Abramovich may raise stake in Highland Gold

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The Independent Online

Roman Abramovich, the billionaire owner of Chelsea Football Club, is preparing to tighten his grip on Russia's vast resources industry after a 20 per cent stake in Highland Gold came on to the market.

Mr Abramovich, who already owns 40 per cent of Highland Gold through his Millhouse Capital investment vehicle, is eyeing at least some of the £100m worth of shares that have become available in the company, which is listed on London's AIM but operates in Russia.

The stake is being sold by Canada's Barrick Gold, the world's biggest gold producer, which, after nine years as an investor, has decided that Russia – home to the world's second biggest gold reserves after South Africa, is "non-core to its business operations and strategy".

Mr Abramovich, pictured, emerged yesterday as one of a series of potential buyers for some, or all, of Barrick's stake.

"We wouldn't rule out buying part of it, but we think our current 40 per cent shareholding is high enough to represent our interest in the company and give us a say in its management," a Millhouse spokesman said.

Analysts said other potential buyers included Polymetal, the FTSE 100, Russia-focused gold producer, as well as foreign gold miners which already have an interest in the country, such as Canada's Kinross.

Despite Barrick's promise to sell its stake through an "orderly process", shares in Highland tumbled nearly10 per cent after Barrick's announcement, before recovering some ground to end down 4 per cent at 163.5p.

Barrick's decision to sell the stake comes a fortnight after Highland announced it had missed its 2011 production target.

Highland produced 184,102 ounces of gold at its three mines last year, compared with its already-reduced forecast of between 190,000 and 200,000 ounces. The group blamed poorer than expected ore quality at one of its three mines – the Mnogovershinnoye mine in the Khabarovsk region near the Chinese border.

After tumbling from a record $1,920 an ounce in September to less than $1,550 an ounce by the end of 2011, gold has rebounded this year and stood at $1,727 yesterday afternoon. Thomson Reuters forecasts that it could breach $2,000 later this year or early in 2013, as investors seek safety amid expecations of rising inflation.