Page 197 - RusRPTMay21

Management update and guidance for 2021, of 31 March).
By September-October, the company plans to provide a 3-5-year strategy, containing Elginskoye construction plans, exploration opportunities and the potential increase of POX capacities. In addition, the company is likely to develop, and agree with shareholders, a dividend policy.
Polymetal will start gold mining at Veduga in 2025. Interfax reported, citing company CEO Vitaly Nesis. Polymetal and Krasnoyarsk region authorities signed an agreement to cooperate on the project with CapEx of $450mn. The company intends to launch gold mining at the Veduginsky field with a designed capacity of 8t (c282.19koz) of gold in 2025. In the first full year of operation, the enterprise should produce 7t (c246.92koz) of gold and, by 2028-29, reach full capacity at a volume of 8t (c282.19koz) per year. The deposit reserves are estimated at 2.8moz of gold.
Russian gold producer Polyus Gold released 1Q21 weak operating results on April 26, but that did not stop the company earning cash thanks to higher prices.
Production volumes were 10% below analysts expectations, reflecting the decline in the head grades at the company's main assets and a temporary WIP inventory increase, VTB Capital (VTBC) said in a note.
“The production guidance for 2021 was reiterated at 2.7mnoz, which we think is achievable if output at Blago and Natalka recovers,” VTBC said. The bank has a twelve-month target price for the stock of $180, which implies an 81% upside on the name leaving its BUY recommendation unchanged.
Gold output of 592koz in 1Q21 fell 1% year-on-year mainly due to problems at the company’s Olimpiada and Blago mines, where head grades and recoveries were 8% and 23% below expectations, respectively.
“At Olimpiada, this partly reflects the planned grade decline in line with the pit entering cut-back for Phase 4 mining (the main reason for the reduced 2.7mnoz guidance for 2021). However, at Blago the company has faced higher arsenic grades and increased ore hardness,” VTBC said. “The additional underperformance vs. our expectations was at Natalka, since recoveries failed to increase to 75% (71% reported).”
The management has left the 2021 guidance unchanged and is expecting to produce 2.7mnoz this year.
However, despite the problems cash generation remained intact.
197 RUSSIA Country Report May 2021 www.intellinews.com