Polymetal reiterates full-year 2016 production guidance

Revenues at the precious metals miner declined 8% to $593m over the six-month stretch to 30 June, as a result of planned lower output volumes, with gold and silver production down by 10% and 7% year-on-year, respectively.

Average realised gold and silver prices were flat when compared to the comparable period of 2015, the company said in a statement.

"I am pleased to report robust earnings for the first half of the year", said Vitaly Nesis, Group CEO, commenting on the results.

"With stronger production and cash flow generation expected for the second half, the Company is positioned to improve profitability and continue developing our growth pipeline while maintaining comfortable balance sheet structure".

So-called all-in sustaining cash costs decreased 4% to $754 per gold equivalent ounce, as total cash costs declined 7% year-on-year, which Polymetal put down to strong operational performances at its Dukat, Voro and Albazino mines.

The weakness in the Russian rouble also proved to be a favourable tailwind and was expected to lead to a reduction in full-year capital expenditures from $350m to $310m.

Operating profits in terms of adjusted EBITDA slipped 1% to $294m with margins at that level improving from 46% to 50%.

Underlying net earnings for the six-month period on the other hand improved from $117m to $124m.

Seasonal working capital demands, investments in Nezhdaninskoye and Kapan, and increased capital expenditure with the start of Kyzyl construction pushed net debt higher from $1.298bn to $1.436bn.

Nevertheless, stronger production and a traditional seasonal working capital reduction should lead to stronger free cash flow generation in the backhalf 2016, management said.

The company said it was on track to meet its 2016 production guidance of 1.26m oz of gold equivalent at a total cash cost of $525-575/GE oz and AISC of $700-750/GE oz..

As of 08:34 BST shares in Polymetal were down by 1.21% to 1,143p.