Petropavlovsk POG

Petropavlovsk (POG.L) announced it produced a total of 422,300 ounces of gold in FY 2018 and although this is a respectable result by any standard, the output barely met the lower end of the production guidance which called for a total production of 420,000-450,000 ounces (midpoint: 435,000 ounces). Except for the gold production in concentrate, pretty much every mine reported lower production results in Q4 (and the entire year) compared to the same periods in 2017.

But 2019 will be substantially better. The company has completed the construction of its POX hub at Pokrovskiy, and the facility has now been commissioned with a first gold pour occurring right before the end of the year. The availability of the POX plant allowed Petropavlovsk to increase its 2019 production guidance to 450,000-500,000 ounces of gold with a total capex of just $45-50M (just $100 per produced ounce of gold).

Petropavlovsk POG 2

The POX hub at the Prokovskiy mine has excess capacity, and Petropavlovsk has the ability to process up to 250,000 tonnes of third-party concentrate, and that’s something the company is definitely considering as the processing fee per tonne of third party concentrate could provide a nice extra boost to the revenue. The 3rd and 4th autoclaves will be up and running by this summer, so Petropavlovsk still has some time to secure additional concentrate (which isn’t absolutely necessary as the construction of a flotation facility at Pioneer could fill the POX hub to capacity). On top of processing third party concentrate, the POX plant at Prokovskiy now finally enables Petropavlovsk to process its almost 10 million ounces of gold in its reserves that are contained in refractory ore.

Go to Petropavlovsk’s website

The author has no position in Petropavlovsk. Please read the disclaimer

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