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Polyus Finance Plc: Trading update for the third quarter of 2021

·16-min read

DGAP-News: Polyus Finance Plc / Key word(s): Miscellaneous
28.10.2021 / 08:00
The issuer is solely responsible for the content of this announcement.

 
Press Release                                                                                28 October 2021
 
 
PJSC Polyus
Trading update for the third quarter of 2021
 
3Q 2021 Highlights
· Total gold output increased by 15% quarter-on-quarter to 770 thousand ounces. This increase was driven by higher production volumes of refined gold across almost all deposits.
· Volumes of ore mined amounted to 16,827 thousand tonnes, a moderate decrease on the previous quarter. On a year-on-year basis, volumes of ore mined declined by 8%, driven by lower mining activities at Olimpiada and Verninskoye due to intensified stripping activities.
· Volumes of ore processed totalled 12,722 thousand tonnes, up 5% on the previous quarter. Year-on-year, volumes of ore processed rose by 4%, primarily due to higher processing volumes at Olimpiada, Natalka and Verninskoye.
· Recovery rate increased to 83.0%, compared to 82.6% in the previous quarter.
· Estimated gold sales amounted to $1,383 million, up 12% compared to the previous quarter, with an estimated weighted-average gold selling price of $1,787/oz, a 2% decline on the second quarter of 2021.
· As at 30 September 2021, the estimated net debt stood at $1,950 million, compared to $2,366 million as at the end of the previous quarter.

9M 2021 Highlights
· Total gold output amounted to 2,033 thousand ounces, compared to 2,056 thousand ounces in the prior-year period, representing a 1% decline year-on-year. Volumes of doré gold totalled 2,072 thousand ounces, down 3% compared to the same period in the previous year.
· Volumes of ore processed increased 4% to 36,017 thousand tonnes, reflecting the improved performance at Olimpiada, Natalka and Verninskoye mainly due to the implementation of throughput capacity expansion projects.
· Recovery rate stood at 82.4%, down 1.3 ppts from the prior-year period, primarily driven by a decline in recoveries at Olimpiada and Blagodatnoye.
· Estimated gold sales increased 5% year-on-year to $3,630 million, with an estimated weighted-average gold selling price of $1,797/oz (9M 2020: $1,755/oz).

 

3Q'21

2Q'21

Q-o-Q

1Q'21

4Q'20

3Q'20

Y-o-Y

9M'21

9M'20

Y-o-Y

Olimpiada

281.6

269.9

4%

242.4

268.0

254.8

11%

793.9

733.8

8%

Blagodatnoye

108.5

117.4

-8%

92.4

117.4

118.3

-8%

318.3

338.0

-6%

Natalka

133.6

125.3

7%

115.1

132.7

117.4

14%

374.0

322.8

16%

Verninskoye

83.0

77.6

7%

64.8

67.4

68.6

21%

225.4

206.0

9%

Kuranakh

65.3

56.0

17%

54.3

64.2

66.5

-2%

175.6

174.5

1%

Alluvials

91.0

25.2

n/a

-

38.0

75.5

20%

116.2

105.3

10%

Refined gold, koz

763.0

671.4

14%

569.0

687.7

701.1

9%

2,003.4

1,880.4

7%

Flotation concentrate production, t

3,547

159

n/a

11,671

7,323

23,219

-85%

15,377

79,427

-81%

Antimony in flotation concentrate, t

602

0

n/a

1,919

1,837

3,950

-85%

2,521

9,121

-72%

Gold in flotation concentrate, koz

7.0

0.1

n/a

22.7

22.0

70.0

-90%

29.8

176.0

-83%

Gold payable in concentrate, koz

5.4

0.0

 n/a

17.4

17.2

55.5

 -90%

22.8 

136.4

-83%

Total gold output, koz

770.0

671.5

15%

591.7

709.7

771.1

0%

2,033.2

2,056.4

-1%

Rock moved, km³

35,729

33,120

8%

31,587

30,741

32,210

11%

100,436

93,493

7%

Stripping ratio, m³/t

1.7

1.5

13%

1.5

1.4

1.4

21%

1.6

1.3

23%

Rock moved, kt

92,306

85,191

8%

81,290

78,706

82,535

12%

258,787

239,723

8%

Stripping ratio, t/t

4.5

4.0

13%

3.9

3.5

3.5

29%

4.1

3.5

17%

Ore mined, kt

16,827

17,027

-1%

16,639

17,301

18,265

-8%

50,493

53,854

-6%

Ore processed, kt

12,722

12,169

5%

11,126

10,438

12,224

4%

36,017

34,675

4%

Recovery rate, %

83.0%

82.6%

0.4ppts

81.6%

83.9%

84.1%

-1.1ppts

82.4%

83.7%

-1.3ppts

Total doré & slime gold output, koz

764.2

693.4

10%

614.7

660.7

770.2

-1%

2,072.3

2,142.8

-3%

 
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:
We delivered solid operational results in the third quarter of 2021. Gold production stood at 770 thousand ounces, which represents a 15% increase over the preceding quarter.
Polyus continued to advance its growth projects throughout the reporting period. We have achieved growth in recovery rates at Olimpiada and Natalka, while we remain on track with the throughput capacity expansion initiatives at Olimpiada, Blagodatnoye, Natalka and Kuranakh.
At Sukhoi Log, we have completed a deep-level and flank exploration drilling campaign. We also continue to progress with the development of the Bankable Feasibility Study, the key highlights of which will be published in the second half of 2022 in line with the previously announced schedule.
I would also like to reiterate our production target for 2021, which remains unchanged at approximately 2.7 million ounces of gold. "
ESG UPDATE
Q3 Highlights
· LTIFR[1] of 0.18 YTD (9M 2020 - 0.08, 6M 2021 - 0.18). Zero fatalities at our operations during Q3.
· Automotive Accident Rate (AARk) at 0.15 (9M 2020 - 0.18, 6M 2021 - 0.18).
· Coronavirus: production assets remain unimpacted and operate without interruption. Thorough COVID-19 protocols remain in place. Employee vaccination program has resulted in immunity levels of over 70% among workers.

 


 
COVID response update
· Vaccination program for employees and contractors continues at all Polyus production sites. At Olimpiada, Blagodatnoye and Verninskoye the vaccination rates are close to 90%.
· Preventive measures remain in place at all operations and offices, including enhanced medical screening, social distancing, provision of personal protective equipment and regular disinfection of all communal areas.
· All shift employees and contractors are tested for COVID-19 and quarantined in observation facilities prior to transfer to Polyus' sites.
 
Environment and Climate
· Verninskoye operation has been certified under the International Cyanide Management Code.
· Scheduled site safety audits of tailings storage and other hydraulic facilities were carried out at Olimpiada, Blagodatnoye and Alluvials. Corporate guidelines on identifying and assessing business risks related to tailings storage facilities and other hydraulic facilities have been developed. Procurement procedures were launched for a hydraulic facility remote monitoring system software.
· Polyus won Minex ESG award by Russian Mining Forum for the Water management campaign.
 
Health & Safety
· Transportation safety management system audit was launched at Irkutsk branch of Polyus Logistics.
· A comprehensive HSE audit was held at Alluvials and Polyus Verninskoye.
· Polyus has published its Supplier Code of Conduct containing guidelines for its suppliers and contractors regarding key areas of sustainable development and ESG.
Local communities
· Polyus donated new medical equipment to the Russian Federal Medical and Biological Agency (FMBA) for a hospital in the Krasnoyarsk region that specializes in treating patients with infectious diseases.
· Winners of the regional theatre award, 'Polyus. Golden Season' were announced.
 
Employees
· 106 employees have graduated from the corporate Talent Pool development program.
· Career guidance events were held for students of 20 schools in the Krasnoyarsk Territory, as part of a pilot school project aimed at increasing the flow of applicants to study professions relevant to Polyus. 785 high school students took part in the events.
· A call center was launched for candidates applying to jobs at Polyus Krasnoyarsk, Polyus Logistics, Polyus Stroy, Polyus Project, MFC Polyus.
· A dashboard system was launched to monitor the level of operational competence of working personnel.
· Several environmental trips were organized as part of Polyus' volunteer activities.
 
 

 



ESG Ratings and indices
· For the second year in a row, Polyus was awarded 2nd place in ESG communications among Russian companies according to a poll by Institutional Investor.
· Polyus has been included in the top-10 of ESG Ranking of Russian companies by rating agency RAEX for the first time.
· Polyus' current ESG ratings:
O S&P Global CSA - 54
o CDP - Climate Change: C; Water Security: C
o Sustainalytics ESG Risk Rating - 26.8
o MSCI ESG - A.
Olimpiada
 3Q 2021 Highlights
Ø Volumes of rock moved totalled 37,062 thousand tonnes, up 20% on the previous quarter.
Ø Recovery rate rose to 84.6%, up from 83.8% in the previous quarter.
Ø Total gold output amounted to 289 thousand ounces.
Gold output
Doré gold output stood at 293 thousand ounces in the third quarter of 2021, up 5% compared to the previous quarter, driven by higher processing volumes and higher recovery rate. Total gold output (refined and concentrate) rose by 7% compared to the previous quarter, to 289 thousand ounces. On a year-on-year basis, doré gold output declined by 8%, while total gold production was down 11%.
Mining works
Rock moved volumes totalled 37,062 thousand tonnes (13,713 km³), up 20% on the second quarter of 2021 as the completion of simultaneous operations within two stages of the Vostochny pit led to improved mining equipment performance. Following the completion of rich-ore mining from the bottom part of the third stage, Polyus intensified stripping activities at the fourth stage of the Vostochny pit, substantially reducing ore mining activities at Vostochny pit. At the same time, in line with a mine plan, Polyus increased mining works at the Zapadny pit, which partially offset the decline in ore mined. As a result, volumes of ore mined temporarily decreased to 1,799 thousand tonnes, down 42% from the previous quarter, while grades in ore mined decreased to 2.43 g/t.
Ore processing
Volumes of ore processed totalled 4,009 thousand tonnes, up 10% compared to the previous quarter. This increase reflects Mill No. 1 and Mill No. 3 undergoing planned maintenance in the second quarter. Average grades in ore processed remained flat quarter-on-quarter, at 3.03 g/t. The recovery rate rose further to 84.6%, up 0.8 ppts compared to the second quarter of 2021. This increase reflects the launch of the Vertimill grinding unit, which enhanced flotation concentrate properties. It was further supported by improved mineralogical characteristics of the ore feed, with the higher share of ore coming from the Zapadny pit.
During the third quarter of 2021, the Company has proceeded with a throughput capacity expansion project at Olimpiada, aimed at increasing capacity to 15.0 million tonnes per annum. Polyus continued to improve the efficiency of BIO complex, including introduction of a second magnetic separation line and ongoing calibration of the flowsheet. This resulted in improved performance of the BIO units, with daily throughput reaching record high in September.

 



Mining works and ore processing

 

3Q'21

2Q'21

Q-o-Q

1Q'21

4Q'20

3Q'20

Y-o-Y

9M'21

9M'20

Y-o-Y

Rock moved, km³

13,713

11,368

21%

10,849

11,073

11,165

23%

35,930

32,817

9%

incl. stripping, km³

13,060

10,249

27%

9,657

9,711

9,661

35%

32,966

28,283

17%

Stripping ratio, m³/t

7.3

3.3

n/a

2.9

2.6

2.3

n/a

4.0

2.3

74%

Rock moved, kt

37,062

30,764

20%

29,372

29,979

30,236

23%

97,198

88,878

9%

incl. stripping, kt

35,263

27,672

27%

26,082

26,220

26,083

35%

89,017

76,364

17%

Stripping ratio, t/t

19.6

8.9

n/a

7.9

7.0

6.3

n/a

10.9

6.1

79%

Ore mined, kt

1,799

3,092

-42%

3,290

3,759

4,153

-57%

8,181

12,514

-35%

Average grade in ore mined, g/t

2.43

3.24

-25%

3.08

2.94

3.30

-26%

3.00

3.25

-8%

Ore processed, kt

4,009

3,648

10%

3,668

3,249

3,757

7%

11,325

10,799

5%

Average grade in ore processed, g/t

3.03

3.03

0%

3.02

3.34

3.56

-15%

3.03

3.42

-11%

Recovery, %

84.6%

83.8%

0.8ppts

82.5%

84.9%

86.1%

-1.5ppts

83.6%

85.5%

-1.9ppts

Doré gold, koz

293.0

279.5

5%

271.8

281.4

319.2

-8%

844.3

947.9

-11%

Refined gold output, koz

281.6

269.9

4%

242.4

268.0

254.8

11%

793.9

733.8

8%

Flotation concentrate production, t

3,547

159

n/a

11,671

7,323

23,219

-85%

15,377

79,427

-81%

Antimony in flotation concentrate, t

602

0

n/a

1,919

1,837

3,950

-85%

2,521

9,121

-72%

Gold contained in concentrate, koz

7.0

0.1

n/a

22.7

22.0

70.0

-90%

29.8

176.0

-83%

Total gold output, koz

288.6

270.0

7%

265.1

290.0

324.8

-11%

823.7

      909.8

-9%

 

 

 

 

 

 

 

 

 

 

 

 

 
Blagodatnoye
3Q 2021 Highlights
Ø Volumes of ore mined totalled 5,452 thousand tonnes up 24% on the previous quarter.
Ø Volumes of ore processed amounted to 2,194 thousand tonnes down 4% on the previous quarter.
Ø Doré gold output totalled 110 thousand ounces.
 
Gold output
Doré gold output in the third quarter of 2021 amounted to 110 thousand ounces, down 5% compared to the previous quarter, driven by lower volumes of ore processed. Refined gold output amounted to 108 thousand ounces, compared to 117 thousand ounces in the previous reporting period. On a year-on-year basis, refined gold output decreased by 8%.
Mining works
Volumes of rock moved increased 5% to 21,028 thousand tonnes (7,550 km³) compared to the previous quarter. In line with the sequence of mining works, volumes of ore mined increased by 24% to 5,452 thousand tonnes, compared to 4,402 thousand tonnes in the second quarter of 2021. Polyus intensified mining activities at the lower-grade area of the third stage of the pit, resulting in an decrease in the average grades in ore mined to 1.42 g/t in the third quarter of 2021 (down from 1.48 g/t in the previous quarter).
Ore processing
The average grade in ore processed amounted to 1.81 g/t during the reporting period, remaining broadly flat quarter-on-quarter. Volumes of ore processed amounted to 2,194 thousand tonnes, down 4% on the previous quarter, reflecting the scheduled maintenance works during the reporting period. Recovery rate increased to 87.2%, compared to 87.0% in the second quarter of 2021.
Mill 5
In the third quarter of 2021, the Company signed an agreement with Esta Construction, the major contractor for the Mill 5 construction project. The construction workers arrived on site during the reporting period and proceeded with preparation activities for the construction of hydromet and comminution circuits. Polyus completed the site preparation for introducing an in-pit crushing and conveying (IPCC) system as well as advanced with construction of the crushed ore stockyard. In addition, Polyus has launched a construction project for two new electrical substations and progressed with the construction of infrastructure facilities on site. 
Mining works and ore processing

 

3Q'21

2Q'21

Q-o-Q

1Q'21

4Q'20

3Q'20

Y-o-Y

9M'21

9M'20

Y-o-Y

Rock moved, km³

7,550

7,180

5%

6,085

5,914

5,914

28%

20,815

17,605

18%

incl. stripping, km³

5,602

5,608

0%

4,502

4,344

4,582

22%

15,712

13,210

19%

Stripping ratio, m³/t

1.0

1.3

-23%

1.0

1.0

1.2

-17%

1.1

1.1

0%

Total rock moved, kt

21,028

19,992

5%

16,949

16,473

16,468

28%

57,969

49,030

18%

including stripping, kt

15,576

15,590

0%

12,515

12,079

12,737

22%

43,681

36,723

19%

Stripping ratio, t/t

2.9

3.5

-17%

2.8

2.7

3.4

-15%

3.1

3.0

3%

Ore mined, kt

5,452

4,402

24%

4,434

4,394

3,731

46%

14,288

12,307

16%

Average grade in ore mined, g/t

1.42

1.48

-4%

1.19

1.30

1.31

8%

1.37

1.28

7%

Ore processed, kt

2,194

2,283

-4%

2,192

2,010

2,336

-6%

6,669

6,778

-2%

Average grade in ore processed, g/t

1.81

1.80

1%

1.65

1.91

1.80

1%

1.75

1.79

-2%

Recovery, %

87.2%

87.0%

0.2ppts

86.2%

88.7%

87.9%

-0.7ppts

86.8%

88.4%

-1.6ppts

Doré gold, koz

109.5

115.8

-5%

100.4

109.6

118.9

-8%

325.7

347.7

-6%

Refined gold output, koz

108.5

117.4

-8%

92.4

117.4

118.3

-8%

318.3

338.0

-6%

 
Natalka
3Q 2021 Highlights
Ø Volumes of ore processed rose to 3,197 thousand tonnes, up 6% on the previous quarter.
Ø Recovery rate rose to 72.6%, up from 71.8% in the previous quarter.
Ø Refined gold output totalled 134 thousand ounces, up 7% quarter-on-quarter.
Gold output
Doré gold output in the third quarter of 2021 amounted to 130 thousand ounces, up 4% compared to the previous quarter, driven by higher processing volumes and higher recovery rate. Refined gold output amounted to 134 thousand ounces, compared to 125 thousand ounces in the previous reporting period. On a year-on-year basis, doré gold output and refined gold output increased by 8% and 14%, respectively.
Mining works
Volumes of rock moved totalled 17,547 thousand tonnes (6,801 km³), remaining flat quarter-on-quarter, while volumes of ore mined rose to 6,079 thousand tonnes, a 4% increase from the second quarter of 2021. The average grades in ore mined amounted to 1.36 g/t, remaining broadly flat compared to the previous reporting period.
Ore processing
Volumes of ore processed totalled 3,197 thousand tonnes, up 6% on the preceding quarter. This improvement reflects the reduced circulation load at the SAG mill, due to the optimisation of the discharge grates parameters and a replaced lining at the MK-60 crusher during the reporting period. In addition, this also reflects less maintenance-related downtime in the third quarter of 2021.
Average grade in ore processed stood at 1.75 g/t, remaining broadly flat quarter-on-quarter. The recovery rate rose to 72.6%, up 0.8 ppts compared to the second quarter of 2021. This reflects the calibration of processing parameters of the flash flotation circuit, including cleaner scheme optimization and upgrade of concentrators, which reduced losses at sorption circuit.
Mining works and ore processing

 

3Q'21

2Q'21

Q-o-Q

1Q'21

4Q'20

3Q'20

Y-o-Y

9M'21

9M'20

Y-o-Y

Rock moved, km³

6,801

6,825

0%

7,222

6,938

7,757

-12%

20,848

21,701

-4%

incl. stripping, km³

4,445

4,556

-2%

4,986

4,391

5,319

-16%

13,987

14,702

-5%

Stripping ratio, m³/t

0.7

0.8

-13%

0.9

0.7

0.9

-22%

0.8

0.8

0%

Total rock moved, kt

17,547

17,583

0%

18,674

17,841

19,906

-12%

53,804

55,696

-3%

         including stripping, kt

11,468

11,735

-2%

12,906

11,229

13,660

-16%

36,109

37,777

-4%

Stripping ratio, t/t

1.9

2.0

-5%

2.2

1.7

2.2

-14%

...

2.1

-3%

Ore mined, kt

6,079

5,848

4%

5,768

6,612

6,247

-3%

17,695

17,919

-1%

Average grade in ore mined, g/t

1.36

1.37

-1%

1.35

...

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