Page 97 - RusRPTAug20

9.2.11 ​Metallurgy & mining corporate news
● Gold & Diamonds
According to a report from​ ​Petropavlovsk​, the court hearing in London has confirmed the validity of the temporary directors on the company’s BoD​. In addition, it stated that some Board resolutions might require the approval of at least two out of the four directors re-elected at the AGM on 30 June 2020. The BoD has confirmed its intention to call an EGM, as per the request from Prosperity and Everest (with new candidates for a permanent BoD). As the final composition of the BoD is still uncertain, the result of the votes for the permanent BoD during the EGM could be an important trigger for the stock. Until the EGM, the court decision adds stability to the current BoD, since it comprises four directors supported by UGC and other major shareholders, which had previously rejected the new BoD election, and five temporary directors from management.
Alrosa​’s sales fell 89% y/y in June to $24.8mn​, recording a 46% y/y decline in 6mo20. The July trading session, originally scheduled for 13-17 July, is to be held from 27 to 31 July. The August session has also been postponed for half a month.
● Steel
Severstal​ expects 60% share of domestic sales in 3Q20, domestic sales share remains 5-10pp below historical levels and slight relief of pressure on EBITDA. ​According to Interfax, Severstal expects to increase the share of domestic sales to 60% in 3Q20, as the company sees the domestic HRC premium rebuilding in June. If it implements this plan, Severstal would increase its share of domestic sales 8-10pp QoQ from the 50-52% in 2Q20, although that would still be 5-10pp lower than the normal level. Lower exposure to export prices in 3Q20, which had a discount of USD 78/t to domestic HRC, might slightly relieve pressure on EBITDA in 3Q20. A recovery in Russian demand in the rest of 2020 would support domestic steel prices, in our view.
Novolipetsk Metallurgical Kombinat​ (NLMK) has reported strong financial results​, beating our and the consensus expectations by 7% and 5%, respectively, on EBITDA. FCFE was also slightly above our expectations on the back of higher earnings and a working capital release. Dividends, however,
97​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com