The gold price is buoyant as investors see it as a safety fallback against the worsening global economy. But that doesn’t help, as Petropavlovsk is reliant on Russian bank Gazprombank (GBP) in two different ways. And GBP is under UK and EU sanctions because of the war.

The company has around $300m of debt with the bank, but it can’t deal with it. It’s already missed payments as a result. It also has a contract to sell its gold to GBP, which it can’t under current sanctions.

Gold sales waivers

On the latter problem, GBP has issued waivers to allow Petropavlovsk to sell gold to other buyers. But that doesn’t help with the repayment of debt. In April, it demanded immediate repayment of around $200m under a term loan agreement, and has assigned the rights of the term loan to another organisation, JSC UMMC-Invest.

In its recent June update, the company told us it “is unable to repay the term loan at the present time and, for a number of reasons, the board considers it very unlikely that it will be able to refinance the term loan in the short term and has to date been unable to do so“.

It doesn’t help that the company has around $300m in outstanding guaranteed notes too, which it also can’t service. It has not paid the most recent coupon.

The way out?

Petropavlovsk has been saying for some months now that one of its options is to sell all its mining interests “as soon as practically possible.” What does this all mean for shareholders?

Firstly, it’s worth highlighting a warning from the company itself. A number of shareholders have been contacted by boiler room scammers offering some kind of deal over their shares.

The biggest individual scam recorded so far resulted in a loss of £6m. So investors should not respond to any unsolicited phone calls, emails or other communications. Other than reporting them to the police, that is.

Why are people buying?

As for the possible asset sell-off, the board said “it is highly unlikely that any return will be secured for shareholders as a result of that process given the level of the company’s indebtedness“.

It hardly seems likely that anyone is buying shares today in the hope of profiting from the sale, then. But investors clearly are still buying.

Perhaps it’s in the hope of an alternative solution? Maybe one that could save the Petropavlovsk share price from falling to zero? If the board can pull something off, might investors make a quick profit? I really don’t know.

All I am convinced of is that a company with a market-cap of under £50m, and at very low penny share prices, is always likely to be a risky investment.

The post After the Petropavlovsk share price has crashed 95%, who’s buying? appeared first on The Motley Fool UK.

Polymetal

Polymetal shares sank in February and March. The UK-listed gold miner has highly profitable assets in Russia and Kazakhstan. However, the firm has highlighted concerns about access to funding after Russia and Russian banks were hit by sanctions. Despite this, the Anglo-Russian miner is operating close to 2021 levels. It’s also benefiting from higher prices for its gold and silver.

Polymetal will remain a top-10 global gold producer and top-five global silver producer if operations aren’t impacted. Production fell 6% in Q1 but the company is still forecast to produce 1.7m ounces of gold this year. That’s the same as 2020, and with higher prices, it could even be a more profitable year for Polymetal.

I owned Polymetal stock before the war and recently doubled my holding as I think there’s a huge growth opportunity here. Based on last year’s earnings, it currently has a price-to-earnings (P/E) ratio of just 1.5. Despite this, I accept that there’s a lot of risk here including the possibility that Polymetal could be sanctioned if the war escalates further in Ukraine.

Ferrexpo

On the P/E metric, Ferrexpo looks even cheaper. The miner has a P/E ratio of just 1.2 after its share price tanked this year. The stock is down 69% over 12 months despite despite iron ore – Ferrexpo’s main product – increasing in value during 2022. Some 70% of Ferrexpo’s mines are in war-torn Ukraine and the firm is seemingly not operating at full capacity.

Ferrexpo recently announced that Q1 iron ore pellet production came to 2.7m tonnes. The figure is in line with the same period in 2021, but 11% below the previous quarter due to “operational and logistical constraints“. However, according to Liberum, the miner’s production levels suggested that it was operating at 70% of capacity during March. 

I’m looking to add Ferrexpo to my portfolio but the ongoing nature of the war presents a huge risk.

Petropavlovsk

Petropavlovsk is a London-based gold mining company with operations in Russia. However, I foresee more challenges for it than for Polymetal. The company is in a catch-22 situation with sanctioned Gazprombank demanding immediate repayment of approximately $201m due under its committed term facility agreement. Despite production increasing, the miner is also struggling to sell its gold, primarily because its main customer, Gazprombank, was sanctioned. These factors, coupled with $300m owed to Western investors, are making it increasingly likely that Petropavlovsk will default on its debts. I’m keeping Petropavlovsk on my watchlist because its trading at a fraction of its pre-war price, but for now, I’m giving this one a miss.

The post 3 distressed stocks with huge potential that I’m considering for my portfolio! appeared first on The Motley Fool UK.

Petropavlovsk’s board says it’s “not currently clear” whether such a sale would generate any return for shareholders. In finance-speak, that’s a serious warning that the shares could go to zero.

A Catch-22 situation

Western sanctions have been designed to stop trade between Russia and the outside world. This is causing serious problems for Petropavlovsk, which is based in the West but makes all of its money in Russia.

One big problem is that Russian bank Gazprombank (GPB) is on the UK and EU sanctions list. POG has nearly $300m of loan facilities with Gazprombank, but it’s unable to service these debts. The gold miner says it has not paid $10.6m which was due to GPB in March.

It gets worse. As part of its loan agreement, Petropavlovsk is contracted to sell all of its gold to GPB. This is also illegal under the sanctions, so the company isn’t able to sell product at the moment.

Petropavlovsk could sell its gold to the Russian Central Bank instead, if GPB agreed. But it still couldn’t make payments to GPB without breaching Western sanctions.

The final straw?

POG doesn’t just owe money in Russia. The company still owes more than $300m to Western investors on a $500m bond issued in 2016. This debt needs to be repaid or refinanced by November. Management says this is likely to be “very challenging”.

There’s one more complication too. According to Petropavlovsk, Russia is considering plans that would make it illegal for Russian companies to refuse to deal with sanctioned businesses. In other words, Petropavlovsk’s Russian mines might be forced to start paying GPB, or face criminal proceedings.

Unfortunately, this would mean that the UK parent company was breaching Western sanctions and could be prosecuted here.

Why the POG share price could hit zero

It looks to me as though Petropavlovsk is likely to default on its debt repayments both in Russia and with Western lenders.

I think the most likely result is that Petropavlovsk’s mines will be sold to a Russian buyer. They would then be able to operate normally within Russia, selling gold to Gazprombank and making loan repayments.

Western lenders might then struggle to get their cash back from such a sale, but they might find a way eventually.

In my view, the most likely losers are UK shareholders. Debt repayments always come before equity. In a distressed sale like this, I don’t think there’s likely to be any cash left for shareholders. That could see POG shares go to zero.

Of course, I might be wrong. At 3p, the Petropavlovsk share price is around 80% below the stock’s book value of 13p per share. If Petropavlovsk can find a solution that will allow the UK holding company to continue owning its Russian assets, the stock might be a bargain.

It’s possible, but I think it’s very unlikely. Buying POG shares today is a gamble, not an investment, in my view. For this reason, I’ll be staying away.

The post Why the Petropavlovsk (POG) share price may be heading for zero appeared first on The Motley Fool UK.

This surge of buying seems to be linked to renewed hopes of a peace settlement in Ukraine. However, I think there’s a second reason why Polymetal shares are flying. The former FTSE 100 firm is investigating changes that could leave its shareholders free to receive generous dividends from gold sales, despite sanctions.

Polymetal dividend could boost share price

For me, the big news today is the possibility that Polymetal’s dividend could still be saved. It operates mines in Russia and in Kazakhstan. The company is reported to be considering whether it could split the Kazakhstan operations into a new business.

The Kazakh mines are low-cost operations. According to Polymetal, they generated revenue of $984m and sold more than 550,000 ounces of gold equivalent last year. Average cash costs were just $643 per ounce, making these mines highly profitable.

My sums suggest that Polymetal’s Kazakh mines alone might be able to support a dividend of up to $1 per share. Based on a Polymetal share price of 320p, that could give a 24% dividend yield.

Too good to be true?

Of course, this is an extreme scenario and there are serious risks attached. There’s no guarantee that a split will go ahead. Polymetal could struggle to devise a plan that’s compatible with financial sanctions against Russia.

Its Kazakh mines might also need fresh investment to maintain productivity. That could reduce the amount of cash available for dividends in future years.

On balance, I think Polymetal’s share price could rise further if the company confirms plans to create a UK-listed Kazakhstan gold miner. But this is a risky sector of the market, with a lot of uncertainties.

Petropavlovsk: bargain buy?

Shares in Russian gold miner Petropavlovsk have also risen sharply today. This former FTSE 250 company’s operations are all in the far northeast of Russia. They’re a long way from the conflict in Ukraine, but the company is still being affected by sanctions.

On Friday, Petropavlovsk admitted that sanctions against key banking partner Gazprombank meant that it could no longer sell its gold to the bank or make interest payments on its loans.

The company is working to find a new way to sell its gold, but says that current restrictions on gold sales in Russia could make this “challenging”.

What I’d do today

I’m not going to buy any Russian gold mining shares for my portfolio. They’re too speculative for me. But if I was going to make a purchase, I would probably choose Polymetal, but I’d only invest money in this situation that I was prepared to lose.

Even before the crisis broke out, Petropavlovsk had a track record of operational and financial problems. By contrast, Polymetal was a profitable FTSE 100 company with a track record of big dividends.

I think that Polymetal’s Kazakhstan operations might allow UK shareholders to retain some value, even if the Russian operations are effectively lost to overseas investors.

The post Why the Polymetal & POG share prices have surged 30%+ today appeared first on The Motley Fool UK.

Following this performance, I have been taking a closer look at the company. As a contrarian value investor, I am always on the lookout for stocks that have lost a substantial amount of value in a short amount of time. Sometimes, hunting for bargains with these equities can lead to high returns, although this is far from guaranteed.

Petropavlovsk share price outlook

Unfortunately, the company has close ties with Russia. This has become a problem as the western world has shut off access to the region with sanctions.

Under the latest sanctions, Gazprombank has been sanctioned by the UK. This is a double gut punch for the firm. Not only does it mean some of its financing arrangements are now in jeopardy, but the bank is also the only buyer of its gold.

The Russian gold miner has a $200m term loan and a near $90m revolving credit facility with Gazprombank. On top of these facilities, Gazprombank acts as an off-taker of 100% of the group’s gold production.

Commenting on the sanctions, the firm said it may become “challenging” to find an alternative purchaser for its gold output.

A huge challenge

This could be a vast, potentially terminal issue for Petropavlovsk. If it cannot sell its gold output, it cannot generate revenue. If it cannot generate revenue, then the firm cannot pay its staff, meet interest obligations, return cash to investors or find new buyers.

That being said, this might not be the end of the road for the company. The Russian government has said it is willing to act as a buyer of last resort for some businesses in the country. It has also said that it might allow oil and gas payments to be made in gold. If the corporation can find a buyer for its gold in Russia or outside of the sanctions regime, then it might be able to move ahead. If it can sell the output at current prices, then the stock looks cheap.

As such, the firm might be able to generate some revenue. However, trying to determine how these changes will impact the business is very challenging.

The bottom line

With this being the case, I am not a buyer of the shares at current levels. While the Petropavlovsk share price might look cheap compared to its trading history, the company’s underlying fundamentals are pretty poor.

If the corporation cannot sell its output, then the stock could fall further in value. Even after recent declines, shares in the company do not look cheap to me, considering the firm’s highly uncertain outlook.

The post What’s next for the Petropavlovsk share price? appeared first on The Motley Fool UK.

The overall reason is obvious. It’s the Russian invasion of Ukraine. Investors will fear that if Petropavlovsk is sanctioned and delisted from the London Stock Exchange, they could lose their money.

Share trading in steel maker Evraz is suspended, and there’s a possibility the same will happen to other companies associated with Russia.

But what if Petropavlovsk is not sanctioned? What might happen to POG shares when the war is over? I wonder if I’m seeing a tantalising possibility here?

The latest POG share price dip comes on the back of the UK government having added Gazprombank to its list of sanctioned Russian banks. In a statement Friday, Petropavlovsk outlined its “substantial commercial and financial relationships” with Gazprombank and its subsidiaries.

Loans and gold sales

There’s a couple of problems here for Petropavlovsk, with one of them potentially pretty serious. Petropavlovsk has a $200m loan from the bank. There’s a $560,000 interest payment due Friday, which the company is now prohibited from making. And if that’s not enough to damage the Petropavlovsk share price, there’s more.

As part of the loan agreements, Gazprombank acts as the off-taker for 100% of Petropavlovsk’s gold production. And UK sanctions rules prohibit any further sales of gold to the bank. The company adds that “restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group’s gold output“.

Uncertain future

So what’s going to happen? Erm, well, we don’t know yet. The company is consulting with advisers, and a “further announcement will be made in due course“.

The risks of investing right now are clear. Petropavlovsk has confirmed that none of the companies in the group have been included in any sanctions against Russia. So that immediate worry is off the table, at least for now. But not being able to trade with its only gold customer… that’s a biggie.

But with big risk comes big opportunity, right? What if the company finds an alternative outlet for its gold? It’s not like nobody wants gold. What if POG should come out of the other end of the Ukraine war intact and with business as usual?

Tempting POG share price

Today, we’re looking at a Petropavlovsk share price of 1.6p. A year ago, it stood at 24p. Even if it gets back to half that level, I could be looking at a very nice profit.

Going for POG shares now would be very much against my Foolish long-term buy-and-hold strategy. I put my investing cash into quality shares I want to hold for decades, not short-term punts in a chase for quick profits. No, in my experience, such profits are usually outnumbered by quick losses.

But that doesn’t mean I can’t gamble a small amount on the POG share price, if it’s a sum I can afford to lose. I probably won’t, but it is tempting.

The post The Petropavlovsk (POG) share price just fell 15%. Time to buy? appeared first on The Motley Fool UK.

Evraz: suspended

Coal and steel group Evraz (LSE: EVR) said on Wednesday that it didn’t believe it should be affected by UK sanctions against Russia.

Even so, Evraz’s board then decided to cancel the interim dividend it had declared on 25 February.

On Thursday morning, things got really serious. The government added Roman Abramovich, the company’s largest shareholder, to the UK’s sanction list. Evraz shares were suspended from London trading.

I can’t emphasise enough how quickly things happened. I saw the news about Abramovich at 10.48 on a newspaper’s live news page. At 11am, the London Stock Exchange suspended Evraz shares.

What happens next? Evraz shareholders won’t receive the March dividend. Although UK shareholders will continue to own the stock, they can’t sell it.

Evraz shares might return to trading at some point. Personally, I think a more likely scenario is that the company’s LSE shares will be cancelled. This would probably leave Evraz shares listed on the Moscow Stock Exchange only.

If this happens, I’d guess that most UK shareholders would be unable to sell and would have to write off their investment.

Polymetal: LSE shares at risk?

Will gold miner Polymetal International (LSE: POLY) follow Evraz into suspension? 

The company said on Wednesday that it “doesn’t consider itself” to be owned or controlled by Russian shareholders. I looked at Polymetal’s ownership in more detail here.

Polymetal’s management say that sanctions have had a limited impact on its mining operations and sales. But they’ve warned that financial restrictions could affect future dividend payments and limit access to bank facilities.

The board declared a final dividend for 2021 on 2 March. They haven’t cancelled it yet. But Wednesday’s statement included a reminder that the board “retains the discretion” to withdraw its dividend recommendation ahead of the group’s AGM on 25 April.

What happens next? I think Polymetal is likely to cancel its dividend to preserve cash.

I also suspect the company will find it easier to operate normally under sanctions if it withdraws from western financial markets. For this reason, I expect Polymetal to cancel its LSE share listing at some point.

Will POG shares be suspended?

Gold miner Petropavlovsk (LSE: POG) said on Wednesday that events in Ukraine had not interrupted its operations in the Far East of Russia. However, the company admitted that some of its Russian shareholders “may be restricted” under sanction regulations.

Having taken legal advice, Petropavlovsk says that it does not believe its LSE shares should be affected by sanctions. This is because its Russian shareholders control less than 50% of the company’s stock.

What happens next? POG shares rose following yesterday’s news but are down today. If operations remain unaffected then this stock could be very cheap, on less than two times 2022 forecast earnings.

However, buying POG shares looks like a big gamble to me. This company sells its gold within Russia and might choose to list domestically. Tighter sanctions could force a share suspension or delisting. Petropavlovsk is too risky for me to buy.

The post Evraz, Polymetal, and POG – what next for these LSE shares? appeared first on The Motley Fool UK.

• Both firms released a statement yesterday that they did not expect to be targeted with sanctions and that operations continued uninterrupted
• For 2021, Polymetal’s gold production increased, while Petropavlovsk’s declined by 17.9%
• Polymetal has a lower trailing P/E ratio, suggesting it may be better value 

With the recent military situation between Russia and Ukraine, many firms operating in the region saw their share prices collapse in a matter of days. Two of these companies are Polymetal International (LSE:POLY) and Petropavlovsk (LSE:POG). In the past month, their share prices are down 85% and 75% respectively. Over the year, they have fallen 89% and 86%, currently trading at 140p and 2.95p. As both mine gold, I want to compare these businesses to see which is a better buy for my portfolio. Should I add to my current Polymetal holding, or buy Petropavlovsk shares instead? Let’s take a closer look.  

Recent results: Polymetal and Petropavlovsk share prices

Investors have rapidly sold shares in both companies out of fear that sanctions will target the firms. On 9 March 2022, however, each business released a statement outlining their shareholder structures. This sought to clarify that none of the major shareholders were linked to the Russian regime.

Consequently, the firms do not expect sanctions to target them under the Russia (Sanctions) (EU Exit) Regulations 2019. I find these statements reassuring given the current tensions.

In this sense, Polymetal may have the edge. The company was quick to point out that Kazakhstan operations actually generate 48% of its net earnings. Furthermore, its gold production increased from 1,637,000 ounces to 1,677,000 ounces between the 2020 and 2021 calendar years. Petropavlovsk, on the other hand, saw its gold production decline by 17.9% over the same time period. Despite this, both of these companies continue their gold mining and production uninterrupted.

Historical comparison: which is better value?

Polymetal’s revenue between the 2017 and 2021 calendar years grew from $1.61bn to $2.89bn. In addition, earnings per share (EPS) increased from ¢70 to ¢188. Investment in this company comes with risk, however, and the ongoing conflict in Ukraine may continue to negatively impact the Polymetal share price.

Meanwhile, Petropavlovsk’s revenue grew from $540m to $988m between the 2016 and 2020 calendar years. Furthermore, EPS declined from ¢1 to −¢1 over the same period. Both of these companies therefore exhibit consistent revenue growth, but Polymetal has a definite edge in terms of historical EPS. 

A comparison of trailing price-to-earnings (P/E) ratios may also indicate if one firm is better value than the other. Polymetal has a trailing P/E ratio of 4.6, while Petropavlovsk’s is 12.85. This would suggest that Polymetal is more of a bargain at current levels. It should be noted, however, that P/E ratios may lose their accuracy in light of recent share price collapses. 

Based on this analysis of earnings, revenue, and P/E ratios, it appears that Polymetal is better value. Given the rapidly evolving military situation in Ukraine, however, I think I’ll wait for more news on the conflict before increasing my current position. 

The post Polymetal (POLY) vs. Petropavlovsk (POG) – which share price is better value? appeared first on The Motley Fool UK.

• Investors are still concerned about the possibility of sanctions following the Russian invasion of Ukraine
• 2021 Q4 gold sales increased by 15%, year on year
• Total gold production for the 2021 calendar year declined by 18% compared to 2020

Operating exclusively in Russia, Petropavlovsk (LSE:POG) is a gold mining company. The firm has hit headlines over the past fortnight because of the ongoing military situation between Russia and Ukraine. Shares are currently trading at 3.45p, up nearly 50% today. With the POG share price down 90% in the past year, however, should I be adding this business to my portfolio? Let’s take a closer look.   

Recent activity and the POG share price

Given that Petropavlovsk exclusively operates in Russia, investors have been concerned about the company ever since the Russian invasion of Ukraine. In the last month, for instance, the share price fell 83%, while over the past week it is down 70%. This price movement has been troubling to watch. 

The main worry is that sanctions could target the firm. This would likely make trading very difficult. In addition, it would limit the client base to which it could sell its gold. Until now, however, no sanctions have targeted the business. 

On the other hand, we may soon see a ceasefire agreed. The situation could improve markedly, not only for the civilians, but also for the POG share price. In the meantime, however, the situation remains very uncertain and that is not attractive to me, a potential shareholder.

Company results

The firm recently released a production and sales report for the 2021 calendar year and Q4 2021. For Q4, total gold production increased 26% year on year, while own-mined gold production rose by 53%. Furthermore, gold sales for this period increased by 15%, year on year.

For the full year, however, the story is not as positive. Total gold production for 2021 was down 18% compared with 2020, although own-mined gold production grew by 1%. Also, gold sales for the 2021 calendar year fell by 20%.

In addition, the company’s cash balance in 2021 Q4 declined by about $10m since the previous quarter. On the flip side, the firm reduced its debt by $2m over the same time period.

With a trailing price-to-earnings (P/E) ratio of 12.85, this is lower than the 19.79 for Barrick Gold, a major competitor in the gold market. While this may indicate that Petropavlovsk is undervalued at the current share price, recent results aren’t particularly exciting. What’s more, the firm is subject to governance issues from $300m of transactions involving potential conflicts of interest.  

The company has been caught up in the investor exodus from firms operating in Russia. As the situation continues to be uncertain, I won’t be going anywhere near this business for the moment, regardless of the low P/E ratio. I will be waiting to gain a better understanding of where the Ukraine conflict is headed, while watching for further results. I prefer to give the current POG share price a miss. 

The post Is the Petropavlovsk (POG) share price now too cheap to miss? appeared first on The Motley Fool UK.

The process of shorting “involves an investor borrowing and selling shares they do not actually own in the hope of repurchasing them at a lower price at a later date”. Major investors like hedge funds have made fortunes by playing the market this way. But they don’t always get it right.

Exchange-traded fund (ETF) provider GraniteShares has just published its list of Britain’s most shorted stocks. The following UK shares occupy the top two positions of companies the big players are expecting to slump. Should I avoid them like the plague? Or, as a long-term investor, should I take a punt?

#1: Cineworld

Cinema operator Cineworld Group (LSE: CINE) has long been the London Stock Exchange’s most-shorted share. According to GraniteShares, a whopping 8.8% of its stock is currently held short. This doesn’t come as a massive surprise to me.

I used to own shares in Cineworld, but sold out at the height of the Covid-19 crisis in autumn 2020. I sold at a time when its cinemas remained shuttered and it had a hulking amount of debt on the balance sheet. At that time, a coronavirus vaccine was yet to be produced and uncertainty loomed as to when the business would reopen its doors.

The outlook has improved for Cineworld since then. Vaccines mean that theatres in its core markets have re-opened and strong trading in recent months shows how strongly the pull of the cinema remains in the post-coronavirus age. Sales in December came in at almost 90% of 2019 levels, latest financials showed. A string of blockbusters in 2022 and beyond could keep its cinemas packed out too.

Massive debts cast a shadow

That said, it’s still far too early to claim that Cineworld is out of the woods. My main concern is the enormous multi-billion-dollar debts that still sit on the company’s balance sheet.

At best this could hamper its ability to capitalise on the rebounding movie industry compared to other cinema chains. It might also affect the levels of investment Cineworld can make to take on Netflix and the other streaming giants. Major changes to the way studios release their films has also raised the stakes for cinema operators like this.

My main worry though is how Cineworld’s net debts could strangle the business if the coronavirus crisis worsens again. These stood at a mammoth $8.4bn as of last June. The sudden and severe recent impact of the Omicron variant — and the return of masks and social restrictions in many territories — underlines the ongoing risk to leisure shares like this.

Cineworld’s debts are set to grow further after a legal ruling related to its abandoned takeover of Canada’s Cineplex too.

#2: Petropavlovsk

Mining company Petropavlovsk (LSE: POG) is another UK share that’s in peril of falling in value. But unlike Cineworld, I think it might be worth close attention today. This is because I believe the outlook for gold prices remains pretty bright.

According to GraniteShares, 6.1% of Petropavlovsk’s shares are currently shorted, putting it second on the list of least-desirable UK shares. Gold stocks have come under extreme pressure in recent months as rocketing inflation across the globe has led to expectations of extreme central bank policy tightening.

When interest rates rise, the value of the US dollar increases, the prime currency in which the yellow metal is traded. This makes it less cost effective to buy the commodity and so demand for it drops, yanking prices lower in the process.

To illustrate the point, Petropavlovsk’s share price just closed at two-year lows below 15p after the Federal Reserve suggested it could raise rates sooner and more sharply than the market had been anticipating. The central bank’s appetite for serious action could grow too if key inflation gauges continue to show runaway price rises. Consumer prices in the States were recently rising at their fastest rate since 1982.

Could gold prices soar again?

Still, it’s my opinion that gold prices — and by extension Petropavlovsk’s share price — could stage a strong recovery. The safe-haven metal surged to its highest price on record above $2,070 per ounce in summer 2020 as Covid-19 bashed the world economy and investor confidence. As I mentioned above, another flare-up in the pandemic could happen at any stage and turbocharge demand for gold again.

There are other reasons why gold could soar in the near future as well. Recent military developments surrounding Ukraine helped the precious metal climb before those Federal Reserve comments prompted another about-turn. A full-scale invasion would likely push investor interest in flight-to-safety bullion much higher again. I’m also aware that Russian and Chinese expansionism could provide a long-term driver for gold values too.

Looking at Petropavlovsk more closely, I think the steady ramping up of its low-cost POX Hub could help profits (and by extension the share price) rise strongly over the long term as well.

At current prices, Cineworld’s share price commands a forward price-to-earnings (P/E) ratio of 16.9 times. I think this looks quite expensive, given the firm’s high debt levels and the huge risks it faces. But, by comparison, Petropavlovsk trades on a modest P/E multiple of 4.8 times.

I think this makes it highly-attractive from a risk-to-reward basis. Indeed, I’d happily buy the gold miner for my own UK shares portfolio today.

The post The 2 most hated UK shares! Should I buy them today? appeared first on The Motley Fool UK.