Highland snaps up gold project to extend footprint in Russia

RUSSIA-focused miner Highland Gold said yesterday it had acquired a gold deposit for $212m (£140m), as it further cements its presence in the Chukotka region of Russia.

The London-listed firm has acquired CJSC Bazovye Metally, which holds the exploration rights to the Kekura gold deposit and surrounding licence area in the Chukotka region, around 250km east of Highland’s existing Klen development project.

The junior stock market listed miner, which has assets in the Khabarovsk and Zabaikalsky regions of Russia as well as in Kyrgyzstan, will also pay a further $11m in the second half of 2013 to a contractor once the pilot plant – which can produce up to 150,000 tonnes a year – has been finished.

The merger, which has already received approval from the Russian anti-trust authorities, will be funded using cash and a new $250m debt facility with Gazprombank, which will also be used for general working capital.

The main plant, which is due to be fully operational by 2017, is expected to produce between 180,000 and 220,000 ounces of gold each year.

Shares in Aim-listed Highland Gold soared yesterday to close up 13.12 per cent at 97p, as investors were cheered by the news of the acquisition.



Numis Securities is acting as the nominated adviser and joint broker to Highland, with Alastair Stratton, Stuart Skinner and James Black working on the deal.

Stratton, head of corporate finance at Numis, has worked with several junior stock market-listed firms including Helius Energy, TomCo Energy, Oxford Catalysts and International Ferro. Most recently, Stratton has advised Central Asian-focused Chaarat Gold on discussions with Shandong Gold Mineral Resources Group regarding a potential transaction. He also advised Canadian miner Nautilus Minerals on its unsolicited bid from a little-known Canadian investor Michael Bailey.

Before joining Numis, Stratton has worked for Matrix Corporate Capital.

Skinner, director of corporate finance at Numis, has also worked with a variety of Aim-listed firms.

Alongside advising Chaarat Gold and Nautilus with Stratton, Skinner has advised Eco City Vehicles, engineer Renew Holdings and insurance firm Randall & Quilter. Skinner, who joined Numis in December 2003, previously worked for law firm Travers Smith.

Black, Numis’ director of corporate broking, has worked with companies including technology firm Abcam, Allocate Software and healthcare software supplier EMIS Online.

Last year, Black had a role on the initial public offering of pharmaceutical company Clinigen Group, alongside colleague David Poutney. Last month, Black worked with the pharmaceutical firm as it acquired oncology support therapy Cardioxane from Novartis for $33m.

The trio from Numis Securities are joined by Charlie Peat from Peat & Co, which is acting as joint broker.