Petropavlovsk PLC (LSE:POG) has appointed a corporate finance boutique to find a buyer saying it will struggle to refinance its debts due to the sanctions imposed on Russia.
In a statement, the Russia-focused gold miner said AlixPartners would assist the board as it explores its options.
“These options include the sale of the company's entire interests in its operating subsidiaries as soon as practically possible.
“It is not currently clear what return, if any, may be secured for shareholders or the holders of the bonds or notes as a result of this process.”
Petropavlovsk has already missed two interest payments totalling around US$10mln on loans of US$288mln from Gazprombank (GBP) because sanctions meant it could not repay the Russian state-owned bank.
Gazprombank is also the buyer of all of the group’s gold production, effectively meaning it cannot sell anything at present.
“The group continues to explore options for the sale of its gold, including to other potential buyers, subject to GPB granting waivers,” it added.
In addition, if it can find a buyer, Russia fixes gold prices well below market rates elsewhere which will affect cashflow, said the statement.
Petropavlovsk said it has limited cash reserves outside Russia but is restricted from transferring money out of the country due to the sanctions.
Another interest payment of approximately US$12.4mln is due on 14 May 2022 on US$500mln of bonds that mature in November and are guaranteed by the miner.
“In the present circumstances the board considers that it will be very challenging to refinance the notes,” said the statement.