Polyus Finance Plc
Polyus Finance Plc: Financial results for the first quarter of 2018
DGAP-News: Polyus Finance Plc / Key word(s): Quarter Results Press Release 30 May 2018 PJSC Polyus Financial results for the first quarter of 2018 PJSC Polyus (LSE, MOEX – PLZL) (“Polyus”, the “Company”, and together with the Company subsidiaries, the “Group”) has today released its unaudited condensed consolidated interim financial results for the first quarter of 2018. Financial highlights – Gold sales amounted to 459 thousand ounces of gold in the first quarter of 2018, down 23% compared to the fourth quarter of 2017 or 6% compared to the first quarter of 2017. Total gold sales include 13 thousand ounces of gold contained in concentrate from Olimpiada. – Revenue totalled $617 million, a 17% decrease compared to $743 million in the fourth quarter of 2017 and a 1% increase compared to the first quarter of 2017. The decrease compared to the previous quarter was driven by lower sales volumes (including flotation concentrate) as gold output volumes (refined and concentrate) declined 13% compared to the previous quarter on the back of inventory accumulation at the refinery and on site. – Group TCC increased by 18% to $383 per ounce from $324 per ounce in the fourth quarter of 2017 or by 1% compared to the first quarter of 2017. The quarterly increase came mainly due to lower sales volumes of gold and flotation concentrate in the period as well as increase in fuel prices and power tariffs, while consumables cost inflation and local currency appreciation put an additional pressure. The Group has launched high-grade antimony-rich ore processing, with the first volumes of antimony concentrate produced in the first quarter. No shipments to foreign offtakers were made before May 2018, and reported TCC for the first quarter of 2018 does not reflect any by-product credit. At the same time, AISC increased to $684 per ounce, up 3% compared to the fourth quarter of 2017 or 17% compared to the first quarter of 2017. – Adjusted EBITDA amounted to $387 million, a 17% decrease from the fourth quarter of 2017 and a 1% increase compared to the first quarter of 2017. The quarterly decrease was driven by lower gold sales volumes. Adjusted EBITDA margin stood flat at 63% in the first quarter of 2018. – Profit for the period decreased to $244 million, down 9% compared to the fourth quarter of 2017 or 51% compared to the first quarter of 2017. The decrease partly reflected the decrease in operating profit and the impact of non-cash items such as gain on investments and revaluation of derivative financial instruments and foreign exchange gain. – Adjusted net profit amounted to $223 million, an 8% decrease from the previous quarter or a 10% increase from the first quarter of 2017. – Net cash inflow from operations amounted to $261 million in the first quarter of 2018, compared to $344 million in the fourth quarter of 2017 or to $282 million in the first quarter of 2017. – Capex amounted to $182 million, down 35% compared to the previous quarter but up 39% compared to the first quarter of 2017. The quarterly decrease reflects lower core capital expenditures across all business units and lower maintenance capital expenditures at Olimpiada, Verninskoye and Kuranakh. – Cash and cash equivalents as at 31 March 2018 amounted to $1,095 million, down from $1,204 million as at 31 December 2017 and from $1,487 million as at 31 March 2017, following an early prepayment of certain credit facilities. – Net debt remained largely unchanged at $3,079 million at the end of the first quarter of 2018 compared to $3,077 million as at the end of the fourth quarter of 2017. Net debt stood at $3,128 million as at the end of the first quarter of 2017. – Net debt/adjusted EBITDA ratio remained at the same level of 1.8x compared to the end of last quarter but decreased from 2.0 as at the end of the first quarter of 2017. Operational highlights – Total gold output amounted to 507 thousand ounces, down 13% quarter over quarter and up 12.6% year-over-year. – Volumes of ore mined amounted to 8,821 thousand tonnes, down 12% on the previous quarter but up 2% compared to the first quarter of 2017. – Volumes of ore processed increased 9% compared to the previous quarter and 28% compared to the first quarter of last year, to 8,492 thousand tonnes. Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented: “We are firmly on track with all our key initiatives. Natalka continues its ramp-up and now operates above 80% of its design processing capacity, ahead of our initial expectations. We are progressing with the drilling campaign and engineering works at Sukhoi Log, and are also working on efficiency improvements across our existing operating assets. Our total gold production guidance for the full year 2018 remains at 2.375-2.425 million ounces”. Comparative financial results
Total Cash Costs In the first quarter of 2018, Group TCC increased by 18% to $383 per ounce compared to the previous quarter, mainly due to lower gold and flotation concentrate sales volumes in the period. At the same time, the Company observed an inflation in diesel prices across all business units and an increase in power tariff at Olimpiada, Blagodatnoye and Kuranakh, while local currency appreciation and consumables cost inflation put an additional pressure. The Group has launched high-grade antimony-rich ore processing, with the first volumes of antimony concentrate produced in the first quarter. No shipments to foreign offtakers were madebefore May 2018, and reported TCC for the first quarter of 2018 does not reflect any by-product credit. TCC performance by mine, $/oz
In the first quarter of 2018, TCC at Olimpiada amounted to $340 per ounce, up by 15% compared to the fourth quarter of 2017. This resulted from an increase in fuel prices, power tariff inflation and a decline in the share of lower-cost flotation concentrate as part of the total gold sold during the quarter. The higher average grades in ore processed (4.2 grams per tonne in the first quarter of 2018 compared to 3.9 grams per tonne in the fourth quarter of 2017) partially mitigated the negative effect. At Blagodatnoye, TCC amounted to $344 per ounce, up by 16% compared to the fourth quarter of 2017, due to a decline in average grade in ore processed (1.7 grams per tonne in the first quarter of 2018 compared to 2.1 grams per tonne in the fourth quarter of 2017). Polyus temporarily intensified mining activities at low-grade flank areas of the Blagodatnoye deposit during a pit cutback. In the first quarter of 2018, the Company proceeded with scheduled maintenance works at Mill-4. TCC at Verninskoye remained almost flat at $415 per ounce, up by 2% compared to the fourth quarter of 2017. At Kuranakh, TCC increased to $559 per ounce, up by 6% compared to the fourth quarter of 2017, reflecting a decline in average grade in ore processed (1.2 grams per tonne in the first quarter of 2018 compared to 1.3 grams per tonne in the fourth quarter of 2017) according to the mining plan and power tariff indexation. Due to the seasonality of activity at placer deposits, no gold was produced at Alluvials in the first quarter of 2018. The washing season ended in November 2017, and was resumed in April 2018 as usual. All-in sustaining costs (AISC) In the first quarter of 2018, the Group’s AISC increased to $684 per ounce, up by 3% compared to the fourth quarter of 2017, driven by lower gold sales volumes in the period. All-in sustaining costs by mine, $/oz
AISC at Olimpiada increased to $615 per ounce driven by higher stripping activity. At Blagodatnoye AISC increased to $564 per ounce due to a pit cutback in the reporting period. AISC at Verninskoye decreased to $704 per ounce, while AISC at Kuranakh decreased to $800 per once both driven by lower sustaining capital expenditures. Capex In the first quarter of 2018, capital expenditures decreased to $182 million from $279 million in the fourth quarter of 2017. Capital expenditures at Natalka, the Group’s main development project, decreased to $82 million (down by 13% compared to the previous quarter). The major part of the project’s investment program was completed in 2017 and the asset is now operating in a ramp-up mode. Purchase of equipment during the period amounted to $45 million, compared to $54 million in the fourth quarter of 2017. In the reporting period, the Group continued to capitalise borrowing costs and other directly attributable operating costs related to the development of Natalka. In particular, total capitalised costs amounted to $37 million, including $23 million of borrowing costs and $14 million of operating cost net of revenue. The construction works at the Natalka Mill’s auxiliary facilities are continuing. Preparation works for access roads and groundwork for the installation of slurry pipelines at the main tailings storage facility are in progress, while the recirculating water supply system has been completed. As of May 2018, Natalka Mill has reached the level of above 80% of its design throughput capacity of 10 million tons on an annualized basis. As the ramp-up continues, mining fleet procurement is ongoing with eights dump trucks delivered on site in the reporting period. Capital expenditures at Olimpiada decreased to $36 million in the first quarter of 2018. The construction of the bio-oxidation circuit (“BIO-4”) at the Mills-1, 2, 3 complex was completed with the remaining four reactors having been installed in the first quarter of 2018. All eight reactors have been in operation since March. In addition, maintenance capital expenditures were lower compared to the previous quarter. At Blagodatnoye, capital expenditures remained almost flat at $17 million in the first quarter of 2018. At Verninskoye, capital expenditures decreased to $10 million as the Stage 2 of the Verninskoye Mill expansion project has been completed. At the same time, mining fleet procurement took place in the fourth quarter of 2017 with two Caterpillar 785C trucks delivered on site. Capital expenditures at Kuranakh decreased to $9 million in the first quarter of 2018 as the procurement of certain fixed asset components related to the mill expansion project was postponed to the next quarter. At Alluvials, capital expenditures remained almost flat at $6 million in the first quarter of 2018. Capex during this period was related to exploration activity as well as the ongoing replacement of worn-out equipment. Capex breakdown[x]
The total cash amount spent on the purchase of PP&E decreased to $200 million, from $321 million in the previous quarter. This mainly reflects the respective decline in total capital expenditures outlined above as well as changes in items capitalised and expenses related to construction of the Ust’-Omchug – Omchak power grid. At Sukhoi Log, the Company is carrying out verification drilling and will continue with in-fill, deep-level and flanks drilling. As at the end of the first quarter of 2018, Polyus had completed 75% of the planned 40 thousand meters of verification drilling. AMC has been engaged to supervise the drilling program and to review the results in compliance with JORC standards. The Company expects to upgrade the classification of a portion of the Sukhoi Log Resources estimates from Inferred Mineral Resource to Measured & Indicated Resources before the end of 2018. Polyus engaged Hatch to develop the Scoping Study and SRK for results’ quality assurance. At the end of the first quarter of 2018, the scoping study was at its final stage. Other areas of investing activities in the first quarter of 2018 comprised of $7 million of interest received and $2 million of proceeds received from the Federal Grid Company for the disposal of Razdolinskaya-Taiga in line with initial agreements.
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A conference call for investors and analysts hosted by Pavel Grachev (Chief Executive Officer) and Mikhail Stiskin (Senior Vice President, Finance and Strategy) will be held on 30 May 2018 at 13.00 (London) / 15.00 (Moscow).
To join the conference call, please dial: UK Number: +44 (0)330 336 9411 (Local access) 0800 279 7204 (Toll free) USA Number: +1 323-794-2094 (Local access) 800-347-6311 (Toll free)
Russia Number: +7 495 646 9190 (Local access) 8 10 8002 8675011 (Toll free)
Conference ID: 2654177
The call will be recorded and there will be a replay facility as follows: 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) Passcode: 2654177
Polyus Polyus is the largest gold producer in Russia and one of the top ten gold miners globally with the lowest cost position. Based on its 2017 Ore Reserves and Mineral Resources, Polyus group ranks second both by attributable gold reserves and gold resources among the world’s largest gold mining companies. The Polyus group’s principal operations are located in Krasnoyarsk, Irkutsk and Magadan regions and the Sakha Republic (Yakutia).
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 at the date of this announcement. Polyus and/or any Polyus group company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.
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30.05.2018 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 Frankfurt, Stuttgart; London |
End of News | DGAP News Service |