In its first six months with the new pressure oxidation plant (POX) in operation, Petropavlovsk (POG) has ticked plenty of boxes, upping production at lower costs than expected. But its 2019 earnings will not get the huge shot in the arm other gold miners are benefiting from, as its revenue is capped by a hedging programme.
The Russia-focused miner will hand over around 130,000 ounces (oz) of its forecast 225,000 oz production in the second half at a miserly $1,281 (£1,045) an oz, compared with the current price of over $1,500 an oz.
The POX plant’s ramp-up phase has come with lower-than-expected costs and Petropavlovsk cut its overall all-in sustaining cost (AISC) in the first half by 10 per cent to $1,029 an oz, despite flooding issues at the Pioneer mine pushing the operation’s AISC up above $1,500 an oz.
Chief executive Pavel Maslovskiy said the establishment of the plant meant the company was looking to buy another mine, specifically a 2m-oz-plus deposit in Russia or Central Asia. He said a higher-grade operation than the company’s current 1.1 grams of gold per tonne (g/t) average would “seriously improve” margins, and a good deal could be found despite current price highs, thanks to the difficulty of getting refractory ore projects into production.
Tamesis Partners forecasts a full-year net loss of $9m, moving to net income of $66m in 2020.
| PETROPAVLOVSK (POG) | ||||
| ORD PRICE: | 10p | MARKET VALUE: | £334m | |
| TOUCH: | 9.9-10.1p | 12-MONTH HIGH: | 10p | 5p |
| DIVIDEND YIELD: | na | PE RATIO: | 5 | |
| NET ASSET VALUE: | 18¢ | NET DEBT: | 91%* | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 (Restated) | 270 | -33.1 | -1.0 | - |
| 2019 | 305 | 16.8 | 0.4 | - |
| % change | +13 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.23 *Excludes lease liabilities of £6.2m | ||||
