15th Apr 2016 06:22
LONDON (Alliance News) - Polymetal International PLC Friday said production slipped in the first quarter of 2015 due to declining grades whilst sales lagged behind due to seasonal factors, but the miner reiterated its full-year production guidance for 2016.
The Russian gold miner reported production of 260,000 ounces of gold equivalent in the first quarter of 2016, down 4% from a year earlier due to lower grades, as expected, at the mature Okhotsk operations, lower-grade stockpiles at Varvara, and a "one-off release of work in progress" at Voro, it said.
Sales also lagged behind production, amounting to 243,000 ounces of gold equivalent in the quarter. The 17,000 ounces that were not sold will be added to the company's stockpile, but Polymetal said the lag is expected to be "fully reversed" during the year.
The reason sales came in lower than production was mostly due to "seasonal factors", the company said, including new year stoppages and annual contract renegotiation with silver off-take customers.
Still, Polymetal reaffirmed its plan to produce 1.23 million ounces of gold equivalent in 2016, adding its total cash cost should still be in the region of USD525 to USD575 per ounce and all-in sustaining costs of USD700 to USD750 per ounce. However, Polymetal said the cash cost guidance is reliant on the exchange rate between the dollar and the Russian rouble. Spot gold stood at USD1,231.30 per ounce.
In 2015, Polymetal produced 1.27 million ounces of gold equivalent, which was down 3% from the previous year, and sales were also behind production during the year.
Net debt has increased 7% since the end of 2015 to sit at USD1.38 billion at the end of March, partly caused by the seasonal sales lag and because of increased spending on Kyzyl and equipment purchases which resulted in negative free cash flow in the quarter.
The Kyzyl project development is on track with all mining equipment is on site and all major contracts for processing equipment signed during the quarter, the miner said.
Polymetal said it will provide an updated production guidance soon to take into account its recent acquisitions of the Kapan gold-polymetallic mine in Armenia and the Komarovskoye gold deposit in Kazakhstan, which were purchased in the first quarter.
By Joshua Warner; [email protected]; @JoshAlliance
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