Date : April 20, 2004



Alrosa Investment Group Reveals Ambitious Plans For Enlarged Partnership With Celtic Resources At 7th Russian Economic Forum.

Russia has been very much to the forefront in Londons gold mining section in recent days. First City Capital Corporation came out with a review of Russian Gold Mining written by Roger Chaplin who used to be with Canaccord and Chris Pearson who wrote the research on Highland Gold for City Capital when it listed and is now joining ING. This was followed by the Seymour Pierce team of Charles Kernot and Jonathan Guy who also produced an excellent piece of research called the Golden Sickle. The companies recommended in this were Avocet Mining, which only qualifies for its operations in Tajikistan; Palladex which listed recently and is focused on Kyrgyzstan; and Trans-Siberian Gold was chosen as their nap bet.

This company has yet to reach its listing price as its brokers over-egged the pudding at the time by going for all the money on offer and neglecting the secondary market. However Seymour Pierce has put a target of 250p on the shares against the current price of 115p. This is based on the feasibility study at Asacha and progress at its other projects, but there are rumours going round the market that a major has its eyes on the company. This would make sense in view of the relationships formed between Highland Gold and Barrick, between Peter Hambro Mining and Rio Tinto and between Celtic Resources and Alrosa Investment Group, of which more anon. Who the major may be is anyones guess, but it makes a lot of sense for them to choose a small company which has a proven track record in Russia already and has its eyes on possible acquisitions that could be made with a friendly financial nudge.

With these two tomes on everyones desks it was time for the 7th Annual Russian Economic Forum at the Queen Elizabeth 11 Conference Centre near Westminster Abbey. This is a ghastly building with little light, very slow lifts and a marked lack of directions to the various rooms where the sessions on trade, politics, economics and investment took place. Fortunately time had been put aside for Precious Metals and this was chaired by himself of Peter Hambro Mining. Unfortunately he did not have a microphone so witticisms about having a partner with an open cheque book and anecdotes about the old banking families of Flemings and Hambros being in the forefront of the advance into Russia went largely over the head of the audience. He was followed, however, by Richard Davis, a fund manager specialising in natural resources at Merrill Lynch who put some bones on the reasons why Russia was now so attractive to gold explorers and producers.

It is now the 5th largest gold producer in the world with 182 tonnes/year which puts it ahead of China and after Peru. The gold resources are huge, but the focus by Russias mining companies during Communist times was on alluvial deposits which are cheap to develop. Now modern exploration technology is being applied to hard rock deposits and Russian projects are markedly attractive when compared with those in mature gold mining regions such as South Africa, Australia and North America. For instance the average cash cost of production in South Africa is US$300/oz compared with US$205/oz in Russia and the value in terms of market capitalisation/oz of gold reserves is US$20/oz in Russia compared with US$100/oz in North America. Small wonder the big boys have it in their sights as they fight to replenish their reserves and resources.

Peter Daresbury followed the fund manager with a quick talk about Highland Gold, but he was inhibited by the fact that he was due to announce preliminary results for 2003 within 24 hours. He got in a plug for Barrick Gold as his partner and confirmed that mining has started at the Darasun and Teremki underground mines in order to build a stockpile of ore for the start-up of the mill which is scheduled for next month. Then came Alexei Mikhailovsky who is second in command of Alrosa Investment Group and had to stand in at rather short notice for the CEO, Sergei Vybornov. He confirmed that the deal with Celtic Resources announced last June was still on track and details would be announced soon. The original deal involved Alrosa, which is the business development arm of the Russian company Alrosa, the worlds biggest producer of rough diamonds, acquiring a critical 50 per cent interest in the Nezdaninskoye gold mine and selling it to Celtic for shares in Celtic which would amount to around 23 per cent of the Celtic equity.

Now, however, it appears that the scope of the deal is being enlarged significantly. Up to five gold mines controlled by Alrosa are going to be sold to Celtic for shares over a period of time. Names such as Khukuzhus and Kuranakh were mentioned but Minews was finding it difficult to juggle earphones, a note book and a receiver which would not receive the translation if placed in a pocket, so the spelling may be at faulty. These are not small projects, that much was clear, and the aim is to build a Russian gold company on a world scale with resources of 100 million ounces and producing at least 1 million ozs of gold a year by 2008.

This may look ambitious, but it should not be overlooked that Alrosas shareholder base includes the Russian Government as well as the regional government of Yakutia so it has real power. Celtic Resources will provide the listing in London as the Anglo/Russian partnership will require access to western capital and presumably it will be promoted from AIM to a full listing in due course. Quite a story, and it proves that those UK companies which engaged in the rough and tumble of the Russian gold industry at an early stage are now reaping their reward.

Guardian

ALLIANCE & LEICESTER (CSFB reckons its half-year trading statement will disappoint) - LA FITNESS (market professionals reckon a bid is on the way - 270 pence is the rumoured price - CELTIC RESOURCES (talk that an upbeat drilling report from its Suzdal mine in Kazakhstan could be on the way)

Give the move today it looks like there are others that belive the same.

time to bring this one back to everyone's attention, as the russkies are seemingly on the nibble and CER is getting acquisitive in its own right ...... chart is good even if rsi a bit toppy.

chart shows 50 and 200 dma

sp gently ticking upwards ..... not huge volume @ 310k but average over last 3 months is <200k

chart is certainly not pretty, but figures published today + forward projection surely indicate that this stock is undervalued ...... for all that, the market seems underwhelmed, which goes to show that sometimes it just cannot be pleased regardless

Figures look interesting, Mr. C.! 4moz Au + 2.62mt Cu = big assets. Mkt cap is close to book value of shareholders' funds?

Will have to give it a closer examination.

I would be more than happy if they kicked the complete board into touch. Come on Servestal, go for it :)


http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2602490.ece

From The Sunday TimesOctober 7, 2007

Threat to oust miners boardJenny Davey

SEVERSTAL, the giant Russian miner and steelmaker, will turn up the heat in its hostile bid for Celtic Resources tomorrow by in effect threatening to oust the mining companys board if it fails to gain the backing of 80% of shareholders for a 161m takeover offer.

The company, through its wholly-owned subsidiary Centro-ferve, will write to the shareholders of AIM-listed Celtic, confirming that it will launch a formal 270p-a-share hostile bid for the company, even though it has been rejected by the Celtic board.

The group will criticise Celtics management for rejecting its bid only 33 minutes after the offer was announced.

It will also accuse the Celtic Resources directors of unnecessarily placing the company shareholders money at risk by not recommending the offer and suggest the board puts continued independence above shareholder value.

Severstal will warn the management that if acceptances fall short of the 80% threshold, it will call an extraordinary meeting and oust the board, install its own management team and run the business as a subsidiary.

The company already speaks for 29.7% of the shares and Bar-rick Gold Corporation, which owns 6.6%, has indicated it is prepared to accept the Severstal offer as well.

A spokesman for Celtic Resources said: The 270p-a-share

offer substantially undervalues the company. The share price has been ahead of the offer price because it is an attempt to buy the company on the cheap.

The spokesman added: Had Severstal wanted to behave in an honourable fashion they would have conducted this conversation in an entirely different way.

We will make sure shareholders get the best price for their shares.

The company had previously announced there was still takeover interest from another party and it said this weekend the interest continued.

The share price closed at 280p on Friday.