Pi Capital
Date of publication: 14 January 2020
Today we will look at one debt security as investment ideas for this week: GeoProMining

IDEA #1: GeoProMining


One of the leaders of price growth in the past year was the only issue of GeoProMining with maturity in 2024. This dynamics does not look surprising, given the characteristics of this paper: senior issue, real sector, moderate duration, relatively high coupon (7.75%) . Even now, after the growth in the price of paper since the beginning of 2020 by almost a figure, the yield on the Eurobonds (6.6%) looks interesting both against the background of Russian securities and in the international context.


GeoProMining is a mining company specializing in the extraction and processing of gold, silver, antimony and copper in Russia and Armenia. The company is controlled by Siman Povarenkin.


In the first half of 2019, the issuer showed good dynamics in financial indicators, in particular, an increase of 57% y / y at the level of consolidated EBITDA can be noted. The company will use the funds raised as a result of the Eurobonds placement to refinance bank loans and complete the construction of an enrichment plant with a capacity of 300 thousand tons of silver-polymetallic ore per year at the Verkhne-Menkeche deposit in Yakutia. It should be noted that despite the placement of this Eurobonder ($ 300 million), the issuer's credit metrics remain at quite comfortable levels: for example, the Net Debt / EBITDA metric is 1.7, the interest coverage ratio is 5.4. In addition, the placement of the Eurobonds made it possible to optimize the debt repayment schedule: now the main payments are expected in 2024.


The 300 million senior GeoProMining issue was placed in June 2019 at 7.75% per annum. The issue market is Eurodollar. S&P and Fitch agencies rate the issue at B +. Options for early withdrawal and / or change of coupon level are not provided. Please note that the minimum lot on paper is 200 thousand dollars. Eurobonds are serviced by NSD.


Alexey Shternshis
Joint Managing Director
Capital Pi

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