In the second half of 2018, Petropavlovsk’s (POG) reinstated management team improved on its predecessors' efforts by cutting costs and commissioning part of the long-awaited pressure oxidation (POX) plant. The gold miner cut second-half cash costs by 28 per cent on the preceding six months to $650 (£504) an ounce (oz). That’s set against an all-in sustaining cost of $1,117 an oz, 13 per cent above the previous year, which the company attributed to $134m in capital expenditure. Chief executive Pavel Maslovskiy, who came back to the company he co-founded in June, took the expected shot at the deposed board, calling the first-half numbers “weak”.
The period-end debt load came in at $568m, a 3 per cent fall on the previous year, and significantly below consensus expectations thanks to the extra cash generated from the efficiency drive. Possible third-party concentrate processing should also allow the company to cut debt faster this year.
The POX hub commissioning means the 2018 production numbers as given are not overly relevant – 12 per cent of the 422,000-ounce figure was attributable to “refractory concentrate stockpiles” that had been processed by the year-end. In the March quarter, Petropavlovsk recovered 28,000 ounces using the POX plant, a pointer to its positive impact on gold output.
Bloomberg consensus gives adjusted EPS of 1.1¢ for 2019, remaining flat through 2020.
| PETROPAVLOVSK (POG) | ||||
| ORD PRICE: | 8.1p | MARKET VALUE: | £ 268m | |
| TOUCH: | 8.1-8.16p | 12-MONTH HIGH: | 8.8p | LOW: 5.15p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 10 | |
| NET ASSET VALUE: | 18¢ | NET DEBT: | 94% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 0.86 | -14.3 | -94.0 | nil |
| 2015 | 0.60 | -142 | -7.0 | nil |
| 2016 | 0.55 | 27.0 | 1.0 | nil |
| 2017 | 0.59 | 48.9 | 1.0 | nil |
| 2018 | 0.50 | 82.4 | 1.0 | nil |
| % change | -15 | +68 | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| £1 = $1.29 | ||||
