Petropavlovsk's IRC Notes Record Production At K&S Iron Ore Mine

(Alliance News) - Petropavlovsk PLC on Monday said K&S iron ore mine located in the Russian Far ...

Alliance News 8 July, 2019 | 9:34AM
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(Alliance News) - Petropavlovsk PLC on Monday said K&S iron ore mine located in the Russian Far East region broke its monthly production record on Friday.

The K&S mine, which is owned by Petropavlovsk's 31%-owned investee company IRC Ltd, operated at an average capacity of 93% in June, driven by rectification of problems in the crusher's feeders.

Looking ahead, operators at the mine are continuing the ramping up program, and expects to see K&S operating to full capacity on a continuous basis later in the year, once production bottlenecks are resolved.

In addition, IRC said it has entered several hedging contracts, mostly in the form of protective collars to reduce the risk of adverse price movements, following iron ore prices rising over the first half of 2019 by 49%.

IRC attributed the rising price to a global supply shortage and increased demand from China.

IRC's strategy looking forward is to hedge no more than half of K&S's production with the remaining volume left unhedged.

"I am pleased that K&S has broken its monthly production record and that the ramping up program is back on track after the feeders have been fixed. The high production rate coupled with the strong market iron ore price have been beneficial to IRC," said IRC Chief Executive Officer Yury Makarov.

"While enjoying the growth in price, we remain vigilance and are keen to manage and reduce risk whenever possible. Our hedging is by no means speculative in nature. Although certain upside in price may be forfeited, the hedging arrangements secure a healthy level of cashflow for IRC which is important from risk management perspective," Makarov added.

Shares in Petropavlovsk were down 0.4% at 9.76 pence in London on Monday.

By Dayo Laniyan; dayolaniyan@alliancenews.com

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Petropavlovsk PLC 10.22 GBX 0.79 -
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