Investment Rationale

Petropavlovsk is a leading vertically integrated Russian gold miner. With a premium listing on the Main Market of the London Stock Exchange, the Company is one of Russia’s largest gold producers. Having operated continuously in the Far East of Russia for over 25 years, from where it has produced more than 7.8Moz of gold, the Company has a strong track record of mine development, expansion and asset optimisation. The Company is one of the major employers and taxpayers in the Amur region and benefits from strong relationships with the local communities in which it operates.

 

The POX Hub

The Pressure Oxidation facility (‘POX Hub’) is a cornerstone of Petropavlovsk’s strategy and the principal driver of future value for the Company. The POX Hub is a world-class facility and one of only two in Russia.

The POX Hub was commissioned late in 2018 and began ramping up in early 2019, onwards and can treat both Petropavlovsk’s own abundant refractory gold reserves as well as those of third parties. Not only does this enable the Company to increase gold production but also reduce cash costs – it also means that Petropavlovsk is in a strong position to consider stranded refractory ore deposits in the region and across Russia.

The POX Hub is well located in terms of easy access and well-developed infrastructure. The anticipated growth in cash flow from processing its own and third-party ore will be used to strengthen the balance sheet, which will then enable the option of paying dividends to our shareholders.

 

Significant Assets

Petropavlovsk has three active gold mines: Pioneer, Albyn and Malomir and gold licences which cover an area of more than 3,200km2 in Russia. The mines are a mix of open pit and underground, with c.15Mtpa ore processing capacity in addition to the 500ktpa potential of the POX Hub. Petropavlovsk today has a long-life mineral resource base with high expansion potential.

 

Experienced Management and Technical Expertise

Through 25 years of operating in Russia, the Company has established itself as a successful explorer, developer and miner of gold, with all its active mines being developed from initial greenfield discoveries. Petropavlovsk differentiates itself from its peers through its technological expertise and R&D capabilities. The Company owns several world-class institutes, including Irgiredmet and NIC Gydrometallurgia (‘RDC Hydrometallurgy’), which are responsible for the innovative design of its processing plant and continuous improvement of its processing operations.

 

Deleveraging

The Company’s Net debt / EBITDA was 2.1x as at 31 December 2019, and Board has set deleveraging as a management priority given the need to strengthen the Company’s balance sheet and liquidity position. The key driver of increased cash flow to the Company is the POX Hub which was commissioned in 2018 and began ramping up in early 2019.

 

ESG Principles

Sustainable development and responsible business practices have always been integral to our operations. Since the early years when Petropavlovsk received financing from the IFC, the Group has adhered to strict ESG principles and the very high H&S standards required under Russian law in addition to operating in line with international best practices. The Company has a strong Sustainability track record and strives for continuous improvement for the benefit of all stakeholders. As part of its ESG strategy, Petropavlovsk joined the UN Global Compact Initiative on corporate sustainability and further enhanced its Corporate Social Responsibility (‘CSR’) framework, among other achievements.

 

Investors

Petropavlovsk PLC’s shares are publicly traded on the Main Market of the London Stock Exchange (the ticker is POG). Detailed share price information may be found here.

Disclosure under section 430 (2B) of Companies Act 2006

Information for US Investors – Announcement of Pricing of Senior Notes

Issuance of Bonds for US

 

Warning to Shareholders

We would like to remind shareholders to be very mindful of unsolicited phone calls or correspondence concerning your shareholding or investment matters. If you have not already done so, please take a few moments to read our warning to Shareholders.

 

Investor Relations

Patrick Pittaway – Head of Investor Relations

E-mail: pp@petropavlovsk.net / teamir@petropavlovsk.net

Telephone:  +44 (0) 20 7201 8900

Petropavlovsk PLC
11 Grosvenor Place
London
SW1X 7HH
United Kingdom

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