delists Gold Miner in London on Low Value

  • Nordgold will delist GDRs from LSE and buy out shareholders
  • Board said mining firm isn’t fairly valued by investors

Nordgold SE, the gold miner owned by billionaire Alexey Mordashov, plans to delist from the London Stock Exchange because the company isn’t fairly valued.

The global depository receipts are undervalued because of their low trading volume and liquidity, caused by the company’s capital structure, and changes to performance are unlikely to overcome this “structural disadvantage,” the company said.

Alexey Mordashov

Photographer: Simon Dawson/Bloomberg

“The fact is our GDRs have never reflected the true value of the business,” Chairman David Morgan said in a statement released by the company.

Nordgold’s withdrawal from the London market marks a failure in the company’s strategy to achieve a stronger presence in the city to attract more international investors. It re-domiciled to the U.K. from the Netherlands in June, but needed more freely traded shares to be eligible for a primary listing.

London Stock Exchange rules require companies to have at least 25 percent of their stock as free float. Mordashov currently owns about 91 percent of the company.

Nordgold, which has gold projects in Burkina Faso, Russia and French Guiana, has rallied 38 percent in the past year. It has a market value of $1.3 billion. The stock trades at 6 times earnings, representing a 60 percent discount to Polymetal International Ltd., another Russian gold miner, BCS Global Markets said on Jan. 27.

Trading is expected to cease on March 8, Nordgold said. Minority shareholders can choose to sell or keep the shares. They can tender the shares until March 16 and the company will pay $3.45 per GDR. Those who choose to stay will have four other opportunities to sell shares at same price, the company said.

Nordgold plans to keep paying dividends and to continue publishing regular financial results.

The company will seek to return to a public listing when it can achieve a fair valuation, probably after starting up a large new project in Siberia, CEO Nikolai Zelenski told reporters on a call. It may consider the London or Toronto stock exchanges among others, he said.

Before it's here, it's on the Bloomberg Terminal.