UMMC put its top manager on the former assets of Petropavlovsk

Ex-CEO appointed as new CEO of Atlas Mining, which manages gold mining assets previously owned by Petropavlovsk “Poles” Fedor Kirsanov, two sources close to the company told Vedomosti. According to them, Denis Alexandrov, the current CEO of Atlas Mining, is leaving his post on February 1.

“The new owner of Atlas Mining is UMMC (“Ural Mining and Metallurgical Company”-“ Vedomosti ”) – replaced the general director of the company, – one of the sources explained. In addition, in December 2022, several key top managers left Atlas Mining, including CFO Stanislav Ploshchenko, who was replaced by Svetlana Ivanitskaya from Gazprombank, says the source of Vedomosti.

Vedomosti sent inquiries to representatives of Atlas Mining and UMMC.

UMMC in September 2022, closed the acquisition of Atlas Mining and other assets of Petropavlovsk. The parent company Petropavlovsk plc is registered in the UK. The mines and production facilities of the gold miner are located in the Amur Region. The assets include the Pokrovsky Autoclave Hydrometallurgical Complex (PAGK) and the Pioneer, Malomyr and Albyn mining companies.

Petropavlovsk’s 2021 production is down 18% to 449,800 troy ounces of gold. The company’s IFRS revenue decreased in the first half of 2021 by 33% year-on-year to $351.9 million, EBITDA decreased by 41% to $114.3 million. The company did not publish results for subsequent periods.

Kirsanov is the director of UMMC-Invest, a structure UMMC, for which Atlas Mining was purchased. He previously worked at McKinsey, Sibur, United Shipbuilding Corporation (USC), OMZ, Russian Fishery Company. CEO of a gold mining company “Pole” he held in 2013-2014.

Alexandrov was appointed CEO of Petropavlovsk in November 2020 after the departure of the previous management team led by the company’s co-founder Pavel Maslovsky. Since November 2022 Aleksandrov has also been a member of the Board of Directors of Norilsk Nickel.

In 2021, during the audit, KPMG identified a number of problematic transactions concluded by Petropavlovsk and its enterprises under the previous management for a total of $302.4 million. Aleksandrov, in an interview with Vedomosti in October 2021, said that the problems were in a large number of intermediaries with procurement. As a result, the company got rid of a number of intermediaries, the contracts were “straightened”, and the capital expenditure program was revised. The gold miner also got rid of guarantees on loans to the IRC iron ore company, selling its 29.9% stake in it in December 2021.

But in March 2022, Petropavlovsk faced an inability to sell gold and pay its loans due to Western sanctions against Gazprombank, the company’s main creditor and buyer of the metal. The gold miner began to miss payments on loans, and in April the bank demanded early repayment of obligations from Petropavlovsk, and then transferred the rights of claim on them to new creditors – UMMC and Nordik.

In July, external managers were appointed to Petropavlovsk, that is, insolvency proceedings were launched, and trading in the company’s securities on the London and Moscow stock exchanges was also stopped.

Eventually, UMMC bought Atlas Mining with the assets of Petropavlovsk, the deal was closed in early September. The company received approximately £166m in cash, including £6m in external management funding and £3m in contingencies, as well as funds to settle with the company’s Eurobond holders (including accrued interest) of approximately $201m.

About a month before UMMC confirmed the purchase of the Magadan gold miner “Susumanzoloto”. At the same time, a new CEO was appointed in the company – the Minister of Natural Resources of the Magadan Region Oleg Kosolapov, and Alexander Chugunov, who headed the company since 2016, left his post, Interfax reported.

Petropavlovsk plc is still in external management and continues to be responsible for the remaining debt of the company – in particular, for the issue of convertible bonds maturing in 2024 and Eurobonds, which were due to be redeemed in 2022. The company reported on January 25 that will be able to pay off the holders of both issues by the end of January 2024.

UMMC is a Russian mining and metallurgical holding, one of the largest producers of copper, zinc, coal and precious metals in Russia. In mid-March 2022, the company announced that Iskandar Makhmudov and Andrey Bokarev had ceased to be the controlling beneficiaries of the company, details of the new shareholder structure were not disclosed.

According to Dmitry Smolin, a senior analyst for metallurgy and mining at Sinara investment bank, a change in leadership at Atlas Mining was expected after the change in ownership of the company last year. »New owner – UMMC – is increasing its presence in the gold mining market, and obviously wants to see in the acquired companies people who share its vision,” he said.