Petropavlovsk secures $60 million for iron ore projects

LSE-listed Russian iron-ore and gold miner Petropavlovsk,  formerly known as Peter Hambro Mining, has announced  that a consortium of Hong Kong-based investors have agreed to invest $60 million into a new holding company to be created for its nonprecious-metals division, NPMHoldCo. The consortium comprises the Asia Resources Fund, which is a subsidiary of General Enterprises Management Services (GEMS), and CEF Holdings, which have agreed to provide the iron-ore miner with $50 million and $10 million in funding, respectively. In return for their investment, the companies would gain an equity interest in the new holding company.

Petropavlosvk noted that the deal valued its nonprecious-metals division at $860 million. Chairperson Peter Hambro noted in a statement that the group’s focus on the nearby Chinese market provided it with “considerable economic advantage”, as it was about 19,000 km closer to China than its Brazilian competitors.

The consortium would have the option to return the $60 million investment to Petropavlovsk after two years under certain circumstances, or earlier if certain “trigger events” occurred. Further, should an initial public offering for NPMHoldCo be held and the shares sold at a lower price than the investors’ subscription price, the consortium would be provided with antidilution protection.