Mining giant Nord Gold unveils plans to float in London

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Nord Gold plc has unveiled its intention to list on London’s main market, having already applied to trading on the Moscow Exchange.

The firm is a pure-play, internationally diversified gold producer with over 1mln ounces of production per annum and more than US$1bn of adjusted underlying earnings (EBITDA) in 2020.

It operates nine mines located in the Russian Federation, Kazakhstan, Burkina Faso and Guinea.

Production has increased at an annual growth of 15% between 2008 and 2020 while proved and probable gold reserves stand at 15.2mln ounces.

The group is targeting approximately 20% production growth and a reduction in operating costs over the next five years.

The float comes at a time of strong gold prices, with the spot sitting at US$1,906 per ounce, having recovered from lows of US$1,700 in March.

The precious metal is benefited from a stalled rally in US real rates, incremental lift in US inflation and the US Federal Reserve’s relatively high tolerance for inflation, according to analysts at Liberum.

Under a new dividend policy announced in March, US$400mln will be allocated for two dividends to be distributed in the year. With effect from 2022 financial year, Nordgold intends to pay minimum dividends equivalent to 50% of free cash flow.

Citigroup, JP Morgan and VTB Capital are acting as joint global co-ordinators and joint bookrunners for the IPO.

The company is controlled by Russian billionaire’s Alexey Mordashov’s family, after he gifted 65% of shares to his two eldest sons in 2019.

“Following a record year in 2020, and with a low cost, low risk development pipeline centred on the highly prospective Gross Region in Russia, now is the right time for Nordgold to seek a premium London listing,” said chief executive Nikolai Zelenski.

“We believe the combination of scale, a strong development pipeline, ambitious growth plans and excellent track record, together with consistent free cash flow generation, disciplined capital allocation, low leverage and a commitment to shareholder returns, makes for a compelling investment case.”

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