Polyus Finance Plc
Polyus Finance Plc: Trading update for 4Q and FY 2018
DGAP-News: Polyus Finance Plc / Key word(s): Miscellaneous
PJSC Polyus Trading update for the fourth quarter and full year 2018
PJSC Polyus (“Polyus” or the “Company”) today releases its 4Q 2018 and FY 2018 operating results for the period ending 31 December 2018. 4Q 2018 Highlights
FY 2018 Highlights
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented: In 2018, Polyus exceeded its production guidance for the fifth consecutive year, setting a new record with total gold output of 2.43 million ounces. The Company remains focused on organic growth opportunities at its existing operations, and we are constantly evaluating potential additions to our brownfield project portfolio. Over the course of the year, we have been focused on ramping up the Natalka operations. Its completion represents an important milestone for Polyus, with Natalka being a significant source of the Company’s further production growth. At Sukhoi Log, one of the world’s largest gold greenfield projects, we have completed the scoping study and verification drilling, and entered the pre-feasibility stage. A thorough study of the results of verification drilling program conducted by AMC resulted in an update on the Sukhoi Log Mineral Resources estimates, with a 9% increase in contained ounces compared to previous estimates. We believe that Sukhoi Log will be the cornerstone of Polyus’ next-generation growth opportunities. I would also like to highlight that Polyus’ sustained commitment to best ESG practices has been recognised by international ESG rating agencies. In November 2018, Sustainalytics upgraded Polyus from “Average performer” to “Outperformer”, and in December FTSE Russell included Polyus’ shares into the FTSE4Good Emerging Markets Index. High standards of corporate governance, HSE and stakeholder engagement remain an ongoing priority for the Company. In 2019, we anticipate another year of production growth and expect our total gold output to reach approximately 2.8 million ounces as previously guided.” SUSTAINABILITY UPDATE Health, Safety and Environment No serious environmental incidents have been reported at Polyus’ operations during 2018. Polyus has introduced a plastic waste crusher at Verninskoye and completed the construction of a new waste management facility at the Krasnoyarsk Business Unit. A new biological waste testing lab was launched at Kuranakh. The LTIFR rate for 2018 decreased 18% to 0.09, compared to 0.11 registered in 2017.
The Company is deeply saddened to report two accidents that resulted in a total of three fatalities at Polyus’ production assets during 2018. One accident (falling from a height) took place during maintenance works at Olimpiada. The other accident (explosion), resulting in two fatalities, took place at the Company’s Alluvials operations. Following a thorough investigation into the root causes of these accidents, the Company has taken appropriate corrective actions to ensure that similar situations do not occur in the future. In December 2018, the integrated Health, Safety and Environment management system of Polyus received certification in accordance with ISO 14001 and ISO 45001 standards.
Sustainability ratings & memberships As a reflection of ongoing improvements in its Sustainability management and reporting systems, in 2018 Polyus notably improved its position in several ratings:
CONSOLIDATED OPERATING RESULTS
4Q 2018 Highlights
FY 2018 Highlights
Olimpiada 4Q 2018 Highlights
FY 2018 Highlights
Gold output Doré gold output in the fourth quarter of 2018 stood at 320 thousand ounces, down 8% compared to the previous quarter, mainly driven by lower recoveries and grades in ore processed. Total gold output (refined and concentrate) declined by 2% compared to the previous quarter, to 345 thousand ounces. On a year on year basis, doré gold output and total gold output rose 4% and 6%, respectively, while refined gold production was down 2%. Mining works Rock moved volumes totalled 35,176 thousand tones, a 6% increase on the third quarter of 2018. Over the course of 2018, Polyus has been actively increasing the share of large-scale mining equipment operating on site. In the reporting period, the Company delivered one Komatsu D475A-5 bulldozer on site. Volumes of ore mined declined 12% to 5,158 thousand tonnes, from 5,884 thousand tonnes in the previous quarter. In line with the mining plan, Polyus downscaled mining activities at low-grade flanks of the Vostochny pit, which resulted in a 5% increase in average grades, to 3.67 g/t from 3.48 g/t in the third quarter of 2018. Ore processing Volumes of ore processed totalled 3,410 thousand tonnes, remaining almost flat compared to the previous quarter. This reflects the sequence of maintenance works, with Mill-1 and Mill-2 undergoing scheduled maintenances during the fourth quarter of 2018. In the reporting period, Polyus’ technical team achieved a 4% increase in hourly throughput of Mill-3 following the installation of new turbo-elevators at SAG mill, designed to lower reintroduction of the pulp into the SAG mill. The latter allows reducing milling cycle. Similar turbo-elevators have previously been installed at Mill-1. The average grades in ore processed decreased 3% to 4.01 g/t, compared to 4.12 g/t in the third quarter of 2018. Recovery rate stood at 78.8%. The decline in grades and recoveries was mainly attributable to temporary variations in the feed mineralogy, with higher antimony and lower gold content in ore. In first quarter of 2019, the Company expects to commission the first stage of the alkaline leaching. This will lead to lower gold losses with CIL tailings and consequently higher recoveries. The Company also plans to commission flash flotation units at Olimpiada’s Mills No. 1, 2 and 3 during the first half of 2019. Volumes of antimony contained in flotation concentrate amounted to 3.5 thousand tonnes in the reporting period. Mining works and ore processing
Blagodatnoye 4Q 2018 Highlights
FY 2018 Highlights
Gold output Doré gold output in the fourth quarter of 2018 was 105 thousand ounces, down 6% compared to the previous quarter, mainly reflecting lower processing volumes. Refined gold output amounted to 112 thousand ounces, up 2% on the previous reporting period. Doré gold output decreased 17% compared to the fourth quarter of 2017 primarily mainly due to lower grades in ore processed. Mining works Volumes of rock moved decreased 10% to 18,151 thousand tonnes compared to the previous quarter. Volumes of ore mined rose 30% to 1,972 thousand tonnes, compared to 1,512 thousand tonnes in the third quarter of 2018. This growth reflects intensified mining activities at the Northern area of the deposit, where the Company conducted stripping works during previous quarters. Polyus continued upgrading its mining fleet at Blagodatnoye in the reporting period. The Company took delivery of two Komatsu D475A-5 bulldozers. Average grade in ore mined stood at 1.56 g/t, remaining almost flat compared to the previous quarter. Ore processing The average grade in ore processed increased to 1.76 g/t during the reporting period, from 1.66 g/t in the third quarter of 2018. Volumes of ore processed totalled 2,135 thousand tonnes, a 9% decline compared to the previous quarter, reflecting scheduled maintenance works at Mill-4 in November-December 2018. During the reporting period, the Company added an additional flash flotation unit at Mill-4 for further recovery improvement. The Company is conducting an expansion project at the Blagodatnoye Mill. Polyus expects to achieve a 9.0 million tonnes per annum throughput capacity by the end of 2019. The recovery rate remained flat at 87.7%. Mining works and ore processing
Verninskoye 4Q 2018 Highlights
FY 2018 Highlights
Gold output Doré gold output was 60 thousand ounces, up 11% on the previous quarter, due to higher processing volumes. Refined gold output amounted to 48 thousand ounces, compared to 60 thousand ounces in the third quarter of 2018, reflecting changes in gold in inventory at the refinery. Refined gold output rose 5% compared to the fourth quarter of 2017. Mining works Volumes of rock moved declined by 12% to 4,174 thousand tonnes, in line with the mining plan. Volumes of ore mined decreased to 649 thousand tonnes, down 14% on the previous quarter. The Company intentionally reduced mining activity during the period in order to properly manage the composition of ore stockpiles. Grades in ore mined stood at 2.70 g/t, compared to 2.60 g/t in the previous quarter, as mining activities were focused on higher-grade areas of the deposit. Ore processing In the reporting period, the average grade in ore processed stood at 2.63 g/t, remaining largely flat compared to the previous quarter. Volumes of ore processed amounted to 792 thousand tonnes, up 11% on the previous quarter. This increase reflects the sequence of maintenance works at the Verninskoye Mill (the Mill underwent scheduled maintenance in September 2018). The recovery rate reached a new record high of 89.6%, compared to 89.5% in the previous quarter. Mining works and ore processing
Alluvials 4Q 2018 Highlights
FY 2018 Highlights
Refined gold output totalled 40 thousand ounces, down 52% compared to the third quarter of 2018. Sands washing
Kuranakh 4Q 2018 Highlights
FY 2018 Highlights
Gold output Doré gold output in the fourth quarter of 2018 amounted to 52 thousand ounces, a 5% decline compared to the third quarter of 2018, due to lower volumes of ore processed at heap leaching facilities. On a year on year basis, doré gold output increased 13%. Refined gold output amounted to 64 thousand ounces, up 47% on the previous quarter, reflecting changes in gold in inventory at the refinery. Mining works Volumes of rock moved amounted to 7,739 thousand tonnes, down 9% on the previous quarter. During the same period, volumes of ore mined declined 33%, to 1,688 thousand tonnes, compared to the previous quarter, as Polyus downscaled mining activities at low-grade areas due to a seasonal slowdown of heap leaching operations. Consequently, this resulted in higher grades in ore mined (1.13 g/t in 4Q 2018 vs 0.97 g/t in 3Q 2018). Ore processing Volumes of ore processed at the mill amounted to 1,329 thousand tonnes, up 2% on the previous quarter. Recovery rate at the Mill stood at 88.7%, a marginal decline compared to the previous quarter. Doré gold output was 45.5 thousand ounces, flat compared to the previous quarter. Stage 3 of the throughput capacity expansion to 5.8 million tonnes per annum is expected to be completed in 2019. Heap leaching 146 thousand tonnes of ore were processed at heap leaching facilities in the fourth quarter of 2018, with average grade of 0.73 g/t. Doré gold output amounted to 6.5 thousand ounces. Due to the seasonality of heap leaching operations, leaching activities were temporarily suspended until the spring 2019. Mining works and ore processing
Natalka 4Q 2018 Highlights
FY 2018 Highlights
Mining works In the fourth quarter of 2018, volumes of rock moved totalled 15,707 thousand tonnes, while volumes of ore mined rose to 2,564 thousand tonnes, posting a 28% increase from the third quarter of 2018. The average grades in ore mined stood at 1.07 g/t. During the reporting period, the Company commissioned one TYHI WK-20 excavator and one Komatsu PC-1250 excavator, which, along with 17 Komatsu E730 trucks already operating on site, contributed to higher rock moved volumes. In the fourth quarter of 2018, mining fleet automation and wireless broadband systems were successfully introduced at Natalka, improving control of mining equipment. The construction works at the Natalka Mill’s auxiliary facilities were ongoing. Polyus completed construction of the assay laboratory, now the Company expects to take delivery of assaying equipment. Ore processing Volumes of ore processed declined to 1,468 thousand tonnes reflecting the ball mill motor breakdown in September 2018. At that time the Company switched to a shortened flowsheet, utilizing a one-stage grinding process at the SAG mill and therefore bypassing the ball mill, which resulted in lower throughput rates and recoveries over the period. Natalka is now operating at a design flowsheet following the completion of repair works at the ball mill and scheduled maintenance works at the end of 2018 and the Natalka Mill has now achieved annualised name-plate throughput capacity of 10 million tons. The Mill’s recovery rate is gradually increasing to meet the design parameter level, reflecting the introduction of higher head grades into the ore processing operations. All processing circuits, including crushing, milling, gravity separation, intensive cyanidation, CIL, electrowinning and smelting are now running in line with the design. In 2019, Polyus will proceed with the development of auxiliary infrastructure at Natalka, as well as construction of the Ust-Omchug/Omchak power transmission line. The Company is currently reviewing options to further increase throughput capacity at the Natalka Mill, above its name-plate capacity, through debottlenecking initiatives. Mining works and ore processing
Sukhoi Log 4Q 2018 Highlights
FY 2018 Highlights
Mineral Resources Update An update on Mineral Resources estimates for Sukhoi Log has been conducted by AMC in compliance with JORC Code 2012. According to AMC, estimated Mineral Resources at Sukhoi Log stand at 962 million tonnes, with an average grade of 2.1 g/t Au and containing 63 million ounces of gold as at 30 October 2018. The estimate is a nine per cent increase compared to the previous estimate of 58 million ounces of gold as at 31 January 2017. AMC has also upgraded 28 million ounces of Inferred Mineral Resources to Indicated Mineral Resource. The 2018 Mineral Resource estimate is based on data from the verification drilling programme available at 14 September 2018 used in conjunction with historic drillhole data. The Company continues in-fill, deep levels, flanks and other drilling. The drilling campaign will continue until the end of 2019. Polyus plans to drill a total of 197,000 meters, including the approximately 135,000 meters drilled since October 2017. Ongoing assessment of the drilling campaign samples may result in further upgrade of the Mineral Resources estimate classification. As previously reported, the Company is proceeding with studies to enable estimation by AMC in 2020 of an Ore Reserve estimate based on Indicated Mineral Resources in the 2018 estimate and estimates resulting from the 2019 drilling campaign. Sukhoi Log Mineral Resources at a 1.0 g/t Au cut-off grade[ii]
FINANCIAL UPDATE Gold sales In the fourth quarter of 2018, the Company sold a total of 644 thousand ounces of gold, an 8% decrease on the previous quarter. Total gold sales include 75 thousand ounces of gold contained in the concentrate from Olimpiada. Estimated gold sales in the reporting period totalled approximately $764 million, compared to $821 million in the previous quarter and $734 million in the fourth quarter of 2017. Debt management As of the end of the fourth quarter of 2018, the Company’s gross debt decreased to $3,982 million, compared to $4,029 million as of the end of the third 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 2019. The Company plans to repay the principal amount and liabilities under cross-currency swaps in the amount of approximately $1.0 billion in April 2019, utilizing a credit facility with Sberbank in a total amount of RUB 65 billion due in 2024. The funds under the credit facility will become available for drawdown in April 2019. As at 31 December 2018, the Company’s estimated cash position was $896 million (30 September 2018: $1,000 million) and its estimated net debt position amounted to $3,086 million (30 September 2018: $3,029 million). Among other factors, the change in cash position reflects a dividend payout for the first half of 2018 in amount of $264 million. Net debt amounts exclude liabilities under cross currency swaps related to RUB-denominated bank credit facilities and rouble bonds, in a total amount of approximately $591 million as of the end of the fourth quarter. In the reporting period, Polyus attracted a new credit line facility with ING in a total amount of $75 million due in 2024. The funds under the new facility became available for drawdown in January 2019.
CONFERENCE CALL INFORMATION Polyus will host an analyst conference call on 24 January 2019 at 1 pm London time (4 pm Moscow time) to present and discuss the fourth quarter operating results. TO JOIN THE CONFERENCE CALL, PLEASE DIAL: Conference ID: 1606861
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TO ACCESS THE REPLAY, PLEASE DIAL: Passcode: 1606861 UK +44 (0) 207 660 0134 (Local access) 0 808 101 1153 (Toll free)
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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.
24.01.2019 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 |