Shares in FTSE 250 gold miner Petropavlovsk (POG) soared over 16% to 36.5p after it revealed big jumps in half year production and sales.

The firm is currently in the midst of a boardroom battle, but that didn’t stop it reporting a 42% increase in total gold production to 320.6koz in the first half of this year, as well as a 39% increase in total gold sales to 312.4koz.

Petropavlovsk reiterated its full-year 2020 production target of 620-720koz of gold, including 430-460koz from its higher-margin ‘own’ production, with this proportion of higher-margin production ahead of analyst expectations.

The company’s average realised gold price in the first half of 2020 was $1,640 per ounce, compared to $1,286 per ounce in the same period a year ago.

The resulting increase in revenue allowed the company to trim its net debt, down to $538 million compared to $561.3 million at the end of December.


The strong update from Petropavlovsk comes as it faces more boardroom drama.

Privately-owned Russian gold miner UGC took a large stake in Petropavlovsk earlier this year, and in the June AGM it and some other shareholders voted former chief executive Pavel Maslovskiy and incoming chairman Fiona Paulus off the board in a surprise move.

Ahead of another shareholder meeting to repeat the board vote, for now co-founder Peter Hambro has returned to the business as non-executive chairman, with Dr Alya Samokhvalova moving from deputy chief executive to the top role.

Speaking to Shares, Dr Samokhvalova insisted the boardroom volatility wouldn’t detract from the company’s performance.

She said, ‘As a management team we are just focusing on our operations, health and safety, and improving our operating performance. This is a paramount focus for us.’

Canaccord Genuity analyst Sam Catalano said the resolution of the boardroom issues will be the ‘key driver’ of the company’s share price in the short-term, but added that today’s announcement shows the ‘well-managed operations’ within Petropavlovsk.

Catalano said, ‘On a fundamental level, this is a stock which is exposed to a robust gold market, has a strong deleveraging story (1.1x Net Debt/EBITDA by end 2020E), should see double-digit free cash flow yield within the next two years (17% in 2022E on our forecasts), is likely to begin dividend payments within that period, and has unique value-creation opportunities over and above our base case which are not available to most of its competitors.’


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Issue Date: 23 Jul 2020