Russia's gold miner sees 2012 output to rise 11 percent

Russia-focused gold miner Petropavlovsk forecast an 11 percent production rise for 2012 as it reaps the benefits of a new multi-million dollar open-pit mine in its core Amur region of Siberia by the Chinese border.
The firm, which now operates four open-pit gold mines in Russia's far east, gave the new target of 680,000 ounces after beating its 2011 forecast of 600,000 oz by around 5 percent on higher production at its flagship Pioneer mine. Shares in Petropavlovsk were up more than 7.5 percent at 0925 GMT, outperforming a 2.6 percent gain in the FTSE 350 Mining Index.
"Petropavolvsk brought 2011 production to 630,000 oz, a strong beat of both our forecast and the company's own guidance. With this result the company has demonstrated that it can meet and exceed its targets," Citi analyst Jon H Bergtheil said in a note. The company shed nearly half its value last year, but is now up nearly 20 percent in the year to date and valued at over $2 billion.
Chairman Peter Hambro said the 2012 forecast was deliberately cautious, adding that long term growth would come from the company's greenfield development.
"The group's 2012 target (680,000 oz) is based on a conservative approach. It does not include production from expansions at Pioneer and (new mine) Albyn," Hambro told Reuters by telephone.
"Our portfolio of greenfield exploration is intact - there are a number of places where we have spent a lot of money on exploration and believe we can bring into production. There is strong growth potential," he added. The 2012 target is slightly above the 640,000 oz forecast by London-listed Polymetal in its production report released last week. Hambro, prone to bullish forecasts for the price of gold, said investor concerns about global events were likely to support the precious metal throughout 2012.
The price of gold, widely seen as a safe haven for investors during uncertain times, has fallen from record highs in early September but remains relatively buoyant at around $1,654 per oz. "The fear factor is strong. Investors are afraid of political instability in the Gulf, they are afraid of the financial crisis in the euro zone, and they are afraid of monetary policy in the US," Hambro said.