The EBRD has agreed to acquire for 1.53 billion roubles a 5.26 per cent stake in GV Gold, a privately owned mining company that is one of Russia’s top 10 gold producers.
The investment in the company is part of an ongoing EBRD strategy to support the fragmented Russian gold mining industry’s competitive position by encouraging consolidation and backing players committed to developing their business in an environmentally and socially responsible way.
Gold is a sector where Russia needs to create world-class companies capable of raising the capital needed to develop the huge potential of the country’s abundant deposits and the EBRD is ready to play its part in the dynamic development of this industry, said the EBRD’s Director of Natural Resources, Kevin Bortz.
Apart from its track record, what makes GV Gold a good partner for the EBRD is its willingness to meet the Bank’s environmental and social requirements, as well as increase transparency and further improve corporate governance, Mr. Bortz said, adding that such commitments would facilitate GV Gold’s access to international capital markets.
EBRD negotiations with GV Gold began in the spring of 2010.
Russia is the world’s fifth largest gold producer. Its gold mining industry is in the process of restoring its former competitive advantages and is becoming one of the most interesting development stories in world mining. However, the Russian sector remains in need of substantial investments in exploration and new equipment.
GV Gold has ambitious targets to increase its own gold output and become one of the five biggest national producers. Its main asset is the Vysochaishy open pit mine in the Irkutsk region of Eastern Siberia.
The EBRD’s funds will cover a substantial part of the company’s capital expenditure programme up to 2014, thus encouraging the modernisation and development of a competitive production base in Russia.
GV Gold is controlled by its Russian founders, and one of its main outside shareholders until now has been BlackRock Funds, one of the world’s largest asset management firms, which holds a stake of just under 20 per cent in this private company.
Not including this transaction, the EBRD has previously invested a total of €60 million in eight gold mining projects in Russia with a total project value of €220 million.