Petropavlovsk pours cold water on UGC merger reports
Russian gold mining giant Petropavlovsk has poured cold water on reports that it is considering a potential merger deal with largest shareholder UGC.
In an interview with the Telegraph, the FTSE 250 firm’s chief executive Pavel Maslovskiy said that discussions between the firms were at an early stage but the deal could “definitely happen”.
If a merger did occur, the new company would become Russia’s largest gold miner.
However, in a statement this morning Petropavlovsk insisted that “it is not currently engaged in any transaction discussions with UGC”.
In February UGC took a 22 per cent stake in the firm, which owns four mines in the far east of Russia.
Speaking to the Telegraph, Maslovskiy said: “Recently, a 22pc stake moved to other hands, to UGC, which produces roughly what we produce.
“We’re similar in the size, but they are private, and we are looking at each other, I would say.
“It can definitely happen, because the company is private, and it can happen fast”.
Shares in the natural resources firm initially surged this morning on the back of the comments, before paring their gains.
Petropavlovsk has been one of the mid-cap index’s best performing stocks over the past year, having tripled in value since this time in 2019.
As a result of the coronavirus crisis, investors have rushed to put money into safe haven assets such as gold, which means that the firm has avoided the same kind of share collapse that has afflicted many other listed bodies.
Its impressive performance comes in spite of a long-running boardroom battle which saw Maslovskiy quit the company before returning last year.
City PM has contacted Petropavlovsk for further comment.