Russia’s Biggest Gold Miner Polyus Set for Production Boost

Russia’s largest gold producer, Polyus, is set to increase production to 2.8 million troy ounces while reducing its capital expenditure in 2019, its CEO Pavel Grachev told Reuters.

The company’s output this year is on track to reach the upper end of its forecast range of 2.375-2.425 million troy ounces, Grachev said on the sidelines of the Eastern Economic Forum in Vladivostok.

A ramp-up of production at its Natalka gold deposit in Russia’s Far East is at its final stage and it should allow Polyus to expect a capital expenditure drop to $650 million in 2019 and to $550 million in 2020 from $850 million in 2018, Grachev said.

Natalka is expected to reach full capacity in coming months.

Polyus has not been targeted by the U.S. sanctions. However, Washington included Suleiman Kerimov along with some other Russian businessmen on the SDN (Specially Designated Nationals) list in April. His son, Said Kerimov, controls the company.

Polyus’s 2019 budget will use the same estimates for the gold price and rouble/dollar exchange rate as its 2018 budget – $1,200 per troy ounce of gold and 60 roubles per dollar, Grachev said.

In June, the company said it planned to make a final investment decision on Sukhoi Log, one of the world’s largest untapped gold deposits, by 2020-2021, when it would also begin capital spending on construction.

Polyus said it expected construction CapEx to be in the range of $2 billion to $2.5 billion. Around $30 million will be spent on geological and engineering studies per year in the run-up to the investment decision at Sukhoi Log, located in the Irkutsk region of eastern Siberia.