Petropavlovsk writes off $600m as gold price slump hits results

City A.M. Reporter
RUSSIA-focused gold miner Petropavlovsk yesterday posted a first-half net loss after a gold price slump forced it to take about $600m (£386.9m) of impairment charges.

Precious metals producers have had to write down billions of dollars after gold price fell 15 per cent since the start of the year.

“These (impairments) have severely affected our earnings,” Peter Hambro, chairman of Petropavlovsk, said in a statement.

Petropavlovsk recorded a net loss of $742m in the first half of 2013 compared to an $11m profit for the same period last year. Its revenue was up nine per cent at $597m.

The company has factored in gold price of $1,300 per troy ounce for write-offs compared to a current market price of around $1,411 per ounce.

“I have reason to believe that demand for physical gold – as opposed to paper promises of gold - is strong and that this will, as a minimum, underpin the gold price in the coming year,” Hambro added in the statement.

The company also maintained its 2013 production target of 760,000-780,000 ounces yesterday and added that it had $59m in cash and equivalents and $123m in undrawn facilities at the end of 2013.