Polyus Finance Plc
Polyus Finance Plc: Trading update for the third quarter of 2018
DGAP-News: Polyus Finance Plc / Key word(s): Miscellaneous Press Release 16 October 2018
PJSC Polyus Trading update for the third quarter of 2018 PJSC Polyus (“Polyus” or the “Company”) today releases its 3Q 2018 operating results.
3Q 2018 Highlights
9M 2018 Highlights
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented: “Polyus delivered another robust operational performance in the third quarter. Our debottlenecking initiatives at Olimpiada, Blagodatnoye and Kuranakh are progressing well, each posting a gradual increase in throughput. We remain focused on addition of profitable ounces within the perimeter of existing operations as this is where we see the greatest opportunity for ongoing value-creation. With 1.8 million ounces of gold produced during the nine months of 2018, the Company remains confident of delivering on its production guidance of 2.375-2.425 million ounces for the full year. The ramp-up of production at Natalka, our key development project, is approaching completion. Being among the top largest deposits globally, Natalka is not only a cornerstone of our production growth, but also an affirmation of Polyus’ team ability to bring operations on line in an efficient manner.” Health and safety update The LTIFR rate for the third quarter of 2018 stood at 0.11, compared to 0.10 registered in the prior-year period. 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 third quarter of 2018, three HSE inspections took place in the Krasnoyarsk Business Unit, Natalka and the Power Group in order to ensure their compliance with HSE requirements. At Kuranakh, a pre-certification audit of the integrated Health & Safety management system was carried out and confirmed that there were no critical non-compliance issues
Consolidated operating results
3Q 2018 Highlights
9M 2018 Highlights
Olimpiada
3Q 2018 Highlights
Gold output Doré gold output in the third quarter of 2018 stood at 347 thousand ounces, up 2% compared to the previous quarter. Total gold output (refined and concentrate) grew by 3% compared to the previous quarter, to 350 thousand ounces, driven by higher production volumes of gold contained in concentrate, increased ore processed volumes and improved recoveries. On a year on year basis, doré gold output remained largerly unchanged, while refined gold production and total gold output increased 7% and 2%, respectively. Mining works Rock moved volumes totalled 33,234 thousand tones, a 12% increase on the second quarter of 2018. Polyus continued upgrading its mining fleet at Olimpiada in the reporting period. The Company delivered two Komatsu bulldozers and two large wheel loaders to the site. In addition, the Company commissioned two TYHI WK-35 shovels. Four WK-35 shovels and 34 CAT 793 trucks with capacity of 220 t are currently operating on site, contributing to the higher volumes of rock moved. Volumes of ore mined rose to 5,884 thousand tonnes, from 3,698 thousand tonnes in the previous quarter. In line with the mining plan, Polyus intensified mining activities at low-grade flanks of the Vostochny pit, which resulted in a 14% decline in average grades, to 3.48 g/t from 4.04 g/t in the second quarter of 2018. Ore processing Volumes of ore processed totalled 3,365 thousand tonnes, remaining almost flat compared to the previous quarter. This reflects the sequence of maintenance works, with Mill-3 undergoing a scheduled maintenance in August. The average grades in ore processed at Olimpiada remained almost in line with the average grades in the second quarter of 2018, at 4.12 g/t. Polyus’ technical team proceeds with optimization of the processing parameters at Mill-1. Installation of turbo-elevators drove a 6% increase in hourly throughput of Mill-1, compared to the previous quarter. Recovery rate increased to 79.2% reflecting lower gold losses with flotation tailings. Polyus expects recovery rates to increase going forward as the Company proceeds with operational initiatives targeting recovery improvement, including the launch of the alkaline leaching circuit and flash flotation. Volumes of antimony contained in flotation concentrate amounted to 6.4 thousand tonnes, a 3% increase on the previous quarter. Mining works and ore processing
Blagodatnoye
3Q 2018 Highlights
Gold output Doré gold output in the third quarter of 2018 was 111 thousand ounces, up 9% compared to the previous quarter, mainly reflecting higher processing volumes. Refined gold output amounted to 110 thousand ounces, up 8% on the previous reporting period. Doré gold output increased 7% compared to the third quarter of 2017 on the back of higher processing volumes. Mining works Volumes of rock moved increased 2% to 20,231 thousand tonnes compared to the previous quarter. Volumes of ore mined rose 5% to 1,512 thousand tonnes, compared to 1,445 thousand tonnes in the second quarter of 2018. The pit cutback at Blagodatnoye remains in progress. A 3% decline in average grade (1.54 g/t in the third quarter of 2018 vs 1.59 g/t in the second quarter of 2018) was the result of continuing mining activities at low-grade flank areas of the deposit, which will allow the Company to extract higher-grade material in later periods. Ore processing The average grade in ore processed was 1.66 g/t during the reporting period. Volumes of ore processed totaled 2,349 thousand tonnes, a 7% increase compared to the previous quarter, reflecting the sequence of maintenance works (maintenance of the first line of Mill-4 was carried out in May). Installation of turbo-elevators at SAG mills positively impacted the hourly throughput of Mill-4 and contributed to a strong performance in the reporting period. The recovery rate increased to 87.7% from 87.3% in the previous quarter, owing to decreased gold losses at CIL due to lower arsenic content in ore feed. Mining works and ore processing
Verninskoye
3Q 2018 Highlights
Gold output Doré gold output was 54 thousand ounces, down 11% on the previous quarter, due to scheduled maintenance works at the Mill. Refined gold output amounted to 60 thousand ounces, compared to 53 thousand ounces in the second quarter of 2018, reflecting changes in gold in inventory at the refinery. Refined gold output rose 12% compared to the third quarter of 2017. Mining works Volumes of rock moved declined by 13% to 4,726 thousand tonnes, in line with the mining paln. Volumes of ore mined rose to 755 thousand tonnes, up 2% on the previous quarter, with grades remaining flat at 2.60 g/t. Implemetation of Mine-to-Mill programme along with the Wenco mining fleet management system continued to positively impact equipment productivity at Verninskoye in the reporting period. Ore processing In the reporting period, the average grade in ore processed stood at 2.64 g/t vs 2.63 g/t in the second quarter of 2018. Volumes of ore processed amounted to 712 thousand tonnes, down 11% on the previous quarter. This decline was driven by scheduled maintenance works at the Verninskoye Mill in September. The recovery rate stood at 89.5%. Mining works and ore processing
Alluvials
3Q 2018 Highlights
In the third quarter of 2018, Alluvial deposits produced 86 thousand ounces of gold in slime, up 158 % on the second quarter of 2018. The third quarter period is peak production season for the alluvial operations. Refined gold output totalled 84 thousand ounces, compared to 24 thousand ounces in the previous quarter. Sands washing
Kuranakh
3Q 2018 Highlights
Gold output Doré gold output in the third quarter of 2018 amounted to 55 thousand ounces, a 13% increase compared to the second quarter of 2018, driven by higher volumes of ore processed at heap leaching facilities. On a year on year basis, doré gold output has increased by 24%. Refined gold output amounted to 44 thousand ounces, in line with the second quarter of 2018, reflecting changes in gold in inventory at the refinery. Mining works Volumes of rock moved amounted to 8,477 thousand tonnes, up 5% on the previous quarter. During the same period, volumes of ore mined increased 27% to 2,522 thousand tonnes compared to the previous quarter, as Polyus continued mining activities at the areas with a lower stripping ratio. Polyus increased the share of lower-grade material in ore mined in order to provide the leaching facilitites with a continous feed of material. Consequently, the average grade decreased to 0.97 g/t. Ore processing Volumes of ore processed at the mill stood at 1,303 thousand tonnes, in line with the previous quarter. Re Recovery rate at the Mill stood at 88.9%, remaining unchanged from the second quarter of 2018. Heap leaching Leaching activities were recommenced in May 2018 and reached design parameters in July 2018. 1,030 thousand tonnes were processed at heap leaching facilities in the third quarter of 2018, with average grade of 0.75 g/t. Doré gold output amounted to 9.2 thousand ounces. Mining works and ore processing
Natalka
3Q 2018 Highlights
Mining works In the third quarter of 2018, volumes of rock moved totaled 13,088 thousand tonnes, while volumes of ore mined increased to 1,998 thousand tonnes, posting a 39% increase from the second quarter of 2018. In accordance with the mine plane, the average grades in ore mined increased to 1.05 g/t. During the reporting period, the Company finished assembling three Komatsu E730 trucks, bringing the total number of operating Komatsu E730 trucks of 186 t capacity to 17 units. In addition, Polyus delivered a TYHI WK -20 excavator to the site, to be commissioned in October. Ore processing In August 2018, Polyus stopped capitalising borrowing costs and other directly attributable operating costs related tothe development of Natalka, as the Natalka Mill reached commercial production. In the third quarter of 2018, the Company proceeded with the construction works at the Natalka Mill’s auxiliary infrastructure, including earthworks at the fuel warehouse and finishing works for an assay laboratory. The Company is also developing wireless broadband at Natalka, which, along with mining fleet automation system, will allow to improve control of mining equipment. The Company conducted scheduled maintenance works in July-August. The latter resulted in a temporary decline in ore treatment volumes compared to the previous quarter (1,623 thousand tonnes vs. 1,893 thousand tonnes). Over the course of the maintenance works, Polyus put the gyratory crusher MK-60-110E back into operation, in line with the previously outlined schedule. The average grade in ore processed was 1.32 g/t, an 18% increase on the previous quarter. By the end of the third quarter, as the Natalka Mill reached its annualized design throughput run rate, the ball mill motor went out of order due to a deformation of the mounting face for the bearing on the rotor shaft. Consequently, the Company has 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. The Company anticipates putting the ball mill back into operation post repairs in November 2018 and expects the mill to revert promptly to operating at full capacity. In December, Natalka will undergo scheduled maintenance. Mining works and ore processing
Sukhoi Log
3Q 2018 Highlights
Current status In the reporting period, Polyus launched the Pre-feasibility Study at Sukhoi Log, which is expected to be completed in 2020. The Company is currently proceeding with the drilling campaign. As at the end of the third quarter of 2018, Polyus had completed approximately 50% of the planned 105 thousand meters of in-fill drilling, which will be followed by deep-level and flank drilling. Polyus had also launched hydrogeological and geotechnical drilling program in the reporting period. The Company expects to have the Measured and Indicated Mineral Resources estimate by the end of 2018, and the Proven and Probable Mineral Reserves report – in 2020.
Financial update Gold sales In the third quarter of 2018, the Company sold a total of 699 thousand ounces of gold, a 32% increase on the previous quarter. Total gold sales include 92 thousand ounces of gold contained in the concentrate from Olimpiada. Estimated gold sales in the reporting period increased to approximately $819 million, compared to $683 million in the previous quarter and $733 million in the third quarter of 2017. Debt management As of the end of the third quarter of 2018, the Company’s gross debt decreased to $4,029 million, compared to $4,116 million as of the end of the second 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 September 2018, the Company’s estimated cash position was $1,000 million (30 June 2018: $908 million) and its estimated net debt position amounted to $3,029 million (30 June 2018: $3,208 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 $507 million as of the end of the third quarter. In the reporting period, Polyus attracted a new credit line facility with Sberbank in a total amount of RUB 65 billion due in 2024 to refinance existing Sberbank credit line facility due in 2019. The funds under the new facility will become available for drawdown by maturity of the existing Facility in April 2019. The Company plans to repay the principal amount and liabilities under cross-currency swaps in the amount of approximately $1.0 billion in 2019, in line with the current maturity schedule. Debt capital markets activities In September, Polyus has invited holders of its notes due 2020, 2022, 2023 and 2024 (the “Series”). to tender those notes for purchase in the aggregate maximum consideration amount of $300 million. The purchase prices were determined pursuant to a Modified Dutch Auction. Polyus repurchased ca. $132 million in aggregate principal amount of notes across all the Series. Dividends In August, the Board of Directors of PJSC Polyus has recommended the dividends for the first six months ended 30 June 2018 in the amount of 131.11 Russian roubles per ordinary share. The dividend amount is equivalent to approximately 1.91 U.S. dollars per ordinary share, or 0.96 U.S. dollars per depositary share (with two depositary shares representing interest in one ordinary share).[1] The total recommended dividend payout for the first half of 2018 will amount to 17,351,049,675.96 Russian roubles and correspond to $253.2 million, representing 30% of the Company’s EBITDA for the first half of 2018, in line with the Company’s dividend policy. The dividend has been approved by the Company’s Extraordinary General Shareholders’ Meeting on 28 September 2018. The dividend record date is set on 18 October 2018.
Conference call
Polyus will host an analyst conference call on 16 October 2018 at 3 pm London time (5 pm Moscow time) to present and discuss the third quarter operating results.
To join the conference call, please dial: Conference ID: 6018397
UK 0800 279 7204 (Toll free)
USA +1 646-828-8143 (Local access) 800-949-2175 (Toll free)
Russia 8 10 8002 8675011 (Toll free)
To access the replay, please dial: Passcode: 6018397 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.
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16.10.2018 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 |