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UPDATE 1-Russia's Petropavlovsk posts loss, in talks with lenders
April 29, 2014 / 8:02 AM / 3 years ago

UPDATE 1-Russia's Petropavlovsk posts loss, in talks with lenders

* Plans to lower net debt below $850 mln by year end

* Says on track to produce 625,000 oz of gold in 2014

* Shares down almost 9 percent (Adds details, quotes, context)

MOSCOW, April 29 (Reuters) - Petropavlovsk is in talks with lenders to refinance its debt, the Russia-focused gold miner said on Tuesday, after reporting a 2013 net loss of $713 million hurt by write-offs.

The loss compared to a $244 million loss in 2012 and was largely attributable to $679 million of post-tax impairment charges and write-downs caused by a gold price fall, it said in a statement.

“The Board and our auditor place emphasis on two matters in Petropavlovsk’s annual accounts for 2013 that, if unresolved, would affect the Company’s status as a going concern,” Peter Hambro, chairman of Petropavlovsk, said in the statement.

These are forecast breaches in December 2014 of certain covenants, contained in its current senior debt facilities, which are under review with lenders, it said. It also needs to repay convertible bonds, which mature in February 2015, of which there are $310.5 million outstanding.

“The Board and the Executive Committee, supported by our advisers, have for some time treated the need for a refinancing plan to resolve these issues as one of paramount importance,” Hambro said.

“A plan to execute the refinancing is well advanced and the Board looks forward to announcing this in due course.”

The company said it had reduced net debt by $115 million in 2013 and planned to achieve a similar debt reduction to lower its net debt to below $850 million by year end.

Petropavlovsk shares were down almost 9 percent at 75.9 pence as of 0756 GMT, compared with a 1.5 percent fall in the FTSE Gold Mines Index.

“News that management is discussing its financing position comes as no surprise,” analysts at Canaccord said in a note. “We have long assumed management would need to roll over existing maturing bank loans as well as secure further facilities allowing the repayment of the remaining convertible debt.”

Petropavlovsk said first-quarter gold production rose 16 percent year on year to 159,100 troy ounces and said it remained on track to produce 625,000 ounces in 2014. (Reporting by Polina Devitt; editing by Megan Davies and Jason Neely)

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