Russian miners look to London listings for fresh funds

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The Independent Online

Two Russian mining companies, including the country's biggest diamond producer, are planning to raise funds by listing on the London stock market.

Alrosa, the state-owned producer of a quarter of the world's uncut diamonds, is considering raising up to $700m (£440m) through an initial public offering of a stake in a key subsidiary.

Separately, Trans-Siberian Gold is preparing to come to market later this year, with the financial adviser Collins Stewart Tullett currently drawing up a prospectus.

The Russian mining industry, rich in national resources but starved of capital for decades, is looking to the West to fund development.

A handful of British entrepreneurs have bought up Russian mining assets and have used the London stock market to fund development costs. These include Peter Hambro Mining, Celtic Resources and Highland Gold. Trans-Siberian Gold, run by Jocelyn Waller, would be a similar, relatively small, listing.

Russia offers the opportunity to acquire potentially valuable assets on the cheap and smaller mining groups have entered the market, while the political and operational risks have kept bigger foreign groups away.

Alrosa would be the first Russian-run and owned business to use the London market to raise funds by taking a full listing. The company needs a significant cash injection to finance development of the giant Lomonsov field in Russia's Arkhangelsk region, held through its majority-owned Severalmaz subsidiary.

The company has also been in talks with an unnamed UK investment company to fund the project instead. It is thought that Alrosa is talking to Fleming Family & Partners, an investment group. It was founded only three years ago but the Fleming family, who formerly owned the Robert Fleming investment bank, have historically strong links to Russia.

Last week Alrosa's president, Vladimir Kalitin, said the company was weighing up both options. "This is a question of who will give more money," he said. There was a preliminary agreement to sell a stake in Severalmaz to Fleming earlier this year but both sides have since raised doubts over this deal.

Alrosa is studying a plan to list on London's Alternative Investment Market next year, selling up to 46 per cent of Severalmaz, which owns licences to Lomonsov. The field contains some 18 per cent of Russia's diamond reserves. It has indicated that it is looking to raise $350m to $500m - other sourcesput the figure at$700m.

Trans-Siberian is well advanced on its Aim listing, which is expected in late October or early November. The company is looking to raise around £10m.

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