Petropavlovsk doubles revenue in 2011

FTSE 250 Russia-focused gold miner Petropavlovsk managed to double revenue in 12 months ended December 31st, helped by soaring metals prices and a ramp-up in production.

Revenue jumped 106% from $612m to $1,262.5m, beating consensus estimates of around $1,228m. This was a result of a 52% increase in gold sold, a 29% rise in the average realised gold sale price (to $1,617/oz) and a 374% jump in revenue from Hong Kong-based iron ore producer IRC in which Petropavlovsk has a 65.6% stake.

"This is the first annual report in which we can measure our financial success in billions of dollars...In order to achieve this we moved record volumes of material, processed record amounts of ore and sold record amounts of gold at record prices," said Chairman Peter Hambro.

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Underlying earnings before interest, tax, depreciation and amortisation surged 205% from $195.5m to $597.1m. Pre-tax profit jumped from $69.2m to $361.3m, beating the $381m estimate.

"Tight cost control and high gold price during the year have yielded record operating cash flows which, together with our substantial borrowing powers, allow us to complete our expansion programme," Hambro said.

While the final dividend per share (DPS) was left at 7p, an increase in the DPS at the interim stage meant that the final payout totalled 12p, up from 10p in 2010.

Meanwhile, net debt surged from $171.1m to $787.3m during the period reflecting an increase in capital expenditure.

BULLISH OUTLOOK FOR GOLD PRODUCTION

Gold production increased by 24% year-on-year from 507koz to 630koz and this is expected to rise a further 8% to 680koz in 2012, a forecast that the group admits is "conservative". The company said that the target does not account for expansions of the Pioneer and Albyn scheduled for the second half.

The firm also remained bullish for future production growth beyond 2012, saying that it expects to change previous estimates for output between 2013 and 2016 due to a substantial increase in capacities.

Shares jumped 4.52% to 648p in early trading on Wednesday.

BC