23 Apr 2020 07:00
Press Release 23 April 2020
PJSC Polyus
Trading update for the first quarter of 2020
1Q 2020 Highlights
· Total gold output in the first quarter of 2020 amounted to 595 thousand ounces, compared to 804 thousand ounces in the fourth quarter of 2019. The decrease reflects a seasonal slowdown in production at Alluvials and lower refined gold volumes at Olimpiada, Blagodatnoye, Natalka and Kuranakh. At Olimpiada, Blagodatnoye and Natalka, a decrease in refined gold volumes mainly reflects changes in gold in inventory at the refinery.
· Volumes of ore mined amounted to 18,226 thousand tonnes, down 4% on the previous quarter, primarily reflecting lower ore volumes mined at Olimpiada.
· Volumes of ore processed decreased 7% to 10,698 thousand tonnes, compared to the previous quarter, primarily driven by lower processing volumes at Natalka, Olimpiada and Blagodatnoye.
· Recovery rate rose to 83.6%, compared to 83.2% in the fourth quarter of 2019, reflecting higher recoveries at Olimpiada and Blagodatnoye.
· Estimated gold sales amounted to $861 million, down 33% compared to the previous quarter, with an estimated weighted-average gold selling price of $1,592/oz (up 7% on the fourth quarter of 2019).
· As at 31 March 2020, the estimated net debt stood at $3,060 million, compared to $3,253 million as at the end of the previous quarter and $3,555 million as 31 March 2019. These amounts include the liabilities under cross currency and interest rate swaps related to RUB-denominated bank credit facilities and rouble bonds.
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:
In the face of the threat of COVID-19, the health and wellbeing of our employees and their families remain our top priority. We are taking action to protect our workers and to contribute to measures taken by the government to prevent the spread of the virus in the regions of our presence. While the Company's operations remain uninterrupted, we continue to assess any potential risks on a daily basis. We have also asked employees at our Moscow headquarters and a number of other offices to work from home until further notice.
Operationally, we have had a solid quarter, with total gold output of 595 thousand ounces almost flat year-on-year. The Company continues to progress with its development projects across its asset portfolio. In addition, we are finalizing feasibility studies on a number of new brownfield projects and will provide a detailed overview of those later in 2020.
At our main greenfield project, Sukhoi Log, we are proceeding with the in-fill drilling programme, and the Pre-Feasibility study is nearing completion."
ESG update: 1Q 2020
Highlights:
· Coronavirus: Production assets remain unaffected and are operating without interruption. Polyus has established a fund to fight COVID-19 in the Russian Far East and donated medical ventilators to hospitals in the regions of its operation
· LTIFR[1] at 0.07 (1Q 2019 - 0.08; FY 2019 - 0.08)
· No significant environmental incidents during 1Q 2020
Coronavirus response:
· Polyus and the Far East Development Fund have established a RUB 1 billion fund to finance activities aimed at preventing the spread of COVID-19 in the Russian Far East. Polyus and the Far East Development Fund will jointly finance 25% of the fund's activities.
· Polyus is donating 45 medical ventilators to hospitals in Krasnoyarsk Territory, Magadan Region, Irkutsk Region, and the Republic of Sakha.
· Production assets remain unaffected and are operating without interruption. Employees at Polyus' headquarters and a number of other units are working remotely until further notice. A coronavirus awareness campaign has been launched. Regular medical checks are conducted at business units and offices.
· Special preventive measures have been introduced at Polyus' operations: health checks for workers on arrival, daily temperature checks for all staff and contractor employees; daily disinfection of areas and equipment. Quarantine zones have been established at all operating assets in the event that any worker develops COVID-19 symptoms. Relevant action plans are in place and regular drills are being carried out.
Health and safety:
· Alluvials was certified under ISO 45001 (Occupational Health and Safety) and ISO 14001 (Environmental Management) and Verninskoye was certified under ISO 50001 (Energy Management).
· Company business units continue implementing action plans to minimise risk of injury
· Polyus' business units and supporting service units approved plans for the implementation of the corporate Standard on Interaction with Contractors on HSE during 2020.
· Industrial, electric and fire safety audits were held at Polyus Krasnoyarsk (Olimpiada and Blagodatnoye) and the Yeruda site of Polyus Logistics. An integrated HSE management system compliance audit was held at Verninskoye.
· A driving safety campaign is being rolled out across Polyus' operations. The number of traffic accidents at Polyus operations and Polyus Logistics service unit is declining.
· Polyus business units have successfully passed four unscheduled state HSE audits during 1Q.
Environment:
· Snap exercises on emergency responses were held at Natalka, with a focus on fuel truck fire and explosion leading to oil spillage. A total of 10 equipment units as well as contracted personnel took part.
· Polyus has selected a contractor to develop the company's climate strategy, climate risks register, and financial assessment in accordance with TCFD requirements.
· A total of 506.84 t used oil, 149.64 t worn tires and 13.56 t plastic waste were disposed of during 1Q 2020.
· Polyus improved its CDP score for Water Security and was named among the "frontrunners" in terms of biodiversity disclosure.
Social projects:
· Polyus supported a regional school environmental contest in Krasnoyarsk.
· In Magadan, Polyus supported regional geology and engineering student competitions at Magadan Polytechnics College and Northeastern State University.
External initiatives:
· Polyus participated in meetings held by the Industrial Safety Committee of the Russian Union of Industrialists and Entrepreneurs to discuss amendments to the industrial safety law.
· Experts from Polyus are members of the ICMM Tailings Review development working group. The launch of the Review has been delayed due to the COVID-19 pandemic.
· Polyus also participated in online ICMM working groups and committee meetings.
ESG Ratings:
· MSCI ESG - A (up from BBB in 2019)
· SAM - 45 (update planned for second half of 2020)
· Sustainalytics - ESG Risk Score 29.4 (Medium Risk)
· CDP: Water Security - D; Climate Change - D
Consolidated operating results
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Olimpiada | 215.0 | 300.8 | -29% | 239.9 | 282.7 | 248.3 | -13% |
Blagodatnoye | 103.4 | 126.2 | -18% | 96.5 | 104.1 | 94.0 | 10% |
Verninskoye | 69.1 | 63.9 | 8% | 63.3 | 61.7 | 67.0 | 3% |
Alluvials | - | 34.6 | n/a | 81.4 | 29.6 | - | n/a |
Kuranakh | 50.5 | 62.9 | -20% | 68.2 | 50.0 | 43.6 | 16% |
Natalka | 95.0 | 132.3 | -28% | 100.4 | 87.2 | 85.1 | 12% |
Refined gold, koz | 533.0 | 720.7 | -26% | 649.7 | 615.3 | 538.0 | -1% |
Flotation concentrate production, t | 26,185 | 33,756 | -22% | 38,732 | 22,725 | 26,149 | 0% |
Antimony in flotation concentrate, t | 2,739 | 4,936 | -45% | 4,978 | 3,732 | 1,127 | 143% |
Gold in flotation concentrate, koz | 61.9 | 83.3 | -26%` | 103.0 | 68.5 | 62.7 | -1% |
Gold payable in concentrate, koz | 48.5 | 61.8 | -22% | 76.4 | 50.8 | 46.5 | 4% |
Total gold output, koz | 594.9 | 804.0 | -26% | 752.7 | 683.8 | 600.7 | -1% |
Rock moved, kt | 83,352 | 83,591 | 0% | 86,868 | 80,738 | 77,666 | 7% |
Stripping ratio, t/t | 3.6 | 3.4 | 6% | 4.0 | 4.2 | 4.6 | -22% |
Ore mined, kt | 18,226 | 19,011 | -4% | 17,477 | 15,661 | 13,946 | 31% |
Ore processed, kt | 10,698 | 11,527 | -7% | 11,366 | 10,901 | 10,284 | 4% |
Recovery rate, % | 83.6% | 83.2% | 0.4ppts | 82.1% | 82.2% | 81.4% | 2.2ppts |
Total doré & slime gold output, koz | 660.2 | 714.3 | -8% | 770.2 | 705.9 | 656.2 | 1% |
1Q 2020 Highlights
· Total gold output in the first quarter of 2020 amounted to 595 thousand ounces, compared to 804 thousand ounces in the fourth quarter of 2019. The decrease reflects a seasonal slowdown in production at Alluvials and lower refined gold volumes at Olimpiada, Blagodatnoye, Natalka and Kuranakh. At Olimpiada, Blagodatnoye and Natalka, a decrease in refined gold volumes mainly reflects changes in gold in inventory at the refinery.
· Doré volumes totalled 660 thousand ounces, down 8% on the previous quarter. This decline is mainly attributable to decreased doré gold production at Olimpiada and Natalka as well as a seasonal downscale of production at the alluvial operations.
· Volumes of ore mined amounted to 18,226 thousand tonnes, down 4% on the previous quarter, primarily driven by lower ore volumes mined at Olimpiada.
· Volumes of ore processed decreased 7% to 10,698 thousand tonnes, compared to the previous quarter, primarily driven by lower processing volumes at Natalka, Olimpiada and Blagodatnoye.
· Recovery rate rose to 83.6%, compared to 83.2% in the fourth quarter of 2019, reflecting higher recoveries at Olimpiada and Blagodatnoye.
· Flotation concentrate output amounted to 26 thousand tonnes, down 22% on the fourth quarter 2019, comprising 8 thousand tonnes of merchant gold containing flotation concentrate and 18 thousand tonnes of antimony-rich flotation concentrate.
· Volumes of antimony in flotation concentrate declined by 45% compared to the fourth quarter, to 2.7 thousand tonnes, reflecting a temporarily decline in volumes of antimony-rich ore in processing at the Mill No. 1.
· Volumes of gold in flotation concentrate decreased 26% on the previous quarter, to 61.9 thousand ounces.
Olimpiada
1Q 2020 Highlights
Ø Volumes of ore processed totalled 3,503 thousand tonnes.
Ø Recovery rate rose to 84.8%, from 84.0% in the previous quarter.
Ø Doré gold output was 324 thousand ounces.
Gold output
Doré gold output in the first quarter of 2020 stood at 324 thousand ounces, down 4% compared to the previous quarter, mainly reflecting lower grades in ore processed. Total gold output (refined and concentrate) declined by 28% compared to the previous quarter, to 277 thousand ounces, due to changes in gold in inventory at the refinery. On a year on year basis, doré gold output declined by 7%, while total gold production was down 11%.
Mining works
Volumes of rock moved totalled 33,621 thousand tonnes, a 2% decline on the fourth quarter of 2019.
Under the mine plan, Polyus decreased the volumes of ore mined to 4,136 thousand tonnes, down 14% from the previous quarter. Polyus temporarily intensified mining activities at lower-grade zones of the Vostochny pit, which resulted in an 11% decrease in average grades to 2.93 g/t, from 3.30 g/t in the previous quarter. Polyus continued upgrading its mining fleet at Olimpiada in the reporting period, delivering two Komatsu bulldozers WD600-6 to the site. In the first quarter of 2020, the Company started exploration, hydrogeological and geomechanical drilling activities at the deep levels of the Vostochny pit at Olimpiada.
Ore processing
Volumes of ore processed totalled 3,503 thousand tonnes, down 4% compared to the previous quarter. This decrease reflects the sequence of maintenance works at Olimpiada, with Mill No. 3 undergoing scheduled maintenance in February 2020. Following a temporary decline in average grades in ore mined, average grades in ore processed decreased to 3.20 g/t in the first quarter of 2020.
The recovery rate rose further to 84.8%, up 0.8 ppts compared to the fourth quarter of 2019. This increase is mainly attributable to a decline in losses at CIL tailings filtration stage, following the introduction of an additional tailings classification circuit and the performance of flash flotation units, which were fully ramped up in the previous quarter. In addition, Polyus is proceeding with the calibration of processing parameters of the Jameson Cell flotation unit at Mill No. 1, while two Jameson Cell flotation units at Mill No. 3 were fully ramped up in the first quarter of 2020. The Company is continuing to implement of a throughput capacity expansion project at Olimpiada, which is aimed at stabilising throughput capacity at 13.4 million tonnes per annum.
Over the course of the first quarter, Polyus continued to upgrade and expand its existing BIO units. This includes the modernization of two reactors at BIO-3 unit and the introduction of magnetic separation, which improves the quality of flotation concentrate, fed into the BIO-reactors.
Mining works and ore processing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Rock moved, kt | 33,621 | 34,388 | -2% | 35,508 | 33,361 | 32,232 | 4% |
incl. stripping, kt | 29,485 | 29,554 | 0% | 30,465 | 27,692 | 27,065 | 9% |
Stripping ratio, t/t | 7.1 | 6.1 | 16% | 6.0 | 4.9 | 5.2 | 37% |
Ore mined, kt | 4,136 | 4,834 | -14% | 5,043 | 5,669 | 5,167 | -20% |
Average grade in ore mined, g/t | 2.93 | 3.30 | -11% | 3.52 | 3.48 | 3.36 | -13% |
Ore processed, kt | 3,503 | 3,645 | -4% | 3,416 | 3,358 | 3,489 | 0% |
Average grade in ore processed, g/t | 3.20 | 3.88 | -18% | 4.01 | 4.03 | 3.76 | -15% |
Recovery, % | 84.8% | 84.0% | 0.8ppts | 82.5% | 82.1% | 80.8% | 4.0ppts |
Doré gold, koz | 323.7 | 338.4 | -4% | 356.1 | 343.1 | 348.2 | -7% |
Refined gold output, koz | 215.0 | 300.8 | -29% | 239.9 | 282.7 | 248.3 | -13% |
Flotation concentrate production, t | 26,185 | 33,756 | -22% | 38,732 | 22,725 | 26,149 | 0% |
Antimony in flotation concentrate, t | 2,739 | 4,936 | -45% | 4,978 | 3,732 | 1,127 | 143% |
Gold contained in concentrate, koz | 61.9 | 83.3 | -26% | 103.0 | 68.5 | 62.7 | -1% |
Total gold output, koz | 276.9 | 384.1 | -28% | 342.9 | 351.2 | 311.0 | -11% |
Blagodatnoye
1Q 2020 Highlights
Ø Volumes of ore processed totalled 2,188 thousand tonnes.
Ø Recovery rate rose to 88.7%, from 88.5% in the previous quarter.
Ø Doré gold output was 113 thousand ounces.
Gold output
Doré gold output in the first quarter of 2020 amounted to 113 thousand ounces, remaining almost flat compared to the previous quarter and up 12% compared to the prior-year period. Refined gold output amounted to 103 thousand ounces, compared to 126 thousand ounces in the previous reporting period, reflecting changes in gold in inventory at the refinery. On a year on year basis, refined gold output increased 10%.
Mining works
Volumes of rock moved amounted to 16,678 thousand tonnes, remaining almost flat compared to the previous quarter.
Volumes of ore mined decreased by 8% to 4,986 thousand tonnes, compared to 5,443 thousand tonnes in the fourth quarter of 2019. In line with the sequence of mining works, average grades in ore mined rose to 1.23 g/t in first quarter of 2020 (from 1.11 g/t in the previous quarter).
Ore processing
The average grade in ore processed stood at 1.76 g/t.
Volumes of ore processed totalled 2,188 thousand tonnes, a 6% decrease compared to the previous quarter, as scheduled maintenance works were carried out at Mill No. 4 in March 2020.
Recovery rate increased to 88.7%, compared to 88.5% in the fourth quarter of 2019. During the reporting period, the Company fully ramped up the Jameson Cell flotation unit at Mill-4.
Polyus is proceeding with the Feasibility Study for the construction of a new mill (Mill-5). The Feasibility Study is expected to be completed in 2020.
Mining works and ore processing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Total rock moved, kt | 16,678 | 16,727 | 0% | 17,691 | 16,334 | 17,050 | -2% |
including stripping, kt | 11,692 | 11,284 | 4% | 13,299 | 13,754 | 14,835 | -21% |
Stripping ratio, t/t | 2.3 | 2.1 | 10% | 3.0 | 5.3 | 6.7 | -66% |
Ore mined, kt | 4,986 | 5,443 | -8% | 4,392 | 2,580 | 2,215 | 125% |
Average grade in ore mined, g/t | 1.23 | 1.11 | 11% | 1.17 | 1.34 | 1.20 | 3% |
Ore processed, kt | 2,188 | 2,340 | -6% | 2,061 | 2,322 | 2,282 | -4% |
Average grade in ore processed, g/t | 1.76 | 1.77 | -1% | 1.72 | 1.61 | 1.57 | 12% |
Recovery, % | 88.7% | 88.5% | 0.2ppts | 87.7% | 87.5% | 87.5% | 1.2ppts |
Doré gold, koz | 113.0 | 114.5 | -1% | 101.1 | 104.4 | 101.2 | 12% |
Refined gold output, koz | 103.4 | 126.2 | -18% | 96.5 | 104.1 | 94.0 | 10% |
Verninskoye
1Q 2020 Highlights
Ø Volumes of ore mined rose to 1,527 thousand tonnes, up 20%
from the previous quarter.
Ø Average grade in ore processed stood at 2.90 g/t.
Ø Refined gold output increased to 69 thousand ounces.
Gold output
Doré gold output in the first quarter of 2020 amounted to 65 thousand ounces, down 3% compared to the previous quarter. On a year on year basis, doré gold output increased 7%. Refined gold output amounted to 69 thousand ounces, compared to 64 thousand ounces in the fourth quarter of 2019, reflecting changes in gold in inventory at the refinery.
Mining works
Volumes of rock moved increased 28% compared to the previous quarter, to 7,517 thousand tonnes, in line with the mining plan. Volumes of ore mined increased to 1,527 thousand tonnes, up 20% on the previous quarter.
Mining activities were focused on lower-grade areas of the deposit, which resulted in a 14% grade decline (1.99 g/t in the first quarter of 2020 vs 2.32 g/t in the fourth quarter of 2019).
Ore processing
During the reporting period, the average grade in ore processed stood at 2.90 g/t, remaining unchanged from the previous quarter.
The recovery rate stood at 89.6% and remained flat compared to the previous quarter.
Volumes of ore processed amounted to 778 thousand tonnes, down 2% on the previous quarter, reflecting scheduled maintenance works at the Verninskoye Mill, completed in March 2020. This decline was partially offset by an increase in hourly throughput (398 t/h in the first quarter of 2020 compared to 374 t/h in the fourth quarter of 2019).
The Company implemented a number of initiatives, including an optimisation of particle size distribution, installation of an additional HP300 cone crusher and a temporary addition of Knelson concentrator at the first stage of gravity concentration, which led to an increase in hourly throughput. Polyus continues further expansion of the Verninskoye Mill to 3.5 million tonnes per annum.
Mining works and ore processing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Total rock moved, kt | 7,517 | 5,879 | 28% | 6,682 | 6,263 | 5,649 | 33% |
including stripping, kt | 5,990 | 4,605 | 30% | 5,426 | 5,323 | 4,671 | 28% |
Stripping ratio, t/t | 3.9 | 3.6 | 8% | 4.3 | 5.7 | 4.8 | -19% |
Ore mined, kt | 1,527 | 1,274 | 20% | 1,256 | 940 | 978 | 56% |
Average grade in ore mined, g/t | 1.99 | 2.32 | -14% | 2.30 | 3.01 | 2.66 | -25% |
Ore processed, kt | 778 | 796 | -2% | 724 | 790 | 725 | 7% |
Average grade in ore processed, g/t | 2.90 | 2.90 | 0% | 2.90 | 2.90 | 2.90 | 0% |
Recovery, % | 89.6% | 89.6% | 0.0ppts | 89.5% | 89.5% | 89.5% | 0.1ppts |
Doré gold , koz | 65.0 | 66.7 | -3% | 60.7 | 66.1 | 60.5 | 7% |
Refined gold output, koz | 69.1 | 63.9 | 8% | 63.3 | 61.7 | 67.0 | 3% |
Alluvials
1Q 2020 Highlights
Ø Due to the seasonality of placer deposits no gold was produced at Alluvials in the first quarter of 2020.
Ø As usual, the washing season ended in November 2019 and was resumed in April 2020.
Ø Maintenance and preparation works were conducted at the deposits.
Sands washing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Sands washed, 000 m³ | - | 1,207 | n/a | 5,115 | 2,259 | - | n/a |
Average grade, g/m³ | - | 0.54 | n/a | 0.52 | 0.55 | - | n/a |
Gold in slime, koz | - | 21.1 | n/a | 84.9 | 39.6 | - | n/a |
Refined gold output, koz | - | 34.6 | n/a | 81.4 | 29.6 | - | n/a |
Kuranakh
1Q 2020 Highlights
Ø Ore processed volumes totalled 1,467 thousand tonnes, down 3% on the previous quarter.
Ø Both grades in ore processed and recovery rate at the Mill remained unchanged.
Ø Refined gold output was 51 thousand ounces.
Gold output
Doré gold output in the first quarter of 2020 amounted to 52 thousand ounces, a 7% decline compared to the fourth quarter of 2019, mainly due to a temporary seasonal suspension of heap leaching operations. On a year on year basis, doré gold output increased 11%. Refined gold output amounted to 51 thousand ounces, down 20% on the previous quarter, reflecting lower doré gold output and changes in gold in inventory at the refinery.
Mining works
Volumes of rock moved amounted to 7,675 thousand tonnes, up 4% on the previous quarter. Volumes of ore mined increased by 2%, to 1,728 thousand tonnes, compared to the fourth quarter of 2019.
Average grades stood at 1.17 g/t compared to 1.21 g/t in the fourth quarter of 2019.
Ore processing
Volumes of ore processed at the Kuranakh Mill remained largely flat at 1,467 thousand tonnes.
The recovery rate and average grade in ore processed at the Mill were 89.0% and 1.25 g/t, respectively, remaining unchanged from the fourth quarter of 2019.
Heap leaching
Due to the seasonality of heap leaching operations, these will be resumed in the second quarter of 2020.
Mining works and ore processing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Total rock moved, kt | 7,675 | 7,373 | 4% | 8,083 | 7,965 | 7,392 | 4% |
including stripping, kt | 5,947 | 5,682 | 5% | 5,831 | 5,685 | 5,766 | 3% |
Stripping ratio, t/t | 3.4 | 3.4 | 0% | 2.6 | 2.5 | 3.5 | -3% |
Ore mined, kt | 1,728 | 1,691 | 2% | 2,252 | 2,280 | 1,626 | 6% |
Average grade in ore mined, g/t | 1.17 | 1.21 | -3% | 1.03 | 1.04 | 1.14 | 3% |
Total ore processed, kt | 1,467 | 1,505 | -3% | 2,313 | 1,720 | 1,344 | 9% |
Mill | |||||||
Ore processed, kt | 1,467 | 1,457 | 1% | 1,469 | 1,364 | 1,344 | 9% |
Average grade in ore processed, g/t | 1.25 | 1.25 | 0% | 1.21 | 1.23 | 1.22 | 2% |
Recovery, % | 89.0% | 89.0% | 0.0ppts | 88.8% | 88.9% | 88.7% | 0.3ppts |
Doré gold, koz | 52.3 | 52.0 | 1% | 50.3 | 48.2 | 47.2 | 11% |
Heap-leach | |||||||
Ore processed, kt | - | 48 | n/a | 844 | 356 | - | n/a |
Average grade in ore processed, g/t | - | 0.77 | n/a | 0.78 | 0.73 | - | n/a |
Recovery, % | - | 72.3% | n/a | 72.3% | 72.3% | - | n/a |
Doré gold, koz | - | 4.4 | n/a | 17.4 | 6.1 | - | n/a |
Total doré gold, koz | 52.3 | 56.4 | -7% | 67.7 | 54.3 | 47.2 | 11% |
Refined gold output, koz | 50.5 | 62.9 | -20% | 68.2 | 50.0 | 43.6 | 16% |
Natalka
1Q 2020 Highlights
Ø Volumes of ore processed amounted to 2,762 thousand tonnes.
Ø Recovery rate stood at 70.7%.
Ø Refined gold output reached 95 thousand ounces.
Gold output
Doré gold output in the first quarter of 2020 amounted to 106 thousand ounces, down 9% compared to the previous quarter. On a year on year basis, doré gold output increased 7%. Refined gold output amounted to 95 thousand ounces, compared to 132 thousand ounces in the fourth quarter of 2019, reflecting changes in gold in inventory at the refinery.
Mining works
In the first quarter of 2020, volumes of rock moved totalled 17,861 thousand tonnes, while volumes of ore mined rose to 5,849 thousand tonnes. The average grades in ore mined rose to 1.31 g/t (1.17 g/t in the fourth quarter of 2019). During the course of the first quarter, Polyus progressed with the construction of the Natalka Mill's auxiliary infrastructure. The Company plans to complete the construction and commissioning of the main tailings storage facility in 2020.
Ore processing
Volumes of ore processed decreased to 2,762 thousand tonnes, down 15% on the previous quarter. This reflects scheduled maintenance works at the Natalka Mill, completed in February 2020. In the first quarter of 2020, hourly throughput at the Natalka Mill remained above 1,500 t/h, in line with the previous quarter, exceeding its initial nameplate hourly throughput capacity of 1,227 t/h.
The average grade in ore processed remained largely flat quarter-on-quarter at 1.59 g/t. The recovery rate decreased to 70.7% due to calibration of comminution parameters, following the installation of rubber-steel lining in the ball mill. This also reflects temporary variations in the feed composition, with a higher share of ore from the Northern pit area with lower gravity recoverability.
The Company is continuing to implement operational initiatives targeting further recovery rate improvement at Natalka. Polyus is currently proceeding with the installation of the first Outotec flotation machine. The Company targets the roll out of flash flotation technology at the Natalka Mill in 2020.
In the reporting period, Polyus's technical team completed the introduction of a magnetic separation to remove recirculating scrap metal at the ball mill and at the intensive cyanidation tailings circuit. In addition, the Company commissioned two concentration shaker tables at the first and the fourth stages of the gravity circuit to increase the productivity of intensive cyanidation.
Mining works and ore processing
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Total rock moved, kt | 17,861 | 19,218 | -7% | 18,904 | 16,809 | 15,343 | 16% |
including stripping, kt | 12,012 | 13,450 | -11% | 14,370 | 12,618 | 11,383 | 6% |
Stripping ratio, t/t | 2.1 | 2.3 | -9% | 3.2 | 3.0 | 2.9 | -28% |
Ore mined, kt | 5,849 | 5,768 | 1% | 4,534 | 4,191 | 3,960 | 48% |
Average grade in ore mined, g/t | 1.31 | 1.17 | 12% | 1.13 | 1.10 | 1.08 | 21% |
Ore processed, kt | 2,762 | 3,241 | -15% | 2,852 | 2,711 | 2,444 | 13% |
Average grade in ore processed, g/t | 1.59 | 1.61 | -1% | 1.51 | 1.56 | 1.78 | -11% |
Recovery, % | 70.7% | 72.3% | -1.6ppts | 71.6% | 71.4% | 71.7% | -1.0ppts |
Doré gold, koz | 106.2 | 117.2 | -9% | 99.8 | 98.3 | 99.1 | 7% |
Refined gold output, koz | 95.0 | 132.3 | -28% | 100.4 | 87.2 | 85.1 | 12% |
Sukhoi Log
1Q 2020 Highlights
Ø The Pre-Feasibility Study is at an advanced stage.
Pre-Feasibility Study highlights
In the reporting period, the Company proceeded with the Project's capital estimate. The Project's mine plan is currently being finalised with the focus on optimising mining and stripping volumes to provide for smooth ramp-up and optimal grades in processing. Other parts of the Pre-Feasibility Study, including metallurgy and processing, project infrastructure, environment and logistics have been completed and are undergoing a comprehensive internal review.
Based on the assessment of the drilling samples obtained during the 2019 exploration and verification programme, the Company expects to provide a further update on the Inferred & Indicated Mineral Resources estimates and publish a maiden Ore Reserve estimate for Sukhoi Log in 2020.
Additional drilling activity at Sukhoi Log
In the reporting period, Polyus completed 5,417 meters of a 30,000 meter in-fill drilling programme at Sukhoi Log, planned for 2020. The drilling works are focused on the future pit area, where Polyus expects to carry out mining activities during the first years of Sukhoi Log's operations. This will allow the Company to better define the gold mineralisation within this area and enable more accurate planning and sequence of the mining works.
The Company also plans to conduct additional drilling at Sukhoi Log's flanks and deep levels in 2020.
FINANCIAL UPDATE
Gold sales
In the first quarter of 2020, the Company sold a total of 544 thousand ounces of gold, a 39% decrease on the previous quarter. Total gold sales include 11 thousand ounces of gold contained in the concentrate from Olimpiada.
Estimated gold sales in the reporting period totalled approximately $861 million, compared to $1,277 million in the previous quarter and $741 million in the first quarter of 2019.
Debt management
The Company's gross debt decreased to $4,565 million, compared to $5,086 million as at the end of the fourth quarter of 2019. At the same time, the Company's gross debt, including liabilities under cross-currency and interest rate swaps related to RUB-denominated bank credit facilities decreased to $4,938 million, compared to $5,054 million in the previous quarter. In the reporting period, Polyus prepaid several credit facilities in a total amount of approximately $115 million.
As at 31 March 2020, the Company's estimated cash position was $1,878 million (31 December 2019: $1,801 million). The estimated net debt position decreased compared to the previous quarter and amounted to $2,687 million (31 December 2019: $3,285 million), while the estimated net debt position, including the liabilities under cross currency and interest rate swaps decreased to $3,060 million (31 December 2019: $3,253 million). The group's liabilities under cross currency and interest rate swaps related to RUB-denominated bank credit facilities and rouble bonds totalled approximately $373 million as of the end of the first quarter.
The Company plans to repay the principal amount of $677 million notes outstanding due in April 2020 from own cash.
SPPP programme update
In February, the Company adjusted the call options for 2020, with call strikes and barriers adjusted upwards and 242.5 thousand ounces out of 280 thousand ounces remaining under call options for 2020 relocated to 2021 with no premium paid.
Subsequently, in March 2020, the Company decided to fully close out its revenue stabiliser programme, with total premium of ca. $32 million paid. In the first quarter of 2020, there was no SPPP effect on the Company's revenue. There are no gold hedges outstanding as at 31 March 2020.
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
Debt maturities [2], $ mln | 690 | 454 | 499 | 1,061 | 2,076 | 31 |
Eurobonds | Bank loans | Convertibles | Finance lease | Local rouble bonds |
53% | 31% | 4% | 2% | 10% |
1Q'20 | 4Q'19 | Q-o-Q | 3Q'19 | 2Q'19 | 1Q'19 | Y-o-Y | |
Refined gold sold, koz | 533 | 722 | -26% | 650 | 628 | 548 | -3% |
Gold contained in concentrate, koz | 11 | 172 | -94% | 79 | 57 | 22 | -50% |
Gold payable in concentrate, koz | 9 | 140 | -94% | 67 | 46 | 18 | -50% |
Total gold sales, koz | 544 | 894 | -39% | 729 | 685 | 570 | -5% |
Gold sales (incl. an SPPP effect), $ mln | 861 | 1,277 | -33% | 1,061 | 886 | 741 | 16% |
Weighted-average refined gold selling price (excl. SPPP), $/oz | 1,592 | 1,482 | 7% | 1,482 | 1,314 | 1,308 | 22% |
Weighted-average refined gold selling price (incl. SPPP), $/oz | 1,592 | 1,482 | 7% | 1,482 | 1,314 | 1,308 | 22% |
SPPP effect, $ mln | 0 | 0 | n/a | 0 | 0 | 0 | n/a |
Average LBMA price, $/oz | 1,583 | 1,481 | 7% | 1,472 | 1,309 | 1,304 | 21% |
Net debt, $ mln | 2,687 | 3,285 | -18% | 3,317 | 3,639 | 3,011 | -11% |
Net debt (incl. derivatives), $ mln | 3,060 | 3,253 | -6% | 3,393 | 3,665 | 3,555 | -14% |
CONFERENCE CALL INFORMATION
Polyus will host an analyst conference call on 23 April 2020 at 3 pm London time (5 pm Moscow time) to present and discuss the first quarter operating results.
To join the conference call, please dial:
Conference ID: 55043563#
UK
+44 207 194 37 59 (Local access)
0800 376 61 83 (Toll free)
USA
+1 646 722 49 16 (Local access)
844 286 06 43 (Toll free)
Russia
+7 495 646 93 15 (Local access)
8 800 500 98 63 (Toll free)
To access the replay, please dial:
Passcode: 418925932#
UK
+44 20 3364 5147
USA
+1 (646) 722-4969
Russia
+7 (495) 249-16-71
Enquiries:
Investor and Media contact
Victor Drozdov, Director Communications & Investor Relations (CIR) Department
+7 495 641 33 77
drozdovvi@polyus.com
Forward looking statements
This announcement may contain "forward-looking statements" concerning Polyus and/or Polyus Group. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of Polyus' and/or Polyus Group's operations. Many of these risks and uncertainties relate to factors that are beyond Polyus' and/or Polyus Group's ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as of the date of this announcement. Polyus and/or any Polyus Company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.
[1] Based on a 200,000 work hours factor.
[2] Net of non-cash IFRS adjustments