* Petropavlovsk H1 2012 gold output rises to 279,100 ounces
* Says on track to produce 700,000 ounces of gold in 2012
* Shares up 7.56 pct, outperforms FTSE 350 Mining index (Releads to add share price, chairman comments. Adds details)
By Polina Devitt
MOSCOW, July 25 (Reuters) - Russia-focused gold miner Petropavlovsk Plc is on track to meet its full-year output target while keeping a lid on costs, the company said on Wednesday, sparking a rebound in its shares which had slipped to a 2012 low in recent sessions.
“This is now six quarters in a row that they have met or beat their own guidance,” said analyst Nikolay Sosnovsky at brokerage VTB Capital.
“Their operating costs for the first half remained almost flat, year-on-year, while they were expecting a sharp rise in early 2012. Nobody expected such a positive development,” Sosnovsky added.
Petropavlovsk’s London-listed shares were up 7.2 percent at 408.45 pence by 1150 GMT, compared with a 1 percent rise in the FTSE 350 Mining index. The stock had dropped as low as 358.8p earlier this month, its lowest level in the year so far.
Petropavlovsk’s first-half gold production rose 27 percent from a year ago to 279,100 ounces, while sales rose 8 percent to 286,000 ounces with an average price of $1,639 per ounce, the company said.
The company forecast a further increase in the second half and Chairman Peter Hambro was upbeat on prospects for the yellow metal. “I am still optimistic (about the gold price), it will be higher at the end of the year than it is now,” Hambro told Reuters in a phone interview.
He reduced his forecast for the global gold price, however, to $1,900 per troy ounce from $2,000 for 2012 as a whole, citing the European debt crisis.
Gold has been trading largely sideways in recent months as a lack of clarity on further monetary easing has kept investors wary. Spot gold inched up to $1,588.49 an ounce by 0935 GMT, extending gains into a second straight session.
The company has been the biggest decliner among major UK gold producers, having lost 42 percent of its value year-to-date, and it has also underperformed the gold price, Liberum Capital said in a note.
The main reason is concern over the cost of an investment to boost hard-to-process “refractory” ore processing over the next three years, and the associated impact on the company’s $793 million net debt, Liberum added.
Hambro said there was nothing the company could do about its share price except to produce large quantities of profitable gold, “and only the market can put a value on that”.
“The world has become very much more frightened, and they would rather own physical gold than gold shares,” Hambro added. ($1 = 0.6441 British pounds) (Editing by Anthony Barker and David Holmes)