30th Jul 2018 09:30
LONDON (Alliance News) - Petropavlovsk PLC said Monday its gold production in the first half of the year decreased 13% as it discovered disruptions to mining operations and delays.
For the six months to June 30, the company said gold production fell to 201,400 ounces from 232,400 ounces in the comparative period a year ago. The lowered production was due to lower grades processed and a decrease in the contribution from gold in circuit, the company said.
An operational review launched by Pavel Maslovskiy, recently reinstated as chief executive officer, revealed recent disruptions to mining operations, including delays in delivering the company's POX hub, the miner's pressure oxidisation processing hub located near the Pokrovskiy mine in Russia.
The company said the POX commissioning, which was expected in the fourth quarter of the year, will now take place in December due to disruptions and instability in the first half of the financial year. Therefore, Petropavlovsk expects "no meaningful production from POX during 2018".
The miner added that Malomir flotation plant operations have started following delays in their scheduled commissioning due to lack of strategic leadership in the first half of the year.
As a result of the delays, the company lowered its full-year guidance. It now expects production of around 400,000 to 410,000 ounces, down from 420,000 to 460,000 ounces forecast previously.
"Recent events had a negative impact in certain areas and have caused some disruption to our operational and development plans. Primarily due to this, we have decided to adjust our guidance for the year to be more conservative, and to introduce a programme of measures to rectify the delays in order to improve current schedules," Maslovskiy said.
The company added that it hired Alexey Dubynin as chief financial officer, although this does not constitute a board appointment. It also appointed Fincraft Holdings Ltd investment advisor Bektas Mukazhanov as non-independent non-executive director. Fincraft is Petropavlovsk's major shareholder.
Lastly, in regards to the repayment of a loan facility of USD340 million of IRC Ltd, for which the miner is a guarantor, the company said its board is now "resolved to achieve a solution to remove the company's guarantee of IRC's bank debt". Petropavlovsk owns a 31.1% stake in IRC.
At the end of June, the entire board of directors of Petropavlovsk was ousted, and previous directors Maslovskiy, Roderic Lyne and Robert Jenkins were re-appointed after shareholder's CABS Platform Ltd and Sleving Ltd issued a requisition letter leading to a shareholders' vote.
As the requisition was approved, the board - composed of then CEO Roman Deniskin, Chairman Ian Ashby, non-executive directors Bruce Buck, Adrian Coates and Garrett Soden - was not re-appointed.
The final vote was very close with 42.7% of shareholders who voted to re-elect Coates, 42.6% for Deniskin, 41.7% for Buck, 47.5% for Soden and 47.7% for Ashby.
Prior to the vote, Petropavlosk underwent a couple months of back-and-forth with what it called "mystery" shareholders, with the miner trying to identify the people behind CABS and Slevin.
The company will publish its interim results on September 27.
Petropavlovsk shares were trading 1.3% higher at 6.99 pence each.
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