Company Announcements
Notice of Publication of Annual Report
Related Companies
By LSE RNS
28 April 2017
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 2016 (the "Annual Report 2016") is available to view and download from the Company's website at www.petropavlovsk.net . A copy of the Annual Report 2016 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 2016, 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 2016 issued on 26 April 2017 (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 2016.
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 2016. 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 2016 or 2015 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 2016 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 2015 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.
APPENDIX
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
· 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
The most significant risks that may have an adverse impact on the Group's ability to meet its strategic objectives and to deliver shareholder value are set out below. The Group seeks to mitigate these risk wherever possible, although some, such as political risks, are largely beyond the Group's control. Summarised alongside each risk is a description of its potential impact on the Group. Measures in place to manage or mitigate against each specific risk, where it is within the Group's control, are also described.
26. Related parties
Related parties the Group entered into transactions with during the reporting period
PJSC Asian-Pacific Bank ('Asian-Pacific Bank') and LLC Insurance Company Helios Reserve ('Helios') are considered to be related parties as members of key management have an interest in and collectively exercise significant influence over these entities.
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 governing board of the Petropavlovsk Foundation and their presence in its board of guardians.
JSC Verkhnetisskaya Ore Mining Company ('Verkhnetisskaya') is an associate to the Group and hence was a related party until 27 May 2016 when the Group disposed its interest in Verkhnetisskaya.
CJSC ZRK Omchak and its wholly owned subsidiary LLC Kaurchak ('Omchak') are associates to the Group and hence were related parties until 29 April 2015 when the Group disposed its interest in Omchak.
IRC Limited and its subsidiaries (Note 35) 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 2016 and 2015 are set out below.
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OPERATIONAL RISKS |
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PRODUCTION RELATED RISK - Failure to achieve the Group's production plan |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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Risk to production from: - Severe weather conditions. - The availability of suitable machinery, equipment and consumables. - Logistics for the delivery of equipment and services |
The Group's assets are located in the Russian Far East, a remote area that can be subject to severe climatic conditions. Severe weather conditions, such as cold temperatures in winter and torrential rain, potentially causing flooding in the region could have an adverse impact on operations, including the delivery of supplies, equipment and fuel; and exploration and extraction levels may fall as a result of such climatic factors.
The Group relies on the supply and availability of various services and equipment in order to successfully run its operations. For example, timely delivery of mining equipment and jaw crushers and their availability is essential to the Group's ability to extract ore from the Group's assets and to crush the mined ore prior to production. Delay in the delivery or the failure of mining equipment could significantly delay production and impact the Group's profitability.
The Group is dependent on production from its operating mines in order to generate revenue and cash flow and comply with the production and sales covenants in certain of its borrowing facilities. |
Preventative maintenance procedures are undertaken on a regular and periodic basis to ensure that machines will function properly under extreme cold weather conditions; heating plants at operational bases are regularly maintained and operational equipment is fitted with cold weather options which could assist in ensuring that equipment does not fail as a result of adverse weather conditions.
Pumping systems are in place and tested periodically to ensure that they are functioning.
Management monitor natural conditions in order to pre-empt any disaster and in order that appropriate mitigating action can be taken expediently. The Group aims to maintain several months of essential supplies at each site. Equipment is ordered with adequate lead time in order to prevent delays in their delivery.
The Group has a number of contingency plans in place to address any disruption to services. |
Flooding and unusually cold weather prevented the Group delivering on the original 2016 mine schedule resulting in a lower average processed grade for 2016 and lower production. However with strong capital discipline and dedicated cost control the Group achieved TCC of US$660oz, improving the Group margin per ounce.
The Executive team and operational management responded well to the bad weather at Pioneer's Andreevskaya deposit. A full impact assessment including detailed mapping, recording and monitoring of rock fractures was carried out. Whilst any available mining fleet was temporarily utilised at Pioneer's other operating pits.
However the Company's overriding commitment to the safety of its employees meant that delays in production at Pioneer were inevitable.
Potential impact - High
Change since 2015 - No change |
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EXPLORATION RELATED RISK |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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The Group's activities are reliant on the quantity and quality of the Mineral Resources and Ore Reserves available to it. |
Exploration activities are high risk, time-consuming and can be unproductive. In addition, these activities often require substantial expenditure to establish Reserves through drilling and metallurgical and other testing, determine appropriate recovery processes to extract gold from the ore and construct or expand mining and processing facilities. Once deposits are discovered it can take several years to determine whether Reserves exist. During this time, the economic viability of production may change. As a result of these uncertainties, the exploration programmes in which the Group is engaged in may not result in the expansion or replacement of current production with new Reserves or mining operations. |
The Group uses modern geophysical and geochemical exploration and surveying techniques. The Group employs a world class team of geologists with considerable regional expertise and experience. They are supported by a network of fully accredited laboratories capable of performing a range of assay work to high standards.
The Group's exploration budget is fixed for each asset at the start of each financial year depending upon previous results. |
Defined within Petropavlovsk's substantial 20.16Moz JORC Resource (7.95Moz JORC Reserve) is a 9.26Moz refractory gold Resource (4.07Moz refractory Ore Reserve), with under explored resource upside within the highly prospective 3,600km2 licence areas.
The completion of the POX Hub will unlock the 9.26Moz refractory Resource which supports Petropavlovsk's long term growth objectives in doubling the average life of mine and sustaining its production profile.
During 2016 the Group continued to explore the potential for further mine life extension and production expansion.
- At Malomir, exploration work has identified several highly prospective satellite refractory targets for further exploration work, including Ozhidaemoe.
- At Pioneer, refractory targets have been identified south of the main Pioneer orebody zone. The Alexandra zone and Sosnovaya licence are also expected to provide further refractory resource upside.
Potential impact - High
Change since 2015 - Decreased risk
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PROJECT RELATED RISKS - Failure to deliver various construction and development projects The Group's long-term strategy relies on the successful commissioning of the POX Hub and the delivery of the underground mining project. |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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1. Pressure Oxidation (POX) Hub. |
If the Group is unable to commission POX within the projected budget and timeframes this may have an adverse impact on the Group's growth plans and its future profitability. |
The Group has entered into a management contract with Outotec a world leader in the design and construction of pressure oxidation and flotation plants. Outotec will oversee the manufacture, installation and commissioning of the equipment and has guaranteed certain operating parameters.
The Group's pilot plant in Blagoveshchensk during 2013-2015 confirmed the feasibility of POX processing for Malomir and Pioneer concentrates.
POX has a special procurement process with a separate budget and expenditure schedule, monitored and signed-off by the CEO, COO and CFO based on the approved budget. |
- During 2016 the Company renewed key contracts with Outotec.
- As part of the recommencing of the POX Hub development Outotec (alongside the Company) ran checks on the major equipment in situ and commenced work on the automation and control systems.
- Tests at the pilot plant continued.
Under the refinancing agreements with VTB and Sberbank (see page [•]), the Group is required to complete the construction of POX out of its free cash flow.
Potential impact - High
Change since 2015 - No change |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
|
2. The underground mining project. |
If the Group is unable to deliver underground mining production within the agreed budget and timeframes this may have an adverse impact on the Group's growth plans and its future profitability. |
The Group employed a Russian engineering firm to undertake a pre-feasibility study and mine design on underground mining. The study concluded that underground mining should be technically feasible and economically viable. |
- An experienced firm of contractors commenced the underground mining works at Pioneer working closely with the Group's in-house underground operations team.
The Executive Committee and the Board closely monitor both the POX and underground mining projects.
Potential impact - high
Change since 2015 - No change
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FINANCIAL RISKS |
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FUNDING AND LIQUIDITY RELATED RISKS |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
|
Lack of funding and liquidity to allow the Group to:
i. Support its existing operations; ii. Invest in and develop its exploration and underground mining projects; iii. Complete the construction of the POX Hub; iv. Extend the life and capacity of its existing mining operations; v. Refinance/repay the Group's debt as it falls due; and vi. Complete the construction of the POX Hub out of its free cash flow.
If the operational performance of the business declines significantly the Company may breach one or more of the financial and production covenants as set out in various financing arrangements.
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The Group needs ongoing access to liquidity and funding in order to (i) refinance its existing debt as required, (ii) support its existing operations and (iii) invest in new projects and exploration. There is a risk that the Group may be unable to obtain the necessary funds when required or that such funds will only be available on unfavourable terms. The Group may therefore be unable to develop and/or meet its operational or financial commitments.
The Group's borrowing facilities include a requirement to comply with certain specified covenants in relation to the level of net debt and interest cover. A breach of these covenants could result in a significant proportion of the Group's borrowings becoming repayable immediately. |
Detailed annual budgets are approved by the Board and monthly forecasts provided. A successful cost reduction programme was undertaken to offset the effect of a reduction in the gold price.
The Group continues to progress its internal KPI to reduce total cash costs by 50% during the period 2013-2018. |
On 20 December 2016 the Group completed the refinancing of US$430 million of its debt with its lending banks Sberbank and VTB.
The approved terms include a revised maturity profile from May 2018 to September 2022 (inclusive of an option to extend the 2019 maturity payment to 2022 subject to certain conditions being satisfied) and an effective average interest rate of c.8%.
The Group is currently completing the final documentation for the Sberbank US$100m commodity linked loan facility. Once this has been completed the Group's entire bank debt of c. US$530m will have been refinanced.
The financial and operational covenants were renegotiated during 2016 as part of the refinancing of the Group's total debt.
Potential impact - High
Changes since 2015 - Decreased risk |
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GOLD PRICE RISK |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
|
The Group's operational results may be affected by changes in the gold price. |
The Group's financial performance is highly dependent on the price of gold. A sustained downward movement in the market price for gold may negatively affect the Group's profitability and cash flow and consequently its ability to fund the construction of the POX Hub. The market price of gold is volatile and is affected by numerous factors which are beyond the Company's control. |
The Executive Committee constantly monitors the gold price and influencing factors on a daily basis and consults with the Board as appropriate.
The Group has a hedging policy and hedges a portion of production as the Executive Committee and Board deem appropriate. |
In order to increase certainty in respect of a significant proportion of its cash flows, the Group entered into a number of gold forward contracts during 2016. Forward contracts to sell an aggregate of 134,545oz of gold matured during the year and resulted in US$(8.5) million net settlement paid by the Group.
Forward contracts to sell an aggregate of 50,006oz of gold at an average price of US$1,303 per oz were outstanding as at 31 December 2016.
During 2017 the Company has continued to hedge a portion of its gold production in order to protect itself from volatility in the price.
Potential impact - High
Changes since 2015 - Decreased risk |
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FX RISK |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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Currency fluctuations may affect the Group. |
The Company reports its results in US Dollars, which is the currency in which gold is principally traded and therefore in which most of the Group's revenue is generated. Significant costs are incurred in and/or influenced by the local currencies in which the Group operates, principally Russian Roubles. The appreciation of the Russian Rouble against the US Dollar tends to result in an increase in the Group's costs relative to its revenues, whereas the depreciation of the Russian Rouble against the US Dollar tends to result in lower Group costs relative to its revenues.
In addition, a portion of the Group corporate overhead is denominated in Sterling. Therefore, adverse currency movements may materially affect the Group's financial condition and results of operations.
In addition, 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. |
The Group has adopted a policy of holding a minimum amount of cash and monetary assets or liabilities in non US Dollar currencies and operates an internal funding structure which seeks to minimise foreign exchange risk exposure. |
The Group does not undertake any foreign currency transaction hedging although this is kept under review.
The Russian Rouble depreciated against the US dollar during 2016, with an average exchange rate for 2016 of 67.18 Rouble per US dollar compared with 61.30 Roubles per US dollar during 2015.
Potential impact - High
Change since 2015 - No change |
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IRC Related RISKS - The Company has a 31.10% interest in IRC, a Hong Kong Listed iron ore producer |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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Currency fluctuations may affect the Group. |
Description and potential impact The Company reports its results in US Dollars, which is the currency in which gold is principally traded and therefore in which most of the Group's revenue is generated. Significant costs are incurred in and/or influenced by the local currencies in which the Group operates, principally Russian Roubles. The appreciation of the Russian Rouble against the US Dollar tends to result in an increase in the Group's costs relative to its revenues, whereas the depreciation of the Russian Rouble against the US Dollar tends to result in lower Group costs relative to its revenues.
In addition, a portion of the Group corporate overhead is denominated in Sterling. Therefore, adverse currency movements may materially affect the Group's financial condition and results of operations.
In addition, 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.
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The Group has adopted a policy of holding a minimum amount of cash and monetary assets or liabilities in non US Dollar currencies and operates an internal funding structure which seeks to minimise foreign exchange risk exposure. |
The Group does not undertake any foreign currency transaction hedging although this is kept under review.
The Russian Rouble depreciated against the US dollar during 2016, with an average exchange rate for 2016 of 67.18 Rouble per US dollar compared with 61.30 Roubles per US dollar during 2015.
Potential impact - High
Change since 2015 - No change |
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RC Related RISKS - The Company has a 31.10% interest in IRC, a Hong Kong Listed iron ore producer |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
|
Risk that funding may be demanded from Petropavlovsk under a guarantee in favour of ICBC arising from:
Inability of K&S to service the interest and meet the repayments due on the ICBC loan due to insufficient funds arising from:
- Late commissioning of K&S
- Decrease in iron ore price
A further delay in the commissioning of K&S and/or a decrease in the iron ore price could result in a decrease in the value of the Company's shareholding in IRC. |
Petropavlovsk has provided a guarantee against a US$340 million project loan facility provided to K&S by ICBC to fund the construction of IRC's iron ore mining operation at K&S, of which c.US$234million is outstanding (2015: c.US$276million). This loan is supported by Sinosure, the Chinese export credit agency. In the event that K&S was to default on its loan, Petropavlovsk may be liable to repayment of the outstanding loan under the terms of the guarantee and other Group indebtedness may become repayable under cross-default provisions
Under the terms of the Company's banking facilities with Sberbank and VTB, the Company is unable to provide any funds to IRC without the prior consent of these lenders. |
Mitigation/comments The Board and the Executive Committee maintain close communication with IRC's Executive.
IRC and the Company continue to consider various options available to them, both separately and jointly, regarding the restructuring of IRC's debt and the potential removal of the guarantee. |
On 31 March 2017, IRC announced that ICBC has waived the obligation of K&S to repay all loan principal instalments due in 2017 totalling US$42.5million. This amount will be spread equally between the five subsequent repayment instalments due under the project finance facility.
In addition K&S is successfully operating at 75% production capacity and the iron ore price has increased considerably during 2017, rising to US$100 per tonne in March 2017. Based on IRC's cost optimisation analysis the estimated unit cash cost of K&S is c.US$34 per tonne for product delivered to the Chinese border.
The above factors represent a significant reduction in the risk that there will be a claim on the Company's guarantee in the immediate future and hence represents a significant reduction in the Company's risk profile.
The Company's interest in IRC was valued at US$36.140 million as at 31 December 2016 (2015: US$39.163 million).
Potential impact - High
Change since 2015 - Decreased risk
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HEALTH, SAFETY AND ENVIRONMENTAL RISK |
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Risk that our employees or those visiting our operations may be injured |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
|
Mining:
- is subject to a number of hazards and risks in the workplace
- requires the use of hazardous substances including cyanide and other reagents.
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The Group's employees are one of its most valuable assets. The Group recognises that it has an obligation to protect the health of its employees and that they have the right to operate in a safe working environment. Certain of the Group's operations are carried out under potentially hazardous conditions. Group employees may become exposed to health and safety risks which may lead to the occurrence of work-related accidents and harm to the Group's employees. These could also result in production delays and financial loss.
Accidental spillages of cyanide and other chemicals may result in damage to the environment, personnel and individuals within the local community. |
Board level oversight of health and safety issues occurs through the work of the Health, Safety and Environmental Committee ('HSE') which is chaired by Mr Alexander Green, Independent Non-Executive Director. Health and Safety management systems are in place across the Group to ensure that the operations are managed in accordance with the relevant health and safety regulations and requirements.
The Group continually reviews and updates its health and 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.
Cyanide and other dangerous substances are kept in secure storages with limited access only to qualified personnel, with access closely monitored by security staff.
H&S targets are included in the annual bonus scheme for Executive Directors and the Executive Committee. |
The Group operates a prompt incident reporting system to the Executive Committee and the Board. There were 34 lost time accidents during 2016 with a Lost Time Injury Frequency Rate ('LTIFR') for 2016 of 2.64 accidents per 1 million manhours worked compared with 36 accidents in 2015 and a LTIFR of 2.63.
There was one fatality during 2016 (2015: 1). This fatality was reported immediately to the Chairman of the HSE Committee. A full investigation of this incident was conducted by the Russian authorities which concluded that the Company was not at fault for the accident. Records confirmed that the individual concerned had received all relevant training from the Company. The HSE Committee discussed this matter in detail to identify whether any actions should be taken or further training provided to mitigate against any reoccurrence of a similar accident. Action was taken by the Group's management and H&S officers to reinforce correct behaviour to employees.
At the request of the HSE Committee the Group commenced a new 'health and safety' campaign specifically aimed at preventing accidents involving vehicles.
There were no accidents involving cyanide or other dangerous substances during 2016.
Potential impact - Medium/High
Change since 2015 - No change
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LEGAL AND REGULATORY RISKS |
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Risks that legal or regulatory issues may impact the ability of the Group to operate |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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The Group requires various licences and permits in order to operate. |
The Group's principal activity is the mining of precious and non-precious metals which require it to hold licences which permit it to explore and mine in particular areas in Russia. These licences are regulated by Russian governmental agencies and if a material licence was challenged or terminated, this would have a material adverse impact on the Group. In addition, various government regulations require the Group to obtain 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. |
There are established processes in place to monitor the required and existing licences and permits on an on-going basis and processes are also in place to ensure compliance with the requirements of the licences and permits. Schedules are presented to the Executive Committee detailing compliance with the Group's licences and permits. |
Potential impact - Medium/High
Change since 2015 - No change |
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Risks that legal or regulatory issues may impact the ability of the Group to operate |
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Risk |
Description and potential impact |
Mitigation/comments |
2016 Progress |
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The Group is subject to risks associated with operating in Russia. |
Actions by governments or changes in economic, political, judicial, administrative, taxation or other regulatory factors or foreign policy in the countries in which the Group operates or holds its major assets could have an adverse impact on the Group's business or its future performance. Most of the Group's assets and operations are based in Russia.
Russian foreign investment legislation imposes restrictions on the acquisition by foreign investors of direct or indirect interests in strategic sectors of the Russian economy, including in respect of gold reserves in excess of a specified amount or any occurrences of platinum group metals.
The Group's Pioneer and Malomir licences have been included on the list of subsoil assets of federal significance, maintained by the Russian Government ("Strategic Assets"). The impact of this classification is that changes to the direct or indirect ownership of these licences may require obtaining clearance in accordance with the Foreign Strategic Investment law of the Russian Federation. |
To mitigate the Russian economic and banking risk the Group strives to use the banking services of several financial institutions and not keep disproportionately large sums on deposit with a single bank.
The Group seeks to mitigate the political and legal risk by constant monitoring of the proposed and newly adopted legislation to adapt to the changing regulatory environment in the countries in which it operates and specifically in Russia. It also relies on the advice of external counsel in relation to the interpretation and implementation within the Group of new legislation.
The Group closely monitors its assets and the probability 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.
Potential impact - High
Change since 2015 - No change |
Trading Transactions
Related party transactions the Group entered into that relate to the day-to-day operation of the business are set out below.
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Sales to related parties |
Purchases from related parties |
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|
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2016 US$'000 |
2015 US$'000 |
2016 US$'000 |
2015 US$'000 |
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Asian-Pacific Bank |
|
|
|
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|
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Other |
22 |
575 |
102 |
113 |
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22 |
575 |
102 |
113 |
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Trading transactions with other related parties |
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Insurance arrangements with Helios, rent and other transactions with other entities in which key management have interest and exercises a significant influence or control |
66 |
1,182 |
3,514 |
5,716 |
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Associates |
|
|
|
|
|
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IRC Limited and its subsidiaries |
69 |
49 |
1,996 |
1,152 |
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CJSC ZRK Omchak and its wholly owned subsidiary LLC Kaurchak |
- |
2 |
- |
- |
|
|
|
135 |
1,233 |
5,510 |
6,868 |
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During the year ended 31 December 2016, the Group made US$0.2 million charitable donations to the Petropavlovsk Foundation (2015: US$0.4 million).
The outstanding balances with related parties at 31 December 2016 and 2015 are set out below.
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Amounts owed by related parties at 31 December |
Amounts owed to related parties at 31 December |
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2016 US$'000 |
2015 US$'000 |
2016 US$'000 |
2015 US$'000 |
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Helios and other entities in which key management have interest and exercises a significant influence or control |
1,383 |
1,328 |
1 |
450 |
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Asian-Pacific Bank |
1 |
|
- |
|
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IRC Limited and its subsidiaries |
14,502(a) |
2,023 |
1,704 |
1,233 |
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15,886 |
3,351 |
1,705 |
1,683 |
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(a) Including US$12.5 million advanced to IRC in December 2016. This balance was fully repaid in January 2017.
Banking arrangements
The Group has current and deposit bank accounts with Asian-Pacific Bank.
The bank balances at 31 December 2016 and 2015 are set out below.
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2016 US$'000 |
2015 US$'000 |
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Asian-Pacific Bank |
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629 |
3,208 |
-
Financing transactions
The Group has charged a fee for the provision of the guarantee to IRC (note 14), equal to 1.75% on the outstanding loan amount under the ICBC Facility Agreement and which amounted to US$4.5 million during the year ended 31 December 2016 (31 December 2015: US$2.2 million). The Guarantee fee principal outstanding amounted to an equivalent of US$3.4 million (31 December 2015:US$nil).
The Group had an interest-free unsecured loan issued to Verkhnetisskaya. Loan principal outstanding amounted to an equivalent of US$2.8 million as at 31 December 2015.
During the year ended 31 December 2015, the Group received a number of loans from Asian-Pacific Bank. Loan principal outstanding as at 31 December 2016 was US$nil (31 December 2015: an equivalent of US$2.7 million). During the year ended 31 December 2016, interest charged on loans received from Asian-Pacific Bank comprised US$0.03 million (31 December 2015: US$0.5 million).
Key management compensation
Key management personnel, comprising a group of 15 (2015: 18) individuals, including Executive and Non-Executive Directors of the Company and members of senior management, are those having authority and responsibility for planning, directing and controlling the activities of the Group.
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|
2016 |
2015 |
|
|
US$'000 |
US$'000 |
|
Wages and salaries |
6,103 |
7,231 |
|
Pension costs |
182 |
357 |
|
Share-based compensation |
610 |
280 |
|
|
6,895 |
7,868 |
33. Subsequent events
In February - March 2017, the Group has entered into forward contracts to sell an aggregate of 549,994oz of gold during the years 2017 - 2019 at an average price of US$1,252/oz.
About Petropavlovsk
Petropavlovsk is one of Russia's leading gold mining companies. As at 31 December 2016, the Company had produced approximately 6.3Moz of gold.
Petropavlovsk is in the construction phase of a state of the art pressure oxidation facility to process the Company's substantial refractory resource base. The Company's combined 3,605km2 license holding has untapped resource potential. The Company is a leading employer and contributor to the development of the local economy in the Amur region, Russian Far East, where it has operated since 1994.
Petropavlovsk is a shareholder (31.1%) of IRC Limited and is the guarantor of the US$340 million project finance facility (US$234 million principal outstanding, as at 31 December 2016). IRC is a vertically integrated iron ore producer and developer in the Russian Far East and North Eastern China. IRC is listed on the Hong Kong Stock Exchange (Ticker: 1029.HK).
Petropavlovsk is listed on the Main Market of the London Stock Exchange (Ticker POG:LN)
Enquiries
For more information, please visit www.petropavlovsk.net and www.ircgroup.com.hk or contact
Petropavlovsk PLC
Alexandra Carse
Grace Hanratty
+44 (0) 20 7201 8900
Maitland
Neil Bennett
James Isola
+44 (0) 20 7379 5151
Petropavlovsk-Maitland@maitland.co.uk
This information is provided by RNS
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