Petropavlovsk Plc’s new Chief Executive Officer Denis Alexandrov said the gold miner will focus on expanding output from existing assets before considering mergers.
Last year, Petropavlovsk’s biggest shareholder — Uzhuralzoloto Group of Companies — joined forces with other investors to oust the company’s founders Pavel Maslovskiy and Peter Hambro. The changes driven by UGC, a Russian gold miner controlled by billionaire Konstantin Strukov, ended the latest round of feuding at London-listed Petropavlovsk.
UGC’s intentions for Petropavlovsk have been disputed, with minority investors saying it’s trying to engineer a takeover without making an offer to all shareholders. Alexandrov, the former CEO of Highland Gold Mining Ltd. who took the helm at Petropavlovsk in December, said the company has other priorities.
“As a manager, I would only welcome the merger of Petropavlovsk and Uzhuralzoloto Group of Companies because it would create the third-largest gold producer in Russia,” Alexandrov said in an interview. “But we have other tasks related to organic growth and for the next few years we’ll focus on that.”
A little more than a decade ago, Petropavlovsk was worth $3 billion and mentioned as a future member of the benchmark FTSE 100 Index, but sinking gold prices and management missteps reduced it to a penny stock. A debt-for-equity swap to save the company brought bondholders onto the register, before a series of businessmen acquired stakes and pushed for changes.
In 2017, shareholders led by Russian billionaire Viktor Vekselberg forced Hambro and other directors out. A year later, Vekselberg sold his shares to Kazakh tycoon Kenes Rakishev, who led a counter coup that brought many of the old board back. Rakishev’s shares eventually ended up with UGC.
Petropavlovsk said on Wednesday that it expects 2021 production of 430,000 to 470,000 ounces, a drop of at least 14% from last year output.
While production from its own mines will be stable, last year’s management turbulence meant the company signed fewer gold concentrate processing contracts with clients in September and October, and those agreed were for lower ore grades, the new CEO said. Petropavlovsk owns a pressure oxidation plant that processes both its own ores and those supplied by third parties.
The plant should be running at full capacity by the end of this year, using the company’s own concentrate, Alexandrov said. Petropavlovsk will consider whether to increase the plant’s capacity and will announce any decision at a strategy update in September, he said.
“I feel that the turbulence for the company is over,” said Alexandrov.
Maslovskiy, the company’s co-founder and former CEO, was arrested in Moscow in December on embezzlement charges.
(By Yuliya Fedorinova)