Petropavlovsk cuts costs to mitigate volatile gold prices

Petropavlovsk plans to make cash savings and cost cuts in response to volatility in gold prices.

Petropavlovsk plans to make cash savings and cost cuts in response to volatility in gold prices.

The Russia-focused miner said it has approved adjustments to its business plan this year including estimated cash savings of $160m to strengthen its financial position against falling commodity prices.

As part of the plan, a comprehensive cost-cutting programme has been implemented to reduce annual operating and central administration costs by about $10m to $15m.

The group is extending the development period of the pressure oxidation (POX) hub and the related flotation plant at Malomir, in the Amur region, by 12 to 18 months. It will defer $150m in capital expenditure that would have been incurred this year.

The company reiterated its 2013 gold production forecast of 760,000 to 780,000 ounces and expects similar output in 2014.

Exploration this year will focus on upgrading oxide resources into reserves for fast-tracking into the 2014 and 2015 production plans.

Petropavlovsk also announced the appointment of Dmitry Chekashkin as Chief Operating Officer and Executive Director. He was previously the Group Head of Precious Metals and sat on the executive committee.

"We said in April that we were undertaking a review of capital and operational expenditure as a consequence of the volatility in the gold price," said Chairman, Peter Hambro.

"That review has concluded that we should delay the start-up of our POX Hub and the Malomir flotation plant and reduce our operating and administrative expenses.

"By promptly taking these important steps, we have ensured the group remains on a sound financial footing. The group expects, at current gold price levels, a reduction in its net debt position at the end of the current year on successful implementation of these measures."

Gold prices fell in Monday's European trading hours. Gold for June delivery dropped $8.60, or 0.6%, to $1,428 an ounce.

Shares in Petropavlovsk rose 0.48% to 146.80p at 11:26 Monday.

RD

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021
Nuclear power might never be popular – but now looks a good time to invest
Commodities

Nuclear power might never be popular – but now looks a good time to invest

Nuclear power gets a very bad press, but it is the ultimate renewable energy source. Interest in it is perking up again, says John Stepek. Which means…
9 Apr 2021
How to find companies that can thrive in the post-Covid world
Advertisement Feature

How to find companies that can thrive in the post-Covid world

Many sectors of the global economy will return to something resembling pre-pandemic status, but others will take far longer to recover.
8 Apr 2021