MOSCOW (Reuters) - Polyus (PLZL.MM), Russia’s largest gold producer, on Wednesday reported first-quarter net profit down 51 percent at $244 million, hit by reduced foreign exchange gains and other non-cash items.
The company controlled by Said Kerimov, son of Russian tycoon Suleiman Kerimov, has not been targeted by the U.S. sanctions against Moscow. Washington included Suleiman Kerimov and some other Russian businessmen on its sanctions list in April.
Polyus reiterated on Wednesday that sanctions applicable to Suleiman Kerimov did not extend to his son or to Polyus.
The company also kept its 2018 gold production guidance unchanged at 2.375—2.425 million troy ounces. It previously said that 2018 output was likely to be at the upper end of this range because it was ramping up its Natalka gold deposit in Russia’s far east ahead of schedule.
“Natalka continues its ramp up and now operates above 80 percent of its design processing capacity, ahead of our initial expectations. We are progressing with the drilling campaign and engineering works at Sukhoi Log,” Pavel Grachev, Polyus chief executive, said in a statement.
The Natalka project is expected to reach full production levels in the second half of 2018. Sukhoi Log is one of the world’s largest untapped gold deposits, for which Polyus plans to complete feasibility studies by end of 2020.
Polyus’s first-quarter revenue and adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were both up 1 percent to $617 million and $387 million respectively. The latter beat an average estimate of $374 million in a Reuters poll.
A note from analysts at Aton said they expected a strong improvement in Polyus earnings in the second quarter, helped by a weaker rouble and higher gold sales.
“That said, the market is likely to ignore the first-quarter results as the share price is currently being driven by sanction concerns, which is the only explanation for the enormous 45 percent Natalka-adjusted discount to global majors. We believe that these risks are overestimated,” the Aton note said.
Polyus shares were up 0.7 percent by 0857 GMT in Moscow.
Reporting by Polina Devitt; Editing by David Goodman