Petropavlovsk PLC (LON:POG) expects total gold production to fall as much as a fifth this year mainly due to a drop in third-party output after management issues disrupted the signing of concentrate contracts.
It forecast 2021 gold production of 430,000-470,000 ounces, comprising of 370,000-390,000 ounces of its own output and third-party gold production of 60,000 to 80,000 ounces. Total gold production in 2020 was 548,100 ounces.
The guidance from the Russian gold producer followed the appointment of Denis Alexandrov as chief executive in December 2020 and a new management team that joined in January this year.
The new team are undertaking a comprehensive review of the business, its corporate structure, internal controls, operational policies and processes with the aim of delivering greater transparency and operational efficiency and outlining a clear pathway to future growth.
Output from third-party material is expected to decline from FY 2020’s 163,000 ounces due to reduced volumes of concentrate available for purchase and lower concentrate grades.
“Management disruption in 2020, prior to the arrival of the new executive team, resulted in the company missing the crucial annual contracting window to secure sufficient concentrate for 2021 delivery and processing,” the company said.
“However, efforts are underway to source additional material to meet the guided range and secure supplies for 2022,” it added.
Petropavlovsk, which has three mines in the Russian Far East, expects production to increase this year at its Pioneer mine, driven by higher grades and the commissioning of a flotation plant by the end of the second quarter, and for output to remain steady at its Malomir mine.
Production at its Albyn mine is forecast to decline from FY 2020’s production of 127,000 ounces due to lower volumes and lower recoveries resulting from the switch to processing ore from the nearby Elginskoye deposit.