Hambro gold miner Petropavlovsk in new twist over battle for control by Russian tycoons

The battle for control for one of the biggest gold producers on the Stock Exchange took another twist today as the Russian billionaires accused of trying to take it over on the cheap demanded a shareholder vote to replace the directors with their preferred candidates.

Petropavlovsk was founded by Peter Hambro – scion of the banking dynasty – to invest in Russian gold mines.

After a heavy investment programme, it is now a major producer at a time of surging gold prices. Its shares have quadrupled in the last two years so the company is now worth nearly £900 million.

This appears to have brought it to the attention of two local barons who analysts suspect have bought stakes of 23% and 12% in the business to seize control of the company by stealth.

At the heart of the battle for control lies Petropavlovsk’s new plant called a pressure oxidation hub, one of only two in Russia that can be used to extract gold known as refactory ore, which is common in Russia but hard to get out of the rock.

Hambro’s team invested $400 million getting the plant up and running and analysts suspect one of the Russians, a tycoon called Konstantin Strukov, wants to put his gold through it.

While the covid-19 crisis appears to have been distracting many shareholders, the Russian shareholders succeeded in voting through an ousting of the current management, winning the poll by 5% after nearly a third of shareholders did not vote.

Then, a major Western shareholder, Prosperity Capital Management, with 20% of the shares, demanded another meeting to overturn the previous vote and restore the status quo.

In the interim, Peter Hambro and three other directors were appointed as temporary directors.