Even though it posted a net loss of US$24.8 million for H1 2018, the company believes it will report a net profit in 2019 thanks to a specialty gold project in its portfolio.
Russia’s Petropavlovsk (LSE:POG) released its H1 results and, despite posting a net loss of US$24.8 million thanks to rising costs and lower sales, the company believes that it will report a net profit in 2019 thanks to a specialty gold project.
The project, known as the pressure oxidation hub (POX), allows the treatment of refractory gold ore that is difficult to process using traditional methods since refractory gold contains ultra-fine gold particles that are typically resistant to recovery by standard methods.
By using this new treatment, the miner will be able to boost production and cut costs.
“This program is already bearing fruit, with updated 2018 full year guidance announced today for higher gold equivalent production and lower cash costs than previously expected,” said CEO Pavel Maslovskiy.
“We will continue to focus on our operational optimisation and cost reduction to improve our margins. We have arrived at an inflection point following our many years work on the development of the POX Hub, which lies at the heart of our growth strategy,” he added.
The company’s 2018 production outlook has been lifted from 400,000 ounces to 410, 000 ounces to between 420,000 ounces and 450,000 ounces thanks to the inclusion of “high-grade sellable floatation concentrate.”
“We should be on schedule and put commercial production in March, which means that we can produce roughly 150,000 ounces out of POX,” Maslovskiy reported.
The miner estimates that its gold production should rise to about 500,000 ounces next year.
In addition to the reporting of next year’s potential net profits, the company also welcomed back its founder, Peter Hambro, as president and senior adviser to the board.
Hambro was removed from his position last year amid a shareholder row over control of the company.
As of 3:26 p.m. EST on Thursday (September 27), Petropavlovsk was trading at GBX 6.39.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.