Petropavlovsk shares spiked 16.4% to 2.2p in early morning trading on Friday, after the company hit its production targets for Q1 2022.
The Russian mining group reported a total gold production of 80.2koz, representing an 8% rise in due to higher volumes from its Pioneer project and third-party concentrate.
Petropavlovsk noted a 73% surge in third-party gold production to 22.8koz compared to 13.2koz over the same period in 2021 as a result of higher throughput volumes.
However, the company mentioned a 3% drop in its own-mined gold production to 80.2koz against 82.4koz in Q1 last year on lower production at its Albyn processing facility and Malomir floatation plant.
“Petropavlovsk achieved its production targets in the first quarter of this year, with higher output from Pioneer, aided by its new flotation plant, and 3rd-party concentrate offsetting expected lower production at Albyn and Malomir due to lower grades,” said Petropavlovsk CEO Denis Alexandrov.
The mining firm highlighted total gold sales of 89.8koz, representing a decline from its 95.6koz sales over its first quarter in 2021.
However, the company benefited slightly from the average realised price of gold increase of 5% to $1,871 per ounce compared to $1,789 per ounce.
Guidance for 2022
Petropavlovsk confirmed its guidance for own gold production in 2022 remained unchanged at 345-365koz, with third-party concentrate guidance lowered to 30-40koz from 35-55koz due to predicted supply chain disruptions.
The mining firm’s total gold production is currently expected to land in the range of 375-405koz against its previous guidance of 380-420koz.
Gazprombank
The company reported no current impact from sanctions on its business or any of its employees, however the group said that sanctions against its largest creditor Gazprombank have prohibited it from making interest and principal repayments below a $200 million committed term loan, and $86.7 million in revolving credit facilities.
Gazprombank has also reportedly notified the company of demands for early repayment of the term loan and revolving credit facilities, and of the assignment of the term loan to joint stock company UMMC-INVEST.
Petropavlovsk also confirmed that it has been prohibited by sanctions from selling gold to Gazprombank, which had previously acted at the main off-taker for the company’s production.
The firm commented that it was currently seeking alternative options for buyers, and that it has applied for a new license to export gold.
“Despite the conflict in Ukraine and related sanctions that have led to various challenges at the corporate level, our mines operated without disruption throughout the period,” said Alexandrov.
“In this rapidly changing environment, we continue to monitor the situation to take all necessary steps to ensure the continuity of our business and compliance with sanctions, and to plan for contingencies that may adversely impact our operations.”