Petropavlovsk plc

Petropavlovsk plc is a London-based gold mining company with operations in Russia. The company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

History

The Group was founded by Peter Hambro and Pavel Maslovskiy in 1994 as an Anglo-Russian venture to develop a highly-prospective, under-developed gold project in the Amur region, Russian far east.

In 2002, the Company was first listed on the Alternative Investment Market Peter Hambro Mining fully acquired Aricom, a business formed by Peter Hambro and Pavel Maslovskiy and operating in the Amur Region, in April 2009. It was also first fully listed on the London Stock Exchange in April 2009.

In September 2009, the company changed its name from Peter Hambro Mining plc to Petropavlovsk plc, retaining the POG stock exchange code, in order to reinforce its Russian focus.

In October 2010, the company floated its non-precious metals division (the assets previously held by Aricom plc) on the Stock Exchange of Hong Kong as IRC Ltd.

In 2017, founder Peter Hambro stepped down as chairman of the company and Pavel Maslovskiy resigned after pressure from a group of shareholders led by Viktor Vekselberg. However, following a vote taken at the company’s annual general meeting on 29 June 2018, it was announced that Pavel Maslovskiy would return to the board of Petropavlovsk along with Sir Roderic Lyne and Robert Jenkins. Kenges Rakishev, the largest shareholder with 22% of the shares in the company, supported the vote and the move to appoint the new directors.

In August 2020, following June boardroom changes which were not supported by Prosperity Capital Management, Petropavlovsk announced the appointment of an interim chief executive. Maksim Meshcheriakov, a Russian executive, would replace co-founder Pavel Maslovskiy, who had left the group. Petropavlovsk also named James Cameron, an existing independent director, as its new chairman.

The immediate priority of the board of directors of Petropavlovsk PLC would be to ensure the on-going stability of operations and to strengthen governance of the company following a boardroom tussle.

Doubts about the competence and independence of an interim chief executive, Maksim Meshcheriakov, were voiced by the Pokrovskiy Mine labor union. The managers of the company's key mines requested the Board to disclose important information regarding the interim CEO. In their letter they wrote that he was not independent, did not have the relevant mining experience of more than 17 years, had been involved in questionable transactions and may still be regarded as a politically exposed person.

On 26 August 2020 Meshcheriakov and a team led by him invaded the Moscow office of the Pokrovskiy Mine. After Meshcheriakov spent a day spent in the office, the IT-systems and software that provide the daily work were destroyed, the submission of reports to state regulatory bodies was interrupted and the HR-department's database was destroyed completely. Part of the data containing proprietary information disappeared and was probably stolen, the other part was destroyed.

In October 2020 it was announced that Meshcheryakov would face a Russian criminal probe following his forced entry of the company's Moscow office. A letter, signed by Alexander Fedorov, vice-chairman of the investigating committee, referred to "indications of criminal activities" under two parts of Russia's criminal code relating to theft and illegal entry.

In December 2021, Petropavlovsk, sold its 31.1% stake in IRC Limited to Gazprombank (24.07%) and to Dmitry Bakatin (5.79%).

Petropavlovsk has embarked on an ambitious programme to strengthen leadership and controls across the group aimed at reducing costs and improving returns to stakeholders.

Group highlights:

548.1koz gold produced in 2020, including third-party concentrate gold.

5.39Moz refractory gold reserves.

16+ years average mine life.

1 of only two POX plants in Russia.

2 projects underway to expand capacity utilisation at the POX Hub.

Six main facts

1. Long-life asset base: Petropavlovsk has a long-life asset base with a history of resource & reserve replacement. The group’s average mine life is more than 16 years. The group’s 18 gold licences cover an area of more than 3,200km² which are considered to be highly prospective by its geologists.

2. Refractory gold processing capabilities: The company has invested in pressure oxidation technology to unlock the value of its extensive refractory gold reserves and resources and commissioned its Pressure Oxidation Hub (“POX Hub”) in late 2018. The POX Hub is one of only two in Russia and can treat a variety of complex refractory concentrates, both from Petropavlovsk’s own mines and third parties, which opens a range of development and growth opportunities from within the group’s existing asset base or externally.

3. Technical expertise: One of our biggest strengths is our capacity for in-house research and development. The company’s world-class institutes, including Irgiredmet and NIC Gydrometallurgia are responsible for the innovative design of its processing plants and continuous improvement of its processing capabilities.

4. Deleveraging & reducing the cost of debt: The company’s Net debt / EBITDA was 1.4x as at 31 December 2020, and the board has set deleveraging and reducing the cost of debt as a management priority to both strengthen the company’s balance sheet and improve cash returns to shareholders.

5. Business transformation: Under the leadership of a new CEO and senior management team, the board intends to simplify the group’s complex corporate structure and improve internal controls, operational policies and processes with the aim of delivering greater business transparency, operational efficiency and future growth for the benefit of all stakeholders.

6. Sustainability principles: Sustainable development is integral to the company’s overall business strategy. The group is committed to operating responsibly and is taking important steps to improve all areas of sustainability. Our environmental management system is ISO certified and our goal is to create a “zero-harm” workplace.