Russian gold and silver miner Polymetal anticipates a stronger financial performance in the second half of the year thanks to weaker local currencies and higher production, it said on Tuesday after first-half net profit fell. The weaker rouble, caused by lower oil prices and Western sanctions imposed on Russia over the Ukraine crisis, helped Polymetal cut dollar-denominated costs in the first half of 2015 and offset a drop in prices for precious metals.
Polymetal owns a gold and copper mine in Kazakhstan, whose volatile tenge currency has been falling due to low oil prices and the weak rouble in its former Soviet master, Russia. "The rouble and tenge weakening should more than offset the decline in gold and silver prices, that is why we expect the second half of the year to be stronger than the first half," Vitaly Nesis, Polymetal chief executive, told Reuters.
Polymetal's second-half production will be higher than in the first six months of the year thanks to seasonal factors, according to Nesis, and the company is still on track to produce 1.35 million ounces of gold equivalent for the full 2015. Thanks to the rouble weakening, Polymetal has reduced its full-year cash cost guidance to $525-575 per troy ounce of gold equivalent, a mix of gold and other metals, from a previously expected range of $575-625.
Its first-half net profit fell 2 percent to $98 million and revenue was down 11 percent to $648 million due to lower gold and silver prices, said the London-listed company, which is part-owned by businessman Alexander Nesis, a brother of Chief Executive Vitaly Nesis. The company has recommended a first-half dividend of $0.08 per share, unchanged from the same period of 2014. Polymetal added that it maintained its guidance for 2015 capital expenditure at $240 million and that it had secured a four-year, $170-million loan from Russian bank VTB in August. Its shares were down 0.4 percent in London at 1315 GMT on Tuesday, outperforming a 5.8 percent decline in the FTSE Gold Mines Index.
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