Shenanigans in Siberia: the Petropavlovsk Saga and Why Retail Investors Matter

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

One of ShareSoc’s key beliefs is that private investors are important and their voice needs to be heard. The current, for want of a better word, shenanigans, at Petropavlovsk (POG) gives private investors a key role in determining the future of a company.


Books could be written about POG, and probably deserve to be. It is a gold miner in Siberia, whose shares rose to above £5 in 2011, before collapsing under the weight of debt and being rescued by an emergency rights issue at 5p in 2015. From there, progress was slow, until around 2019, when things began to improve, reflecting the rise in the price of gold. During 2019 the share price rose from 6p to 12p. And in 2020 it has carried on that strength and now sits at 38p. Indeed, I believe it is the best performing share in the FTSE 250 over the last 18 months.

Now, POG was burdened with debt because it had spent a couple of billion building a POX hub, which is a facility which enables it to process efficiently a type of gold bearing ore that is commonly found in Russia. This facility, in Siberia, is now in use, and can process POG’s own ore and ores produced by third parties. This should be a lucrative money spinner. After all, unless you are willing to spend billions on a POX hub of your own, if you are a gold miner in that part of the world, the chances are you would have little choice but to use POG’s facility.

For many private investors, including me, the stars seemed to have aligned for POG. The shares were rerating, and the future seemed positive. Various Russian entities were buying strategic stakes, the price of gold was rising…everyone wanted a piece of POG.

Boardroom Coup

And then, on 30 June, an unwelcome RNS. Three shareholders, holding 39% of the shares in POG, voted to remove seven existing directors, including the CEO of the company. The existing board felt this was a coup and, before the AGM, appointed a few directors of their own to redress the balance. It was an old fashioned boardroom tussle for power.

Since then the company has become embroiled in a battle between the existing board and a group led by the Uzhuralzoloto Group of Companies (UGC) and supported by 2 other major shareholders. UGC is a group of gold mining companies in the South Ural region of Russia ( which appear to be largely owned by Konstantin Strukov. Perhaps they produce the refractory ore that can best be processed in POG’s hub…I honestly don’t know. But they certainly want control of POG, though they don’t want to launch a bid to actually take it over.

There have been various court applications and PWC have announced that they don’t really want to be the auditor of the company until they understand who the directors will be and what the plans for the company are. Accordingly, at present, the company does not have any auditor.

The story has been widely covered in the press, including articles such as this one for those of you with FT access:

The Role of Individual Investors

As private investors, what can we do? There is a simple answer: make our voice heard. There is a requisitioned general meeting scheduled for 10 August which will hopefully resolve this. Whether you believe the “existing” board should stay on or be replaced, it is clear that a prolonged period of conflict and uncertainty is unlikely to be in shareholder’s interests.

ShareSoc has been approached by Georgeson, proxy voting agents who represent Prosperity, a Russia focussed asset manager, who are opposed to what they see as an attempted takeover of POG by concert parties. They have set up a website ( setting out their views.

Among those views is a belief that UGC acted in concert with Everest, another investor, to try to circumvent the rules on takeovers, and they have asked the Takeover Panel to investigate. Everest appear to have themselves complained about Prosperity to the Takeover Panel.

Having spoken to friends at UKSA, I understand they have been approached by representatives of Everest, who, as you might expect, take a different perspective, and insist they believe that good corporate governance can take the company forward.

Who to trust? Well, I cannot make any recommendation. But I can note that the shares in POG are currently at a multi-year high, indicating that there is an asset here worth fighting over. And with 39% on the side of UGC and a sizeable chunk of institutions for the original board, it is quite possible that, for once, the casting vote will lie with retail investors.

Neither ShareSoc nor UKSA has any wish to take sides in this dispute. It is vital that all shareholders make sure their opinion is heard. Phone your broker and tell them how you want to vote. And make sure you look at a few websites, because some of the resolutions are more complex than they need to be. If, for example, you vote the one way on resolution 18, it could have the effect of cancelling your votes on certain earlier resolutions.

Importantly, although the meeting is on 10 August, platforms often require voting instructions to be placed some days before, so if you want to vote, don’t delay.

If your broker wants to charge you an additional fee for a core service such as allowing you to vote, express your displeasure and let us know. Shareholders own companies and have a say in how the company should be run: any attempt to reduce the ability of investors to vote their shares is unacceptable.

This is one of the few occasions where the balance of the vote may well be determined by the votes of retail investors, so if you have an opinion, make sure it counts.

The LSE’s Role

POG is a FTSE 250 company. You might wonder what the LSE is doing while this battle is going on to wrest control of a company that had appeared a great turnaround story. Are they stepping in to ensure the company has strong, independent corporate governance that is acting in the best interest of all shareholders? No sign of that.

Paul de Gruchy, Director, ShareSoc
DISCLOSURE: I currently own shares in Petropavlovsk and it is one of my favourite shares for trading.

With contribution from Peter Parry, UKSA

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