Petropavlovsk PLC Released 2011 Half Year Trading Update
OREANDA-NEWS. July 27, 2011. 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 2011 to 30 June 2011 ("the Period") in advance of its half year results, which are expected to be published on 25 August 2011.
HIGHLIGHTS
Total attributable gold production for H1 2011
|
|
Attributable production1 | |||||
|
|
Q2 2011 |
Q2 2010 |
Variance |
H1 ended 30 June 2011 |
H1 ended 30 June 2010 |
Variance |
|
|
'000oz |
'000oz |
% |
'000oz |
'000oz |
% |
|
Pioneer |
80.0 |
54.1 |
48 |
116.6 |
89.9 |
30 |
|
Pokrovskiy |
24.0 |
29.6 |
(19) |
41.9 |
59.4 |
(29) |
|
Malomir |
17.3 |
- |
n/a |
37.9 |
- |
n/a |
|
Alluvial operations2 |
22.4 |
7.4 |
202 |
22.7 |
7.4 |
207 |
|
Joint ventures and other investments3 |
- |
9.6 |
n/a |
- |
9.6 |
n/a |
|
TOTAL |
143.7 |
100.7 |
43 |
219.1 |
166.3 |
32 |
Operations and production
■ Total attributable gold production for the first half of the year was 219,100oz, c.32% higher than during the same period in 2010 (166,300oz) and marginally ahead of the Group's estimate for the first six months of 2011. Production in the second half of the year 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;
■ Total material moved at Pioneer during H1 2011, was c.84% higher than during the comparative period in 2010 (14,177,000m3 vs. 7,707,000m3). Advanced stripping will allow access to ore scheduled for processing in H2 2011; and
1. Total attributable gold production, as stated throughout this document, is comprised of 100% of production from the Group's subsidiaries and, where applicable, the relevant share of production from joint ventures and other investments. Figures for the comparative period are restated accordingly. 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.
2. Production from alluvial operations for H1 2011 includes production from the assets previously held by the Omchak Joint Venture, which was a 50/50 joint venture prior to the acquisition of 32.5% and 7.5% of the issued capital of the Omchak Joint Venture from JSC Susumanzoloto and JSC Shkolnoye respectively in H2 2010. Production from these assets is now 100% attributable to the Group.
3. Production from joint ventures and other investments includes production from the Omchak Joint Venture prior to its acquisition in H2 2010. Following the termination of the Odolgo Joint Venture in 2011, the Group no longer operates any joint ventures.
■ The Group reiterates its announced production target of 600,000oz for the year.
Gold sales and costs
■ During the first half of the year, the Group sold 266,000oz of gold at an average realised gold sales price of USD 1,455, a c.71% increase in the quantity of gold sold compared with the first six months of 2010 (155,000oz at an average realised gold sales price of USD 1,154/oz);
■ Gold sold in H1 was c.47,000oz greater than H1 2011 production due to gold in circuit from 2010 becoming available for sale; and
■ Operating costs were in line with the Group's estimates, which have been under pressure from industry wide inflation and the appreciation of the Rouble against the USD , the Group's functional reporting currency.
Project development: Malomir and Albyn
■ In mid-July 2011, the second crushing and grinding line at Malomir was commissioned ahead of schedule and is currently being ramped up; and
■ Construction work on the Group's fourth gold mine, Albyn, remains on track for launch in Q4 2011, as previously announced.
Financial position excluding IRC
■ In addition to the 2010 year end cash-in-hand of USD 96 million, the Group has entered into new committed banking facilities totalling USD 340 million. Accordingly the Group is fully funded for its capital expenditure programmes.
■ As announced on 21 June 2011, following a period of extensive research and testing, the Group has completed an internal feasibility study for the construction of a pressure oxidation processing plant to be located at the Pokrovskiy mine ("POX hub"), to process flotation concentrate from Malomir and Pioneer;
■ Work on the foundations for the plant at Pokrovskiy and construction of the flotation stage at Pioneer and Malomir is in progress; and
■ The contract for construction and installation of the flotation plant at Malomir was signed with Outotec (
■ A new, previously unknown, high-grade mineralised zone with intersections of up to 17.0g/t on 20m thickness has been delineated at NE Bakhmut. The high grade ore column contains both non-refractory and refractory mineralisation and remains open in a down dip direction;
■ A new mineralised zone, Zvezdochka, has been discovered and explored north-west of the Bakhmut zone. It is parallel to the high grade Andreevskaya and
Albyn and the surrounding areas
■ A new zone of alteration similar to the Albyn zone has been intersected by two trenches in the Kharginskaya area; and
■ Exploration at the new Elginskoye licence area has identified wide shallow dipping zones of alteration with the first intersection of 33m thickness at an average grade of 1.23g/t.
■ New non-refractory mineralisation has been identified to the north-east of the Quartzitovoye open pit;
■ Exploration at the previously identified Kanavinskaya zone has identified non- refractory resources which will become a source of additional ore for the existing RIP plant at Malomir. The zone remains open in a down dip direction; and
■ Exploration at Zone 26, north of the Malomir deposit, has identified an addition to Malomir's refractory ore reserves and mineral resources. The zone remains open in a down dip direction.
■ Geochemical work at the Osezhinskaya licence has identified extensive gold, copper and molybdenum anomalies. The Group's geologists are evaluating the possibility of discovering a copper-molybdenum-porphyry deposit.
JORC Reserves and Resources estimates
■ A new JORC-based Reserves and Resource estimate, including results of H1 2011 exploration work, is being prepared for release on 25 August 2011, together with the Group's interim results.
■ On 12 July 2011, IRC issued its Trading Update which noted the following points:
- Total production increased by 142% compared to the previous six-month period;
- All 2011 production targets are on track to be achieved;
- The consolidated average realised price achieved in the first half of 2011 was c.USD 147/t. Pricing is attained at a formula related to spot, and is agreed on a monthly basis;
- Construction works at K&S are ongoing; and
- IRC is undertaking an optimisation study for the K&S project to review the potential to increase throughput. The study was initiated following the JORC reserve increases announced in February 2011. IRC expects to publish the study with its interim results due on 23 August 2011.
Commenting on the announcement, Peter Hambro, Chairman, said:
"The strong first half and the fact that that the second half of the year is on schedule means that we remain on track to achieve the 600,000oz production target announced at the start of 2011.
Commissioning the second mill at Malomir and the likelihood of our fourth hard-rock gold mine, Albyn, coming on-stream this year demonstrates that both the skill and commitment of our construction teams match that of the production side of the business, which has produced these excellent results.
We have also continued the planning and development of the POX hub at Pokrovskiy, which is due to be commissioned in 2013. This is an exciting new project for the Group which, I believe, will propel us into a new phase of growth and development, helping to unlock the considerable refractory ore resources in our portfolio and in
On the exploration side, we have had a number of successes which have the potential to improve our production scenarios and development plans in the coming years. We are currently evaluating these exploration results and intend to report our findings later in the year."
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