Polymetal gold production improves quarterly but drop year-on-year

Polymetal International announced its group production results for the third quarter and nine months to 30 September on Tuesday, with production of 372 Koz of gold equivalent in Q3 2016, an increase of 29% quarter-on-quarter.

The FTSE 100 firm said the increase in production was driven by seasonal de-stockpiling at Mayskoye, launch of the Svetloye heap leach at Okhotsk operations, and a strong performance at Albazino and Varvara.

Year-on-year GE production dropped 5%, however, as grades declined at Dukat and Omolon.

Polymetal said it remains on track to deliver 1.26 Moz gold equivalent production for the year, and reiterated its cost guidance for the full year, with TCC of $525-575/GE oz and AISC of $700-750/GE oz.

The company said it generated “significant” free cash flow in the third quarter, while net debt remained essentially unchanged at $1.47bn after it paid $38m of interim dividends and spent $100m to acquire Komarovskoye.

At Kyzyl, the board said construction activities are progressing on schedule, with the amended subsoil contract and with the program of work receiving the final approval of the Kazakh government.

The project remains on track to produce its first concentrate in Q3 2018.

At Svetloye, gold production commenced in August, delivering 15 Koz of gold during the quarter.

Svetloye is currently running at 100% of design capacity, Polymetal reported, and is set to become the “key driver” for sustaining production levels at the Okhotsk hub in the long term.

“Polymetal regrettably reports a fatal incident at Svetloye on 8 October,” the board said in its statement.

“The company will continue to implement additional measures to reinforce safety risk management procedures in order to fully eliminate fatalities at all of its operations.”

The company reconfirmed its production guidance for 2017 at 1.4 Moz of GE and for 2018 at 1.55 Moz of GE.

“We remain firmly on track to meet our annual production and cost guidance,” said group CEO Vitaly Nesis.

“The commissioning of Svetloye, acquisition of Komar and successful integration of Kapan, are important milestones in our medium-term growth plans.

“As originally expected, we delivered solid free cash flow for the quarter and remain strongly committed to shareholder returns.”