London listed Petropavlovsk has said it is unable to sell gold or repay a loan because of Gazprombank’s inclusion on the UK’s sanctions list.
Shares in the Russia focussed gold miner are down 90 per cent this year to date and fell 12 per cent today after the firm said it was “urgently” discussing financing arrangements with advisors.
In a statement FTSE 250 listed Petropavlovsk said it has “substantial commercial and financial relationships with GPB and its subsidiaries.”
“The Company is urgently considering with its advisers the implications for the Group’s activities and financing arrangements resulting from GPB being designated for the purposes of an asset freeze. A further announcement will be made in due course,” Petropavlovsk added.
Petropavlovsk’s financial relationship with Gazprombank includes a $200m loan and an $87m revolving credit facility. The gold miner said it has been forced to halt an interest payment of $560,000 which was due to be paid today.
Gazprombank is also an “off-taker of 100 per cent of the group’s gold production,” causing significant difficulties for Petropavlovsk.
“Gazprombank’s designation under regulations for the purposes of asset freeze prohibits further sales of gold by the group to Gazprombank at present,” the statement noted.
“Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group’s gold output,” Petropavlovsk admitted.