Even the Russians are feeling the bite of a bitter gold market. The country’s biggest gold producer Polyus Gold (LSE: POLG; US-OTC: OPYGY) reported that revenues were off 9% for the quarter, compared to the same period last year.
The culprit was the usual suspect: lower gold prices. The weakness in the yellow metal meant revenues were down to US$1.7 billion over the first nine months of the year.
But the price Polyus fetched for its gold was down 15% year-over-year to US$1,431 per troy oz. — so a 9% decrease in revenue doesn’t look all that bad.
The company mitigated the price drop with a 6% increase in production. Over the first three quarters Polyus turned out 1.1 million oz. gold, and reconfirmed its previous guidance of between 1.59 million and 1.68 million oz. for the year.
The company sold 520,000 oz. gold in the third quarter and produced 467,000 oz. It did not disclose its cash costs.
The results were in line with BMO Capital Markets analyst David Haughton. Haughton was looking for production for the year to come in at 1.6 million oz. gold, at cash costs of US$701 per oz.
BMO rates Polyus as “market perform”. In London on Oct. 18, the company’s stock was trading for £1.98 per share.
The increase in production came on the back of its three Russian mines: Olimpiada, Titimukhta and Verninskoye.
Olimpiada, which recently had its power-supply infrastructure upgraded and its mills automated, produced 186,000 oz. gold. At Blagodatnoye production came in at 89,000 oz., and at Verninskoye the company is working to finish mill automation by year-end.
At its emerging flagship mine, Natalka, the company said development is on schedule and that the mine should reach commercial production in mid-2014.
The mine is expected to process 10 million tonnes of ore per year and already has a pilot plant installed, which could produce gold in the coming months.
The company is spending $1.2 billion this year on Natalka’s construction.
Polyus finished the third quarter with US$1.2 billion in cash and has an estimated US$122-million net debt.
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