Tuesday, mining and metals company Kazakhmys Plc (KAZ.L) confirmed that it is not currently contemplating the implementation of a combination through a structure that would be classified as a reverse takeover under the rules of the UK Listing Authority. The announcement follows after Kazakhmys noted on Monday it was in talks with an unnamed third party regarding a potential combination.
There were media speculations that Kazakhmys is in talks with Russia's Metalloinvest regarding a reverse takeover that would create $50 billion mining giant and would give the Russian company a London listing.
Responding to previous media reports of Kazakhmys' talks for potential combination with Metalloinvest, Kazakhmys, the Kazakh copper miner, on Monday confirmed its very preliminary discussions about a possible combination of its business with a third party that may or may not lead to an offer for Kazakhmys. The company added that it continues to evaluate a wide range of potential opportunities.
Kazakhmys had pointed out then that there is no certainty of the terms and structure of such a transaction as the talks are in a very early stage, however, any such deal would be subject to shareholder approval. To proceed with any transaction, Kazakhmys requires the consent of Vladimir Kim, its chairman and 39% shareholder.
With a reverse takeover of Kazakhmys, Metalloinvest, owned by Alisher Usmanov, the Russian oligarch with a stake in Arsenal Football Club, would get access to London without much trouble, the reports said.
Some analysts reportedly noted that a combination of Metalloinvest and Kazakhmys could result in a much larger group, because, with its sufficient bulk, it could make a bid for Eurasian Natural Resources Co., a Kazakh iron ore producer. In March, Eurasian Natural said that it was considering an offer for Kazakhmys, but later dropped the idea. Kazakhmys holds a 22% stake in Eurasian Natural.
In a separate statement, Kazakhmys said the Bozymchak Gold Project in Kyrgyzstan has successfully completed its pre-feasibility study. Also, its Board approved progressing the project to the feasibility stage, and approved a lead investment of up to $22 million for the project for establishing essential infrastructure, and ensuring that the project remains on schedule.
The company plans to complete the feasibility study by the end of 2008, and consulting engineers WorleyParsons will continue to manage the same. The extraction of ore is intended to commence in 2009, and the company projects annual production to reach 30 koz of gold and 7 kt of copper.
It was in July 2007 that Kazakhmys acquired the Bozymchak deposit in south western Kyrgyzstan as part of the assets of Eurasia Gold Inc. The deposit is estimated to contain combined indicated and inferred resources of 16.5 million tonnes with 0.95% copper and 1.58 g/t gold.
Oleg Novachuk, chief executive officer of Kazakhmys said, "Bozymchak is an attractive project and we are pleased that it continues to make good progress towards production. This is one of many opportunities that we believe exist in the region and we believe we are uniquely placed to bring these projects to full development."
KAZ.L is currently trading on the LSE at 1,476 pence, down 39 pence or 2.57%, on a volume of 650 thousand shares.
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