Petropavlovsk cuts 2013 interim dividend

DividendMax Ltd.

Petropavlovsk cuts 2013 interim dividend

H1 2013 Results

- Record half-year revenues of US$597 million, up 9% on H2 2012 revenues, notwithstanding  a decrease in the average gold spot price

- US$83 million net cash from operating activities, up 79% year-on-year

- Total cash costs ("TCC/oz") (hard-rock mines) of US$1,136/oz1 (US$740 in H1 2012); significant improvement expected in H2

- US$1,579/oz average realised gold price, including US$84/oz benefit from hedging

- Forward gold sales outstanding as at 1 July 2013:

- 219,400oz at forward price of US$1,664/oz for H2 2013

- 145,700oz at forward price of US$1,494/oz for H1 2014

- Since 30 June 2013, further forward gold sales were put in place:

- 95,000oz at a price of US$1,313/oz for H2 FY2013

- 62,000oz at a price of US$1,412/oz for Q3 FY2014

- Net debt reduced to US$1.15 billion compared to the peak (c.US$1.2 billion) in March 2013

- Cash and equivalents of c.US$59 million and committed undrawn facilities of US$123.4 million (excluding US$219.6 million for IRC)

- Capital expenditure (excluding exploration) of US$149 million, a 43% decrease year-on-year

- Comprehensive cash optimisation programme launched:

- Hedging programme implemented to limit downside exposure to price volatility

- Non-essential capital expenditure postponed (c.US$150 million deferred)

- Central administration costs savings of c.US$6 million and c.US$13 million expected in FY 2013 and FY 2014 respectively

- Operating costs expected to be reduced by c.US$12 million in FY 2013 and c.US$58 - US$68 million in FY 2014

- The net loss for the period was US$742.2 million, compared to an US$11.0million profit for H1 2012

- Lower gold price environment has led to a non-cash, post-tax impairment of c.US$358 million of goodwill and mining assets and $62.2 million of Tokur exploration and evaluation assets

- The Group's annual review of its exploration and evaluation assets resulted in an additional US$31.2 million impairment

- A further US$143 million impairment of IRC assets was due to IRC's net assets being adjusted to fair value, based on IRC's share price of HK$0.85 as at 30 June 2013

- The Group assessed the recoverability of the carrying value of its ore stockpiles and recorded post-tax impairment charges of c.US$35 million


FY 2013 Outlook

- 760,000 - 780,000oz production forecast for FY 2013 maintained

- Higher production in H2 due to higher grades and increased seasonal alluvial and heap leach production

- FY 2013 total cash costs (hard rock mines) expected to be lower than guidance, driven by:

- Higher production in H2

- A decrease in stripping across all mine sites

- On-going impact of cash optimisation programme

- Capex anticipated to be substantially less than H1 with full year target now US$220 million

- Net debt (exclusive of IRC) at year-end expected to fall below US$1 billion

- No interim dividend given volatile environment; dividend to be reviewed at year-end

- On-going review of 2014 production schedules -market update anticipated in Q4 2013

Companies mentioned