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.
Russian diamond miner ALMAR plans to sell 15% of its shares in an initial public offering next month, betting that a booming gem market will attract investors despite geopolitical tensions weighing on the nation’s stocks.
The company plans to list on Russia’s SPB Exchange and use the proceeds on exploration work and buying a mining license, Deputy CEO Andrey Novikov said in an interview. It expects reserves to be confirmed in 2023 and production and sales to start the following year.
The diamond industry has rebounded since the start of the pandemic as stuck-at-home consumers bought stones with other luxuries such as travel restricted, and kept buying as the economy strengthened. But betting on small miners can be risky, as some companies can struggle to unearth enough profitable stones.
While ALMAR is targeting retail investors, it’s a challenging time to sell shares. After a boom in offerings in 2021, the country’s IPO market has been dealt a blow as escalating tensions over Ukraine pushed Russian stocks down this year. The government has repeatedly denied that it has any plans to invade Ukraine.
ALMAR, which is based in Russia’s Far East region of Yakutia, may offer $10 million of shares, Novikov said. The company also plans to later raise another $30 million to fund production, potentially in a secondary offering or debt financing, he said.
“We are a fast-growing company because we’re at an early stage of development,” said Novikov, who previously worked at Russia’s only listed diamond miner, Alrosa PJSC. He also said that geopolitical risks have stopped the company’s hopes of listing abroad.
(By Áine Quinn, with assistance from Thomas Biesheuvel and Yuliya Fedorinova)
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