Polymetal Continued to Generate Free Cash Flow in Third Quarter
Polymetal reports another strong set of the results, with 1,061 Koz of gold equivalent produced during the nine month period ended 30 September 2015, an increase of 2% year-on-year.
Gold equivalent production in the third quarter was 429 Koz, an increase of 28% quarter-on-quarter and 10% year-on-year driven by seasonal de-stockpiling of Mayskoye concentrate and a strong performance at Dukat and Albazino Quarterly gold production was 270 Koz, up 4% year-on-year. Silver production in the third quarter was 9.3 Moz, up 21% year-on-year.
Polymetal continued to generate free cash flow in the third quarter and paid out USD 34 million of interim dividends to shareholders. Net debt at 30 September 2015 increased by USD 35 million compared to 30 June 2015 to USD 1,268 million as the Company paid a net consideration of USD 68 million for the settlement of the Kyzyl put option. As is normal, silver sales lagged production during the first three-quarters of the year, as most of silver is sold in the form of concentrate to offtakers which results in a longer work-in-progress cycle. This trend is expected to be reversed before year-end with the corresponding cash inflows.
At Kyzyl, the external audit of the feasibility study is nearing completion, and the release of its results is scheduled for the third week of November. A significant capital expenditure reduction vs. earlier projections is expected, mostly due to the impact of depreciation of the Russian Rouble. Site preparation is already under way and full-scale construction is on track to commence in Q3 2016.
Polymetal will host an Analyst and Investor Day on November 16 in London to present and discuss the results of the Kyzyl feasibility study
Polymetal is especially focused on remedial measures in response to three fatalities at our mines from 1st of August to the date of this report. The Company has established a dedicated Safety and Sustainability Committee of the Board. The Committee's role will be to oversee the results of in-depth external audit of safety management systems, and to assist and monitor Polymetal's management in developing and implementing additional measures to improve safety performance and overall risk management efficiency in this area.
The Company remains in a strong position to meet its annual production guidance of 1.35 Moz of gold equivalent in 2015, along with its total cash cost guidance of USD 525-575/GE oz and all-in sustaining cash costs of USD 700-750/GE oz.
Guidance for 2016 reconfirmed at 1.35 Moz of gold equivalent and for 2017 at 1.4 Moz of gold equivalent.