Russia-based gold miner Petropavlovsk increased its gold production by 42% year-on-year to 320 600 oz for the first half of this year.
Production included 178 000 oz from the processing of own and third-party refractory gold concentrates at the pressure oxidation facility hub.
Further, the company's gold sales increased by 39% year-on-year to 312 400 oz, driven by the increase in gold production; while the average realised gold price increased by 28% to $1 640/oz, driven by higher gold prices and no impact from the company’s hedging arrangements.
Petropavlovsk’s total cash costs (TCC), however, also increased by 27% to $983/oz, primarily owing to the higher costs associated with third-party gold concentrate.
TCC from own material increased marginally by 3% to $800/oz as a result of lower grades of nonrefractory ore at Albyn and Malomir, lower resin in pulp recoveries at Malomir, inflation of certain rouble-denominated costs and an increase in mining tax rates from 1.2% to 6% at LLC Malomirskiy Rudnik.
The increase was partially offset by higher grades and recoveries of nonrefractory ore processed at Pioneer, higher grades and recoveries of refractory ore processed at Malomir and rouble depreciation.
The miner’s all-in sustaining costs also increased by 19% to $1 220/oz, mainly owing to higher TCC, as well as an increase in capitalised stripping expenditure at both Pioneer and Malomir.
Petropavlovsk’s group revenue (including non-precious operations) increased by 71% to $522.7-million, reflecting higher production volumes and a higher average gold sales price.
As such, the company’s underlying earnings before interest, taxes, depreciation and amortisation increased by 96% to $192.6-million as a result of higher revenues but partially offset by higher TCC.
Petropavlovsk’s headline loss for the period was $22-million, compared with headline earnings of $3.9-million in the first half of the prior year.
The loss was the result of a negative non-cash adjustment of $122.2-million related to a fair value loss on the conversion option, reflecting the increase in the company’s share price.
Capital expenditure, meanwhile, increased by 32% to $59.6-million, with expenditure focused on construction of the Pioneer and Malomir flotation plants, the Elginskoye mine development and development work to support underground mining at Pioneer.
The company’s cash generated from operations increased by 213% to $172.8-million, driven by higher gold sales, higher gold prices and rouble weakness, but partially offset by an increase in costs associated with the purchase of third-party concentrates and higher mining taxes.
The miner also managed to reduce its debt by $538-million as at June 30, principally driven by an increase in cash.
Further, Petropavlovsk also placed emphasis on settling of the interest-bearing gold prepays during the first six months, which stood at about $121-milion as at June 30 – a net decrease of $66.4-million over the period.
Petropavlovsk chairperson James Cameron Jr says Petropavlovsk has “excellent assets” with substantial opportunities.
“Our guiding focus is to deliver greater value for all shareholders. This will involve reducing costs, improving controls and raising standards of governance across the company."
Meanwhile, he adds that, over the past few months, the board and interim CEO have encountered a lack of cooperation from certain employees and received legal actions, which have no legal merit.
As such, Cameron adds that the board is finalising the selection of a forensic investigator to examine all transactions in the past few years which may have involved “connected parties”, as requested by shareholders at the requisitioned general meeting on August 10.