Page 152 - RusRPTNov20

reported that it generated a “record quarterly free cash flow in 3Q20”, raising expectations of special dividends for 2H20. According to the new dividend policy,” the Board will now have the discretion to increase the final dividend amount to a maximum annual payout of 100% of free cash flow (provided that it is greater than 50% of underlying net income).” Leverage remained under control, with net debt at the end of 3Q20 down 5% y/y to $1.61bn.
Polymetal​’s Board of Directors has approved the construction of the Kutyn project. ​The company plans to start production at the asset in 2023, with average output of 90koz at AISC of $590/oz. The company estimates the project’s NPV at between $79mn (under gold at $1,200/oz) and $157mn ($1,500/oz). While the remaining capex is guided at $80mn, the company does not plan to change its production and capex guidance, as Kutyn is to offset lower production from Albazino (where management has decided not to proceed with expanding underground mining). The project as attractive, since the planned AISC of $590/oz is 34% below Polymetal’s 2020F average. We think this is due to the high-grade (3 g/t) oxide ore, which is only partly offset by the modest 70% recovery (due to the heap leach process, which has been chosen). Under our positive gold price outlook of $1,800/oz in the long term, the project's NPV might exceed $230mn and add some 5% to our production forecast (our model does not envisage an expansion of the Albazino underground mine). Hence, we treat the news as positive.
Polyus Gold​ posted a solid 3Q20 trading update, with gold production up 2% y/y to 771koz thanks to the 36% y/y growth in gold revenue.
“We noted a shrinkage of gold in flotation concentrate volumes (-32% y/y, 70koz), a lower stripping ratio (3.5x vs. 4.0x in 3Q19) and improved recovery rates (84% vs. 82% in 3Q19), all of, which point to better operational efficiency,” Sova Capital said in a note.
The company re-iterated its 2020 production target of approximately 2.8mnoz.
Polyus posted a solid 3Q20 trading update, with gold production up 2% y/y to 771koz. Gold sales demonstrated similar dynamics, increasing 6% y/y to 772koz, which resulted in gold revenue growing 36% y/y ($1.444bn) thanks to the appreciation in the gold price (+30% y/y, LBMA). The company re-iterated its 2020 production target of approximately 2.8mnoz.
Positive output dynamics among Polyus’ main assets delivered an output growth of 2% y/y in 3Q20. Olimpiada (+6% y/y, 255koz), Blagodatnoe (+23% y/y, 118koz) and Natalka (+17% y/y, 117koz) supported the growth, while high-cost operations at Lenzoloto
152 ​RUSSIA Country Report​ November 2020 www.intellinews.com