ICSM Business News: London-based Russian gold mining firm collapses after failing to repay loans

ICSM Business News: London-based Russian gold mining firm collapses after failing to repay loans

By Harry Mottram: The latest fall-out from Russia invading Ukraine has seen the largest prospector of gold in the world collapse into administration.

Based in London Petropavolvsk has failed to repay a £170 million loan to Gazprombank in April and have indicated it cannot pay the money any time soon. The firm has asked to withdraw its shares from the London and Moscow stock markets and is going into administration to protect it from wipe-out. If a buyer can be found then share-holders are unlikely to see a penny while suppliers owed by Petropavolvsk are left high and dry.

Petropavolvsk was founded by British businessman Peter Hambro and Russian’s Pavel Maslovskiy in 1994 after the collapse of the Soviet Union to develop a gold in the far East of Russia in Amur district. The firm has subsequently been embroiled in controversy after the exit of the founders and criminal power struggle to control the outfit in Moscow.

They have five operations in Russia aimed at mainly open cast mines with the large scale production of extracting gold ore to be processed into gold bullion. It has been widely reported that Petropavolvsk have said they are in discussions with a buyer but with the value of their shares down more than 90% this year due to the West’s trade sanctions with Russia the future of the company is in doubt. Opus Business advisory Group will however seek a buyer of a way out of the impasse that has essentially seen the firm frozen despite the potentially high value of its products in Russia. The war has seen all of that come to a halt despite assets of more than a billion dollars which are wiped out by liabilities leading to the precarious situation.

ICSM has commented to say any dealings with Russian or Belarus linked companies are problematic since the West has imposed sanctions on the two countries and strongly advise to find alternative business opportunities.

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk

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