TIDMPOG
RNS Number : 0248J
Petropavlovsk PLC
22 April 2022
22 April 2022
Petropavlovsk PLC
Q1 2022 Production and Sales 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 quarter ending 31
March 2022 (the "Period" or "Q1 2022").
Mr Denis Alexandrov, CEO, said:
"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. 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. 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."
Operational Highlights
Gold Production
-- Total Q1 2022 gold production was 103.0koz, an 8% increase
versus Q1 2021 (95.6koz) on higher volumes from Pioneer and
3rd-party concentrate
-- Own-mined gold production during the period was 80.2koz, a 3%
decrease vs. Q1 2021 (82.4koz) due to lower production at Albyn and
Malomir
-- 3rd-party concentrate gold production increased 73% to
22.8koz (Q1 2021: 13.2koz) on higher throughput volumes as compared
to the same period last year
Gold production (koz)
---------------------------------------------
Asset Q1 2022 Q1 2021
------------------------- -------- --------
Pioneer 32.9 24.1
Malomir 30.2 36.0
Albyn 17.2 22.3
Total Own Gold 80.2 82.4
------------------------- -------- --------
3rd-party concentrate 22.8 13.2
Total Group 103.0 95.6
------------------------- -------- --------
Gold Sales
-- Gold sales totalled 89.8koz in Q1 2022 (Q1 2021: 95.6koz)
-- The average realised gold price during the period was
US$1,871/oz, a 5% increase on Q1 2021 (US$1,789/oz)
Pokrovskiy Pressure Oxidation (POX) Hub
-- The POX Hub processed c.99kt of refractory gold concentrate
in Q1 2022, almost twice the throughput in the same period in 2021
(52kt), essentially operating at near full capacity for
concentrates with the sulphur and carbon content mix treated during
the quarter
-- Total Q1 2022 throughput included 37kt from Pioneer at a
grade of 21.1g/t, 35kt from Malomir at 28.4g/t and 28kt of
3rd-party concentrate at 26.2g/t (all average grades), meaning 72%
of the concentrate processed during the period was from our own
mines (Q1 2021: 64%)
2022 Guidance
-- Guidance for own gold production for the year remains
unchanged in the range of 345-365koz. Guidance for production from
3rd-party concentrate is lowered to 30-40koz (previously 35-55koz)
due to expected supply chain disruptions. Total gold production is
therefore expected to be in the range of 375-405koz (previous
guidance: 380-420koz)
Debt Principal and Cash
-- Cash (unaudited) as of 31 March 2022 was US$71.8m (31
December 2021: US$25.5m)
-- Debt principal outstanding as of 31 March 2022 was US$624.4m
(31 December 2021: US$590m)
Hedging
-- Following the expiry of zero cost collar option contracts for
gold and currency on 31 December 2021, the Company has not entered
into any new zero cost collar contracts
-- The Company hedges purchases of 3rd-party concentrate from
the time of purchase until gold is produced and is ready for sale.
The amount and timing of hedging corresponds to the volume of gold
the Company expects to produce and the timing of the expected sale.
As of 31 March 2021, no gold was hedged using forward contracts
Sanctions Impact
-- Petropavlovsk continues to monitor the adoption of sanctions
against Russia due to the conflict in Ukraine , and countermeasures
introduced by the Russian government , to ensure compliance and
assess the possible direct or indirect impact these may have on its
business
-- At the time of publishing, there are no direct sanctions on
the Company or any of its subsidiaries, directors or employees, and
mining operations continue uninterrupted
-- Potential disruptions to the supply chain were flagged as a
key risk to future mine performance, and the Group initiated
contingency planning on day one of the crisis
-- As per the Company's announcements on 25 and 30 March and 14
and 20 April 2022. sanctions enacted in relation to the Company's
largest creditor, Gazprombank ("GPB"), prohibited the Group from
making interest and principal repayments under a US$200m committed
term loan and US$86.7m in revolving credit facilities ("RCFs"). GPB
has notified the Group of demands for early repayment of the term
loan and RCFs and of the assignment of the term loan to JSC
UMMC-INVEST
-- Petropavlovsk is also prohibited by sanctions from selling
gold to GPB, which had acted as the main off-taker for the Group's
production. The Group continues to explore options for the sale of
its gold, including to other potential buyers, and has applied for
a new licence to export gold
-- In light of the above, as well as legal restrictions that
limit the Group's ability to transfer cash out of Russia, and
keeping in mind the US$500 million 8.125% guaranteed notes 2022
issued by Petropavlovsk 2016 Limited (of which US$304 million
remains outstanding) maturing November 2022, the Company has
appointed AlixPartners UK LLP to assist the Board of Directors as
it explores its options and determines the Company's course of
action in the best interest of all stakeholders, including
creditors and shareholders.
-- Please refer to the Company's announcements on 25 and 30
March and 14 and 20 April 2022 for more detail
Responsible Business
-- No fatal accidents occurred at the Group's operations during
the period
-- The Group recorded a Lost Time Injury Frequency Rate
("LTIFR") of 1.0 in Q1 2022, less than half the rate recorded
during the same period last year
-- The improved safety performance follows the implementation in
2021 of better personnel training, new standards for safe work
practices, stricter controls on the application of fundamental
safety rules, and broad information campaigns designed to highlight
key occupational and seasonal risks
-- Zero major environmental incidents were recorded during the
quarter
Metric Units Q1 2022 Q1 2021
------------------------- ------------------- -------- --------
LTIFR Per 1m hrs worked 1.00 2.01
Environmental incidents Number 0 0
------------------------- ------------------- -------- --------
Note: Environmental incidents defined as moderate or serious
-- Despite an uptick in reported, mostly mild COVID -19 cases
among Group employees during the Omicron wave in January-February,
the Company avoided major outbreaks at its production sites, where
strict protocols remain in place
-- As of 4 April 2022, 85% of the Group's employees were fully
vaccinated against COVID -19
Development Update
Malomir expansion
-- The construction of a third line at the Malomir flotation
plant is progressing. The project is due for completion in Q3 2022,
although supply chain issues could potentially cause some delay
-- When launched, the expansion will add an additional 1.8Mtpa
of flotation processing capacity, increasing the Group's total
combined refractory ore processing capacity to 9.0Mtpa
Corporate News
-- On 24 January 2022, the Board of Directors (the "Board")
appointed Mr Stanislav Ploshchenko as the Group's chief financial
officer. Mr Ploshchenko has over two decades of experience in
finance including CFO positions at several major publicly listed
companies
-- On 11 April 2022, the Board appointed Mr Roman Deniskin as
independent non-executive director. Mr Deniskin has over 20 years
of operational and strategic experience in the mining, metals and
minerals industries in Russia and Kazakhstan. His appointment
followed the departure of independent director Natalia Yakovleva,
who resigned on 4 April 2022
Operations Report
Pioneer
Pioneer mines refractory and non-refractory ores from several
conventional open pits and underground operations. The launch of a
new flotation plant at Pioneer in Q2 2021 was a major step in the
mine's transition from mining non-refractory to mainly refractory
ores, which are concentrated ahead of processing at the POX
Hub.
PIONEER Units Q1 2022 Q1 2021
----------------------------------- ---------- -------- --------
Mining operations
----------------------------------- ---------- -------- --------
Total material moved m3 '000 5,047 4,720
Non-refractory ore mined t '000 644 1,085
----------------------------------- ---------- -------- --------
Average grade g/t 1.07 1.02
Gold content oz. '000 22.1 35.4
Refractory ore mined t '000 665 -
----------------------------------- ---------- -------- --------
Average grade g/t 1.01 -
Gold content oz. '000 21.6 -
Processing operations (RIP
plant)
----------------------------------- ---------- -------- --------
Ore milled t '000 381 1,314
Average grade g/t 1.27 0.67
Gold content oz. '000 15.6 28.2
Recovery % 78.8 80.6
Gold recovered oz. '000 12.3 22.7
Flotation plant (refractory ores)
----------------------------------------------- -------- --------
Ore milled t '000 882 -
Average grade g/t 1.06 -
Gold content oz. '000 30.1 -
Recovery % 83.7 -
Concentrate yield % 4.2 -
Concentrate produced t '000 37.2 -
Average grade g/t 21.1 -
Concentrate gold content oz. '000 25.2 -
POX Plant (Pioneer concentrate)
----------------------------------------------- -------- --------
Concentrate treated t '000 36.6 -
Average grade g/t 21.1 -
Gold in concentrate oz. '000 24.9 -
Recovery % 95.7 -
Gold recovered oz. '000 23.8 -
Total gold production (doré) oz. '000 32.9 24.1
----------------------------------- ---------- -------- --------
Note: numbers may not add up due to fluctuation of gold in
circuit and / or rounding
Pioneer processed ore from both open pit and underground mining
in Q1 2022, with total gold production rising by 36% year-on-year
to 32.9 koz. Just over half the ore mined during the period was
refractory versus zero in the first quarter of last year, while the
total volume of mined ore rose by 21% from 1,085 kt to 1,309 kt.
The average grade for mined non-refractory ore improved slightly to
1.07 g/t versus 1.02 g/t during the same period last year. At 1.01
g/t, refractory ore mined was of a lower grade than in Q4 2021
(1.30 g/t).
Open pit mining focused on the Severny and Katrin open pits,
with work on the latter being accelerated due to a backlog of
stripping work at Severny. Mining of the underground Andreevsky and
Bakmut-3 ore zones was completed in Q1 2022, while work continues
on the Bakmut-2 ore zone.
Issues with the press filters at the flotation plant, first
flagged by the Company in its Q3 2021 trading update, have
recurred, thereby constraining the plant's ability to produce dry
concentrate. While repairs are ongoing, Pioneer has employed cement
trucks to transport wet concentrate directly to the POX plant.
Malomir
Malomir is a conventional open pit mine and underground
operation which has transitioned from mining mainly non-refractory
ore towards processing refractory ore using the onsite flotation
plant. The flotation concentrate is shipped to the POX Hub for
further processing. 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.
MALOMIR Units Q1 2022 Q1 2021
----------------------------------- ---------- -------- --------
Mining operations
----------------------------------- ---------- -------- --------
Total material moved m3 '000 3,685 2,273
Non-refractory ore mined t '000 - 110
----------------------------------- ---------- -------- --------
Average grade g/t - 1.89
Gold content oz. '000 - 6.7
Refractory ore mined t '000 1,532 1,176
----------------------------------- ---------- -------- --------
Average grade g/t 1.00 1.17
Gold content oz. '000 49.0 44.2
Processing operations (RIP plant)
Resin-in-pulp (RIP plant), non-refractory
ores
----------------------------------------------- -------- --------
Ore milled t '000 - 110
Average grade g/t - 2.18
Gold content oz. '000 - 7.7
Recovery % - 71.9
Gold recovered oz. '000 - 5.5
Flotation plant (refractory ores)
----------------------------------------------- -------- --------
Ore milled t '000 1,037 958
Average grade g/t 1.30 1.26
Gold content oz. '000 43.3 38.8
Recovery % 83.0 83.2
Concentrate yield % 3.8 3.7
Concentrate produced t '000 39.3 35.5
Average grade g/t 28.5 28.2
Concentrate gold content oz. '000 35.9 32.3
POX Plant (Malomir concentrate)
----------------------------------------------- -------- --------
Concentrate treated t '000 34.9 32.9
Average grade g/t 28.4 28.5
Gold in concentrate oz. '000 31.9 30.1
Recovery % 93.2 92.9
Gold recovered oz. '000 29.7 28.0
Total gold production (doré) oz. '000 30.2 36.0
----------------------------------- ---------- -------- --------
Note: numbers may not add up due to fluctuation of gold in
circuit and / or rounding
Malomir shifted its focus entirely to refractory ore last year
and mined 1,532 kt of ore in Q1 2022, an increase of 30%
year-on-year. Ore mining focused mainly on the Central open pit
following the recruitment of a contractor to increase mining and
transportation capacity.
Concentrate produced at the flotation plant rose by 11%
year-on-year to 39.3 kt during the period, reflecting a combination
of higher volumes and yields. Nevertheless, total gold output
during the period fell by 16% year-on-year to 30.2 koz as the
increase in production of gold from refractory sources failed to
compensate for the lack of production from non-refractory ore.
Together with the decline in grades to 1.00 g/t versus 1.17 g/t the
year prior, this supports the case for investing in the ongoing
expansion of the flotation plant.
Albyn
The Albyn processing facility is currently being used to treat
ore from the nearby Elginskoye satellite deposit, which replaced
the depleted Albyn pit as the main source of non-refractory ore
starting from 2021. Albyn could also potentially treat ore from the
earlier-stage Unglichikanskoye deposit in the future. Both of these
licences are owned 75% through TEMI LLC.
ALBYN Units Q1 2022 Q1 2021
----------------------------------- ---------- -------- --------
Mining operations
----------------------------------- ---------- -------- --------
Total material moved m3 '000 - 3,197
Non-refractory ore mined t '000 - 3,338
----------------------------------- ---------- -------- --------
Average grade g/t - 0.95
Gold content oz. '000 - 102.0
Refractory ore mined t '000 - -
----------------------------------- ---------- -------- --------
Average grade g/t - -
Gold content oz. '000 - -
Processing operations (RIP plant)
----------------------------------------------- -------- --------
Ore milled t '000 921 792
Average grade g/t 0.76 0.96
Gold content oz. '000 22.4 24.5
Recovery % 74.3 88.3
Gold recovered oz. '000 16.6 21.6
Total gold production (doré) oz. '000 17.2 22.3
----------------------------------- ---------- -------- --------
Note: numbers may not add up due to fluctuation of gold in
circuit and / or rounding
Mining operations at the Elginskoye deposit were halted in Q1
2022 pending completion of a new mine plan following a broad
exploration drilling programme undertaken at the site in 2021.
Additional RC drilling was carried out during the period to confirm
the block model and to identify promising occurrences of
non-refractory ore.
During the quarter, the processing plant treated ore from
stockpiles, with higher processing volumes more than offset by
lower grades and recoveries, leading to a decline in gold produced
to 17.2koz from 22.3koz. Albyn is examining ways to implement ore
sorting at the stockpiles to improve feedstock to the mill.
3rd-Party Concentrate (POX Hub)
Petropavlovsk processes 3rd-party concentrate as a means to
optimise unused POX Hub capacity, which allows the Group to
demonstrate the production potential of the POX Hub and improve
Group cash flow.
3RD PARTY CONCENTRATES Units Q1 2022 Q1 2021
----------------------------------- ---------- -------- --------
POX plant
----------------------------------- ---------- -------- --------
Concentrate treated t '000 28.0 18.9
Average grade g/t 26.2 30.1
Gold in concentrate oz. '000 23.5 18.3
Recovery % 93.2 93.4
Gold recovered oz. '000 21.9 17.0
Total gold production (doré) oz. '000 22.8 13.2
----------------------------------- ---------- -------- --------
Note: numbers may not add up due to fluctuation of gold in
circuit and / or rounding
The POX hub treated 28kt of 3rd-party concentrate in Q1 2022,
48% more than in the same period last year when there were issues
with concentrate supplies. The average concentrate grade was 13%
lower at 26.2 g/t, but the resulting volume of gold recovered
increased by 29% to 21.9koz. Accounting for gold in circuit, total
production rose by 73% to 22.8koz.
All four autoclaves were in operation during most of the
quarter, aside from brief stoppages for maintenance.
About Petropavlovsk
Petropavlovsk PLC (LSE: POG. MOEX: POGR) is a major integrated
Russian gold producer with JORC Resources of 19.50Moz Au which
include Reserves of 7.16Moz 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. The Company's shares also trade on the
Moscow Exchange and are a constituent of the RTS Index and MOEX
Index.
The Company's key operating mines (Pioneer, Malomir and Albyn)
and its Pokrovskiy Pressure Oxidation (POX) Hub are located in the
Amur Region in the Russian Far East. Petropavlovsk has produced a
total of c.8.8Moz of gold since operations began in 1994 and has a
strong track record of mine development, expansion, and asset
optimisation.
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
John Mann / Max Zaltsman TeamIR@petropavlovskplc.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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