Actuality February 22, 2008

   Gazmetall Holding Company is the last large Russian mining and metallurgical group which stocks are not traded on a stock exchange and which did not expose its financial indices. But in spring it plans to publish the reporting by IFRS (International Financial Reporting Standards) standards for 2006-2007, and director general of Metalloinvest Management Company LLC (manages Gazmetall) Maxim Gubiev exposed the key numbers.

Gazmetall told first, how much it earns. In 2007 its EBITDA totaled $2,68 bln, profitability – about 38%, value – $22 bln, and by the year-end it will be $30 bln.

   Provident Gazmetall
12 bln tons total the explored and proven reserves of iron ore of Gazmetall by the international Jorc standard.
17 bln tons total reserves by the Russian standards, said the company representative.
41,3 mln tons iron-ore concentrate produced Gazmetall in 2007. By the output of the finished iron-ore products it occupies the fourth place in the world among the independent suppliers.

   Gazmetall is the mining and metallurgical holding that owns the Lebedinsky (100%) and Mikhailovsky (98,5%) Integrated Mining and Processing Works, the Ural Steel (100%) and the Oskol Electric Steel Works (100%). New metal works is constructed in the United Arab Emirates – Hamriyah Steel (1mln ton of rebar a year).
Steel production – 6,4 million ton, rolled products – 4,8 million ton, ore production – 100,16 million ton (2007).
Owners – Alisher Usmanov (50%), fund of Andrey Skoch (30%), Vasiliy Anisimov (20%).

   The company profit exceeded $7 bln in 2007, and this year should exceed $10 bln. In 2006 EBITDA was $1,59 bln, and in 2007, according to the preliminary estimations, reached $2,54-2,68 bln. The forecast for 2008 is $3,5 bln, is said in the information of Gazmetall presentation. In fact, this number will be 5-10% higher, Gubiev hopes. As prices at the basic products of Gazmetall – iron ore – grow. For a year it grew in price by 20-25% and now the ton of concentrate costs $70-80, and iron-ore pellet – about $105, reminds Kirill Chuyko, the analyst of Uralsib.

   Gazmetall demonstrates the excellent level of profit, marks Alexander Yakubov, the analyst of Trust Bank Holding: profitability by EBITDA totals no less than 38%. It is just higher at the international producers of iron ore: at CVRD (new name – Vale) profitability by EBITDA was about 45% in 2006.

It is not eliminated that metallurgy bosses up the whole show in case with Gazmetall, Chuyko marks.

   But Gazmetall has very comfort level of net debt – $4,6 bln, according to Gubiev. Thus, the volume of capital investments of Gazmetall is planned at the level of $6 bln for 2007-2013. As compared to Gazmetall earnings it is not so much and the company would be able to finance the program without the large borrowings, Yakubov supposes.

   Such indices allow estimating Gazmetall at $20 bln, Yakubov and Chuyko consider. Gubiev declared yesterday, that one of the last estimations of the company, conducted by investment banks, is $22 bln. According to his opinion, by the end of 2008 it can increase up to $30 bln.

   It could not have come at a better time for Gazmetall stockholders, because the company prepares to the transactions – IPO or amalgamation with competitors. Interros Company declared, that Dresdner Kleinwort offered OJSC MMC Norilsk Nickel to consider the opportunity of consolidation with Gazmetall. Gubiev declared that he did not receive any official offers about such transaction from OJSC MMC Norilsk Nickel, but it would be interesting to Gazmetall.