Polymetal filed an application for delisting from the Moscow Exchange

Mining company Polymetal International, which changed its name to Solidcore Resources in June, has applied to delist its shares (ticker POLY) from the Moscow Exchange. In the spring, the company closed a deal to sell its Russian business.

The decision was made in connection with the sanctions of the US Treasury against the trading platform: these measures, as well as “the complete restriction of rights for the company’s shareholders on the Moscow Exchange make further listing inappropriate.”

“[After the introduction of sanctions against the Moscow Exchange] the pressure on the company from non-Russian counterparties, investors, regulators, and creditor banks increased manifold, because in the continuation of the listing they see significant reputational and even sanctions risks for the company and, accordingly, for them when working with us,” Maxim Nazimok, deputy general DIRECTOR for finance at Solidcore Resources (formerly Polymetal), told RBC.

Polymetal offers holders of Russian shares to exchange them for Kazakh ones in a ratio of 1 to 1. To do this, investors need to open an account with a Kazakh or Russian broker with access to the Astana International Exchange (AIX), transfer the securities there and contact the company. This offer is valid until September 30, 2024 - on the same date Polymetal asks to set the last day of trading in shares on the Moscow Exchange.

“With such a set of sanctions against NSD and the Moscow Exchange, we, unfortunately, do not see prospects for unblocking [Russian shares of Polymetal], and this is definitely not in the power of the company. Therefore, the only thing we could do was to request a long enough period from the exchange to stop trading so that all remaining investors would either sell their shares to professional investors who would participate in the exchange, or participate in the exchange themselves,” the company’s top manager added.

So far, Russian investors are not particularly active in the exchange, Nazimok admits: “Out of about 14% [of the company’s shares] that shareholders could potentially exchange, 3% have been exchanged to date. This is largely due to the fact that the average shareholder owns a very small stake; there are a lot of shareholders - tens of thousands of people. And many of them also own shares through sanctioned brokers, and for them this makes the process a little more complicated.”

The company does not currently plan to buy back shares during delisting on the Moscow Exchange, Nazimok added: “Now shareholders have two options: exchange or sale [of Russian shares].” At the same time, the company hopes that Russian investors will take a more active part in the exchange of shares, he added: “We would really not like to leave behind thousands of offended shareholders. We have now done everything in our power to return these shareholders to their rights. And we, naturally, are interested in as many investors as possible coming to the Astana exchange, increasing the liquidity of the paper, but it is now far from what we had in London and Moscow.”

Back in February 2024, Polymetal shares on the Moscow Exchange were significantly (up to 30%) more expensive than the same securities on the Astana exchange. This situation persisted even after the company announced the sale of its Russian business, and analysts began to say that holding Polymetal’s Russian securities no longer made sense. However, since then the price of securities on the Moscow Exchange has halved, and now Kazakh shares are quoted slightly more expensive than Russian ones.

If the holder of the shares does not exchange them by September 30, it is unclear whether the company will be able to offer him anything, Nazimok says: “Today, an exchange is the only option that we can offer investors, given the current realities. However, we will closely monitor how the situation develops towards the end of September and make decisions depending on the circumstances.”

Polymetal, following the outbreak of hostilities in Ukraine and the first Western sanctions against Moscow, announced that it “does not consider itself a legal entity owned by or acting on behalf of or at the direction of a person associated with RUSSIA.” In the summer of 2022, the company announced a business restructuring by dividing its Russian and Kazakh assets and re-registering the parent holding from the Island of Jersey to the jurisdiction of Kazakhstan.

Following a change in major shareholder from ICT billionaire Alexander Nesis to Omani sovereign wealth fund MDI, the latter owns a 23.9% stake in Polymetal (now Solidcore Resources). Another 4% belongs to the American investment giant BlackRock, 3.3% belongs to Fodina BV, 0.7% of the company is owned by directors and management, 68.1% falls on “institutional and private investors” - that is, traded on stock exchanges in Moscow and Astana.

After the sale of the Russian business, Solidcore Resources becomes a stable, although not the leading, Kazakh gold miner, analysts told RBC. Experts did not see significant potential for growth in Solidcore's capitalization unless the company carries out a series of M&A transactions.

When the Russian Polymetal came under American sanctions , Polymetal Chief Executive Officer Vitaly Nesis and Chief Financial Officer Maxim Nazimok left their leadership positions in the Russian subsidiary.

In mid-February 2024, Polymetal agreed to sell the Russian business to Mangazeya Plus, which is part of the Mangazeya group of companies owned by Sergei Yanchukov. The value of assets was estimated at $3.69 billion, including external and intragroup debt.

Shortly after this, the Moscow Exchange announced that Polymetal shares were transferred from the first level of listing to the third. Then the company said that it was not going to initiate delisting from the site.