Russian miner Petropavlovsk seeks new export licence as sales struggle

Russian miner Petropavlovsk has applied for a new export licence, it said on Friday, seeking a fresh lease of life after it was prohibited from selling gold to sanction-hit Gazprombank, the only buyer of its output. Its London-listed shares surged as much as 38%, after plunging about 91% since Russian forces started massing on Ukraine's border.

Russian miner Petropavlovsk has applied for a new export license, it said on Friday, seeking a fresh lease of life after it was prohibited from selling gold to sanction-hit Gazprombank, the only buyer of its output.

Its London-listed shares surged as much as 38%, after plunging about 91% since Russian forces started massing on Ukraine's border. The miner said its gold production for the quarter ending March 31 rose 8% to 103-kilo ounces, while gold sales slipped by 6%.

Britain sanctioned Gazprombank, one of the main channels for payments for Russian oil and gas, on March 24. The sanctions, imposed on several Russian companies, prohibit any financial dealings with such firms. Petropavlovsk is even restricted from making debt repayments to Gazprombank, which is also its main lender.

Petropavlovsk said it was still exploring options for gold sales, including with other potential buyers. This week, Gazprombank called on Petropavlovsk to immediately repay a term loan worth $201 million and return about $87 million due under other revolving credit facilities by April 26.

Petropavlovsk had received a notice from Russia's UMMC-INVEST that Gazprombank had assigned all its rights under the term loan to UMMC as the successor agent. The London-listed miner on Friday cut its annual gold production outlook. It said it now expects production in the range of 375 to 405-kilo ounces, down from a previous outlook of 380-420 kilo ounces.

Gold prices have remained firm in recent weeks at around $2,000 an ounce level, as Ukraine concerns and rising inflationary pressures increased safe-haven bids for the precious metal.