Page 71 - UKRRptFeb21

30,000 today – 6% the level of the end of the Soviet period. In the last 15 years, government subsidies to coal mines have been cut from $8bn a year to less than $500mn a year today.
Foreign mining investors are watching the experience of Avellana Gold, Ukraine’s only working gold mine, ​according to the Global Mining Review, a UK-based news site. Founded by Brian Savage, an American, Avellana had finished the construction of a new gravity plant in 2019, when corporate raiders attacked, aided by corrupt lower courts in Zakarpattia. Avellana prevailed in higher courts, partly with the help of Ukraine’s international business associations and with the support of higher officials. Today, the company is developing its Muzhieva deposit, located 40 km south of Mukachevo and believed to hold 55 tons of gold and 1mn tons of zinc and lead.
9.2 ​Major corporate news 9.2.1​ Oil & gas corporate news
Naftogaz initiates split of Ukrnafta amid risk of multi billion claims from minorities.​A​ ndriyKobolev,CEOofstatecompanyNaftogazofUkraine,has filed a letter to the supervisory board of Ukraine’s leading oil company Ukrnafta (UNAF UK) asking the board to study the possibility of dividing the company’s assets between two groups of shareholders, Interfax-Ukraine reported on February 3. Namely, Naftogaz (which owns 50%+1 shares in Ukrnafta) wants the board to consider dividing the company by business directions to further separate the company between Naftogaz and a group of minority shareholders (related to tycoon Igor Kolomoisky, who owns with his partners at least a 41% stake in the company). In his letter, Kobolev asks to create a working group for the assets split, hire one of the big-four audit companies to undertake an assets valuation and hire a legal advisor that will conduct the process. Kobolev expects that such issues will be considered at Ukrnafta’s next shareholder meeting.
Interfax-Ukraine also reported on January 28 that Naftogaz had directed a letter to minority shareholders of Ukrnafta informing them about the intention to hold a shareholder meeting as soon as possible. The minority shareholders aligned with Kolomoisky filed legal complaints against Ukrainian government in 2016 ​demanding compensation for an alleged $4.67bn in losses​. According to Ukraine’s Justice Minister Denys Maliuska, the Arbitration Court in Stockholm might rule on this case in February 2021. He estimated the potential loss for the government from the claim at about $6bn.
Kolomoisky, as a powerful minority shareholder in Ukrnafta, was always a headache for Naftogaz, so the intention of the state company to divorce itself from this group is natural. If the separation happens, this will add stability to Naftogaz operations. However, the process does not promise to be fast: most likely it will take a couple of years.
Meanwhile, the claim of Ukrafta minorities against the government, however absurd it could look at first glance, is a risk that should not be ignored. If the minorities win their claim in Stockholm, their leverage in Ukrnafta will significantly increase. Moreover, in such case, it might happen that the government will have to compensate the minorities by providing them some shares in Ukrnafta, which would result in losses for Naftogaz.
71​ UKRAINE Country Report​ February 2021 ​ ​www.intellinews.com