News
UGC seeks truly independent Board for Petropavlovsk
Joint Stock Company Uzhuralzoloto Group of Companies ("UGC") notes recent statements by other shareholders in Petropavlovsk plc (“Petropavlovsk” or “the Company”) about the composition of the Petropavlovsk Board of Directors. UGC’s clear objective as a shareholder in Petropavlovsk is to seek to enhance the independence of the Board of Directors and thus to ensure a rigorous focus on the company’s core business and operational efficiency.
· UGC wants to support the appointment of truly experienced, diverse and independent Directors to the POG Board
· Only experienced independent Directors will be able to effectively address the issues that have held Petropavlovsk back from achieving its potential
· UGC is not proposing candidates for the Board, beyond its existing Director, Mr Maxim Kharin
· UGC has requested that a leading Executive Recruitment agency be appointed to select the candidates on merit from a wide and diverse talent pool
· A new senior executive management team would take the Company forward with a close focus on its economic efficiency supporting a sustainable improvement of its returns profile and outlook for the benefit of Company’s shareholders
· UGC is disappointed that the Company does not currently have an appointed auditor following rejection of the proposed appointment by PricewaterhouseCoopers following Deloitte’s earlier decision not to seek reappointment (including due to concerns about Company’s reporting processes) and calls for an expedited appointment of the Company’s auditor as soon as practicable
· UGC urges the shareholder elected directors to act to address the concerns of shareholders, so the Company can move forward to realise fully the potential of its resource base
· UGC calls on all shareholders to support the appointment of a truly independent Petropavlovsk board, that will have the appropriate skillset to build the Company’s future and unlock its full potential
UGC acquired its stake in Petropavlovsk having carried out a full analysis of publicly available information and based on its understanding of the Company's potential. UGC, as an established large-scale gold producer, sees itself as the first strategic shareholder in the Company in years to take interest in the field by field workings of the business.
However, over the past several months UGC has become increasingly concerned with the Company's actual operating and financial performance, and some of the publicized actions of its board, which was the reason behind its vote against the re-election of some of the directors at the Company's recent AGM but still leaving in place an independent Board.
UGC's aim is not to single out management for any historical issues, but to ensure that a sustainable turnaround of the Company's operations and financial position is delivered in the future. UGC believe that the Company's cost structure could be enhanced, and that substantial additional savings could be realised with techniques previously used by UGC, helping to increase cash flow and reduce the Company's burdensome leverage and strong dependence on the gold price.
Since becoming a shareholder, UGC has attempted to discuss these thoughts with management on how the Company might reduce its costs and be operated more efficiently, but the management has not been receptive to these suggestions.
UGC voted to retain a majority of independent directors on the board following the AGM who could reconstitute a board that is fully compliant with the UK Corporate Governance Code. UGC does not believe that those purported temporary directors appointed to the board following the AGM were independent and welcomes them stepping off the board at the conclusion of the General Meeting.
UGC continues to seek a resolution of the current disputes in the interests of all shareholders. Whilst a number of its managers would be excellent candidates for Petropavlovsk's new board, UGC will not be proposing that any of its staff are appointed to the Board (except for Mr. Maxim Kharin) or management team of Petropavlovsk.
UGC believes that only a duly elected board with a majority of truly independent non-executive directors can ensure the long-term future of Petropavlovsk and calls on the shareholder elected directors to appoint an experienced executive recruitment firm to lead this search process and select candidates for these positions. At the same time, the appointed executive recruitment firm would also be able to propose candidates for the positions of Chief Executive, Chief Financial Officer and Chief Operating Officer.
UGC calls on all shareholders to support the appointment of a truly independent Petropavlovsk board, that will have the appropriate skillset to build the Company’s future and unlock its full potential.
For more information
Please visit http://www.ugold.ru/en/ or contact:
Citigate Dewe Rogerson
David Westover Tel +44 7768 897722
Louise Mason-Rutherford Tel +44 7932 681947
Email ursa@citigatedewerogerson.com
About UGC
UGC is one of Russia's largest gold mining companies, with a track record of growth over many years. It produced 450,000 oz of gold in 2019, generating revenue of over US$600m and significant cash flow. It has doubled production in the five years since 2014, and has mined 150 tonnes of gold over the last 22 years. UGC has a low cash cost per ounce, has built a portfolio of assets representing the third largest gold reserves in Russia, and constructed the largest processing plant in Russia (Svetlinskaya at Chelyabinsk). UGC is run by experienced mining professionals, with the current management team having been in place since 1997. It aims to maintain the best industry ESG standards, and has a long record of cost-efficient production and successful investment in its business.