Polymetal confident of full-year targets

Russia-focused metals giant Polymetal has said it has 'significantly de-risked' its achievement of its full-year production targets after a stable operational performance in the first quarter.

However, the company said that it has initiated a review of all discretionary capital spending including exploration projects due to the recent sharp falls in gold and silver prices.

While the results of this review won't be revealed until the second-quarter output results, Polymetal said that projects likely to be delayed and/or re-engineered include Kutyn, Maminskoye and the heap leach facility at Sopka.

The company said it is on track to hit its 1.2m ounces production guidance this year after the start-up of the Mayskoye concentrator this month, the renewal of an off-take agreement for Albazino, and the ramp-up of its Amursk POX facility.

Total gold equivalent production totalled 235 thousand ounces (K oz) during the first quarter of 2013, up 16% year-on-year.

Gold production was up 20% at 121K oz helped by an additional contribution at the Amursk POX plant of 13Koz during the period. Meanwhile, silver output rose 14% to 6.4m oz due to a continuous improvement in grades and recoveries at Dukat.

However, metal sales lagged production during the quarter on the back of an increase in metals at refineries during public holidays in Russia. Total sales were $341m in the period, down 9.0% year-on-year.

"Thanks to an excellent performance at Dukat and the timely launch of the Mayskoye concentrator, we are on track to achieve our annual production guidance", said Vitaly Nesis, Chief Executive Officer.

"Polymetal is well positioned to withstand the current adverse metal price movements given our strategic preference for higher grade assets and intense management focus on cost control and efficient capital allocation".