Petropavlovsk PLC on Friday said its first-quarter production has increased, despite the fallout from the war in Ukraine, but noted that it has seen sales fall as it searches for new buyers.
Shares shot up 29% at 2.52 pence each on Friday morning in London.
Petropavlovsk is a London-based gold mining company with operations in Russia.
The miner said total gold production for the first quarter ended March 31 increased 8% to 103,000 ounces from 95,600 ounces in the same quarter a year before.
Own-mined gold production dropped 3% to 80,200 ounces from 82,400 ounces, due to lower production at the Albyn and Malomir mines. Third-party concentrate gold production increased 73% to 22,800 ounces from 13,200 ounces, it said.
Petropavlovsk said that it reached its production targets for the period and operated without disruption, despite the conflict in Ukraine and related sanctions that have led to ‘various challenges at the corporate level.’
It said that there are no direct sanctions on the company or any of its subsidiaries, due to the conflict. However, Petropavlovsk noted that it is prohibited from selling gold to Gazprombank, a lender to Petropavlovsk which had acted as the main off-taker for the company’s production.
Total gold sales dropped 6.1% to 89,800 ounces in the quarter from 95,600 ounces, but the average realised gold price in the quarter improved 4.6% to $1,871 per ounce from $1,789.
‘The group continues to explore options for the sale of its gold, including to other potential buyers, and has applied for a new licence to export gold,’ the company added.
The miner continued: ‘In light of the above, as well as legal restrictions that limit the group’s ability to transfer cash out of Russia, and keeping in mind the $500 million 8.125% guaranteed notes 2022 issued by Petropavlovsk 2016 Ltd - of which $304 million remains outstanding - maturing November 2022, the company has appointed AlixPartners UK LLP to assist the board of directors as it explores its options and determines the company’s course of action in the best interest of all stakeholders, including creditors and shareholders.’
Petropavlovsk maintained its annual guidance for its own gold production of 345,000 to 365,000 ounces. However, the company lowered guidance for production from third-party concentrate to 30,000 to 40,000 ounces from 35,000 to 55,000 ounces, due to expected supply chain disruptions.
Petropavlovsk’s total annual gold production outlook, therefore, dropped to 375,000 to 405,000 ounces from the 380,000 to 420,000 ounces previously guided.
‘In this rapidly changing environment, we continue to monitor the situation to take all necessary steps to ensure the continuity of our business and compliance with sanctions, and to plan for contingencies that may adversely impact our operations,’ Chief Executive Denis Alexandrov said.
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