Ian Ashby
JOHANNESBURG (miningweekly.com) – Russian gold miner Petropavlovsk has reported a 31% increase in its profit for 2017, reflecting higher revenue as a result of increased gold sales at a stronger price.
The UK-based company on Wednesday reported that its profit increased from $31.7-million in 2016 to $41.5-million, including a benefit of $34.6-million of capitalised interest and partially offset by a $29.2-million effect of deferred taxation.
Revenue rose by 9% from $540.7-million to $587.4-million, as gold sales increased by 10% to 439 800 oz and the average realised gold sales price increased by 3% to $1 262/oz.
The higher volumes of gold sold at a higher price were offset by an increase in costs. Group total cash costs jumped 12% to $741/oz, owing to the effect of the rouble’s appreciation, inflation of certain rouble-denominated costs and lower processing recoveries and grades.
Group all-in sustaining costs (AISC) surged by 19% to $963/oz, mainly owing to an increase in sustaining capital expenditure (capex) in relation to the Pioneer and Malomir underground projects, the expansion of the Pioneer and Albyn tailings dams, ongoing near mine exploration and an increase in central administration expenses.
Total capex amounted to $88.1-million, a significant increase on the $29.4-million of 2016.
Petropavlovsk increased its production by 10% to 439 600 oz during 2017.
“Both of the company's flagship mines, Pioneer and Albyn, significantly outperformed the previous year's production. This result is even more impressive considering that in general the team treated lower grade material than in the previous year, and that Pioneer, Pokrovskiy and Malomir had decreased recovery rates due to the more refractory nature of the ores mined. These factors also put upward pressure on our costs,” said chairperson Ian Ashby.
The company is targeting production of between 420 000 oz and 460 000 oz in 2018, and includes anticipated first production from the POX Hub towards the end of the year.
The group said that its total costs would be between $700/oz and $750/oz and that its AISC would reduce to between $800/oz and $850/oz as a result of lower underground sustaining capex, lower sustaining exploration costs and slightly lower administrative costs.
Petropavlovsk has forecast capex of $105-million for 2018 – the last year of significant capex.