One of the most prominent Anglo-Russian executives in the metals industry is seeking to raise $125mn for a new mining venture through a London-listed special purpose acquisition company.
Artem Volynets, former chief executive of EN+ Group, believes now is a good time for mining deals, particularly for critical metals such as copper and cobalt, despite difficult market conditions.
“This is a great time. The valuations are depressed,” Volynets told the Financial Times. “The next 12 months is a terrific time to negotiate a transaction?.?.?.?It has been placed into our hands.”
The new blank-cheque fund, ACG, is seeking to raise up to $125mn in its initial public offering on Thursday and will identify a target mine producing copper, nickel, cobalt or another metal.
Prices of these metals have all fallen in recent months owing to fears of economic recession, but demand is expected to rise over the next decade because of demand for clean energy products and electric vehicles.
The Spac structure allows executives to raise money through an IPO then merge with another company, effectively taking the target public.
Volynets, who led the listing of the Russian aluminium giant Rusal in Hong Kong in 2010, said Spacs are well-suited for mining ventures because they offer a relatively quick path to going public.
“I have done IPOs with mining companies. It is very difficult?.?.?. and you don’t know whether it is going to happen, until the last moment,” he said.
Last year the London listing of Russian miner Nordgold was pulled at the last moment owing to commodity price fluctuations.
Volynets was deputy chief executive at Rusal until 2010 and worked for billionaire mining magnate Oleg Deripaska until 2013.
The mining sector has been largely unaffected by the Spac craze, with only a handful of significant deals materialising so far
The most prominent of these was Metals Acquisition Corp; it listed in New York in 2021 and agreed to buy Glencore’s CSA copper mine in Australia for $1.1bn earlier this year.
Vision Blue Resources, a fund founded by former Xstrata chief executive Mick Davis, backed a Spac that raised $300mn in New York last year.
One of the downsides of the Spac format comes in the event of shareholders choosing to exercise their redemption rights, in which case the company would have to repurchase their shares, potentially presenting a liquidity challenge.
Volynets say ACG can avoid that by exercising a $100mn forward-purchase agreement it has inked with IXM, a subsidiary of China Molybdenum.
The company will look for a target mine that is already producing ore or very close to production. Copper, nickel and cobalt are “at the top of our list” for a target which could be anywhere in the world outside Russia, Volynets said.