Petropavlovsk lowers targets

Marion Dakers
RUSSIAN gold miner Petropavlovsk yesterday further lowered its gold production guidance for 2010 while claiming many difficulties it encountered this year have now been overcome.

Petropavlovsk, formerly known as Peter Hambro Mining, now expects to produce 510,000 to 530,000 ounces of gold in 2010, down from the 636,500 to 670,000 guidance stated in August and 670,000 to 760,000 given before that.

The company blamed suppliers for a delay in the delivery of major mining equipment, while harsh weather hit work to ramp up production at the Pioneer mine.

“Going forward it looks a great deal better,” said chairman and founder Peter Hambro. “It’s been a beastly year so far but we have turned a corner.”

A second big excavator is still being assembled on the Pioneer site and won’t be operational for another week, Hambro said. The slower-than-expected arrival caused a four-to-six-week delay in accessing high-grade material, he added.

The company will announce its 2011 output target in January and Hambro said it will be more conservative than this year. Petropavlovsk produced 138,300 ounces of gold in the third quarter, the firm said in its interim management statement. The cut in production guidance was more severe than many analysts had predicted, though Charles Kernot from Evolution Securities added in a note: “Petropavlovsk’s gold in the ground will eventually be produced and so we retain our Buy [rating].”

Petropavlovsk also said it expects a significant increase in reserves and resources following exploration work this year. Shares in FTSE 250-listed Petropavlovsk lost 3.8 per cent yesterday to close at 903p.