11 Feb 2020 14:06

Polyus plans capex of $700 mln-$750 mln for 2020, TCC at $400-$450/oz

MOSCOW. Feb 11 (Interfax) - PJSC Polyus , Russia's largest gold producer, is planning capital expenditures of $700 million to $750 million in 2020, the company said.

The company previously announced plans for capex of $550 million in 2020. The new estimate takes into account a number of new projects, Polyus said. The updated capex guidance reflects the list of new approved projects, including Verninskoye Mill expansion to 3.5 million tonnes per annum and further debottlenecking of the Natalka Mill. The feasibility study on the upgrade of BIO facilities at Olimpiada and engineering design works at Mill-5 at Blagodatnoye are also included in the estimate. Polyus plans to announce the final investment decision on these projects and provide a detailed overview in 2020. In addition, the updated capex guidance includes an increased exploration budget at the core assets and spending on IT as well as capex rollover from 2019.

Capex totaled $630 million in 2019, which was 14% less than in 2018. This decrease mainly reflects the lower capital expenditures at Natalka, which went fully online in 2018, as well as Olimpiada and Blagodatnoye, Polyus said.

The company has also revised its 2020 guidance for total cash cost (TCC) to $400-$450 per ounce from "less than $450." It expects a gradual increase of TCC from 2019's level, which mainly reflects inflationary factors in 2020.

The company's TCC averaged $365 per ounce in 2019, up 5% from 2018. This reflects a decline in average grades in ore processed at Olimpiada - 3.92 grams per tonne in 2019 compared to 4.10 grams per tonne in 2018 - and lower by-product credit from sales of antimony-rich flotation concentrate - $10 per ounce in 2019 compared to $21 per ounce in 2018. Inflation in consumables and diesel prices also negatively impacted the cost performance during the reporting period. These factors were partially offset by a higher share of lower cost flotation concentrate in total gold sold and modest local currency depreciation compared to the previous year.

Additionally, the company's Q4 2019 TCC was $341 per ounce.

All-in sustaining costs (AISC) were $576 per ounce in Q4 2019, averaging $594 for the year. Annual AISC was down by 2% owing to the decrease, reflecting the lower sustaining capital expenditures in 2019 compared to the previous year.

Polyus maintains its 2020 production guidance at around 2.8 million ounces.

Polyus is Russia's largest gold producer, mining hardrock and alluvial deposits in the Krasnoyarsk territory, Irkutsk, Magadan and Amur regions and Yakutia. Polyus Gold International Limited (PGIL), the beneficiary of which is Suleyman Kerimov's son Said, is the principle shareholder in PJSC Polyus with 78.2% of shares.