Polyus Gold Seeks Merger With Rival, Prokhorov Says (Update1)
March 02, 2010, 5:14 AM EST

By Lyubov Pronina and Yuriy Humber

March 2 (Bloomberg) -- Billionaire Mikhail Prokhorov, one of the two largest
shareholders in OAO Polyus Gold, said the Russian mining company is seeking a
merger or acquisition with a global rival as part of its strategy to expand.

Any deal must result in Russian shareholders keeping control of Polyus, the
country's largest gold producer, Prokhorov told reporters in Paris today. The
Moscow-based company has "targets that could be realized" and would use cash or
equity in a transaction, he said.

Polyus is controlled by Prokhorov and billionaire lawmaker Suleiman Kerimov, who
each own as much as 40 percent of the company, according to Moscow-based
brokerage Troika Dialog. The mining company aims to triple output by 2015.
Polyus spent almost a decade buying deposits to amass the world's fifth- largest
gold reserves.

"Polyus Gold's long-term future could lie in a grand-scale merger with an
international gold miner, possibly done via an equity swap, which would likely
be hailed by the market," Mikhail Stiskin, a metals analyst at Troika in Moscow,
wrote last month in a report.

The miner picked Toronto-based Kinross Gold Corp., the world's third-largest
producer, in December as a partner to develop the Nezhdaninskoye deposit in East
Siberia. A merger between Polyus and Kinross was discussed several years ago,
Polyus Chief Executive Officer Evgeny Ivanov said last month. Such a deal is
"hardly possible" now because of Kinross's expansion in output in the last few
years, he said.

Polyus gained 6.31 rubles, or 0.4 percent, to 1,465.51 rubles at 12:33 p.m. in
Moscow, valuing the company at 279.4 billion rubles ($9.3 billion).

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