An ASX-listed Russian coal miner backed by billionaire businessman Paul Little will sell itself to a Russian merchant days after the Federal Court found it was in breach of Australian sanctions put in place after the Kremlin’s invasion of Ukraine.
Tigers Realm Coal said on Monday that it would offload its assets – including two Siberian coking coal mines and an export terminal – for $49 million to APM-Invest, which is solely owned by Russian businessman Mark Buzuk.
Tigers Realm inked the deal with Mr Buzuk six days after the Federal Court found the miner had breached Australian sanctions laws that prohibit business with Russia.
Tigers Realm emerged from a trading halt on Monday to announce the sale, which requires approval from shareholders, including former Toll boss Mr Little, and his wife Jane Hansen, a businesswoman and Melbourne University chancellor, who own 5.6 per cent of the miner. In March, Mr Little insisted he was unable to sell his stake.
The deal will also require a sign-off from Sirtex Medical founder and Tigers Realm non-executive director Bruce Gray, who holds a controlling 59.89 per cent stake in the company, while Russian private equity firm Baring Vostok Mining owns 18.2 per cent.
Last week, Tigers Realm lost the case it brought against the Department of Foreign Affairs and Trade in a bid to overrule the department’s assessment that the miner had violated Australian sanctions law.
It argued the sanctions did not apply because the coal was destined for export.
But Federal Court judge Geoffrey Kennett dismissed this, finding Tigers Realm’s Russian subsidiaries, in moving coal from the mine to the port – all of which occurs in Russia – were “transporting” goods in breach of Australian sanctions law.
The decision, handed down last Tuesday, upheld DFAT’s assessment of the miner.
Foreign officials said on Wednesday they were mulling legal action against the miner.
Despite Tigers Realm decision to sell the company to Mr Buzuk, the board said they were still considering asking DFAT for an exemption from Australia’s sanctions regime.
Tigers Realm chairman Craig Wiggill said that the divestiture of the coking coal projects was in the best interest of shareholders, who would receive all the cash from the sale.
The three-person board – which includes Mr Gray and Mitch Jakeman – said they decided to sell the company after a detailed strategic review and “carefully” identified the buyer, Mr Buzuk, a local mining executive who fully owns APM-Invest, which is incorporated under Russian Federation law.
The $49 million sale includes Tigers Realm’s mining licences for the Amaam North project, held by Beringpromugol, its main operating entity, and Amaam coal deposit, which is held by joint-stock company Northern Pacific Coal Company.
The transaction also includes Beringovsky Coal Terminal, held by Port Ugolny and Beringpromservice – both wholly owned subsidiaries of Beringpromugol.
The sale will transfer debt and intercompany loan agreements to APM-Invest.
Tigers Realm has operated thermal and coking coal mines in Siberia since 2017. It reported a net profit of $46 million from $140 million in revenue in the year to December 31.
The severe winters in Siberia mean Tigers Realm can only ship coal to customers for between six and eight months every year from the Bering Sea coast.
Tigers Realm stock is now worth half a cent, a far cry from the 50¢ at which the company was floated on the ASX in 2011. The company will hold an extraordinary general meeting to vote on the deal. It has not yet set a date.
By Elouise Fowler, AFR
