Petropavlovsk Share Discussion Threads

[popeye888] 20/2/2017 12:02

What will happen is that the world and financial system will become more unstable, gold will become more the safe haven, and gold miners (even the current overlooked POG, will become much hotter stocks, what will matter is production and
POG will become hot). Then POX, takeovers, underground, IRC earnings
etc will all kick in and we will be really off and running. Give all that 12 months. Put this in a drawer for that time, and you won't regret it IMO.

A successful POX plant will make POG incredibly attractive with their low valuation IMO. All the other current plants are in miners with a $3B+ mkt cap


wallywoo, I notice you use the word "WILL" as if you have psychic powers and Know what is going to happen in the future. You must be a very wise person.

[wallywoo] 20/2/2017 11:06

Missing the big picture IMO stoopid. POG will chug along I agree. I think they will beat this years 460K production figure (since underground mining will make a big difference), but other than that net Debt will probably remain static in the low $500M range.

What will happen is that the world and financial system will become more unstable, gold will become more the safe haven, and gold miners (even the current overlooked POG, will become much hotter stocks, what will matter is production and POG will become hot). Then POX, takeovers, underground, IRC earnings etc will all kick in and we will be really off and running. Give all that 12 months. Put this in a drawer for that time, and you won't regret it IMO.

A successful POX plant will make POG incredibly attractive with their low valuation IMO. All the other current plants are in miners with a $3B+ mkt cap

[stoopid] 20/2/2017 10:55

Very low daily volumes, nothing has changed except that IRC looks like its over the worst of its issues and debt has been "rearranged" I doubt even the results will make any difference as it will just be more promise's of jam tomorrow...2018/2019. When POX is up and running and underground mining is providing cheap high grade oz and produced oz are up around 700k - 900k.....

[tsmith2] 20/2/2017 09:17

Zilch value being attributed to IRC which seems v v harsh given iron ore price and progress made there...

[grbaker] 17/2/2017 15:47

Ditto, thanks very much for posting that. Excellent find.

[iankn73] 16/2/2017 21:05

Thanks officehead. Interesting article. I will continue to accumulating at these prices whilst I can.

Good luck all

[stoopid] 16/2/2017 19:53

Officehead ta for the post...

[stoopid] 16/2/2017 19:53

Excellent article, the for the post. So share price rise by end 2018/19 when POX comes online as there will be a large increase of produced oz. Maybe back to 700k a year.700k a year, gold price $1200+ and TCC's of $800 per oz would mean a share price of around 20- 30.....

[officehead] 16/2/2017 18:56

hxxp://gold.1prime.ru/bulletin/interview/show.asp?id=41660

Interview with Pavel, even with weak auto translate, gives an interesting update in a period short of info.

When Petropavlovsk will start to pay dividends, which price of gold is waiting in 2017, why did not intend to abandon the hedge contracts, and why intends to return to the transactions with "Cupid Gold" and "Gold of Kamchatka", and which may allow the GMD Gold construction of two autoclaves at its territory, and which still remains the main thing in his life told in an interview with Itar company CEO Paul Maslowski

QUESTION: Pavel, how satisfied are you with the results of 2016?

A: In a sense, we are satisfied with the results of the year - did everything that could be done in the circumstances. And under the circumstances, I am referring to the wonders of weather events that have occurred in the Amur region: this flood, and early frosts, then thaw, then again cold - there has been a certain slowdown in the execution of mining operations, although we are practically not interrupted, but therefore, not Doda products as initially planned. It was necessary to adjust the results.

On the other hand, while the amount of gold that we produced - 416 thousand ounces, sold 400 thousand ounces, - we have the cost of (TCC) of 700 dollars per ounce, and the cost where the "all inclusive" (the AISC) - $ 800 per ounce . For such content for such a rock mass that we have processed it very clearly shows the effectiveness of our work.

The average gold grade from us - 0.9 grams per ton, because we just do not have time to take the rich ore by the end of the year as expected. It should have been a significant drop in the quarry, a large overburden - is planned for the end of November and December. Prevented the weather, but the gold is still there, we will take this year.

Q: In 2017 you move into an active phase of underground mining?

ANSWER: Yes, last year we started underground operations and quickly moving - have already passed more than a kilometer underground mine workings. In the second half of the year will begin production of a high content of ore at the deposit Pioneer.

We have massive ore bodies are deep down, so we gave up a high stripping - a lot of work that was done in previous years. Before we came to the rich content in the ore through open work (quarry), - and it is becoming expensive, and inefficient. Now, in the continuation of the ore bodies with high contents will come out of the ground, it turns more efficient and allows for a year more evenly distribute the work. Furthermore, it opens the possibility of underground exploration.

We see great potential in the stocks under underground mining at the Pioneer, and in order to get a more accurate, detailed picture of the resources and reserves are drilling wells from the ground.

QUESTION: What about gold in 2017 you have to be extracted from the earth?

ANSWER: The forecast, which we have given - 420-460 thousand ounces of gold and includes underground mining. The difference - 40 million ounces - the main component, a significant portion, but not all - is underground mining. We are quite conservative, since underground mining for us the first experience, and even though we have enough experienced contractor, we are very carefully give the forecast - a look at what will be the result of underground works, as long as we are the biggest uncertainties.

Q: The company in recent years steadily decreases production (2014 = 624 500 oz; 2015 = 504.1; 2016 = 416.3). Previously, you were more optimistic - the first forecast for 2015 was 700 thousand ounces. The deposits have the same - wrong as the ore?

ANSWER: No, we adjusted growth. If you remember, we got rid of our alluvial (placer mining on) assets. In connection with a reduction in the price of gold, they became less and less profitable. Thus distracted, we require a sufficiently long time, management effort. So we got rid of them, leaving only the core assets, and it was an essential contribution to our production.

And then our goal - not the number of ounces of production and profit maximization. You might have noticed that we have a cost of $ 700 per ounce and total cash costs, which includes support and production capital expenditures - $ 800. This is a very good indicator of the industry is very competitive, even though we have low grade ores.

Specify only the cost (TCC) can and ought to get more ounces, but then quickly wears mountain fleet spend more funds for repairs, the replacement of units, the purchase of new equipment. So we moved to a more subtle plan to minimize costs rather than chase ounces.

As the ore we have never been wrong. This year happens, I agree, we have reduced the forecast. Just because of the weather conditions did not reach the rich ore body. But the quality of the ore, and its content, we understand well enough.

Q: And in the hedge were not disappointed, in 2016, you have lost $ 21 with every ounce of will to continue / renew hedge contracts?

ANSWER: Yes, last year hedge contracts let us down, but if the whole to consider the entire hedging period - from spring 2013 to 2015, then we are a big plus.

2016 - the first, when we were in a small minus, and I do not say that these losses are dramatic for us. So we come to opportunistically hedge contracts, try to be fairly conservative, and we will not leave this instrument.

QUESTION: When you refinance loans, in December 2014 has been determined to have the condition, dividend payments are possible, when the ratio of debt to EBITDA to be no more than 2 to 1 when you reach these conditions? When the dividend to shareholders to wait?

ANSWER: This condition was determined by banks, and we could not agree more with him. A specific policy regarding the payment of dividends, we will determine after the release of this indicator and taking into account the absolute size of the debt.

In addition to our efforts, here plays a big role in the price of gold. Now we have a ratio of debt to EBITDA slightly more than three to one. But we hope that we will reach the relationship of two to one already in 2018.

QUESTION: Capital expenditures for 2017 are planned to 100-110 million dollars, including about 60% to the autoclave. What it is scheduled for exploration, construction?

ANSWER: On the exploration we obtained in pure form is somewhere around $ 15 million.

The fact that part of the underground mining will also apply to exploration, so it is difficult to identify them formally figure may vary, but the order just that. The rest (25-30 million dollars) - we have to finish in the flotation field Malomyr.

QUESTION: What is the price of gold in the budget 2017?

A: Volatility in the price of gold makes us to be flexible. Therefore, we can not say what figure firmly laid in the budget. We believe that the average price is $ 1,200 per ounce. But of course, the budget and was tested at when the price will be $ 1,100, - that is, on the whole, we are ready to adjust our behavior, work program and at 1150 dollars.

QUESTION: Why did you break up with GMD Gold, as the decision was made - to finish construction of the autoclave at the expense of its own cash flow?

ANSWER: When we first agreed, we have not been able to pay for everything. A significant part of the funds had to be sent to the current loan repayment - the schedule was very tough, and therefore offered GMD Gold large part in the project. After clearing the graphics have been revised calculations have shown that, with the support of banks, we can complete the construction of the autoclave itself. Banks was concluded, and we agree with them that give 50% of the project is not necessary.

Actually, the method revised loan amortization schedules, calculated by us in cooperation with banks and consultants, so that we could finish the autoclave from its own funds.

But on the other hand, we are ready to discuss with our partners another alternative cooperation. While we did not discuss in detail anything until they and we have to get used to this new reality.

QUESTION: How can be this cooperation?

ANSWER: At some stages, we are ready to provide them our capacity for processing concentrates.

Another option - to build digesters under their concentrates.

Our project represents a significant expansion since originally we had hoped to make six autoclave units and as a result they have four. Scientific and technological research of our concentrates have allowed improved process - we have achieved a significant reduction in the residence time in the autoclave, and refining our program concentrates that we will get to Malomyr and Pioneer, we can carry on four autoclaves. And the original project, and the amount of space we have been made under the six, therefore, to our four, we can add two more autoclave. And in fact, that it may be one of the options for cooperation.

QUESTION: How is it interesting?

ANSWER: I do not know. This is my idea, it's not their proposal.

Q: And you would be interested in?

A: And I do not know. This should be discussed. It's all a question of price - it's a commercial issue.

QUESTION: At what price of gold you get 120-140 million dollars needed for the completion of the autoclave itself?

ANSWER: 1200-1250 dollars per ounce, in this interval. And this for two years.

This year we will continue to work on the construction of the autoclave complex - they are now deployed in full swing, and in 2018 it should be run. We fully finish construction and start processing of concentrates at the end of 2018. In the fourth quarter of the complex to work.

Q: What if all of a sudden the price of gold will be lower, and the resources will not suffice? What are your covenants to the banks - they make it possible to attract new loans? Or will push back the launch date?

ANSWER: We will not push back the launch date autoclaved complex. Significant lack of funds is not expected in the first place, we will send them to "turn the starter", followed by finishing touch. We do not just arrived at the completion of our businesses. It works.

QUESTION: In what state is now St. Andrew's underground mine, as it contains rich ore?

ANSWER: At St. Andrew area all set in order, especially the work did not stop, they just slowed down because of the cold, as I said. There is a rich ore body goes into depth is still very far down. For underground mining operations, we plan to begin after verification of its parameters fall and strike the drilling from the surface.

QUESTION: And there are similar, rich ore bodies?

ANSWER: Yes. They have all come to the depth of - as a walking surface and go into the depths. And the gold content in them increases.

Now we have two underground program. The first - is to pioneer, and so far only in one place. And there are other similar ore zones, in other careers - in the northeast we have looked Bachmuth zone. Under the same area of ​​St. Andrew there is a lot of rich ore shoots that go into the depths. And plus - on Malomyr already started to work underground.

All subway, which we consider to mining, has the average gold content of about 8-9 grams per ton.

QUESTION: How much do you have expended funds of underground mines?

A: To date, our investment amounted to about 300 million rubles.

QUESTION: How do you expand your resource base?

A: We now have an adequate package of exploration licenses. As we reported, we have very good results in the Elga deposit - almost 2 million ounces of reserves discovered only now getting ready to defend them. And I think that there is not all, there may be even a doubling and resources and reserves. In a geographical sense, Elga, - a satellite of our deposit Albyn, though it is much larger Albyna. It is near, and with it the ore can be processed on Albynskoy factory.

In the same area we have ore occurrence Clearly, it used to be during the Soviet era, it was small underground development. But we looked at it the other hand, the presence may be a lower grade gold, but more powerful ore bodies discovered.

Also, on the flanks of the Pioneer, we continue to explore, there is a very good indicatives.

The money that we spend on exploration, they are fully justified. We now have a total of about 20 million gold resources, and approximately 8 million ounces of reserves.

QUESTION: Transactions that have been discussed - for the acquisition of "Cupid Gold" and "Gold of Kamchatka", - it is also a way to expand your geography and resource base capacity?

A: In a sense, yes, we have considered the possibility of a merger with the "Golden Cupid". I see in this deal a great synergy, I like the asset, and the area is close to the Amur region, is located in our neighborhood. I think this is an interesting asset, and we will certainly at some point return to this conversation is necessary.

With regard to the assets of Kamchatka, there manufacturing synergy less visible, because the distance between the large contact. But his colleagues are now preparing their materials - audit inventory, and so on. They are prepared to continue the conversation - the issue is not yet closed.

But so far, we believe, like the majority of shareholders, which is not the best time for a purely paper transactions (payment in shares). After all, we are now significantly undervalued, although the assets we have are very good. First, you need a little lift capitalization companies.

Q: Who are your biggest shareholders (structures of Viktor Vekselberg and "Renova" group owned 18.377% of the shares, plus convertible bonds - 6.8774%). As far as they are involved in the transaction process, and the company's management process - do not interfere?

ANSWER: Yes, they are our largest shareholder. It says only that they see the prospect of our company would not have wasted the money to invest. In operating the process, they do not interfere. We are also working with them, as with all shareholders and meet, discuss something.

QUESTION: Are there any plans to get listed on the Moscow stock exchange?

ANSWER: Listing is not an end in itself - it is all the extra costs that a London listing that Moscow. The sole purpose of the listing for the company - it is access to capital, and for the shareholders - it is the liquidity of the shares. That's two goals, two fundamental meaning of the listing, and if we find that some of these issues are solved, then be sure to do it.

Now the situation is such that there are no opportunities to raise the capital of the company at our level on the Moscow stock exchange. Such examples are not, and liquidity is not much, but we are monitoring the process for a long time.

QUESTION: Do planned full withdrawal from the IRC? Are you satisfied with the partnership with the Chinese comrades?

A: The Chinese partners have done their job - they are all built so that cooperation ended. Because IRC is not going to go. The output should be good money.

Offer to share in the unfinished facility, or in a complete facility that generates cash flow and self-sufficient - that being said, two big differences. IRC started, the designed capacity - only now there, this process takes place in full swing. Therefore, we actively with this issue is not doing, but it is also one of the options to raise capital. This idea will be considered later.

QUESTION: What do you expect from 2017 - a gold price?

A: I would say that in 2016 a turning point for the gold price and the views of the metal. At the end of 2015 we have been very negative forecasts, considered dropping to $ 1,000 and below. But suddenly, in the middle of the year unfolded, and even the price reached 1350 dollars. Now it is just a little lower, but it's still good. I believe that this is the beginning of a fundamental reversal.

This year, I believe that we can see and $ 1,400 per ounce - political instability strongly influences the gold, the uncertainty in the actions of the new US president strongly excites the market. I'm not ready to comment on its validity, they correct or incorrect, but his energetic approach disturbs the market, and the price of gold reacts in a positive side for us.

QUESTION: Pavel, you are to consider yourself primarily a matter of life: Metals and IRC, or gold "Petropavlovsk"?

A: I decided many problems in life: and the house was built, and gave birth to a son, and trees planted - but if we talk about the remaining cases it is - autoclave construction. Now I see, and very happy that we have renewed it's our baby, and mine as well.

I believe that after the restructuring of bonds, after the restructuring of loans, we have received a new breath. Autoclave, basically - it's a new life for the enterprise. More than half of our reserves - it is resistant ore. They are profitable to extract and process the autoclave method, because it is very low cost of production - we have massive ore bodies, low stripping ratio. For Russia as a whole, stocks of refractory ores prevalent.

We have a long road to go - ready, create a scientific base, pilot production. They built an experienced shop, and a pilot plant - one of the unique in Russia, where the whole simulated autoclave process in a continuous mode. This is not a trivial task, which is very interesting and difficult to solve, not only from a commercial point of view, but also from the perspective of an engineer, metallurgist. For me this task, given the fact that I was already 60 years old - and the most important in the life of the remaining business.

Sergey Padalko, Bulletin of Gold

02.14.2017 11:27

[wallywoo] 16/2/2017 11:52

POG still playing big boys games when it comes to investing in gold production. Very brave when you think about it. HGM 2017 cap ex is $36M (mkt cap over £600M), POG's cap ex is $110M (mkt cap £223M).

So if the gold price goes up significantly POG will be a massive benefactor in years to come BUT if gold price goes down significantly they could struggle. Can also explain the caution in the share price of course too, and "deja Vu" for some!

[dan554] 15/2/2017 23:38

People need to see before they believe , words are not enough here.

When pox shows results and the debt keeps coming down POG will rise.

Debt has lowered a good amount but still a bit of a way to go.

[shaf200] 15/2/2017 20:34

And nothing happens to share price after this release...

[celeritas] 15/2/2017 16:03

Petropavlovsk’s cost profile represents a dramatic success, says Peter Hambro


11:21 14 Feb 2017

Petropavlovsk's pending use of pressure oxidation processing technology will boost production significantly
Petropavlovsk’s cost profile represents a dramatic success, says Peter Hambro
Petropavlovsk expects to produce between 420,000 and 460,000 ounces of gold this year
“The banks are supportive,” says Peter Hambro, chairman of London-listed gold miner Petropavlovsk PLC (LON:POG). It’s an important statement to make because at one point Petropavlovsk appeared to be carrying an unsustainable debt burden.

But no longer. “We’ve now completed the two year reorganisation of the company,” says Hambro. “It has been a truly transformational time.”

“We’ve been dealing with the 2015 refinancing, and much more importantly with the restructuring of the Petropavlovsk debt profile, which has been extended to 2022.” This is all in line with a production profile that has been agreed with the banks.

One critical component of the supportive mood is the viability of plans to install a new pressure oxidation facility at the Pokrovskiy mine in Russia’s Far East. This will handle flotation concentrate from two of the company’s other major mines, Pioneer and Malomir.

Allowing pressure oxidation to go to work on ores that were previously likely to be set aside as being hard to process will have a great impact on the business.

“POX unlocks 4 mln ounces of reserves, as already defined within our asset base, with further untapped exploration resource potential,” says Hambro, “

The banks arranged for two studies into the viability of POX, which is why they are, says Hambro, “comfortable,” and working together with Petropavlovsk as partners.

“The project has been substantially de-risked. And we know it works because it’s being done all over the world. Barrick has one. Polymetal has one. And Macraes Flats in New Zealand has one, and furthermore we have a one–of-a-kind POX pilot plant, which has been operating since 2011.”

In the more immediate term, Petropavlovsk is guiding for production of between 420,000 ounces and 460,000 ounces this year, with cash costs likely to be between US$650 and US$700, and all-in sustaining costs between US$800 and US$900.

“The cost profile is amazing,” says Hambro. “It is a solid achievement, allowing us to focus on maximising margins.”

In the coming year, the plan is to invest around US$100 mln on operations generally, of which 60 per cent will go into POX.

For some that won’t come soon enough, as the gold price looks to trend upwards.

“In this industry, much depends on the gold price,” says Hambro.

“We are cautiously optimistic. Gold looks more buoyant than it has done for a while with increasing macro uncertainty coupled with a diminishing supply of paper gold. Things are looking brighter.”

[wallywoo] 15/2/2017 15:18

yep you should never under estimate Asteroid impacts when thinking about investing!

Dean - at least the gold price is providing a bit of interest. The US inflation figure should of hit gold hard, after a blip it just bounced back. I think 2017 is going to be anything but dull but we need patience

[celeritas] 15/2/2017 15:09

I like the bit about Tsunamis, hurricanes and earthquakes.
Maybe it should have gone further with Asteroid impacts.

[deanroberthunt] 15/2/2017 14:57

DELIST DELIST, FFS!!!!

[deanroberthunt] 15/2/2017 12:54

Market cap (£m) Share price (p) Sales (£m) Pre-tax profit (£m) 2017 PE (x) 2017 Yield (%)
Acacia Mining 2,050 499 841 216 14.6 x 1.60%
Centamin 2,022 177 554 202 16.8 x 2.60%
Petropavlovsk 227 6.9 467 41 10.4 x 0.00%
Polymetal 4,235 987 1,450 513 10.6 x 4.00%
Randgold Resources 7,017 7,500 972 327 28.1 x 1.70%

[wallywoo] 15/2/2017 08:08

lol, so an article that says POG is loss making when it is making a profit is a good one?? Some articles are just rubbish. Sure debt is not to be ignored, and that is certainly not the case here.

Invest here if you believe in a gold bull market and want a company that is currently undervalued, and likely to be a huge winner in a bull gold market (and patient enough to wait until the market decides to rerate). If you believe that gold will struggle in years to come then don't, since as that article says and everyone knows if gold went down to $900 an ounce POG would struggle to survive (but so would 90% of all gold miners). Simple as that.

[popeye888] 14/2/2017 20:35

wallywoo full article below.

What does Petropavlovsk PLC’s (LSE:POG) balance sheet tells us abouts its future?
Felix Olson February 7, 2017
Petropavlovsk PLC (LSE:POG) is a small-cap-stock with a market capitalization of USD $283 Million. While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. The significance of doing due diligence on a company’s financial strength stems from the fact that over 20,000 companies go bankrupt in every quarter in the US alone.

Apart from geopolitical events such as political unrest and natural calamities, a company which is suddenly facing a hostile market environment must be able to fulfil short-term commitments with its reserves so that it can see another day. Here are few basic financial health checks to judge whether a company fits the bill or there is an additional risk which you should consider before taking the plunge.
See our latest analysis for POG
Does POG generate enough cash through operations to meet all its needs?

More than the revenue shown on paper, what matters is how much cash is generated through operations and whether it is enough to continue operations, meet debt-obligations and fund growth . For Petropavlovsk the ratio of operating cash flow to overall debt stands at 19.8%. This means while Petropavlovsk can cover its operating expenses, I would be cautious about its ability to service the debt should tougher times come.


LSE-POG-historical-debt-Wed-Feb-08-2017

Can POG meet its short-term obligations with the cash in hand?

There are many problems that come unannounced. For instance, a hurricane or even labor strikes. In 2011, a Tsunami and earthquake in Japan had wiped out a significant chunk of auto supply chain in the country. If these were not Japan’s biggest automakers and electronics-maker with big cash reserves and funding sources, it’s hard to imagine how would they have recovered . But that does not absolve the company from its obligations such as lease payments, interest payments, and salaries. In addition, failure to service debt and bank loans can seriously hurts its reputation, making funding extremely expensive in the future, if at all it survives. Petropavlovsk short term (1 year) commitments are greater than its holdings of cash and other short term assets.


LSE-POG-net-worth-Wed-Feb-08-2017

Can POG service its debt comfortably?

Debt to equity ratio tells you if the company faces tough times or goes out of business, how much assets the debtors could claim. In the case of Petropavlovsk, the debt-to-equity ratio is 119.9% and this indicates that the company is holding a high level of debt / liabilities compared to its net worth, and in the event of financial stress may experience difficulty meeting debt or interest obligations . No matter how high is the debt, if a company can easily cover the interest payments, it’s considered to be making a good use of that excessive leverage. To keep an eye on how it’s doing on that front, an investor can check how easily the company can service its debt. If it earns at least 5x or more of its interest payments, that’s an indication of financial strength. In POG’s case the company is making a loss, therefore interest on debt is not well covered by earnings.

Conclusion

Although a balance sheet highlights a company’s financial condition at a point in time, its revenue and profit trends are equally important to make a fully-informed decision. Check out Petropavlovsk’s FREE complete fundamental analysis report

[marvin9] 14/2/2017 20:23

What duller than the PMO thread? I doubt it

[deanroberthunt] 14/2/2017 18:52

Meanwhile most of the other Golders 4-8 bagged last year, dipped late summer and are now bagging again

[deanroberthunt] 14/2/2017 18:50

COMING UP TO 2 YEARS OF TRACKING SIDEWAYS....JEEZ

THIS IS DULLER THAN THE DULLEST DITCHWATER ON THE DULLEST DAY IN DULLVILLE TWINNED WITH BORING

[popeye888] 14/2/2017 17:15

wallywoo full article below.

[wallywoo] 13/2/2017 22:58

It all depends pop's. Debt to equity ratios only make sense when the equity is valued properly. In pogs case they have over 500m US dollars in net assets (proper assets too mostly property plant and equipment with gold reserves, net assets were over 1000M in 2014 before refinance) which the market values at £ 223M. Of course sometimes that valuation is right and the assets need to be written off, and sometimes wrong and the equity rises to the shareholders delight. Place your bets.

ps poyeye: POG was making a profit last time I checked!!

And on the point of the Debt burden: