18th May 2016 07:23
LONDON (Alliance News) - Polymetal International PLC Wednesday said it has increased its production guidance for the current year after taking its two new mines into account as the miner expects to produce an extra 30,000 ounces than originally planned.
The new guidance for this year was part of a wider target which aims to increase production by 2020 by over 40% from current production levels.
Polymetal said it expects to produce a total of 1.26 million ounces of gold in 2016, rising from its previous guidance of 1.23 million ounces. Polymetal said it was updating its guidance back in April in order to take its two new assets into account.
Polymetal's production was significantly lower in the first quarter of 2016 compared to the final quarter of last year and also down from the same period a year earlier, down 4% from the previous year but more notably production in the first quarter was more than 16% lower than the final quarter of 2015.
Although guidance has now been increased to take the new Kapan asset in Armenia and the Komarovskoye asset in Kazakhstan which will be secured in the third quarter of this year, the new guidance is still lower than 2015 production of 1.27 million ounces.
Based on the 260,000 ounces of gold equivalent produced in the first quarter, Polymetal would produce 1.04 million ounces in 2016, implying that production is expected to increase in the remaining three quarters of this year if Polymetal is to deliver its guidance.
That is likely to come from its new assets and potentially from the Kyzyl development project.
Polymetal agreed to snap up the Kapan gold mine in Armenia from Dundee Precious Metals Inc back in early March, paying USD25.0 million, comprised of USD10.0 million in cash and USD15.0 million in Polymetal shares.
The deal concerning the Komarovskoye gold deposit will see Polymetal pay USD100.0 million in cash to purchase the deposit from Kazzinc Ltd, a Glencore PLC-owned business.
Polymetal also adjusted its longer-term guidance covering the next four years. The miner said it expects to produce 1.4 million ounces in 2017, 1.55 million ounces in 2018, 1.7 million ounces in 2019 and 1.8 million ounces in 2020.
Based on the new production gudance, Polymetal is expecting production to fall by 0.8% this year, before rising 11% per annum in 2017 and 2018 and then increasing 9.7% in 2019 followed by another 5.9% year-on-year rise in 2020.
If delivered, production in 2020 should be running around 41% higher than what was produced in 2015.
Polymetal shares were down 0.9% to 804.50 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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