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Petropavlovsk gold production way up

Board strife continues as miner reports 39 per cent jump in gold production in first half
July 23, 2020

Russian gold miner Petropavlovsk’s (POG) years of struggling to build a new and highly specialised processing plant is paying off, with first half gold production climbing 39 per cent on last year, to 320,600 ounces (oz). The major increase came from buying gold concentrate, effectively ground-down ore, from other miners. This provided 100,000oz in the half. 

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Petropavlovsk is in the midst of a board crisis, after fellow miner and major shareholder UGC and others voted former chief executive Pavel Maslovskiy and incoming chairman Fiona Paulus off the board at the June AGM in a surprise move. 

Dr Maslovskiy is now officially serving as chief operating officer and deputy chief executive Alya Samokhvalova has moved up to the top role. UGC said this month it would add to its 22 per cent holding by converting bonds to shares. Its complaint about management was that it had let Petropavlovsk’s debt get too high but also said a dividend was needed. The miner’s net-debt-to-Ebitda ratio was 2.1 times at the end of 2019, down from 5.1 times the year before, according to FactSet. 

Petropavlovsk said it would bring in a dividend policy by the end of the year. 

There is another shareholder meeting in the pipeline to repeat the board vote and a shareholder backing management said it has complained to the Takeovers Panel about UGC and 5 per cent shareholder Everest Alliance working together, which they have denied. 

Away from the ructions, the company’s own mines had a varied first half. The Pioneer mine, which also feeds the pressure oxidation (POX) hub, had a 14 per cent increase in production while the Malomir and Albyn mines were both down 10 per cent year-on-year. The Malomir decline was from the type of ore that does not go to the POX hub.