3 Sep 2018 16:57

Rakishev expects Petropavlovsk rating upgrade on H2 results

MOSCOW. Sept 3 (Interfax) - Kenes Rakishev, currently the biggest shareholder in Petropavlovsk plc, expects the gold miner's credit rating to be upgraded on the basis of results for H2 2018.

"I'm confident the outlook will improve based on the 2018 results as there are all the necessary premises for this, including the Pokrovsky POX Hub. Management plans to finish commissioning this in Q4 2018 and for the hub to produce its first gold in Q1 2019. After the hub has been launched, the company will raise gold production which will ensure Petropavlovsk can sustain a high level of production for years to come thanks to its large refractory ore reserves. All of this should be reflected positively in the ratings," Rakishev told Interfax via a spokesperson.

Fitch Ratings said on Friday that it had lowered Petropavlovsk's long-term issuer default rating and priority unsecured rating to "CCC" from "B-" and had also downgraded its bonds to "CCC" from "B-", leaving their RR4 rating intact.

The agency said it had downgraded the ratings on weaker-than-expected operating results for H1 2018, delays with launching the POX hub, the lowering of the company's 2018 production and total cash cost (TCC) guidance and more conservative forecasts by Fitch for the company's cash flow and liquidity over the next 18 months. The "CCC" rating also reflects risks related to a guarantee don a credit facility raised by IRC Limited, the iron ore mining spin-off in Petropavlovsk remains the biggest shareholder, from Industrial and Commercial Bank of China (ICBC).

Rakishev said too much should not be read into the rating downgrade. He said the rating was affected by the company's objective results for the first half year when a "corporate conflict was smoldering."