Polymetal Reviews Exploration Projects After Gold Prices Fall

Polymetal International Plc (POLY), the London-listed gold and silver producer with most of its operations in Russia, is reviewing spending plans and projects after prices for the precious metals slumped.

“We plan to complete the review in about a month and a half and to announce the results along with the second-quarter output figures,” Chief Executive Officer Vitaly Nesis said today in a phone interview. “We have good projects and it’s hard to say which ones we may delay.”

Gold plunged 14 percent in a two-day rout earlier this month, the biggest slide in three decades, while silver also fell into a bear market. Projects likely to be delayed or modified by Polymetal include Kutyn, Maminskoye and the heap leach facility at Sopka, the company said in a statement.

Still, gold may recover from a two-year low, according to Polymetal’s CEO.

“The market is too volatile and it’s hard to say if my previous forecast of prices reaching $2,000 per ounce by year- end will be correct, but still there is a possibility it will happen,” Nesis said today. “I see no fundamental reasons for the recent slump in prices.”

Nesis said in January that gold may climb to a record above $2,000 an ounce by the end of 2013 after averaging $1,700 to $1,800 this year.

Gold for immediate delivery rose as much as 1.1 percent to $1,448.28 an ounce, and traded at $1,443.94 as of 8:57 a.m. in London. Bullion has fallen 14 percent in 2013 after climbing for 12 years through 2012.

Polymetal’s revenue fell 9 percent in the first quarter to $341 million from a year earlier even as gold equivalent production advanced 16 percent to 235,000 ounces.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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