Severstal boosts stake in High River Gold

Finance

Publishing Date: 28 May 2010 5:19pm GMT
Author: Mining Journal

Severstal OAO gold’s subsidiary has announced the purchase of an 18.8% stake in High River Gold Mines Ltd from an affiliate of Russian investment bank, Troika Dialog.

The purchase of 150 million shares, worth about C$120 million (US$115 million) boosts the Russian steelmaker’s total holding to almost 68.9%. Richard Ogdon, the Troika nominee on High River’s board, has resigned as a result of the transaction.

In the first three months of 2010, High River’s mines produced 77,762oz of gold (with an estimate of 300,000oz for this year) at a total cash cost of US$624/oz from the underground and open pit mines in Russia and the one operation in Burkina Faso.

The company also has two exploration projects, the Prognoz silver project in Russia, and the Bissa gold project in Burkina Faso.

Severstal originally gained control in High River by participating in private placements in November 2008 and June 2009.

Earlier this year Severstal entered into a tussle for control of Crew Gold, owner of the LEFA gold mine in Guinea. The company purchased a 27% stake in the miner and announced intentions to make an offer. However, no offer was made after Canadian bank Endeavour Financial Corp raised its holding to 43%.

Recent news reports say that Severstal has hired advisors for the London listing of its gold unit this year.