* Petropavlovsk says half of 2014 output hedged
* Nord Gold Q4 revenue down 5 pct year-on-year at $329 mln
* Polyus Gold recently delayed its key project
MOSCOW, Jan 23 Two Russian gold miners -
Petropavlovsk and Nord Gold - plan to cut
production in 2014 as they focus on cost reduction after a slump
in the gold price, they said on Thursday.
Many gold producers were hit by a 28 percent fall in the
price of gold last year - its biggest annual loss in 32
years - prompting miners to cut costs, delay new projects and
hedge, selling their production forward.
"The miners were mining at the highest possible cost because
the gold price was going up and when it stopped going up, they
had to reduce that. So that means that they will mine less
gold," Peter Hambro, Petropavlovsk chairman, told Reuters.
Petropavlovsk expects its 2014 gold production to decline 16
percent year-on-year to 625,000 troy ounces after it sold
high-cost alluvial assets, the company said in a statement.
Its peer Nord Gold is targeting 2014 production in the range
of 870,000 to 920,000 ounces of gold equivalent, compared to
924,400 ounces in 2013.
Petropavlovsk is able to sell 279,100 ounces at a price of
$1,429 per ounce and 65,115 ounces at $1,250 ounce this year in
line with its forward sales contracts, the company said.
"We decided that it would be wise to have about 50 percent
of our one-year production hedged," Hambro added.
In 2014, gold will not push much lower than its current
levels of around $1,250 per ounce, according to the consensus
estimate in the latest Reuters poll.
Petropavlovsk this year plans to reduce cash costs for
hard-rock production by 5 percent to $950 per ounce. Its net
debt fell 11 percent, year-on-year, to $945 million as of the
end of December, below analysts' expectations, some of them said
in their notes.
Nord Gold, controlled by businessman Alexei Mordashov, said
its output decline this year would be mainly due to lower grades
at its Bissa mine in Burkina Faso. The company's revenue fell 5
percent year-on-year to $329 million in the fourth quarter.
"Management is focused on achieving increased efficiency at
all its mines to reduce costs," Nord Gold said in a statement.
Two other Russian gold producers are also unlikely to
support the country's production growth: its largest gold miner,
Polyus Gold, has recently delayed the start of its key
project by a year until summer 2015. Its rival Polymetal
plans to keep 2014 production flat.
Russia's 2013 gold production was expected to rise by 6
percent year-on-year to 240 tonnes (7.7 million troy ounces),
according to the Gold Industrialists' Union.
The union plans to prepare an estimate for the country's
2014 gold production next month after the actual data for last
year is published, Sergei Kashuba, the head of the union, said