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Petropavlovsk riding high on POX production

Russian gold miner now hedge-free and looking for another big uptick in production
January 23, 2020

Petropavlovsk (POG) has certainly got a handle on its pressure oxidisation (POX) plant, which has been in operation for just over a year now.

IC TIP: Buy at 15p

Gold sales for 2019 were up almost 40 per cent on the year before at 514,000 ounces (oz), including third-party concentrate, which provided around 45,000 oz. 

Production was weighted to the second half, as the POX ramp up continued. The company’s hedging programme knocked $88 (£67) an ounce off the average sales price compared with average spot prices in the final quarter, but this is now finished and Petropavlovsk is currently selling at spot. 

Its share price was up 15 per cent on the production results, to 15p. This is the highest point since 2014. Petropavlovsk has bigger goals for 2020. Guidance has gold sales climbing between 100,000 oz and 200,000 oz compared with last year, and an addition to the plant at the Pioneer mine will double processing capacity for refractory ore by the end of the year. This involves a shift at the operation from non-refractory ore to refractory ore, with the former easier to extract gold from. 

Alongside the results, the company announced the departure of finance chief Alexey Dubynin, after 18 months in the job. He will be replaced by Danila Kotlyarov on 1 February. This month has also seen further movement at the top end of Petropavlovsk's share register.  

The Abu Dhabi Investment Authority started selling down its stake this month, after buying 4.5 per cent of the company in December. It is now down to 2.9 per cent.