Petropavlovsk PLC - 2009 Full Year and Fourth Quarter Trading UpdateRNS Number : 8906F
Petropavlovsk PLC
20 January 2010
2009 Full Year & Fourth Quarter Trading Update
Petropavlovsk PLC ("Petropavlovsk" or the "Company") today issues its 2009 full year and fourth quarter trading statement as an update and in advance of its Annual Results for the year ended 2009 which are expected to be issued on 25 March 2010.
Highlights
Gold production report for Fourth Quarter 2009
| Attributable Production* |
| Q4 2009 | Q4 2008 | Year ended 31 Dec 2009 | Year ended 31 Dec 2008 |
| oz | oz | oz | oz |
Amur region Pokrovskiy deposit** | 41,100 | 45,200 | 190,100 | 189,500 |
Pioneer deposit** | 81,600 | 73,200 | 234,100 | 150,500 |
Alluvials (including Tokur) | 6,200 | 4,000 | 24,400 | 22,700 |
Joint ventures |
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Odolgo (50%) and Solovevsky Rudnik (13%) | 3,800 | 2,700 | 11,400 | 10,800 |
Omchak (50%)*** | 800 | 1,700 | 26,800 | 28,100 |
TOTAL | 133,500 | 126,800 | 486,800 | 401,600 |
Production update:
The Groups total attributable gold production for the full year ended 31 December 2009 increased by 21% compared to 2008 to 486,800oz, which is in the upper half of the Groups 2009 original production target of 460,000 - 510,000oz;
Pokrovskiy and Pioneer mines combined full year production increased by 25% to 424,200oz compared to 2008;
The Groups joint ventures and alluvial operations contributed a further 62,600oz in 2009 (compared to 61,600oz during 2008) in line with the Groups forecast;
Costs and average realised gold sales price
Cash operating costs for full year 2009 were in line with the Groups forecast;
During 2009 the Russian Rouble rapidly depreciated in the first quarter reaching c.RUR36/US$ then gradually began appreciating during the remaining nine months of the year and ended the year at RUR30.24/US$, only 3% lower in dollar terms than the exchange rate at 31 December 2008;
The Groups average realised gold sales price of US$975/oz during 2009 was 15% higher than the average price of US$845/oz achieved in 2008;
Resumption of dividends
Project development
The expected commissioning of Pioneers third milling line has been advanced to the first half of 2010 from the second.
This line will provide additional capacity of 135,000 tonnes of ore per month;
The Malomir project is scheduled for commissioning in the second half of 2010;
The infrastructure programme at Albyn has commenced.
Production is currently scheduled to begin at the end of 2011;
2010 plans and forecast production
The Groups attributable production for 2010 is currently expected to be between 670,000oz and 760,000oz;
An independent mineral consultant, AuVerdi Capital, has been working with the Group to set up an internal JORC reporting system to report fully JORC compliant reserves and resources.
It is expected that the first results of this process will be included in the Groups Annual Results which are due to be published on 25 March 2010.
Commenting on the announcement, Peter Hambro, Chairman, said:
"I am pleased that we have delivered a sound 21% increase in gold production in 2009 and that costs are in line with our forecasts. This has enabled the Board to resume dividend payments.
Pioneers progress has been a great credit to our phased expansion strategy and we can look forward to an even stronger performance in 2010.
The commitment shown at both Pokrovskiy and Pioneer to work together to effectively deal with a potential sidewall movement at Pokrovksiys main pit showed evidence of the strength of our teamwork throughout the Group.
In an environment of further strong gold prices, our ongoing project development continues in 2010 with an accelerated capital expenditure commitment to ensure that Pioneers still growing contribution and the first production from Malomir will deliver another double digit percentage production increase.
I am also pleased to release our production target for 2010 which anticipates a significant increase in the Groups gold output. Production in 2010 is likely to increase as the year progresses due to the significant volume of stripping scheduled at Pioneer in the first quarter which will produce high grade material for the mill and also the new production capacity coming on stream during the year."
* Total attributable gold production, as stated throughout this document, is comprised of 100% of production from the Groups subsidiaries and the relevant share of production from joint ventures and other investments.
Figures for the comparative period are restated accordingly.
The Group has held c.1.1% interest in Rusoro Mining Ltd since March 2009; no attributable ounces are included in the Group figures.
The Companys direct and indirect interest in Pokrovskiy Rudnik is 98.61%.
**During 2009, some of the ore from Pioneer deposit was processed through Pokrovskiy mill, yielding production of 9,500oz.
Pioneer gold processed through Pokrovskiy mill is included in the Pioneer deposit figures.
Figures for the comparative period are restated accordingly.
*** The Group has entered into a conditional contract for the disposal of the majority of its interest in Omchak.
At this stage there is no certainty that this disposal will take place and the numbers and forecasts in this document do not reflect any reduction in this interest.
There will be a conference call today to discuss the announcement at 09:00 (London time).
Details to access the conference call are as follows:
The Dial-in number in the UK will be: 0800 694 0257
The Dial-in number in Russia will be: 8108 002 097 2044
The Dial-in number in the USA will be: 1866 966 9439
Elsewhere, the Dial-in number will be: 0044 1452 555 566
The Conference ID in all cases will be: 52072489
Enquiries:
Petropavlovsk PLC Alya Samokhvalova Charles Gordon Rachel Tuft
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+44 (0) 20 7201 8900
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Merlin David Simonson Tom Randell
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+44 (0) 20 7726 8400 |
Production
Pokrovskiy mine
The Pokrovskiy mine exceeded its 2009 production target by 13% (199,600oz versus the Groups forecast of 177,000oz), and operated successfully throughout 2009 with the plant processing 1,782,000 tonnes of ore (an increase of 5% versus 2008) and heap leach operations yielding impressive 67% recovery rates.
The increase in production compared to the original plan was achieved despite the mining plan being rescheduled in Q4 to accommodate significant remedial work necessary to manage a potential sidewall failure in the main pit.
The mines management continually monitors the ground conditions around the pit to provide early warning of any geotechnical problems as well as monitoring ground water conditions.
This system indicated potential sidewall stability issues at the main Pokrovskiy pit and allowed the management to address the situation before it became a major concern. To that end, around 600,000 cubic metres of stripping at Pokrovskiy was undertaken in a short period of time with the help of the Pioneer mining fleet.
A large portion of scheduled stripping at Pokrovskiy was thus delayed and resulted in a shortfall of about 350,000 tonnes of planned ore production from the main pit. However, the resulting mine plan rescheduling saw some mining being diverted to the flanks of the main deposit with the result that the shortfall of ore produced by the main pit was compensated by the ore from the Pokrovka-2 pit - the nearest flank to the main deposit.
In the second half of 2009, 232,000 tonnes of ore from this source at an average grade of 3 g/t (22,000oz) were processed through the Pokrovskiy plant.
The advanced stripping mentioned above was part of the 2010 and 2011 mining schedule and therefore the associated cost will still be a constituent of the overall costs of production for the Pokrovskiy deposit when the ore from these areas will be processed.
Pokrovskiy mining and processing operations
Pokrovskiy mining operations |
|
| Units | Q4 2009 | Q4 2008 | Year ended 31 Dec 2009 | Year ended 31 Dec 2008 |
Total material moved | m³ 000 | 1,336 | 1,308 | 5,445 | 5,594 |
Ore mined | t 000 | 279 | 498 | 1,879 | 2,105 |
Average grade | g/t | 2.6 | 2.4 | 2.7 | 3.0 |
Gold content | oz 000 | 24 | 39 | 161 | 203 |
Pokrovskiy processing operations |
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| Units | Q4 2009 | Q4 2008 | Year ended 31 Dec 2009 | Year ended 31 Dec 2008 |
Resin in Pulp Plant |
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Ore from pit | t 000 | 467
Products & Services | Jobs
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