TIDMPOG
RNS Number : 8377M
Petropavlovsk PLC
26 January 2021
26 January 2021
Petropavlovsk PLC
Q4 and FY 2020 Sales & Production Report
Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together
with its subsidiaries, the "Group") today issues its sales and
production results and corporate update for the period from 1
October 2020 to 31 December 2020 (the "Period" or "Q4") as well as
its full year sales and production results ("FY 2020").
Mr Denis Alexandrov, CEO said: "Faced with several challenges in
2020, and in Q4 in particular, we were still able to deliver a
notable 6% year-on-year increase in gold production, slightly below
our guidance but broadly in line with market expectations . We also
made solid progress on our development projects such as the Pioneer
flotation plant and Malomir expansion.
The new management team and I have started visiting the mines
and conducting a comprehensive review of our operations, management
structure, and budget and forecast for 2021. This work will
position us to update our guidance on production and capital
expenditure targets for the year ahead."
Operational Highlights
Gold production and sales
-- FY 2020 gold production amounted to 548.1koz (FY 2019:
517.3koz) representing an increase of 6.0%, although this was
slightly below the guidance range due to lower than expected
production from both own mined gold ore and third-party
concentrate
-- Own mined gold production amounted to 385.6koz in FY 2020 (FY
2019: 471.6koz) with a weak Q4 occuring at all operations for
reasons explained below
-- Third-party concentrate gold production increased to 162.5koz
in FY 2020 (FY 2019: 45.7koz), although this was lower than
expected mainly due to logistical issues associated with the
COVID-19 pandemic
Gold production '000oz
----------------------------------------------------------
Asset Q4 2020 Q4 2019 FY 2020 FY 2019
---------------------------- -------- -------- -------- --------
Pioneer 27.9 36.9 119.0 120.4
Malomir 29 .4 47.6 140.1 180.3
Albyn 28.2 44.7 126.5 170.9
3rd-party concentrate (POX
Hub) 28.0 32.5 162.5 45.7
---------------------------- -------- -------- -------- --------
Total Group 113.5 161.7 548.1 517.3
---------------------------- -------- -------- -------- --------
Note: Numbers may not add up due to rounding effect
-- FY 2020 gold sales totalled 546.5koz (FY 2019: 514.0koz)
-- Average realised gold prices were significantly higher,
gaining 33.6% in Q4 2020 and 29.8% in FY 2020 compared to previous
periods. There were zero gains or losses from hedging in both Q4
2020 and FY 2020 which compares to small losses in the previous
periods
Average realised gold price in US$/oz
-----------------------------------------------------------
Q4 2020 Q4 2019 FY 2020 FY 2019
----------------------------- -------- -------- -------- --------
Average contractual gold
price 1,864 1,483 1,748 1,407
Gain or (loss) from hedging 0 (88) 0 (61)
----------------------------- -------- -------- -------- --------
Average realised gold price 1,864 1,395 1,748 1,346
----------------------------- -------- -------- -------- --------
Pokrovskiy Pressure Oxidation (POX) Hub
-- In FY 2020, a total of 245.3kt of refractory gold concentrate
was processed through the POX Hub, comprising 144.0kt from Malomir
concentrate with an average grade of 29.0g/t and 101.3kt from
third-party concentrate with an average grade of 48.4g/t
-- Of the 140.1koz of gold produced at Malomir in FY 2020,
122.4koz of gold was recovered from refractory concentrates at the
POX Hub with recoveries averaging 91.4% and the balance from
non-refractory gold ore
-- Of the 162.5koz produced from third-party concentrates in FY
2020, 148.0koz of gold was recovered with recoveries averaging
93.8% and the balance representing gold released from circuit
Debt Principal and Cash
-- Debt principal outstanding as of 31 December 2020 was
US$538.0m (30 September 2020: US$542.8m), the change relating to
further conversion of the US$125m Convertible Bonds in Q4
-- Cash (unaudited) as of 31 December 2020 was US$35.4m (30
September 2020: US$68.5m)
-- The Company continues to settle the interest-bearing gold
prepays which stood at c.US$63.8m as at 31 December 2020 (US$72.3m
as at 30 September 2020), a net decrease of c.US$8.5m for the
fourth quarter
Hedging
-- Zero cost collars remain with a gold price floor of $1,600/oz
and a cap of $1,832/oz for 3,500koz maturing every month until
December 2021
-- Zero cost collars with a RUB:USD price floor of RUB75.00 and
a cap in the range of between RUB90.65 and RUB100.00 for US$7.0m
maturing every month until December 2021
Responsible Business
-- In FY 2020, there was a 7% reduction in LTIFR to 1.50
accidents per 1 million hours worked which is in line with the
Group's 2020 target to improve or sustain a LTIFR of 1.61.
Including contractors, the LTIFR stood at 1.23 in FY 2020
-- No fatal accidents occurred during the year either among
Petropavlovsk employees or the Company's contractors
-- Zero environmental incidents were reported in 2020
Metric Units Q4 2020 Q4 2019 FY 2020 FY 2019
--------------------------- --------------------- -------- -------- -------- --------
LTIFR Per 1m hours worked 1.56 2.05 1.50 1.61
Environmental incidents Number 0 0 0 0
--------------------------- --------------------- -------- -------- -------- --------
Note: Environmental incidents defined as moderate or serious
-- Two community consultations were organised during H2 2020 to
introduce and explain our projects to local residents, NGOs and
local authorities with a key focus on environmental safety. The
meetings were held with strict compliance with COVID-19 sanitary
measures
-- In December 2020, Petropavlovsk became a constituent of the
FTSE4Good Index Series. Created by the global index provider FTSE
Russell, the FTSE4Good Index Series is designed to measure the
performance of companies demonstrating strong Environmental, Social
and Governance (ESG) practices
COVID-19 Update
-- No material COVID-19 outbreaks have occurred at our
operations so far. The Company continues to implement strict
quarantine and safety measures at all its operations with remote
working practices established at offices in Moscow, Blagoveshchensk
and London
-- As of 18th January 2021, there have been 10 reported cases
among the Group's employees. All affected employees are
self-isolating or receiving medical care
-- At the time of the reporting, the Group's supply chains
remain fully functional
Development Update
Start-up of Pioneer flotation plant and expansion of the
flotation facility at Malomir
-- As announced, the commissioning of the Pioneer flotation
plant is now scheduled for Q2 2021
-- Once operational, the new Pioneer flotation plant will double
the Group's capacity to process refractory gold ore from its own
mines, from 3.6Mtpa (at the existing Malomir flotation plant) to a
combined Group total capacity of 7.2Mtpa, thus reducing the POX
Hub's reliance on treating low-margin third-party concentrates
-- The construction of a third line at the Malomir flotation
plant is underway and will further add 1.8Mtpa of capacity from Q1
2022, bringing the combined Group total capacity to 9.0Mtpa
Corporate Update
-- As of the date of this release, the Company has received
Conversion Notices in respect of the exercise of conversion rights
under the US$125 million Convertible Bonds amounting to an
aggregate of US$ 87 m (balance remaining of US$38m), which resulted
in the issue of c. 644.4m new ordinary shares
-- On 20 January 2021, the Company provided a corporate update.
In particular, that the Group's mines continue to operate as
normal, despite the challenges presented by COVID-19 pandemic.
Further, the lack of co-operation that the Group has experienced
from a small group of senior employees and ongoing related legal
hearings had improved markedly in recent weeks
-- On 30 November 2020, the Company announced the appointment of
Denis Alexandrov as CEO of the Group
-- On 23 November 2020, the Company announced it had appointed
KPMG LLP to undertake a forensic investigation into certain
transactions undertaken by the Company and its subsidiaries, and
IRC Ltd and its subsidiaries, in the three years to August 2020
-- On 12 October 2020, the Company announced the appointments of
John Smelt as Head of Corporate Affairs from 19 October 2020 and
Dorcas Murray as Company Secretary from 2 November 2020
Operations Report
Pioneer
Pioneer is currently focused on mining non-refractory ores from
several conventional open pits and underground operations. The
construction of new flotation facilities at Pioneer will lead to a
transition, starting in Q2 2021, from mining non-refractory to
mainly refractory ores which will be concentrated ahead of
processing at the POX Hub.
PIONEER Units Q4 2020 Q4 2019 FY 20 FY 201
20 9
----------------------------- ---------- -------- -------- ------- -------
Mining operations
----------------------------- ---------- -------- -------- ------- -------
Total material moved m3 '000 4,863 4,324 19,884 19,042
Ore mined t '000 836 1,720 3,145 3,795
Average grade g/t 1.15 0.92 1.00 0.97
Gold content oz. '000 30.8 50.8 101.1 118.6
Processing operations (RIP plant)
----------------------------------------- -------- -------- ------- -------
Ore milled t '000 1,327 1,344 5,410 5,707
Average grade g/t 0.79 0.97 0.81 0.78
Gold content oz. '000 33.6 42.0 140.0 143.5
Recovery % 83.0 81.1 84.6 81.7
Gold recovered oz. '000 27.9 34.1 118.4 117.2
Gold production (doré) oz. '000 27.9 36.9 119.0 120.4
----------------------------- ---------- -------- -------- ------- -------
Note: Numbers may not add up due to fluctuation of gold in
circuit and gold production includes a small amount of g old
recovered from heap leach pads stacked before 2019
Due to the delay in the commissioning of the flotation circuit
(mentioned above), the planned processing of refractory ore in Q4
was replaced by non-refractory ore with slightly lower grades but
with higher recoveries. As a result, Pioneer produced 27.9koz from
material grading 0.79g/t with recoveries of 83.0%
In FY 2020, Pioneer processed non-refractory ore from both open
pit and underground mining operations to produce 119koz from
material grading 0.81g/t with recoveries of 84.6%
2020 production was less than expected mainly due to delays
caused by underground contractors and the COVID-19 pandemic in the
preparation of underground mining of high grade ore at the
Andreevskaya ore zone, which was due to start-up in Q4 2020 but
which has now been delayed to Q1 2021
Malomir
Malomir is a conventional open-pit mine and underground
operation transitioning towards mainly refractory ore processing
using the onsite flotation plant. The resulting concentrate is
shipped for processing to the POX Hub. The Malomir deposit has
extensive refractory reserves and resources and both near-mine and
surrounding areas are considered highly prospective for the
discovery of further refractory gold ounces.
Units Q4 2020 Q4 2019 FY 2020 FY 2019
--------------------------------- ----------- -------- -------------------- -------- --------
Mining Operations
--------------------------------- ----------- -------- -------------------- -------- --------
Total material moved m3 '000 2,290 2,020 9,867 7,658
Non-refractory ore mined
: t '000 87 85 423 413
Average grade g/t 2.65 2.81 2.24 3.96
Gold content oz. '000 7.4 7.6 30.5 52.6
Refractory ore mined
: t '000 746 1,262 4,128 5,282
Average grade g/t 1.26 1.17 1.16 1.11
Gold content oz. '000 30.2 47.5 153.9 189.1
Malomir Processing Operations
---------------------------------------------- -------- ---------------- ------------------
Resin-in-pulp (RIP plant), non-refractory
ores
---------------------------------------------- -------- ------------------------------ --------
Ore milled t '000 95 82 414 536
Average grade g/t 2.69 2.85 2.23 3.38
Gold content oz. '000 8.2 7.5 29.7 58.2
Recovery % 77.8 77.7 77.1 78.7
Gold recovered oz. '000 6.4 5.8 22.9 45.9
--------------------------------- ----------- -------- ---------- ------------------ --------
Flotation plant, refractory
ores
---------------------------------------------- -------- ---------- ------------------ --------
Ore milled t '000 990 997 3,874 3,762
Average grade g/t 1.22 1.33 1.26 1.15
Gold content oz. '000 38.9 42.5 157.1 139.3
Recovery % 82.9 87.7 84.2 87.1
Concentrate yield % 3.7 3.8 3.7 3.5
Concentrate produced t '000 36 37 143 133
Grade g/t 27.5 31.0 28.8 28.4
Gold content oz. '000 32.3 37.3 132.3 121.4
POX Plant (Malomir concentrate)
---------------------------------------------- -------- ---------- ------------------ --------
Concentrate treated t '000 33 44 144 155
Average grade g/t 27.5 31.0 29.0 30.0
Gold in concentrate oz. '000 28.7 43.7 133.9 149.0
Recovery % 91.1 92.2 91.4 88.6
Gold recovered oz. '000 26.2 40.3 122.4 132.0
--------------------------------- ----------- -------- ---------- ------------------ --------
Total gold production
(doré) oz. '000 29.4 47.6 140.1 180.3
--------------------------------- ----------- -------- ---------- ------------------ --------
Note: Numbers may not add up due to fluctuation of gold in
circuit
Malomir predominantly treated refractory ore in FY 2020 with
performance largely in-line with expectations. In total, c.4.1Mt of
refractory ore grading 1.16g/t was mined with 122.4koz gold
recovered from processing at the POX Hub. POX plant recovery rates
for Malomir concentrate were 91.4%, in-line with expectations and
project design rates
Mining of non-refractory ore was largely from underground
operations with some non-refractory gold mined from the
Magnetitovoye open pit. In total, 423kt of non-refractory ore was
mined grading 2.24g/t with 22.9koz gold recovered from the RIP
plant. Underground mining occured at the deeper levels of the
Quartzitovoye deposit where the complex configuration of ore body
led to increased dilution which negatively affected mined grades in
both Q4 and through FY 2020
Albyn
The Albyn deposit effectively ceased operating in Q3 2020 and
its processing facilities will be used to treat ore from the nearby
Elginskoye satellite deposit, which will replace the Albyn pit as
the main source of non-refractory ore from 2021, and potentially
from the earlier-stage Unglichikanskoye deposit in the future. Both
these licences are owned 75% through TEMI LLC.
As of 31/12/2019, these deposits contained JORC Measured,
Indicated and Inferred Mineral Resources of 3.93Moz Au which
include 2.32Moz of JORC Proved and Probable Ore Reserves.
Units Q4 2020 Q4 2019 FY 2020 FY 2019
------------------------ ---------- -------- -------- -------- --------
Mining Operations
------------------------ ---------- -------- -------- -------- --------
Total material moved m3 '000 535 3,123 9,451 12,465
Ore mined t '000 87 1,879 2,338 6,222
Average grade g/t 0.64 1.27 0.87 1.22
Gold content oz. '000 1.8 76.8 65.1 243.5
Processing operations (RIP
Plant)
------------------------------------ -------- -------- -------- --------
Ore milled t '000 922 1,091 4,368 4,602
Average grade g/t 0.99 1.34 0.95 1.22
Gold content oz. '000 29.2 47.0 132.8 180.2
Recovery % 93.8 93.9 93.9 93.9
Gold recovered oz. '000 27.4 44.2 124.8 169.3
Total gold production
(doré) oz. '000 28.2 44.7 126.5 170.9
------------------------ ---------- -------- -------- -------- --------
Note: Numbers may not add up due to fluctuation of gold in
circuit
As anticipated, Albyn's performance was lower in 2020 than in
2019 due to the depletion of the Albyn deposit and transition to
mining the satellite deposit at Elginskoye. In addition, a delay in
obtaining an official permit for treating Elginskoye ore at the
Albyn processing plant meant that more low grade stockpiled ore was
treated in H2 2020 than anticipated, which caused FY 2020
production to decrease further than had been expected. The official
permit was received in late December, so this issue has been
resolved
In Q4, a total of 922kt of ore grading 0.99g/t was processed at
the Albyn plant to produce 28.2koz of gold with the lower grades
reflecting the processing of stockpiles
In FY 2020, a total of c.4.4Mt of ore grading 0.95g/t was
processed to produce 126.5koz of gold reflecting a mix of mined
and, increasingly, stockpiled ores in H2 2020
Third-party concentrate (POX Hub)
Third-party concentrate processing is a temporary solution that
optmises unused POX Hub capacity which allows the Group to
demonstrate production potential of the POX Hub and improve Group
cash flow
Units Q4 20 Q4 201 FY 20 FY 201
20 9 20 9
----------------------------- ---------- ------ ------- ------ -------
POX Plant ( third- party
concentrates)
----------------------------- ---------- ------ ------- ------ -------
Concentrate treated t '000 23.0 19.5 101.3 32.5
Avg. grade g/t 37.2 71.8 48.4 61.6
Gold in concentrate oz. '000 27.5 45.1 157.8 64.5
Recovery % 92.7 94.9 93.8 94.9
Gold recovered oz. '000 25.5 42.8 148.0 61.2
Gold production (doré) oz. '000 28.0 32.5 162.5 45.7
----------------------------- ---------- ------ ------- ------ -------
Note: Numbers may not add up due to fluctuation of gold in
circuit
In Q4, the Company processed 23.0kt of third-party concentrate
grading 37.2g/t to produce 28.0koz of gold. In FY 2020, the Company
processed 101.3 kt of third-party concentrate grading 48.4 g/t to
produce 162.5 koz of gold. Production in both periods was
negatively affected by logistics caused by the COVID-19 pandemic
which limited the quantity of third-party concentrates that could
be supplied to the POX Hub
FY 2020 gold production benefitted from a release of gold in
circuit reflecting the processing of high grade material at the end
of 2019 from which gold was produced in 2020
About Petropavlovsk
Petropavlovsk PLC (LSE: POG. MOEX: POGR) is a major integrated
Russian gold producer with JORC Resources of 21.03Moz Au which
include Reserves of 8.46Moz Au. Following its IPO on the
Alternative Investment Market (AIM) in 2002, Petropavlovsk was
promoted to the London Stock Exchange in 2009, where today it is a
Premium Listed company and a constituent of the FTSE 250, FTSE 350
and FTSE All Share indices. The Company's shares also trade on the
Moscow Exchange and are a constituent of the flagship RTS / MOEX
index.
Petropavlovsk's key operating mines (Pioneer, Malomir and Albyn)
are in the Amur Region in the Russian Far East. Petropavlovsk has
produced a total of c . 8.2 Moz of gold since operations began in
1994 and has a strong track record of mine development, expansion
and asset optimisation.
The Group recently entered a new era of growth following the
successful commissioning and start-up of its flagship asset, the
Pressure Oxidation (POX) Hub at Pokrovskiy, which enables the
processing of the Company's abundant refractory reserves and
resources.
Petropavlovsk is one of the region's largest employers and one
of the largest contributors to the sustainable development of the
local economy.
For more information
Please visit www.petropavlovskplc.com or contact:
Petropavlovsk PLC +44 (0) 20 7201 8900
Patrick Pittaway / Max Zaltsman / Viktoriya TeamIR@petropavlovskplc.com
Kim
Hudson Sandler +44 (0) 20 7796 4133
Charlie Jack / Katerina Parker / Elfie Kent Petropavlovsk@hudsonsandler.com
Cautionary note on forward-looking statements
This release may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward
looking statements include all matters that are not historical
facts. They appear in a number of places throughout this release
and include, but are not limited to, statements regarding the
Group's intentions, beliefs or current expectations concerning,
among other things, the future price of gold, the Group's results
of operations, financial position, liquidity, prospects, growth,
estimation of mineral reserves and resources and strategies, and
exchange rates and the expectations of the industry. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances [outside the
control of the Group. Forward-looking statements are not guarantees
of future performance and the development of the markets and the
industry in which the Group operates may differ materially from
those described in, or suggested by, any forward- looking
statements contained in this release. In addition, even if the
development of the markets and the industry in which the Group
operates are consistent with the forward looking statements
contained in this release, those developments may not be indicative
of developments in subsequent periods. A number of factors could
cause results and/or developments to differ materially from those
expressed or implied by the forward-looking statements including,
without limitation, general economic and business conditions,
demand, supply and prices for gold and other long-term commodity
price assumptions (and their effect on the timing and feasibility
of future projects and developments), trends in the gold mining
industry and conditions of the international gold markets,
competition, actions and activities of governmental authorities
(including changes in laws, regulations or taxation), currency
fluctuations (including as between the US Dollar and Rouble), the
Group's ability to recover its reserves or develop new reserves,
changes in its business strategy, any litigation, and political and
economic uncertainty. Except as required by applicable law, rule or
regulation (including the Listing and Disclosure Guidance and
Transparency Rules), the Group does not undertake any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Past
performance cannot be relied on as a guide to future performance.
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