Petropavlovsk Plc, a miner of gold in Russia, fell the most in 3-1/2 years in London as interest payments and depreciation costs dragged down first-half profit.
Petropavlovsk slumped 16 percent to 394 pence by the close in London, the biggest drop since December 2008, after reporting a 90 percent decline in net income to $11 million. Interest charges more than doubled to $34.6 million in the period and the company took a depreciation charge of $106.9 million.
The gold producer has accumulated $1.12 billion in debt as it expands its Albyn and Pioneer mines and builds a so-called pressure oxidation plant at its Pokrovskiy operation. The London-based company said interest costs will be “slightly higher” in the second half as borrowings continue to rise.
“While the operations continue to perform well, the miss on the financial extras is likely to disappoint, especially as the company has been hitting targets well over the last few quarters,” Numis Securities Ltd. said today in a note.
Petropavlovsk, whose output reached 279,100 ounces of gold in the first half from 219,100 ounces a year ago, reiterated its 700,000 annual target. Sales rose 15 percent to $546.8 million.