Polyus Gold produced 559,000 ounces of refined gold in 6M 2008, up 19% y-o-y, with growth attributed to gold production expansion at the Olimpiadinsky ore mining and processing works (GOK), which has phased in the third section of its sulfide ore dressing factory. The company has also processed ore from the Vostochny open-cast mine and the Olenye deposit, which was extracted in 2007. In 1H 2008, the company extracted 3,286,000 tons of ore and processed 4,614,000 tons of ore.
Table. Polyus Gold: production and financial indicators
| Indicator | Unit of maesure | 1F2008 | 1F2007 | 2007 | 1F2008/1F2008 |
|---|
| Ore extraction | thou. tons | 3286 | 5667 | 9377 | -42.02% |
| Ore processing | thou. tons | 4994 | 4614 | 10653 | +8.24% |
| Refined gold production | thou. ounces | 559 | 470 | 1214 | +18.94% |
| Olimpiadinsky GOK | thou. ounces | 449 | 347 | 861 | +29.34% |
| Kuranakhsky GOK | thou. ounces | 68 | 69 | 142 | -1.45% |
| Zapadny GOK | thou. ounces | 11 | 16 | 32 | -65.62% |
| Placer deposits | thou. ounces | 31 | 37 | 179 | -16.22% |
| Revenue | mn. USD | 508 | 309 | 867 | +64.4% |
| Average selling price of gold | USD | 908.7 | 659.7 | - | +37.74% |
Source: company data, Finam estimates
The company also published preliminary financial results for 1H 2008. Revenue soared 64.4% y-o-y, with robust growth attributable to production and sales growth, coupled with price hikes on gold and the absence of hedged gold positions.
However, the results posted are weaker than those reported by Polymetal. The latter managed to expand production by 20.35% and boost sales by 88% in the same period. However, compared to other Russian gold producers, Polyus Gold, with the world's fifth largest gold reserves, is better placed to expand production amid high prices on precious metals and mounting inflationary pressure, which prompts investors to invest in gold as a hedge against inflation.
We do not currently have an official recommendation on Polyus Gold shares.
11.8
12.74
