Gold output surges at Petropavlovsk in 2011

Petropavlovsk, the Russian gold miner, saw production over the whole of 2011 up by almost a quarter from 2010's levels.

In a trading update the firm also reveals total sales of gold were 51% ahead of 2010, hitting 676,000 ounces (oz) by the year's end.

Total production for the year was 630,100oz. The sales figure is significantly higher than the production figure because it reflects the disposal of a huge mountain of gold produced in the exceptional final quarter of 2010.

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Indeed, the final quarter of 2011, in which the group produced 182,900oz, was still down on its 2010 comparator by 10%.

The average realised sales price was $1,617/oz in 2011, 29% higher than the average price achieved during 2010.

In the final quarter the average price was US$1,693/oz, a 23% increase over the same period in 2010.

Petropavlovsk will now be under scrutiny to see whether it can match its sterling 2011 performance this year. Its stated production target is 680,000oz, an increase of 11% compared to 2011.

The success of Petropavlovsk propelled its founder Pavel Maslovskiy into elected office as a Senator in the Russian Duma, which meant that, under Russian law, he was no longer allowed to continue as Chief Executive Officer (CEO) of the company. He has replaced in December 2011 as CEO by Sergey Ermolenko but in order to retain access to his knowledge and experience the company has made him Honorary President of the firm. Maslovskiy will not receive any salary from the firm and will not be able to vote at board meetings, though he will be allowed to attend them.

New CEO Ermolenko said the main reason for the progress in 2011 is "thanks to the improved performance of our flagship mine at Pioneer, where management was able to resolve the problems and difficulties experienced in 2010, bringing the mine to world-class standards of efficiency".

Pioneer actually saw production rise 56% during the year. Of the other three gold mines, Malomir was up 143% by the end of 2011 while Pokrovskiy was down by 37%; Albyn was not in operation during 2010 to provide comparisons.

Over the last 12 months Petropavlovsk shares have declined 33% in value.

BS