19th Jul 2016 06:54
LONDON (Alliance News) - Polymetal International PLC on Tuesday said production fell in the first half of the year as had been expected, but the company is still on track to deliver its full year guidance through a significant improvement in production and cashflow in the second half of the year.
The Russian miner said gold equivalent production was 8.0% lower in the first half of 2016 at 522,000 ounces compared to the 568,000 ounces produced a year ago. That was the result of gold production falling 10% year-on-year whilst silver production was down 7.0%.
Polymetal said first half production was in line with its plan for the year, adding the second half should be "materially stronger" due to seasonal de-stocking of concentrate, the start up of the Svetloye heap leach at Okhotsk, and stronger grades at Dukat and Okhotsk, all in Russia.
The miner said it generated free cashflow in the second quarter of 2016 and again expects that to be "significantly stronger" in the second half because of the anticipated rise in production and the traditional drawdown of seasonal working capital.
The miner still expects to produce 1.26 million ounces of gold equivalent this year, meaning production needs to come in at around 738,000 ounces in the second half - more than 41% higher than what was produced in the first half.
The guidance for the year has already been raised slightly by the company, but Polymetal is still not expecting to produce more than the 1.27 million ounces made in 2015.
Polymetal also reiterated its full-year cost guidance, estimating total cash costs of USD525 to USD575 per gold equivalent ounce and an all-in sustaining cash cost of USD700 to USD750 per ounce. Spot gold was trading at USD1,330.0 per ounce on Tuesday morning.
The Kyzyl development project is undergoing full-scale construction and is still expected to begin producing its first concentrate by the third quarter of 2018. The acquisition of Komarovskoye is expected to close in the third quarter of this year following the deal to snap up the new Kapan asset in Armenia and the Komarovskoye mine in Kazakhstan earlier this year.
Polymetal agreed to snap up the Kapan gold mine in Armenia from Dundee Precious Metals Inc back in early March, paying USD25.0 million. The deal concerning the Komarovskoye gold deposit saw Polymetal pay USD100.0 million in cash to purchase the deposit from Kazzinc Ltd, a Glencore PLC-owned business.
By Joshua Warner; [email protected]; @JoshAlliance
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