Russian gold miner Nordgold to capitalise on soaring commodity prices with £3.5 billion London IPO

by Jonathan Adams
gold miner

Russian gold miner Nordgold is reportedly gearing up for a London IPO to take advantage of rising commodity prices. Gold prices have been picking up again over the past couple of months after a 6-month bear market that followed the previous steep upwards trajectory for the precious metal. Nordgold, which operates nine mines in Russia, Kazakhstan and Burkina Faso, wants to strike while the iron is hot.



With the company reportedly ready to free float at least 25% of its stock, an IPO valuing it at around $5 billion (£3.5 billion) would see Nordgold enter London’s benchmark FTSE 100 index.

Demand for raw materials is generally booming, pushing prices up as economic growth takes hold as the Covid-19 pandemic slows across much of the developed world. Gold’s price has benefitted too thanks to its reputation as a hedge against inflation, which many investors see as a major risk over coming months.

The London Stock Exchange is already home to quite a number of gold miners and is now seen as the sector’s preferred listing destination. Canadian miners Yamana Gold and Wheaton Precious Metals recently listed their shares on the LSE. Both are also listed on the Toronta Stock Exchange and NYSE. A third Canadian gold miner, Endeavour Mining, will do the same this month, with Allied Gold, the Africa-centric miner also said to be planning a London IPO before the end of 2021.

Nordgold was originally a gold mining subsidiary of Russian steel company Severstal, owned by Russian billionaire Alexey Mordashov. It was spun out of Severstal in 2012 and was publicly traded in London via global depository receipts before being taken private again in 2017. At the time the company said the decision was taken on the grounds it wasn’t being fairly valued by investors.

A secondary listing will also be sought in Moscow. No new cash is being raised by the company via the IPO, with the Mordashov family and senior staff taking the opportunity to cash in on shares. The IPO will also, say Nordgold, keep its options open for potential future fundraising initiatives. It is expected to qualify for the premium listing that should see it enter the FTSE 100.

Last year the company produced over a million ounces of gold, generating adjusted earnings before interest, tax, and other charges of about $1 billion. Nordgold’s chief executive is Nikolai Zelenski. The former McKinsey consultant, who specialised as an analyst of the mining sector, has been in charge since the company was created as a Severstal subsidiary in 2007. He commented on the company’s IPO plans:

“Following a record year in 2020 and with a low-cost, low-risk development pipeline centred on the highly prospective Gross Region [in Russia], now is the right time for Nordgold to seek a premium London listing.”

This article is for information purposes only.
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