Russian gold miner Petropavlovsk (POG) was up 2.4% to 21.5p as it stuck to its annual guidance, including production in the range of 430,000 to 470,000 ounces of gold.

The company also swung to a first-half profit, though its underlying performance weakened owing to a drop in production volumes.

Net profit for the six months through June amounted to $48.9 million, compared to year-on-year losses of $22 million that included some one-off, non-cash items.

Operating profit slumped 67% to $48.3 million after revenue dropped 33% to $351.9 million, thanks to a 39% fall in gold production that more than offset a 9% rise in the company’s average realised gold price.

According to Petropavlovsk the lower output was a result of a transitional period, with more refractory ore, a type of material which requires more sophisticated treatment in order to recover the gold, being processed at its POX plant.

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Historically Petropavlovsk has been beset by corporate governance issues and boardroom dramas.

CEO Denis Alexandrov, who took the helm in December 2020, faced the unusual situation of being voted off the board in June. He told Shares this had not affected his ability to run the company and that having spoken to those shareholders who voted against him, still had the impression they felt he was the right person to lead the company.

‘As to why I was voted off, that’s a question for them but it was not a vote of no confidence in me in the role of CEO,’ he said.

Alexandrov, who has led previous turnaround efforts in the mining sector, including at AIM-quoted Highland Gold which was taken over in a £1 billion deal in 2020, is due to update the market on a strategic review of Petropavlovsk at an investor day at a yet to be determined date in October.

He said among the areas the company was looking at was a ‘balanced approach’ to using the cash flow from operations which would include paying a dividend.

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Issue Date: 01 Sep 2021