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Stock photo of the Polymetal logo
By Yadarisa Shabong
March 30 (Archyde.com) – Russian gold miners Polymetal and Petropavlovsk warned on Wednesday of growing hurdles to doing business, including rising operating costs and continuing difficulties repaying loans to sanctioned banks.
Petropavlovsk said it was in early talks with its main lender, the sanctioned Russian bank Gazprombank, to restructure its debt after failing to make payments. He has also been unable to sell his gold.
The company, whose main investor is Russian billionaire Sergey Sudarikov, said any restructuring of its debt would have to be within sanctions limitations.
A Petropavlovsk spokesman said it was in talks with Gazprombank and its advisers and it was too early to comment on the way forward.
For its part, Polymetal said some gold projects were experiencing delays of three months to a year. The company is also cutting some exploration budgets as it faces higher costs after being forced to switch transport service providers.
However, demand for gold in Russia has been boosted by local retail investment, it said in a statement.
Interest in gold and buying physical gold has increased in the last four weeks in Russia due to sanctions. The removal of value added tax this month on purchases of the gold metal has further boosted demand, a spokesman added.
Western sanctions on Russian entities in response to their invasion of Ukraine have complicated various businesses and livelihoods in Russia and pose a challenge to unsanctioned Russian companies trying to circumvent the new rules.
Shares of London-listed Polymetal and Petropavlovsk have fallen more than 60% since Russia launched what it called a “special military operation” in Ukraine more than a month ago. Polymetal shares reversed early gains and fell 7% by 1320 GMT, while Petropavlovsk fell 21%.
In a positive development for Polymetal, the company said it had resumed gold sales in Russia after shipments were initially affected following the termination of deals with logistics providers.
He added that the sanctions have not had a material impact on the business, but did not rule out the possibility of sanctions being imposed on the company itself, which is partly owned by Russian businessman Alexander Nesis.
(Additional reporting by Sachin Ravikumar and Muhammed Husain; Spanish editing by Carlos Serrano)