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INVESTIS EMAIL ALERT - PETROPAVLOVSK PLC



Petropavlovsk PLC - Update on Business Plan
RNS Number : 5266E
Petropavlovsk PLC
13 May 2013
 



13 May 2013

 

Optimised business plan in response to the volatility in the gold price, recent exploration successes and board change

 

Petropavlovsk PLC ("Petropavlovsk" or the "Company", or together with its subsidiaries, "the Group") announces that following the recommendations of its Operating and Executive Committees, the Companys Board of Directors has approved adjustments to the Companys business plan in response to the recent volatility in the gold price.

The aim of these adjustments is to reduce the level of the Companys net debt and improve the Companys cash flows.

 

The Company also announces that Mr.

Dmitry Chekashkin has been appointed as Chief Operating Officer and an Executive Director of the Company by the Board on 10 May 2013.

 

Highlights

Total estimated cash savings of US$160 million being made in 2013 in order to strengthen the financial position of the Group;

Extending the development period of the pressure oxidation ("POX") Hub and the related flotation plant at Malomir by 12 to 18 months, thereby deferring US$150 million in capital expenditure which would have been incurred in  2013;

A comprehensive cost-cutting programme has been implemented to reduce annual operating and central administration costs by approximately US$10-15 million; 

The Group reiterates its 2013 gold production forecast of 760,000-780,000oz;

Gold production in 2014 is expected to be in line with 2013 levels, unchanged from previous guidance despite the extension of the POX Hub development period, due to recent exploration successes, particularly:

-     at Malomir, where new non-refractory resources are expected to sustain current levels of production in 2014;

-     at Pioneer, where the Group received positive indications of the existence of further high-grade ore bodies; and

-     at Albyn, where there are significant historical resources at the newly-acquired Uglichikanskaya deposit (located 15km from the Albyn RIP plant).

2013 exploration will focus on upgrading oxide resources into reserves for fast-tracking into the 2014 and 2015 production plans;

These positive exploration results are expected to also benefit the Groups production in 2015 and beyond;

The Company will continue to explore further measures to strengthen the financial position of the Group. 

 

Corporate Update

The Group is pleased to announce the appointment of Mr.

Dmitry Chekashkin as Chief Operating Officer and an Executive Director of the Company with immediate effect;

Prior to his appointment to the Board, Mr Chekashkin was Group Head of Precious Metals and sat on the Executive Committee.

Mr Chekashkin is a qualified engineer and worked as Deputy General Director of Finance for two leading gold mining enterprises in the Russian Far East before joining the Group in 2003.

 

Commenting on the announcement, Peter Hambro, Chairman said:

"We said in April that we were undertaking a review of capital and operational expenditure as a consequence of the volatility in the gold price.

That review has concluded that we should delay the start-up of our POX Hub and the Malomir flotation plant and reduce our operating and administrative expenses.

By promptly taking these important steps, we have ensured the Group remains on a sound financial footing
.

The Group expects, at current gold price levels, a reduction in its net debt position at the end of the current year on successful implementation of these measures.

 

Slowing down the development of the POX project does not affect our production outlook for 2013 and 2014 due to recent successes in the Companys exploration programme, especially at Pioneer and Albyn.

The discovery of new, non-refractory resources next to existing production facilities has validated the Groups long-term strategy of investment in a comprehensive exploration programme in areas with well-known geology and excellent infrastructure.

 

The Group is still committed to completing the POX Hub and considers it a long-term strategic project which will provide the basis for further profitable growth.

Todays announcement means that the capital expenditure will be spread over a longer period than initially planned.

By hedging half of our production earlier this year, we have protected much of the Groups cash flows during this period of investment.

 

I am also pleased to welcome to the Board Dmitry Chekashkin - an experienced engineer, who has worked with the Group for the last 10 years - as our new COO.

I hope that Dmitry will be instrumental in implementing our comprehensive cost-cutting plan and that the Groups financial position will improve significantly in the course of this year."

 

 

Enquiries

 

Petropavlovsk PLC                                                                              +44 (0) 20 7201 8900

Alya Samokhvalova

Rachel Tuft

 

Maitland                                                                                              +44 (0)20 7379 5151

Neil Bennett

George Trefgarne

Seda Ambartsumian

 

 

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 Groups intentions, beliefs or current expectations concerning, among other things, the Groups results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry. 

 

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.

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 developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, currency fluctuations (including the US dollar and Rouble), the Groups ability to recover its reserves or develop new reserves, changes in its business strategy, political and economic uncertainty.  Save as required by the Listing and Disclosure and Transparency Rules, the Company is under no obligation to update the information contained in this release.

 

Past performance cannot be relied on as a guide to future performance.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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