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UPDATE 1-Petropavlovsk says on track to meet gold target
October 16, 2012 / 1:00 PM / 5 years ago

UPDATE 1-Petropavlovsk says on track to meet gold target

* Petropavlovsk Q3 gold output rises 39 percent q-on-q

* On track to produce at least 700,000 ounces in 2012

* Shares up 3 pct, outperforms FTSE 350 Mining index

LONDON, Oct 16 (Reuters) - Russia-focused gold miner Petropavlovsk is on track to meet its full-year output target while keeping its costs flat, the company said on Tuesday, sending its shares up.

“It will be at least 700,000 troy ounces as previously planned and announced but there is a potential for the company to outperform if Pioneer and Pokrovskiy (mines) keep their good performance in the fourth quarter,” Peter Hambro, Chairman of Petropavlovsk, told Reuters.

The company’s third-quarter gold production reached 219,400 ounces, 39 percent higher than the previous quarter, while its total cash costs for the full year were expected to remain in line with the first-half level.

Last year, the miner produced 630,100 ounces of gold.

Petropavlovsk’s London-listed shares rose 3.05 percent to 439.7 pence by 1209 GMT, compared with a 1.31 percent rise in the FTSE 350 Mining index.

Petropavlovsk’s growing debt pile and a larger-than-expected charge after investments in new mines dragged its net profit down 90 percent in the first half, sending its shares tumbling.

But the continuing strength of the gold price, and at least meeting production and unit cost guidance, should mean an improved balance sheet compared with expectations at the time of the half-year results, Canaccord Genuity said in a note.

During the first nine months of 2010 Petropavlovsk’s gold sales and the average realised gold sales price were both up 4 percent year-on-year, to 505,600 ounces and to $1,658 per ounce respectively, it added on Tuesday.

Hambro also said that he expected gold prices to rise by the end of the year thanks to strong demand from central banks, China and India, and because of weak South African production.

“At the moment we’ve seen some speculative shortselling, but we will see it higher than it is at the moment. I would say at $1,850 by ounce by the end of the year,” Hambro added.

Gold prices firmed on Tuesday, recovering some lost ground from a one-month low in the previous session. Spot gold was up at $1,742.74 an ounce at 1209 GMT.

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