MOSCOW (Reuters) - Russian gold and silver producer Polymetal said on Thursday it will focus on asset sales in 2019 rather than getting involved in industry consolidation.
“The pressure from at least some of our shareholders has been to grow smaller or to grow more focused to reduce the number of assets in our portfolio,” chief executive Vitaly Nesis said when asked if Polymetal might take part in M&A.
“We do not rule out making new acquisitions in the future but ... not in 2019,” Nesis told an analyst call.
Newmont Mining is preparing to buy Goldcorp for $10 billion, prompting speculation of further consolidation with too many gold companies chasing too few assets.
This leaves London-listed Polymetal, which has a market capitalisation of $5.3 billion (4 billion pounds), going against the grain, with three of its small gold projects in Russia - Kutyn, Maminskoye and Veduga - as well as Lichkvaz in Armenia up for sale.
Polymetal, part-owned by Vitaly’s older brother Alexander, has been gradually selling assets where it now considers production costs to be too high.
It plans to reduce its 2019 total cash costs to $600-650 per ounce of gold equivalent - a mix of gold and other metals - due to rising low-cost production at the Kyzyl mine in Kazakhstan, the recent disposal of the high-cost Kapan mine in Armenia and the Okhotsk mine in Russia.
Earlier on Thursday, Polymetal reported an 11 percent rise in fourth quarter revenue to $652 million on record high production following a full Kyzyl ramp-up in 2018.
It is now focused on its Nezhda gold mine in Siberia, which is due to start production in late 2021.
This project and the POX-2 project, a processing plant for refractory ore in Russia which is expected to get board approval next week, are expected to consume half of Polymetal’s expected 2019 capital expenditure of $380 million.
Polymetal said in November that POX-2 could have a potential capex of $400 million with a start-up in 2023. It plans to update and disclose these estimates on Feb. 11, Polymetal’s Chief Financial Officer Maxim Nazimok told Reuters.
Reporting by Polina Devitt; Editing by Susan Fenton and Alexander Smith