Nova Resources told first offer for Kaz Minerals ‘indefensible’

A FTSE 250 mining company has come under fire from a powerful shareholder advisory group over directors’ decision to recommend an “indefensible” initial takeover bid from its chairman and billionaire shareholder Vladimir Kim.

Kaz Minerals, a Kazakhstan-focused copper miner, is being taken private by Nova Resources, controlled by its chair- man Oleg Novachuk and Mr Kim, after their final offer of 869p was accepted last month, valuing the company at £4.1bn. Nova had originally offered 640p per share last October and the offer was recommended by a committee of directors independent of the consortium. But they increased it twice amid pressure from shareholders and rising copper prices – eventually agreeing to cough up a further £1.1bn.

Shareholder advice group ISS said the first offer was “indefensible in the context of the final offer”. It added: “The offer price was only raised because of resistance from minority shareholders.

This, of course, raises serious questions about the governance, culture and general dynamics of this board.”

ISS nonetheless recommends shareholders vote for the directors at the company’s annual meeting on April 29, given the final offer has been accepted and the company is being delisted.

Kaz Minerals produced 306,000

tonnes of copper last year and 196,000 ounces of gold, with revenue up 4pc during 2020 to $2.35bn (£1.7bn), and profits up 9pc to $1bn.

As well as its mines in Kazakhstan, in January 2019 Kaz bought the Baimskaya copper project in Russia for $900m from investors including Roman Abramovich,

spooking investors over Russian political risk. Making the buyout offer last October, Nova said it believed the long-term development of Baimskaya “would be best undertaken away from the public markets”.

It said the company’s decision to focus on capital-intensive, long-term growth “may be misaligned with the preference of many investors in the mining sector”.

Copper prices have soared as economic activity starts to recover from the pandemic and due to its use in green energy products, rising 33.37pc between the end of October and the end of March to $8,929 per tonne.

A spokesman for Nova Resources said: “The offer represents an attractive total shareholder return of 399pc over the last five years.”

A Kaz Minerals spokesman said: “The independent committee has robustly represented the interests of minority shareholders, during a period in which market prices for copper rose by approximately 33 per cent.”