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Polymetal gold production rises

19 April 2017 07:08

Polymetal produced 280 Koz of gold equivalent (GE) in its first quarter of 2017 which is an 8% increase over the same period of 2016.

Management reported a strong performance at Omolon and contributions from newly acquired operations - Komar (Varvara) and Kapan added to positive momentum in the period.

Gold production for the quarter increased 18% over 2016 to 199 Koz, while, as expected, silver production decreased 15% due to the anticipated grade decline at Dukat.

Gold and silver sales in the period lagged production due to the traditional shutdown of Russian refineries in January, and a seasonal increase of concentrate in transit from Dukat to off-takers. This working capital accumulation would be expected to reverse by Q4 2017.

At Kyzyl, construction and pre-stripping activities were progressing in line with the project schedule. Kyzyl was on track to produce its first concentrate in Q3 2018.

The company reported that the introduction of a new Critical Risks Management system was complete, contributing to a material improvement in its safety performance in Q1 2017 with LTIFR of 0.12, a 37% decrease compared to the prior year period, and no fatalities.

Net debt increased from $1,329m as at 31 December 2016 to $1,506m as at 31 March 2017, due to the lag between production and sales, seasonal advance purchases of diesel fuel, and increased spending at Kyzyl.

As in prior years, free cash flow generation would be skewed towards the second half of the year, with input from Mayskoye concentrate sales and seasonal heap leach production at Svetloye.

The company reconfirmed its production guidance of 1.40 Moz of gold equivalent in FY2017 at total cash costs of $600-650/ GE oz and all-in sustaining cash costs of $775-825/GE oz.

The cost guidance remained contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group's Rouble-denominated operating costs.

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