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Petropavlovsk still eyeing 2020 growth

Guidance for this year maintained despite Russian lockdown
Petropavlovsk still eyeing 2020 growth

Even with a country-wide Covid-19 lockdown in place, Petropavlovsk (POG) said its expansion plans were on track and has maintained production guidance for this year. In its 2019 financial results, the miner said it was still looking at an end-of-2020 startup for the new Pioneer flotation plant, and production of 620,000-720,000 ounces (oz) this year. 

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This comes after a major step-up in gold sales in 2019 – a 40 per cent year-on-year increase to 514,000 oz, including just over 42,000 oz of third-party concentrate. 

Petropavlovsk was not fully exposed to the gold price spike in the second half of 2019 because its hedging knocked $61/oz (£49) from its average sales price.

The millstone of IRC, the iron ore miner Petropavlovsk owns a 31.1 per cent stake in, knocked reported pre-tax profit to well below last year’s $82m, to $53m. On top of the $12m recognised as the gold miner’s share of IRC’s loss, it took a $23m impairment on the holding. 

Petropavlovsk said in March it had found a buyer for all but 1.2 per cent of the holding for $10m, but there was no further news on the sale process in the latest update. It is not clear who was behind the Liechtenstein-registered company called Stocken, which would also need to take on the liability for over $200m in debt for the deal to go ahead. 

Broker Peel Hunt forecasts adjusted earnings per share to climb from 1¢ in 2019 to 4.4¢ this year, and for cash profits to jump 84 per cent to $381m.

PETROPAVLOVSK (POG)   
ORD PRICE:24pMARKET VALUE:£ 794m
TOUCH:23-26p12-MONTH HIGH:29pLOW: 8p
DIVIDEND YIELD:NILPE RATIO:30
NET ASSET VALUE:19¢NET DEBT:90%*
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2015600-142-7.0nil
201655027.01.0nil
201759048.91.0nil
201850082.41.0nil
201974252.91.0nil
% change+48-36--
Ex-div:na   
Payment:na   
£1=$1.23 *Includes lease liabilities of $13.2m