Peter Hambro Mining, the London-listed Russian gold producer, today dropped its final dividend payout to conserve cash after profits sank by over a quarter last year.

Chairman Peter Hambro and his deputy Pavel Maslovskiy saw their bonuses cut by 50% after pre-tax profits fell to $40.4 million (£27.7 million) from $55.2 million in 2007.

The shares lost 60p to 500p as the company, which hopes to re-merge with iron-ore group Aricom this week, said foreign exchange losses, higher wages and financing costs had eaten into profits.

But higher production and the soaring cost of gold — which is currently trading at about $869 a troy ounce — drove revenues up by 69% to $382 million.

Hambro is bullish about the gold price, predicting an average of $1000 per ounce for this year and he said that this year would be better: “We are encouraged by new gold findings at Pokrovskiy and we have found very high quality of gold at our new mine, Pioneer.”

The merger with Aricom, which was spun out of the group in 2003, is expected to be completed tomorrow.

It would give chairman Hambro access to Aricom's substantial cash pile and would see the enlarged group begin trading on the main market of the London Stock Exchange on Wednesday.