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By John Helmer in Moscow

On October 6, Peter Hambro claimed in an interview with Reuters Television that his proposed stock exchange listing of IRC Ltd., a titanium and iron-ore miner in the Amur and Jewish Autonomous Region of fareastern Russia, is his idea of a gift: “We’ve always wanted to give Russian people access to ownership of shares in what is effectively a Russian company,” said Hambro.

For fifteen years, Hambro’s Russian partner Pavel Maslovsky has also wanted to give Russian people access to ownership of shares. Tokur Zoloto (“Gold”) was the first of his gifts, created in the mid-1990s. The Russian shareholders were told the company would mine gold at the Pokrovskoye deposit. But unfortunately, the gift stopped giving and started taking. On February 2, 1998, Tokur Zoloto was ordered into bankruptcy in a ruling of the Arbitrazh Court of the Amur region.

That much is clear in the public record. What happened next, alleged by Russian press reports of the time, is that the Russian shareholders were left with their shares, while Maslovsky sold the rights to mine Pokrovskoye to Hambro’s London company. Called by Hambro’s name, then renamed Petropavlovsk Plc, the duo went on to prosper. The initial gift to the Russian shareholders did not. Here is a brief summary of the mergers and acquisitions record, out of which Hambro and Maslovsky have turned their publicly listed gold-mining company into current market capitalization of ₤2.1 billion ($3.4 billion).

Additional transaction history explains how the new IRC shareholding company has been created out of Petropavlovsk in the early months of this year, with the obligations that have arisen as part of that process. This can be found in the prospectus document, starting at page 71.

On September 22, Maslovsky was asked whether he acknowledges the bankruptcy of Tokur Zoloto, and the subsequent record of what he did with the Pokrovsky asset. He refuses to reply.

To date, there has been no correction of the record, nor amplification of the history in the share sale prospectus which has been circulating on the Hong Kong Stock Exchange.

In this week’s interview with Hambro, Reuters omitted to ask him the bankruptcy question. But Reuters records a certain nervousness on Hambro’s part regarding the sentiment among potential shareholders for the offer of shares of IRC Ltd., the latest spinoff from Petropavlovsk.

According to Hambro, “At the moment it looks as if we can do it. I’m cautiously optimistic.” Reuters says he declined to comment on shareholder interest or how much money the listing will raise. “Only time will tell,” he is reported as saying. A section of the prospectus, entitled “Cornerstone Investors”, is blank, and carries the legend that it is “intentionally blank”, and that it is incomplete, subject to change, and should be read in conjunction with the warning posted at the head of the offer document. Among other things, the warning says: “No investment decision should be based on the information contained [in the document].”

A London mining banker reports on the position: “They are raising between $376 million to $512 million (1,325 million shares at HK$2.20 to HK$3.00). But only 80% (1,070 million) of the shares are primary, i.e., that cash goes to the company, which means that the implied pre-money valuation is $658 million to $898 million. Market receptivity is poor not only in Hong Kong, but also in London.”

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