The Polymetal International PLC PK (LON: POLY) share price rallied 26.56% after its CEO, Vitaly Nesis, announced plans to sell its Russian operations within six months. The CEO noted that the company expects significant benefits from the deal.
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The news was first broken by Financial Times on Sunday. In the report, the company confirmed that it has already received bids from several Chinese and Russian miners about its Russian operations.
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Polymetal recently completed redomiciling its operations from the UK’s Jersey Islands to Kazakhstan and said it would use the sale proceeds to boost its operation in the new jurisdiction. The company noted that it has a clear business purpose to operate in Kazakhstan.
The sale process could be delayed by the requirement to gain approval from Russia’s Federal Antimonopoly Service before proceeding. As with any regulatory approval, we cannot rule out the possibility of delays as regulators assess the merits and demerits of the deal.
Earlier this month, on 10 August 2023, the company completed the re-domiciliation process and started trading on the Astana International Exchange in Kazakhstan. The AIX became Polymetal’s primary exchange following the re-domiciliation.
The move to Kazakhstan was first proposed in May this year. The company explained that the move was in the best interest of the company and its stakeholders and would remove several “significant” restrictions facing the company.
As a gold and silver producer with assets in Russia and Kazakhstan, the company’s operations were adversely affected by the Russia-Ukraine war as numerous sanctions were imposed on Russian people, entities and sectors, with Russia adopting counter-sanctions.
Russia designated Jersey Island as an “unfriendly jurisdiction”, which hindered the company’s ability to conduct its corporate activities with Russian operations. The company noted that the sanctions placed significant risk on its continued existence.
Consequently, Polymetal decided re-domiciliation was a “necessary and critical” step to preserve shareholder value. Therefore, it is surprising to see Polymetal decide to sell its Russian operations a few weeks after it re-domiciled its operations to Kazakhstan.
However, investors' positive reaction to the decision indicates that they support the decision to divest the Russian operations, which is a pleasant surprise.
Polymetal share price.
The Polymetal share price rallied 26.56% to trade at 202.50p, from Friday’s closing price of 160.00p.
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