April 08, 11

By John Helmer in Moscow

When we put down the telephone to Maxim Finsky’s office at Intergeo last week in Moscow, he wasn’t saying much of anything about his attempt to persuade Canadian shareholders to accept his proposed merger of two junior gold miners he controls, White Tiger Gold and Century Mining.

Just three days later, he and his old school chum, Mikhail Prokhorov, have released parallel announcements, placed in two Moscow business papers on April 5th, in which they claim they are planning to sell shares of their mineral prospecting company, Intergeo, on the Toronto Stock Exchange soon. They also claim that the market valuation of the assets, and thus of Intergeo’s shares, is US$3 billion.

As a footnote to the White Tiger story, this is a Bigfoot footnote.

They appear to have decided to place the following advertisement about Intergeo, suggesting that “creating a hit has begun”. What they mean is that Prokhorov, who owns 100 per cent of Intergeo, and Finsky, the chief executive, have registered for permission from the Federal Antimonopoly Service (FAS) to sell a bloc of 10 per cent of Intergeo shares abroad. In order to do this, they say they have spun, or will spin, Intergeo out of Prokhorov’s Onexim holding.

The timing given in one newspaper is “within the next six months”; in the second newspaper, “at year end”. Although one newspaper headline calls this an initial public offering, it then suggests that the listing of new shares may take the form of “private placement” or “a reverse takeover deal”.

According to Prokhorov’s remarks to the reporters, Intergeo will be a “mini-Norilsk Nickel”. The company website, which can be reached via a link on the Onexim website, is not particularly informative: http://www.mmcintergeo.ru/. But Finsky apparently told reporters that right now he is planning to restructure Intergeo to make the company more transparent and understandable, including for the upcoming placement.

In the newspaper advertisements, Intergeo claims to hold 12 licenses for mineral fields with estimated reserves and resources of 15 million tonnes of copper, nine million tonnes of nickel, one million tonnes of molybdenum, 750 tonnes, or 24.1 million ounces of platinum group metals, and substantial amounts of titanium. Most of those resources are derived numbers are from a prospect in the Irkutsk region, which Norilsk Nickel bought at auction in 2008. Payment was Rb726 million (then worth US$29.2 million), and the details of that transaction are available here. This prospecting licence for what is called the Iisko-Tagulskaya area is reported by Finsky to have been let go by Vladimir Potanin when Prokhorov and he divided their jointly held assets, and Prokhorov sold his Norilsk Nickel shareholding to Oleg Deripaska.

But what stage are any of these assets at? A leading Moscow mining analyst comments: “To my knowledge, none of the assets is producing; or at least none of the assets located in Russia are. [Regarding the] reserves audit – my guess is that they are not booked as Russian reserves, but most probably as resources.”

Prokhorov and Finsky told the Russian newspapers: “If Intergeo will implement its plan, Moscow newspapers, “it will be the first Russian metallurgical company with a listing in Canada.” And if the Canadians turn them down, Intergeo will be the second Russian mining company to be rejected by the Toronto Stock Exchange. The first was GV Gold, an Irkutsk gold miner owned by Sergei Dokuchayev, the Lanta Bank proprietor, who went to Toronto in 1998, and came back empty-handed.