Russia’s Nordgold cancels London IPO, citing market volatility

Russian gold miner Nordgold has stopped planning for an initial public offering (IPO) on the London Stock Exchange, just two weeks after announcing its intentions to sell a 25% stake to investors, including via a secondary listing in Moscow.

Nordgold said on Tuesday it would ‘not be sensible to pursue an IPO at this particular juncture’, following a 6% drop in the gold price since first announcing the plans on June 3.

The company’s billionaire owner Alexei Mordashov targeted inclusion in the FTSE 100 index, with his family set to make about £1 billion from the listing. He had previously told the Financial Times there was a ‘strong appetite for gold stocks in the market, also gold stocks from Russia’.

However, an announcement last week by the Federal Reserve stating that it may raise interest rates in 2023 dented investor enthusiasm for gold, according to the firm.

“Recent central bank comments indicating an acceleration in expected interest rate rises have created significant uncertainty and volatility in the resources sector, in particular impacting gold and gold equities,” Nordgold’s chief executive Nikolai Zelenski said.

Nordgold operates nine mines (four in Russia, three in Burkina Faso and one each in Guinea and Kazakhstan), producing more than one million ounces of gold a year with a reported EBITDA in excess of US$1 billion last year.

The company is developing two new gold mines in the Far East of Russia, which will help it boost production by an expected 20% over the next five years.