Trans-Siberian Gold to buy back shares from big investors

Trans-Siberian Gold shares fell after the company said it would buy back shares from two of its biggest investors.

The AIM-listed gold miner said it would spend £7.6m buying back about 21% of its issued share capital from Destin Investment Management and UFG Private Equity Fund I. It will pay 33p a share, a discount of 42% to the closing price on 2 May.

The selling shareholders will sell shares worth a further 10.4% of Trans-Siberian's share capital to other members of the UFG group, new investors and the company's directors.

Destin is an investment vehicle whose beneficiaries have a controlling interest in the general partner of UFG Private Equity Fund I. UFG, which specialises in Russian investments, will remain Trans-Siberian's biggest shareholder after the buyback.

Trans-Siberian said the shareholders were selling for logical reasons now that UFG's investment has matured. It said the buyback would increase returns for other shareholders, diversify its shareholder base and increase liquidity in trading of its shares.

But the company's shares fell almost 8% in early trading and were down 3.5% to 55p at 1001 BST.

Alexander Dorogov, TSG chief executive, said: "UFG has always been an incredibly supportive shareholder in TSG and I know that will continue. This transaction creates a great opportunity for TSG. It gives us the opportunity to acquire shares at an attractive discount in a carefully managed way so as to avoid market turbulence and provides significant flexibility in the management of our capital base to create value for all our shareholders."

The buyback requires the approval of shareholders at a meeting to be held in early June.