Alex Mordashov of Nordgold seeks takeover of High River Gold Mine
Nordgold, the illustrious Russian based gold producer is currently attempting to add High River Gold Mines to its holdings. High River Gold is Toronto operated with mining outfits based out of Russia and West Africa, last year reporting a company record net gold revenue of $564 million.
High River is currently finalizing the terms of a new deposit in South Africa, the project has ongoing costs of $250 million and is set to pour its first gold in early 2013.
Alex Mordashov, the Russian billionaire with the 89% controlling stake of Nordgold began the priming for a High River acquisition back in 2008. Mordashov completed a non-brokered private placement within the Canadian company under the shelter of OAO Severstal, Russia’s most extensive steel producer.
Severstal, of which Morshadov owns 82%, purchased 282 million High River shares providing the toronto based junior with $45 million worth of investment in exchange for 50% equity. The deal was conditional on the restructuring of the board of directors and the resignation of High River’s president and CEO David Mosher. Mordashov then filled the position with Nikolay Zelenskiy of Severstal and placed three additional Russian figures onto the board of directors.
Since this initial acquisition, finalized in 2008, Morshadov has been attempting to wrestle control of the remaining 50% equity.
2009 saw Severstal put in a bid for the remaining High River shares at 22¢ per share, after minority investors failed to be tempted the offer was raised to 30¢ a share. The latter saw an increasing transfer of equity to the tune of 12%, raising Severstal’s total holdings to 62%, still far short of Mordashev’s 100% goal. By the middle of 2011 through an eclectic mix of bid offers a further 82 million shares were grappled away from High River shareholders for prices as high as $1.29 per share.
Nord Gold now held 73% equity but the remaining 27% minority stake found shareholders unwilling to sell to the Russian company.
July 2012 heralded an announcement from Nordgold that it had managed to acquire 28% of the remaining High River shares. Nordgold’s offer included an option to convert shares in High River into debt at a rate of .285 Nordgold (GDR) per share. The paper value is currently traded on the LSE at around $5.00 per GDR. The alternate offer for the minority shareholders is a direct stock exchange at $1.40 in cash per share. The offer is a 17% premium relative to the closing prices of Nordgold and High River’s stocks on July 17th. Nordgold is assuming this margin will edge shareholders in the right direction, as High River’s value is temporarily inflated to approximately $1.2 billion.
High River still has 840 million shares outstanding for a current market value of $1.2 billion.
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