Polyus Gold International Limited
Trading update for 9 months ended 30 September 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 operating results for the 9 months ended 30 September 2013.
Highlights
- Gold production from continuing operations up by 6% year-on-year to 1,185 thousand ounces1 (nine months of 2012: 1,119 thousand ounces)
- Significant increase in gold production at Olimpiada (+9%) due to higher processing volumes and increased grade, Titimukhta (+12%) due to increased processing volumes and improvement in recovery rates, and Verninskoye (+84%) as a result of continuing ramp up
- On track to meet 2013 production target of between 1.59 and 1.68 million ounces
- Natalka development on schedule for launch of the full flowsheet in the summer 2014.
German Pikhoya, Chief Executive Officer of Polyus Gold, commented:
“Polyus Gold has delivered strong operating results despite the continued decline in the gold price during 2013. In the reporting period, our flagship mine, Olimpiada, set another gold production record, while gold output at Titimukhta and Verninskoye grew rapidly, and performance at Blagodatnoye and Kuranakh remained stable. With the launch of the Natalka mine in the pipeline, we are well positioned to capitalise on our excellent asset base.”
Health and safety update
The Company deeply regrets that it has to report two work-related fatalities in Q3 2013 as a result of a truck overturning while crossing a river during flooding. The accident took place at the alluvial operations in the Irkutsk region, thus bringing the number of work-related fatalities in the reporting period to three. An action plan based on the root-cause analysis is to be rolled out during Q4 2013 to prevent such accidents in the future.
Four lost time injuries (LTI’s) were reported in Q3 2013. In the first 9 months of 2013, the LTI frequency rate was 0.11, down from 0.16 in the first 9 months of 2012.
The Company continues to introduce measures to improve health and safety performance across its operations. A medical emergency response and minimum occupational health standard has been implemented across the Company’s operations. Development of a minimum standard for personal protective equipment and work uniform has been started and is expected to be completed by the end of 2013.
__________________________1 Excluding 17 thousand ounces of refined gold produced at divested Kazakhstan assets in January and February of 2013
Operating results
In the first 9 months of 2013, the Company produced 1,185 thousand ounces of refined gold from continuing operations, a 6% increase compared to 1,119 thousand ounces a year ago. The growth in total production was achieved as a result of higher gold production at Olimpiada, Titimukhta and Verninskoye. In Q3 2013, the Company produced 467 thousand ounces of refined gold, a 4% increase to the 450 thousand ounces produced in Q3 2012.
Polyus Gold moved 49.4 million cubic meters of rock in total during the first 9 months of 2013 which is in line with the same period of 2012. In Q3 2013, the Company’s mines moved 16.7 million cubic meters of rock in total, compared to 17.0 million cubic meters a year ago. The reduction was mainly due to lower mining volumes at Blagodatnoye and Kuranakh.
The average stripping ratio for the Company in the 9 months of 2013 decreased by 20% year-on-year to 1.82 m³/t (9 months of 2012: 2.27 m³/t). In Q3 2013, the average stripping ratio for the Company was 1.69 compared to 2.70 in Q3 2012.
A total of 22.3 million tonnes of ore was mined in the first 9 months of 2013, an increase of 21% compared to the 9 months of 2012 (18.5 million tonnes). The increase was mainly due to higher ore production at Olimpiada and Verninskoye. In Q3 2013, a total of 8.0 million tonnes of ore were mined, a 43% increase over the 5.6 million tonnes mined in Q3 2012 mainly due to increased mining at Verninskoye.
In the first 9 months of 2013, the Company processed 16.7 million tonnes of ore, which is 4% more than a year ago. This was due to increased processing at Blagodatnoye, Titimukhta and Verninskoye. In Q3 2013, the Company’s mines processed 5.8 million tonnes of ore compared to 5.6 million tonnes in Q3 2012.
|
Refined gold production
(in thousand ounces) |
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Olimpiada | 494.0 | 451.6 | 9% | 185.8 | 133.2 | 39% |
| Blagodatnoye | 284.0 | 290.3 | −2% | 89.2 | 116.4 | −23% |
| Titimukhta2 | 93.7 | 83.5 | 12% | 30.3 | 37.6 | −19% |
| Verninskoye | 54.9 | 29.8 | 84% | 22.8 | 11.9 | 92% |
| Alluvials | 154.0 | 161.0 | −4% | 103.3 | 117.4 | −12% |
| Kuranakh | 104.4 | 102.9 | 1% | 35.4 | 33.0 | 7% |
| Total refined gold production
from continuing operations3 | 1,185.0 | 1,119.1 | 6% | 466.8 | 449.5 | 4% |
2 Including 4.5 thousand ounces of refined gold produced in the 9 months of 2013 from ore purchased from the third party-owned Veduga mine in accordance with an off-take agreement
3 Calculation may not be precise due to rounding
|
Mining works and ore processing
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, mln m³ | 49.4 | 49.4 | 0% | 16.7 | 17.0 | −2% |
| Average stripping ratio, m³/tonne | 1.82 | 2.27 | −20% | 1.69 | 2.70 | −37% |
| Total ore mining, mln tonnes | 22.3 | 18.5 | 21% | 8.0 | 5.6 | 43% |
| Ore processed total, mln tonnes | 16.7 | 16.0 | 4% | 5.8 | 5.6 | 3% |
Operating results by mine
Olimpiada
In the first 9 months of 2013, Olimpiada produced 494 thousand ounces of refined gold, compared to 452 thousand ounces a year ago. The increase was due to higher processing volumes and increased gold grade in ore processed. The reduction in stripping and increase in ore mined was a result of the mine plan revision aimed at increasing efficiency and improving safety.
In Q3 2013, Olimpiada produced 186 thousand ounces of gold compared to 133 thousand ounces in Q3 2012.
As a result of an upgrade of the mine’s power supply infrastructure, including installation of a ring feed supply from the Company’s power station, no interruptions to the operation of the bio-oxidation facility have been registered in the first 9 months of 2013, despite regular disruptions in the external electricity supply. Automation of both Olimpiada mills, including the bio-oxidation facility, continued as planned.
|
Olimpiada
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 18,684 | 18,235 | 2% | 6,236 | 6,106 | 2% |
| including stripping | 15,540 | 15,647 | −1% | 5,081 | 5,512 | −8% |
| Stripping ratio (m³/t) | 1.83 | 2.24 | −18% | 1.63 | 3.44 | −53% |
| Ore mined, 000 tonnes | 8,490 | 6,985 | 22% | 3,120 | 1,604 | 94% |
| Average grade in ore mined (g/t) | 3.58 | 3.32 | 8% | 3.52 | 3.45 | 2% |
| Ore processed, 000 tonnes | 5,942 | 5,812 | 2% | 2,145 | 1,860 | 15% |
| Average grade in ore (g/t) | 3.56 | 3.44 | 3% | 3.61 | 3.39 | 6% |
| Recovery (%) | 73.6 | 73.4 | 0% | 72.9 | 68.3 | 7% |
| Refined gold production, 000 oz | 494.0 | 451.6 | 9% | 185.8 | 133.2 | 39% |
Blagodatnoye
Blagodatnoye produced 284 thousand ounces of gold in the first 9 months of 2013 (9 months of 2012: 290 thousand ounces).
In Q3 2013, the mine produced 89 thousand ounces of gold compared to 116 thousand ounces in Q3 2012. The decrease was mainly due to lower gold grades in the ore processed.
|
Blagodatnoye
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 9,925 | 11,518 | −14% | 3,366 | 3,850 | −13% |
| including stripping | 8,033 | 9,783 | −18% | 2,739 | 3,257 | −16% |
| Stripping ratio (m³/t) | 1.53 | 2.02 | −24% | 1.57 | 1.97 | −20% |
| Ore mined, 000 tonnes | 5,245 | 4,847 | 8% | 1,741 | 1,654 | 5% |
| Average grade in ore mined (g/t) | 2.07 | 2.08 | 0% | 2.04 | 2.08 | −2% |
| Ore processed, 000 tonnes | 5,074 | 4,848 | 5% | 1,700 | 1,734 | −2% |
| Average grade in ore (g/t) | 2.06 | 2.12 | −3% | 1.99 | 2.14 | −7% |
| Recovery (%) | 88.0 | 86.5 | 2% | 87.7 | 88.0 | 0% |
| Refined gold production, 000 oz | 284.0 | 290.3 | −2% | 89.2 | 116.4 | −23% |
Titimukhta
Gold production at Titimukhta increased by 12% year-on-year to 94 thousand ounces in the first 9 months of 2013, including 4.5 thousand ounces of refined gold produced from ore purchased from the third party-owned Veduga mine in accordance with an off-take agreement. The increase was mainly due to higher processing and improved recovery rates following the mill upgrade.
In Q3 2013, the mine produced 30 thousand ounces of gold compared to 38 thousand ounces in Q3 2012. The decrease was due to lower processing volumes and gold grade in the ore processed.
|
Titimukhta
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 7,656 | 7,678 | 0% | 2,637 | 2,544 | 4% |
| including stripping | 6,972 | 6,989 | 0% | 2,405 | 2,315 | 4% |
| Stripping ratio (m³/t) | 3.71 | 3.70 | 0% | 3.78 | 3.67 | 3% |
| Ore mined, 000 tonnes | 1,879 | 1,890 | −1% | 636 | 631 | 1% |
| Average grade in ore mined (g/t) | 2.04 | 2.05 | −1% | 2.02 | 2.03 | 0% |
| Ore processed, 000 tonnes | 1,719 | 1,582 | 9% | 511 | 661 | −23% |
| Average grade in ore (g/t) | 1.92 | 2.07 | −7% | 1.93 | 2.03 | −5% |
| Recovery (%) | 84.8 | 82.0 | 3% | 85.2 | 82.4 | 3% |
| Refined gold production, 000 oz | 93.7 | 83.5 | 12% | 30.3 | 37.6 | −19% |
Verninskoye
Verninskoye produced 55 thousand ounces of gold in the first 9 months of 2013, compared to 30 thousand ounces in the same period a year ago. The increase was due to higher processing volumes and an increase in gold grade.
In Q3 2013, the mine produced 23 thousand ounces of gold, compared to 12 thousand ounces in Q3 2012.
The mobile primary crusher and larger flotation concentrate pumps have been installed and are being fine-tuned. Completion of the mill automation is expected in December 2013.
|
Verninskoye
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 3,254 | 1,861 | 75% | 1,224 | 653 | 87% |
| including stripping | 1,912 | 1,169 | 64% | 678 | 376 | 81% |
| Stripping ratio (m³/t) | 0.53 | 0.63 | −16% | 0.46 | 0.50 | −8% |
| Ore mined, 000 tonnes | 3,623 | 1,868 | 94% | 1,472 | 748 | 97% |
| Average grade in ore mined (g/t) | 1.97 | 1.80 | 9% | 2.08 | 1.70 | 23% |
| Ore processed, 000 tonnes | 1,069 | 944 | 13% | 416 | 377 | 10% |
| Average grade in ore (g/t) | 2.51 | 2.29 | 10% | 2.64 | 2.26 | 17% |
| Recovery (%) | 67.5 | 68.9 | −2% | 71.3 | 53.9 | 33% |
| Refined gold production, 000 oz | 54.9 | 29.8 | 84% | 22.8 | 11.9 | 92% |
Alluvials (Irkutsk region)
In the reporting period, the Company’s alluvial operations produced 154 thousand ounces of gold, compared to 161 thousand a year ago.
In Q3 2013, the Company’s alluvial operations produced 103 thousand ounces of gold compared to 117 thousand ounces in Q3 2012.
|
Alluvials
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Sands washed (thousand m³) | 8,155 | 18,133 | 0% | 5,283 | 5,597 | −6% |
| Average grade (g/m³) | 0.66 | 0.70 | −6% | 0.63 | 0.69 | −9% |
| Refined gold production, 000 oz | 154.0 | 161.0 | −4% | 103.3 | 117.4 | −12% |
Kuranakh
Kuranakh produced 104 thousand ounces of gold in the first 9 months of 2013 compared to 103 thousand ounces a year ago. A slight increase in gold output was due to higher processing volumes.
In Q3 2013, the mine produced 35 thousand ounces of gold, a 7% increase over Q3 2012 (33 thousand ounces).
|
Kuranakh
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 9,885 | 10,137 | −2% | 3,192 | 3,802 | −16% |
| including stripping | 8,170 | 8,451 | −3% | 2,630 | 3,266 | −19% |
| Stripping ratio (m³/t) | 2.64 | 2.90 | −9% | 2.55 | 3.48 | −27% |
| Ore mined, 000 tonnes | 3,092 | 2,916 | 6% | 1,030 | 938 | 10% |
| Average grade in ore mined (g/t) | 1.37 | 1.34 | 2% | 1.41 | 1.34 | 5% |
| Ore processed, 000 tonnes | 2,857 | 2,794 | 2% | 966 | 958 | 1% |
| Average grade in ore (g/t) | 1.36 | 1.34 | 1% | 1.37 | 1.35 | 2% |
| Recovery (%) | 83.2 | 86.5 | −4% | 84.1 | 86.3 | −3% |
| Refined gold production, 000 oz | 104.4 | 102.9 | 1% | 35.4 | 33.0 | 7% |
Development projects
Natalka
Natalka remains on schedule for the launch of the full flowsheet in the summer of 2014. The Company is considering an option to start production at the mine in the winter of 2014 using a partial flowsheet and the already installed pilot plant.
In the first 9 months of 2013, 2.4 million tonnes of ore were mined for stock-piling, including 532 thousand tonnes at 2.0 g/t, 959 thousand tonnes of ore at 1.0 g/t and 943 thousand tonnes at 0.6 g/t. In Q3 2013, 1.0 million tonnes of ore were mined, including 291 thousand tonnes of high grade ore.
Assembling of the SAG and ball mills has been largely completed. Installation of metal frames and wall panels continues at the gravity and flotation sections of the plant and in the gold cash room.
Earthworks at the site of the № 1 power substation and construction of foundations for the 110 KV power line are in progress.
Dump trucks, loaders, crusher and the equipment for the reagent preparation, desorption, carbon recovery and cyanidation sections have been delivered onsite.
Construction staff headcount onsite reached 3,000 personnel. A temporary construction camp has been commissioned and populated. Construction of 2 buildings at the permanent camp is underway and is expected to be completed in December 2013.
|
Natalka
|
9 months 2013
9 months 2012
Change
Q3 2013
Q3 2012
Change
| |||||
|---|---|---|---|---|---|---|
| Total rock moved, 000 m³ | 3,585 | - | 1,526 | - | ||
| including stripping | 2,677 | - | 1,150 | - | ||
| Stripping ratio (m³/t) | 1.10 | - | 1.14 | - | ||
| Ore mined, 000 tonnes | 2,434 | - | 1,007 | - | ||
| Average grade in ore mined (g/t) | 1.07 | - | 1.13 | - | ||
Financial update
In the first 9 months of 2013, the Company sold 1,174 thousand ounces of gold from continuing operations, a 5% increase compared to 1,114 thousand ounces a year ago. In Q3 2013, the Company sold 520 thousand ounces of gold from continuing operations (Q3 2012: 428 thousand ounces).
The Company estimates its gold sales from continuing operations for the first 9 months of 2013 will be approximately USD 1,680 million, which is 9% less than in the same period last year (USD 1,846 million). The estimated realised gold price was USD 1,431 per ounce, a 15% decrease compared to USD 1,657 in the first 9 months of 2012. In Q3 2013, the estimated realised gold price was USD 1,328 per ounce, a 25% decrease year-on-year (Q3 2012: USD 1,664).
At 30 September 2013, the Company’s cash position was USD 1,201 million. The Company’s estimated net debt position was USD 122 million compared to net cash position of USD 642 million a year ago.
Corporate update
On 4 October 2013, Mr. Ilya Yuzhanov and Mr. Edward Dowling were appointed to the Board as independent non-executive Directors. Mr. Ilya Yuzhanov was elected Chairman of the Board. Additionally, Mr. Yuzhanov was appointed Chairman of the Nominations Committee, Mr. Edward Dowling was appointed to the Health, Safety, Environment and Community Committee and the Risk Committee, and Lord Clanwilliam stood down from the Risk Committee.
2013 Outlook
Gold production guidance for 2013 is reconfirmed at between 1.59 and 1.68 million ounces.
Conference call information
Polyus Gold will host an analyst conference call today at 2:00 pm London time to present and discuss the 9 months of 2013 operating results.
TTo join the conference call, please dial:
| UK toll free | 0808 237 0033 |
| UK International | +44 (0) 20 3139 4845 |
| USA toll free | 1866 928 6048 |
| Russia toll free | 810 800 206 85011 |
A live webcast of the presentation will be available at:
https://arkadin-event.webex.com/arkadin-event/onstage/g.php?t=a&d=701971169
Event passcode: 642881
A replay of the conference call will be available from 6 pm London time on 18 October 2013, 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 |
Access number: 642881#
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.