Petropavlovsk 2014 interim results

DividendMax Ltd.

Petropavlovsk 2014 interim results

Financial highlights

Record H1 gold production of 306,400oz

Group revenue of US$453.0 million, down 10% yoy, mainly due to a 12% yoy decrease in the average realised gold sales price partially offset by a 5% yoy increase in gold sold

Average realised gold sales price of US$1,386/oz (H1 2013: US$1,579/oz), including a US$93/oz positive effect resulting from contracts to forward sell gold

A c.25% yoy decrease in TCC/oz for our hard-rock mines to US$847/oz (H1 2013: US$1,136/oz) mainly due to:

An increase in grades processed at Albyn

An increase in recovery rates at Pokrovskiy, Albyn and Malomir

An increase in operational efficiencies

A 13% depreciation of the Rouble against the US Dollar which mitigated Rouble- denominated cost inflation

A c.16% yoy decrease in central administration expenses (from US$27.1 million in H1 2013 to US$22.9 million in H1 2014), primarily due to cost-cutting measures

US$104 million net cash from operating activities from continuing operations, up 53% compared to H1 2013 (US$68.1 million), despite a decrease in the average realised gold price and gold production remaining at a similar level to H1 2013. The increase in net cash from operating activities was mostly due to the lower cost of production and a US$37 million reduction in working capital

A c.41% yoy increase in underlying EBITDA

A c.58% decrease in capital expenditure on gold projects (from US$168.8 million in H1 2013 to US$70.2 million in H1 2014), in line with the Group's strategic aim to reduce its indebtedness, focusing mainly on:

Tailing dams and some infrastructure works at Malomir, Albyn and Pioneer

On-going exploration of prospective areas adjacent to the main mining operations

Restricting expenditure on the pressure oxidation ("POX") facilities to fulfilling pre-existing contractual obligations and undertaking essential maintenance work

A c.87% yoy reduction in the total net loss for the Period (from US$742.2 million in H1 2013 to US$95.3 million in H1 2014) mainly due to the 5% increase in gold sold, a significant decrease in TCC/oz and, compared to H1 2013, much lower impairment charges

A c.3% decrease in net debt (from US$948.4 million at 31 December 2013 to US$924 million at 30 June 2014), in line with the Group's strategy of net debt reduction and balance sheet optimisation

Forward contracts to sell 225,446oz of gold at an average price of US$1,326/oz were outstanding as at 30 June 2014. Forward contracts to sell 163,134oz of gold at an average price US$1,314/oz were outstanding at the date of this announcement

Companies mentioned