Page 128 - RusRPTFeb19

below 2g/t. Meanwhile, the company reported reaching the designed 10mnt capacity after the maintenance works in 4Q18, while noting a potential increase in capacity through debottlenecking (might suggest upside to our conservative throughput estimates in 2019F), VTBC said. “Despite reported gold revenues being under our forecasts on a lower market gold price, the company’s net debt of $3.09bn was 4%, or $120mn, below our estimates, which might be a reflection of lower working capital and capex for 4Q18,” VTBC concluded. The company increased its Sukhoi Log resources estimate 9% to 63moz, while also raising its resources grade 5% to 2.1 g/t, which improved its outlook on the project’s NPV. This might be additionally enhanced by the fact the maiden 28mnoz of indicated resources (part of the total) has a 14% higher grade, of 2.4g/t, which further reduces cost outlook for the project. A more bullish reserve estimate remains on track, to be announced in 2020. To recap, the company preliminarily estimatedthe project’s total cash costs at $420-470/oz, with the announced grade increase putting some 15% downside to it.
Russia's largest gold producer Sukhoi Log has completed half of its drilling program in the major Sukhoi Log mine with "promising results", Reuters reported on December 11 citing the CEO of the company Pavel Grachev. Grachev also told Reuters in an interview Polyus plans to reach full capacity at its new Natalka gold deposit in December or in early 2019. Located in the Irkutsk region in the middle of Russia, Sukhoi’s license has been on the docket for nearly two decades and accounts for quarter (28%) of all Russia’s gold resources. It has 1,953 tonnes of inferred gold resources under a B+C1+C2 category, 1,541 tonnes of silver and 799 tonnes of off-balance gold reserves. Natalka is not as big as Sukhoi but expected mine life is 31 years of open pit mining and the deposit has ore reserves of 16mn oz and mineral resources totalling 34mn, making it the 15th largest gold asset globally by reserves.
● Minerals
Sales of diamonds of Russia’s Alrosa jumped by 38% on the year and 20% on the month to US $328.7mn in December 2018 due to successful stock optimization, the company said in a statement late on January 11. “In the second half of the year, buying activity in the low-priced product segment significantly deteriorated due to weakening of the global market situation and both seasonality and destocking at a number of Indian midstream companies,” the company said quoting Yevgeny Agureyev, director of the United Selling Organization of Alrosa. “At the same time, the company was actively engaged in optimizing its stocks, which made it possible to increase sales in physical terms, despite a decline in production in 2018 by 8% to 36.6mn carats.” The company sold rough diamonds worth $323.7mn and polished diamonds worth $5mn. The company also raised its diamond sales by 6% on the year to $4.507bn in monetary terms in 2018, with the sales of rough diamonds reaching $4.412bn and sales of polished diamonds amounting to $95.3mn.
Russian diamond producer Alrosa reports modest 4Q18 trading update.
Russia’s diamond mining monopoly Alrosa has reported a mixed 4Q18 trading update: despite production reaching the company’s guidance, the sales data suggests that the average realised price was lower than expected, VTB Capital (VTBC) said in a note on January 25. “This leaves a reduced outlook on 4Q18 profitability, suggesting a 3% downside risk to our FY18F EBITDA forecast. Nevertheless, we reiterate our Buy recommendation on the name, with our unchanged 12-month Target Price of RUB 130 implying an ETR of 39%,” the
128 RUSSIA Country Report February 2019 www.intellinews.com