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The Guardian: Russian lessons

5 December 2007

Highland Gold has struggled for years to make progress in Russia and last month the roof appeared to be falling in. Oleg Mitvol, Moscow’s environmental policeman, was warning darkly that licences might have to be revoked, which, as Shell learned at Sakhalin, can be costly.

Then, as if by magic, Highland’s licences in the north eastern Russian province of Chukotka were extended. Now Roman Abramovich, who happens to be Chukotka’s governor, appears as Highland’s major shareholder, buying his shares at a discount to the market price. Are these facts related?

Highland threw little light on the plotline yesterday.

In fact, it even neglected to mention that Abramovich is the zillionaire behind Millhouse, the vehicle making the investment.

Millhouse gets 25% of Highland as an initial bite and will then take its holding to 40%. That’s unless Highland’s current shareholders object to 40%.

As if. Like the company’s chairman, James Cross, they will inevitably welcome the new “shareholder of notable standing”. That’s the way it is in Russia.

http://www.guardian.co.uk/business/2007/dec/05/bhpbilliton.riotinto

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