25th Aug 2015 06:51
LONDON (Alliance News) - Russia-focused gold and silver miner Polymetal PLC on Tuesday said its pretax profit came in higher in the first half of 2015 after it managed to pull down its costs sufficiently to offset a fall in revenue caused by lower gold and silver prices.
Polymetal said its pretax profit for the six months to the end of June was USD157.7 million, up from USD141.4 million, as the group managed to cut costs successfully to offset its revenue falling to USD648.0 million from USD726.9 million. Polymetal said the revenue decline was caused by falls in gold and silver prices over the year, with its gold and silver volumes sales broadly flat year-on-year but its gold equivalent sold falling 4.0%.
The company said its total cash cost of production in the first half was down by 14% against the second half of 2014 and down 12% year-on-year, driven by a strong operating performance across its portfolio and the significant depreciation of the ruble against the US dollar, which offset inflation in Russia and a shift in the gold-silver price ratio.
All-in sustaining cash costs for the half were down by 16% year-on-year, primarily thanks to the total cash cost fall, but also by falls in capital expenditure at the group's operating mines.
Gold production in the half was down by 4.0%, while silver production rose 1.0%. Gold equivalent production fell 3.0%. Copper production plunged to almost nothing, due to the temporary shutdown of the group's flotation circuit at the Varvara project in 2014. The circuit only started operations again in June 2015.
The group has proposed an interim dividend of 8.0 US cents per share.
Polymetal reaffirmed its production guidance for the full year of 1.35 million ounces of gold equivalent and has pulled down its total cash cost guidance and all-in sustaining cost guidance on the back of the savings achieved in the first half and the anticipated continued weakness of the ruble.
"I am pleased to report robust cost performance and cash flow generation in these challenging market conditions," said Vitaly Nesis, Polymetal's chief executive. "With strong operational delivery and financial strength in the current environment, we remain focused on free cash flow generation and providing dividends while progressing steadily on the development of the next generation of assets, including the Kyzyl project."
By Sam Unsted; [email protected]; @SamUAtAlliance
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