25 July 2012

2012 Half Year Trading Update

 

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 2012 to 30 June 2012 ("the Period" or "H1 2012") in advance of its half-year results, which are expected to be published on 23 August 2012.

 

HIGHLIGHTS

Total attributable gold production⁽¹⁾for H1 2012

 

	Attributable Production
	Q2 2012	Q2 2011	Variance	H1 2012	H1 2011	Variance
	000oz	000oz	%	000oz	000oz	%
Pioneer	59.7	80.0	(25%)	125.3	116.6	7%
Pokrovskiy	22.7	24.0	(5%)	37.4	41.9	(11%)
Malomir	33.5	17.3	94%	66.1	37.9	74%
Albyn	16.2	0.0	n/a	24.1	0.0	n/a
Alluvial operations	26.2	22.4	17%	26.2	22.7	15%
TOTAL	158.3	143.7	10%	279.1	219.1	27%

 

Operations and gold production

n  Total attributable gold production for the Period was 279,100oz, a 27% increase compared to the same period in 2011 (219,100oz) and in line with the Groups increased production target for the full year;

n  Production during the second half of 2012 is expected to be higher than in the first half due to a greater contribution from the Groups seasonal heap-leach and alluvial operations and the expanded processing capacity at Pioneer and Albyn;

n  The Group reiterates its production target of 700,000oz for the full year.

 

Gold sales and costs

n  Gold sales during the period totalled 286,000oz, an 8% increase on the equivalent period in 2011 (266,000oz);

n  The average realised gold price for the period was US$1,639/oz, a 13% increase compared to H1 2011 (US$1,455/oz);

n  Operating costs for the Period for the Groups hard-rock mines (excluding Albyn) were marginally in line with H1 2011.

 

1.    Total attributable gold production, as stated throughout this document, is comprised of 100% of production from the Groups subsidiaries.

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 Companys direct and indirect interest in JSC "Pokrovskiy rudnik" (the holder of the Groups 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.

 

 

Project development: Pioneer and Albyn expansion

n  On 4 June 2012, the fourth processing line at Pioneer mine was commissioned ahead of schedule, increasing the plants design capacity by c.40% to c.6.6Mtpa;

n  On 10 June 2012, the second processing line was commissioned at Albyn ahead of schedule, doubling the plants design capacity to c.3.6Mtpa.

 

POX processing hub

n  Construction work has been progressing according to schedule, with work on the oxygen plant at Pokrovskiy under way and key items of equipment on order;

n  The first delivery of equipment at the Pokrovskiy site is scheduled to take place in Q3 2012.

 

Exploration

n  The Group successfully continued exploration at and around its operating mines in the Amur region;

n  A new reserves and resource estimate in accordance with JORC Code (2004), including the results of further H1 2012 exploration work is being prepared for release on 23 August 2012, together with the Groups half-year results.

 

IRC Limited ("IRC")

n  On 12 July 2012, IRC issued its Q2 Trading Update which noted the following highlights:

-     Kuranakh 2012 full year production targets reaffirmed;

-     K&S project construction on track; processing plant foundations underway and electrical substation ready;

-     Garinskoye DSO scoping study announced to realise near-term value for reduced capital expenditure;

-     Molybdenum exploration and Bolshoi Seym transactions announced.

 

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

 

"We are delighted to look back on six months of record gold production at our mines, following yet another quarter of strong operational performance.

Our track-record of building a successful multi-mine portfolio was strengthened further with the commissioning, ahead of schedule, of the fourth processing line at Pioneer and the second processing line at Albyn.

The latter doubles the designed capacity at Albyn eight months after it commenced production.

In parallel, our exploration programme is continuing to uncover further non-refractory reserves adjacent to our existing assets, ensuring that our growth trajectory is maintained in the years to come.

We look forward to providing a further update on exploration in August.

 

Our strong performance this quarter supports our upgraded full-year production target of 700,000oz.

Work has been progressing well on the pressure oxidisation ("POX") facilities for our planned commissioning at the end of 2013.

At the same time, training has been continuing at our in-house facilities for the expert team which will be running the process in the years to come.

Our focus for the second half of the year will remain on tight cost control and an increase in operational efficiencies."

 

 

 

 

 

ENQUIRIES

Petropavlovsk PLC   Alya Samokhvalova    Rachel Tuft	+44 (0) 20 7201 8900
Merlin   David Simonson   Ian Middleton   Anca Spiridon	+44 (0)20 7726 8400

OPERATIONS AND PRODUCTION

 

PIONEER

During H1 2012, Pioneer produced 125,300oz of gold, an increase of 7% on the amount produced during the same period in 2011.

This includes production from the seasonal heap-leach facility at Pioneer, which began production in April 2012, contributing 1,300oz of gold.

 

In Q2 2012, production at Pioneer totalled 59,700oz, a decrease of 25% compared with the same period in 2011 (80,000oz).

The decrease was due to a scheduled decrease in ore grades through the plant.

 

Pioneer: Mining	Units	Q2 2012	Q2 2011	H1 2012	H1 2011
Total material moved	m3 000	10,853	8,226	19,967	14,177
Ore Mined	t 000	3,096	1,869	4,120	2,781
Grade	g/t	1.6	1.7	1.6	1.7
Gold in ore	oz 000	159.3	101.7	209.4	147.9
Pioneer: Processing	Units	Q2 2012	Q2 2011	H1 2012	H1 2011
Resin-in-Pulp Plant
Total milled	t 000	1,360	1,229	2,476	2,364
Average grade	g/t	1.6	2.3	1.8	1.8
Gold content	oz 000	69.1	92.4	144.5	136.5
Recovery rate	%	85	84	86	83.7
Gold recovered	oz 000	58.5	77.7	124.1	114.3
Heap-Leach Operations
Ore stacked	t 000	432	225	432	225
Average grade	g/t	0.6	0.7	0.6	0.7
Gold content	oz 000	8.3	5.0	8.3	5.0
Recovery rate	%	15	45.2	15	45.2
Gold recovered	oz 000	1.3	2.3	1.3	2.3
Total gold recovered	oz 000	59.7	80.0	125.3	116.6

 

 

 

POKROVSKIY

During H1 2012, Pokrovskiy performed well, with total gold production standing at 37,400oz, of which 4,500oz were processed via the mines heap-leach operations.

This was slightly less than the 41,900oz the mine produced during the comparative period in 2011 due to lower ore grades through the mill, as scheduled.

The Pokrovka-2 deposit was the primary source of ore mined during H1 2012.

 

Pokrovskiy: Mining	Units	Q2 2012	Q2 2011	H1 2012	H1 2011
Total material moved	m³ 000	2,514	1,652	3,927	3,274
Ore mined	t 000	660	273	850	688
Average grade