TIDMPOG
RNS Number : 4224I
Petropavlovsk PLC
25 July 2012
25 July 2012
2012 Half Year Trading Update
Petropavlovsk PLC ("Petropavlovsk", the "Company" or, together
with its subsidiaries excluding IRC Limited ("IRC"), the "Group")
today issues its Trading Update for the period from 1 January 2012
to 30 June 2012 ("the Period" or "H1 2012") in advance of its
half-year results, which are expected to be published on 23 August
2012.
HIGHLIGHTS
Total attributable gold production(1) for H1 2012
Attributable Production
Q2 2012 Q2 2011 Variance H1 2012 H1 Variance
2011
-------- --------- -------- ------- ---------
'000oz '000oz % '000oz '000oz %
-------- --------- -------- ------- ---------
Pioneer 59.7 80.0 (25%) 125.3 116.6 7%
-------- -------- --------- -------- ------- ---------
Pokrovskiy 22.7 24.0 (5%) 37.4 41.9 (11%)
-------- -------- --------- -------- ------- ---------
Malomir 33.5 17.3 94% 66.1 37.9 74%
-------- -------- --------- -------- ------- ---------
Albyn 16.2 0.0 n/a 24.1 0.0 n/a
-------- -------- --------- -------- ------- ---------
Alluvial operations 26.2 22.4 17% 26.2 22.7 15%
-------- -------- --------- -------- ------- ---------
TOTAL 158.3 143.7 10% 279.1 219.1 27%
Operations and gold production
n Total attributable gold production for the Period was
279,100oz, a 27% increase compared to the same period in 2011
(219,100oz) and in line with the Group's increased production
target for the full year;
n Production during the second half of 2012 is expected to be
higher than in the first half due to a greater contribution from
the Group's seasonal heap-leach and alluvial operations and the
expanded processing capacity at Pioneer and Albyn;
n The Group reiterates its production target of 700,000oz for
the full year.
Gold sales and costs
n Gold sales during the period totalled 286,000oz, an 8%
increase on the equivalent period in 2011 (266,000oz);
n The average realised gold price for the period was
US$1,639/oz, a 13% increase compared to H1 2011 (US$1,455/oz);
n Operating costs for the Period for the Group's hard-rock mines
(excluding Albyn) were marginally in line with H1 2011.
1. Total attributable gold production, as stated throughout this
document, is comprised of 100% of production from the Group's
subsidiaries. The Group has held a c.1.1% interest in Rusoro Mining
Ltd since March 2009; no attributable ounces are included in the
Group figures. The Company's direct and indirect interest in JSC
"Pokrovskiy rudnik" (the holder of the Group's Pokrovskiy and
Pioneer interests) is 98.61%. Cumulative gold production, as stated
throughout this document, consists of gold physically recovered and
gold in circuit. Accordingly, gold produced in the year consists of
gold recovered during the period and adjusted for the movement in
gold still in circuit.
Project development: Pioneer and Albyn expansion
n On 4 June 2012, the fourth processing line at Pioneer mine was
commissioned ahead of schedule, increasing the plant's design
capacity by c.40% to c.6.6Mtpa;
n On 10 June 2012, the second processing line was commissioned
at Albyn ahead of schedule, doubling the plant's design capacity to
c.3.6Mtpa.
POX processing hub
n Construction work has been progressing according to schedule,
with work on the oxygen plant at Pokrovskiy under way and key items
of equipment on order;
n The first delivery of equipment at the Pokrovskiy site is
scheduled to take place in Q3 2012.
Exploration
n The Group successfully continued exploration at and around its
operating mines in the Amur region;
n A new reserves and resource estimate in accordance with JORC
Code (2004), including the results of further H1 2012 exploration
work is being prepared for release on 23 August 2012, together with
the Group's half-year results.
IRC Limited ("IRC")
n On 12 July 2012, IRC issued its Q2 Trading Update which noted
the following highlights:
- Kuranakh 2012 full year production targets reaffirmed;
- K&S project construction on track; processing plant
foundations underway and electrical substation ready;
- Garinskoye DSO scoping study announced to realise near-term
value for reduced capital expenditure;
- Molybdenum exploration and Bolshoi Seym transactions announced.
Commenting on the announcement, Peter Hambro, Chairman,
said:
"We are delighted to look back on six months of record gold
production at our mines, following yet another quarter of strong
operational performance. Our track-record of building a successful
multi-mine portfolio was strengthened further with the
commissioning, ahead of schedule, of the fourth processing line at
Pioneer and the second processing line at Albyn. The latter doubles
the designed capacity at Albyn eight months after it commenced
production. In parallel, our exploration programme is continuing to
uncover further non-refractory reserves adjacent to our existing
assets, ensuring that our growth trajectory is maintained in the
years to come. We look forward to providing a further update on
exploration in August.
Our strong performance this quarter supports our upgraded
full-year production target of 700,000oz. Work has been progressing
well on the pressure oxidisation ("POX") facilities for our planned
commissioning at the end of 2013. At the same time, training has
been continuing at our in-house facilities for the expert team
which will be running the process in the years to come. Our focus
for the second half of the year will remain on tight cost control
and an increase in operational efficiencies."
ENQUIRIES
Petropavlovsk PLC
Alya Samokhvalova
Rachel Tuft +44 (0) 20 7201 8900
Merlin
David Simonson
Ian Middleton
Anca Spiridon +44 (0)20 7726 8400
OPERATIONS AND PRODUCTION
PIONEER
During H1 2012, Pioneer produced 125,300oz of gold, an increase
of 7% on the amount produced during the same period in 2011. This
includes production from the seasonal heap-leach facility at
Pioneer, which began production in April 2012, contributing 1,300oz
of gold.
In Q2 2012, production at Pioneer totalled 59,700oz, a decrease
of 25% compared with the same period in 2011 (80,000oz). The
decrease was due to a scheduled decrease in ore grades through the
plant.
Pioneer: Mining Units Q2 2012 Q2 2011 H1 2012 H1 2011
m(3)
Total material moved '000 10,853 8,226 19,967 14,177
--------- -------- -------- -------- --------
Ore Mined t '000 3,096 1,869 4,120 2,781
--------- -------- -------- -------- --------
Grade g/t 1.6 1.7 1.6 1.7
--------- -------- -------- -------- --------
Gold in ore oz '000 159.3 101.7 209.4 147.9
--------- -------- -------- -------- --------
Pioneer: Processing Units Q2 2012 Q2 2011 H1 2012 H1 2011
Resin-in-Pulp Plant
Total milled t '000 1,360 1,229 2,476 2,364
--------- -------- -------- -------- --------
Average grade g/t 1.6 2.3 1.8 1.8
--------- -------- -------- -------- --------
Gold content oz '000 69.1 92.4 144.5 136.5
--------- -------- -------- -------- --------
Recovery rate % 85 84 86 83.7
--------- -------- -------- -------- --------
Gold recovered oz '000 58.5 77.7 124.1 114.3
--------- -------- -------- -------- --------
Heap-Leach Operations
Ore stacked t '000 432 225 432 225
--------- -------- -------- -------- --------
Average grade g/t 0.6 0.7 0.6 0.7
--------- -------- -------- -------- --------
Gold content oz '000 8.3 5.0 8.3 5.0
--------- -------- -------- -------- --------
Recovery rate % 15 45.2 15 45.2
--------- -------- -------- -------- --------
Gold recovered oz '000 1.3 2.3 1.3 2.3
--------- -------- -------- -------- --------
Total gold recovered oz '000 59.7 80.0 125.3 116.6
POKROVSKIY
During H1 2012, Pokrovskiy performed well, with total gold
production standing at 37,400oz, of which 4,500oz were processed
via the mine's heap-leach operations. This was slightly less than
the 41,900oz the mine produced during the comparative period in
2011 due to lower ore grades through the mill, as scheduled. The
Pokrovka-2 deposit was the primary source of ore mined during H1
2012.
Pokrovskiy: Mining Units Q2 2012 Q2 2011 H1 2012 H1 2011
m(3)
Total material moved '000 2,514 1,652 3,927 3,274
--------- -------- -------- -------- --------
Ore mined t '000 660 273 850 688
--------- -------- -------- -------- --------
Average grade g/t 1.5 2.1 1.5 1.8
--------- -------- -------- -------- --------
Gold in ore oz '000 31.7 18.3 39.8 40.7
--------- -------- -------- -------- --------
Pokrovskiy: Processing Units Q2 2012 Q2 2011 H1 2012 H1 2011
Resin-in-Pulp Plant
Total milled t '000 400 453 828 888
--------- -------- -------- -------- --------
Average grade g/t 1.8 1.7 1.5 1.6
--------- -------- -------- -------- --------
Gold content oz '000 23.1 24.3 39.8 45.6
--------- -------- -------- -------- --------
Recovery rate % 79 80.1 83 81.9
--------- -------- -------- -------- --------
Gold recovered oz '000 18.2 19.5 32.9 37.4
--------- -------- -------- -------- --------
Heap Leach Operations
Ore stacked t '000 446 334 446 334
--------- -------- -------- -------- --------
Average grade g/t 0.7 0.8 0.7 0.8
--------- -------- -------- -------- --------
Gold content oz '000 9.9 8.0 9.9 8.0
--------- -------- -------- -------- --------
Recovery rate % 45 54.6 45 54.6
--------- -------- -------- -------- --------
Gold recovered oz '000 4.5 4.5 4.5 4.5
--------- -------- -------- -------- --------
Total gold recovered oz '000 22.7 24.0 37.4 41.9
MALOMIR
During H1 2012, Malomir produced 66,100oz, a 74% increase on the
same period in 2011 (37,900oz). The increase was due to the
expansion of the plant in July 2011 and the sorption circuit at the
beginning of 2012.
Mining operations were focused on the non-refractory ore at the
Quartzitovoye deposit as well as stripping of the oxidised
non-refractory cap from the refractory ore body at the Central
pit.
Malomir: Mining Units Q2 2012 Q2 2011 H1 2012 H1 2011
m(3)
Total material moved '000 3,788 2,124 7,009 3,710
--------- -------- -------- -------- --------
Ore Mined t '000 1,242 349 1,783 732
--------- -------- -------- -------- --------
Grade g/t 1.8 2.4 2.1 2.8
--------- -------- -------- -------- --------
Gold in ore oz '000 73.1 26.9 119 65.1
--------- -------- -------- -------- --------
Malomir: Processing Units Q2 2012 Q2 2011 H1 2012 H1 2011
Resin-in-Pulp Plant
Total milled t '000 570 182 994 354
--------- -------- -------- -------- --------
Average grade g/t 2.5 3.7 2.9 3.9
--------- -------- -------- -------- --------
Gold content oz '000 46.7 21.3 91.6 44.9
--------- -------- -------- -------- --------
Recovery rate % 72 81.3 72 84.5
--------- -------- -------- -------- --------
Total gold recovered oz '000 33.5 17.3 66.1 37.9
ALBYN
During H1 2012, Albyn was going through a ramp up and expansion
period and produced 24,100oz. Following the commissioning of the
second processing line at Albyn in June 2012, the mine is expected
to work at its full capacity during the second half of the
year.
Albyn: Mining Units Q2 2012 Q2 2011 H1 2012 H1 2011
m(3)
Total material moved '000 2,815 - 4,180 -
--------- -------- -------- -------- --------
Ore Mined t '000 474 - 691 -
--------- -------- -------- -------- --------
Grade g/t 1.6 - 1.6 -
--------- -------- -------- -------- --------
Gold in ore oz '000 23.7 - 35.9 -
--------- -------- -------- -------- --------
Albyn: Processing Units Q2 2012 Q2 2011 H1 2012 H1 2011
Resin-in-Pulp Plant
Total milled t '000 355 - 556 -
--------- -------- -------- -------- --------
Average grade g/t 1.6 - 1.5 -
--------- -------- -------- -------- --------
Gold content oz '000 18.2 - 27.1 -
--------- -------- -------- -------- --------
Recovery rate % 89 - 89 -
--------- -------- -------- -------- --------
Total gold recovered oz '000 16.2 - 24.1 -
ALLUVIAL PRODUCTION
During the period, the Group produced 26,200oz of gold from its
alluvial operations. The majority of alluvial production is
expected during H2 2012, given that July to October are the main
production months for this seasonal operation.
DEVELOPMENT
Pioneer
In June 2012, the fourth processing line at Pioneer was
successfully commissioned ahead of schedule, increasing Pioneer's
throughput capacity by c.40%. Following ramp up, the plant is now
running at full capacity of c.6.6Mtpa.
Albyn
The launch of the second line at Albyn in June 2012, doubling
designed plant capacity to 3.6Mtpa. The June 2012 commissioning was
ahead of schedule and the plant is expected to work at full
capacity during the second half of 2012.
POX Hub at Pokrovskiy
Construction work has been progressing as planned during H1 2012
and the project remains on schedule. Work on the oxygen plant at
Pokrovskiy is under way and key items of equipment are on
order.
The manufacturing of two autoclaves, four flash tanks and four
receivers is now complete and quality control tests at the
respective factories, under the supervision of Outotec (Finland)
Oy, have been completed. The first delivery of equipment to the
Pokrovskiy site is scheduled to take place in Q3 2012.
The Group and its in-house experts continue to perform tests at
the POX pilot test plant in Blagoveschensk, in order to confirm and
further optimize operating parameters and reagent usage.
EXPLORATION
In H1 2012, the Group continued its successful exploration
programme at and around its principal assets. Encouraging results
were received from extensions at NE Bakhmut (at Pioneer),
Elginskoye (adjacent to Albyn) and Zheltunak (near Pokrovskiy).
Pioneer
A new high-grade pay shoot was identified in Q1 2012 at the
highly prospective NE Bakhmut trend. The Group's geologists believe
that this zone strikes from North to South in an almost
perpendicular fashion to the strike of the NE Bakhmut zone and
parallel to the Yuzhnaya Zone in the western part of Pioneer. The
best intersections received to date include 21.6m at 7.3g/t and
5.9m at 19.7g/t (thickness is apparent). These high-grade
intersections represent a pay shoot with a strike length of 150m
and true thickness of 3m - 10m with expected average grades of
between 4g/t and 6g/t. It is expected that this zone holds
resources of both non-refractory (including high-grade) and
refractory material.
In addition, two new and previously unknown zones of
mineralisation were also discovered south east of Nikolaevskaya and
north of Bakhmut. Assay results from these new discoveries to date
indicate grades of 1.1g/t - 1.7g/t with apparent thickness of 7m to
29m. Exploration is at an early stage with further results expected
later this year.
Albyn
The Group has been successful in its exploration at Elginskoye.
Zones of gold mineralisation have been traced by trenching and
geochemical surveys over a strike length of 28km. Approximately
1,600m of this strike length has been drilled on a 150m x 80m grid,
identifying two shallow dipping structures 5m - 25m in thickness.
Both zones are still open in strike and down dip directions.
Structural interpretation and computer modelling completed by Group
specialists has resulted in an estimate of c.180Koz of Inferred
gold resources (c.5.1Mt at 1.1g/t) at a cut-off grade of 0.4g/t.
The Group's geologists consider that these resources to be
non-refractory.
Since this estimate was produced, further drilling results have
been received, including high grade intersections of up to 6m at a
grade of 12g/t. Other selected high grade results from trenches
include intersections with thicknesses of between 4m - 22m at
5.1g/t - 5.9g/t. The Inferred resource estimate is currently being
updated with these most recent exploration results and it will be
included in the Mineral Resource update in August 2012.
Pokrovskiy
A high-grade zone was identified at Zheltunak, a satellite
deposit near the Pokrovskiy plant. Mineral Resources and Ore
Reserves are currently being estimated and it is planned that they
will be included in the Group's reserves and resources update,
which it intends to publish in August 2012.
Zheltunak remains prospective with further exploration planned
for H2 2012.
GOLD SALES AND COSTS
During H1 2012, the Group sold 286,000oz of gold at an average
realised gold sales price of US$1,639/oz. This represents an
increase of 8% on gold sold during the first six months of 2011
(266,000oz at an average realised gold sales price of US$1,455/oz).
The Group's average gold sales price in H1 2012 was 13% higher than
in H1 2011.
Operating costs for hard-rock mines (excluding Albyn) during H1
2012 were marginally in line with the same Period in 2011. The
average Rouble exchange rate was US$1:RUB31.0 during Q2 2012
compared to US$1:RUB30.2 in Q1 2012. The average Rouble exchange
rate during H1 2012 was US$1:RUB30.6, compared to US$1:RUB28.6 in
H1 2011.
CORPORATE UPDATE
Following shareholder approval at the Company's Annual General
Meeting held on 31 May 2012, the Company will pay a final dividend
of GBP0.07 per share on 26 July 2012 to shareholders on the
register as at close 29 June 2012.
IRC
IRC is a producer and developer of industrial commodities and is
the Group's former Non-Precious Metals Division, prior to its
listing on the Stock Exchange of Hong Kong Limited. The Group holds
a 64.5% stake in IRC with a current market value of US$194m, as at
close on 24 July 2012.
FY2012 production targets reaffirmed
On 12 July 2012, IRC issued its Trading Update. It stated that
Q2 2012 and interim production numbers are on track, with
Kuranakh's production of iron ore for the quarter 19% higher and
ilmenite production 95% higher compared to Q2 2011. Annual targets
of 820,000 tonnes of iron ore concentrate and 125,000 tonnes of
ilmenite concentrate are reaffirmed.
Sales above expectations
Iron ore sales were above IRC management expectations, at
206,332 tonnes in Q2 2012 and 424,021 tonnes for H1 2012. Ilmenite
sales were also ahead of management expectations, at 26,996 tonnes
for Q2 2012 and 52,966 tonnes for H1 2012.
K&S project construction on track
Performance is ahead of expectations, enabling foundation work
to progress rapidly.
The 22kv transformer site is now complete and ready to be
connected to the main cross country overhead power supply, before
switching over to full national grid power. Full construction works
are underway on the processing plant site.
Bolshoi Seym transaction
IRC announced the signing of an agreement to acquire the
remaining 51% ownership of the high-grade ilmenite Bolshoi Seym
deposit resulting in 100% ownership. Its geology is attractive,
with the deposit containing approximately 331.5Mt of reserves and
resources and located adjacent to IRC's established Kuranakh mine,
suggesting potential for economies of scale and synergies.
Garinskoye Direct Shipment Ore ("DSO") scoping study
Since the DSO opportunity was announced earlier in 2012,
progress has continued. The JORC resources model has been updated
with new data from recent drilling and a technological mapping of
the deposit and a full scale technological sampling for the pilot
testing at the Ural Mining Institute of the Russian Academy of
Science is underway. During H2 2012, it is anticipated that the
JORC report will be completed along with the pit optimisation study
and technological study for the primary processing of the high
grade ore.
Molybdenum exploration
During Q2 2012, IRC announced the signing of an agreement to
acquire a controlling 50% plus one share stake and an option over
all remaining shares in a molybdenum exploration project situated
in the Amur Region. IRC subsequently announced on 12 July 2012 that
this transaction had been completed. This is a low cost entry into
a new project with significant exploration upside. The acquisition
will provide IRC with an attractive industrial commodity
development opportunity whilst enhancing its commodity and regional
diversification.
Further information may be obtained from the IRC website,
www.ircgroup.com.hk
Forward-looking statements
This release may include statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this
release and include, but are not limited to, statements regarding
the Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations
of the industry.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance
and the development of the markets and the industry in which the
Group operates may differ materially from those described in, or
suggested by, any forward-looking statements contained in this
release. In addition, even if the development of the markets and
the industry in which the Group operates are consistent with the
forward-looking statements contained in this release, those
developments may not be indicative of developments in subsequent
periods. A number of factors could cause developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in law or regulation, currency fluctuations
(including the US dollar and Rouble), the Group's ability to
recover its reserves or develop new reserves, changes in its
business strategy, political and economic uncertainty. Save as
required by the Listing and Disclosure and Transparency Rules, the
Company is under no obligation to update the information contained
in this release.
Past performance cannot be relied on as a guide to future
performance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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