Russian gold miner Petropavlovsk (POG) fell 6.5% to 23.5p in mid-morning trading on Wednesday despite a big jump in annual production and sales. The move perhaps reflecting some profit taking after a strong run for the shares.

Recently promoted back in to the FTSE 250, the gold miner reported a surge in production, revenue and underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2019.

In the year to 31 December, total gold produced jumped 22% to 517.3koz while revenue soared 48% higher to $741.6m and underlying EBITDA surged 45% to $264.8m.

Its average realised gold price increased 7% to $1,346 per ounce, with sales increasing 39% to 514koz, while the firm also managed to keep a decent lid on costs with all-in sustaining costs declining 5% to $1,020 per ounce.

Overall profit for the year dipped 0.8% to $25.7m, but the company said this reflected non-cash items including foreign exchange losses and a deal for its stake in iron ore miner IRC valued lower than it is booked.


In the first quarter of 2020, gold production increased 71% compared to the same period last year, with 186.2koz of gold produced. Based on the Q1 numbers, the company said it remains on track to hit its full year production target of 620koz-720koz.

Petropavlovsk chief executive Pavel Maslovskiy said the big increases in production has been driven by its POX technology, the development of which was completed by the end of 2018.

The technology helps Petropavlovsk dig refractory gold ores out of the ground. These ores have ultra-fine gold particles but are naturally resistant to being recovered by normal processes. Around half of Petropavlovsk’s estimated resources are refractory ores.

Maslovskiy said, ‘This transformative year demonstrated that our POX technology can produce profitable ounces from some of the most challenging ores in Russia.

‘The company's significant investment in this area is now bearing fruit and our POX Hub (which is one of only two pressure oxidation facilities in Russia) has accounted for c.35% of our total production last year.’


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Issue Date: 27 May 2020