LONDON — Miner Petropavlovsk reported strong 2009 gold production and predicted a jump of up to 56 percent this year, prompting the company to promise to reinstate dividends.
Petropavlovsk said that "in light of the excellent preliminary trading results," it had decided to pay an interim dividend of 7 pence (11 cents) a share at the end of March following a one-year hiatus.
"No final dividend will be paid, but in future years the board expects to pay both interim and final dividends," it said in a statement Thursday.
Liberum Capital described the company's production update as reassuring and a "compelling buying opportunity."
"This release should assuage market concerns following December's negative 6 percent production downgrade … and we question whether December's unnerving statement was actually required," analyst Dominic O'Kane said in a note to clients.
"Fears over significant production downgrades to 2010 are unwarranted," he said, adding that the dividend changes are "an unexpected and major positive."
Total attributable gold production hit 486,800 ounces last year, a 21 percent increase on 2008 and comfortably within the group's production target range of 460,000 to 510,000 ounces.
On average it sold the gold for $975 an ounce, up 15 percent on the $845 achieved in 2008.
The group said it expected attributable production to rise to between 670,000 and 760,000 ounces in 2010 as new projects come on stream.
"We are the owners of a huge number of development projects, and our organic growth pipeline is one of the best in the world," chairman Peter Hambro said.
Hambro said he was following the Hong Kong IPO of aluminum giant United Company RusAl with interest, adding that a possible listing on the Chinese bourse was one of many possibilities being explored by the group.
"We look at all possibilities open to us. We've looked at Moscow, Toronto. … We saw the RusAl decision to list in Hong Kong and thought 'that's interesting'," he said.
Hambro added that he expected the price of gold to continue to rise in 2010.
"I don't believe the world's problems have gone away. We have seen people buy gold as a store of value, and we believe they will continue to do so," he said.
The price of gold typically strengthens during tough times because it is considered a safe haven from the world's woes.
The spot gold price has retreated from an all-time high of $1,226.10 per ounce touched last month, but the current level of $1,105 is 30 percent higher than a year ago.