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Regulatory Story
Company Petropavlovsk PLC
TIDM POG
Headline Q3 2019 Sales and Production Report
Released 07:00 21-Oct-2019
Number 4644Q07

RNS Number : 4644Q
Petropavlovsk PLC
21 October 2019
 

 

 

 

 

 

21 October 2019

 

Petropavlovsk PLC

 

Q3 2019 Sales and Production Report

 

Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together with its subsidiaries, the "Group") today issues its production results for the period from 1 July 2019 to 30 September 2019 (the "Period").

Q3 Operational Highlights

Gold sales

▪     53% increase in total gold sales to 126.4koz (Q3 2018: 82.8koz[1]) including 38.9koz (c.30%) from processing refractory gold concentrate at the POX Hub

▪     Q3 2019 average realised gold price of US$1,388/oz (Q3 2018: US$1,228/oz), including an US$(89)/oz hedging effect

▪     The Company remains on track to meet its full-year sales target of c.450koz - 500koz

Gold sales '000oz

Asset

Q3 2019

Q3 2018

YTD 2019

YTD 2018

JSC Pokrovskiy Mine

39.8

31.4

92.6

115.8

Pioneer (incl. Pokrovskiy mine)

31.0

31.4

83.8

115.8

Third party concentrate

8.8

-

8.8

-

LLC Malomirskiy Rudnik

39.6

13.0

132.6

59.7

LLC Albynskiy Rudnik

47.0

38.4

126.3

108.7

Total Group

126.4

82.8

284.2

Pioneer sales includes 6.3koz produced from the former Pokrovskiy mine in the first 9 months of 2018 and 0.7koz produced in Q3 2018

Pokrovskiy Pressure Oxidation (POX) Hub

▪     A total of 29.7koz of gold was produced from processing 35kt of Malomir refractory concentrates with recoveries stabilising at c.91%

▪     Starting 5th July 2019, the Company successfully processed 13kt of third party concentrates reaching recoveries of c.95% over the period

 

 

Malomir flotation plant

▪     Malomir flotation plant worked successfully, exceeding design parameters in terms of capacity and grades of concentrate produced. YTD 96kt of concentrate containing c.84koz of gold was produced at the plant

Gold hedging

▪     As at 30 September 2019, forward contracts to sell an aggregate of 80koz of gold at an average price of US$1,300/oz were outstanding

Responsible Business

▪     LTIFR declined to 1.54 (Q3 2018: 1.58) while the 9 months statistics have demonstrated a meaningful improvement due to educational Health and Safety procedures and stricter site monitoring

▪     The consumption of water and energy has increased as a result of both higher production and the commissioning of the POX Hub

▪     Normalised GHG emissions per gold ounce produced declined due to improved efficiency and increased production

▪     No environmental incidents were reported during Q3 2019

Metric

Units

Q3 2019

Q3 2018

YTD 2019

YTD 2018

LTIFR

-

1.54

1.58

1.46

2.77

Water used

Million m3

6.28

4.74

18.68

14.46

Energy consumption

Million GJ

1.18

1.02

3.96

3.62

GHG

Tonne CO2e/oz

0.79

0.86

0.96

1.00

 

Development Update

Update on the construction of a new flotation facility at Pioneer

▪     The construction of a new flotation facility at Pioneer will double the Company's refractory ore processing capacity from 3.6Mtpa to 7.2Mtpa

▪     Key items of equipment have been secured and have begun arriving at the site. The project    remains on track for Q4 2020 commissioning

Corporate Update

Upgrade of outlook to Positive by S&P Global Ratings (S&P) on expectation of stronger performance

▪     On 9 October 2019, S&P upgraded Petropavlovsk's Outlook to Positive, affirming its B- rating and highlighting the progress the Company has made over the past 12 months towards demonstrating a "stronger operating performance, improved liquidity, stronger governance, and a potential to reduce leverage meaningfully from 2020"

▪     S&P stated that the upgrade to a "positive outlook reflects the potential for an upgrade in the next six to twelve months if the Company establishes a longer track record of efficient operations, deleveraging in line with our base case and maintaining adequate liquidity"

Appointment of Non-Executive Director

▪     On 14 October 2019, the Board announced the appointment of Mr Mirzaaziz (Aziz) Musakhanov as a Non-Executive Director with immediate effect

▪     Mr Musakhanov was nominated as a Director by Aeon Mining Limited (formerly Fincraft Holdings Ltd), the Company's largest shareholder at the time of his appointment

Dr Pavel Maslovskiy, CEO, comments:

"I am pleased to announce that our operations have continued to perform in line with forecasts and that the smooth ramp-up has continued at the POX Hub where we have now successfully commenced treating third party concentrates during the quarter.

I am particularly pleased with our operations at the new flotation plant at Malomir which have so far exceeded all expectations. Our engineers are now aiming to enhance performance even further by increasing both throughput and concentrate grades. Any increase in throughput would reduce our reliance on processing third party material while increasing economies of scale. Higher grades will lower transport costs, benefit the environment and improve our margins.

Albyn, which is our largest producing mine and an important source of non-refractory ore, performed better than expected with 47koz produced this quarter due to higher grades as well as better recoveries. In the last quarter, we have proven up additional reserves from the Elginskoye open pit deposit and completed construction of an all-season road between the deposit and processing facilities at Albyn. We remain confident that commercial scale mining will begin in 2020.

In conclusion, I am pleased to welcome Mr Musakhanov to the Board as a representative of our largest shareholder. I am confident that the breadth of his experience will allow him to make a significant contribution to the Company's ability to implement its plans and create value for all of our stakeholders."

Operations Report

JSC Pokrovskiy Mine          

The JSC Pokrovskiy mine is a holder of a number of licences including licences for the Pokrovskiy and Pioneer deposits. The Pokrovskiy deposit ceased operations in Q1 2018 with its site and processing facilities now home to the new POX Hub where concentrates from the Malomir flotation plant (which is reported as part of the Malomir production table) and third party concentrates are processed.

 

Pokrovskiy

Units

Q3 2019

Q3 2018

YTD 2019

YTD 2018

POX Plant (3rd party concentrates)

 

 

 

 

 

Concentrate treated

t '000

13

-

13

-

Avg. grade

g/t

46.4

-

46.4

-

Gold in concentrate

oz. '000

19.5

-

19.5

-

Recovery

%

94.8

-

94.8

-

Gold recovered

oz. '000

18.4

-

18.4

-

Gold production (doré)(1)

oz. '000

13.1

-

13.2

-

(1)  Gold production (doré) includes a small amount of gold (c.0.3koz in Q3 and 0.7koz YTD) recovered from the recirculation of residual tailings solutions. Numbers may not add up due to gold in circuit

 

The processing of third party material commenced in July, with recoveries quickly reaching c.95%. A total of 13kt of third party concentrate was processed with grades ranging from c.40g/t to 50g/t.

 

 

Pioneer deposit

Units

Q3 2019

Q3 2018

YTD 2019

YTD 2018

Mining operations

 

 

 

 

 

Total material moved

m3 '000

4,228

4,350

14,718

13,799

Ore mined

t '000

879

353

2,075

2,883

Average grade

g/t

1.04

1.09

1.00

1.11

Gold content

oz. '000

29.5

12.3

66.6

103

Processing operations (RIP plant)

 

 

 

 

Total milled

t '000

1,544

1,598

4,363

4,865

Average grade

g/t

0.73

0.65

0.72

0.78

Gold content

oz. '000

36.4

33.4

101.4

122.2

Recovery

%

84.3

82.7

81.9

79.9

Gold recovered

oz. '000

30.7

27.6

83.1

97.6

Heap leach operations

 

 

 

 

Total stacked

t '000

-

354

-

679

Average grade

g/t

-

0.5

-

0.5

Gold content

oz. '000

-

5.7

-

10.9

Recovery

%

-

63.9

-

42.7

Gold recovered

oz. '000

1.3

3.6

2.4

4.7

Gold production (doré)

oz. '000

30.8

30.2

83.5

108.8

             

Pioneer is currently focused on mining non-refractory ores from several conventional open pits and underground operations. The construction of a new flotation facility at Pioneer will lead to a transition in Q4 2020 from mining non-refractory to mainly refractory ores, ready for processing at the POX Hub.

Open-pit mining produced mostly lower grade material (0.5 - 0.7g/t) which was blended with higher grade ores from the Katrin pit (1.0 - 1.5 g/t) and high-grade underground ore (4.9 - 6.6 g/t) prior to processing at the plant.

LLC Malomirskiy Rudnik    

LLC Malomirskiy Rudnik is a holder of a licence for the Malomir deposit, a conventional open-pit and underground operation transitioning towards mainly refractory ore processing using the onsite flotation plant. The resulting concentrate is shipped for processing to the Pokrovskiy 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.

 

Malomir deposit

Units

Q3 2019

Q3 2018

YTD 2019

YTD 2018

 

Mining Operations

 

 

 

 

 

 

Total material moved

m3 '000

1,800

1,837

5,638

6,082

 

Non-refractory ore

t '000

83

776

316

2,085

 

Average grade

g/t

3.56

1.38

4.40

1.26

 

Gold content

oz. '000

9.5

34.5

44.7

84.4

 

Refractory ore

t '000

1,320

-

4,033

-

 

Average grade

g/t

1.22

-

1.09

-

 

Gold content

oz. '000

51.9

-

141.9

-

 

Malomir Processing Operations

 

 

 

 

 

 

Resin-in-pulp (RIP plant), non-refractory ores 

 

 

 

 

 

Total milled

t '000

107

459

454

2,104

Average grade

g/t

3.05

1.27

3.48

1.18

Gold content

oz. '000

10.5

18.8

50.7

79.6

Recovery

%

77.1

70.8

78.9

72.0

Gold recovered

oz. '000

8.1

13.3

40.0

57.3

Flotation plant, refractory ores

 

 

 

 

Ore

t '000

954

518

2,766

518

Grade

g/t

1.32

1.37

1.09

1.37

Gold content

oz. '000

40.5

22.7

96.8

22.7

Recovery

%

86.9

86.9

86.9

86.9

Concentrate yield

%

3.9

3.3

3.5

3.3

Concentrate produced

t '000

37

17

96

17

Grade

g/t

29.6

36.4

27.4

36.4

Gold content

oz. '000

35.2

19.7

84.1

19.7

POX Plant (Malomir concentrate)

 

 

 

 

Concentrate treated

t '000

35

-

111

-

Grade

g/t

29.4

-

29.6

-

Gold in concentrate

oz. '000

33.1

-

105.2

-

Recovery

%

89.7

-

87.1

-

Gold recovered

oz. '000

29.7

-

91.7

-

Total gold production (doré)(1)

oz. '000

39.5

13.0

132.6

59.8

                                 

(1)   Numbers may not add up due to gold in circuit

Mining of non-refractory ore continued at both the open pit and underground operations. Exceptionally heavy rainfall in August and September did not affect production rates although additional pumping measures were required at the underground part of the operation.

Mining of refractory ore continued at the Centralny open pit and production was in line with expectations for both run-of-mine ores and the production of flotation concentrate. Pit expansion workings continued at Centralny which will allow production to increase in 2020.

LLC Albynskiy Rudnik        

LLC Albynskiy Rudnik is a holder of the licence for the Albyn deposit, the Group's principal non-refractory asset which operates as a conventional open pit and RIP circuit. The mine life of the Albyn deposit is expected to cease in 2020. Thereafter, the Company intends to use Albyn's current processing facilities to treat ore from the Elginskoye and Unglichikan deposits located nearby. These deposits, under the Company's control, contain JORC Measured, Indicated and Inferred Mineral Resources of 4.00Moz Au, including 1.95Moz of JORC Proved and Probable Ore Reserves. During 2020, the Elginskoye pit will be developed to replace the Albyn pit as the main source of ore from 2020. Road construction between Elginskoye and the Albyn processing plant was finalised during August 2019.

 

Albyn deposit

Units

Q3 2019

Q3 2018

YTD 2019

YTD 2018

Mining Operations

 

 

 

 

 

Total material moved

m3 '000

2,995

4,342

9,342

14,449

Ore mined

t '000

1,915

1,060

4,344

2,937

Average grade

g/t

1.23

1.12

1.19

1.02

Gold content

oz. '000

75.8

38.3

166.8

96.6

Processing operations (RIP Plant)

 

 

 

 

Total milled

t '000

1,178

1,163

3,511

3,454

Average grade

g/t

1.31

1.11

1.18

1.04

Gold content

oz. '000

49.5

41.6

133.2

115.6

Recovery

%

93.9

94.1

94.0

94.0

Gold recovered

oz. '000

46.5

39.1

125.1

108.7

Total gold production (doré)

oz. '000

47.0

38.5

126.2

108.8

Production at the Albyn pit remained on budget in terms of mining, processing and production, with mining taking place in the lower horizons. Year-to-date gold production continues to track above target due to higher grade ores.

About Petropavlovsk

With a Premium Listing on the London Stock Exchange, Petropavlovsk (LSE: POG) is a major integrated Russian gold producer with JORC Resources of 20.5Moz Au which include Reserves of 8.2Moz Au.

 

The Company's key operating mines (Pioneer, Malomir and Albyn) are in the Amur Region in the Russian Far East and the Company has produced a total of c.7.5Moz of gold since operations began in 1994. Petropavlovsk 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.petropavlovsk.net and www.ircgroup.com.hk or contact:

 

Petropavlovsk PLC                                      

Patrick Pittaway / Max Zaltsman / Viktoriya Kim

+44 (0) 20 7201 8900

TeamIR@petropavlovsk.net

Peel Hunt LLP                                              

Ross Allister / James Bavister / David McKeown

+44 (0) 20 7418 8900

Canaccord Genuity Limited

Henry Fitzgerald-O'Connor / James Asensio

+44 (0) 20 7523 8000

Buchanan

Bobby Morse / Ariadna Peretz

+44 (0) 20 7466 5000

POG@buchanan.uk.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. The content of websites referred to in this announcement does not form part of this announcement.

 

[1]Total gold sales in Q3 2018 were affected by the build-up of 19.7koz of gold contained in concentrate stockpiles ahead of POX plant commissioning


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