Full-year results for Petropavlovsk (POG) were effectively a sideshow to two significant announcements made on the same day. Not only is the Peter Hambro-chaired group pushing ahead with plans to acquire Russian gold producer Amur Zoloto, but the miner has found financing to finish construction of the half-completed pressure oxidation (POX) hub it abandoned amid a slump in the price of gold in 2013.
The POX hub deal has been struck with GMD Gold, which will provide $120m (£82m) for a 51 per cent stake in the asset. The hub will allow Petropavlovsk to process refractory gold reserves from its Malomir and Pioneer mines, leading to a further 200,000 to 300,000 ounces of gold a year at full capacity, and can be leased to third parties and affiliates of GMD Gold.
Production should be given a further boost from the Amur Zoloto acquisition, which is targeting an increase of 70,000 to 127,000 ounces between 2017 and 2020, at an average cash cost of $640 an ounce. This transaction - which requires shareholder approval - is also being funded by two partners, who will receive 30.3 per cent of Petropavlovsk's enlarged share capital at a knockdown price of 6.89p per share.
Prior to these results, Canaccord Genuity was forecasting full-year adjusted earnings per share of 2¢, against a loss per share of 2¢ in 2015.
PETROPAVLOVSK (POG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 8.3p | MARKET VALUE: | £272m | |
| TOUCH: | 8-8.3p | 12-MONTH HIGH: | 8.4p | LOW: 5.1p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 15¢ | NET DEBT: | 119% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 1.30 | 361 | 124 | 12 |
| 2012 | 1.20 | 40.0 | na | 12* |
| 2013 | 1.20 | -523 | -259 | nil |
| 2014 | 0.86 | -14.3 | -94 | nil |
| 2015 | 0.60 | -142 | -7.0 | nil |
| % change | -31 | - | - | - |
Ex-div:na Payment:na £1=$1.46 *Includes 5p a share scrip dividend | ||||
