Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Alrosa has announced the acquisition of a 51% stake in Nizhne-Lenskoye, a diamond mining company, for RUB 3.67 billion (USD 119.5 million).
Nizhne-Lenskoye mines alluvial diamonds in the immediate vicinity of ALROSA subsidiary Almazy Anabara’s operations.
Nizhne-Lenskoye mines about 2 million carats of diamonds per year and has estimated reserves of 26.4 million carats.
The acquisition boosts ALROSA’s total reserves by 3%-4%.
According to an InvestCafe analyst, the asset has been purchased at a fair price but the deal has a downside for ALROSA as well: Nizhne-Lenskoye has a large debt burden, which will add to ALROSA’s own large debt burden.
According to the analyst, Nizhne-Lenskoye’s net debt is 2.87 times its expected EBIT for 2012.
Source (Russian): InvestCafe via BrightWire News.
