Severstal Extends Bid For Celtic

Severstal said Monday that it had extended its offer for gold and molybdenum miner Celtic Resources Holdings as it builds up a precious metals business that may later be spun off.

The company will allow Celtic shareholders to tender stock by Dec. 7, Severstal said in a statement. Severstal controlled 45.6 percent of Celtic as of Friday, the previous deadline, the statement said.

"We see gold price growth as a long-term tendency," Severstal's owner and chief executive, Alexei Mordashov, said Friday. "India alone is significantly large enough to drive demand."

Mordashov envisions Severstal as one of the top three or four Russian gold producers and may spin off the business within five years. His first involvement in gold production was in August, when he acquired 22 percent of London-based Celtic. He wants Severstal to expand the gold business through exploration and acquisition, he said Friday. Celtic represented a "cheap entry" into the industry and was considered a better option than London-based Highland Gold Mining, Mordashov said.

Now that Celtic is being acquired, Severstal will not be looking to buy Highland at least "for the next few years," said the steel company's mining division spokesman, Sergei Loktionov .

Mordashov raised his offer for Celtic to 280 pence per share, or about ?173 million ($361.9 million) on Nov. 9, winning the company's board approval after two previous bids were rejected.