©Bloomberg

Vitaly Nesis, chief executive officer of Polymetal International Plc

The Russian miner that will rejoin London’s FTSE 100 index this month still faces a fight to win acceptance from investors who remain biased against the country, its chief executive says.

Polymetal International was part of a wave of emerging markets resources companies that listed in the UK several years ago, amid surging commodity markets. The gold and silver miner was part of the FTSE 100 from 2011 until a sharp fall in precious metals prices in 2013.

A resurgence in gold and silver this year has contributed to an 80 per cent rise in Polymetal’s shares and propelled it back into the ranks of blue-chip UK stocks, following London Stock Exchange’s latest index review last week.

Since Polymetal’s UK listing five years ago investor sentiment towards emerging markets resources companies has broadly soured, with corporate governance concerns at miners including Indonesian-controlled Bumi and Kazakh-backed Eurasian Natural Resources Corporation, which have both left the London market.

Vitaly Nesis, who has led Polymetal since its listing, said the miner remained significantly undervalued compared with peers and said investors were “using rules of thumb to make judgments about jurisdictional risk” about companies operating in Russia and neighbouring countries.

“If you look at facts you will see that fundamentally these are solid jurisdictions where mining companies can make good money and can repatriate cash and profits to investors without any problems,” said Mr Nesis, whose brother Alexander is Polymetal’s largest shareholder.

“It is an uphill battle for Polymetal to convince international institutional investors that this is the case, but we have been around for almost five years in London and it is the persistence and consistency of the story that will turn the tide and help Polymetal get the sort of valuation that our peers have.”

In specific cases of poor corporate governance “the underlying causes were company-specific not country-related”, said Mr Nesis. “We as a company have to work and overcome this bias.”

Mr Nesis said Polymetal had “got off the radar” of many investment funds in the two years since it left the FTSE 100 and said he would spend more time in London to “reconnect” with investors.

Recent volatility in commodity prices “still weighs heavy on the sector”, Mr Nesis said. “A lot of investors are not convinced that the current uptick is here to stay. The longer [gold] is rangebound or drifts slightly higher, the more comfortable investors will become.”

Polymetal, which mines in Russia and Kazakhstan, said last week that its latest Russian mine had started up nine months early and at less cost than budgeted.

The group’s inclusion in the FTSE 100 will lift to eight the number of miners in the blue-chip index. The list includes two other precious metals miners, Fresnillo and Randgold Resources, focused on Latin America and Africa respectively.