On September 10 Polyus Gold released its preliminary consolidated financials for 6M 2008, based on IFRS. Revenue surged by 64.5% y-o-y, while EBITDA almost doubled to USD 230 million. The company's probable gold reserves have expanded by 5.4% to 72.3 million ounces. Gold production picked up by 19% to 560,000 ounces.
We are generally positive on the revenue growth reported by the company, mainly attributable to favorable price trends in the reporting period. We also note the robust growth in the company's production levels and an increase in its proven gold reserves. On the downside, we turn investor attention to a 37% growth in the company's expenses, which rose to USD 448 per ounce, from USD 326 per oz in the year-earlier period.
Despite the signs of a pullback in gold prices in recent months, caused by the strengthening dollar, the world gold prices remain at comfortable levels for gold producers and we expect the company to report sound financial results for the full year.
We estimate the fair price of Polyus Gold common shares at USD 32.6 per share, which implies an upside potential of 36%.
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