Petropavlovsk PLC Notice of Publication of Annual Report

Fecha : 01/06/2020 @ 01:44
Fuente : UK Regulatory (RNS & others)
Emisora : Petropavlovsk Plc (POG)
Cotización : 26.05  0.6 (2.36%) @ 10:35
Petropavlovsk Cotización de acciones Gráfica

Petropavlovsk PLC Notice of Publication of Annual Report

Petropavlovsk (LSE:POG)
Gráfica de Acción Histórica


De May 2020 a Jul 2020

Haga Click aquí para más Gráficas Petropavlovsk.

TIDMPOG

RNS Number : 5049O

Petropavlovsk PLC

01 June 2020

1 June 2020

Petropavlovsk PLC (the "Company" or, together with its subsidiaries, the "Group")

Notice of Publication of Annual Report

The Annual Report for the year ended 31 December 2019 (the "Annual Report 2019") is available to view and download from the Company's website at www.petropavlovsk.net . A copy of the Annual Report 2019 has also been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm

The information contained in the Appendix to this announcement, which is extracted from the Annual Report 2019, is included solely for the purposes of complying with the Disclosure Guidance and Transparency Rules (the "DTR") 6.3.5 and the requirements it imposes on how to make public annual financial reports. The Appendix should be read in conjunction with the Company's Annual Results for the year ended 31 December 2019 issued on 27 May 2020 (the "Annual Results Announcement"). Together, these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material should be read in conjunction with, and is not a substitute for reading, the Annual Report 2019.

References to page numbers and notes to the financial statement made in the Appendix refer to page numbers and notes to the financial statements in the Annual Report 2019. The information contained in this announcement does not constitute the Company's statutory accounts as defined in section 434 of the Companies Act 2006 (the "Act") for 2019 or 2018 but is derived from those accounts. The auditors have reported on those accounts and their report was unqualified, and did not contain statements under section 498(2) of the Act (regarding adequacy of accounting records and returns) or under section 498(3) of the Act (regarding provision of necessary information and explanations). The statutory accounts for the year ended 31 December 2019 have been approved by the Board and will be delivered to the Registrar of Companies. A copy of the statutory accounts for the year ended 31 December 2018 was delivered to the Registrar of Companies.

Neither the content of the Company's website, nor the content of any other website accessible from hyperlinks on the Company's website is incorporated into, or forms part of, this announcement.

APPIX

   1.       Directors' responsibility statement 

We confirm that to the best of our knowledge:

-- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole;

-- the Strategic Report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

-- the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's position and performance, business model and strategy.

   2.    Principal risks relating to the Group 

A table summarising Principal Risks is provided below. The risks set out in the table should not be

regarded as a complete or comprehensive list of all potential risks and uncertainties facing the Group which could have an adverse impact on its performance. Additional risks which are currently believed to be immaterial could turn out to be material and significantly affect the Group's business and financial results.

 
 OPERATIONAL RISKS 
 PRODUCTION RELATED RISK - Failure to achieve the Group's production 
  plan 
 Risk                                                          Description and potential                                           Mitigation/comments/       Potential 
                                                                impact                                                              2019 Progress              impact/ 
                                                                                                                                                               change 
                                                                                                                                                               since 2018 
   Risk to the                                                 The global COVID-19                                                 The Group has              Potential 
    Group's employees                                           pandemic could significantly                                       implemented measures        impact 
    and operations                                              impact on the Group's                                              in each of the              - High 
    from COVID-19                                               employees and could                                                jurisdictions 
                                                                result in the suspension                                           in which it operates, in    New Risk 
                                                                of some or all, of                                                 line 
                                                                the Group's mining                                                 with published guidance, 
                                                                operations.                                                        in order 
                                                                                                                                   to protect employees and 
                                                                                                                                   the 
                                                                                                                                   Group's operations. 
 
                                                                                                                                   - The formation of an 
                                                                                                                                   emergency 
                                                                                                                                   response team to limit 
                                                                                                                                   the spread 
                                                                                                                                   of COVID-19 at the Group 
                                                                                                                                   companies. 
                                                                                                                                   Members of the response 
                                                                                                                                   team 
                                                                                                                                   will work in 
                                                                                                                                   co-operation with 
                                                                                                                                   the local authorities 
                                                                                                                                   when and 
                                                                                                                                   if required. The team 
                                                                                                                                   includes 
                                                                                                                                   representatives from 
                                                                                                                                   each Group 
                                                                                                                                   enterprise in Russia; 
                                                                                                                                   and 
                                                                                                                                   - Coordinators 
                                                                                                                                   responsible for 
                                                                                                                                   the control and 
                                                                                                                                   counteraction 
                                                                                                                                   against the spread of 
                                                                                                                                   COVID-19 
                                                                                                                                   have been appointed at 
                                                                                                                                   each location. 
                                                               The Group's assets                                                  Preventative maintenance   High 
   Risk to production                                           are located in the                                                 procedures 
   from:                                                        Russian Far East,                                                  are undertaken on a        Risk 
                                                                a remote area that                                                 regular basis              Unchanged 
   (i)Weather                                                   can be subject to                                                  to ensure that machines 
   (ii) Delivery                                                severe climatic conditions.                                        will 
   of equipment                                                 Severe weather conditions,                                         function properly under 
                                                                such as cold temperatures                                          extreme 
                                                                in winter and torrential                                           cold weather conditions; 
                                                                rain, potentially                                                  heating 
                                                                causing flooding                                                   plants at operational 
                                                                in the region could                                                bases are 
                                                                have an adverse impact                                             regularly maintained and 
                                                                on operations, including                                           operational 
                                                                the delivery of supplies,                                          equipment is fitted with 
                                                                equipment and fuel.                                                cold 
                                                                Exploration and extraction                                         weather options which 
                                                                levels may fall as                                                 could assist 
                                                                a result.                                                          in ensuring that 
                                                                The Group relies                                                   equipment does 
                                                                on the supply and                                                  not fail as a result of 
                                                                availability of various                                            adverse 
                                                                services and equipment                                             weather conditions. 
                                                                in order to successfully                                           Pumping systems 
                                                                run its operations.                                                are in place and tested 
                                                                Delay in the delivery                                              periodically 
                                                                or the failure of                                                  to ensure that they are 
                                                                mining equipment                                                   functioning. 
                                                                could significantly 
                                                                delay production                                                   Management monitor 
                                                                and impact the Group's                                             natural conditions 
                                                                profitability.                                                     in order to pre-empt any 
                                                                The Group is dependent                                             disaster 
                                                                on production from                                                 and in order that 
                                                                its operating mines                                                appropriate 
                                                                (both open pits and                                                mitigating action can be 
                                                                underground) and                                                   taken. 
                                                                from the POX plant                                                 The Group aims to 
                                                                in order to generate                                               maintain several 
                                                                revenue and cash                                                   months of essential 
                                                                flow.                                                              supplies 
                                                                                                                                   at each site. Equipment 
                                                                                                                                   is ordered 
                                                                                                                                   with adequate lead time 
                                                                                                                                   in order 
                                                                                                                                   to prevent delays in 
                                                                                                                                   delivery. 
 
                                                                                                                                   The Group has 
                                                                                                                                   contingency plans 
                                                                                                                                   in place to address any 
                                                                                                                                   disruption 
                                                                                                                                   to services. 
 
                                                                                                                                   2019 
                                                                                                                                   In July 2019, the 
                                                                                                                                   Company announced 
                                                                                                                                   that heavy rainfall had 
                                                                                                                                   impacted 
                                                                                                                                   underground development 
                                                                                                                                   works 
                                                                                                                                   at Malomir which is in a 
                                                                                                                                   remote 
                                                                                                                                   region where heavy 
                                                                                                                                   rainfall events 
                                                                                                                                   are not uncommon during 
                                                                                                                                   the summer 
                                                                                                                                   months. The Company is 
                                                                                                                                   well equipped 
                                                                                                                                   to deal with such issues 
                                                                                                                                   as they 
                                                                                                                                   arise including employee 
                                                                                                                                   welfare 
                                                                                                                                   and safety. The 
                                                                                                                                   situation was 
                                                                                                                                   well managed. Malomir 
                                                                                                                                   produced 
                                                                                                                                   180.3koz of gold 
                                                                                                                                   doré in 
                                                                                                                                   2019, including from 
                                                                                                                                   concentrate, 
                                                                                                                                   compared with 77.6koz in 
                                                                                                                                   2018. 
 
   EXPLORATION RELATED RISK 
 Risk                                                          Description and potential                                           Mitigation/comments/       Potential 
                                                                impact                                                              2019 Progress              impact/ 
                                                                                                                                                               change 
                                                                                                                                                               since 2018 
 The Group's                                                   Exploration activities                                              The Group uses core        Potential 
  activities                                                   are speculative,                                                    drilling                    impact 
  are reliant                                                  time-consuming and                                                  combined with modern        - High 
  on the quantity                                              can be unproductive.                                                geophysical                 Change 
  and quality                                                  In addition, these                                                  and geochemical             - Reduced 
  of the Mineral                                               activities often                                                    exploration and 
  Resources                                                    require substantial                                                 surveying techniques. 
  and Ore Reserves                                             expenditure to establish                                            The Group 
  available                                                    reserves through                                                    employs a world-class 
  to it.                                                       drilling, metallurgical                                             team of 
                                                               and other testing,                                                  geologists with 
                                                               to determine appropriate                                            considerable 
                                                               recovery processes                                                  regional expertise and 
                                                               to extract gold from                                                experience. 
                                                               the ore and to construct                                            They are supported by a 
                                                               or expand mining                                                    network 
                                                               and processing facilities.                                          of fully accredited 
                                                               Once deposits are                                                   laboratories 
                                                               discovered it can                                                   experienced in 
                                                               take several years                                                  performing a range 
                                                               to determine whether                                                of assay work to high 
                                                               reserves exist. During                                              standards. 
                                                               this time, the economic 
                                                               viability of production                                             Group Mineral Resource 
                                                               may change. As a                                                    and Ore 
                                                               result of these uncertainties,                                      Reserve estimates are 
                                                               the exploration programmes                                          prepared 
                                                               in which the Group                                                  by a team of qualified 
                                                               is engaged may not                                                  specialists 
                                                               result in the expansion                                             following the guidelines 
                                                               or replacement of                                                   of JORC 
                                                               the current production                                              Code 2012, which is one 
                                                               with new reserves                                                   of the 
                                                               or operations.                                                      most recognised 
                                                                                                                                   reporting codes. 
                                                                                                                                   Mineral Resource and Ore 
                                                                                                                                   Reserve 
                                                                                                                                   estimates are subject to 
                                                                                                                                   regular 
                                                                                                                                   independent reviews and 
                                                                                                                                   audits. 
                                                                                                                                   The last full audit was 
                                                                                                                                   completed 
                                                                                                                                   in April 2017 by Wardell 
                                                                                                                                   Armstrong 
                                                                                                                                   International. 
 
                                                                                                                                   In addition, as a part 
                                                                                                                                   of compliance 
                                                                                                                                   with The Subsoil Law, 
                                                                                                                                   the Group 
                                                                                                                                   also prepares reserve 
                                                                                                                                   estimates 
                                                                                                                                   following Russian GKZ 
                                                                                                                                   guidelines. 
                                                                                                                                   These estimates are 
                                                                                                                                   subject to 
                                                                                                                                   GKZ audits. Where 
                                                                                                                                   possible, the 
                                                                                                                                   Group reconciles GKZ and 
                                                                                                                                   JORC 
                                                                                                                                   estimates which provides 
                                                                                                                                   additional 
                                                                                                                                   assurance about the 
                                                                                                                                   Company's 
                                                                                                                                   Reserve estimates. 
 
                                                                                                                                   The Group employs a team 
                                                                                                                                   of qualified 
                                                                                                                                   mining engineers to 
                                                                                                                                   undertake 
                                                                                                                                   mine planning, detailed 
                                                                                                                                   open 
                                                                                                                                   pit and underground mine 
                                                                                                                                   design 
                                                                                                                                   and production 
                                                                                                                                   scheduling. 
 
                                                                                                                                   The successful 
                                                                                                                                   commissioning 
                                                                                                                                   of the POX Hub unlocked 
                                                                                                                                   the economic 
                                                                                                                                   potential of the Group's 
                                                                                                                                   12.99Moz 
                                                                                                                                   refractory resources 
                                                                                                                                   which support 
                                                                                                                                   the Group's long-term 
                                                                                                                                   growth 
                                                                                                                                   objectives. The Group 
                                                                                                                                   continues 
                                                                                                                                   to explore the potential 
                                                                                                                                   for 
                                                                                                                                   further mine life 
                                                                                                                                   extension and 
                                                                                                                                   production expansion and 
                                                                                                                                   has 
                                                                                                                                   identified several 
                                                                                                                                   prospective 
                                                                                                                                   satellite refractory 
                                                                                                                                   targets 
                                                                                                                                   at Malomir and Pioneer. 
 
                                                                                                                                   In February 2020, the 
                                                                                                                                   Group acquired 
                                                                                                                                   exploration assets at 
                                                                                                                                   Mariinskiy 
                                                                                                                                   comprising two adjacent 
                                                                                                                                   exploration 
                                                                                                                                   licences. Our 
                                                                                                                                   exploration geologists 
                                                                                                                                   believe these assets 
                                                                                                                                   have the 
                                                                                                                                   potential to contain 
                                                                                                                                   substantial 
                                                                                                                                   gold resources, of a 
                                                                                                                                   similar 
                                                                                                                                   scale and to known 
                                                                                                                                   orebodies 
                                                                                                                                   at Malomir including its 
                                                                                                                                   satellites. 
 
                                                                                                                                   Successful near mine 
                                                                                                                                   exploration 
                                                                                                                                   identified a number of 
                                                                                                                                   promising 
                                                                                                                                   targets that warrant 
                                                                                                                                   further 
                                                                                                                                   exploration, which may 
                                                                                                                                   result 
                                                                                                                                   in an increase in 
                                                                                                                                   Mineral Resources 
                                                                                                                                   and possibly new Ore 
                                                                                                                                   Reserves. 
 
   PROCESSING 
 Risk                                                          Description and potential                                             Mitigation/comments/   Potential 
                                                                impact                                                                2019 Progress         impact/change 
                                                                                                                                                            since 2018 
 The POX Hub,                                                  POX is a new and complex                                              The smooth ramp-up     Potential Risk: 
  together with                                                 metallurgical facility                                               of                     High 
  the associated                                                which brings added challenges.                                       the POX Hub in 2019 
  flotation                                                     If there is a failure                                                is a record for the    Change: Reduced 
  plants at                                                     in the POX process it                                                industry. The POX 
  Malomir and                                                   could lead to lower production                                       Hub 
  Pioneer, sits                                                 and/or higher costs which                                            exceeded the Group's 
  at the heart                                                  may have a detrimental                                               most optimistic 
  of Petropavlovsk's                                            impact on the Group's                                                expectations, 
  strategy and                                                  operating and financial                                              with 193.2koz of 
  is the principal                                              condition.                                                           gold 
  driver of                                                     Radioactive isotopes are                                             recovered from 
  future value                                                  used in monitoring the                                               refractory 
  for the Group.                                                POX process. Failure to                                              concentrates during 
                                                                use this equipment correctly                                         its first 12 months 
  A mechanical                                                  could result in contamination.                                       of operations. Of 
  or metallurgical                                                                                                                   this 
  failure of                                                                                                                         amount, 132.0koz 
  the POX Hub,                                                                                                                       came 
  including                                                                                                                          from concentrates 
  failure to                                                                                                                         produced 
  reach expected                                                                                                                     at Malomir, leading 
  recovery rate                                                                                                                      to an increase of 
  or high levels                                                                                                                     132% 
  of 'preg robbing'                                                                                                                  in gold produced at 
  could result                                                                                                                       Malomir compared to 
  in lower production                                                                                                                a year ago. 
  and/or higher                                                                                                                      Gold recoveries from 
  costs, thus                                                                                                                        Malomir concentrates 
  impacting                                                                                                                          increased steadily 
  the Group's                                                                                                                        at 
  Strategy.                                                                                                                          the POX plant 
                                                                                                                                     through 
                                                                                                                                     2019 to reach above 
                                                                                                                                     design during the 
                                                                                                                                     fourth 
                                                                                                                                     quarter. 
                                                                                                                                     Productivity 
                                                                                                                                     and capacity 
                                                                                                                                     utilisation 
                                                                                                                                     for key equipment 
                                                                                                                                     exceeded 
                                                                                                                                     design rate and all 
                                                                                                                                     four autoclaves have 
                                                                                                                                     tested at stable, 
                                                                                                                                     full 
                                                                                                                                     capacity. 
                                                                                                                                     The Group's 
                                                                                                                                     expertise 
                                                                                                                                     in pressure 
                                                                                                                                     oxidation 
                                                                                                                                     is guided by RDC 
                                                                                                                                     Hydrometallurgy, 
                                                                                                                                     a scientific 
                                                                                                                                     research 
                                                                                                                                     centre based in St 
                                                                                                                                     Petersburg 
                                                                                                                                     with a POX pilot 
                                                                                                                                     plant 
                                                                                                                                     located in 
                                                                                                                                     Blagoveschensk. 
                                                                                                                                     Using its scientific 
                                                                                                                                     strengths, RDC is 
                                                                                                                                     now 
                                                                                                                                     focussing on ways to 
                                                                                                                                     process more complex 
                                                                                                                                     refractory ores. 
                                                                                                                                     Stringent safety 
                                                                                                                                     standards 
                                                                                                                                     governing licensing 
                                                                                                                                     and use of nuclear 
                                                                                                                                     isotopes 
                                                                                                                                     are second only to 
                                                                                                                                     the 
                                                                                                                                     space industry. 
                                                                                                                                     Employee 
                                                                                                                                     training for such 
                                                                                                                                     activity 
                                                                                                                                     is undertaken at the 
                                                                                                                                     Novosibirsk 
                                                                                                                                     Institute 
                                                                                                                                     for Advanced 
                                                                                                                                     Studies. 
 FINANCIAL RISKS 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                                      impact/change 
                                                                                                                                                            since 2018 
 Liquidity                                                     The Group may need ongoing                                            In the event that      Potential 
  Risk                                                          access to liquidity and                                              the                    impact 
                                                                funding in order to:                                                 Group requires         - High 
                                                                                                                                     additional             Change - 
                                                                (i) Refinance its existing                                           finance for shorter    Reduced 
                                                                debt;                                                                term liquidity 
                                                                (ii) Support its existing                                            purposes, 
                                                                operations and extend                                                including for 
                                                                their life and capacity;                                             capital 
                                                                and                                                                  expenditure 
                                                                (iii) Invest to develop                                              purposes, 
                                                                its refractory ore concentrate                                       the Group may access 
                                                                production, including                                                forward gold sales 
                                                                construction of flotation                                            funding. 
                                                                plants, underground mining                                           This may be 
                                                                projects and exploration.                                            advantageous, 
                                                                                                                                     depending upon the 
                                                                There is a risk that the                                             Group's 
                                                                Group may be unable to                                               access or otherwise 
                                                                obtain the necessary funding                                         to debt or equity 
                                                                when required or that                                                finance 
                                                                such funding will only                                               and the terms on 
                                                                be available on unfavourable                                         which 
                                                                terms.                                                               these may be 
                                                                The Group may therefore                                              available. 
                                                                be unable to meet its                                                No forward contracts 
                                                                business development objectives                                      to sell gold were 
                                                                or financial commitments.                                            outstanding 
                                                                                                                                     as at 31 December 
                                                                                                                                     2019 
                                                                                                                                     (31 December 2018: 
                                                                                                                                     200,000 
                                                                                                                                     ounces of gold at an 
                                                                                                                                     average price of 
                                                                                                                                     US$1,252/oz). 
                                                                                                                                     Gold contracts 
                                                                                                                                     during 
                                                                                                                                     2018 and 2019 
                                                                                                                                     provided 
                                                                                                                                     the Group with 
                                                                                                                                     flexibility 
                                                                                                                                     during the POX plant 
                                                                                                                                     ramp up period. 
                                                                                                                                     In June 2019, the 
                                                                                                                                     Company 
                                                                                                                                     successfully 
                                                                                                                                     refinanced 
                                                                                                                                     the Group's US$100 
                                                                                                                                     million 
                                                                                                                                     9% Convertible Bonds 
                                                                                                                                     due March 2020 by 
                                                                                                                                     the 
                                                                                                                                     placement of US$125 
                                                                                                                                     million 8.25% 
                                                                                                                                     Convertible 
                                                                                                                                     Bonds due 2024 (the 
                                                                                                                                     'New Bonds') 
                                                                                                                                     significantly 
                                                                                                                                     de-risking the 
                                                                                                                                     Group's 
                                                                                                                                     balance sheet. In 
                                                                                                                                     addition, 
                                                                                                                                     funds from the New 
                                                                                                                                     Bonds 
                                                                                                                                     have been used to 
                                                                                                                                     advance 
                                                                                                                                     construction of a 
                                                                                                                                     new 
                                                                                                                                     flotation facility 
                                                                                                                                     at 
                                                                                                                                     the Pioneer mine, 
                                                                                                                                     enabling 
                                                                                                                                     the Group to grow 
                                                                                                                                     its 
                                                                                                                                     production by 
                                                                                                                                     unlocking 
                                                                                                                                     the value embedded 
                                                                                                                                     in 
                                                                                                                                     its refractory 
                                                                                                                                     reserves 
                                                                                                                                     via the Pressure 
                                                                                                                                     Oxidation 
                                                                                                                                     (POX) Hub. 
                                                                                                                                     In August 2019, 
                                                                                                                                     Fitch 
                                                                                                                                     Ratings upgraded the 
                                                                                                                                     Group's Long-Term 
                                                                                                                                     Issuer 
                                                                                                                                     Default Rating and 
                                                                                                                                     senior 
                                                                                                                                     unsecured rating to 
                                                                                                                                     'B-' from 'CCC' with 
                                                                                                                                     a Positive Outlook 
                                                                                                                                     due 
                                                                                                                                     to 'a significant 
                                                                                                                                     strengthening 
                                                                                                                                     in Petropavlovsk's 
                                                                                                                                     liquidity 
                                                                                                                                     position due to the 
                                                                                                                                     refinancing of the 
                                                                                                                                     convertible 
                                                                                                                                     bond, repayment of 
                                                                                                                                     US$57 
                                                                                                                                     million bridge loan 
                                                                                                                                     by affiliated iron 
                                                                                                                                     ore 
                                                                                                                                     producer IRC Limited 
                                                                                                                                     and the increased 
                                                                                                                                     visibility 
                                                                                                                                     for production due 
                                                                                                                                     to 
                                                                                                                                     the launch of the 
                                                                                                                                     POX 
                                                                                                                                     Hub in November 
                                                                                                                                     2018. 
 Risk                                                          Description and potential                                             Mitigation/comments/   Potential 
                                                                impact                                                                2019 Progress         impact/ 
                                                                                                                                                            change since 
                                                                                                                                                            2018 
 The Group's                                                   The Group's financial                                                 The Chief Financial    Potential 
  result of                                                     performance is highly                                                Officer constantly     impact 
  operations                                                    dependent on the gold                                                monitors               - High 
  may be affected                                               price. The gold market                                               the gold price and     Change - no 
  by changes                                                    is cyclical and sensitive                                            influencing            change 
  in the gold                                                   to changes in the economy                                            factors and consults 
  price                                                         and numerous factors which                                           with the Board as 
                                                                are beyond the Group's                                               appropriate. 
                                                                control.                                                             The Group has a 
                                                                A significant continuous                                             hedging 
                                                                decline in the gold price                                            policy and hedges a 
                                                                would negatively affect                                              portion of 
                                                                the Group's profitability                                            production 
                                                                and cash flow and consequently                                       as the Chief 
                                                                its ability to develop                                               Financial 
                                                                its business.                                                        Officer and Board 
                                                                                                                                     deem 
                                                                                                                                     necessary. As at 31 
                                                                                                                                     December 2019 the 
                                                                                                                                     Group 
                                                                                                                                     was unhedged. 
 Exchange rate                                                      The Company reports its                                          The average            Potential 
  fluctuations                                                       results in US Dollars,                                          year-on-year           impact 
                                                                     which is the currency                                           depreciation of the    - High 
                                                                     in which gold is principally                                    Russian Rouble         Change - no 
                                                                     traded and therefore in                                         against                change 
                                                                     which most of the Group's                                       the US Dollar was 
                                                                     revenues are generated.                                         approximately 
                                                                     Significant costs are                                           3.2%, with the 
                                                                     incurred in and/or influenced                                   average 
                                                                     by the local currencies                                         exchange rate for 
                                                                     in which the Group operates,                                    2019 
                                                                     principally Russian Roubles.                                    being RUB64.69 : 
                                                                     An appreciation of the                                          US$1 
                                                                     Russian Rouble against                                          compared to RUB62.68 
                                                                     the US Dollar tends to                                          : US$1 for 2018. 
                                                                     result in an increase 
                                                                     in the Group's costs relative                                   The Group's policy 
                                                                     to its revenues whereas                                         is 
                                                                     the depreciation of the                                         to keep under review 
                                                                     Russian Rouble against                                          possible options for 
                                                                     the US Dollar tends to                                          exchange rate 
                                                                     result in lower Group                                           hedging. 
                                                                     costs relative to its 
                                                                     revenues. 
 
                                                                     In addition: 
                                                                     A portion of the Group 
                                                                     corporate overhead is 
                                                                     denominated in Sterling. 
                                                                     Therefore, adverse exchange 
                                                                     rate movements may materially 
                                                                     affect the Group's financial 
                                                                     condition and results 
                                                                     of operations; and 
                                                                      *    If inflation in Russia were to increase without a 
                                                                           corresponding devaluation of the Russian Rouble 
                                                                           relative to the US Dollar, the Group's business, 
                                                                           results of operations and financial condition may be 
                                                                           adversely affected 
 
 
   FINANCIAL RISK 
 FUNDING AND LIQUIDITY RELATED RISKS 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                2019 Progress         impact/change 
                                                                                                                                                            since 2018 
 Risk that:                                                    As at 1 January 2019,                                                 - On 18 December       Potential 
  *    funding may be demanded from Petropavlovsk under a       Petropavlovsk had provided                                           2018,                  Impact: 
       guarantee provided in relation to a project finance      a guarantee against a                                                K&S signed two new     High 
       facility provided to K&S, a wholly owned subsidiary      US$340 million project                                               broadly 
       of IRC.                                                  loan facility provided                                               identical facility     Change: Reduced 
                                                                to K&S by ICBC to fund                                               agreements 
                                                                the construction of IRC's                                            with Gazprombank 
  *    K&S will not be able to service the interest and meet    iron ore mining operation                                            (the 
       the repayments due on its loan due to insufficient       at K&S, of which c.US$169                                            'Facility 
       funds arising from a decrease in the iron ore price      million was outstanding                                              Agreements') 
       or operational issues at the K&S site.                   as at                                                                whereby Gazprombank 
                                                                1 January 2019.                                                      would provide K&S 
                                                                In the event that K&S                                                with 
                                                                defaulted on its loan,                                               a US$240 million 
                                                                Petropavlovsk may have                                               facility 
                                                                been liable to repayment                                             for the purposes of 
                                                                of the outstanding loan                                              repaying in full the 
                                                                under the terms of the                                               outstanding project 
                                                                guarantee and other Group                                            finance facility K&S 
                                                                indebtedness may have                                                had with ICBC and 
                                                                become repayable under                                               repaying 
                                                                cross-default provisions.                                            the two bridge loans 
                                                                Due to actions taken by                                              provided by 
                                                                IRC and the Company during                                           Petropavlovsk 
                                                                2019 (see Mitigation/Comments)                                       to IRC (the 
                                                                this risk has substantially                                          'Gazprombank 
                                                                reduced.                                                             Facility'). 
                                                                                                                                     - Pursuant to the 
                                                                                                                                     Facility 
                                                                                                                                     Agreements, 
                                                                                                                                     Petropavlovsk 
                                                                                                                                     was to guarantee the 
                                                                                                                                     obligations of K&S 
                                                                                                                                     up 
                                                                                                                                     to an initial amount 
                                                                                                                                     of US$160 million 
                                                                                                                                     through 
                                                                                                                                     a series of five 
                                                                                                                                     guarantees 
                                                                                                                                     over the life of the 
                                                                                                                                     Gazprombank 
                                                                                                                                     Facility. 
                                                                                                                                     These guarantees 
                                                                                                                                     were 
                                                                                                                                     entered into by the 
                                                                                                                                     Company and 
                                                                                                                                     Gazprombank 
                                                                                                                                     on 15 February 2019, 
                                                                                                                                     with the 
                                                                                                                                     effectiveness 
                                                                                                                                     of each of the 
                                                                                                                                     guarantees 
                                                                                                                                     being conditional 
                                                                                                                                     upon 
                                                                                                                                     shareholder approval 
                                                                                                                                     being obtained at a 
                                                                                                                                     General Meeting. 
                                                                                                                                     Such 
                                                                                                                                     shareholder approval 
                                                                                                                                     was obtained on 12 
                                                                                                                                     March 
                                                                                                                                     2019. 
                                                                                                                                     - The Gazprombank 
                                                                                                                                     Facility 
                                                                                                                                     has been fully drawn 
                                                                                                                                     down and has enabled 
                                                                                                                                     IRC to: 
                                                                                                                                     - Repay in full the 
                                                                                                                                     sum of approximately 
                                                                                                                                     US$169 million 
                                                                                                                                     outstanding 
                                                                                                                                     under the ICBC 
                                                                                                                                     Facility; 
                                                                                                                                     - Repay 
                                                                                                                                     Petropavlovsk 
                                                                                                                                     the Rouble 
                                                                                                                                     equivalent 
                                                                                                                                     of approximately 
                                                                                                                                     US$57 
                                                                                                                                     million, in addition 
                                                                                                                                     to any accrued 
                                                                                                                                     interest 
                                                                                                                                     and fees, as full 
                                                                                                                                     repayment 
                                                                                                                                     of the two bridge 
                                                                                                                                     loans; 
                                                                                                                                     and 
                                                                                                                                     - Pay Petropavlovsk 
                                                                                                                                     approximately US$6 
                                                                                                                                     million 
                                                                                                                                     in fees owed by K&S 
                                                                                                                                     and IRC to 
                                                                                                                                     Petropavlovsk 
                                                                                                                                     in respect of the 
                                                                                                                                     guarantee 
                                                                                                                                     provided under the 
                                                                                                                                     ICBC 
                                                                                                                                     Facility. 
                                                                                                                                     - The risk of K&S 
                                                                                                                                     defaulting 
                                                                                                                                     on its loan, and 
                                                                                                                                     hence 
                                                                                                                                     the risk that 
                                                                                                                                     Petropavlovsk 
                                                                                                                                     may be liable to 
                                                                                                                                     repay 
                                                                                                                                     the outstanding 
                                                                                                                                     loan, 
                                                                                                                                     has been reduced by 
                                                                                                                                     K&S entering into 
                                                                                                                                     the 
                                                                                                                                     Gazprombank Facility 
                                                                                                                                     and repaying the 
                                                                                                                                     ICBC 
                                                                                                                                     Facility because: 
                                                                                                                                     - The Gazprombank 
                                                                                                                                     Facility 
                                                                                                                                     provides for a 
                                                                                                                                     significantly 
                                                                                                                                     more relaxed 
                                                                                                                                     amortisation 
                                                                                                                                     schedule compared to 
                                                                                                                                     that under the ICBC 
                                                                                                                                     Facility; and 
                                                                                                                                     - It better aligns 
                                                                                                                                     with 
                                                                                                                                     the proposed ramp up 
                                                                                                                                     of K&S and the 
                                                                                                                                     revenues 
                                                                                                                                     that are anticipated 
                                                                                                                                     to be generated by 
                                                                                                                                     it. 
                                                                                                                                     - The guarantee 
                                                                                                                                     provided 
                                                                                                                                     by the Company has 
                                                                                                                                     decreased 
                                                                                                                                     to US$160 million as 
                                                                                                                                     at the date of this 
                                                                                                                                     Annual Report. 
                                                                                                                                     However, 
                                                                                                                                     in certain 
                                                                                                                                     circumstances 
                                                                                                                                     the Company could 
                                                                                                                                     have 
                                                                                                                                     a maximum liability 
                                                                                                                                     of the full amount 
                                                                                                                                     outstanding 
                                                                                                                                     to Gazprombank by 
                                                                                                                                     K&S. 
                                                                                                                                     As at 31 December 
                                                                                                                                     2019, 
                                                                                                                                     the Group has 
                                                                                                                                     guaranteed 
                                                                                                                                     the outstanding 
                                                                                                                                     amounts 
                                                                                                                                     IRC owed to 
                                                                                                                                     Gazprombank. 
                                                                                                                                     The outstanding loan 
                                                                                                                                     principal was US$225 
                                                                                                                                     million as at 31 
                                                                                                                                     December 
                                                                                                                                     2019. 
 
                                                                                                                                     Preliminary 
                                                                                                                                     Agreement 
                                                                                                                                     for the Proposed 
                                                                                                                                     Termination 
                                                                                                                                     of IRC Guarantees 
                                                                                                                                     and 
                                                                                                                                     the Disposal of 
                                                                                                                                     29.9% 
                                                                                                                                     of the Company's 
                                                                                                                                     interest 
                                                                                                                                     in IRC 
                                                                                                                                     On 18 March 2020, 
                                                                                                                                     the 
                                                                                                                                     Company entered into 
                                                                                                                                     a preliminary 
                                                                                                                                     agreement 
                                                                                                                                     with Stocken Board 
                                                                                                                                     AG, 
                                                                                                                                     setting out the 
                                                                                                                                     non-binding 
                                                                                                                                     terms on which 
                                                                                                                                     Petropavlovsk 
                                                                                                                                     would sell to 
                                                                                                                                     Stocken 
                                                                                                                                     a 29.9% shareholding 
                                                                                                                                     in IRC Limited, 
                                                                                                                                     subject 
                                                                                                                                     to certain 
                                                                                                                                     conditions 
                                                                                                                                     precedent being met, 
                                                                                                                                     including the 
                                                                                                                                     release 
                                                                                                                                     of the Group's 
                                                                                                                                     obligation 
                                                                                                                                     to guarantee IRC's 
                                                                                                                                     loan 
                                                                                                                                     facilities with 
                                                                                                                                     Gazprombank. 
 Risk that                                                     Due to the guarantees                                                 IRC announced its      Potential 
  further issues                                                provided by the Company                                              2019                   Impact: 
  delaying the                                                  to Gazprombank, the Group's                                          full year results on   High 
  ramping up                                                    going concern status remains                                         27 March 2020. This    Change: Reduced 
  of the K&S                                                    sensitive to IRC's ability                                           confirmed that K&S 
  facility and/or                                               to comply with covenants                                             had 
  a decrease                                                    within the new facilities                                            operated at 81% of 
  in the iron                                                   and generate sufficient                                              capacity 
  ore price                                                     cash flows from its K&S                                              during 2019 whilst 
  could result                                                  mine.                                                                it 
  in a decrease                                                                                                                      was currently 
  in the value                                                                                                                       operating 
  of the Group's                                                                                                                     at c.95%. However, 
  shareholding                                                                                                                       the 
  in IRC.                                                                                                                            IRC Board noted the 
                                                                                                                                     potential negative 
                                                                                                                                     impact 
                                                                                                                                     of COVID-19 on IRC's 
                                                                                                                                     performance. 
 
   HEALTH, SAFETY AND ENVIRONMENTAL RISK 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                                      impact/change 
                                                                                                                                                            since 2018 
 The Group                                                     The Group's employees                                                 Health & Safety        Potential 
  operates potentially                                          are its most valuable                                                management             impact 
  hazardous                                                     assets. The Group recognises                                         systems are in place   - Medium/High 
  sites such                                                    that it has an obligation                                            across the Group to    Change - no 
  as the POX                                                    to protect the health                                                ensure that the        change 
  Hub, open                                                     of its employees and that                                            operations 
  pits, underground                                             they have the right to                                               are managed in 
  mines, exploration                                            operate in a safe working                                            accordance 
  sites, processing                                             environment. Certain of                                              with the relevant 
  facilities                                                    the Group's operations                                               health 
  and explosive                                                 are carried out under                                                and safety 
  storage facilities.                                           potentially hazardous                                                regulations 
  The operation                                                 conditions. Group employees                                          and requirements and 
  of these sites                                                may become exposed to                                                where possible with 
  exposes its                                                   health and safety risks                                              international best 
  personnel                                                     which may lead to work-related                                       practice. 
  to a variety                                                  accidents and harm to                                                The Group 
  of health                                                     the Group's employees.                                               continually 
  and safety                                                    These could also result                                              reviews and updates 
  risks.                                                        in production delays and                                             its health and 
                                                                financial loss                                                       safety 
                                                                                                                                     procedures in order 
                                                                                                                                     to minimise the risk 
                                                                                                                                     of accidents and 
                                                                                                                                     improve 
                                                                                                                                     accident response, 
                                                                                                                                     including 
                                                                                                                                     additional and 
                                                                                                                                     enhanced 
                                                                                                                                     technical measures 
                                                                                                                                     at 
                                                                                                                                     all sites, improved 
                                                                                                                                     first aid response 
                                                                                                                                     and 
                                                                                                                                     the provision of 
                                                                                                                                     further 
                                                                                                                                     occupational, health 
                                                                                                                                     and safety training. 
                                                                                                                                     Board level 
                                                                                                                                     oversight 
                                                                                                                                     of health and safety 
                                                                                                                                     issues occurs 
                                                                                                                                     through 
                                                                                                                                     the work of the 
                                                                                                                                     Safety, 
                                                                                                                                     Sustainability and 
                                                                                                                                     Workforce 
                                                                                                                                     Committee (SS&W 
                                                                                                                                     Committee). 
                                                                                                                                     The Committee is 
                                                                                                                                     chaired 
                                                                                                                                     by Mr Harry 
                                                                                                                                     Kenyon-Slaney, 
                                                                                                                                     Independent 
                                                                                                                                     Non-Executive 
                                                                                                                                     Director, who is 
                                                                                                                                     assisted 
                                                                                                                                     by his colleagues on 
                                                                                                                                     the Committee 
                                                                                                                                     namely, 
                                                                                                                                     Dr Pavel Maslovskiy, 
                                                                                                                                     Chief Executive 
                                                                                                                                     Officer, 
                                                                                                                                     Mr Damien Hackett 
                                                                                                                                     and 
                                                                                                                                     Mrs Katia Ray, 
                                                                                                                                     Independent 
                                                                                                                                     Non-Executive 
                                                                                                                                     Directors 
                                                                                                                                     and Dr Alya 
                                                                                                                                     Samokhvalova, 
                                                                                                                                     Deputy CEO. Mr 
                                                                                                                                     Kenyon-Slaney's 
                                                                                                                                     introduction to the 
                                                                                                                                     Sustainability 
                                                                                                                                     Report 
                                                                                                                                     is provided on page 
                                                                                                                                     89 of this Annual 
                                                                                                                                     Report. 
                                                                                                                                     Members of the SS&W 
                                                                                                                                     Committee visited 
                                                                                                                                     the 
                                                                                                                                     Group's operating 
                                                                                                                                     mines 
                                                                                                                                     in April 2019 and 
                                                                                                                                     met 
                                                                                                                                     with members of the 
                                                                                                                                     workforce and the 
                                                                                                                                     local 
                                                                                                                                     community. 
 
                                                                                                                                     Progress during 
                                                                                                                                     2019: 
                                                                                                                                     - As part of the 
                                                                                                                                     Company's 
                                                                                                                                     commitment to 
                                                                                                                                     environmental, 
                                                                                                                                     sustainability and 
                                                                                                                                     governance 
                                                                                                                                     (ESG) matters, the 
                                                                                                                                     Company 
                                                                                                                                     became a member of 
                                                                                                                                     the 
                                                                                                                                     UN Global Compact 
                                                                                                                                     Initiative 
                                                                                                                                     on corporate 
                                                                                                                                     sustainability. 
                                                                                                                                     This requires the 
                                                                                                                                     Company 
                                                                                                                                     to align its 
                                                                                                                                     operations 
                                                                                                                                     and strategies with 
                                                                                                                                     ten universally 
                                                                                                                                     accepted 
                                                                                                                                     principles in the 
                                                                                                                                     areas 
                                                                                                                                     of human rights, 
                                                                                                                                     labour, 
                                                                                                                                     environment and 
                                                                                                                                     anti-corruption; 
                                                                                                                                     - The Lost-Time 
                                                                                                                                     Injury 
                                                                                                                                     Frequency Rate 
                                                                                                                                     (LTIFR) 
                                                                                                                                     for 2019 of 1.61 
                                                                                                                                     accidents 
                                                                                                                                     per 1 million 
                                                                                                                                     man-hours 
                                                                                                                                     worked represented a 
                                                                                                                                     c.36% reduction 
                                                                                                                                     compared 
                                                                                                                                     to 2018; 
                                                                                                                                     - Greenhouse Gas 
                                                                                                                                     Emissions 
                                                                                                                                     were reduced from 
                                                                                                                                     1.01t 
                                                                                                                                     CO2e per ounce of 
                                                                                                                                     gold 
                                                                                                                                     in 2018 to 0.88t; 
                                                                                                                                     and 
                                                                                                                                     - The Company 
                                                                                                                                     recently 
                                                                                                                                     appointed an 
                                                                                                                                     experienced 
                                                                                                                                     Head of Sustainable 
                                                                                                                                     Business who will 
                                                                                                                                     assist 
                                                                                                                                     with the development 
                                                                                                                                     of the Group in this 
                                                                                                                                     area. 
 
                                                                                                                                     Health & Safety 
                                                                                                                                     targets 
                                                                                                                                     are included in the 
                                                                                                                                     annual bonus scheme 
                                                                                                                                     for Executive 
                                                                                                                                     Directors 
                                                                                                                                     and the Executive 
                                                                                                                                     Committee. 
                                                                                                                                     The Remuneration 
                                                                                                                                     Committee 
                                                                                                                                     may also consider 
                                                                                                                                     the 
                                                                                                                                     Group's health and 
                                                                                                                                     safety 
                                                                                                                                     performance during 
                                                                                                                                     the 
                                                                                                                                     year when 
                                                                                                                                     considering 
                                                                                                                                     bonus plan payments. 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                                      impact/change 
                                                                                                                                                            since 2018 
 Major pollution                                               If the Group was involved                                             The Company operates   Potential 
  arising from                                                  in a major environmental                                             a certified            impact 
  operations                                                    event, potential impacts                                             environmental          - Medium/High 
  include: air                                                  could include fines and                                              management system at   Change - no 
  and water                                                     penalties, statutory liability                                       all of its sites       change 
  pollution,                                                    for environmental redemption                                         which 
  land contamination                                            and other financial consequences                                     meet international 
  and deforestation.                                            that might be significant.                                           standards. 
                                                                Accidental spillages of                                              The Company has 
                                                                cyanide and other chemicals                                          implemented 
                                                                may result in damage to                                              a number of 
                                                                the environment, personnel                                           initiatives 
                                                                and individuals within                                               to monitor and limit 
                                                                the local community.                                                 the impact of its 
                                                                                                                                     operations 
                                                                                                                                     on the environment. 
                                                                                                                                     Cyanide and other 
                                                                                                                                     dangerous 
                                                                                                                                     substances are kept 
                                                                                                                                     in secure storages 
                                                                                                                                     with 
                                                                                                                                     access limited to 
                                                                                                                                     qualified 
                                                                                                                                     personnel and 
                                                                                                                                     closely 
                                                                                                                                     monitored by 
                                                                                                                                     security 
                                                                                                                                     staff. 
 Country and Compliance Risks 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                                      impact/change 
                                                                                                                                                            since 2018 
 The Group                                                     The Group's principal                                                 There are              Potential 
  requires various                                              activity is gold mining                                              established            impact 
  licences and                                                  which requires licences                                              processes in place     - Medium/High 
  permits in                                                    permitting exploration                                               to                     Change - no 
  order to operate                                              and mining in specific                                               monitor the required   change 
                                                                areas in Russia. These                                               and existing 
                                                                licences are regulated                                               licences 
                                                                by Russian governmental                                              and permits on an 
                                                                agencies and if a material                                           on-going 
                                                                licence was challenged                                               basis. Processes are 
                                                                or terminated, this would                                            also in place to 
                                                                have a material adverse                                              ensure 
                                                                impact on the Group.                                                 compliance with the 
                                                                In addition, various government                                      requirements of the 
                                                                regulations require the                                              licences and 
                                                                Group to obtain permits                                              permits. 
                                                                to implement new projects 
                                                                or to renew existing permits. 
 
 
                                                                Failure to comply with 
                                                                the requirements and terms 
                                                                of these licences may 
                                                                result in the subsequent 
                                                                termination of licences 
                                                                crucial to operations 
                                                                and cause reputational 
                                                                damage. Alternatively, 
                                                                financial or legal sanctions 
                                                                could be imposed on the 
                                                                Group. Failure to secure 
                                                                new licences or renew 
                                                                existing ones could lead 
                                                                to the cessation of mining 
                                                                at the Group's operations 
                                                                or an inability to expand 
                                                                operations. 
 The Group                                                     Actions by governments                                                To mitigate Russian    Potential 
  is subject                                                    or changes in economic,                                              economic and banking   impact 
  to Sovereign                                                  political, judicial, administrative,                                 risk the Group         - Medium/High 
  Risk                                                          taxation or other regulatory                                         strives                Change - no 
                                                                factors or foreign policy                                            to use the banking     change 
                                                                in the countries in which                                            services 
                                                                the Group operates or                                                of several financial 
                                                                holds its major assets                                               institutions and not 
                                                                could have an adverse                                                keep 
                                                                impact on the Group's                                                disproportionately 
                                                                business or its future                                               large sums on 
                                                                performance. Most of the                                             deposit 
                                                                Group's assets and operations                                        with a single bank. 
                                                                are based in Russia.                                                 The Group seeks to 
                                                                Russian foreign investment                                           mitigate 
                                                                legislation imposes restrictions                                     political and legal 
                                                                on the acquisition by                                                risk by constant 
                                                                foreign investors of direct                                          monitoring 
                                                                or indirect interests                                                of proposed and 
                                                                in strategic sectors of                                              newly 
                                                                the Russian economy, including                                       adopted legislation 
                                                                gold reserves in excess                                              in the countries in 
                                                                of a specified amount                                                which it operates 
                                                                or any occurrences of                                                and 
                                                                platinum group metals.                                               specifically in 
                                                                The Group's Pioneer and                                              Russia. 
                                                                Malomir licences have                                                It also relies on 
                                                                been included on the list                                            the 
                                                                of subsoil assets of federal                                         advice of external 
                                                                significance, maintained                                             counsel 
                                                                by the Russian Government                                            in relation to the 
                                                                ("Strategic Assets").                                                interpretation 
                                                                The impact of this classification                                    and implementation 
                                                                is that changes to the                                               of 
                                                                direct or indirect ownership                                         new legislation. 
                                                                of these licences may                                                The Group closely 
                                                                require clearance in accordance                                      monitors 
                                                                with the Foreign Strategic                                           its assets and the 
                                                                Investment law of the                                                probability 
                                                                Russian Federation.                                                  of their inclusion 
                                                                                                                                     into 
                                                                                                                                     the Strategic Assets 
                                                                                                                                     lists published by 
                                                                                                                                     the 
                                                                                                                                     Russian Government. 
                                                                                                                                     The Company's 
                                                                                                                                     Articles 
                                                                                                                                     of Association 
                                                                                                                                     include 
                                                                                                                                     a provision which 
                                                                                                                                     allows 
                                                                                                                                     the Board to impose 
                                                                                                                                     such restrictions as 
                                                                                                                                     the Directors may 
                                                                                                                                     think 
                                                                                                                                     necessary for the 
                                                                                                                                     purpose 
                                                                                                                                     of ensuring that no 
                                                                                                                                     ordinary shares in 
                                                                                                                                     the 
                                                                                                                                     Company are acquired 
                                                                                                                                     or held or 
                                                                                                                                     transferred 
                                                                                                                                     to any person in 
                                                                                                                                     breach 
                                                                                                                                     of Russian 
                                                                                                                                     legislation, 
                                                                                                                                     including any person 
                                                                                                                                     having acquired (or 
                                                                                                                                     who would as a 
                                                                                                                                     result 
                                                                                                                                     of any transfer 
                                                                                                                                     acquire) 
                                                                                                                                     ordinary shares or 
                                                                                                                                     an 
                                                                                                                                     interest in ordinary 
                                                                                                                                     shares which, 
                                                                                                                                     together 
                                                                                                                                     with any other 
                                                                                                                                     shares 
                                                                                                                                     in which that person 
                                                                                                                                     or members of their 
                                                                                                                                     group is deemed to 
                                                                                                                                     have 
                                                                                                                                     an interest for the 
                                                                                                                                     purposes of the 
                                                                                                                                     Strategic 
                                                                                                                                     Asset Laws, carry 
                                                                                                                                     voting 
                                                                                                                                     rights, exceeding 50 
                                                                                                                                     per cent. (or such 
                                                                                                                                     lower 
                                                                                                                                     number as the Board 
                                                                                                                                     may determine in the 
                                                                                                                                     context of the 
                                                                                                                                     Strategic 
                                                                                                                                     Asset Laws) of the 
                                                                                                                                     total 
                                                                                                                                     voting rights 
                                                                                                                                     attributable 
                                                                                                                                     to the issued 
                                                                                                                                     ordinary 
                                                                                                                                     shares without such 
                                                                                                                                     acquisition having 
                                                                                                                                     been 
                                                                                                                                     approved, where such 
                                                                                                                                     approval is 
                                                                                                                                     required, 
                                                                                                                                     pursuant to the 
                                                                                                                                     Strategic 
                                                                                                                                     Asset Laws. 
                                                                                                                                     This risk cannot be 
                                                                                                                                     influenced by the 
                                                                                                                                     management 
                                                                                                                                     of the Company. 
                                                                                                                                     However, 
                                                                                                                                     the Group continues 
                                                                                                                                     to monitor changes 
                                                                                                                                     in 
                                                                                                                                     the political 
                                                                                                                                     environment 
                                                                                                                                     and reviews changes 
                                                                                                                                     to the relevant 
                                                                                                                                     legislation, 
                                                                                                                                     policies and 
                                                                                                                                     practices. 
 Loss of Personnel 
 Risk                                                          Description and potential                                             Mitigation/comments    Potential 
                                                                impact                                                                                      impact/change 
                                                                                                                                                            since 2018 
 The Company                                                   The loss of key personnel                                             - During 2019, the     Potential 
  is dependent                                                  to the Company may impact                                            Executive              impact 
  on Dr Pavel                                                   the morale of senior management,                                     Committee has been     - Medium/High 
  Maslovskiy,                                                   its workforce, the result                                            strengthened           Change - No 
  CEO and other                                                 of the Group's operations                                            by the appointment     change 
  long-serving                                                  and a delay in the delivery                                          of 
  members of                                                    of projects.                                                         Mr Dmitrii 
  the senior                                                                                                                         Chekashkin, 
  executive                                                                                                                          Group Executive, 
  team.                                                                                                                              Business 
                                                                                                                                     Transformation and 
                                                                                                                                     Operational 
                                                                                                                                     Efficiency. 
                                                                                                                                     - During 2020, Mr 
                                                                                                                                     Danila 
                                                                                                                                     Kotlyarov was 
                                                                                                                                     appointed 
                                                                                                                                     as Chief Financial 
                                                                                                                                     Officer 
                                                                                                                                     and Executive 
                                                                                                                                     Director, 
                                                                                                                                     further 
                                                                                                                                     strengthening 
                                                                                                                                     the Board and the 
                                                                                                                                     executive 
                                                                                                                                     team. 
                                                                                                                                     - A revised 
                                                                                                                                     Remuneration 
                                                                                                                                     Policy will be 
                                                                                                                                     proposed 
                                                                                                                                     to shareholders for 
                                                                                                                                     approval at the 
                                                                                                                                     Company's 
                                                                                                                                     2020 Annual General 
                                                                                                                                     Meeting. 
 
 

11. Subsequent events

On 13 April 2020 it was resolved that the principal subsidiary of the Company would distribute a Russian Rouble denominated dividend in the amount equivalent of US$45.6 million.

     2 6 .     Related parties 

Related parties the Group entered into transactions with during the reporting period

The Petropavlovsk Foundation for Social Investment (the 'Petropavlovsk Foundation') is considered to be a related party due to the participation of the key management of the Group in the board of directors of the Petropavlovsk Foundation.

IRC Limited and its subsidiaries (Note 3 3 ) are associates to the Group and hence are related parties since 7 August 2015.

Transactions with related parties which the Group entered into during the years ended 31 December 201 9 and 201 8 are set out below.

Trading Transactions

Related party transactions the Group entered into that relate to the day-to-day operation of the business are set out below.

 
                                           Sales to related      Purchases from 
                                                parties          related parties 
---------------------------------------  --------------------  -----------------  --------- 
                                             201 9      201 8              201 9      201 8 
                                           US$'000    US$'000            US$'000    US$'000 
---------------------------------------  ---------  ---------  -----------------  --------- 
 
 Entities in which key management have 
  interest and exercise a significant 
  influence or control                           -          -              4,046        764 
 IRC Limited and its subsidiaries               42        164              5,458        681 
---------------------------------------  ---------  ---------  -----------------  --------- 
                                                42        164              9,504      1,445 
---------------------------------------  ---------  ---------  -----------------  --------- 
 
 

In March 2018, the Group entered into a transaction with the member of key management personnel to purchase the office building and land, which were subject to an operating lease arrangement. The aggregate consideration paid was an equivalent of c.US$3.2 million. The transaction was completed in February 2019.

On 13 December 2019, the Group entered into the sale and purchase agreement with a seller (the "Seller"), a related party of the Company, LLC GMMC. Pursuant to the sale and purchase agreement, the Group agreed to purchase, and the Seller agreed to sell, a helicopter for a consideration of RUB316.7 million (equivalent to US$5.0 million). At 31 December 2019, the contractual balance outstanding amounted to US$4.5 million.

During the year ended 31 December 201 9 , the Group made US$ 1.0 million charitable donations to the Petropavlovsk Foundation (201 8 : US$ 0.4 million).

The outstanding balances with related parties at 31 December 201 9 and 201 8 are set out below.

 
                                            Amounts owed by     Amounts owed to 
                                            related parties      related parties 
---------------------------------------  --------------------  -----------------  --------- 
                                             201 9      201 8              201 9      201 8 
                                           US$'000    US$'000            US$'000    US$'000 
 Entities in which key management have 
  interest and exercise a significant 
  influence or control                           -      1,556                759          - 
 IRC Limited and its subsidiaries            3,651      2,078              5,863        976 
---------------------------------------  ---------  ---------  -----------------  --------- 
                                             3,651      3,634              6,622        976 
---------------------------------------  ---------  ---------  -----------------  --------- 
 
 

Financing transactions

Guarantee over IRC's external borrowings

The Group historically entered into an arrangement to provide a guarantee over its associate's, IRC, external borrowings, the ICBC Facility ('ICBC Guarantee'). At 31 December 2018 the principal amounts outstanding subject to the ICBC guarantee were US$169.6 million. Under the terms of the arrangement the Group was entitled to receive an annual fee equal to 1.75% of the outstanding amount, which amounted to US$0.7 million during the year ended 31 December 2019 (31 December 2018: US$4.0 million).

In March 2019, IRC has refinanced the ICBC Facility through entering into a US$240 million new facility with Gazprombank ('Gazprombank Facility'). The facility was fully drawn down during the year ended 31 December 2019 and was used, inter alia, to repay the amounts outstanding under the ICBC Facility in full, the two loans provided by the Group in the equivalent of approximately US$57 million and part of the ICBC Guarantee fee of US$6 million owed by IRC to the Group. At 31 December 2019 t he remaining outstanding contractual guarantee fee was US$5.0 million, which had a corresponding fair value of US$4.4 million and is payable by IRC no later than 31 December 2020 (31 December 2018: outstanding contractual guarantee fee of US$10.3 million with a corresponding fair value of US$6.8 million).

A new guarantee was issued by the Group over part of the Gazprombank Facility ('Gazprombank Guarantee'), the guarantee mechanism is implemented through a series of five guarantees that fluctuate in value through the eight-year life of the loan, with the possibility of the initial US$160 million principal amounts guaranteed reducing to US$40 million within two to three years, subject to certain conditions being met. For the final two years of the Gazprombank Facility, the guaranteed amounts will increase to US$120 million to cover the final principal and interest repayments. If certain springing recourse events transpire, including default on a scheduled payment, then full outstanding loan balance is accelerated and subject to the guarantee. The outstanding loan principal was US$225 million as at 31 December 2019. Under the Gazprombank Guarantee arrangements, the guarantee fee receivable is determined at each reporting date on an independently determined fair value basis, which for the year ended 31 December 2019 was at the annual rate of 3.07% for 2019 by reference to the average outstanding principal balance under Gazprombank Facility. The guarantee fee charged for 2019 was US$5.6 million, with corresponding value of US$5.0 million after provision for expected credit losses.

On 18 March 2020, the Group announced a preliminary agreement to dispose of its 29.9% out of 31.1% interest in IRC to Stocken Board AG for a cash consideration of US$10 million, subject to certain conditions precedent being met, including the release of the Group's obligation to guarantee IRC's debt under the Gazprombank Facility (note 31).

The following assets and liabilities have been recognised in relation to the ICBC Guarantee and Gazprombank Guarantee as at 31 December 2019 and 31 December 2018:

 
                                                         31 December   31 December 
                                                                2019          2018 
                                                             US$'000       US$'000 
------------------------------------------------------  ------------  ------------ 
 Other receivables - ICBC Guarantee (a)                        4,436         6,829 
 Other receivables - Gazpombank Guarantee (b)                  4,981             - 
 Financial guarantee contract - ICBC Guarantee 
  (c)                                                              -        37,387 
 Financial guarantee contract - Gazprombank Guarantee          8,923             - 
  (d) 
------------------------------------------------------  ------------  ------------ 
 

(a) The fair value of the receivable, comprising billed fee receivable (31 December 2018: both billed and future fee receivable), less provision for credit losses. Considered Level 3 of the fair value hierarchy which valuation incorporates the following inputs:

   -      Assessment of the credit standing of IRC and implied credit spread; 
   -      Share price and share price volatility of IRC as at 31 December 2019 and 2018; 

(b) Amounts of guarantee fee for the period that are expected to be received from IRC and calculated by applying annual rate of 3.07% for 2019 by reference to the average outstanding principal balance under Gazprombank Facility for the period from 19 March 2019 until 31 December 2019, less provision for ECL.

(c) Measured in accordance with ECL model: the amount of the loss allowance equals to the lifetime ECL as it has been concluded that the credit risk on the financial guarantee contract had increased significantly since initial recognition, which reflected declining credit status of IRC prior to the refinancing through Gazprombank Facility completed in March 2019.

(d) Measured in accordance with ECL model: the amount of the loss allowance equals to 12-month ECL as it has been concluded that the credit risk on the financial guarantee contract has not increased significantly since initial recognition (note 3.1.)

The results from relevant re-measurements of the aforementioned assets and liabilities were recognised within Other finance gains and losses and impairments of financial instruments (note 9 ).

Loans issued to IRC

In June 2018, the Group provided a Rouble denominated unsecured loan to IRC in the amount of RUB1,878 million (an equivalent of US$29.75 million). The loan carried interest of 12% per annum. The loan was recognised net of lifetime ECL of US$0.5 million at inception and further US$0.8 million impairment based on ECL model was recognised during the year ended 31 December 2018. The loan was fully repaid in March 2019 with consequent reversal of US$1.3 million previously recognised ECL (note 9 ).

In December 2018, the Group provided a dollar denominated unsecured loan to IRC in the amount of US$27.0 million. The loan carried interest of 16% per annum. The loan was recognised net of lifetime ECL of US$1.9 million at inception. The loan was fully repaid in March 2019 with consequent reversal of US$1.9 million previously recognised ECL (note 9 ).

Other financing transactions

In March 2018, the Group entered into a loan agreement with Dr Pavel Maslovskiy. At 31 December 2019, the loan principal outstanding amounted to an equivalent of US$0.2 million (2018: US$0.2 million). Interest charged during the year ended 31 December 2019 comprised an equivalent of US$0.01 million (2018: US$0.01 million).

In April 2019, the Group entered into a loan agreement with Dr Alya Samokhvalova. At 31 December 2019, the loan principal outstanding amounted to an equivalent of US$0.4 million. Interest charged during the year ended 31 December 2019 comprised an equivalent of US$0.02 million.

Investing transactions

In May 2019, the Group entered into the option contract to acquire the remaining non-controlling 25% interest in the subsidiary LLC TEMI from Agestinia Trading Limited, a non-controlling holder of 25% interest in LLC TEMI, for an aggregate consideration of US$60 million (adjusted to US$53.5 million if certain conditions are met). This represents a related party transaction as it is over the equity of a subsidiary company. The option premium payable is US$13 million, which was paid during the year ended 31 December 2019. The exercise period of the option is 730 days from 22 May 2019.

The Group employed an independent third party expert to undertake the valuations of the underlying 25% interest in LLC TEMI and the call option. As at 31 December 2019, the fair value of the derivative financial asset was US$11.0 million reflecting a loss on re-measurement to fair value of US$2.0 million and the initial US$13 million cash payment (note 18).

There are no other related party relationships with Agestinia Trading Limited present.

Key management compensation

Key management personnel, comprising a group of 14 individuals during the period (201 8 : 1 6 ), including Executive and Non-Executive Directors of the Company and members of senior management, are those having authority and responsibility for planning, directing and controlling the activities of the Group.

 
                               201 9     201 8 
                             US$'000   US$'000 
--------------------------  --------  -------- 
 Wages and salaries            5,794     7,761 
 Pension costs                    62       136 
 Share-based compensation        157       404 
--------------------------  --------  -------- 
                               6,013     8,301 
--------------------------  --------  -------- 
 

Enquiries

Please visit www.petropavlovsk.net or contact:

 
 Petropavlovsk PLC                               +44 (0) 20 7201 8900 
  Patrick Pittaway / Max Zaltsman / Viktoriya     TeamIR@petropavlovsk.net 
  Kim 
 Peel Hunt LLP 
  Ross Allister / David McKeown / Alexander 
  Allen                                          +44 (0) 20 7418 8900 
 Canaccord Genuity Limited 
  Henry Fitzgerald-O'Connor / James Asensio      +44 (0) 20 7523 8000 
 Buchanan                                        +44 (0) 20 7466 5000 
  Bobby Morse / Kelsey Traynor / Ariadna          POG@buchanan.uk.com 
  Peretz 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

ACSQFLBBBQLZBBB

(END) Dow Jones Newswires

June 01, 2020 02:44 ET (06:44 GMT)

Su Consulta Reciente
BMV
FIBRAPL14
Fibra Prol..
BMV
AMXL
América Mó..
BMV
ME
IPC México
BMV
ALSEA*
Alsea
FX
USDMXN
United Sta..
Las acciones que ha visto aparecerán en este recuadro, lo que le permite volver fácilmente a las cotizaciones que ha consultado previamente
Registrarse ahora para crear su lista personalizada de acciones en streaming.

Cotizaciones PLUS están en tiempo real. Cotizaciones NYSE y AMEX están con retraso de por lo menos 20 minutos.
El resto de las cotizaciones están con retraso de por lo menos 15 minutos al menos que se indique lo contrario.

Al acceder a los servicios disponibles de ADVFN usted acepta quedar sujerto a los Términos y Condiciones

P: V:mx D:20200710 03:08:24