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Polymetal Int PLC POLY Q3 and 9M 2012 production results



  Polymetal Int PLC (POLY) - Q3 and 9M 2012 production results

RNS Number : 8682O
Polymetal International PLC
17 October 2012
 



 

              

Release time IMMEDIATE
Date         17  October
             2012

 

 

Polymetal International plc

  Q3 and 9M 2012 production results and interim management statement

 

Polymetal International  plc  (LSE:  POLY) (together  with  its  subsidiaries, 
including JSC "Polymetal"  - "Polymetal",  the "Company", or  the "Group")  is 
pleased to announce the Group's production  results for the third quarter  and 
nine months ended September 30, 2012.

HIGHLIGHTS

·     Polymetal  has  posted  another  strong  quarter,  with  quarterly  gold 
equivalent production  reaching  an all-time  high  of 317  Koz,  growing  48% 
year-on-year and 7%  quarter-on-quarter. Gold equivalent  production for  nine 
months ended 30 September 2012 was 818 Koz, up 46% year-on-year. This superior
operating performance  was driven  by continued  strong production  growth  at 
Omolon, further progress  at Albazino-Amursk,  and improved  grade profile  at 
Khakanja;

·      Sales  were   ahead  of  production,   most  importantly  for   silver, 
representing an expected reduction in  inventory (most importantly, at  Omolon 
and Dukat) and thus contributing to stronger operating cash flows.

·     Ramp-up  of Amursk  POX is  catching  up with  the plan,  after  several 
unscheduled shutdowns in Q3 due to the need for additional welding work.  Full 
ramp-up expected to be achieved in November 2012.

·     Based  on  the  strong  performance already  achieved,  the  Company  is 
revising its FY2012 production  guidance to 1,050 Koz  of gold equivalent,  up 
from original 1,000 Koz. In 2013, the Company expects to produce approximately
1,200 Koz of gold  equivalent, including approximately 760  - 800 Koz of  gold 
and approximately 23 - 24  Moz of silver and  5 - 6 Kt  of copper. The 2012  - 
2013 production  guidance is  revised  cumulatively down  by  50 Koz  of  gold 
equivalent (approx. 2%), mostly due to the delay in the expected commissioning
of Mayskoye concentrator.  Production guidance  for 2014 remains unchanged  at 
1,400 Koz of gold equivalent.

·     The Board of  Directors has approved changes  to the Company's  dividend 
policy, raising minimum payout ratio to 30% of net earnings (provided that Net
debt /  Adjusted  EBITDA ratio  does  not exceed  1.75),  introducing  interim 
dividends, and instituting  special dividend to  be considered at  the end  of 
each financial year.

"We have demonstrated another record  quarterly performance this year,  driven 
by strong operational delivery at both mature and new operations and  allowing 
us to beat our original production guidance. Importantly, during this  quarter 
we have essentially closed the gap between production and sales, resulting  in 
stronger than  expected  cash flow  performance"  said Vitaly  Nesis,  CEO  of 
Polymetal. "The new  dividend policy adopted  by the Board  will ensure  sound 
capital  discipline  and  consistent  decision-making  in  allocation  of  our 
financial resources".

                  3 months ended Sep             9 months ended Sep
                          30,         % change^1        30,         % change^1
                     2012      2011                2012      2011
Waste mined, Kt     22,723    21,451     +6%      65,172    62,182     +5%
Underground         11,363    8,779      +29%     33,938    24,635     +38%
development, m
Ore mined, Kt       3,714     3,551      +5%       9,492    7,990      +19%
Open-pit            3,296     3,198      +3%       8,260    6,963      +19%
Underground          418       352       +19%      1,232    1,026      +20%
Ore processed, Kt   2,680     2,609      +3%       7,506    6,679      +12%
Production
Gold, Koz            196       117       +68%       452      307       +47%
Silver, Moz          6.8       5.3       +27%      20.5      13.5      +52%
Copper, tonnes      1,718     1,796      -4%       4,897    5,308      -8%
Gold equivalent,     317       214       +48%       819      559       +46%
Koz^2
Sales
Gold, Koz            197       112       +77%       415      299       +39%
Silver, Moz          7.6       4.7       +61%      20.0      12.0      +67%
Copper, tonnes      1,506      683      +121%      4,887    3,254      +50%
Revenue, US$m^3      530       374       +42%      1,283     920       +39%
Safety
LTIFR                0.46      0.50      -8%       0.60      0.70      -14%
FIFR                  -         -        NA^4        -        -         NA
Notes:     (1) % changes can be different from zero even when absolute numbers
are unchanged because of rounding. Likewise, % changes can be equal to zero
when absolute numbers differ due to the same reason. This note applies to all
the tables in this release.

                (2) Based on 1:60 Ag/Au and 5:1 Cu/Au conversion ratios.

                (3) Calculated based on the unaudited consolidated management
accounts (except for the 1H 2012 and 1H 2011 results which are based on the
reviewed and audited  consolidated financial statements, respectively).
Concentrate sales are recorded based on forward prices for the expected dated
of final settlement and concentrate revenue is presented net of refining and
treatment charges.

                (4) NA = not available

CONFERENCE CALL AND WEBCAST

Polymetal will hold a  conference call and webcast  on Wednesday, October  17, 
2012 at 5:30 pm Moscow time (2:30 pm London time; 9:30 am New York time).

To participate in the call, please dial:

810 8002 198 4011 (toll-free from Russia), or

0800 358 5256 (toll-free from the UK), or

1 877 941 6013 (toll-free from the US), or

44 20 7190 1596 (from outside the UK, the US and Russia), or follow the link:

http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=1852 

Please be prepared to introduce yourself to the moderator or register.

A  recording  of   the  call   will  be  available   on  Polymetal's   website 
(www.polymetalinternational.com)                    and                     at 
http://polymetal171012-live.audio-webcast.com immediately after  the call.  It 
will also be available at 0800 358 9369 (toll-free from the UK) or 44 20  7959 
6720 (from outside  the UK), access  code 4569864#, from  7:30 pm Moscow  time 
Wednesday, October 17, till 11:59 pm Moscow time Wednesday, October 24, 2012.

 

Enquiries

    Media                         Investor Relations
College Hill   +44 20 7457    Polymetal          ir@polymetalinternational.com
               2020
Leonid Fink                   Maxim Nazimok       

Tony Friend                   Evgenia Onuschenko +7 812 313 5964 (Russia)

                              Elena Revenko      +44 20 7016 9503 (UK)
    Joint Corporate Brokers        
Morgan Stanley +44 20 7425    Canaccord Genuity  +44 20 7523 8350
               8000
Sam McLennan                  John Prior

Sandip Patodia                Roger Lambert

 

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE,
"FORWARD-LOOKING STATEMENTS".  THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS
AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS
"TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY",
"ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH
CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS,
OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS.  THESE FORWARD-LOOKING
STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS.  BY THEIR
NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO
BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.  SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT
AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL
OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE.  THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED
IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY
OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE
COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS
OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED

 

DUKAT OPERATIONS

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Dukat
Waste mined, Kt           269      192      +40%      865      558      +55%
Underground
development, m           5,749    4,151     +38%    17,485    10,759    +63%
Ore mined, Kt             311      310      +0%      1030      862      +20%
Open-pit                  16        60      -73%      131      139      -6%
Underground               295      250      +18%      899      723      +24%
Goltsovoye
Underground
development,  m          1,543    1,207     +28%     3,656    2,922     +25%
Ore mined
(underground), Kt         31        39      -20%      51       118      -57%
Lunnoye + Arylakh
Waste mined, Kt           607      767      -21%     1,985    2,128     -7%
Underground
development, m           1,124     554     +103%     3,303    1,613    +105%
Ore mined, Kt             87        75      +16%      280      235      +19%
Open-pit                  43        37      +16%      133      121      +10%
Underground               44        38      +15%      147      114      +29%
PROCESSING
Dukat
Ore processed, Kt         301      377      -20%     1,073     1041     +3%
Head grades
Gold, g/t                0.69      0.62     +11%     0.67      0.7      -0%
Silver, g/t               398      334      +19%      407      365      +12%
Recovery^1
Gold                     82.7%    79.0%     +5%      79.9%    83.8%     -5%
Silver                   86.0%    82.7%     +4%      83.8%    75.6%     +11%
Production
Gold, Koz                 5.3      7.0      -24%     18.3      16.8     +9%
Silver, Moz               3.2      3.9      -17%     11.5      9.2      +26%
 

Lunnoye
Ore processed, Kt         87        66      +33%      251      219      +15%
Head grades
Gold, g/t                 1.1      1.1      -1%       1.2      1.2      +0%
Silver, g/t               427      371      +15%      424      392      +8%
Recovery^1
Gold                     88.5%    91.5%     -3%      90.6%    92.0%     -2%
Silver                   88.2%    87.2%     +1%      87.7%    87.5%     +0%
Production
Gold, Koz                 2.7      2.1      +25%      8.9      8.0      +12%
Silver, Moz               1.0      0.6      +59%      2.9      2.4      +22%
TOTAL PRODUCTION
Gold, Koz                 8.0      9.1      -13%     27.2      24.8     +10%
Silver, Moz               4.2      4.5      -6%      14.4      11.5     +25%

Note:       (1)  Technological  recovery,  includes  gold  and  silver  within 
work-in-progress inventory (concentrate, precipitate)

               

Quarterly silver production at Dukat decreased  by 6% compared to same  period 
of 2011 ("year-on-year") as the replacement of the SAG mill in August  reduced 
throughput in Q3 by  20%.  Silver production  for the nine  months was 25%  up 
year-on-year on the back of continued strength in grades and recoveries.

At Dukat  underground  mine,  silver grades  decreased  quarter-on-quarter  as 
extraction of  pillars  was  completed  in  Q2.   Open-pit  mining  works  are 
continuing to wind down and are expected to be fully completed in 2013.

At Goltsovoye,  underground development  increased  28% compared  to  previous 
quarter ("quarter-on-quarter") while ore mined  was up more than twofold  when 
ore body 9 was accessed.

At Lunnoye, ore mined  in Q3 increased by  16% year-on-year, while  throughput 
and silver grade processed increased  by 33% and 15% respectively.  Recoveries 
further improved to 88.2%.

At Arylakh, the deeper horizons are  mined with increased silver grades  while 
open-pit mining works are nearing completion, with underground development  to 
be started in 2013.

KHAKANJA

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Khakanja + Yurievskoye
Waste mined, Kt           656     2,749     -76%     4,034    7,794     -48%
Underground
development, m            382      265      +44%     1,264    1,147     +10%
Ore mined, Kt             360      133     +171%      992      301     +230%
Open-pit                  320      131     +143%      881      294     +200%
Underground               40        1       NM^2      110       7        NM
Avlayakan
Waste mined, Kt           462      277      +67%     1,167     799      +46%
Ore mined (open pit),
Kt                        34        33      +5%       59        95      -38%
PROCESSING
Ore processed, Kt         155      157      -1%       463      469      -1%
Grade
Gold, g/t                 6.0      3.7      +63%      4.6      3.9      +17%
Silver, g/t               287      172      +67%      292      150      +94%
Recovery^1
Gold                     96.1%    96.2%     -0%      95.3%    95.0%     +0%
Silver                   84.0%    81.7%     +3%      80.0%    77.4%     +3%
TOTAL PRODUCTION
Gold, Koz                28.8      19.3     +50%     65.5      58.1     +13%
Silver, Moz               1.2      0.7      +67%      3.5      1.8      +94%

Note:       (1)  Technological  recovery,  includes  gold  and  silver  within 
work-in-progress inventory (precipitate)

(2) NM = not meaningful

Gold and  silver  production in  Q3  at Khakanja  increased  by 50%  and  67%, 
respectively, year-on-year as the plant  restarted treating higher gold  grade 
ore from Avlayakan as well as continued to process high silver grade ore  from 
Khakanja's pit 3.

After conducting geotechnical studies  the decision was  made to postpone  the 
development of an underground mine at Khakanja in favor of another pushback at
the open pit 1.  This approach will reduce short-term capital costs and  risks 
associated with underground mining in difficult geotechnical conditions.

In 2013 Khakanja plant will operate as a true processing hub treating ore from
4 deposits: Khakanja, Yurievskoye, Avlayakan, and Ozerny,

VORO

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Voro
Waste mined, Kt          2,885    3,217     -10%     8,518    8,471     +1%
Ore mined (open pit),
Kt                        930     1,017     -9%      1,359    1,456     -7%
-     primary             206      216      -5%       575      580      -1%
-     oxidised            724      801      -10%      784      877      -11%
Degtyarskoye
Waste mined, Kt           334      432      -23%     1,051    1,289     -18%
Ore mined (open pit),
Kt                        43        36      +20%      70       149      -53%
PROCESSING
Voro Heap Leach
Ore stacked, Kt           439      420      +5%       759      819      -7%
Gold head grade, g/t      1.8      1.9      -9%       1.6      1.7      -5%
Gold production, Koz      11        11      +2%       23        5      +338%
Voro CIP
Ore processed, Kt         241      233      +4%       692      672      +3%
Gold head grade, g/t      5.2      6.0      -13%      5.4      5.8      -8%
Gold recovery            79.7%    77.0%     +3%      78.9%    77.4%     +2%
Gold production, Koz      31        36      -15%      88        93      -6%
TOTAL PRODUCTION
Gold, Koz^2              44.3      47.0     -6%      114.8    115.7     -1%
Silver, Moz              0.052    0.052     +1%      0.120    0.126     -4%

Notes:       (1) Heap leach recoveries are  meaningful for full year only  due 
to                    the                     influence                     of 
seasonality                                                    
                  (2) Including the effect of rounding

Gold production at Voro for the nine months was essentially flat, as a  result 
of increased throughput mostly compensating for  the grade decline at the  CIP 
plant.

Ore mined was more than 3 times higher quarter-on-quarter, mainly as a  result 
of increased mining  of oxidized ore  in the summer  season to be  used in  HL 
circuit. Mining at Degtyarskoye is nearing completion; ore mined is  processed 
at both Varvara and Voro plants.

VARVARA

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Waste mined, Kt          7,023    5,279     +33%    19,476    19,601    -1%
Ore mined (open pit),
Kt                        874     1,134     -23%     2,797    2,840     -2%
PROCESSING
Flotation
Ore processed, Kt         249      252      -1%       736      719      +2%
Grade
Gold, g/t                 1.2      1.4      -14%      1.3      1.3      +0%
Copper                   0.75%    0.88%     -14%     0.76%    0.88%     -14%
Recovery^1
Gold                     61.7%    60.5%     +2%      61.7%    62.3%     -1%
Copper                   92.5%    88.2%     +5%      91.7%    89.1%     +3%
Production
Gold (in concentrate),
Koz                       6.0      6.3      -5%      18.1      17.8     +1%
Copper (in
concentrate), t          1,718    1,796     -4%      4,897    5,308     -8%
Leaching
Ore processed, Kt         632      670      -6%      1,981    1,890     +5%
Gold head grade, g/t      1.3      1.0      +26%      1.2      1.1      +8%
Gold recovery^1          84.0%    81.0%     +4%      84.9%    81.0%     +5%
Gold production (in
dore), Koz               18.8      19.5     -4%      56.6      52.7     +7%
TOTAL PRODUCTION
Gold, Koz                24.8      25.9     -4%     74.654     70.5     +6%
Copper, t                1,718    1,796     -4%      4897     5,308     -8%

Note:        (1)  Technological  recovery, includes  gold  and  copper  within 
work-in-progress inventory

At Varvara, gold  production for the  nine months 2012  grew 6%  year-on-year, 
while gold production for  Q3 was 4% below  year-on-year due to planned  grade 
decline at the flotation circuit and lower throughput at the leach circuit due
to increased use of third-party purchased ore.

Stripping ratio at Varvara continues to display some volatility due to  switch 
of the mining works between different parts of the pit and ore types.

Throughput at  both float  and leach  circuits is  changing depending  on  the 
hardness of the ore feedstock which has an impact on the milling capacity.

Copper production for the  quarter increased by  6% quarter-on-quarter due  to 
improvement in copper head grades and continued improvement in recoveries.

OMOLON OPERATIONS

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Sopka
Waste mined, Kt          2,543    1,847     +38%     7,474    3,636    +106%
Ore mined (open pit),
Kt                        447      284      +57%      976      491      +99%
Birkachan
Waste mined, Kt          2,593    2,469     +5%      7,469    6,626     +13%
Ore mined (open pit),
Kt                        255      347      -26%      845      848      -0%
Tsokol
Waste mined, Kt           917       -       n/a      2,230      -       n/a
Ore mined (open pit),
Kt                        24        -       n/a       55        -       n/a
PROCESSING
Kubaka Heap Leach
Ore stacked, Kt           72        -       n/a       72        -       n/a
Gold head grade, g/t      1.1       -       n/a       1.1       -       n/a
Gold production, Koz      0.0      3.1     -100%      0.0      3.3     -100%
Kubaka Mill
Ore processed, Kt         192      159      +20%      540      458      +18%
Grade
Gold, g/t                 7.7      2.7     +186%      6.6      2.1     +210%
Silver, g/t              243.8     17.3    +1307%    176.1     10.4      NM
Recovery^1
Gold                     94.9%    92.4%     +3%      95.0%    88.4%     +7%
Silver                   90.5%    80.8%     +12%     86.4%    42.1%    +105%
Gold production, Koz     43.9      12.4    +255%     108.9     28.1    +287%
Silver production, Moz    1.3     0.049      NM       2.5     0.077      NM
TOTAL PRODUCTION
Gold, Koz                43.9      15.5    +184%     108.9     31.4    +247%
Silver, Moz               1.3     0.049      NM       2.5     0.077      NM

Note:       (1)  Technological  recovery,  includes  gold  and  silver  within 
work-in-progress inventory

Omolon posted another strong quarter. Processing high-grade ore from Sopka  at 
Kubaka plant through the Merrill Crowe  section has been completed, and in  Q4 
the hub will be processing ore from Birkachan and Tsokol with relatively lower
grades which will result in lower Q4 production in line with the plan.

Omolon full-year production is  expected to surpass  earlier estimates at  the 
expense of production in 2013 due to the shift of high-grade ore trucking  and 
processing to 2012.

At both Sopka  and Birkachan,  active ore mining  has resumed  after focus  on 
waste stripping in previous quarter.

At  Birkachan  heap  leach  facility,  crushing  equipment  was   successfully 
commissioned and low-grade ore stacking resumed.  Heap leaching is expected to
commence in June 2013.

ALBAZINO-AMURSK

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011              2012      2011
MINING
Waste mined, Kt          4,432    4,111     +8%     10,904    11,038    -1%
Ore mined (open pit),
Kt                        309      114     +170%      953      520      +83%
PROCESSING
Albazino concentrator
Ore processed, Kt         310      275      +13%      940      392     +140%
Gold head grade, g/t      5.9      4.7      +24%      5.0      4.5      +13%
Gold recovery^1          87.1%    65.4%     +33%     86.6%    65.5%     +32%
Concentrate produced,
Kt                       31.6      17.6     +79%     82.9      25.1    +230%
Concentrate gold
grade, g/t               51.0      48.2     +6%      49.7      45.3     +10%
Gold in concentrate,
Koz^2                    51.8      27.3     +90%     132.4     36.5    +263%
Concentrate sold, Kt     26.2      4.7     +458%     31.6      4.7     +573%
Payable gold in
concentrate sold,
Koz^3                    42.2      6.8     +518%     50.5      6.8     +640%
Amursk POX
Concentrate processed,
Kt                        3.8       -        NA      10.2       -        NA
Gold head grade, g/t     39.8       -        NA      38.9       -        NA
Recovery                  85%       -        NA       88%       -        NA
Gold produced, Koz        4.1       -        NA      10.6       -        NA
TOTAL PRODUCTION
Gold, Koz                46.3       -        NA      61.1      6.8     +795%

Notes:     (1) To concentrate

                (2) For information only; not considered as gold produced  and 
therefore not reflected in the table representing total production

                (3) Included in total production upon sale to off-taker

Albazino continued to operate with design recovery, with head grades improving
19% quarter-on-quarter as a result of higher grade in ore mined. Throughput in
the quarter was lower 12%  quarter-on-quarter due to unscheduled repair  works 
at the diesel gensets,  however gold in concentrate  produced was flat due  to 
improved grade.

The Company continued sales to  the Chinese off-taker in  Q3 2012 in order  to 
maximize sales during the ramp-up of the POX facility. Total sales during nine
months 2012 reached 42 Koz of payable gold, a 6-fold increase year-on-year.

Due to mechanical issues (mainly, defective stainless pipe welding) the Amursk
POX facility  underwent  two lengthy  maintenance  shutdowns which  led  to  a 
material delay  in the  original ramp-up  schedule. Currently  all  mechanical 
issues have been resolved and the facility is continuing ramp-up.

Full design capacity at the POX is expected to be reached in mid-November this
year.

MAYSKOYE

                       3 months ended Sep          9 months ended Sep
                              30,         % change        30,         % change
                         2012      2011               2012      2011
MINING
Underground
development,  m          2,565    2,602     -1%     8,230     8,194     +0%
Ore mined
(underground), Kt          7        24      -70%      25       65       -61%

 

Underground development  at  Mayskoye  continues,  with  the  commencement  of 
stoping scheduled for Q4 2012.

There  were  significant  delays  in  delivering  the  remaining  construction 
materials by railroad  to the seaports  (for further shipping  to Mayskoye  by 
sea).  Some of the materials will need to be airlifted after the navigation is
over.

Given this fact and the need  to interrupt construction for New Year  holidays 
in Russia, the start-up  of Mayskoye concentrator is  now scheduled for  April 
2013. This will allow the concentrator to produce and ship concentrate to  the 
POX facility and/or off-takers  in the 2013  summer navigation, as  originally 
planned, however the volume is expected to be lower.

Capital expenditure

The Company expects that FY 2012 capital expenditure will comprise approx. US$
300 million compared with the previous guidance of $250 million, due to

·      increased costs at  Mayskoye due to  additional logistics expenses  and 
extension of contractors' time on site ($15 million);

·      additional  welding and  other works  performed at  Amursk POX  in  the 
ramp-up process ($10 million);

·      intensified spending  on logistics  development at  Kutyn and  Svetloye 
($15 million);

·      other increases due to changes in scope of smaller investment  projects 
($10 million).

CapEx guidance for  2013 will  be updated  at the time  of the  release of  Q4 
operating results in January  2013.  Updated development  plans for Kutyn  and 
Svetloye will be provided at the same time.

dividend policy changes

On 16 October,  the Board of  Directors of the  Company reviewed the  existing 
dividend policy and approved the following amendments:

·      the Company's target  regular payout ratio is  increased to 30% of  net 
earnings, provided that net debt / adjusted EBITDA is below 1.75;

·      interim semi-annual dividends will be paid in accordance with the  same 
rules;

·      at the end of  each financial year, the  Board will consider a  special 
dividend payment, based on the Company's  available free cash flow and  future 
capital expenditure and other investment  requirements. This practice will  be 
started from December 2012.

The Board believes that the amended dividend policy will be significantly more
aligned with the interests of the Company's stakeholders and global trends  in 
the sector,  and  reaffirms the  Company's  commitment to  capital  allocation 
discipline and value distribution.

 

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
QRTMRBATMBABMFT -0- Oct/17/2012 06:04 GMT
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