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Gold miner Petropavlovsk (LON:POG) met production targets in its latest three months as it focuses on the high grade ounces at its four Russian mines.
The miner has adopted a high margin only strategy to ensure it can hit its debt repayment schedule.
In line with this new plan, gold production fell to 114,500oz in the three months to September compared to 150,100oz a year ago.
Net debt was cut by US$255mln to US$675m over the same period and Pavel Maslovskiy, chief executive, said it was “progressing well” with its target to reduce net debt to US$600mln by the end of the year.
Total gold production for the first nine months of the year was 354,700oz (456,500oz)
Sales for this period were 343,500oz (460,900oz) at an average price US$1,198/oz. For the latest quarter, sale prices averaged US$1,153/oz.
For the full year Petropavlovsk said cash costs would be US$600 per ounce with all-in-sustaining costs 15% higher and all-in-costs 5% above that.
Maslovskiy added: “Operationally, Q3 works were carried out in line with the group's plan across all our mines with the exception of Pioneer.”
Here, access to the high-grade area required a new set of technological parameters but now 150,000oz of gold is expected to be recovered by the end of the year.
Brokers said the production in the third quarter may have hit the company’s forecasts but it was below market expectations.
Sanlam said output had dipped 2% compared to the previous three months, though the ore from Pioneer’s high grade areas should give a boost to the final three months of the year.
The broker trimmed its production forecast to 557,000oz at US$600/oz, but it maintained its target price for the shares at 12p and its rating at ‘speculative buy’.
Shares eased 5% to 5.9p.