Investment Rationale

Petropavlovsk is a leading vertically integrated Russian gold miner. With a premium-listing on the Main Board 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 7.5Moz 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.

 

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. The plant is expected to reach full operating capacity from 2021 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 gold mines; Pioneer, Albyn, and Malomir, across a total licence area of over 2,600 km2. The mines are a mix of open pit and underground, with c.14Mtpa RIP processing capacity in addition to the 500kt p.a. potential of the POX Hub. Since the start of operation, the Company has produced more than 7.5Moz of gold. 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 mines being developed from initial greenfield discoveries.  Petropavlovsk differentiates itself from its peers though its technological expertise and R&D capabilities [link to the Technological Expertise (R&D) tab]. The Company owns several world-class institutes, including Irgiredmet and RDC Hydrometallurgy, which are responsible for the innovative design of its processing plant and continuous improvement of its processing operations.

 

Net debt / EBITDA target of 2.0x

The Board has set a Net debt / EBITDA target of 2.0x 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. POX is expected to reach full operating capacity from 2021 onwards.

 

Strong Board and Governance

Petropavlovsk has a strong and experienced Board [link to the Board tab] which is fully compliant with the UK Corporate Governance Code in terms of composition and diversity, including six Independent Non-Executive Directors with a strong range of skillsets ranging from auditing, mining, investment banking and legal. We have an established Code of Conduct and Business Ethics.

 

ESG Principles

Sustainable development has been a key focus for the Group since its foundation and, from its early years when the Company received financing from by the EBRD and IFC, the Company has adhered to strict ESG principles and the highest standards as required by Russian law and through operating in line with international best practise.  As a result, the Company has a strong track record but strives for continuous improvement in all its activities. As part of its ESG initiatives, Petropavlovsk joined the UN Compact Initiative on Corporate Sustainability and appointed two women NEDs to its Board to further enhance diversity.

 

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

POX Capital Markets Day and H1 2019 Financial Results

Latest Report

2018 At A Glance