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By John Helmer in Moscow

Roman Abramovich’s holding company Millhouse has obliged two of its Russian steelmaking partners, Alexander Abramov and Alexander Frolov, to buy an indirect stake of 9.99% in Highland Gold Mining. No explanation for the move has been issued, either by Highland Gold, or by Millhouse; or by Abramov and Frolov, who made their acquisition through a private company called Tremadon.

No details of the transaction value have been disclosed.

Highland Gold (ticker HGM:LN) told Minesite through spokesman Dmitry Yakushkin that there has been “an indirect change. Practically, this doesn’t concern [our] company.” He said Abramov’s and Frolov’s company had bought a 9.99% stake in Highland Gold from Primerod, the company through which Abramovich’s holding controls its 32% stake in Highland. This is the largest stake in the AIM-listed mining company, which has suffered an 85% loss in its market value over the past year; it is now worth less than $180 million. According to Yakushkin, “the pie-chart [of shareholders] remains the same. Millhouse still has 32%.”

Millhouse also controls the Evraz steel and coal and iron-ore mining group, Russia’s largest steelmaker. Last month, Abramovich forced changes in the Evraz board resulting in the demotion of Frolov, who was replaced as board chairman by Abramov. This followed a severe loss of market confidence in Evraz’s capacity to refinance its foreign loans, and an emergency bailout from the state VEB bank to save Evraz from forfeiting US steelmill assets to its banks. Evraz has also been funded by the Kremlin to pay its Russian tax bill.

The reshuffle at Evraz came amidst speculation that Abramov had been facing bank margin calls on loans secured by his Evraz shares. A Moscow bank source also told Minesite that Abramov had lost heavily when his Diamond Age Capital Advisors, a Moscow-based hedge fund, collapsed recently.

The Highland Gold news raises the question of why, facing their own liquidity problems, Abramov and Frolov would want to pay up to $20 million for gold exposure right now; and also why Abramovich, who has suffered sizeable markdowns in the value of his own equity stakes, would require such a sum of cash at this point.

Asked whether Abramovich had initiated the sale of Highland equity to Abramov and Frolov to reduce Millhouse’s exposure to the falling value of the shares, Yakushkin said he doesn’t know, and can’t comment. Evraz does not disclose the shareholdings of Millhouse, Abramov and Frolov, and says it does not comment on shareholder issues. Abramov and Frolov do not respond to questions about their shareholdings.

In Moscow trading on Tuesday, Highland Gold shares lost 2.8% to 51 US cents. The share gained 5.7% in UK trading to 37 pence.

Late in 2007, Millhouse became a 40% shareholder of Highland Gold Mining, replacing Barrick Gold in control of the company, and providing the company with $400 milllion in a rights issue priced at GBP1.51. Barrick retained 20%, while Highland Gold executives held 14.5%, of which 6% is held by Ambramovich protege and founding chief executive of Highland Gold, Ivan Kulakov. Eight percent of the original Millhouse 40% was subsequently sold to Evgeny Shvidler, one of Abramovich’s partners and co-stakeholders in Millhouse. That left Millhouse with its current 32%. Another 33%, including Shvidler’s stake, is reported to be the public free float.

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