As Russian/British foreign relations continue to plummet, here at Mining Feeds we feel it’s high time to pursue our monitoring of the continuing internal machinations at our favourite London-listed Russian gold miner, Petropavlovsk (LSE: POG)[1].

Within the past couple of months, the attempted murder of a former Russian spy in a sleepy British town[2], coupled with Britain’s vocal condemnation of Russia’s annexation of Crimea and intervention in Ukraine and Syria[3], along with Britain’s support of the US sanctions against prominent Russians, have plunged London-Moscow relations to an all-time low.

But while diplomatic relations freeze over, shenanigans at Petropavlovsk are heating up.

The dormant current board – who ousted POG co-founders Peter Hambro and Pavel Maslovskiy in a much publicized coup last June, the twists and turns of which were followed here at Mining Feeds[4]  – continue to fail on delivering on their transparency pledge[5].

Shareholders will be particularly delighted by the serendipitous exit by Viktor Vekselberg in December of his 22% stake, as the Russian and his Renova Group got shamed this month by stringent US sanctions. Never has a Kazakh been more welcome in London as businessman Kenes Rakishev with his investment in the gold miner.

One of a new breed of Kazakh investor, Rakishev has in many ways been POG’s knight in shining armour, buying up Vekselberg’s old stake. Still little known in the UK, in his home country Rakishev is a recognised and respected entrepreneur, still best known for his investment in Kazakhstan’s Kazkommertsbank and co-ownership of Kazakhstan-focused base metals producer Central Asia Metals Plc (AIM:CAML).

He has a strong history in natural resources in Kazakhstan and, according to the few interviews he has done so far, Petropavlovsk is his first premium listing in London on which he intends to focus a great deal of time going forward. Well, that sure is reassuring after the company’s sorry experience with the still-bewildering “Renova board shake-up then cut-and-run” chapter.

Central Asia Metals is a copper, zinc and lead production and exploration company, with operations in Kazakhstan and Macedonia. Under the direction of Rakishev, its valuation has grown from $100 million to $800 million. Now that’s got to be a track record to thrill any corporate board. So, it is pretty puzzling that POG’s chief appear not to be drawing on their new Kazakh investor’s counsel.

Rakishev has been open about his desire to give Petropavlovsk a fresh start and to bring the sluggish company to a position of growth with a robust M&A strategy to acquire undervalued gold assets across Russia and Central Asia[6], and to bring back the erstwhile Pavel Maslovskiy as CEO, for him to complete his pressure oxidation processing plant at the company’s Malomir mine[7].

Talk to anyone in-country and they will tell you that POG continues to boast an excellent operations team and, along with its underground mining and POX Hub implementation, has the potential to be performing much better than current results suggest.

Worryingly, the board has stayed quiet on its reception of Rakishev’s vision, while offering no vision of its own. Instead, after no action for nine months to strength the company’s leadership team, they’ve announced the appointment of a different CEO with arguably little mining experience: Roman Deniskin, who is due to take the reins next week.

Will shareholders have to wait until the next AGM in June to hear a proper strategy from the board? Or will the new CEO be the breath of fresh air that is so needed? So far, the silence is deafening.








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