Page 102 - RusRPTOct19

Russian gold producer Highland Gold reported 6% gain in revenues in 1H19 under IFRS to $175mn, as compared to 2H18 (h/h), in line with the consensus expectations. Company's Ebitda gained 6% h/h to $87, beating the consensus on strong cost control in the reporting period. Highland also posted net profit of $44mn on lower taxes. The board recommended dividends of $0.06 per share making a 2% yield and 33% payout ratio from operational cash flow, versus the expected 40%, but above the minimum payment of 20%. Highland also maintained its 2019 production guidance at 290,000-300,000 ounces of gold.
Polyus Gold CEO Pavel Grachev commented on the company's target capital structure, capital allocation policy and the Sukhoi Log project. Grachev said that additional FCF generated by the recent rise in the gold price will be used to repay debt and that there are no plans for special dividends. Polyus continues to calculate the IRR for investment projects based on a gold price of $1,050/oz. He reiterated the company's medium-term free-float target of 25-30%. He also said that the drilling program at Sukhoi Log has been completed and that the company still plans to provide an initial reserves estimate in 1H20.
Russian gold producer Petropavlovsk posts a net loss of $9mn in 1H19 under IFRS, despite Ebitda increasing by 37% year-on-year and coming in line with consensus expectations at $83mn. As reported by bne IntelliNews, Russian businessman Roman Trotsenko will continue to invest in gold asset consolidation with $0.7bn in the next two years, after acquiring a 22.4% stake in Petropavlovsk this month. Company's revenues gained 13% y/y to $305mn in 1H19, but was subdued by higher than expected costs. The miner’s 1H19 capital expenditure was at high $45mn versus $45mn-$55mn guidance for the whole year due to start of flotation facility at Pioneer. BCS GM maintained a Sell recommendation with a target price of GBP6.3 per share. Petropavlovsk confirmed a 2019 production guidance of 450,000-500,000 ounces.
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At the Investor Day in London on September 25 Russian fertiliser major Phosagro unveiled its growth plans seeing its European sales boosted by 25% to 2.7mn tonnes in 2019 and to 3.1mn tonnes by 2025, according to Vedomosti daily. Phosphate fertiliser consumption in Europe stands at about 14mn tonnes annually. The company sees its 2019 fertilizer output at 9.5mn tonnes, up by 6% y/y, with phosphate rock production expected to be 5% higher y/y at 10.5mn tonnes. Phosagro has already completed the three main projects of its 2020 strategy, such as $1bn ammonia and urea plants (which added $150mn to Ebitda), $145mn expansion of Apatite plant ($100mn) and $197mn phosphoric acid expansion project ($100mn). The company's key targets for 2025 are to reach 11.7mn tonnes of fertilizer output, 11.1mn tonnes phosphate rock output, 1.0-1.5x Net Debt/Ebitda (down from 1.3x seen in 1H19), with over $450mn of Ebitda generated from new projects.
The sales of Russian diamond major Alrosa in August 2019 increased diamond sales by 9% month-on-month to $180mn, but remained weak in year-on-year terms declining by 36% y/y. In 8M19 overall diamond sales were down 35% y/y to $1.13bn. This month Alrosa made an effort to improve its investment case by pledging to pay dividends for 2H19 even if cash flow turns negative.
The global diamond market environment remained unsupportive in
102 RUSSIA Country Report October 2019 ww.intellinews.com