Petropavlovsk said its main Russian lender has asked it to repay a $200-million loan immediately, piling more pressure on the London-listed gold miner that’s been thrown into turmoil by sanctions against Moscow.
The gold producer has found itself in an existential crisis after Russia’s invasion of Ukraine and the sanctions that followed. It’s headquartered and listed in London, but all its gold mines are in Russia’s far east.
Petropavlovsk has an agreement with Russia’s Gazprombank, which acts as off-taker of all the company’s gold production under the conditions of two loans. But UK sanctions against the Russian lender mean Petropavlovsk is unable to sell any gold. The company also has bond payments due next month and has limited cash reserves outside Russia.
Petropavlovsk said Wednesday that Gazprombank had asked for the immediate repayment of a loan of about $201 million and asked for another $87.1-million credit facility to be paid next week.
“The company is considering the implications of these notices with its advisers,” Petropavlovsk said in a statement.
Petropavlovsk said last week that it’s looking at selling all its assets as sanctions against Russia mean it can’t sell the bullion it produces in the country or pay its debts.
A little more than a decade ago, Petropavlovsk was worth $3-billion and mentioned as a future member of the benchmark FTSE 100 Index, but sinking gold prices and management missteps reduced it to a penny stock. Petropavlovsk slumped 21% in London trading, bringing its decline this year to more than 90%.