Russia 090421 Basic Political Developments

MMK returns to profitability in Q1

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MMK returns to profitability in Q1
MOSCOW. April 21 (Interfax) - Magnitogorsk Iron & Steel Works (MMK)

(RTS: MAGN) posted a net profit of 3.89 billion rubles in the first

quarter of 2009, down from the profit of 6.17 billion rubles in the same

quarter last year, the company said in a statement.

MMK had a net loss of 23.4 billion rubles in the fourth quarter of

2008. The improvement in the latest quarter came on a 9% increase in

sales and an 18% decline in production costs, as well as a gain from

revaluation of financial investments (compared with a revaluation loss

in the fourth quarter last year).

It was reported earlier that MMK produced 2.7 million tonnes of

steel in the first quarter of 2009, 42.5% less than in the same period

last year.

Potanin Cuts Norilsk Stake to 25%

21 April 2009 Bloomberg

Vladimir Potanin cut his stake in Norilsk Nickel to 25 percent, according to an April 17 filing by a Norilsk unit to the U.S. Securities and Exchange Commission.

Potanin is the beneficial owner of 25 percent plus one share of Norilsk. Potanin said Aug. 8 that he held "just below" 30 percent of Norilsk.

Potanin's wealth dropped to $2.1 billion, almost 90 percent less than last year, according to a list published last month by Forbes magazine. He received about $1.3 billion after selling 37 percent of Polyus Gold, Vedomosti reported April 17.

Potanin's Norilsk stake was reduced after Potanin sold shares to the nickel producer as part of its $2 billion stock buyback last year, said a spokesman for Potanin's investment company Interros Holding. United Company RusAl owns 25 percent plus two shares of Norilsk, according to RusAl's web site.

Aluminum giant RusAl posts 7.2% decline in Q1 aluminum output

MOSCOW, April 21 (RIA Novosti) - Russian aluminum giant RusAl said on Tuesday its primary aluminum output had decreased 7.2% year-on-year in January-March to 1 million metric tons.

United Company RusAl, established in March 2007 through a merger of the Russian aluminum giants RusAl and SUAL and Swiss Glencore's alumina assets, said bauxite production fell 34.2% in the reporting period to 3 million metric tons, while alumina output declined 25.3% to 2.1 million metric tons.

"As part of its Cost Efficiency Leader program, RusAl has reduced production across its most economically inefficient and environmentally unsound facilities. By the end of 2009, the total reduction of aluminum will be 0.5 mln tons, which is approximately 11% of 2008 volume. The alumina output will be cut by 3.9 mln tons, approximately 34% of the total output," the company said.

RusAl said that total savings from cost-cutting measures amounted to $554 million in the first quarter, with the company expected to save $1.1 billion in 2009, excluding the investment program.

Hambro Announces 53% Earnings Jump
21 April 2009 Reuters
LONDON -- Peter Hambro Mining, Russia's second-biggest gold producer, posted a 53 percent jump in underlying annual core earnings Monday but missed expectations partly because of foreign exchange losses.

The London-listed company also said it would not pay a final dividend and said chairman Peter Hambro and deputy chairman Pavel Maslovsky have accepted a 50 percent cut in bonuses to conserve cash.

Underlying earnings before interest, tax, depreciation and amortization rose to $136.4 million, below the $144.7 million average forecast of four analysts.

"It's been a very tough year," Hambro said in a telephone interview. "I don't want to go through it again."

Revenue surged 69 percent to $381.7 million, however, beating the $347.2 million expected thanks to higher production and gold prices.

The AIM-listed company announced its results a week early because of the expected completion of its takeover of iron-ore company Aricom on Wednesday.

The combined company, which will have a market capitalization of about ?980 million ($1.5 billion), will list on the main market of the London Stock Exchange and is a contender to enter the FTSE 100.

Merrill Lynch expects the move to be supportive to the shares and estimates that index-tracking funds could need to buy 8 million shares, equivalent to 9 1/2 days trading volume.

Brokerage Fairfax IS also anticipates that the shares will be rerated higher.

"We can see a potential doubling of the shares this year, putting the stock on the edge of the FTSE 100, where a market cap of ?1.4 billion would have been sufficient for index entry this month," it said in a recent research note.

The shares closed down 8.4 percent at 513 pence, retreating from recent gains.

The rise in the share price since the beginning of the month, in the face of a declining gold price, is most likely a reflection of the move to the main board, Arbuthnot said.

Hambro said he saw the recent decline in gold prices as temporary and that he was still confident of substantially higher gold prices this year.

Some analysts have forecast prices of about $1,500 per ounce over the next 12 months, a level that Peter Hambro called realistic.

"I don't see any sign of people wanting to own money. People want real assets, they don't want paper."

The company's total attributable production rose 36 percent, following a restatement of 2007's output, to 393,600 ounces. The company aims to increase gold production to 1 million ounces by 2012.

Peter Hambro said production this year was on track with group's target of 460,000 to 510,000 ounces.

The average realized gold sales price rose to $845 per ounce in 2008, from $668 per ounce in 2007.

Gold firmed in Europe on Monday as last week's price fall of 1.5 percent tempted jewelry and other physical buyers back to the market and as stock markets weakened, but a firmer dollar kept a lid on gains.

Spot gold was bid at $871.45 an ounce Monday afternoon, against $867.90 late in New York on Friday.

Noncash items included a $32 million rise in foreign exchange losses, while higher staff costs and financing costs also weighed.

"One of the effects of the economic downturn is that people are more concerned about keeping their jobs than in what they get paid," Hambro said. "Wage pressures are not where they were in the first half of last year."

As part of its exploration update, the company was upbeat about prospects at its Pokrovsky deposit and further drilling and trenching at the Andreyevskaya zone at Pioneer could indicate the likelihood of further ore columns and show bonanza grades, in places up to 3,500 grams per ton in individual samples, the company said.

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