UPDATE 1-Kazakh investor to finance Russian oil firm Timan

(Adds details, background)

MOSCOW Oct 9 (Reuters) - Kazakh businessman Timur Kuanyshev will lend up to $100 million to London-listed Russian explorer Timan Oil & Gas Plc TMAN.L in a deal that could result in his taking a 51 percent stake in the firm, Timan said on Thursday.

Timan said it would use the five-year loan, to be supplied in two $50 million tranches, to pay off debt and develop licences in the Russian Arctic. Kuanyshev's company, Kamanisk Holdings Ltd, could convert the loan into a majority stake.

"Kamanisk is entitled to a payment equal to the higher of the loans plus accrued interest and an amount representing 51 percent of the value of Timan at repayment," Timan said in a statement.

"Alternatively, the loan together with accrued interest is convertible at any time after initial drawdown into new ordinary shares of 0.1 pence each ... On conversion, Kamanisk would obtain 51 percent of Timan's fully diluted ordinary shares."

Timan, which operates in the resource-rich Arctic region of Timan-Pechora and the Caucasus region of Dagestan, has already drawn down the first $5 million of the loan to pay creditors and for short-term working capital.

It will draw down the remainder of the first tranche over the next 12 months, allowing it to recommence drilling next month at the NGPT, or Nizhnechutinskoye, project and to develop the KNG, or Khudayelskoye, field. Both are in Timan-Pechora. "Given the necessary financing obtained, we will continue to develop the NGPT and KNG fields and look forward to overall increased well productivity," Timan Chief Executive Alexander Kapalin said in the statement.

Kuanyshev has invested in assets in Russia, Kazakhstan and worldwide in the oil and gas sector, as well as construction, retail, agriculture and consumer goods. His Kamanisk company can nominate three directors to the board at Timan.

"I trust we will build up Timan into a significant production company through our in-depth participation and joint effort with the current management team," Kuanyshev said in the statement.

The second $50 million tranche will be supplied subject to the company meeting reserves and production targets at NGPT and KNG within the next 18 months.

Trade in Timan's shares on London's Alternative Investment Market (AIM) is currently suspended and will resume on the day its interim accounts are announced, on or before Oct. 24. (Reporting by Robin Paxton; Editing by David Cowell)