GDR: +63% till end of 2020
Revision date: 30.10.2019
Revision price: 0.099 GBP
GDR target price: 0.16 GBP till end of 2020

We’ve extended an investment period for Petropavlovsk GDRs from the end of 2019 to the end of 2020, and raised the company's GDR value estimate from 0.12 GBP at the end of 2019 to 0.16 GBP at the end of 2020. Out new estimate implies a 63% premium to the current mkt price within the next 12 months.

Recently, the company has undergone a transformation, having completed a major investment programme and a launch of new facilities, which has improved production and sales (by increasing processing of outer ore and production margin), contributes to higher revenue, lower costs and debt. Moreover, Petropavlovsk is top 5 Russian gold miner, benefiting from rising gold prices along with other gold producers. For more details see a note of September 11.

Please note that recently two major shareholders have acquired stakes in the company's (Fortiana Holdings, owned by Vladislav Sviblov, purchased 4.6% and Prosperity fund – 3%), suggesting they are confident in the prospects for the company’s development in the medium term. Low liquidity is a major constraint on Petropavlovsk's shareholder value growth.

 Petropavlovsk estimated share price

Source: Company data, ITI Capital estimate

 Petropavlovsk

Source: Bloomberg, ITI Capital estimate

Anna Kupriyanova, Senior investment strategist

Анна Куприянова
01.11.2019
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