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Polymetal Sees Writedowns of Up to $340 Million on Gold Drop

July 29 (Bloomberg) -- Polymetal International Plc, the Russian gold and silver miner part-owned by billionaire Alexander Nesis, expects to write down the value of assets by as much as $340 million after a slump in the price of bullion.

The company is assessing the impact of lower commodity prices and expects a non-cash impairment charge to be recorded for the first half, mostly on the write-off of goodwill and some low-grade ore stockpiles, St. Petersburg-based Polymetal said in a regulatory filing today. The charges are expected to be in the range of $280 million to $340 million, it said.

Gold-mining companies have announced at least $15 billion of writedowns in the past two months after the precious metal’s steepest quarterly drop in more than nine decades in London. Gold prices have declined more than 20 percent in 2013 and is headed for its first annual loss in 13 years after some investors lost faith in bullion as a store of value.

“We have changed the gold and silver price assumptions we use for testing our assets for impairment in the first half to a very conservative level of $1,200 per ounce of gold and $18 per ounce of silver,” Vitaly Nesis, Polymetal chief executive officer and brother of the billionaire co-owner, said in a telephone interview. The company previously used assumptions of $1,300 an ounce for gold and $22.50 an ounce for silver.

Polymetal has cut its 2014 gold output forecast by 5.4 percent to 1.33 million ounces of gold equivalent, it said in an e-mailed.

Gold Writedowns

Newmont Mining Corp., the second-largest gold producer, said July 26 it will take a $1.77 billion writedown on the value of two Australian mines and stockpiles. Goldcorp Inc. said July 25 it took a writedown of $1.96 billion. Barrick Gold Corp., the biggest producer by sales, said June 28 it expects to write down the value of a project on the border of Chile and Argentina by as much as $5.5 billion. Newcrest Mining Ltd. said June 7 it may take a charge of as much as A$6 billion ($5.6 billion).

“We see the impairment as a good way to clear the balance of assets that would become not worth developing should prices fall any further,” Nesis said. “Some of the assets we write down may be returned to the schedule for development in time.” Nesis said he doesn’t see any fundamental reason for the decline in gold prices and expects them to recover “quite soon.”

Polymetal’s second-quarter gold equivalent output rose 9 percent to 323,000 ounces compared with a year earlier, while quarterly revenue rose 8 percent to $399 million, it said in today’s filing. The company’s sales are projected to fall 2 percent this year to $342.8 million, according to the estimates of 21 analysts surveyed by Bloomberg.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at

To contact the editor responsible for this story: John Viljoen at

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