Bloomberg News

Polyus Profit Surges After Sale of Gold Fields Stake

June 07, 2007

OAO Polyus Gold, Russia's biggest producer of the metal, said full-year profit jumped more than 10-fold after the sale of a stake in Gold Fields Ltd. (GFI)

Net income rose to $1.16 billion, or 76 cents a share, from $113 million a year earlier, the Moscow-based company said in a statement. Polyus made $980 million from the sale of its Gold Fields stake. The cost of mining at its main deposit, Olympiiskaya, rose to $210 an ounce, from $166.

Polyus, aiming to join the top five producers worldwide from No. 12 now, bought two miners in Russia's Far East last year to expand output. The company, spun off from OAO GMK Norilsk Nickel in January last year, has also committed at least $150 million this year on exploration to expand reserves.

Shares of Polyus fell 6.65 rubles, or 0.6 percent, to 1,024.41 rubles in Moscow, valuing the company at 195 billion rubles ($7.5 billion) at the close. Cash costs across all mines rose to $278 an ounce, from $209.

``I'm pretty disappointed, mainly on the jump in costs,'' said Vladimir Zhukov, analyst with Alfa Bank in Moscow. Polyus's acquisitions, including OAO Aldanzoloto and OAO Lenzoloto, have added to its mining costs, he said.

Polyus produced 1.2 million ounces of gold last year, from 1.04 million in 2005. The fifth-largest gold miner is Harmony Gold Mining Co. with 2.34 million ounces based on the previous four quarters, World Gold Analyst magazine reported in March.

Polyus doesn't plan to increase production this year and costs should remain static, Polyus Chief Financial Office Dmitry Glotov said today in a conference call.

Gold prices, which have gained for six consecutive years and traded at $669.65 an ounce in London today, may rise further. Demand from India, China and exchange-traded funds and declining output is likely to push gold above $1,000 in the next several years, JPMorgan Chase & Co. said in a report yesterday.

Polyus has $294 million ``invested in securities and available for acquisitions,'' Glotov said.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net.

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus