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The CEO of Russian diamond major Alrosa, Sergey Ivanov, has met with President Vladimir Putin, and confirmed that the diamond sales for 4Q20 are expected to be at the same level as seen in 2019. Ivanov also noted that the potential purchases for the state reserves Gokhran will support the company in the adverse conditions on the diamond market. As reported by bne IntelliNews, the company surprised on the upside with strong sales in August, after previously struggling on the weak market and cancelling dividends for 1H20. The company also has recently improved its outlook on 3Q20, and further recovery in sales was seen in September. "The company’s expectations of a full recovery in 4Q20 are more positive than ours, as we expect Alrosa’ sales to be down 7% y/y in 4Q20 (in US dollar terms)," VTB Capital (VTBC) commented on October 13, while still reiterating a Buy recommendation on the name. VTBC treats the news about the Gokhran purchase as positive and expects $300mn of purchases in 4Q20 and an additional $300mn in 1Q21.
Polymetal reported good results with gold output up 7% y/y in 3Q20 and maintained its 2020 cost and output guidance, the company said on October 22.
Gold production increased 7% y/y to 477koz (Au Eq), with gold sales up 6% y/y. The strong price dynamics for gold during 3Q20 (+30% y/y, LBMA) supported the 35% y/y growth in gold revenue. Polymetal reported that it “generated record quarterly free cash flow” in 3Q20 while maintaining its 2020 cost guidance for TCC ($650- 700/oz) and AISC ($985-900/oz), as well as its 2020-21 production guidance of 1.5mnoz and 1.6mnoz, respectively.
Gold production gained momentum. Polymetal reported a 3Q20 gold output of 477koz (+7% y/y). Strong performances at Omolon (+40% y/y), Varvara (+35% y/y) and Voro (+24% y/y) underpinned the solid growth in output. Kyzyl, the largest gold producing asset within Polymetal’s portfolio (102koz, or 21% of 3Q20 output), posted a solid production growth of 8% y/y. The negative performance of Albazino-Amursk (-13% y/y) was driven by lower grades and throughput. The company abandoned its plans to double the size of its Olga underground mine (part of Albazino) due to the challenging geotechnical conditions. Management confirmed its production guidance of 1.5mnoz for 2020 and 1.6mnoz for 2021.
The above production growth came on top of the strong growth in the gold price (+30% y/y, LBMA), resulting in 3Q20 gold revenue growing 35% y/y to $884mn. The company re-iterated its 2020 cost guidance of $650-700/oz for TCC and $985-900/oz for AISC. The company
151 RUSSIA Country Report November 2020 www.intellinews.com
