Petropavlovsk investee in the firing line of Russian regulator

Petropavlovsk said on Friday that IRC, the producer and developer of industrial commodities in which it is a significant shareholder owning 31.1%, has updated it on operations at its wholly-owned subsidiary Kimkano-Sutarsky Mining and Beneficiation Plant (K&S).

The FTSE 250 company said that, according to IRC, the Russian Federal Service for Environmental, Technological, and Nuclear Supervision has initiated an administrative offence proceeding against K&S in the Obluchensky District Court of Russia’s Jewish Autonomous Region, for operating the K&S project without the requisite approvals.

It said it understood that no court date had been set, adding that K&S would continue to operate as usual.

“The potential outcome of the administrative offence proceeding is unclear,” the Petropavlovsk board said in its statement.

“The company understands that if K&S is found to have committed an offence a fine may be imposed by the court, or K&S may be required to suspend its operations until the required formalities are completed and necessary approvals are received.”

Petropavlovsk said it acts as guarantor of the obligations of K&S under two loan facility agreements with Gazprombank.

The outstanding loan principal amount was $204m as at 31 December.

“The company will continue to monitor the situation and update shareholders accordingly,” it added.

At 0835 BST, shares in Petropavlovsk were up 0.24% at 25.38p.