22nd Jul 2014 08:17
LONDON (Alliance News) - Petropavlovsk PLC Tuesday said gold production has increased in its first half and has started July production rates ahead of schedule, with the company reiterating its full year production and cash cost guidance.
The gold mining company with operations in Russia said it saw a 4% increase in gold production to 306,400 ounces for the six months ended June 30 from 294,700 ounces the previous year.
The company said its Malomir mine production increased 22% to 46,800 ounces due to improved recoveries, and its Albyn mine production increased 90% to 97,300 ounces as the company vastly increased mining activities and the average grade recovered. These figures more than offset lower production at the company's Pioneer, Pokrovskiy and Alluvial operations during the period.
However, Petropavlovsk saw a fall in overall production during its second quarter compared to the previous year as all of its operations expect from the Albyn mine were hit by production drops.
The company said production in the first half of July is ahead of schedule and its full year production guidance was reiterated at 625,000 ounces of gold.
In its first half, the company saw a 5% increase in gold sales volumes to 310,700 ounces and, due to a hedging programme, its average realised price of gold was USD1,386 per ounce, well above the prevailing market price for the period.
It added that an ongoing cost cutting programme has continued to see gains during the first half, and the company reiterated its total cash cost guidance for the full year of USD900 to USD950 per ounce.
"Looking forward, I am pleased to reconfirm that we foresee a significant reduction in our cash costs in 2015-2019 to USD750 per ounce," Chairman Peter Hambro said in a statement.
Earlier this month, the company said it is performing operationally in accordance with its strategic plan and budget and maintained its guidance for 2014 total production of 625,000 ounces of gold, responding to recent weakness in its share price.
Petropavlovsk originally had a 2013 production guidance of 760,000 to 780,000 ounces but in October reduced this rate to 740,000 to 750,000 ounces due to the affects of bad weather. It eventually achieved a 2013 production rate of 741,200 ounces of gold.
The company set a 2014 production level of 625,000 ounces of gold, a significant decrease on the 2013 figures due to the disposal of certain high-cost alluvial assets in 2013 beginning to hit production. It produced 159,100 ounces of gold in the first quarter of 2014, up 16% from 136,800 ounces in the 2013 quarter.
Petropavlovsk shares were up 7.6% to 37.94 pence, putting it among the top AIM risers during early trading on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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