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2013 has been a tough year for Petropavlovsk: a gold price that was stuck in a downward spiral pattern badly affected the company’s profitability. This subsequently saw a number of City institutions downgrade their forecasts and price targets for the embattled precious metal miner. A month ago the Royal Bank of Canada (RBC) chopped its price target from 150p down to 105p. RBC has a long history of analysing equities in the mining sector, and historically has not been prone to making too many rash calls.
The move in gold over the last four weeks will have come as a welcome relief to many in the mining sector, and the jump in the last 24 hours up to highs of $1373 has seen shares in Petropavlovsk leap by as much as 17.5%. As with almost all gold miners, any move in the underlying commodity has a full and direct consequence for the bottom-line profitability of the company.
Even though Petropavlovsk has started to tackle some of its debt issues, and is making improvements to both profitability and running costs, the ultimate driving force behind the share’s performance will be the spot gold price.