Polymetal to Announce Production Results for Q1 2016
Polymetal produced 260 Koz of gold equivalent in the first quarter of 2016, down 4% year-on-year, mainly due to an expected grade decline at our mature Okhotsk operations, a one off release of work in progress at Voro in the same period last year and processing of stockpiles at Varvara. All other operations had strong performances and Varvara is expected to improve with the purchase of the Komarovskoye deposit.Quarterly gold production was 169 Koz, down 9% year-on-year, while silver production was 7.2 Moz, up 6% year-on-year.
Sales at 243 Koz lagged production by 17 Koz of gold equivalent mostly due to seasonal factors, including New Year stoppages at refineries and annual contract re-negotiation with silver concentrate off-takers. This lag in sales is expected to be fully reversed during the year.
Net debt increased by 7% from USD 1,298 million at 31 December 2015 to USD 1,383 million at 31 March 2016, as a result of the seasonal sales lag in Q1 and increased spending on Kyzyl and equipment purchases which resulted in negative free cash flow in the quarter.
The Company reconfirms its production guidance of 1.23 Moz of gold equivalent in FY2016, along with its total cash cost guidance of US$ 525-575/ GE oz and all-in sustaining cash costs of US$ 700-750/GE oz. The cost guidance is contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group's Rouble-denominated operating costs.
Since the beginning of the year, Polymetal has entered into binding agreements for the acquisition of two operating assets - Kapan gold-polymetallic mine in the Republic of Armenia and Komarovskoye gold deposit located 187 km from the Varvara plant in Kazakhstan. Polymetal will provide updated production guidance incorporating these new acquisitions after the closing of the transactions, which are subject to certain regulatory approvals and are expected in Q2 and Q3 2016, respectively.