Kaz Minerals PLC (LON:KAZ) saw its shares drop by over a quarter in value on Thursday after the firm announced a deal to buy a copper project in Baimskaya, Russia for US$900mln from a group of investors including Chelsea FC owner Roman Abramovich.
The deal includes an initial US$675mln payment for a 75% stake and a deferred payment of US$225mln for the remainder.
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Aristus Holdings Ltd, a company owned and controlled by a consortium of investors including Abramovich, was named as the seller of the project.
Baimskaya holds 9.5mln tonnes of copper and 16.5mln ounces of gold. It is expected to yield an average annual output of 250,000 tonnes of copper and 400,000 tonnes of gold over its first decade of production and have a 25-year life.
Kaz Minerals chairman Oleg Novachuk said the deal would deliver “both value and volume as the copper market is forecast to enter a period of significant supply deficit”.
In late afternoon trading, Kaz Minerals shares shed 27.7% at 592.8p
Analysts at Jefferies International cut their rating for the FTSE 250-listed stock to ‘hold’ from ‘buy’ and reduced their target price to 650p from 1,350p highlighting the risks involved in the deal.