Page 151 - RusRPTMar21

and the Leningrad region). With Enel Russia's appetite for renewables, we do not rule out a potential equity raise in the future (and nor has management; for details see our Enel Russia – Time-shifting investor trust, of 19 February 2021).
Federal Grid Company's plans through 2025. The report indicates that the plans were drafted based on the assumption that the company will finance the second stage of its Baikal-Amur Mainline (BAM) and Trans-Siberian Railway development projects with its own funds and debt, which implies that there will not be any budget subsidies or tariff hikes. Under these assumptions, the company's debt/EBITDA ratio could increase to 3.2-3.3 in 2023-25, which is above the 3.0 previously voiced as the maximum level. Kommersant reports that Federal Grid Company's plans envisage a total of R174 bln in capex on the aforementioned projects through 2025. This would be a major increase in capex, which, if financed with the company's own funds or debt, could affect free cash flow generation and, hence, dividend payments. As we see stable dividends as a cornerstone of Federal Grid's investment case, we expect the news to generate negative sentiment toward the stock.
9.2.11 Metallurgy & mining corporate news
● Gold & Diamonds
Polymetal is planning to bid for the license for the Kuchus gold deposit. Discovered in 1963 in Yakutia, Russia, the Kuchus gold deposit contains 5.6mnoz of gold (C1+C2) at an average grade of 8.5g/t. Given the size of the deposit, the new owner/developer is likely to face power supply issues, we consider. Polymetal is listed as a potential bidder for the license for the Kuchus gold deposit, which Russia’s Federal Agency on Subsoil Use (Rosnedra) is planning to auction off, Interfax reported. Discovered in 1963 above the Arctic Circle in Yakutia, Russia, the Kuchus gold deposit contains 5.6mnoz of gold (C1+C2) at an average grade of 8.5g/t, the main gold-bearing ores being arsenopyrite and pyrite. Given the size of the deposit, the new owner/developer is likely to face power supply issues, we consider. The potential bidders include Polymetal, Sunsky Karer, a JV between GV Gold and Atomredmetzoloto Uranium Holding, and Rosatom’s mining division. The auction for the deposit should take place in 2H21. Polymetal is currently developing the Nezhda gold project and evaluating the Prognoz silver project in Yakutia.
Polyus Gold has reported broadly neutral 4Q20 earnings, providing downbeat 2021 guidance due to higher capex, with both production and costs being in line with our estimates for 2021F. Although we remain positive on the gold price, which is set to be the key driver for the Polyus investment case, we lower our 12-m TP to $180/DR due to marking-to-market our 1H21F gold price forecasts. As Polyus now offers a 94% ETR, we reiterate our Buy
151 RUSSIA Country Report March 2021 www.intellinews.com