Polyus Gold's Exploration Assets Sale on Hold

Polyus Gold has put on hold its plan to spin-off its geological exploration assets because of a disagreement between its main shareholders, the chief executive of Russia's biggest gold producer said Wednesday.

Evgueni Ivanov, CEO and general director of Polyus, however, told Reuters that conflicts between the main shareholders, Mikhail Prokhorov and Vladimir Potanin, did not affect the company's everyday business such as producing gold and constructing mills.

"The only area which I'm afraid would be difficult for the company... is mergers and acquisitions because this is something definitely both shareholders have to agree on," Ivanov said in the interview during the Denver Gold Forum.

Prokhorov and Potanin, ranked Russia's fifth - and sixth-richest men respectively by Forbes magazine, shared control of Polyus Gold and Norilsk Nickel before publicly announcing their plans to divide their assets in January 2007.

Meanwhile, Ivanov said that the company would not be interested in buying gold reserves as a strategy to grow because Polyus already owned substantial reserves.

"I think that with the correction of the market that took place in the last few months, there will be new interest from our side on potential acquisitions," Ivanov said.

Spot gold was at $752.55/754.15 an ounce on Wednesday, sharply below its all-time high of $1,030.80 set on 17 March and a secondary peak of $987.75 on 15 July.

However, Ivanov added that no major decision on acquisitions could be made without an agreement between the shareholders.

by Frank Tang.