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. Last Updated: 07/27/2016

Norilsk Nickel Planning to Spin Off Gold Assets

Metals giant Norilsk Nickel said on Monday it would spin off its gold assets, including Polyus and Norilsk's 20 percent stake in South Africa's Gold Fields, into a separate company.

"It is the intention of the board of Norilsk Nickel that [the new company] would seek both domestic and international listings as soon as practicable following the transaction," Norilsk said in a statement.

Polyus, Russia's largest gold producer, said earlier this month it wanted to enter global capital markets after 2007 either by listing shares in New York or Toronto or by merging with a foreign company.

Analysts have estimated Polyus to be worth more than $3 billion now and expect it to grow further as it explores its gold assets in Russia and expands its reserve base.

"The initial step in the transaction will be to consolidate all the company's gold assets [including its 20 percent interest in Gold Fields] under Polyus," Norilsk said.

"The contemplated transaction, if implemented, should create a new large independent gold major with the potential for substantial organic growth and a window into one of the world's most prospective gold regions: Russia."

It added the decision was taken at a board meeting on Friday.

The core business of Norilsk is in base and platinum group metals.

But booming gold prices have forced the world's biggest nickel and palladium producer to focus more on the yellow metal.

Norilsk bought into Gold Fields last year, becoming its biggest shareholder. The world's No. 4 gold company, Gold Fields, is now fighting a takeover bid from smaller rival Harmony, which has the provisional backing of Norilsk.

Polyus aims to boost gold reserves by as much as 100 tons per year as it explores new regions and develops existing mines.

It also hopes eventually to raise its current annual gold production of around 34 tons to over 100 tons.