Evraz, Polymetal, and POG – what next for these LSE shares?

These LSE shares have all fallen around 80% in one month. Roland Head asks what’s next for Russian miners Evraz, Polymetal International, and Petropavlovsk.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Russian mining companies on the London Stock Exchange have been hit hard by the risk of sanctions. Today I want to look at three LSE shares that have each fallen by around 80% over the last month.

Evraz: suspended

Coal and steel group Evraz (LSE: EVR) said on Wednesday that it didn’t believe it should be affected by UK sanctions against Russia.

Even so, Evraz’s board then decided to cancel the interim dividend it had declared on 25 February.

On Thursday morning, things got really serious. The government added Roman Abramovich, the company’s largest shareholder, to the UK’s sanction list. Evraz shares were suspended from London trading.

I can’t emphasise enough how quickly things happened. I saw the news about Abramovich at 10.48 on a newspaper’s live news page. At 11am, the London Stock Exchange suspended Evraz shares.

What happens next? Evraz shareholders won’t receive the March dividend. Although UK shareholders will continue to own the stock, they can’t sell it.

Evraz shares might return to trading at some point. Personally, I think a more likely scenario is that the company’s LSE shares will be cancelled. This would probably leave Evraz shares listed on the Moscow Stock Exchange only.

If this happens, I’d guess that most UK shareholders would be unable to sell and would have to write off their investment.

Polymetal: LSE shares at risk?

Will gold miner Polymetal International (LSE: POLY) follow Evraz into suspension? 

The company said on Wednesday that it “doesn’t consider itself” to be owned or controlled by Russian shareholders. I looked at Polymetal’s ownership in more detail here.

Polymetal’s management say that sanctions have had a limited impact on its mining operations and sales. But they’ve warned that financial restrictions could affect future dividend payments and limit access to bank facilities.

The board declared a final dividend for 2021 on 2 March. They haven’t cancelled it yet. But Wednesday’s statement included a reminder that the board “retains the discretion” to withdraw its dividend recommendation ahead of the group’s AGM on 25 April.

What happens next? I think Polymetal is likely to cancel its dividend to preserve cash.

I also suspect the company will find it easier to operate normally under sanctions if it withdraws from western financial markets. For this reason, I expect Polymetal to cancel its LSE share listing at some point.

Will POG shares be suspended?

Gold miner Petropavlovsk (LSE: POG) said on Wednesday that events in Ukraine had not interrupted its operations in the Far East of Russia. However, the company admitted that some of its Russian shareholders “may be restricted” under sanction regulations.

Having taken legal advice, Petropavlovsk says that it does not believe its LSE shares should be affected by sanctions. This is because its Russian shareholders control less than 50% of the company’s stock.

What happens next? POG shares rose following yesterday’s news but are down today. If operations remain unaffected then this stock could be very cheap, on less than two times 2022 forecast earnings.

However, buying POG shares looks like a big gamble to me. This company sells its gold within Russia and might choose to list domestically. Tighter sanctions could force a share suspension or delisting. Petropavlovsk is too risky for me to buy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Looking for value stocks? Here’s 1 I’d buy and 1 I’d avoid!

This Fool delves deeper into two value stocks she’s had her eye on and explains why she’s bullish on one,…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

With the Airtel Africa share price in pennies, is it a bargain?

With the Airtel Africa share price having slumped by a quarter in just one month, this shareholder considers some of…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Are these 2 defensive FTSE 100 stocks shrewd buys after recent updates?

This Fool takes a closer look at these FTSE 100 stocks. She admires their defensive traits -- but does that…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The FTSE 100 closes up after full-year results from leading UK firms – are they buys?

Earnings season brings about a lot of ups and downs for the FTSE 100. Yesterday had some particularly good releases,…

Read more »

artificial intelligence investing algorithms
Investing Articles

Should I buy NVIDIA stock as a British investor?

NVIDIA stock is up two-thirds this year alone. Our writer considers some pros and cons, specifically given that he is…

Read more »

Investing Articles

With £2,000 in excess savings, I’d buy 41 shares in this Warren Buffett dividend stock

Stephen Wright thinks one of the best dividend shares to buy right now might be a Warren Buffett stock that’s…

Read more »

Investing Articles

How many Aviva shares do I need to collect a £100 monthly income?

Aviva shares are well suited for passive income purposes. Our writer works out how many would be needed for a…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

£2k to invest? I’d buy 883 shares of this overlooked dividend giant for a second income

This FTSE 100 dividend stock has had a mixed time since floating in 2019 but it looks like a brilliant…

Read more »