Petropavlovsk Plc, a miner of gold in Russia, rebounded from a record low in London trading, climbing the most in more than four years after saying it continues to operate within its bank covenants.
Petropavlovsk jumped as much as 26 percent, the steepest intraday gain since Jan. 26, 2009. It was the best performer on the FTSE All-Share Mining Index. The company said it’s not aware of any “particular recent event” that could account for the fall in its share price.
“The group continues to operate with financial headroom provided by its long-term banking facilities and restates its target of reducing net debt,” it said today in a statement.
Petropavlovsk fell 14 percent yesterday to 67.25 pence, the lowest since it first sold shares in 2002. The shares tumbled partly on its debt levels. The company reported net debt of $1.2 billion at the end of the first quarter, up from $1.06 billion at the end of 2012.
“In the current gold price environment, investors are understandably worried when considering heavily indebted businesses going into a downturn,” Investec Plc said in a note to investors today. If the company reveals in its next results “that the bank covenants have been tested and the group is comfortable, this may provide support for the shares.”
Petropavlovsk traded 12.75 pence higher at 80 pence by 10:00 a.m. in London.