Petropavlovsk (POG) reported a mixed full-year performance, with positive news on gold production being overshadowed by a 35 per cent increase in net debt to $1.06bn (£697m). Still, management reckons that a significant decrease in capital expenditure in 2014, and steady cash flows from gold mining, should slash debt by 2019.
Admittedly, the debt surge is linked to the development of a new processing plant, which should boost capacity from next year. Petropavlovsk anticipates repaying debt by increasing gold output - that rose 13 per cent in 2012 to 710,400 ounces - and through increased returns on its 40 per cent stake in iron-ore miner IRC. Management expects Petropavlovsk to produce 760,000-780,000 ounces of gold this year - 46 per cent of which has been hedged at $1,663 an ounce. But, despite benefiting from a 4 per cent rise in gold sales and higher realised prices ($1,670 an ounce), a $198m write-down on its IRC stake meant 2011's $240.5m net profit was turned into a $243.9m net loss. Operating expenses jumped 73 per cent, too, to $1.49bn - which boosted average cash costs by a third to $875 an ounce. Overall, group underlying cash profit fell 18 per cent to $488m.
JPMorgan Cazenove raised its adjusted 2013 EPS from 49¢ to 82¢ (53¢ in 2012).
| PETROPAVLOVSK (POG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 223p | MARKET VALUE: | £419m | |
| TOUCH: | 223-224p | 12-MONTH HIGH: | 574p | LOW: 206p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 767¢ | NET DEBT: | 64% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.38 | 40.0 | 27.1 | 8.00 |
| 2009 | 0.47 | 197 | 98.0 | 7.00 |
| 2010 | 0.61 | 69.2 | 11.0 | 10.0 |
| 2011 | 1.26 | 361 | 124 | 12.0 |
| 2012 | 1.38 | -205 | -85.0 | 12.0† |
| % change | +10 | - | - | - |
Ex-div: 26 Jun Payment: 26 Jul †Includes 5p a share scrip dividend £1=$1.52 | ||||
