OREANDA-NEWS. October 27, 2011. Petropavlovsk PLC ("Petropavlovsk" or the "Company", or together with its subsidiaries "the Group") issues its interim management statement for the period from 1 July 2011 to date, in accordance with the UK Listing Authority's Disclosure and Transparency Rules.

Highlights

Gold Production Report for Q3 2011

 

Total Attributable Gold Production1

 

Q3 2011

Q3 2010

Variance

9 months to 30 Sep 2011

9 months to 30 Sep 2010

Variance

 

'000oz

'000oz

 

'000oz

'000oz

 

Pioneer

117.7

42.5

177%

234.3

132.4

77%

Malomir

22.2

3.4

553%

60.1

3.4

1,668%

Pokrovskiy

28.2

30.9

(9)%

70.1

90.3

(22)%

Alluvial operations (incl. Tokur and the relevant share in joint ventures)

60.0

61.5

(2)%

82.7

78.5

5%

TOTAL

228.1

138.3

65%

447.2

304.6

47%

 

Operations and production

ЃЎ          The Group's total attributable gold production for Q3 2011 was 228,100oz, a 65% increase on the same period in 2010 and a 59% increase compared to Q2 2011;

ЃЎ          The Group's total attributable gold production during the first nine months of the year totalled 447,200oz, 47% higher than the equivalent period in 2010;

ЃЎ          Good performance at Pioneer, Malomir and Pokrovskiy continues through October with all mines on schedule, and accordingly the Group is confident of meeting its full-year production target of 600,000oz.

Development

ЃЎ          Construction work at Albyn has been progressing ahead of schedule and has now reached an advanced stage. It is expected that the mine will be commissioned in the last quarter of 2011;

ЃЎ          Work on the development of the pressure oxidation ("POX") hub at the Pokrovskiy mine and the flotation lines at Malomir and Pioneer remains on schedule.

Gold sales, costs and financial position

ЃЎ          Total gold sold during the first nine months of 2011 was 485,200oz at an average realised gold sales price of USD 1,587, which was 33% higher than the price achieved during the same period in 2010;

ЃЎ          The average realised gold sales price in Q3 2011 was USD 1,750;

ЃЎ          Total cash operating costs during Q3 benefited from the devaluation of the Rouble against the US Dollar;

ЃЎ          Petropavlovsk has entered into a new USD 200mln, 3 year banking facility at Libor +5% per annum with VTB Group; otherwise, the financial position of the Company as at 20 October 2011 has not materially changed from that reported at 25 August 2011.

Outlook for 2012

ЃЎ          The Group's 2012 production guidance will be announced in January 2012;

ЃЎ          The guidance will take into account the optimisation of the mining schedules following recent additions to the Group's reserves and resources base.

Corporate update

ЃЎ          The Company paid a final dividend of 7 pence per share on 28 July 2011 to shareholders on the register as at close of business on 1 July 2011 and on 24 August 2011, the Board of Directors approved an interim dividend of 5 pence per share, which will be paid on 11 November 2011 to shareholders on the register as at close of business on 7 October 2011;

ЃЎ          In August 2011, as previously announced, the Board welcomed Dr David Humphreys as a Non-Executive Director. The Board continues to work with external consultants to appoint an additional Non-Executive Director.

IRC

On 12 October 2011, the Group's 65.6% owned subsidiary, IRC, announced its Trading Update for

the Third Quarter to 30th September 2011. Highlights included:

ЃЎ          The continued ramp-up of the Kuranakh mine, with full production capacity of iron ore now being achieved on a sustainable basis;

ЃЎ          Record production levels were reported at Kuranakh at record prices for magnetite and ilmenite concentrate;

ЃЎ          Further progress has been made at K&S;

ЃЎ          Strong cash balances with no significant external funding requirements forecasted;

ЃЎ          Drawdown of ICBC loan to fund K&S development commencing in near-term.

Commenting on the announcement, Peter Hambro, Chairman, said:

"I am delighted to report that the Group has enjoyed another strong quarter, delivering record production levels which see us on track to achieve our annual production targets.

This was a result of a significant improvement in the Group's operational performance and efficiencies at every site when compared to the previous year, including a 15% increase in total volumes of mining works at Pioneer compared to the beginning of the year.

With Albyn nearing completion and our POX hub development progressing well, our development plans are also on track.

Our balance sheet is healthy and has again been strengthened by the strong gold price environment during this year and an additional significant facility from VTB Group.

Looking ahead, we intend to provide the market with production guidance for next year in January 2012 together with our final operational results for 2011.

In the context of the high volatility and still uncertain outlook in the international markets, it is pleasing to be reporting such a strong performance, and a confident operational outlook for the full year."