Petropavlovsk swings to FY loss despite increased gold production

Gold miner Petropavlovsk posted a full-year loss of $48.9m, despite an increase in gold production boosting both revenues and underlying earnings.

While Petropavlovsk said on Monday that full-year own gold production had slipped 18% to 385,600 ounces in the twelve months ended 31 December, a 256% surge in the processing of third-party refractory gold concentrates at its POX processing plant, up to 162,500 ounces, bumped overall production up 6% to 548,100.

Total gold sales were also up 6% year-on-year, while the group's average realised gold price increased 30%, group revenues improved 33% to $988.5m and underlying earnings shot up 32% to $350.7m.

However, Petropavlovsk stated that it had swung from an annual profit of $25.7m in 2019 to a full-year loss of $48.9m just twelve months later, principally due to the impact of non-cash items, including an impairment of mining, exploration and evaluation assets.

Chief executive Denis Alexandrov said: "Petropavlovsk delivered a solid financial performance in 2020 despite numerous challenges, with revenue and EBITDA improving substantially year-on-year on the back of a 6 per cent increase in production and higher gold prices.

"Looking ahead, there is much to be addressed to drive improvement across the business in 2021 and beyond. From a cash flow perspective, one of our immediate opportunities is maximising utilisation of the POX Hub using our own refractory gold concentrates to reduce reliance on lower-margin third-party material via the successful on-schedule delivery of two major projects – the Pioneer flotation plant later this year and the Malomir flotation plant expansion next year."

As of 0845 BST, Petropavlovsk shares were up 2.30% at 25.72p.