Stocks & stats Back
En Ru
2,160 koz of gold
produced in 2017 (2016: 1,968 koz)
364 $/oz
Total cash cost per ounce sold
621 $/oz
All-in sustaining cash cost
Ore processed, kt
26,445 2016
28,663 2017
Adj. EBITDA $ mln
1,536 2016
1,702 2017
5 5 operating assets: 4 hard-rock mines and alluvial operations
2,721 $ mln
Total Revenue in 2017
0.10
Lost time injury frequency rate (LTIFR) per 200k hours worked in 2017 (2016: 0.13)
Factsheet

For immediate release

Polyus Gold International Limited

Financial Results for the Full Year 2013

Polyus Gold International Limited (LSE - PGIL, OTC (US) - PLZLY, “PGIL”, “Polyus Gold” or the “Company”), the largest gold producer in Russia, today releases its audited financial results for the full year 2013.

Highlights

  • Gold sales down by 14% to USD 2.3 billion, reflecting a 17% fall in the gold price, but partly offset by a 4% increase in gold sold (FY 2012: USD 2.6 billion)
  • Total cash costs (TCC) per oz sold1 rose by just 1% to USD 707 per oz following improved cost control throughout the operations and the appreciation of the US dollar against the Russian rouble by 2%, which helped to offset cost inflation
  • Following the significant fall in the gold price in 2013 an impairment of USD 472 million was recognised, primarily related to the Nezhdaninskoye (USD 248 million) and Degdekanskoye (USD 48 million) deposits at the exploration stage and the Kuranakh mine (USD 138 million)
  • Adjusted operating profit2 of USD 694 million, compared to USD 1,211 million in 2012
  • Adjusted EBITDA3 of USD 910 million (2012: USD 1,303 million), and Adjusted EBITDA margin of 39% (2012: 49%)
  • Adjusted profit for the year from continuing operations 4decreased 42% to USD 564 million (FY 2012: USD 978 million)
  • Adjusted earnings per share5 of 17 US cents (FY 2012: 32 US cents)
  • Profit for the year from continuing operations decreased to USD 143 million, compared to USD 965 million in 2012
  • Net debt position of USD 349 million compared with a net cash position of USD 680 million at the end of 2012.

   __________________________

1 Total cash costs per oz sold is total cash costs divided by the ounces of gold sold during the period. For more details refer to page 19 of the Financial review.
2Adjusted operating profit represents Operating profit, before impairment charges.
3Adjusted EBITDA is defined by the Group as profit before finance costs, income tax, income/(losses) from investments, depreciation, amortisation and finance cost, and is further adjusted for certain items, being mainly impairments. For more details refer to page 17 of the Financial review.
4Adjusted profit for the year from continuing operations represents profit from continuing operations before impairment charges.
5Adjusted earnings per share represents adjusted profit from continuing operations attributable to the shareholders of the Company divided by the weighted average number of ordinary shares.

Comparative financial results for the years ended 31 December 2013 and 2012

 
USD’000, unless specified otherwise
Year ended 31 December
 
2013
2012
% change
 
y-o-y
Gold production (k oz) 1,649 1,569 5
Gold sold (k oz) 1,631 1,571 4
Average realised gold price (USD per oz) 1,385 1,666 (17)
Total revenue 2,328,915 2,679,913 (13)
Profit for the year from continuing operations 143,001 965,104 (85)
Weighted average number of ordinary shares (‘000s)6 3,032,150 2,950,916 3
Earnings per share – basic and diluted (US Cents) 4 31 (87)
Adjusted operating profit 693,528 1,210,527 (43)
Adjusted operating profit margin (%) 30 145
Adjusted profit for the year from continuing operations 563,791 977,966 (42)
Adjusted earnings per share – basic and diluted (US Cents) 17 32 (47)
Net cash flow from operations 422,339 991,769 (57)
Capital expenditures 1,439,691 808,886 78
Adjusted EBITDA 910,076 1,303,131 (30)
Adjusted EBITDA margin (%) 39 49
Total cash cost per oz sold (USD per oz) 707 697
All-in-sustaining costs per oz sold (USD per oz)7 1,002 1,007 (1)
Net (debt)/cash (349,096) 679,871 -

Adjustments for impairment charges for the years ended 31 December 2013 and 2012

 
All amounts are in USD ‘000
Year ended 31 December 2013
 
Reported
Impairment
Adjusted
Year ended 31 December 2012
 
Reported
Impairment
Adjusted
Operating profit/(loss) for the year 221,871 (471,657) 693,528 1,195,103 (15,424) 1,210,527
Add/(less):
Finance costs (13,878) - (13,878) (31,573) - (31,573)
Income from investments, net 21,348 - 21,348 35,960 - 35,960
Foreign exchange gain 4,348 - 4,348 12,026 - 12,026
Current income tax expense
(131,964) - (131,964) (246,193) -
(246,193)
Deferred income tax gain/ (expense) 41,276 50,867 (9,591) (219) 2,562 (2,781)
Profit/(loss) for the year from continuing operations 143,001 (420,790) 563,791 965,104 (12,862) 977,966
Attributable to shareholders of the Company 133,860 394,275
528,135
922,066 12,237
934,303
Weighted average number of ordinary shares ('000s) 3,032,150 - 3,032,150 2,950,916 - 2,950,916
Earnings per share from continuing operations – basic and diluted (US Cents) 4 - 17 31 - 32
   __________________________

6 The weighted average number of shares changed following the sale of treasury shares on 10 May 2012, which resulted in the increase in the number of shares outstanding and therefore the average number for the year.
7 AISC measures costs related to sustaining production and includes TCC, SG&A expenses, sustaining CAPEX and other cash costs attributable to current sales. For more details refer to page 20 of the Financial review.

Operational highlights

In 2013, the Company produced 1,649 thousand ounces of refined gold from continuing operations, a 5% increase compared to 1,569 thousand ounces a year ago. The growth in total production was achieved as a result of higher gold output at Verninskoye, Olimpiada and Titimukhta.

In December 2013, in light of the challenging market conditions, the Company decided to re-sequence the development of the Natalka project and delay the launch of the plant to summer 2015 from the previously announced target of summer 2014.

Although it was operationally possible to commence gold production at the Natalka mine as previously planned, the Company deems it prudent to postpone its commissioning given the recent substantial decline in gold prices. The decision to re-sequence the construction schedule will enable the Company to better balance the capital requirements of Natalka with the need to maintain a robust funding position in the uncertain macro environment.

In addition to a deferral of the project’s residual capital expenditures (“CAPEX”), the re-sequencing will allow the Company the opportunity to identify further cost and operational efficiencies, including the optimisation of capital and operating expenditure, improvements to the project design and the potential implementation of the photometric separation technology (optical sorting) as a way to pre-concentrate the ore.

A detailed plan of project improvements is expected to be finalised by the middle of 2014. The plan will benefit from the findings of an additional project assessment review initiated in early January 2014. In the meantime, construction works are continuing onsite, albeit at a slower pace than previously planned. Mining works which commenced in 2013 in accordance with the license terms also continue.

Capital expenditures

In 2013, the Company’s CAPEX amounted to USD 1.4 billion. The majority of the funds were invested in the construction of the Natalka project and the optimisation of production at the Krasnoyarsk business unit. CAPEX related to Verninskoye decreased 52% as the mine reached its designed capacity.

 
USD’000
Year ended 31 December
 
2013
2012
% change
 
y-o-y
Mine under development (Natalka project) 1,023,818 305,525 235
Capital construction-in-progress, including 383,221 463,119 (17)
   Krasnoyarsk BU 209,813 100,733 108
   Capital construction BU 68,229 133,917 (49)
   Irkutsk ore BU 53,253 111,504 (52)
   Irkutsk alluvial BU 18,386 23,501 (22)
   Yakutia Kuranakh BU 15,673 26,684 (41)
   Other 17,867 66,780 (73)
Exploration and evaluation assets 32,652 40,242 (19)
Capital expenditures, continuing operations 1,439,691 808,886 78
Discontinued operations, including - 41,833 (100)
   Capital construction-in-progress - 36,831 (100)
   Exploration and evaluation assets - 5,002 (100)
Capital expenditures, total 1,439,691 850,719 69

Total cash costs per ounce sold

In 2013, the TCC per ounce of gold sold increased by 1%. The key driver was an increase in the cost of gold sales partly offset by the appreciation of the US dollar against the Russian rouble.

 
Total cash cost per ounce sold by mine, USD/oz
Year ended 31 December
 
2013
2012
% change
 
y-o-y
Olimpiada 666 685 (3)
Blagodatnoye 479 463 16
Titimukhta 920 869 6
Verninskoye 869 789 9
Alluvials 880 925 (5)
Kuranakh 1,085 993 9
Total cash cost per ounce sold 707 697 1

At Olimpiada, the 3% decrease in TCC per ounce of gold sold was a result of an improvement in average grade and recovery rates. At Blagodatnoye, the increase in TCC per ounce of gold sold resulted from a lower grade of ore processed partially offset by improved recovery rates. At Titimukhta, the increase in TCC per ounce of gold sold was a result of a 12% decrease in gold grade partially offset by an improvement in the recovery rate following installation of a new thickener and the expansion of the hydro-metallurgical section. At Verninskoye, the 9% increase in TCC per ounce of gold sold came as a result of a combination of an increase in consumption of various mining and processing materials amid significantly higher mining volumes, growth in the number of personnel and increased prices for goods purchased. At the alluvial operations, the 5% decrease in TCC per ounce of gold sold was due to ongoing optimisation of the mining plan and a decrease in labour costs. At Kuranakh, a 9% increase in TCC per ounce of gold sold was primarily a result of the reduced recovery rate due to an abnormal zinc content in the ore fed to the plant and an increase in cash operating costs.

All-in sustaining cash costs per ounce sold

In June 2013, the World Gold Council (WGC) published a guidance note on the all-in sustaining costs (AISC) metric for gold mining companies. It is expected that the adoption of AISC by precious metal producers may help to provide investors, governments, local communities and other stakeholders with better visibility into the true cost of producing gold.

AISC measures costs related to sustaining production 8 . We calculate it in accordance with the recommendation of the WGC including TCC, SG&A expenses, sustaining CAPEX and other cash costs attributable to current sales.

In 2013, AISC for the Company was USD 1,002 per oz sold, which is 1% lower than in 2012 (USD 1,007 per oz). The main reasons for the decrease are explained by a 2% fall in the Russian rouble against the US dollar, 61% lower stripping activity asset additions and a 12% reduction in SG&A expenses partly offset by overall inflation in the cost of sales and a 31% increase in sustaining CAPEX.

   __________________________

8 Non-sustaining costs are those costs incurred at new operations and costs related to ‘major projects’ at existing operations where these projects will materially increase production. Companies need to publicly disclose those operations and ‘major projects’ which are considered non-sustaining. All other costs related to existing operations are considered sustaining.


 
USD’000,
unless otherwise indicated
Year ended 31 December
 
2013
2012
% change
 
y-o-y
Total cash costs 1,153,266 1,095,054 5
SG&A less SG&A depreciation 221,309 214,157 3
Research expenses 2,499 2,079 20
Stripping activity asset additions 37,692 96,623 (61)
Sustaining capital expenditures 210,236 159,950 31
Unwinding of discounts on decommissioning liabilities 5,442 9,003 (40)
Adding back expenses excluded from TCC 2,592 4,509 (43)
All-in sustaining cash costs 1,633,036 1,581,375 3
Gold sales (K oz) 1,631 1,571 4
All-in sustaining cash costs per oz sold (USD per oz) 1,002 1,007 (1)

Corporate update

On 27 February 2014, the Company received notice from its Chief Financial Officer, Mr. Oleg Ignatov, that he wishes to resign from his position as CFO in order to pursue other activities. As of 27 March 2014, Mr. Mikhail Stiskin, who is currently Deputy CEO for Strategy and Corporate Development, will be appointed Chief Financial Officer of Polyus Gold.

2014 Outlook

The Company’s guidance for refined gold production for 2014 is set between 1.58 and 1.65 million ounces.

The possible small decrease in total gold production is expected to be driven by our planned reduction in mining works at the highest cost alluvial deposits due to the current gold environment, and lower ore grades at Blagodatnoye and Kuranakh.

Conference call information

Polyus Gold will host an analyst conference call on 26 March at 12.00 (noon) London time to present and discuss the financial results for full year 2013.

To join the conference call, please dial:

UK toll free 0808 237 0033 
UK International +44 (0) 20 3426 2845 
USA toll free  1877 841 4558 
Russia toll free 8108 00206 85011

A live webcast of the presentation will be available at:

https://arkadin-event.webex.com/arkadin-event/onstage/g.php?t=a&d=703064913

Event passcode: 646785

A replay of the conference call will be available from 4 pm London time on 26 March 2014, for the duration of 7 days.

To access the replay, please dial:

UK toll free: 0808 237 0026
UK International: +44 (0) 20 3426 2807
US toll free: 18665358030

Access number: 646785#

Enquiries:

Investor contact
Mikhail Seleznev, Director Investor Relations and Capital Markets
+44 (0) 203 585 35 37 ir@polyusgold.com

Media contact
Sergey Lavrinenko, Director Communications
+44 (0) 203 585 35 37 lavrinenkosn@polyusgold.com

Forward looking statements

This announcement may contain “forward-looking statements” concerning PGIL. Generally, the words “will”, “may”, “should”, “could”, “would”, “can”, “continue”, “opportunity”, “believes”, “expects”, “intends”, “anticipates”, “estimates” or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of PGIL’s operations. Many of these risks and uncertainties relate to factors that are beyond PGIL’s ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. PGIL assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.