Page 156 - RusRPTOct20

Markets commented on September 10 that the sale is supportive for HGM’s financial position and free cash flow in 2020 with the cash part representing about 1.1% of the company’s market capitalisation. BCS GM analysts see the news as positive for the name. Most recently Russian tycoon Roman Abramovich and partners ​selling 40.06% in HGM​ to Fortiana Holdings of Vladislav Sviblov. HGM ​reported a revenue increase of 12% year on year to $195mn under IFRS in 1H20​ on higher realised gold prices outweighing lower sales volumes, with Ebitda up by 11% y/y to $96mn, making a margin of 50%.
According to a​ ​Polymetal​ press release, the company has completed an initial Mineral Resource estimate for the Tomtor niobium and rare-earth metals project​. JORC Mineral Resources at 31 December 2019 were 13.2mnt of ore available for open-pit mining at 5.9% Nb2O5 and 15% REO (rare-earth oxides) grade containing 0.8 Mt of Nb2O5 and 2.0 Mt of REO. The 15% REO grade includes 2.8% NdPr oxides. Polymetal plans to complete its estimates of the Tomtor reserves and a prefeasibility study in early 2021. The timing of the estimates is in line with Polymetal’s plans: the company had planned to publish the initial estimate of Tomtor resources this month. While niobium pentoxide and rare-earth oxide resources decreased vs. the GKZ estimate of 1.2mnt and 3.2mnt, respectively (33% and 38% respectively), it reflects mining dilution and losses incorporated into the JORC estimate, we believe, and is in line with GKZ to JORC conversion. At the same time, the economic attractiveness of the deposit improved, since JORC resources grades increased 45% and 42%, respectively. Additionally the company disclosed a 2.8% NdPr oxides grade, which confirms Tomtor as the highest-grade rare-earth deposit in the world. In March 2020, Polymetal purchased a 9.1% stake in Tomtor and noted the possibility of increasing its share in the project, subject to a reserves estimate. We expect the company to proceed in early 2021. Given the improved economics of the deposit, we view the news as slightly positive. The Tomtor project remains part of the company's long-term growth optionality.
Polymetal​ has started construction of its 450kt/a Voro flotation plant, Interfax reports. In 2019, Polymetal had planned to start the construction of the plant in March 2020; however, this was postponed by six months. As a result, it is possible that delays in the plant reaching full capacity could create 1.8% downside risk to our forecast for 2022F EBITDA.
● Steel
Novolipetsk Metallurgical Kombinat​ (NLMK) has suspended work at Stoilensky GOK for an undisclosed period due to the collapse of the conveyor gallery​, reports Interfax. The company noted that there were no injuries among workers, although two sustained bruises. Stoilensky GOK produces all of NLMK’s iron ore – 18.4mnt/a. We also forecast it to account for 40% of company’s EBITDA for 2020F. Given the uncertain period of repair work, we note that there is therefore downside risk to our forecast for the
156 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com