Fitch affirms Polyus Gold at 'BBB-', outlook stable
MOSCOW. July 4 (Interfax) - Fitch Ratings has affirmed UK-based Polyus Gold International Limited's (Polyus Gold) Long-term Issuer Default Rating (IDR) at 'BBB-', the agency said in a statement.
The Outlook is Stable.
The foreign currency Long-term IDR was affirmed at 'BBB-', Outlook Stable, and foreign currency Short-term IDR affirmed at 'F3'. The foreign currency senior unsecured rating was affirmed at 'BBB-'
"The affirmation of the rating reflects the company's resilient financial performance despite a weak market environment as well as its prudent management approach to ensure stable production growth while protecting its credit profile," Fitch said.
Fitch also said the company had considerably strengthened its operational diversification over the past few years through the launch of the Blagodatnoye, Titimukhta and Verninskoye mines, thereby reducing the share of the Olimpiada mine, the company's flagship mine, to 42% of total output in 2013 from 64% in 2009.
With the commissioning of the Natalka project, the largest gold deposit in Russia and the third largest globally by reserves, Polyus Gold's operational diversification will be even stronger.
The commissioning of Natalka was initially scheduled in summer 2014 but in December 2013 Polyus Gold announced the decision to postpone the development of the project to summer 2015 due to material gold price decline, an over-ambitious original construction schedule and opportunity to consider additional operational improvements. Fitch takes a positive view of management's decision to postpone development to allow for additional technical optimisations in the project and to avoid significant deterioration in leverage.
Fitch said latest estimates (June 2013) of Polyus Gold's proved & probable reserve base amounted to 83.12moz, making it the third-largest among global gold producers. With an annual production of 1.65moz in 2013 this implies more than a 50-year lifespan of its operations, well above the gold industry's average levels. The above-average quality of Polyus Gold's reserves is supported by a fairly high average gold grade of 1.97g/t compared with the industry's average of 1.5g/t.
