Petropavlovsk confirmed at BUY, TP GBp 44.6 - Output expansion at own mines amplified by higher price
Estimated production expansion is expected to add 3% in 2021e and 10% in 2022eCoupled with falling TCC, this is to bring in an extra USD 238 mn of EBITDA in 2021-22e
Strong free cash flow with a yield of 14% and 23% is forecasted for 2021e and 2022e
Net debt-to-EBITDA of 1.3x in 2020e falling to 0.4x in 2021e and turning negative in 2022e
EV/EBITDA sliding from 6.5x in 2020e to 4.8x in 2021e and 3.9x in 2022e, given current EV
Looming exit from corporate conflict, yet still sharp discount vs. peers on EV/Reserves
Petropavlovsk is engaged in the mining of precious and non-precious metals which require it to hold licences which permit it to explore and mine in particular areas in Russia. Co.'s reportable segments, which are aligned with its operating locations, are Pokrovskiy, Pioneer, Malomir and Albyn hard-rock gold mines which are engaged in gold and silver production as well as field exploration and mine development.
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