Polyus Finance Plc
Polyus Finance Plc: Trading update for the second quarter of 2018
DGAP-News: Polyus Finance Plc / Key word(s): Miscellaneous
PJSC Polyus Trading update for the second quarter of 2018 PJSC Polyus (“Polyus” or the “Company”) today releases its 2Q 2018 operating results for the period ending 30th June 2018.
2Q 2018 Highlights
1H 2018 Highlights
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:
Health and safety update The LTIFR rate for the second quarter of 2018 stood at 0.13, compared to 0.11 registered in the prior-year period. With great regret, Polyus reports that a work-related fatality took place at the Olimpiada operations in June 2018. During the installation of a pipeline for flotation concentrate at the BIO facility, one of our colleagues fell from a height and sustained fatal injuries. This loss of life is completely unacceptable, and the accident is currently under investigation by a special commission formed by Polyus. The safety of our employees is our primary concern and remedial actions will be taken to ensure that a similar incident cannot take place again. The Company works continually to ensure that it has the appropriate health and safety practices in place and that all personnel receive the optimal training. Over the course of the second quarter of 2018, eight HSE inspections took place across all business units in order to check compliance with HSE requirements. Diagnostic testing of the integrated HSE control system was carried out in Polyus’ business units. In addition, ICMM representatives attended a workshop “Mining with Principles: Safety in Focus”, which was held by Polyus in the reporting period.
Consolidated operating results
2Q 2018 Highlights
1H 2018 Highlights
Olimpiada
2Q 2018 Highlights
Gold output Doré gold output in the second quarter of 2018 was 341 thousand ounces, up 7% compared to the previous quarter, mainly due to higher processing volumes. Total gold output (refined and concentrate) rose 18% compared to the previous quarter, to 339 thousand ounces, mainly driven by lower volumes of gold in the inventory at the refinery. Both doré gold and refined gold output increased 22% compared to the second quarter of 2017, while total gold output rose by 31% during the same period. Mining works Rock moved volumes totaled 29,691 thousand tones, a 4% increase on the first quarter of 2018. Volumes of ore mined rose to 3,698 thousand tonnes, from 3,420 thousand tonnes in the previous quarter. In line with the mining plan, the Company intensified mining activities at higher-grade zones of the deposit, increasing volumes of high-grade stockpiled ore in order to provide Mill-2 and Mill-3 with optimal feed. Average grade in ore mined rose to 4.04 g/t, compared to 3.79 g/t in the previous quarter. In the reporting period, Polyus commisioned one Komatsu WD600-6 bulldozer, two TYHI WK-35 excavators and five САТ 793D trucks with payload capacity of 220 tonnes, increasing the share of large-scale mining equipment operating at Olimpiada. Ore processing Volumes of ore processed rose 6% to 3,337 thousand tonnes, compared to the first quarter of 2018. This growth reflects increased hourly throughput at Mill-2 as well as the sequence of maintenance works at Olimpiada. Mill-1 underwent scheduled maintenance during the reporting period, while maintenance works at Mill-2 were completed in the first quarter of 2018. The Company is currently implementing further Mills expansion at Olimpiada, with throughput capacity of 13.4 million tonnes per annum expected to be reached in 2020. Volumes of antimony contained in flotation concentrate amounted to 6.2 thousand tonnes, down 16% on the previous quarter, due to scheduled maintenance works at Mill-1. The average grades in ore processed at Olimpiada declined to 4.10 g/t from 4.17 g/t in the previous quarter. Recovery rate declined to 79.0%. Variations in the feed mineralogy along with temporary voltage drops impacted BIO process, while higher antimony content in ore led to an increase of gold losses in flotation tailings at Mill-3. Polyus expects recovery rates to increase going forward as the Company proceeds with separate processing of antimony-rich ore and operational initiatives targeting recovery improvement. Mining works and ore processing
Blagodatnoye
2Q 2018 Highlights
Gold output Doré gold output in the second quarter of 2018 was 102 thousand ounces, up 2% compared to the previous quarter, mainly due to higher processing volumes. Refined gold output amounted to 102 thousand ounces, up 12% on the previous reporting period. Refined gold output decreased 4% compared to the second quarter of 2017 on the back of lower grades in ore processed. Mining works Polyus continues to conduct a pit cutback at Blagodatnoye. Volumes of rock moved increased 3% to 19,760 thousand tonnes compared to the previous quarter. Volumes of ore mined declined 36% to 1,445 thousand tonnes, compared to 2,241 thousand tonnes in the first quarter of 2018. Mining works were focused on low-grade flank areas of the deposit, which resulted in a 5% decline in average grade in ore mined, to 1.59 g/t from 1.68 g/t in the first quarter of 2018. The Company introduced seven new САТ 793D trucks at Blagodatnoye during the second quarter of 2018. Ore processing The average grade in ore processed decreased to 1.64 g/t during the reporting period due to lower grades in ore mined. Volumes of ore processed totaled 2,195 thousand tonnes, up 8% compared to the previous quarter, reflecting completion of maintenance works at Mill-4 in the first quarter of 2018 and higher volumes of stockpiled ore processed. The Company is conducting an expansion project at the Blagodatnoye Mill. Polyus anticipates to achieve a 9.0 million tonnes per annum throughput capacity by the end of 2019. In the reporting period, the recovery rate stood at 87.3%. Mining works and ore processing
Verninskoye
2Q 2018 Highlights
Gold output Doré gold output was 61 thousand ounces, up 19% on the previous quarter, mainly due to higher volumes of ore processed. Refined gold output amounted to 53 thousand ounces, compared to 59 thousand ounces, reflecting changes in gold in inventory at the refinery. Refined gold output was flat compared to the second quarter of 2017. Mining works Volumes of rock moved rose 8% to 5,415 thousand tonnes. The Wenco mining fleet management system, introduced in the previous quarter, along with on-going rolling out of the Mine-to-Mill programme contributed to better equipment productivity and consequently higher rock moved volumes. Volumes of ore mined declined to 741 thousand tonnes, down 12% from the previous quarter, in line with the mining plan. The Company reduced volumes of ore mined in order to properly manage stockpiled ore. Grades in ore mined stood at 2.61 g/t (2.63 g/t in the first quarter of 2018). Ore processing In the reporting period, the average grade in ore processed was 2.63 g/t. Volumes of ore processed amounted to 801 thousand tonnes, up 19% compared to the previous quarter. This growth was attributable to the sequence of maintenance works at Verninskoye (a scheduled maintenance was completed in March 2018). The Company is currently implementing a stage 3 of capacity expansion project at Verninskoye Mill, with annualized capacity now exceeding 3.0 million tonnes per annum. The recovery rate reached a new record high of 89.5%, compared to 89.4% in the previous quarter. Mining works and ore processing
Alluvials
2Q 2018 Highlights
In the second quarter of 2018, Alluvial deposits produced 33 thousand ounces of gold in slime, down 13% on the second quarter of 2017. This decline was primarily due to lower volumes of sands washed. Refined gold output totalled 24 thousand ounces, compared to 31 thousand ounces in the second quarter of 2017. Sands washing
Kuranakh
2Q 2018 Highlights
Gold output Doré gold output in the second quarter of 2018 was 49 thousand ounces. Refined gold output decreased 5% compared to the previous quarter, to 44 thousand ounces. Refined gold production rose 14% compared to the second quarter of 2017 due to higher volumes of ore processed and improved recoveries. Mining works In line with the mining plan, volumes of rock moved increased to 8,103 thousand tonnes, up 6% on the previous quarter. During the same period, volumes of ore mined increased 22% to 1,988 thousand tonnes compared to the previous quarter, as Polyus continued mining activities at the areas with a lower stripping ratio, with average grade declining to 1.07 g/t. Ore processing Volumes of ore processed at the mill increased to 1,308 thousand tonnes, up 4% compared to the previous quarter, due to increased hourly throughput. The Company completed the installation of an additional cyclone cluster with an automated pump control system at the 2nd and 3rd stages of the grinding circuit and introduced an automated control system at CIL. Recovery rate at the Mill rose to 88.9%, compared to 88.3% in the first quarter of 2018. This increase was driven by renovations of the 3rd stage of grinding circuit and control system installation at CIL circuit as well as commissioning of three additional CIL columns. Stage 3 of the capacity expansion project to 5.8 million tonnes per annum is expected to be completed in 2019. Heap leaching Leaching activities were recommenced in May 2018. 338 thousand tonnes were processed at heap leaching facilities in the second quarter of 2018, with average grade of 0.75 g/t. Doré gold output totaled 2.5 thousand ounces. Mining works and ore processing
Natalka
2Q 2018 Highlights
Mining works In the second quarter of 2018, volumes of rock moved totaled 9,828 thousand tonnes, while volumes of ore mined amounted to 1,436 thousand tonnes. Average grades in ore mined were 0.98 g/t, as mining works were concentrated on lower grade zones of the ore body, in line with the mine plan. During the quarter, Polyus delivered 9 Komatsu E730 trucks to the site, bringing the total number of Komatsu E730 trucks to 17. 14 trucks are already operating, and the remaining 3 trucks are being assembled. The Company plans to purchase additional large-scale mining equipment in the second half of 2018. Ore processing In the reporting period, the average grade in ore processed was 1.12 g/t, a 10% increase on the previous quarter, in line with the initial plan. Ore treatment volumes amounted to 1,893 thousand tonnes, posting a 38% increase on the first quarter of 2018. Hourly throughput of the Natalka Mill reached 1,127 t/h in the second quarter of 2018. Natalka currently operates at above 90% of design capacity. Polyus anticipates that the Natalka Mill ramp-up will be completed in the second half of 2018. In the second quarter of 2018, the Company proceeded with the construction works at the Natalka Mill’s auxiliary infrastructure. A pump station has been already commissioned, while preparatory works for construction of a fuel storage facility are currently underway. Mining works and ore processing
Sukhoi Log
2Q 2018 Highlights
Scoping Study highlights The Scoping Study was carried out by Hatch and Polyus engineering team, while SRK performed quality assurance and quality control. The Study outlined key areas for further geological, engineering and infrastructure development. Key economic parameters for the Sukhoi Log project (as indicated by the Scoping Study):
The next update on the economic parameters of the project will be provided upon completion of the Pre-feasibility Study (2020). Detailed information on the key Scoping Study findings can be found at the below link: http://polyus.com/upload/iblock/34b/2018_sl-presentation_final_eng.pdf Current status The Company is currently finalizing the assaying and intepretation of verification drilling results. Polyus has already started the in-fill drilling campaign, which will be followed by deep-level and flank drilling. The Company expects to have the Measured and Indicated Mineral Resources estimate in the fourth quarter of 2018, and the Proven and Probable Mineral Reserves – in 2020.
Financial update Gold sales In the second quarter of 2018, the Company sold a total of 531 thousand ounces of gold, a 16% increase on the previous quarter. Total gold sales include 31 thousand ounces of gold contained in the concentrate from Olimpiada. Estimated gold sales in the reporting period increased to approximately $683 million, compared to $608 million in the previous quarter and $617 million in the second quarter of 2017. Debt management In the second quarter of 2018, Polyus attracted a bilateral bank credit facility with ING in the total amount of $70 million at a fixed interest rate in order to finance its ongoing operations. As of the end of the second quarter of 2018, the Company’s gross debt decreased to $4,116 million, compared to $4,174 million as of the end of the first quarter. Polyus’ debt portfolio is predominantly comprised of US dollar denominated instruments in regards to currency allocation. The Company’s debt maturity profile remains smooth with limited debt maturities outstanding until the end of 2018. As at 30 June 2018, the Company’s estimated cash position was $908 million (31 March 2018: $1,095 million) and its estimated net debt position amounted to $3,208 million (31 March 2018: $3,079 million). Debt capital markets activities In April 2018, due to significant market dislocation, the Company announced an invitation to holders of its $250 million 1% guaranteed convertible bonds due 2021 to tender up to $50 million (or 20% of the issue) in aggregate principal amount of the Bonds for purchase. The final buyback price was 86.7% and the Company has decided to accept Bonds submitted pursuant to valid Tender Instructions in an aggregate nominal amount of $50 million. J.P. Morgan Securities plc acted as Dealer Manager in respect of the buyback. Following the transaction, the total nominal amount of the outstanding convertible bonds stands at $200 million. Dividends Dividends for the second half of 2017, approved at the AGM meeting on 31 May 2018, were paid in June 2018 in the amount of $311 million. The total dividend payout for the full year of 2017 corresponds to $550 million, in line with Polyus existing dividend policy suggesting dividend payout to be the higher of 30% of adjusted EBITDA or $550 million for the full year 2017 and 2018. This amount includes $239 million paid out in form of dividends for the first half of 2017 in October 2017.
Conference call
Polyus will host an analyst conference call on 24th July 2018 at 1 pm London time (3 pm Moscow time) to present and discuss the second quarter operating results.
To join the conference call, please dial: Conference ID: 7133159
UK +44 (0)330 336 9411 (Local access) 0800 279 7204 (Toll free)
USA +1 323-994-2082 (Local access) 888-204-4368 (Toll free)
Russia +7 495 646 9190 (Local access) 8 10 8002 8675011 (Toll free)
To access the replay, please dial: Passcode: 7133159 UK +44 (0) 207 660 0134 (Local access) 0 808 101 1153 (Toll free)
USA +1 719-457-0820 (Local access) 888-203-1112 (Toll free)
Russia 810 800 2702 1012 (Toll free)
Enquiries:
Investor contact Victor Drozdov, Investor Relations Director +7 495 641 33 77
Media contact Victoria Vasilyeva, Director Public Relations +7 (495) 641 33 77
Forward looking statements This announcement may contain “forward-looking statements” concerning Polyus and/or Polyus Group. 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 Polyus’ and/or Polyus Group’s operations. Many of these risks and uncertainties relate to factors that are beyond Polyus’ and/or Polyus Group’s ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as of the date of this announcement. Polyus and/or any Polyus Company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.
24.07.2018 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |
Language: | English |
Company: | Polyus Finance Plc |
16 Berkeley Street | |
W1J 8DZ London | |
United Kingdom | |
Phone: | +44 (0)203 907 4050 |
E-mail: | sergei.nossoff@pgil.co.uk |
Internet: | http://polyus-finance.polyus.com/ |
ISIN: | XS1533922933 |
WKN: | A19CYF |
Listed: | Regulated Unofficial Market in Stuttgart; London |
End of News | DGAP News Service |