* Says sees 2017 capex at $800 mln
* Capex rose 73 pct in H1 due to Natalka construction (Adds details on 2017 capex, Natalka)
MOSCOW, Aug 14 (Reuters) - Russia’s largest gold producer Polyus on Monday reported a 10 percent increase in first-half core earnings as higher sales volumes compensated for a flat gold price.
Polyus, controlled by the family of Russian tycoon Suleiman Kerimov, also said that it was on track to start production at its main greenfield project - the Natalka gold deposit in Russia’s far east - by the end of this year.
The ramp-up of construction at Natalka was the main reason for a 73-percent increase in capital expenditure to $322 million in the first half of 2017, Polyus said.
“We expect a certain speed up of capital expenditure in the second half of 2017,” Mikhail Stiskin, Polyus vice-president for finance and strategy, told a conference call. He also said that the company’s full-year capex was now expected at $800 million.
The Natalka project will drive Polyus’ production growth in the coming years and helped the company to sell a stake to investors in Moscow and London and also to reach an agreement on investment with China’s Fosun earlier in 2017.
“Polyus’ flagship greenfield project Natalka remains on track to be commissioned by the end of 2017. This allows us to reiterate production guidance for 2017 at 2.075–2.125 million troy ounces,” Pavel Grachev, Polyus chief executive, said in a statement.
Its production is expected at 2.35—2.4 million ounces in 2018 and at 2.8 million ounces in 2019.
Natalka will be producing between 450,000 and 500,000 troy ounces of gold per year once it reaches its production capacity, Stiskin said. The cash cost production guidance for the deposit will be disclosed after its launch, he said.
Polyus’s first-half adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to $762 million from $691 million a year ago. Revenue was up 14 percent to $1.2 billion.
One-off non-cash items and forex gains supported its first-half net profit, which was up 21 percent year on year to $603 million. Excluding those factors, adjusted net profit was still up 17 percent to $475 million.
Polyus also said that its net debt fell to $3.1 billion by the end of June from $3.2 billion as of the end of 2016 mainly due to the sale of its stake in the deposit in the Nezhdaninskoye gold deposit in Russia’s far east.
Polyus shares in Moscow were up 0.2 percent on Monday, slightly underperforming a 0.6 percent growth in the broader MICEX index. (Reporting by Polina Devitt; editing by Jane Merriman)