ALMATY/FEB. 4 2021 (The Bulletin) —  Nova Resources, a company linked to the Kazakh elite, increased its offer to buy miner KAZ Minerals off the London Stock Exchange by 22% because of rising copper prices.

In a takeover bid that has become increasingly acrimonious, Nova Resources, which is led by KAZ Minerals chairman Oleg Novachuk and former chairman Vladimir Kim, wrote to shareholders to promote what it said was a “compelling valuation”.

“The major reason we want to take this company off-market is because as a public company we do not have enough entrepreneurial flexibility to run this kind of risk,” the letter said.

Some analysts take a different view. They have said that both Mr Novachuk and Mr Kim are close to the top of the Kazakh elite and that these elite have now decided to pull in their assets. This includes, the analysts said, taking KAZ Minerals off the London Stock Exchange.

And there is precedence. In 2013, after a number of corruption allegations, the founders of ENRC took the company off the London Stock Exchange. ENRC was also a Kazakh mining company linked to the Kazakh elite.

Last year, KAZ Minerals bought the $8b copper mine Baimskaya in Chukotka, Far East Russia. The project, one of the biggest copper projects in the world, has been delayed because of a Russian government drive to upgrade infrastructure across the remote region that will slow the Baimskaya development.

Nova Resources wants to buy the 61% of KAZ Minerals that it doesn’t own but some shareholders have said that the new offer is still too low. 

“As we forecast that KEC Minerals will generate more than $5.5bn of ebitda over the next three years, it is our opinion that the £7.80 per share offer price still materially undervalues the company,” said London-based fund RWC Partners.

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— This story was first published in issue 471 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021