On Saturday May 17 this site was attacked by a Russian, who left behind a trail of technical identifiers, and whose identity is known. The feedback confirms the accuracy and value of the materials posted on the site during the past week. We appreciate the backhanded acknowledgement.
By John Helmer in Moscow
Announcement from ADC suggests there is more value in the Grib pipe than De Beers report calculates.
Archangel Diamond Corporation (ADC), the Toronto-listed junior diamond miner, headed by De Beers lawyer Jonathan Dickman, has trapped itself in an awkward contradiction over the value of its Russian asset, the Grib pipe in Arkhangelsk region. The contradiction also appears to have been relevant to share trading in mid-May, when nearly a million ADC shares exchanged hands, causing a sharp drop in the price.
On April 29, the day after Toronto Stock Exchange trading in ADC shares recommenced after a six months suspension, ADC was reported as telling Street Wire “the company would begin technical work that would lead to what amounts to a feasibility study by 2010. A production decision would follow the expected favourable result, with engagement of contractors and the start of construction beginning early next decade” (emphasis added).
If ADC was expecting a favourable result on April 29, it did not appear to be thinking so on April 8, when the NI 43-101 Technical Report, prepared by De Beers analysts Johan Ferreira and WEolf Skublak, signed off on their Net Present Valuation of the project, along with estimates of the diamond value in the Grib pipe, if mined to the 1,000-metre level.
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By John Helmer in Moscow
De Beers report heightens geotechnical and political challenges in Archangel diamond mining project.
To adapt the old saw, a great many fresh girls are going to be obliged to make diamonds their best friends before Grib, Russia’s newest, and possibly largest, diamond pipe, can make enough profit to justify digging.
Located in Arkhangelsk region, one thousand kilometres northwest of Moscow, Grib was discovered in 1996; it is the largest kimberlite pipe newly found in Russia. Developed initially by Archangel Diamond Corporation (ADC), a De Beers-controlled company, it was the target of a 10-year hostile takeover by Vagit Alekperov and Alisher Usmanov, who between them control substantial Russian oil, iron-ore and steel assets. De Beers sued for recovery in Sweden and damages in the US.
With LUKoil, Alekperov’s oil company, which wholly owns the local licence-holder for Grib, Arkhagelskgeoldobycha (AGD), De Beers and ADC signed an out of court settlement a month ago. This provides for a staged development plan for the new mine, starting with a down-payment of $100 million from De Beers and ADC, once the new project framework has been approved.
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By John Helmer in Moscow
Fate of Rusal shareholding hinges on evidence in UK, Swiss and Israeli courts
In what is shaping up as the most significant case against the Russian business oligarchy ever argued in an international court, Oleg Deripaska, Russia’s richest man, has told the UK High Court, in his defence, that he didn’t have a business partnership with Michael Cherney (Mikhail Chernoy), but he did sign an agreement with him in London, and he did pay him about $250 million.
Missed by newspapers and wire services, which failed to read the transcripts and several thousand pages of evidence presented in the High Court during two days of hearings on April 30 and May 1, Deripaska’s new defence strategy is the ancient one of the pot calling the kettle black.
Deripaska is claiming that Cherney extorted his signature, plus the payoff, in return for protection. No evidence was presented to substantiate this claim, except for references to a Russian gangster named Anton Malevsky. A parachute enthusiast, Malevsky was killed in a jumping accident in South Africa on November 6, 2001.
Mineweb has verified the cause of Malevsky’s death, according to SA Police Inspector H.J. van Wyk, and an Interpol telecopy from Pretoria: “on approaching the landing site, the wind whirled the parachute out of control and caused the landing to be fatal.”
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The document is available here.
By John Helmer in Moscow
Putin names his merry men, no change in the forest
The list of the new Russian government ministers, released by Prime Minister Vladimir Putin this afternoon, preserves most senior officials in their place, and keeps the precarious balance of factions, which compete for and decide Russia’s major resource concessions, and the biggest of the money-spinners, energy exports.
The immediate and obvious practical effect is that none of the established oligarchs, nor rising commercial challengers, has been able to promote his own man into the cabinet. Oil and gas, pipelines, ports, and tanker fleets remain in much the same hands that have controlled these lines of business for the past four years.
For those who may have been looking to gauge who is likely to win the major new mining concessions to be awarded this year — the Udokan copper project in Chita region, and the Sukhoi Log gold licence in Irkutsk — the new cabinet appointments suggest the same answer as before: Putin and his closest associates will encourage competitive bidding, and then decide for themselves.
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By John Helmer in Moscow
In the good old days, when intrepid Englishmen competed with Russians for commercial and military footholds in Central Asia, the object of their Great Game was to fill the local bazaars with English manufactured goods, and extract in exchange as much treasure as the locals could be gulled into giving up.
Never in two centuries, however, was there ever an Englishmen (or Russian), who played this game, a practising lawyer. So, who could have imagined that what moves today along the old Silk Road to Dushanbe are invoices for legal services, performed in the London courts; for the price of which the great despot of the Pamirs is prepared to let his country’s people freeze for lack of money to generate electricity and pay for heat.
Mineweb reported on April 28 that Herbert Smith, one of the largest billing of the UK law firms, has been setting an English, and probably a world record, for charging the Tajikistan government more than $100 million for a 3-year court claim ordered by the Tajik President, Imomali Rakhmonov (Rahmon): here
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By John Helmer in Moscow
Acron reports big jump in complex fertilizer revenue, but Uralkali tanks on potash nerves.
Acron, Russia’s leading producer of complex fertilizers, has reported that in the first quarter to March 31, sales revenue reached $493 million; that is a jump of 72%, compared with the corresponding quarter of 2007. It is the largest quarterly growth rate yet recorded by the Moscow-based company, which consolidates three production subsidiaries – Acron plant, Dorogobuzh and Hongri-Acron (in China).
Net profit, calculated according to Russian Accounting Standards, more than quadrupled — from $116 mllion in 1Q07 to $558 million in 1Q08. Part of this profit reflects the jump in share value of stakes Acron holds in potash producer, Silivinit (8.1%); in phosphate producer Apatit (5.3%), and Sibneftegaz (21%). The growth rate for Acron’s profit figure, if this equity gain is removed from the calculation, is 343% — from $47 million to $161 million.
Ebitda surged 206% from $73.8 million in 1Q 2007 to $227.5 million in Q1 2008.
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By John Helmer in Moscow
Herbies beats aluminium into profit shares
Herbert Smith, one of the largest billing of the UK law firms, has been forced to reveal this month in the UK High Court that it is charging the Tajikistan government more than $100 million for a 3-year court claim ordered by the Tajik President, Imomali Rakhmonov (Rahmon). Rahmon’s targets are a group of aluminium traders and managers, now based in London, who were ousted from the Tajikistan Aluminium Plant (TadAZ, Talco) after getting too close to the president’s interest in Tajikistan’s principal industry.
The fee numbers and estimates were part of the disclosures that were tabled in a High Court hearing on April 15, 2008, before Mr Justice Tomlinson. Herbert Smith is the law firm acting for the Tajik smelter (Talco), which is wholly owned by the Tajikistan government, and directly supervised by President Rahmon. The estimate of costs from Herbert Smith (aka Herbies in London legal slang) also covers barristers’ fees, which include those of Murray Rosen QC, who is acting for Talco on Herbies’ instructions.
Additional case fee charges of GBP10 million ($20 million) have also been revealed. These are being run up by a British Virgin Islands registered company called CDH, which is a cutout in the complex aluminium trading arrangements devised by Rahmon’s government between Talco and its Norwegian supplier and partner, Hydro Aluminium. CDH is being represented in the High Court by Osborne Clarke.
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