Sepetmber 1– Sepetmber 15
N69 (298) 15.09.2014
OFFICIAL NEWS ...................................................................................................................................................................... 2
Kazakh president orders parliament to give priority to subsoil bill ...................................................................................... 2
Mangistau authorities offer KZT 1.5-million reward to find cesium container ..................................................................... 3
Atyrau region rescuers joined the missing cesium search ................................................................................................. 3
Lost container with cesium found in Kyzylorda region - ministry ........................................................................................ 3
Baiterek National Holding to invest 250 bln tenge in “industrialization map” projects by end-2014 .................................... 4
Astana and Washington to team up against nuclear smuggling ......................................................................................... 4
Majilis approves ratification of ILO Convention on Promotional Framework for Occupational Safety and Health .............. 5
STATISTICS ............................................................................................................................................................................. 5
Inflation in Kazakhstan at 0.4% in August, 5.4% year to date ............................................................................................ 5
Kazakhstan's industrial prices decline 0.8% in August ....................................................................................................... 6
Kazakhstan's gold, forex reserves up 9.9% in January-August.......................................................................................... 6
Kazakhstan's GDP rose 4.1% in eight months - Ministry of National Economy ................................................................. 6
Industrial production in Kazakhstan down 0.1% in Jan-Aug............................................................................................... 7
Kazakhstan's foreign trade surplus increased 19.4% in seven months .............................................................................. 7
Fixed capital investment up 5.7% in eight months in Kazakhstan ...................................................................................... 7
Kazakh import prices grow 13.5%, export prices fall 3.5% in July...................................................................................... 7
Coal production in Kazakhstan declined 6.6% in January-August ..................................................................................... 8
Kazakhstan ups gold production 10.1% in Jan-Aug ........................................................................................................... 8
Steel production in Kazakhstan up 20% in Jan-Aug........................................................................................................... 8
Kazakhstan's iron ore production down 0.2% in Jan-Aug .................................................................................................. 8
COMPANY NEWS ................................................................................................................................................................... 9
Spain’s Ampo S.Coop may launch a valve production line in Petropavlovsk ..................................................................... 9
Polymetal estimates investments in Kyzyl development at $440-$640 mln ....................................................................... 9
Kazakhstan Electrolysis Plant expects 19% decrease in aluminum output in 2014 ........................................................... 9
Kazakhstan's president visits SSGPO and Evraz Caspian Steel ..................................................................................... 10
Polymetal finalizes acquisition of Kyzyl in Kazakhstan (Part 2) ........................................................................................ 10
Mining group including 10 iron ore deposits to be set up in Kostanai region.................................................................... 11
Bogatyr Komir completing construction of an equipment repair shop .............................................................................. 11
Kazakh-Iranian copper mining project to see $50 million in initial investments ................................................................ 12
CIS NEWS ............................................................................................................................................................................. 12
Polyus Gold EBITDA declines 6% to $393 mln in H1, beating forecast ........................................................................... 12
Polymetal boosts EBITDA 30% in H1 to $310 mln, above forecast ................................................................................. 13
Petropavlovsk EBITDA jumps 41% to $139 mln in H1, exceeds forecast ........................................................................ 16
Silver Bear prepared to offer 30% of Mangazeisky project to Chinese investor - paper................................................... 18
Lenzoloto posts IFRS net losses of 123 mln rubles in H1 ................................................................................................ 19
Rusal boosts Q2 EBITDA 26% to $220 mln, below forecast ............................................................................................ 19
Norilsk Nickel boosts EBITDA 8.6% in H1 to $2.5 bln, above forecast ............................................................................ 23
Metalloinvest sold portion of Norilsk Nickel stake for $490 mln in May-July..................................................................... 25
UMMC to start exporting copper cathodes after export duty on copper canceled ............................................................ 25
Evraz posts EBITDA of $1.08 bln in H1, exceeding expectations .................................................................................... 26
MMK posts EBITDA of $399 mln in Q2 under IFRS, beating forecast ............................................................................. 27
Metalloinvest sees IFRS EBITDA fall 12% in H1 to $1.1 bln ............................................................................................ 28
TMK EBITDA at $190 mln in Q2, slightly below forecast ................................................................................................. 30
Kuzbass Fuel Company swings to IFRS net loss of 76 mln rubles in H1 ......................................................................... 31
Russian international reserves down $2.5 bln in week ..................................................................................................... 31
Nordgold EBITDA jumps 42% to $141 mln in Q2, exceeds forecast ................................................................................ 32
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INTERFAX-KAZAKHSTAN
KAZAKHSTAN MINING REPORT
N69 (298) 15.09.2014
Centerra considers Kyrgyzstan's claims about KGC dividend payments unfounded ....................................................... 33
Chelyabinsk Zinc Plant swings to net profit of 925 mln rubles in H1 ............................................................................... 34
Rostec, Shenhua agree $10 bln in coal mining, power projects ....................................................................................... 35
Russian international reserves down $0.3 bln in week ..................................................................................................... 35
Russia boosts gold production, concentrate exports 24% in 7M ...................................................................................... 35
Russia cuts aluminum exports 20%, copper up 5%, nickel - 0.6% in 7M ......................................................................... 35
Russia boosts ferrous metal exports 1.15% in 7M ........................................................................................................... 36
Ukraine cuts steel output 11% in 8M ................................................................................................................................ 37
Nesis ups stake in Polymetal to 19.86% .......................................................................................................................... 37
GV Gold, Kopy Goldfields targeting 40,000-60,000 oz gold per year at Krasny field ....................................................... 38
Manas Resources receives environmental approval to develop Shambesai field ............................................................ 39
Gold mining enterprise robbed in Kyrgyzstan................................................................................................................... 39
China to invest $30 mln in Tajik cathode plant ................................................................................................................. 39
Severstal shareholders approve 2.14 ruble/share dividend for H1 ................................................................................... 40
Latvia selling Liepajas metalurgs to Ukrainian KVV Group for 107 mln euro ................................................................... 40
Mechel aiming to raise $2 bln-$3 bln in 2-3 yrs with asset sales – paper......................................................................... 40
IMPORTANT MACROECONOMIC INDICATORS OF KAZAKHSTAN
Inflation
Rate
Gold and currency reserve
August
2014
Year-todate
of refinancing
(Sept 1, 2014)
0.4%
5.4%
5.5% per annum
National Bank - $27.743 bl
National Fund - $77.236 bl
FOREX rates
Country
rating
KZT 181.95/$1 (Sept 15)
S&P – BBB+
Moody’s – Ваа2
Fitch – BBВ+
OFFICIAL NEWS
Kazakh president orders parliament to give priority to subsoil bill
ASTANA. Sept 2 (Interfax-Kazakhstan) – Kazakh President Nursultan Nazarbayev instructs the parliament to
give priority to the subsoil bill.
"First, you need to adopt amendments to the law on mineral resource management as these amendments are
aimed to ease the license issue procedure, reduce administrative barriers and make the decision-making
process more transparent", the president said when addressing the fourth session of the fifth parliament of
Kazakhstan in Astana on Tuesday.
In February 2014, the government proposed 189 amendments to the subsoil legislation.
According to the amendments, the expertise requirements for license contracts will be reduced to 60%; the
terms and conditions of the model contract optimized; the companies extracting solid mineral resources-excluding uranium--will now not have to get approval for changes in the production volumes.
The amendments also propose a new mechanism for awarding license contracts based on the “first come, first
served” principle. In this case, the subsoil use fee will increase annually.
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The bill also provides free access to geological information and excludes the feasibility study requirement from
the mandatory project documentation.
Mangistau authorities offer KZT 1.5-million reward to find cesium container
ALMATY. Sept 4 (Interfax-Kazakhstan) – One and half million tenge reward is offered for missing container
with radioactive cesium-137, said the Mangistau region Governor office.
70 National Guard servicemen "have combed the area from Shetpe to Oporny village in Beineu district, a
distance of 300 km," said the regional administration.
The police go door to door explaining hazards to local residents and looking for new information in the case.
Vehicles are being searched and all scrap metal outlets are subject to inspection.
A 50-60 kg container with cesium-137 fell out of the Kamaz truck on the way from Uralsk to Mangutsau region.
The radioactive cargo was intended for scientific use. All emergency services in the area, including the police
and military units are engaged in the search campaign. A toxic hazard warning has been issued to local
residents.
Atyrau region rescuers joined the missing cesium search
AKTAU. Sept 4 (Interfax-Kazakhstan) – Nearly 250 people armed with metal detectors are looking for the
missing container with cesium-137, deputy head of the regional emergency department Kazhimuhan Kospayev
said at a Thursday press conference in Aktau.
According to him, the container might fall out of KAMAZ in the desert, 275 km from Aktau. "Roads there are in a
very poor condition covered with a thick layer of road dust and sand," he said.
"Just in case, we have engaged Atyrau region search teams as well," he added.
Director of BN-350 Reactor Decommission at MAEC Kazatomprom Yuri Shirokobokov said at a press
conference that Kazpromgeofizika was transporting cesium and the Kamaz truck had three containers fastened
to the sides of the truck body.
He specified that the container has a double capsule with the active core having 6 mm to 6.5 mm in diameter. In
other words, cesium weight in the capsule is measured in grams.
"If the capsule is cracked open, the radiation willl exceed norm 8,000 times. But opening it without special tools
it's not easy task," added Shirokobokov.
One and half million tenge reward was offered for the missing container with radioactive cesium-137. All
emergency services in the area, including the police and military units are engaged in the search campaign. A
50-60 kg container with cesium-137 presumably fell out of the Kamaz truck on the way from Uralsk to
Mangutsau region on August 28.
Lost container with cesium found in Kyzylorda region - ministry
ASTANA. Sept 8 (Interfax) - A container carrying cesium-137, which was lost in Kazakhstan's Mangistau region,
has been found in the Kyzylorda region, the republic's Interior Ministry said on Saturday.
In the early hours of September 6, police received a call from a resident of the city of Kyzylorda who said that a
Kamaz vehicle was carrying the lost radioactive isotope of cesium, the spokesperson said.
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"As soon as the report came in, the personnel in the Kyzylorda and nearby regions were immediately instructed
to stop the vehicle. As a result of their concerted efforts, police officers stopped the Kamaz vehicle with a driver
and passenger and the lost capsule in the trunk, on the turn into the town of Baigekum, Shieli District, Kyzylorda
region, at 2 a.m. this morning," the Interior Ministry said.
The driver and the passenger of the vehicle have been brought to the Shieli District Police Department and are
now being questioned.
It was reported that a container carrying cesium-137, which was 30 centimeters high, had 20 centimeters in
diameter and weighed about 50-60 kilograms, fell out of the Kamaz vehicle on August 28 on the Sai-OtesShetpe road in the Mangistau region.
The search for the dangerous object involved all regional emergency agencies, including the police, the
emergency situations ministry and the army. The authorities of the Mangistau region promised a 1.5-million
tenge award (the current exchange rate: 182 tenge/$1) to anyone who finds the container with the cesium.
Baiterek National Holding to invest 250 bln tenge in “industrialization map” projects by end2014
ASTANA. Sept 8 (Interfax-Kazakshtan) – National Management Holding Baiterek will finance “industrialization
map” projects to the total amount of 250 billion tenge by the end of this year, Baiterek says in a press release.
Current FOREX rate is 182/$1.
“By the end of 2015, Baiterek will finance projects to the total amount of about 250 billion tenge, including an
expansion project at the carmaker Saryarka Avtoprom, a project for construction of a high-carbon ferrochrome
shop at the Aktobe ferroalloy plant, a zinc export project at Kazzinc and others,” the press release says.
In the seven months of the current year, the Development Bank of Kazakhstan supported 16 projects by lending
a total of 341.5 billion tenge and made a decision to finance another six projects with 44.5 billion tenge worth of
loans.
The Investment Fund of Kazakhstan is mulling over 16 rehabilitation projects in 2014-2015. The Fund expects a
return-on-investment of 3.1 billion tenge in 2015, according to the press release.
In January-July 2014, the enterprises that were supported by the National Agency for Technical Development
produced 5.45 billion tenge worth of goods. The Agency also provided 128 million tenge in innovation grants.
National Management Holding Baiterek was organized in May 2013 to manage the stakes in the national
institutes of development, the national companies and other legal entities. Baiterek either owns such stakes or
manages them on behalf of the other stakeholders.
Baiterek manages the Development Bank of Kazakhstan (DBK), Investment Fund of Kazakhstan, DAMU
Entrepreneurship Development Fund, Kazyna Capital Management, Baiterek Development JSC, Center for
Management of Public Private Partnership Projects LLP, the National Agency for Technical Development,
Zhilstroisberbank of Kazakhstan (Housing Construction Savings Bank), Mortgage Company of Kazakhstan,
Mortgage Loan Guarantee Fund of Kazakhstan and KazExportGrant JSC.
Astana and Washington to team up against nuclear smuggling
ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan and the United States have reached agreement to step
up effort in the fight against nuclear and radiological material smuggling.
“A multiagency delegation of U.S. officials met with their Republic of Kazakhstan counterparts in Astana on
September 8-9 to advance U.S.-Kazakhstani mutual efforts to counter nuclear smuggling,” the US Embassy in
Kazakhstan says in a press release.
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The meeting provided an opportunity to deepen our ongoing bilateral partnership in this area under the U.S.Kazakhstan Communiquй on Intentions to Improve Kazakhstan’s Capabilities to Combat Nuclear Smuggling,
which the two countries signed in 2006, according to the press release.
During the meeting in Astana, the sides agreed to cooperate more closely in support of Kazakhstan’s effort to
develop a training curriculum on illicit trafficking at the Nuclear Security Training Center, an initiative that
President Nazarbayev announced at the 2012 Nuclear Security Summit in Seoul.
“Specifically, U.S. and Kazakhstani officials discussed how to use ongoing and proposed training opportunities at
the Center to strengthen national competencies in the areas of nuclear forensics, radiation detection, and law
enforcement investigations. In addition, our governments reviewed overall progress in implementing the 2006
Communiquй across a broad range of cooperative activities to work with Kazakhstan to prevent, detect, and
respond to nuclear and radiological material trafficking incidents,” the press release says.
Majilis approves ratification of ILO Convention on Promotional Framework for Occupational
Safety and Health
ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan's Majilis, Lower Chamber of Parliament on Wednesday
approved ratification of the Convention on the Promotional Framework for Occupational Safety and Health (No.
187).
According to the Minister of Health and Social Development Tamara Duysenova, ILO Convention was ratified by
25 member countries including Russia and Moldova.
According to statistics, the number of employees working in hazardous conditions in Kazakhstan, at the
beginning of 2014 amounted to 376,000 or one fifth of the total employment. High noise level poses danger to
40% of employees (153,800), while high gas content and dust in the working area affects more than 35%
(132,900).
"Currently, the Kazakh government is working on the transition from the compensation OSH management
system to a modern professional risk management to implement a preventive approach to workers' health risks
and cut costs associated with hazardous working conditions. Therefore, it is suggested to ratify ILO Convention
187," said Duysenova.
Convention No 187 was adopted at the General Conference of the International Labor Organization (ILO) on
June 15, 2006 in Geneva.
Convention No. 187 calls for ratifying member States to take action to progressively achieve a safe and healthy
working environment and commit themselves to continuous improvement of occupational safety and health by
means of a national policy, a national system and a national program aimed at the prevention of occupational
injuries, diseases and deaths, through tripartism and social dialogue.
STATISTICS
Inflation in Kazakhstan at 0.4% in August, 5.4% year to date
ALMATY. Sept 2 (Interfax-Kazakhstan) – In August the inflation level in Kazakhstan stood at 0.4%, the Kazakh
State Agency for Statistics said.
In August 2014, the prices for food products decreased by 0.1%, for non-food items rose by 1.1% and for
services by 0.4%.
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The annual inflation rate through the eight months ended August 31, 2014 is at 5.4%, with prices for food stuffs
climbing by 5.3%, non-food products by 6.2% and services by 4.7%.
Kazakhstan's industrial prices decline 0.8% in August
ASTANA. Sept 2 (Interfax-Kazakhstan) - The prices for industrial products and services decreased 0.8% in
August 2014 compared to July 2014 and rose 15.4% compared to August 2013, the State Agency for Statistics
reported.
In August 2014 the prices for industrial products decreased 0.8% from a month earlier or an increase of 16%
compared to August 2013; industrial service prices remained flat compared to the previous month or grew by
7.9% compared to August 2013.
Last month the prices in the mining sector went down by 1.8% while the prices in the manufacturing grew by
1.8%.
In the reporting month the prices for metal ores decreased by 3.1%, crude oil and natural gas by 1.9% while the
precious and non-ferrous metals rose by 4.7% in price, paper and paper products by 4.2%, coke and petroleum
products by 2.4% and tobacco products by 2.3%.
Kazakhstan's gold, forex reserves up 9.9% in January-August
ALMATY. Sept 8 (Interfax-Kazakhstan) - Kazakhstan's gold and foreign currency reserves, including the Kazakh
National Bank's gross reserves and funds accumulated in Kazakhstan's National Fund, rose to $104.979 billion
as of the end of August 2014, up 1.2%in the month and 9.9% in January-August, the National Bank said in a
statement.
Assets of the National Fund grew 0.62% in July to $77.236 billion (up 9.1% in 8 months).
In August 2014, gross international reserves of the National Bank rose 2.76% to $27.743 billion (up 12.25% in 8
months) and the bank's net international reserves grew 2.85% to $27.106 billion, up 12.15% from the beginning
of the year.
Currency reserves fell 1.12% in August to $20.224 billion (up 5.53% in 78M), while gold assets rose 14.91% to
$7.519 billion (up 35.45% in 8M).
Kazakhstan's GDP rose 4.1% in eight months - Ministry of National Economy
ASTANA. Sept 10 (Interfax-Kazakhstan) – Kazakhstan's GDP in January-August 2014 increased by 4.1%.
"GDP growth according to the estimates made 4.1% in eight months," said the Minister of National Economy
Erbolat Dossaev at a Wednesday briefing in Astana.
"The index of physical volume of industrial production was 0.1% down, agriculture growth was 2.5%,
construction (4.7% up), trade (9.4% up), transport (7% up) and communications (9.3% up), " Dosayev said.
The investment in fixed assets increased by 5.7%.
"Inflation over the past month was 0.4% and in annual terms amounted to 5.4% in eigth months," said the
Minister.
The Kazakh government expects real GDP growth in 2014 at 6%.
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Industrial production in Kazakhstan down 0.1% in Jan-Aug
ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-August 2014 the industrial output in Kazakhstan edged
down 0.1% year-on-year, the State Statistics Agency said.
In the reporting period the mining industry shrank by 0.1%, processing industry declined by 0.4%, power,
electricity, gas and steam supplies increased by 1.7%, and water supplies reduced by 4.2%.
According to the statistics, industrial output grew in nine regions of the country in January-August 2014. A
decrease in industrial production was reported in the Aktobe, Atyrau, Kyzylorda, Pavlodar regions and in Astana
and Almaty.
The industrial production in Kazakhstan decreased 0.4% in January-June 2014 and rose 2.3% in 2013.
Kazakhstan's foreign trade surplus increased 19.4% in seven months
ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-July 2014, the foreign trade surplus of Kazakhstan totaled
$25.2 billion, or an increase of 19.4% compared with the same period of 2013, the State Agency for Statistics
reported.
In the reporting period, the country's foreign trade turnover decreased by 7.7% year-on-year to $71 billion,
including exports of $48.1 billion (down 3.6%) and imports of $22.9 billion (down 15.3%).
In the reporting period, export operations with the Customs Union amounted to $2.915 billion (down 21%),
imports to $7.825 billion (down 22.9%).
The main buyers of Kazakhstan-made products were Italy (22.8% of all exports), China (13.3%), and the
Netherlands (11.4%). The main exporters to Kazakhstan were Russia (32.7% of all Kazakhstan’s imports in the
reporting period), China (17.7%), Germany (5.8%).
Fixed capital investment up 5.7% in eight months in Kazakhstan
ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-August 2014, fixed capital investment in Kazakhstan
amounted to 3.699 trillion tenge (182.5 tenge/$1), or an increase of 5.7% compared with the same period of
2013, the State Agency for Statistics said.
In January-August 2014, the most attractive industries for investment were mining (31% of all fixed capital
investment), transport and warehousing (18.8%) and real estate (11.3%), according to statistics.
In the reporting period, investment mostly came from the companies’ equity capital (57.7% of total investment),
public money (20.1%), loans from banks (9.2%, including loans from foreign banks - 4.6%) and borrowed funds
(13%, including non-residents' borrowed funds - 7.8%).
Kazakh import prices grow 13.5%, export prices fall 3.5% in July
ALMATY. Aug 13 (Interfax-Kazakhstan) - In July 2014 the prices for imported goods in Kazakhstan rose 13.5%
and export prices declined 3.5% compared to July 2013, the State Agency for Statistics said in a statement.
According to the statistics, the prices for commodity imports rose by 1%, commodity exports fell by 6.6% in price.
Imported semi-finished products grew in price by 3.7%, exported items by 3%. The prices for imported finished
products increased by 16.9% and for exported items rose by 17.3%.
Compared to June 2014, the July export prices and import prices went down 0.5% and 2.3%.
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July 2014 saw a decline in export prices for nonferrous and ferrous metal ore (7.7%), copper (2.3%) and
liquefied propane (1.9%). On the other hand, there was an increase in export prices for lead (10.9%), natural
gas (7%), aluminum (4.4%), ferroalloys (4.3%), coal (3.5%), zinc (2.6%), gas condensate (2.3%) and oil (0.2%).
In the reporting month exported flour fell (9.8%), while cotton and barley increased 11.7% and 2.3%.
The import prices went down for vegetable oil (8.6%), vegetables (6.6%), dairy products (1.3%), tea (0.7%) and
fish (0.4%). Rice rose in price (9.9%), meat products (3.7%), coffee (2.2%), poultry (2.1%) and sugar (0.8%).
Coal production in Kazakhstan declined 6.6% in January-August
ALMATY. Sept 12 (Interfax-Kazakhstan) – In January-August 2014 Kazakhstan produced 68.072 million tonnes
of coal, 6.6% down from the same period last year, the statistics committee of the ministry of national economy
said.
Kazakhstan has mainly coal mines in Karaganda, Pavlodar and East Kazakhstan regions.
Kazakhstan ups gold production 10.1% in Jan-Aug
ALMATY. Sept 15 (Interfax-Kazakhstan) - In January-August 2014 Kazakhstan produced 30,432 kg of refined
gold or an increase of 10.1% year-on-year, said the Statistics Department of the Ministry of Economy.
In the same period, the republic produced 588,171 kg of refined silver or a decrease of 8.9% compared with
January-August 2013.
In January-August 2014, the output of unmanufactured zinc came to 216,156 tonnes or up 2.1% year-on-year,
and unmanufactured refined copper production amounted to 184,716 tonnes or down 26.9%.
Steel production in Kazakhstan up 20% in Jan-Aug
ALMATY. Sept 15 (Interfax-Kazakhstan) – Kazakhstan produced 2.616 million tonnes of crude steel in JanuaryAugust 2014 or an increase of 20% compared with the same period last year, reported the State Agency for
Statistics.
In the reporting period, the output of flat steel products grew 17.6% to 1.684 million tonnes, production of
galvanized steel rose 9.9% to 364,516 tonnes and production of tin-plate and tin-plated sheet declined 14.2% to
58,977 tonnes.
In January-August 2014, the republic produced 1.122 million tonnes of ferroalloys or a rise of 5.7% year-on-year.
Kazakhstan's iron ore production down 0.2% in Jan-Aug
ALMATY. Sept 15 (Interfax-Kazakhstan) – Kazakhstan extracted 33.891 million tonnes of iron ore in JanuaryAugusts 2014 or a decrease of 0.2% compared to the same period last year, said the Statistics Department of
the Ministry of Economy.
In the reporting period Kazakhstan produced 25.863 million tonnes of copper ore or a decrease of 6.7% year-onyear, 3.586 million tonnes of copper and zinc ore or up 0.8%, and 4.560 million tonnes of lead and zinc ore or
down 6.4%.
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According to statistics, the output of copper in concentrate amounted to 308,100 tonnes or up 4.7%, and zinc in
concentrate to 228,900 tonnes or down 2.6%.
COMPANY NEWS
Spain’s Ampo S.Coop may launch a valve production line in Petropavlovsk
ASTANA. Aug 29 (Interfax-Kazakhstan) – Ampo S.Coop, incorporated in Spain, is mulling over a valve
production project on the site of MunayMash Plant in Petropavlovsk, according to a press release of the North
Kazakhstan Region administration.
The project was discussed at a meeting between Regional Governor Yerik Sultanov and Ampo S.Coop
President Jon Aguirre, the regional administration says in a press release.
The company is considering a possibility of launching a valve shop on the site of ManayMash JSC that will
produce valves for the oil, gas and water pipelines and other infrastructure.
“First, we need to develop a business plan. It will take us six weeks. In addition, we may have to train the local
specialists and we are ready to send them to Spain for training. We hope that the new production line will be put
into operation in January 2015,” Aguirre is quoted as saying.
Ampo S.Coop manufactures fittings and components for pipeline construction.
MunayMash JSC produces subsurface oil pumps.
Polymetal estimates investments in Kyzyl development at $440-$640 mln
MOSCOW. Sept 2 (Interfax) - Russian gold and silver producer OJSC Polymetal estimates investments in the
Kyzyl project in Kazakhstan at $440-$640 million, the company said in a presentation.
A total of $40 million may be spent in 2015, including on design and a feasibility study, $200-$250 million in
2016, $150-$250 million in 2017 and $50-$100 million in 2018, materials say.
Polymetal noted that these figures were preliminary. Spending in 2015 may be re-estimated in Q4 2014, as well
as in 2016-2018 following a possible deal (expected in Q4 2014) and a renewed feasibility study (Q4 2015).
Kazakhstan Electrolysis Plant expects 19% decrease in aluminum output in 2014
PAVLODAR. Sept 2 (Interfax-Kazakhstan) – JSC Kazakhstan Electrolysis Plant, part of Eurasian Resources
Group (ERG), plans to produce 203,000 tonnes of aluminum by year-end or 47,000 tonnes less (down 18.8%)
year-on-year, the press office of the enterprise told Interfax-Kazakhstan.
The decrease in output is caused by an overhaul of electrolysis units at the plant, which is planned, according to
the press office.
Kazakhstan Electrolysis Plant in Pavlodar region is the only domestic producer of primary aluminum and has
been annually producing 250,000 tonnes of aluminum annually since 2010.
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The plant exports over 90% of its products. Its major consumers are plants in Russia, Ukraine, Belarus and
Uzbekistan.
In December 2013, ERG closed a deal to buy ENRC. ENRC specialized in the production of bauxites, copper,
coal, aluminum, ferro-alloys, pellets; its owned assets included Kazchrome, Zhairem Mining and Processing
Integrated Works, Sokolov-Sarbai Mining and Processing Integrated Works, Aluminum of Kazakhstan,
Kazakhstan Electrolysis Plant, Eurasian Energy Corporation, Shubarkol Komir and ENRC Logistics.
Kazakhstan's president visits SSGPO and Evraz Caspian Steel
ASTANA. Sept 3 (Interfax-Kazakhstan) – Kazakhstan President Nursultan Nazarbayev named the SokolovSarbai Mining and Processing Production Association (SSGPO), a leader of the national industrial production,
when visiting the company during his working visit to the region.
The president praised SSGPO as it was celebrating its 60th anniversary for implementing a wide-scale
modernization, launching major investment projects and creating new jobs.
Later the same day, during his trip to Kostanai region, he visited Evraz Caspian Steel rolling mill producing light
sections and rebars. The mill has an annual capacity of 450,000 mt of light sections.
SSGPO is the largest iron ore mining and processing enterprise in Kazakhstan. Operations include the
Sokolovsky, Sarbaisky, Kacharsky and Korzhinkolskiy iron ore open pits; the Sokolovsky underground mine;
dolomite and limestone open pits; and crushing, concentrating and pelletising facilities. The Rudny heat and
energy plant supplies these operations with reliable, low-cost power.
Polymetal finalizes acquisition of Kyzyl in Kazakhstan (Part 2)
MOSCOW. Sept 4 (Interfax) - Russian gold and silver producer OJSC Polymetal finalized on Thursday the
acquisition of Altynalmas Gold Ltd (AAG), the holding company for the Kyzyl gold project in Kazakhstan,
Polymetal said in a statement.
The initial cost of the acquisition was $318.5 million in cash funds and another $300 million in shares from an
additional issue. As a result, the seller - Sumeru Gold, which is owned by Timur Kulibayev, the son-in-law of the
President of Kazakhstan - received 7.45% of Polymetal's increased equity.
According to Interfax's calculations, the stake of Polymetal's largest shareholder, Peter Kellner's PPF Group, fell
to 18.97% from 20.5% as a result of the additional issue. The stake of Alexander Nesis' ICT Group fell to 17.11%
from 18.49%, while Alexander Mamut's went to 9.21% from 9.95%.
"The initial consideration for this acquisition comprised $318.5 million in cash and $300 million payable through
the issue to Sumeru Gold B.V. of 31,347,078 new ordinary shares of the Company (the "Consideration Shares"),
representing approximately 7.45% of the Company's enlarged issued share capital. The number of shares
issued was determined by dividing $300 million by the unweighted mean average closing price of Polymetal
shares on the Main Market of the London Stock Exchange in the twelve calendar months ending three trading
days before Completion which comprised $9.57027 per share. Deferred additional cash consideration up to an
agreed cap, contingent on certain conditions being met and dependent on the relative dynamics of the gold price
and the price of Polymetal's shares, may be payable over up to the next seven years. Sumeru Gold B.V. is
entitled to a put option giving it a right to require Polymetal to acquire or procure acquirers for the Consideration
Shares by notice to Polymetal during the one month period immediately following the first anniversary of
Completion at a price per Consideration Share equal to $9.57027," the statement says.
The Kyzyl gold project comprises the Bakyrchik and Bolshevik gold deposits and is located in north-eastern
Kazakhstan.
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The acquisition will increase Polymetal's gold equivalent reserves by approximately 50% to 19.7 million ounces
with a single large high-grade property containing 6.7 Moz gold at 7.5 g/t (JORC), and a life of mine of 20 years
based on reserves at Bakyrchik. Resources will increase 23%, or 20.6 million ounces.
Polymetal hopes by the end of 2015 to finish appraising the project's reserves and drafting a feasibility study.
Construction might begin early 2016 and production, according to preliminary estimates, in 2018.
Based on Polymetal's preliminary estimate, production at Kyzyl could total 100,000-150,000 ounces of gold in as
soon as 2018 with overall production totaling 1.45-1.5 million ounces. In addition, Production at Kyzyl in 2019
could reach 325,000-375,000 ounces with overall production of 1.55-1.6 million ounces.
Investments are estimated at $440-$640 million. A total of $40 million may be spent in 2015, including on design
and a feasibility study, $200-$250 million in 2016, $150-$250 million in 2017 and $50-$100 million in 2018,
materials say.
Polymetal International plc is Russia's largest silver producer and one of the country's largest gold miners. The
London- and Moscow-listed Polymetal's free float is 50.16%. Major shareholders include PPF Group (20.5%),
Alexander Nesis's ICT Group (18.49%) and Alexander Mamut (9.5%). Management and employees own 0.91%
of the shares. The company has operations in Magadan and Sverdlovsk regions, Khabarovsk Territory,
Chukotka and Kazakhstan.
Mining group including 10 iron ore deposits to be set up in Kostanai region
KOSTANAI. Sept 5 (Interfax-Kazakhstan) – Sokolovka LLP together with Civic-Oriented Entrepreneurial
Corporation Tobol plans to set up a mining group including 10 iron ore deposits in Kostanai region.
The total amount of investment into exploration will top 11 billion tenge (182 tenge/$1), Tobol told InterfaxKazakhstan.
Sokolovka LLP will be an investor and partner for Tobol. The company plans to implement the project using its
own funding and borrowings. The two entities will set up a JV with specified stakes, according to Tobol.
A decision was made to unite 10 deposits into one group because their reserves are not significant and such an
agglomeration would bolster their investment attractiveness and reduce exploration expenditure. The deposits
are situated in Kostanai, Mendykara, Taran, Karabalyk, Kamysty, Zhitikara districts, according to Tobol.
Approximately contracts will be registered during the first half of 2015. After receiving contracts exploration is to
be conducted as long as 6 years and should define the overall iron ore reserves, according to Tobol.
Sokolovka LLP is registered in Kostanai region and specializes in the collection (procurement), storage,
processing and sale of scrap metal and non-ferrous metal wast, production and processing of iron ore,
limestone, dolomite, as well as production and sale of pellets, concentrate, crushed stone and limestone.
Civic-Oriented Entrepreneurial Corporation Tobol was set up in 2007 in Kostanai region and researches 33
minerals located in the region.
Bogatyr Komir completing construction of an equipment repair shop
PAVLODAR. Sept 9 (Interfax-Kazakhstan) – Bogatyr Komir LLP in Ekibastuz is completing the construction of an
equipment repair shop, the company told Interfax-Kazakhstan.
Ekibastuz is a town in the Pavlodar Region, north Kazakhstan.
The cost of the project is over one billion tenge (182/$1).
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The new shop will be used to repair the company’s trucks, which transport coal, and the equipment and
machinery from the Bogatyr and North open-cast mines.
This year, the company has already completed a number of capital expenditure projects totaling 567.4 million in
value.
Bogatyr Komir is owned by JSC Samruk-Energo, which is part of Kazakhstan’s National Wealth Fund SamrukKazyna, and Russia’s RUSAL.
The company produces coal using an open-cut method at two deposits – Bogatyr and Severny, the total coal
reserves of which are estimated at around 3 billion tonnes. The production capacity of the Bogatyr deposit is 32
million tonnes of coal a year and the North deposit 10 million tonnes.
Kazakh-Iranian copper mining project to see $50 million in initial investments
PAVLODAR. Sept 12 (Interfax-Kazakhstan) – Iran's Kavand Nahan Zamin have signed an agreement with
Kazakhstan's Cooper-kz LLP on joint exploration and production of cooper at the Borly deposit in Karaganda
region, Ministry of Investment and Development told Interfax-Kazakhstan.
The document was signed within the framework of the Kazakh-Iranian Business Forum held in Astana on
September 9.
"The initial investment is estimated at $50 million," said the spokesman.
"An exploration stage will last until 2016 to be followed by copper production," according to the Ministry's press
office.
The ministry, however, declined to elaborate on other details of the deal such as share interests in the project
and financing.
Iran and Kazakhstan at a business forum held in Astana during the first state visit of Iranian President Hassan
Rouhani to Kazakhstan, signed a number of bilateral documents, including agreements in the fields of geology,
metallurgy, agriculture, transport, logistics, tourism and manufacturing of building materials to the total of $500
million
CIS NEWS
Polyus Gold EBITDA declines 6% to $393 mln in H1, beating forecast
MOSCOW. Aug 22 (Interfax) - Polyus Gold International Ltd (PGIL), the controlling shareholder in Polyus Gold,
reduced earnings before interest, taxes, depreciation and amortization (EBITDA) 6% to $393 million in the first
half of 2014, the company said in its IFRS earnings statement.
Analysts told Interfax in a consensus forecast that EBITDA would decline 6.5% to $390 million.
Revenue in the six months edged down 2% year-on-year to $1.007 billion.
Net profit totaled $253 million compared with a net loss of $167 million in H1 2013.
Capex in H1 was $287 million, which was 59% less than in H1 2013. The company said that capex fell because
costs at the Natalka field also fell.
All-in sustaining costs came to $905 per ounce, down 18% from H1 2013, when they were $1,103. Total cash
costs declined 13% to $662 per ounce. These two figures fell thanks to a program to optimize spending and
because of the ruble's depreciation.
Copyright © 2014 by Interfax-Kazakhstan news agency
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The company's net debt was $370 million as of end-June 2014 versus $349 million a year ago. The net debt to
EBITDA ratio remained at 0.4x.
Main financial results, mln rubles:
H1 2014
H1 2013 Change
Sales revenue 1 007
1 024
-2%
Profit
253
(167)
-
Operating profit 278
(156)
-
Earnings per share, cents
8
(5)
Capex
700
-59%
Gold production, '000 ounces
746
718
4%
Gold sales, '000 ounces
751
654
15%
Average sales price, $ per ounce
1 296
1 513
-14%
EBITDA
417
-6%
41%
2 pp
287
393
EBITDA margin 39%
-
Polyus Gold boosted production 4% in H1 to 745,600 ounces. The company confirmed its 2014 production
forecast at 1.58-1.65 million ounces of gold.
In other company news, Anastasia Galochkina has joined the Polyus Gold board of directors.
Galochkina was nominated for the board of directors of the gold miner from Wandle Holdings Limited, which is
affiliated with the fund established by Suleyman Kerimov, the Suleyman Kerimov Foundation.
The place on the Polyus Gold board of directors became vacant on August 18 due to the departure of the
company's non-executive director, Anna Kolonchina.
Galochkina is the managing director of Nafta Moscow. In 2004-2011 she worked at the Swedish investment
company, Vostok Nafta Investment Ltd, and in 2006-2008 she was on the board of directors for Kontakt East
Holding AB. Before joining Vostok Nafta, Galochkina worked at the Moscow office of Ernst&Young.
Polymetal boosts EBITDA 30% in H1 to $310 mln, above forecast
MOSCOW. Aug 27 (Interfax) - OJSC Polymetal, Russia's largest silver producer and a leading gold producer,
boosted adjusted earnings before taxes, depreciation, and amortization (EBITDA) 30% year-on-year in JanuaryJune 2014 to $310 million, the company said.
Analysts from nine investment banks said in an Interfax consensus survey that EBITDA would total $271 million.
In January-June 2014 Polymetal had net profit of $100 million versus loss of $255 million a year before. Adjusted
net profit was $101 million.
Polymetal's board of directors decided to pay out dividends from 30% of adjusted net profit in H1 at $0.08 per
share. Dividends for H1 2013 were $0.01 per share, meaning this year's interim dividends could be 700% more.
Polymetal IFRS financial highlights for H1 2014:
H1 2014
H1 2013 %
Revenue, $ mln 727
721
+1%
Total cash cost, $/GE oz
627
787
-20%
All-in cash cost, $/GE oz
938
1,210
-22%
Adjusted EBITDA, $ mln
310
239
+30%
Adjusted EBITDA margin
43%
33%
+10 p.p.
Average realized gold price, $/oz
1297
1441
-10%
Average LBMA gold price, $/ oz
1290
1524
-15%
Copyright © 2014 by Interfax-Kazakhstan news agency
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N69 (298) 15.09.2014
Average realized silver price, $/oz
19,1
24,3
-21%
Average LBMA silver price, $/oz
20,1
26,6
-25%
Net profit, $ mln
100
(255)
-
Adjusted net profit, $ mln
101
17
-
Return on equity
11%
2%
+9 p.p.
Basic EPS, $/share
0,26
(0,66) -
Underlying EPS, $/share
0,26
0,04
-
Dividend declared for the period, $/share
0,08
0,01
-
Net debt, $ mln 1,038
1,045*
-1%
Net debt/Adjusted EBITDA
1,55
1,75*
-11%
Net operating cash flow, $ mln
141
59
+139%
Capital expenditure, $ mln
105
171
-38%
Free cash flow, $ mln
29
(125)
-
* As of December 31, 2013
In comparison with the same period of last year, the average realized price for gold and silver fell by 10% and
21%, respectively. "The price decline was offset by 12% growth in the volume of gold equivalent sold," Polymetal
said in statement on its website.
"Adjusted EBITDA margin was 43% compared to 33% in H1 2013," it said.
"Group Total Cash Cost was $627 per gold equivalent ounce (GE oz), down 13% compared to H2 2013 (half-onhalf) and down 20% year-on-year due to a robust operational performance, resulting in higher average grades
processed and increased throughput across the portfolio, coupled with significant Russian ruble and Kazakh
tenge depreciation against the US dollar," the statement said.
"All-in cash costs amounted to $938/GE oz and decreased 22% year-on-year, driven mostly by a reduction in
total cash costs during the period, combined with increased production levels and associated reduction in per
ounce sustaining capital and exploration expenditure at operating mines," Polymetal said.
"Net debt at June 30, 2014 decreased by $7 million to $1.038 billion (December 31, 2013: $1.045 billion), while
the Company paid dividends of $31 million during the period. Free cash flow was $29 million and is expected to
be significantly stronger in the second half of the year due to the planned de-stockpiling at Mayskoye and the
seasonal reduction of the timing gap between production and sales," Polymetal said.
Polymetal's unused credit lines currently amount to $1.115 billion.
Sales
South Korea accounted for 10% of the metal sales of Polymetal in the first half of 2014.
Shipments to South Korea totalled $74 million in the first half, 48 times more than in the same period of 2013,
Polymetal reported.
Meanwhile, shipments to China and Europe, which accounted for respectively 8% and 12% of Polymetal's metal
sales in the first half of 2013, virtually stopped.
Russian gold miners usually sell most of their metal to Russian banks. Polymetal's domestic sales grew to 71%
from 63% of the total. The second largest share of sales was in Kazakhstan, where the company has the
Varvarinskoye deposit and a major regular customer in Kazzinc.
Breakdown of Polymetal metal sales by region, mln USD:
Region
H1 2014
H1 2013 H1 2014/H1 2013
Russia
518.8
451.6
71%*
63%
99.3
87.7
Kazakhstan
Copyright © 2014 by Interfax-Kazakhstan news agency
Total in 2013
14.9% 1060.9
62%
13.3% 170.2
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N69 (298) 15.09.2014
South Korea
Japan
China
Europe
14%
12%
73.9
1.5
10%
0%
30.7
38.770
4%
5%
2.9
54.335
0%
8%
0.2
86.9
-99.8% 152
0%
12%
9%
Total metal sales
100%
725.8
10%
4720.4%
90.5
5%
-20.9% 65.2
4%
-94.6% 165.4
10%
720.8
100%
0.7%
1704.1
100%
* Here and elsewhere, share of Polymetal metal sales in corresponding period
"The change in the structure of sales by region is due to the shipment conditions that were offered. We are
continually analyzing the market and regularly conduct negotiations with potential buyers. As a result, the
geography of shipments can change," a Polymetal spokesman told Interfax.
The drop in shipments to China is also due to the fact that Polymetal has stopped selling concentrate from the
Albazino deposit in Khabarovsk Territory to China. This year all the concentrate is being processed at the
Amursk POX facility. In 2013, offtake sales to China from Albazino totaled 79,000 ounces in concentrate.
Last year Polymetal also sold concentrate from its Dukat gold and silver mine in Magadan Region and gold from
the Varvarinskoye deposit under offtake contracts to Japan, South Korea, Kazakhstan and China. The company
said that in 2014 it intends to diversify sales from Dukat at the expense of offtake buyers from Japan,
Kazakhstan and South Korea.
There should be an increase in shipments to China in the second half of 2014. Polymetal has already signed
agreements with three offtake buyers from China for the delivery of gold concentrate from the Maiskoye deposit
in Chukotka. In 2013, Polymetal shipped 30,000 tonnes of concentrate from Maiskoye to China, which is
equivalent to 48,000 ounces of gold.
Capex
Polymetal reduced capex to $115 million in the first half of 2014, 36% less than in the same period last year, the
company said.
The startup of the Mayskoye facility in April 2013 marked the completion of Polymetal's major investment
projects and beginning with the second half of 2013, the bulk of capex has gone to support business operations
and geological exploration, the company said.
Polymetal confirmed the 2014 capex target totaling $250 million, including capitalized stripping costs.
Polymetal capex in H1 2014 ($ mln):
H1 2014
H1 2013 Change
Mayskoye (Chukotka)
9
30
-69%
Dukat (Magadan region)
13
15
-12%
Amursk/Albazino ( Khabarovsk territory)
9
23
-61%
Omolon (Magadan region)
5
10
-53%
Varvara ( Kazakhstan )
5
11
-57%
Khakanja ( Khabarovsk territory)
3
7
-60%
Voro ( Sverdlovsk region)
3
5
-39%
Geological exploration
35
19
+82%
Corporate and other
6
9
-32%
Copyright © 2014 by Interfax-Kazakhstan news agency
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Capitalized stripping costs
25
49
-49%
Capitalized interest
2
3
-31%
Total
181
-36%
115
Capex excluding stripping costs totaled $90 million in the first half of 2014, down from $132 million in the same
period last year.
Capex declined for all existing enterprises in the period year-on-year and mainly reflects the cost of renewing the
fleet of mining equipment and maintenance of processing capacity.
Investment in standalone exploration projects totaled $35 million in the first half, up from $19 million in the first
half last year. The exploration effort is focused on the Maminskoye deposit in Sverdlovsk region, on the Svetloye
and Kutyn deposits in Khabarovsk territory and at PGM deposits.
Capex for stripping activities applies to those enterprises whose stripping ratio during the reporting period
exceeded the average, for the most part, Varvara, Voro and Khakanja.
Dividends
Polymetal will pay its shareholders dividends for the first half of the year on September 26, the company said.
Polymetal's board of directors decided to pay dividends upwards of $31 million, or 30% of adjusted net profit for
H1 2014.
Dividends will be paid at $0.08 per share, up eightfold from the $0.01 per share paid for H1 2013.
The register of shareholders to receive dividends closes on September 5, 2014. The last day to select a currency
(dollars or pounds sterling) is September 8.
Polymetal's charter capital consists of 389,472,865 shares.
TCC forecast
Polymetal has lowered its forecast for total cash costs (TCC) in 2014 to $650-$700 per ounce of gold equivalent,
the company said in materials.
That is 7% lower than the 2014 TCC forecast that Polymetal announced in March, $700-$750 per oz.
It also lowered the forecast for all-in cash costs, by roughly 2.5% to $950-$1,000 per oz of gold equivalent from
$975-$1,025 per oz.
Polymetal said the decrease in costs was the result of ruble weakening, in which most of its expenses are
denominated, and anticipated superior operating results.
The forecasts might be revised downward further if the ruble weakening persists until the end of the year,
Polymetal said.
The ruble has depreciated 2.8% against the dollar in the year so far. The average exchange rate declined 12.8%
compared with the same period last year. Most of the weakening occurred in February-May 2014.
Polymetal's TCC was $627 per oz in H1 2014, 13% less than in H2 2013 and 20% less than in H1 2013. All-in
cash costs were 22% lower year-on-year at $938 per oz.
Polymetal's shares are traded on the London Stock Exchange (LSE) and the Moscow Exchange, and free float
exceeds 50%. Major shareholders include PPF Group (20.5%), Alexander Nesis's ICT Group (18.49%) and
Alexander Mamut (9.95%). The company has operations in Magadan and Sverdlovsk regions, Khabarovsk
Territory, Chukotka and Kazakhstan.
Petropavlovsk EBITDA jumps 41% to $139 mln in H1, exceeds forecast
MOSCOW. Aug 28 (Interfax) - Petropavlovsk, a Russian gold mining company, increased its earnings before
interest, tax, depreciation and amortization (EBITDA) by 41% year-on-year to $139.2 million in the first half of
2014, the company reported.
Analysts at six investment banks polled by Interfax had expected the company to post EBITDA of $106 million.
Revenue declined 10% to $453 million, mostly connected with a drop in sales price of 12%, which was partially
compensated by a 5% increase in sales in real terms.
Copyright © 2014 by Interfax-Kazakhstan news agency
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The company reduced its net loss to $95.3 million from $742.2 million.
In light of the losses, Petropavlovsk's board of directors is recommending that the company not pay first-half
dividends.
Petropavlovsk operating and financial highlights in H1 2014:
H1 2014
H1 2013 Change
Gold production, '000 oz
306,4
294,7
4%
Gold sales, '000 oz
310,7
297,1
5%
Average sales price, $/oz
1386
1579
(12%)
Cash cost at hard-rock mines, $/oz
847
1136
(25%)
Total cash costs, $/oz
853
1157
(26%)
Revenue, $ mln 453
505,1
(10%)
EBITDA, $ mln 139,2
98,7
41%
Net loss/profit, $ mln
8,3
(615,4) -
Basic (loss) earnings per share, $
(95,3)
(742,2) (87%)
Net income (loss) incurred by shareholders, $ mln
(54)
(666,1) (92%)
Net income (loss) per share, $
(0,28)
(3,39) (92%)
Net cash flow from operations, $ mln
80,8
82,7
(2%)
Petropavlovsk's net debt as of July 1, 2014, was $924 million. Compared with the end of the first quarter ($911
million) the company increased net debt 1.4%. Compared with the end of 2013 ($948 million), debt is down
2.5%.
JORC resources, reserves
Petropavlovsk plc has boosted its JORC mineral resource base by 1 million oz gold, the company said.
Proven + probable reserves increased by 0.5 million oz gold. The increase entirely covers withdrawals from
reserves in H1 2014.
Petropavlovsk also converted into JORC a portion of the resource and reserves classified earlier under the
Russian Classification System: 3.1 million oz of non-refractory resources and 0.82 million oz of non-refractory
reserves.
Total ore reserves amounted to 9.34 million oz, including 4.47 million oz of proven + probably reserves.
Total mineral resources (Measured, Indicated and Inferred) were 26.41 million oz.
Petropavlovsk ore reserves as of June 30, 2014 (JORC):
Category
Tonnage (mln t)
Grade (g/t Au)
Gold (mln oz)
Non-refractory ore reserves
115.687 1.20
4.47
- Proven
6.491
1.50
0.31
- Probable
109.197
1.18
4.16
Refractory ore reserves
147.594 1.03
- Proven
19.676
1.23
0.78
- Probable
127.918
1.00
4.09
Total ore reserves
263.282 1.10
- Proven
26.167
1.30
1.09
- Probable
237.115
1.08
8.25
4.87
9.34
Petropavlovsk gold resources as of June 30, 2014 (JORC):
Category
Tonnage (mln t)
Grade (g/t Au)
Copyright © 2014 by Interfax-Kazakhstan news agency
Gold (mln oz)
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Non-refractory mineral resources
14.30
- Measured+Indicated
239.131 1.08
- Measured
35.475
1.15
1.31
- Indicated
203.656
1.07
7.00
- Inferred
193.935
0.96
5.98
Refractory mineral resources
8.32
12.11
- Measured+Indicated
226.770 0.91
- Measured
25.058
1.13
0.91
- Indicated
201.712
0.88
5.71
- Inferred
250.097
0.68
5.49
Total mineral resources
6.62
26.41
- Measured+Indicated
465.901 1.00
- Measured
60.533
1.14
2.22
- Indicated
405.368
0.98
12.72
- Inferred
444.031
0.80
11.47
14.94
Petropavlovsk expects to increase resources further through additional conversion of Russian Classification
System resources to JORC and from new non-refractory ore sections. For example, the company has received
very promising results at Berezoviy area's Uspenskiy stream, about 10 km northwest of the Malomir plant, where
it found 5-meter-long interval of mineralization with a grade of about 22 g/t which has yet to be reflected in total
resources.
Petropavlovsk commercially develops gold deposits - the Pokrovsky mine, Pioneer, Malomir and Albyn - in the
Amur region. Petropavlovsk raised gold production 4% last year to 741,000 oz.
The company's biggest shareholders include Van Eck Associates Corporation, which owned 10% as of April 28;
Schroders plc with 5.09%; and Peter Hambro with 3.43%.
Silver Bear prepared to offer 30% of Mangazeisky project to Chinese investor - paper
MOSCOW. Aug 26 (Interfax) - Silver Bear, a company that develops silver projects in Russia, is prepared to
team up with Chinese investors, national daily Kommersant reported on Tuesday, citing a list of proposals for the
development of Russian-Chinese cooperation prepared by business association Delovaya Rossiya at the
request of the Economic Development Ministry.
Silver Bear is willing to offer co-investors, including investors from China, a 30% stake in the Mangazeisky silver
project in Yakutia, the paper reported company board director Alexei Sotskov as saying.
He said silver is purchased by state repository Gokhran and banks, so it is not that important whether the coinvestor is an industrial or financial player. But a co-investor is "one of the financing options, in addition to loans,
not instead of them; the company will implement the project in any case," Sotskov said.
The matter has not yet progressed to the stage of specific negotiations with investors, the paper said. Interest in
investment from China began to surge in the spring, after the cooling of Russia's relations with the West.
Silver Bear has raised CAD11 million (about $10 million) since the beginning of 2014 in a private placement for
the development of the Mangazeisky project. As a result, Inflection Management Corporation, the beneficiary of
which is TekhnoNikol president and cofounder Sergei Kolesnikov, has acquired almost 26% of Silver Bear.
Alexei Mordashov's investment fund Aterra Investments has increased its stake to more than 25%.
The Mangazeisky project is Silver Bear's core asset. The total cost of its development is estimated at $83.5
million plus or minus 30%, a report on the preliminary economic assessment of the project states. This includes
an estimated $32.35 million for the first stage of the project (before the start of production).
Silver Bear could produce an average of 1.748 million ounces of silver annually at Mangazeisky over the
projected mine life of 19 years, including 2.687 million ounces per year in the first five years. Open-pit mining is
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possible for ten years. The internal rate of return is expected to be 63%, at a pessimistic silver price forecast of
$20 per ounce.
Silver Bear's other major shareholders are the bank Forbes & Manhattan with about 9% and Mikhail Fridman's
Alfa Group with less than 5%.
Silver Bear posted a net loss of CAD2.9 million (about $2.7 million) in the first half of 2014. Most expenditures
(about $1 million) went into exploration.
Lenzoloto posts IFRS net losses of 123 mln rubles in H1
IRKUTSK. Aug 27 (Interfax) - OJSC Lenzoloto, which is owned by Polyus Gold, post net losses to International
Financial Reporting Standards (IFRS) amounting to 123 million rubles in H1 2014 against 281 million rubles in
net profit in H1 2013, the company said in a report to IFRS.
Sales revenue fell 24.8% to 1.759 billion rubles.
Lenzoloto financial highlights for H1 (mln rubles)
H1 2014
H1 2013
Sales revenue 1 759
2 340
Revenue from gold sales
1 592
2 194
Operating profit (loss)
(124)
263
Pretax profit (loss)
(106)
358
Gross profit
660
242
Net profit (loss) (123)
281
Lenzoloto closed 2013 with net profit of 1.455 billion rubles to IFRS, down 49.8% from 2012. Sales revenue fell
by 21% to 9.223 billion rubles.
OJSC Lenzoloto produces alluvial gold in the Irkutsk region via a subsidiary, CJSC Gold Mining Company
Lenzoloto. Lenzoloto is principally involved in the management of its ore mining subsidiaries and it also provides
real estate and other property rental services.
The company owns 44 licenses to produce alluvial gold, with total B+C1+C2 balance sheet reserves of over 14
tonnes. Gold Mining Company Lenzoloto owns 45 licenses.
Rusal boosts Q2 EBITDA 26% to $220 mln, below forecast
MOSCOW. Aug 27 (Interfax) - Russian aluminum company UC Rusal boosted adjusted earnings before taxes,
depreciation, and amortization (EBITDA) to International Financial Reporting Standards (IFRS) 26.4% year-onyear in the second quarter of 2014 to $220 million, the company said in a statement.
Analysts surveyed by Interfax had forecast that EBITDA would increase 29% to $225 million. Goldman Sachs
had the closes forecast ($222 million).
Results
Rusal had EBITDA of $393 million in H1, down 6.3% from the same period of last year.
Revenue in Q2 was up 6.5% compared with the same period of last year at $2.261 billion due to an increase in
aluminum sales of 4.6%, an increase in the average price of aluminum on the London Metal Exchange (LME) of
5.3% and because of a 5.4% growth in premiums on the price on LME, the statement says.
Revenue in the first half of 2014 decreased by 15.7% to $4.384 billion as compared to $5.203 billion in the first
half of 2013 due to a 12.6% decrease in physical aluminum sales and continued pressure of the LME price down
to an average of $1,753 per tonne, a 8.7% decrease compared to the same period of 2013, partially offset by
historically high premiums over LME aluminum price of $347 per tonne for the first half of 2014, the company
said.
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"Management views further improvement of margins and profits in the second half of 2014 at current aluminum
price levels. 2014 capex is expected to be approximately $500-$600 million. Rusal's EBITDA in the second half
of the year is expected in excess of $600 million at current aluminum price levels," the statement says.
"Aluminum segment cost per tonne decreased by 9.8% to $1,752 per tonne in the first half of 2014, in
comparison with $1,942 per tonne in the first half of 2013 following the successful completion of capacity
curtailments program at the least efficient smelters. External factors such as the depreciation of the Russian
Ruble to the US dollar by 12.8% to 34.98 rubles in the first half of 2014 from 31.02 rubles in the respective
period of 2013, has also had a significant positive effect on the overall level of costs," Rusal said.
The company recognized profit and recurring net profit of $116 million and $129 million, respectively, for the
second quarter of 2014, demonstrating positive results for the first time since the first quarter of 2013, the
company said. Recurring Net Loss decreased by 74% to $40 million for the first six months of 2014, as
compared to $154 million for the same period in 2013 as negative effect of the foreign exchange differences was
more than compensated by the increase in the company's share in results of associates due to significantly
improved performance of Norilsk Nickel.
Adjusted net loss increased to $395 million for the first half of 2014, as compared to $236 million for the same
period of 2013, primarily due to a foreign exchange loss in the reporting period as compared to a foreign
exchange gain in the same period of the prior year as a result of the significant depreciation of the
Russian Ruble against the US dollar, the company said.
The company said adjusted net profit excludes its stake in Norilsk Nickel, the result of changes in the fair cost of
derivatives, changes to the interest rate on restructured debt and the effect of depreciated non-current assets.
Net debt as of end-June was $10.594 billion, up 2.4% from March 31 ($10.34 million).
Commenting on the first half results, Rusal CEO Oleg Deripaska said: "During the first half of 2014, there was a
major improvement in Rusal's financial results in the second quarter compared to the first quarter, which was a
result of a recovery in the aluminum price, a rise in average realized premiums, and tight cost controls."
"In the second half of the year, we expect the LME spot aluminum price to remain around current levels and we
see a potential upside for physical premiums. The positive dynamics in the aluminum sector is supported by the
mounting ex-China deficit, solid demand fundamentals driven by the ongoing shift from steel to aluminum in the
automotive sector and a lack of new primary aluminum projects putting pressure on the supply side of the
equation," he said.
Main financials for Q2, H1 2014 (mln USD):
Revenue
Q2 2014
H1 2014
Change compared with Q2 2013 Change compared with Q1 2014
Change compared with H1 2013
2 261
-10,3% 6,5%
4 384
-15,7%
Adjusted EBITDA
220
26,4% 27,1% 393
-6,4%
Adjusted EBITDA margin
9,7%
2,8 pp 1,6 pp 9%
0,9 pp
Net profit (loss) 116
--
-209
47,6%
Adjusted profit (loss)
-149
-20%
-39,4% -395
67,4%
Recurring net profit (loss)
129
-
-
-40
-74%
Sales of primary aluminum and alloys
893
-11%
4,6%
1 747
-10%
Aluminum segment cost per tonne, $
1 764
-7,7% 1,3%
1 752
-9,8%
Total cost of sales decreased by 17.8% to $3.656 billion for the six months ending June 30, as compared to
$4.446 billion for the corresponding period of 2013. The decrease was primarily driven by the 12.6% (or 251
thousand tonnes) reduction in the aggregate volumes of aluminum sold, the company said.
Cost of alumina decreased in the reporting period (as compared to the first six months of 2013) by 26.1%,
primarily as a result of a decrease in both alumina purchase volumes and average alumina purchase price.
Cost of bauxite decreased by 3.5% in the first six months of 2014 as compared to the same period of prior year,
due to 8.6% decrease in purchase volume partially compensated with the slight increase in the purchase prices,
the statement says.
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"Decrease in costs of raw materials (other than alumina and bauxite) and other costs by 11.8% for the first six
months of 2014 as compared to the first six months of 2013 was primarily driven by the lower volume of primary
aluminum and alloys sold," Rusal said.
"Energy cost decreased by 24.6% in the first half of 2014 compared to the same period of 2013, primarily due to
the continuing depreciation of the Russian Ruble against the US dollar as well as decrease in weighted-average
electricity tariffs," the statement says.
Aluminum output
Rusal reduced aluminum production 9.3% year-on-year in Q2 2014 to 900,000 tonnes, the company said.
Aluminum output in H1 2014 fell 10.8% year-on-year to 1.783 million tonnes.
Overall output fell due to a drop in production at some smelters located in European Russia and the Urals,
notably Bogoslovsk, Urals, Volkhov, Volgograd and Nadvoitsy; the first phase of the Novokuznetsk smelter in
Siberia; and the Alscon smelter in Nigeria.
Alumina production declined 1.3% year-on-year in Q2 2014 to 1.8 million tonnes and edged down 0.5% in H1
2014 to 3.618 million tonnes.
Bauxite production for the quarter ended March 31, 2014 was 3 million tonnes, up 2.1% year-on-year, but down
0.5% in H1 2014 to 5.9 million tonnes.
Production of foil and packaging rose 4% in H1 2014 year-on-year to 45,400 tonnes.
The share of value-added products in Rusal's output rose to 46.9% in Q2 2014.
Rusal targets production of 1.8 million tonnes of aluminum in H2 2014.
Rusal operating highlights in Q2 2014 and H1 2014 ('000 tonnes):
Q2 2014
H1 2014/H1 2013
Q2 2014/Q2 2013
Q2 2014/Q1 2014
Aluminum
900
-9.3%
2%
1 783
-11%
Alumina
1 804
-1.3%
-0.5% 3 618
-0.5%
Bauxite
3 303
2.1%
14.6% 5 885
-0.5%
H1
2014
Global production and consumption
Rusal's 2014 market outlook remains broadly unchanged with a slight improvement in the H2 2014 due to
seasonally stronger demand. Global consumption of primary aluminum is forecast to reach 55 million tonnes in
2014, an increase of 6.5% compared to the previous forecast of 6%, Rusal said in the press release. China
remains the largest growing market with an expected 13% growth rate (previously 10%), followed by North
America with 5% growth, Asia excluding China with 4% growth and Europe with 3% growth.
During H1 2014, global primary aluminum consumption reached 27 million tonnes, representing a 6% increase
compared to H1 2013. The fastest growing markets during the period were China (13%), Japan and South Korea
(10%) and Central and South America (5%). North America experienced a 4.3% increase in growth whereas
consumption grew moderately in Europe by 3% year-on-year.
Global industrial production, a key driver of commodity demand, rose by 4% year-on-year in H1 2014, increasing
due to strong growth in North America and China and a fast recovery throughout Europe. Rusal forecasts that
the aluminum market ex-China experienced a market deficit of 0.6 million tonnes due to stronger than
anticipated aluminum consumption and production curtailments during H1 2014.These factors have supported
the recovery of the aluminum price to $2,000 per tonne (on the LME) at the beginning of July, and it has
continued to rally with physical market premiums.
Overall, UC Rusal forecasts the 2014 global aluminum market to be in 1.5 million tonnes of supply deficit
According to IAI and CRU data, global aluminum production excluding China fell by 231,000 tonnes during H1
2014 versus the same period of last year. Despite new capacity commissioned in Middle East and Asia, more
than 1.1 million tonnes of ex-China capacity was closed during H1 2014 and another 0.6-0.7 million tonnes may
be closed during H2 2014.As expected, higher prices will not incentivize marginal producers to restart or expand
capacity any time soon due to cheap power constrains, labor contracts, raw materials, one off restart costs,
restocking the internal smelter supply chain etc.
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Chinese net operating capacity increased by 603,000 tonnes during H1 2014. This was due to a capacity
recommencement in specific provinces throughout China despite the low aluminum price and significant losses
from some domestic smelters. Still around 30% of Chinese production or 7 million tonnes is unprofitable despite
some recent recovery in Shanghai Futures Exchange (SHFE) price. Aluminum production in China rose by 12%
year-on-year to 13.7 million tonnes during H1 2014.
Half of the initially planned new capacity measures were commissioned during H1 2014 and much slower growth
is forecast for H2 2014. As of the end of June 2014, around 2.4 million tonnes of operating capacity has been
closed.
Chinese semis aluminum exports are not growing at a significant pace despite aluminum deficits during H1
2014. Chinese semis export grew by 6% during H1 2014 compared to the same period of last year. We expect
China will be unable to fill the supply deficit gap in the aluminum market
Chinese investors for Taishet
Rusal is planning to attract Chinese investors for the construction of the Taishet anode factory in the Irkutsk
region, the aluminum producer's first deputy CEO, Vladislav Solovyev, said during a conference call on
Wednesday.
"We are actively looking at the participation of Chinese contractors and investors, correspondingly, Chinese
money. We want it as project financing, but with Chinese investors, the first deputy CEO said.
At present, the project feasibility study is completely ready, and now tenders are underway for the selection of
contractors, applications are being collected and talks are being held, Solovyev said.
"I think that this process will be complete before the end of the year," he said.
Due to low prices for aluminum, Rusal suspended the construction of the Taishet aluminum plant and anode
factory. The company planned to step up work on the construction of first stage of the anode factory in the
second half of 2013, once it has signed a deal to fund it with Vnesheconombank (VEB). Rusal invested $750
million in the plant since work on the project began in 2006.
Answering a question about the possible postponement of the launch of the Boluchansky aluminum plant,
Solovyev said the company "is planning to receive the first metal [output] closer to the end of the year."
The plant is being built as part of a joint project of Rusal and RusHydro for the creation of the Boguchanskoye
Energy and Metals Complex (BEMO), which includes the Boguchanskaya hydropower plant. The construction is
being financed with funds from VEB.
Aluminum stocks and premiums
U.S. premiums rose sharply during January 2014 from 12 to 20.75 cents/lb, a record level, the press release
says. The premiums declined slightly to 19.5 cents/lb at the end of June 2014.
In Europe, the primary ingots premiums rose significantly from $210-$230/t to $340-$360/t by the end of June
2014.
Spot premiums in Asia, as reflected by the Cost, Insurance and Freight in Major Japanese Ports (MJP) indicator,
grew significantly from $245-$247/t to $390-$400/t by the end of June 2014.
Aluminum stocks on the LME continued to decline due to the current aluminum market deficit. Since the
beginning of 2014, LME stocks dropped by 500,000 tonnes to 4.958 million tonnes, a 22 month low. Rusal
expects the LME inventories to drop further on physical market tightness in H2 2014.
Importantly, the deliveries of aluminum into LME warehouses has been minimal with 167,000 tonnes since April
2014, so much so that irrespective of the outcome of the LME's judicial review appeal, the load out rate from the
"affected" warehouses of Detroit and Vlissingen will remain the same as that implied under the old warehousing
rules. Consequently, Rusal expects physical premiums to maintain their growth path as the deficit out of China is
forecast to widen during H2 2014.
Rusal was established in 2007 through the merger of Rusal, SUAL and the alumina assets of Swiss trader
Glencore. Oleg Deripaska is Rusal's biggest shareholder, controlling 48.13% via En+. Mikhail Prokhorov's
Onexim group owns 17%, Sual Partners - 15.8% and Glencore - 8.75%. The free float is around 10%.
No additional borrowing
Rusal is not planning any additional borrowing and will repay existing loans out of free cash flows, Solovyev said.
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"The bulk of investment in capital intensive projects has already been completed and the company will not
borrow money for existing capex. Nor will it carry out any additional borrowing. The company will use free cash
flow to repay existing debt," Solovyev said.
Since 2008, Rusal's strategy has focused on reducing the debt burden, director for strategy, business
development and financial markets Oleg Mukhamedshin said.
"Since 2009, net debt has been reduced 25%. We will strive to reduce net debt in future. Current prices on
aluminum and the current cash flow from operations enable us to entirely finance operations without raising
additional sources. We anticipate that the cash flow will be sufficient to step up the pace of repayment in 20152016," Mukhamedshin said.
Mukhamedshin said the 2.4% increase in net debt to $10.594 billion as of the end of June compared with the
end of March was the result of several factors.
The increase "stems from the fact the company raised additional funds in the course of the second quarter that
were then repaid, that is, the balance of borrowing to repayment did not change, but cash declined. Looking at
the cash cushion at the end of the first and second quarters, a portion of cash was used for operations. There
was also some revaluation owing to changes in the ruble/dollar exchange rate," he said.
Norilsk Nickel boosts EBITDA 8.6% in H1 to $2.5 bln, above forecast
MOSCOW. Aug 28 (Interfax) - MMC Norilsk Nickel boosted earnings before interest, taxes, depreciation, and
amortization (EBITDA) 8.6% year-on-year in the first half of 2014 to $2.496 billion, the company said Thursday.
Analysts told Interfax in a consensus forecast that this figure would be $2.386 billion.
EBITDA margin rose from 40% to 44% thanks to a favorable situation on the forex market and a fall in costs at
Russian enterprises. In particular, the EBITDA margin at Kola MMC rose from 18% to 30%.
The company's consolidated revenue to International Financial Reporting Standards (IFRS) was up 0.4% yearon-year at $5.708 billion. The recovery of the nickel market and high prices for palladium offset lower copper and
platinum prices. This figure had been expected at $5.67 billion.
Norilsk Nickel had net profit of $1.456 billion, up 170% year-on-year. The consensus forecast was $1.305 billion.
Financial highlights to IFRS for H1 2014
H1 2014
H1 2013 %
5 708
5 686
0,4%
Revenue from metal sales
5 202
5 149
Gross profit
2 724
2 473
10,1%
EBITDA
2 496
2 299
8,6%
EBITDA margin, %
44%
40%
Net profit
545
167%
Revenue
1 456
1%
4 p.p.
Net profit before impairment of financial and non-financial assets
Net working capital
2 127
4,122
- 48,4%
Net cash from operating activities
2 823
1 691
66,9%
Capital expenditures
491
884
-44,5%
Free cash flow 2 371
849
179%
Net debt
5 065
-31,7%
Net debt/EBITDA
0,8x
1,1 x
ROIC*
16,9%
3,4 p.p.
3 461
20,3%
1 527
1,181
29,3%
* return on invested capital
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Capital expenditures amounted to $491 million, having fallen by 45% due to a weakening ruble, a more
disciplined approach to investments and the optimization of mandatory capex on infrastructure projects
Working capital fell by $0.9 billion and nearly two-fold for the last 12 months. Free cash flow increased nearly
three-fold to $2.4 billion due to a rise in EBITDA, a fall in working capital and a fall in capex.
Net debt/EBITDA fell from 1.1x at the end of 2013 to 0.8x at the end of the reporting period. Net debt at the end
of H1 2014 was $3.461 billion.
Nickel deficit
Norilsk Nickel, which is the world's largest producer of nickel, is expecting a small increase in the supply of nickel
due to the launch of new laterite projects.
"Overall, we expect that marginal supply growth will not match the increase of global metal consumption, thus
driving the nickel market to balance this year and to a sizeable deficit in 2015," the company said.
"The Indonesian government's determination to keep the ban in place and unaltered with regard to nickel has not
changed since the presidential elections in July, with no public indications to the contrary. As a result the nickel
price settled comfortably above $18,000 per tonne in the second quarter of 2014, well above the market
consensus expectations in early 2014," it said.
"We remain bullish on nickel in the medium term assuming that the Indonesian ban remains in place unaltered,"
the company said.
"We expect NPI output in China to reduce by over 50 thousand tonnes year-on-year this year and at least
another 150 thousand tonnes year-on-year in 2015," Norilsk Nickel said.
"We also expect that the substantial part of the lost Chinese NPI volumes to be compensated by the ramp-up of
new laterite projects in Indonesia, Oceania, Madagascar and Latin America. We believe that the ramp-up of
these projects is likely to accelerate driven by stronger nickel price, but is still subject to the successful resolution
of many technical issues," the company said.
"We expect that the improvement in the fundamentals of the nickel market started in H1 2014 will continue
throughout the remainder of the year and further onto medium term. We believe that the recent change in export
regulations in Indonesia has triggered a fundamental change of the nickel industry globally," the statement cited
Norilsk Nickel CEO Vladimir Potanin as saying.
"The average price in H1 2014 was $16,523 per tonne, flat year-on-year," the statement said.
Capex forecast
Norilsk Nickel has adjusted its 2014 capex forecast to $1.7 billion, the company's CEO, Vladimir Potanin, is
quoted in a press release as saying.
The press release was on the company's H1 financial performance to IFRS.
Norilsk Nickel's five-year plan for CAP has been approved by majority shareholders and calls for $2 billion for the
year.
"Due to the roll-out of stringent investment governance discipline and a recent completion of the review of the
downstream configuration, we have scaled down our mandatory capital investment plans and, where possible,
deferred some of the capex until 2H2014 and 2015. Having also factored in the improvement of payment terms
with a number of key contractors in favor of Norilsk and depreciation of the Russian ruble against the USD, we
revise our annual capex guidance down to $1.7 billion in 2104," he said.
The company had capex of $491 million in H1, down 44.5% from a year ago.
Interim dividends
Norilsk Nickel will announce interim dividends for the first nine months of 2014 at the end of October, CFO
Sergei Malyshev told journalists.
"Last year the company paid interim dividends [for 9M] in December and will strive to justify the expectations of
shareholders this year as well," he said.
"The specific parameters of the payment, the dates and totals, will be determined by shareholders in accordance
with the economic situation and the company's strategy," Malyshev said.
The interim dividends will include funds from sale of non-core and international assets in 2014, Malyshev said.
The proceeds from those sales in the first quarter totaled $76 million. The dividends could include proceeds from
deals it concludes by the end of October, he said.
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"Given the substantial improvement in our cash flow and the significant liquidity reserve, we are confident in our
ability to fully finance dividend payments in coming years in accordance with shareholder benchmarks,"
Malyshev said.
Overseas assets
Norilsk Nickel is in talks to sell the Lake Johnston facility in Australia, which has been idle since the spring of
2013, and a deal may be closed in the second half, Malyshev said.
"The deal on Lake Johnston is very close to conclusion," he said without providing details.
Norilsk continues talks on sale of two assets in Africa - Nkomati and Tati - which no longer fit into the company's
strategy. "I hope we will report on the results of this deal in the second half," he said.
Asked about sale of Norilsk's biggest non-core asset - approximately 13% of shares in Inter RAO UES Malyshev said that the company was waiting for the right opportunity to "maximize earnings from sale of this
stake."
"We have the opportunity to exercise this option [sale of the Inter RAO stake] for 18 months. We do not want to
be at the mercy of market constraints that might affect the value of this deal," he said.
Kolsk upgrades
Norilsk Nickel will invest around 50 billion rubles in upgrades to OJSC Kolsk MMC in the Murmansk region, the
regional government's press service said in a statement following a meeting between Kolsk MMC CEO Igor
Ryshkel and the acting governor of the Murmansk region, Marina Kovtun.
"Several investment projects are planned to be carried out at Kolsk MMC: using [a method for] cobalt production
unique for Russia, setting up a recycling complex for salt discharge from nickel refining, turning existing nickel
production into modern electroextraction technology," the statement says.
In addition, it is planned that Kolsk MMC's Monchegorsk facility will become the refining center for all of Norilsk
Nickel.
The company is also planning to carry out several environmental projects. Ryshkel said during the meeting that
the environmental burden would be lowered due to the closure of calcination facilities and because of the switch
to copper-nickel concentrate briquetting technology.
Metalloinvest sold portion of Norilsk Nickel stake for $490 mln in May-July
MOSCOW. Aug 26 (Interfax) - Metalloinvest sold a portion of the Norilsk Nickel American Depositary Receipts
(ADR) it holds in May-July for $490 million, reducing its stake in the metals giant to 3.5% from 5% previously,
Metalloinvest said.
"Metalloinvest's Norilsk Nickel holding is a portfolio investment in nature," Metalloinvest said. "This year, prices
for Norilsk Nickel ADR were at their highest level since 2011. Therefore, the decision was made to sell a portion
of the stake. Overall the company sold about 1.5% of company equity on the market in May-July 2014," a
Metalloinvest spokesman told Interfax. The spokesman did not say what the company did with the proceeds.
Metalloinvest initially sold Norilsk ADR worth $251 million, reducing its stake to 4.2% from 5%. It sold another
$239 million worth in July, lowing the stake to 3.5%.
Between May and July, inclusive, Norilsk ADR grew 9.5% on the London Stock Exchange (LSE) and 10.6% on
the Moscow Exchange. The price of shares grew amid fears of a nickel deficit resulting from Indonesia's
embargo on raw ore exports.
UMMC to start exporting copper cathodes after export duty on copper canceled
YEKATERINBURG. Aug 25 (Interfax) - Urals Mining and Metals Company (UMMC) will begin exporting copper
cathodes after the export duty on copper is cancelled, UMMC's General Director Andrey Kozitsyn said.
"We are actually beginning to export [copper] cathodes today. This means increasing the product's sales
volume, which will positively affect the results of our work and subsequently the size of tax revenues to the
region's budget," Kozitsyn is quoted as saying in a statement from the information policy department of the
governor of Sverdlovsk region.
He said there had previously been a 10% export duty on the cathodes. For that reason, the company exported
rods, which are not affected by the duty. This was in spite of the fact that the market for this was very competitive
and complicated. In addition, there is a duty on the import of this product in Europe.
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UMMC did not give any details on the volume of planned exports.
As reported, the Russian government canceled export customs duties on unalloyed nickel and copper cathodes
in July. On July 22, Russian Prime Minister Dmitry Medvedev signed the order, which goes into effect 30 days
after it was officially published.
Export duties are currently 3.75% on nickel, 10% on copper and 6.5% on platinum group metals. Under Russia's
obligations to the WTO, the duties on nickel and copper will be eliminated on September 1, 2016.
MMC Norilsk Nickel, the largest nickel producer in the world and a leading copper producer, suggested the quick
cancellation of export duties on nickel and copper. The company said it would feel an effect estimated at 11
billion rubles by cancelling the duty before late 2016.
Ural Mining and Metallurgical is one of Russia's largest producers of cathode copper, zinc, lead and rolled
ferrous metals. The company includes over 40 enterprises located in various regions of Russia. The main owner
of the company is its president Iskander Makhmudov and the general director UMMC's General Director Andrey
Kozitsyn.
Evraz posts EBITDA of $1.08 bln in H1, exceeding expectations
MOSCOW. Aug 27 (Interfax) - Evraz plc, one of Russia's leading steel and mining companies, posted earnings
before interest, tax, depreciation and amortization (EBITDA) of about $1.08 billion in the first half of 2014, which
was better than the Interfax consensus forecast of $988 million.
The group said in a press release that EBITDA grew 17% year-on-year, primarily thanks to measures to optimize
the company's asset portfolio and increase economic efficiency.
Evraz also reduced its net debt to EBITDA ratio to 3.1 from 3.6 in the first half, bringing it close to its target ratio
of 3
Revenue fell 7% in January-June to $6.8 billion, which was slightly above analysts' forecast ($6.6 billion). The
negative change primarily reflects lower prices amid global excess in steel.
Evraz had net profit of $1 million versus net loss of $146 million in H1 2013. This was largely due to improved
business figures. The group gained around $193 million from asset optimization and lowered expenses,
excluding the effect of exchange rate fluctuations.
Analysts surveyed by Interfax said the group's average net profit for the reporting period would total $96 million.
Positive free cash flow for the half year amounted to $444 million due to the same factors as well as the sale of
the Czech Vitkovice Steel plant.
Since the end of last year, the company's net debt has fallen 7.2% to $6.095 billion. The current financial position
of the group seems stable, and given the recently raised syndicated loan for $425 million, Evraz is now almost
fully funded to service its debt until the fourth quarter of 2015.
Capex in the first half of 2014 were $365 million versus $492 million in the same period of last year. This decline
was due to the completion of several large investment projects and a reassessment of investment plans.
Evraz is a vertically integrated steel, mining and vanadium business with operations in the Russian Federation,
Ukraine, Kazakhstan, United States, Canada, Czech Republic, Italy and South Africa. Evraz is among the top
steel producers in the world based on crude steel production of 16.1 million tonnes in 2013.
Ukraine risks
Evraz is consulting legal and other advisers both nationally and internationally to assess the risks connected with
the situation in Ukraine, the company said.
"With key assets located in Russia and the Ukraine, Evraz is not immune to geopolitical risks. To date, neither
our operations nor our assets in the Ukraine have been affected by the unrest in the country. In addition, Evraz
has not been subject to sanctions introduced by a number of countries. We are watching the developments in
the region closely and are consulting legal and other advisers, nationally and internationally, in order to analyze
the risks and prepare, to the extent feasible, contingency plans," it said.
In Ukraine, Evraz owns mining and processing complex Sukha Balka, Dnepropetrovsk Iron and Steel Works,
coke plant Bagleykoks, Dneprokoks and Dneprodzerzhinsky Coke and Chemical Plant.
North America
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Evraz is considering different options for raising funds for the development of its North American division, but
there are currently no immediate plans to sell stakes in Evraz North America (Evraz NA).
"The company is considering different ways of attracting financing for the development program of its North
American assets, different instruments are being discussed, but we have no immediate plans to sell stakes, hold
share placements or use some other similar instrument," Evraz senior vice president for international activity,
Pavel Tatyanin said during a conference call for journalists on Wednesday.
Unofficial information that Evraz is considering the possibility of selling a stake in its North American division,
Evraz NA, emerged at the beginning of June. The group's proceeds would have been directed toward
decreasing its debt, media outlets said. At the time it was not uncertain what sort of stake the company was
ready to offer or if it would sell it completely.
Evraz North America is fully owned by Evraz group and unites factories in the U.S. - Portland, Oregon;
Claymont, Delaware; Pueblo, Colorado as well as enterprises in Canada, in Regina (Saskatchewan), Surrey
(British Columbia), Calgary, Camrose and Red Deer (Alberta).
Evraz is one of the world's largest vertically integrated metallurgical and mining companies, comprising
enterprises in Russia, the U.S., Canada, Italy, the Czech Republic, Ukraine and South Africa.
MMK posts EBITDA of $399 mln in Q2 under IFRS, beating forecast
MOSCOW. Aug 22 (Interfax) - Magnitogorsk Iron & Steel Works (MMK) posted EBITDA of $399 million in the
second quarter of 2014 under international financial reporting standards (IFRS), beating the consensus forecast
of analysts surveyed by Interfax - $377 million.
EBITDA was 35.7% higher than in the first quarter. MMK credited the increase to growth in sales volumes,
improved structure of the product line, price recovery on the domestic market (the ruble devaluation factor and
seasonal recovery) and lower prices on iron ore.
The EBITDA margin in the second quarter was greater than 18%.
"MMK Group's revenue for Q2 2014 totaled $2.211 billion, up 17.7% quarter-on-quarter (8.8% - due to steel
price growth on the domestic market and 8.9% - due to sales volumes growth)", the group said in a press
release.
Analysts surveyed by Interfax expected revenue at $2.154 billion.
"MMK Group's financial results for Q3 2014 will be affected by a marginal reduction of output volumes at the
main production site and by a decrease in global iron ore indices," the statement said.
"Cost of sales in Q2 2014 amounted to $1.764 billion, up 15.4% quarter-on-quarter," it said.
"Decline in the key raw materials prices and effective cost management allowed the Group to decrease the cash
cost of slab by 4.5% quarter-on-quarter to $322 per tonne," MMK said.
"Profit for Q2 2014 amounted to $159 million against loss of $79 million in the previous quarter," the press
release said. This figure is significantly better than what was expected by analysts, who forecast profit at $98
million.
"MMK Group's net debt as of the end of Q2 2014 decreased by $324 million as compared to the end of 2013 to
$2.702 billion. The Group's net debt/EBITDA ratio as of the end of Q2 2014 was x2.18 (x2.47 as of the end of
2013)," it said.
"MMK Group's free cash flow (FCF) in Q2 2014 amounted to $224 million, up nearly sevenfold compared to Q1
2014," the statement said.
MMK's financial highlights for Q2 2014 (IFRS, $ million):
Q2 2014
Q1 2014 %
Revenue
2 211
1 879
Cost of sales
(1 764)
(1 529) 15,4%
17,7%
Operating profit 189
78
142,3%
EBITDA, of which
399
294
35,7%
- steel segment (Russia)
403
267
50,9%
- steel segment (Turkey
2
13
-84,6%
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- coal segment -8
15
n/a
EBITDA margin 18,0%
15,6%
2,4 p.p.
Loss/profit for the period
159
-79
-
Debt
"Total debt of MMK Group at the end of H1 2014 remained almost unchanged from the end of 2013 and
amounted to $3.199 billion," MMK said.
"Short-term debt and the current portion of long-term debt of MMK Group as of the end of Q2 2014 amounted to
$1.01 billion, which is fully covered by liquid financial assets at the company's disposal," the statement said.
"Thus, as of June 30, 2014, MMK Group had cash and cash equivalents of $360 million, short-term financial
investments of $150 million (including short-term deposits of $137 million) and liquid securities (a stake in
Fortescue Metals Group) of $637 million," it said.
"In H1 2014 investment in fixed assets amounted to $281 million, which is slightly higher than in H1 2013, but
within the target level for 2014 ($550 million-$600 million)," the press release said.
MMK has refinanced $500 million of the $1 billion of debt the Russian company was due to pay in the year from
July 2014 to July 2015, MMK deputy CEO for finance and economics, Sergei Sulimov said in a conference call.
The debt was refinanced in July-August, "primarily with three-year credit facilities, so we simultaneously
managed to improve the structure of the debt portfolio," Sulimov said. The refinancing was obtained in U.S.
dollars at an annual interest rate of less than 4%, he added.
An MMK spokesman told Interfax that, including earlier payments and refinancing, the company has completed
the restructuring of this year's debt obligations.
"In 2015 we're due to repay about $1 billion. The stake in FMG will cover about 70% of this amount, and we
expect to get the remaining $300 million from operating cash flow. This means that next year we plan to
completely pay off our short-term debt without raising new credit facilities," Sulimov said.
Earlier on Friday MMK reported that the group had $360 million in cash and cash equivalents, $150 million in
short-term financial investments (including $137 million in short-term deposits) and liquid securities (the stake in
FMG) totalling $637 million as of June 30.
Sulimov said that MMK still plans to sell its 5% stake in Australia's Fortescue Mining Group (FMG) by the end of
the year, but there are no specifics yet about the terms of the deal and the group is not yet holding negotiations
with potential buyers. It was reported at the beginning of the year that MMK might sell this stake and use the
proceeds to pay down debt.
MMK is one of Russia's largest steelmakers. The company's principal beneficiary is its chairman Viktor
Rashnikov, who controls 86.6% of shares.
Metalloinvest sees IFRS EBITDA fall 12% in H1 to $1.1 bln
MOSCOW. Aug 26 (Interfax) - The Metalloinvest group saw earnings before taxes, depreciation, and
amortization (EBITDA) to International Financial Reporting Standards (IFRS) fall 11.6% in January-June 2014 to
$1.087 billion, the company's press service said.
The company said EBITDA fell primarily due to a $202 million drop for EBITDA in the mining segment, which
was partially compensated for by a $143 million increase for EBITDA in the metallurgy segment.
"Despite the significant decline in iron ore prices, we have managed to maintain our EBITDA margin above 30%.
Additionally, our Steel Segment made a positive contribution to the Company's EBITDA," Metalloinvest's press
service quotes Deputy CEO and CFO Pavel Mitrofanov as saying.
EBITDA in the mining segment, which fell 17.9% to $924 million, accounted for 85% of consolidated EBITDA,
down from 91.5% in the same period last year.
Revenue for the group declined 7.2% to $3.533 billion.
The share of the mining segment in consolidated revenue declined to 51.1% from 53.7%. Revenue in the mining
segment was down 11.7% to $1.805 billion, mostly due to lower global iron ore prices.
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The steel segment accounted for 44.1% of consolidated revenue, up from 43.2% in H1 2013. Steel segment
revenue declined 5.3% to $1.557 billion, mostly due to structural changes in shipments: higher volumes of pig
iron (up 30.2%) and lower volumes of steel products (down 4.0%).
The domestic market accounted for 40.1% of revenue in the six months, down from 47.5% in H1 2013. Europe
and the Middle East accounted for 22.8% and 14.8% respectively. Asia, including China, accounted for 9.5%.
Cost of sales declined 5.8% to $1.876 billion.
Net profit declined 11.6% to $549 million, mostly due to market conditions and a drop in global iron ore prices,
the press release says.
Metalloinvest financial highlights for H1 2014 ($ mln):
H1 2014
H1 2013 Change
Revenue
3 533
3 807
-7.2%
EBITDA
1 087
1 230
-11.6%
EBITDA margin 30.8%
32.3%
-1.5 p.p.
Net profit
621
-11.6%
549
The value of assets was $11.088 billion as of June 30, 2014, up 6.1% from $10.451 billion as of December 31,
2013.
Net debt declined to $4.855 billion as of June 30, 2014, reducing the net debt/LTM EBITDA ratio to 2.32 from
2.43 as of December 31, 2013.
The share of long-term loans fell to 84% from 97%, due to an upcoming put option on ruble-denominated bonds
in March 2015 (series 01, 05, 06).
Cash and cash equivalents amounted to $993 million as of June 30, up from $523 million as of December 31,
2013, partly due to receipt of $251 million in proceeds from disposal of MMC Norilsk Nickel ADRs that reduced
Metalloinvest's stake to 4.2% as of June 30, 2014 from 5% previously.
Capex in the first half rose 22.1% year-on-year to $287 million.
Construction of Pellet Plant #3 at MGOK constituted a major part of capital expenditure (approximately 18% for
the period). Pellet Plant #3 will increase Metalloinvest's pellet production capacity by 5 million tonnes a year
when completed. Another key investment project for Metalloinvest is HBI-3 construction at LGOK (approximately
3% of total capital expenditure in H1 2014. Costs attributable to oxygen station construction at OEMK amounted
to 10% of total capex for the period.
Investment program
Metalloinvest is considering decreasing its investment program in 2014, one of the participants in a conference
call for analysts with Metalloinvest's financial director, Pavel Mitrofanov, said on Tuesday.
"It's possible that capex this year will be cut by $150 million and amount to $600 million, the source said citing
the top manager.
Mitrofanov said that the decrease in capex is connected with the fall in expenses on the purchase of equipment
and also the transfer of some small projects to 2015-2016, particularly in the steel segment and for the
modernization of energy systems.
At present, Metalloinvest is composing the budget for next year, and according to the estimates of Mitrofanov,
the investment program for 2015 could amount to $600 million-$700 million. Earlier the financial director
estimated that the company's annual investments in 2014-2015 would amount to $700 million-$750 million.
The group's main investment projects are the construction of hot-briquetted iron plant No. 3 at its Lebedinsky
GOK, the construction of indurating machine No. 3 at the Mikhailovsky GOK, as well as the construction of an air
separation plant at the Oskol Electrometallurgical Plant (OEMK). The company earlier estimated its investment
program for 2012-2016 at $1.868 billion.
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TMK EBITDA at $190 mln in Q2, slightly below forecast
MOSCOW. Aug 26 (Interfax) -TMK posted earnings before interest, taxes, depreciation and amortization
(EBITDA) of $190 million in the second quarter of 2014, slightly below the consensus forecast of $196 million
compiled by Interfax.
EBITDA was up 3% quarter-on-quarter, TMK said in a press release reporting IFRS results. EBITDA was higher
due to improvement in the structure of sales in the American division.
The adjusted EBITDA margin was unchanged from Q1 2014 at 13%.
Net income totaled $60 million in the three months compared with a net loss of $16 million in the first quarter.
Analysts surveyed by Interfax forecast that second quarter net profit would total $40 million. The foreign
exchange gain was $32 million compared with a forex loss of $63 million in the first quarter.
Revenue grew 3% quarter-on-quarter to $1.516 billion, due mainly to higher welded pipe sales in the Russian
division. The consensus forecast called for revenue to equal $1.506 billion.
Total debt increased to $3.753 billion as of June 30, 2014, $160 million more than on March 31, due in part to
the rubles appreciation against the dollar. The weighted-average nominal interest rate increased to 7.04%, 46
basis points higher than on March 31.
Net debt increased by $105 million in the three months to $3.631 billion.
H1 figures
Revenue in the first half totaled $2.982 billion, 12% less than in the first half last year, mainly due to lower LDP
sales in the Russian division and the negative effect of currency translation.
Adjusted EBITDA decreased by 28% year-on-year to $375 million mainly due to unfavorable price and product
mix of seamless pipe in the Russian division, lower LDP sales and a negative effect of currency translation.
Adjusted EBITDA margin was 13% compared to 15% in the first half of 2013.
Net profit was $45 million as compared to $125 million for the first half of 2013.
Total debt increased by $60 million as of June 30, 2014 compared to December 31, 2013. TMK's weighted
average nominal interest rate increased by 32 b.p. compared to December 31, 2013.
Net debt increased by $31 million in the first half of 2014 compared to December 31, 2013.
Key IFRS financial indicators for TMK in Q2 and H1 2014 ($ mln):
Q2 2014
Q1 2014 Change H1 2014
H1 2013
Revenue
1 516
1 466
3%
2 982
3 374
-12%
Gross profit
285
281
1%
566
724
-22%
Foreign exchange gain/loss, net
32
(63)
-
-31
(44)
-30%
Income/loss before tax
76
(14)
-
62
173
-64%
Net income/loss
60
(16)
-
45
125
-64%
3%
375
523
-28%
13%
0
13%
15%
Adjusted EBITDA
Adjusted EBITDA margin, %
184
13%
Change
-2 p.p.
H2 forecast
For the second half of 2014, the company foresees an increase of the pipe market in Russia mainly due to
higher consumption of large-diameter pipe as a result of the commencement of Gazprom's Power of Siberia
project, TMK said.
In the U.S., TMK expects commodity prices to further support robust drilling activity throughout 2014. Following
the final OCTG Trade Case decision the flow of imports and inventory levels should gradually decrease, which
should positively influence the pricing environment.
The European pipe market is expected to largely remain unchanged in the second half of 2014, it said.
"Overall, for the second half of the year TMK expects a stronger set of results due to growing LD pipe sales,
higher seamless pipe prices in Russia in line with stable raw materials prices as well as a gradual recovery on
the U.S. market," the press release says.
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Capex
TMK confirmed its plans to decrease its investment program for 2014 by 20%.
"This [decrease in investments in 2014] would not have a negative effect on our main investment projects - they
are nearly complete," the company's deputy CEO for strategy and development, Vladimir Shmatovich, said
during a conference call.
That TMK might decrease its investment program by 10%-20% compared with the previous plan for $400 million,
Shmatovich announced already in March of this year. If the situation gets seriously worse, the company can
markedly decrease its capex, but TMK didn't see "reason for panic" then.
Dividends
TMK may pay out interim dividends in 2014, Shmatovich said.
"Yes, we may pay out dividends. We consider this fair in our relations with shareholders. Our dividend policy has
remained unchanged - no less than 25% of net profit," he said.
TMK paid shareholders 975.1 million rubles in six-month dividends last year at 1.04 rubles per share. H1 2012
dividends were 1.4 billion rubles at 1.5 rubles per share.
Including interim dividends, TMK paid out around 1.8 billion rubles in dividends in 2013.
TMK, Russia's biggest pipe producer, also has manufacturing assets also in the United States, Romania,
Kazakhstan and Oman, as well as two research centers in Russia and the United States. Its principal beneficiary
is the chairman of its board of directors, Dmitry Pumpyansky. The free float is 23%.
Kuzbass Fuel Company swings to IFRS net loss of 76 mln rubles in H1
KEMEROVO. Aug 27 (Interfax) - OJSC Kuzbass Fuel Company (KTK) posted net loss to International Financial
Reporting Standards (IFRS) of 76 million rubles in January-June 2014 versus profit of 21 million rubles in H1
2013, the company said in a statement.
Revenue declined 9% to 8.721 billion rubles, while earnings before taxes, depreciation, and amortization
(EBITDA) fell 18% to 785 million rubles.
"The main factors influencing the financial result were a continued decline in the Asian markets. At the current
price level of export sales to the Asia-Pacific region brings Company minor losses, but these shipments can not
be interrupted in order to avoid the loss of a long-term attractive market and established customer base in South
Korea and Japan," the statement says.
"Management is convinced that if the global trend will change, key opportunities will be concentrated on this
market. At the same time, thanks to the warm winter of 2014, the seasonal decline in demand for coal in the
domestic market and in Poland turned out to be much more significant than in past years," the company said.
Net debt as of June 30, 2014, amounted 6.117 billion rubles, up 20% compared to March 31, 2014. The net debt
to EBITDA for the 12 months was 2.71. The main reasons for the increase, including the short term portion of the
loan portfolio, was the creation of the company's own coal reserves at warehouses in Poland, to be sold in Q3
2014 and cover the increased trade receivables. Management plans to decrease the net debt to EBITDA ratio in
H2 2014, KTK said.
KTK is planning to produce 2.81 million tonnes of coal in the third quarter of this year, the company said in a
statement.
Coal production totaled 4.8 million tonnes in H1 and 7.39 million tonnes in January-September 2013, meaning
production could grow 3% year-on-year in January-September 2014 to 7.61 million tonnes.
Production in Q3 2014 will be 12% more than Q3 2013. This growth is due to deferred demand, which will allow
sales to grow in Q3, the company said.
KTK is planning to increase production 2% in 2014 to 10.4 million tonnes versus 10.2 million tonnes in 2013.
Russian international reserves down $2.5 bln in week
MOSCOW. August 28 (Interfax) - Russia's international reserves fell $2.5 billion to $466.1 billion in the week to
August 22, the Central Bank said on Thursday.
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The reserves stood at $468.6 billion on August 15.
They consist of highly liquid financial assets at the disposal of the CB and Russian government, including foreign
currency, monetary gold, special drawing rights, the reserve position at the IMF and other reserve assets.
Nordgold EBITDA jumps 42% to $141 mln in Q2, exceeds forecast
MOSCOW. Aug 29 (Interfax) - Nordgold, an emerging markets gold miner that was spun off from Russian
steelmaker Severstal, increased earnings before interest, tax, depreciation and amortization (EBITDA) by 42%
year-on-year to $141.3 million in the second quarter of 2014, the company reported.
Analysts at six investment banks polled by Interfax had expected Nordgold to post quarterly EBITDA of $125
million.
Results
The company's EBITDA grew 24% year-on-year to $244.8 million in the first half of 2014.
Despite lower gold prices, Nordgold boosted revenue 7% in Q2 2014 to $342.1 million. Revenue in H1 2014 was
flat at $617 million, with a 14% increase in production offsetting a 13% decline in prices.
Nordgold posted a net profit of $49.1 million in the second quarter and $73.7 million in the first half, compared to
losses a year earlier.
The company's board has decided to set aside part of the net profit for dividends. Nordgold shareholders will get
3.81 cents per share or GDR for the second quarter.
Including the first quarter interim dividend, Nordgold shareholders will receive 5.34 cents per share or GDR for
the entire first half.
Nordgold IFRS financial highlights:
Q2 2014
H1 2014/ H1 2013
Q2 2014/ Q2 2013
Q2 2014/ Q1 2014
Revenue, $ mln 342.1
7%
24%
617.0
0%
EBITDA, $ mln 141.3
42%
37%
244.8
24%
EBITDA margin 41.3%
10.2 p.p. 4 p.p.
39.7% 7.7 p.p.
Net profit, $ mln
49.1
99%
73.7
-
normalized net profit attributable to shareholders, $ mln 48.0
86%
149%
67.3
Cash flows from operating activity, $ mln
83.8
33%
68%
133.7
30%
Capex, $ mln
(26%)
115%
70.6
(46%)
Incl. exploration, $ mln
4.7
(82%) (14%) 10.0
(75%)
Free cash flow, $ mln
49.6
-
116%
72.6
-
cash and cash equivalents, $ mln*
306.9
34%
13%
306.9
34%
Total debt, $ mln*
993.8
(4%)
(1%)
993.8
(4%)
Net liabilities, $ mln *
687.0
(14%) (6%)
687.0
(14%)
TCC, $ mln
(8%)
23%
336.0
(44%)
TCC, $ per oz 702
(20%)
(2%)
708
(22%)
AISC, $ per oz 905
(18%)
1%
899
(22%)
48.2
185.1
-
H1
2014
94%
*at end of period
Total cash costs (TCC) and all-in sustaining costs (AISC) per oz declined 22% to $708 and $899 respectively.
The company revised the AISC forecast for full-year 2014 to $950-$1,000 per oz.
Net debt totaled $687 million as of June 30, down 6% from $729.8 million as of March 31.
Capex, costs
Nordgold has reduced its capital expenditures guidance for 2014 by 10% to $180 million, the company said.
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Nordgold CEO Nikolai Zelensky said in mid-May that capex might actually turn out to be lower than the initially
planned $200 million, but that the company had not made a decision on this.
Nordgold is investing $30 million in exploration in 2014, expenditures on maintaining capacity will total $80
million, and expenditures on development and introduction of new technologies will total $27 million.
Capex dropped 46% year-on-year to $70.6 million in the first half of 2014, including $10 million on exploration
and evaluation. This included $24.8 million invested in the Lefa deposit and $11.4 million in Bissa, which were
the two largest targets of capex.
In light of a substantial decrease in all-in sustaining costs in the first half of 2014, by 22% to $899 per ounce,
Nordgold has revised its 2014 forecast for this figure downward to $950-$1,000 from the initially planned $1,050$1,100.
Nordgold produced 476,100 ounces of gold equivalent in the first half of 2014, 14% more than in the same
period of last year.
Nordgold has raised its production forecast for 2014 to 900,000-950,000 ounces of gold equivalent from
870,000-920,000 ounces.
Nordgold produced 476,100 ounces of gold equivalent in the first half of 2014, 14% more than in the same
period of last year.
Burkina Faso
Nordgold is planning to produce 140,000 ounces of gold per year at the Bouly field in Burkina Faso using the
process of heap leaching, the company said in a presentation.
In the second quarter of 2014 Nordgold completed its own preliminary economic assessment on the Bouly
project. Australian company Lycopodium is preparing a feasibility study, which is planned to be finished in Q2
2015.
"We have also delivered a robust preliminary economic assessment of the Bouly project in Burkina Faso, moving
the project into the feasibility study phase. Finally, pilot stage production at Gross is progressing according to
schedule with preliminary leaching data tracking results of the feasibility study," the company has said.
International engineering company Knight Piesold will design the heap leaching unit at Bouly.
Measured and indicated resources of the Bouly asset, which is located close to Nordgold's current Bissa field,
total 1 million ounces with gold content of 0.75 grams per tonnes. Nordgold estimates that this figure could grow
to 2-3 million ounces in the future.
Nordgold is the former gold producing subdivision of Severstal's resource division, and it was spun off in January
2012. Steel magnate Alexei Mordashov is Nordgold's principal beneficiary with a stake of 85.4%, and free float is
around 15%. The company operates nine active mines in four countries - Russia, Kazakhstan, Guinea, and
Burkina Faso - as well as a number of projects at the development and exploration stages.
Centerra considers Kyrgyzstan's claims about KGC dividend payments unfounded
BISHKEK. Sept 4 (Interfax) - Canadian mining company Centerra Gold Inc. considers the Kyrgyz authorities'
claims about illegal dividend payments from its subsidiary, CJSC Kumtor Gold Company (KGC), which is
developing the republic's largest gold mine, Kumtor, unfounded, Centerra said in a statement.
This is the first official comment of Centerra Gold regarding the payment of $200 million in dividends in
December 2013, which was given in response to criticism from the Kyrgyz authorities, who are accusing KGC's
management of illegally sending funds abroad.
On December 6, 2013, KGC's board of directors, without the consent and without notifying the Kyrgyz
government, decided to recommend that its single shareholder, Centerra Gold, announce a dividends payment
of $200 million for 2012.
Based on this decision, on December 20, the sum was transferred to the account of Centerra Gold, in which
Kyrgyzstan holds a 32.75% stake via state-owned OJSC Kyrgyzaltyn, and the remaining shares belong to
international investment funds.
The General Prosecutor's Office of Kyrgyzstan felt that the payment of dividends was illegal. In March this year,
the prosecutor's office opened a criminal investigation into the removal of funds from KGC. The general
prosecutor feels that the decision concerning the transfer of funds should have been made with the agreement of
the Kyrgyz government, because the Kumtor mine is a strategic asset.
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As part of this criminal case, the CEO of Kyrgyzaltyn and KGC Board Chairman Dilger Zhaparov was arrested in
May and later removed from his post. He was charged with abuse of office.
Centerra Gold considers all announcements made by some Kyrgyz officials regarding dividend payments
incorrect and that the transfer of funds fully complied with Kyrgyz legislation.
Over the years of its work in Kyrgyzstan, Centerra Gold has invested about $2 billion in KGC for the
development and operation of the Kumtor mine. The Canadian company is the only shareholder in KGC, and
according to Kyrgyz law, the subsidiary has the full right to pay dividends to the parent company from its own
profit, which it receives from production and gold sales.
Different Kyrgyz regulations and laws, including the law, On Investments, stipulate such a type of payment.
According to Centerra Gold, similar provisions were laid down in the agreement governing the activities of the
Kumtor project, each of which was approved by the Kyrgyz Parliament in 2009.
"The payment of such dividends is a legal and recognized mechanism so that Centerra can recoup its
investments and receive income from its investments," the announcement said.
The company also is calling the attention of the authorities to the fact that Kyrgyzaltyn, as a shareholder of
Centerra, in the case of KGC dividend payments, is receiving its share of income. In particular, since 2010,
Centerra Gold has paid Kyrgyzstan more than $67 million in dividends, the announcement said.
Chelyabinsk Zinc Plant swings to net profit of 925 mln rubles in H1
CHELYABINSK. Aug 29 (Interfax) - Chelyabinsk Zinc Plant posted a net profit of 924.667 million rubles in the
first half of 2014 compared with a net loss of 108.796 million rubles in the same period last year, the company
said in its IFRS earnings statement.
"Significant net income growth was due to the increase of revenue with a simultaneous decrease of cost of sales
and also to the reversal of previously accrued impairment loss related to LLP Nova Zinc [Kazakhstan]," the
statement says.
Revenue was up 8.85% to 6.773 billion rubles.
Gross profit increased 130% to 1.837 billion rubles. Pretax profit was 1.218 billion rubles compared with a pretax
loss of 71 million rubles a year earlier.
Earnings before taxes, depreciation, and amortization (EBITDA) for H1 totaled 1.175 billion rubles versus 399
million rubles a year before.
"In H1 2014, CZP's revenue from sale of zinc and zinc alloys decreased by 6% as compared to the H1 2013 and
amounted to 3.387 billion rubles. Decrease of the revenue was due to decline of sales on the domestic market
by 20.3% (H1 2014: 41.9 thousand tonnes; H1 2013: 52.6 thousand tonnes)," the company said.
"Revenue of the Brock Metal Company Limited for H1 2014 amounted to 1.392 billion rubles, 58% higher than in
H1 2013. This increase was due to 32.5% growth of zinc alloys sales (H1 2014: 15.9 thousand tonnes; H1 2013:
12.0 thousand tonnes) and 22.4% growth of Pound Sterling (GBP)/Russian ruble average exchange rate (H1
2014: 58.55 rubles; H1 2013: 47.83 rubles)," the statement says.
"CZP received revenue of 1.007 billion rubles under tolling agreement in H1 2014, which is 75.4% higher
compared to H1 2013. The increase of tolling's volume (H1 2014: 37.3 thousand tonnes; H1 2013: 21.3
thousand tonnes) was due to decrease of zinc and zinc alloys sales on the domestic market. Fixed processing
fee amounted to 27,000 rubles/tonne," Chelyabinsk Zinc Plant said.
Revenue from lead concentrate sales for H1 2014 amounted to 249 million rubles (H1 2013: 270 million rubles),
the statement says.
In H1 2014, revenue from CZP's other by-products decreased by 20% to 698 as compared to H1 2013. The
main reason of revenue decrease was the temporary interruption of precious metals sales due to prices
reduction (average official prices for gold in H1 2014: 1,458 rubles/gram, in H1 2013: 1,515 rubles/gram; silver in
H1 2014: 22.6 rubles/gram, in H1 2013:
26.5 rubles/gram), the company said.
"In H1 2014, costs of utilities and fuel decreased by 45% to 597 million rubles mainly due to decrease of
expenses on electricity transmission services. In H1 2014 expenses on electricity transmission services were
accrued applying tariffs of OJSC FSK UES while during H1 2013 - applying tariffs of OJSC MRSK-Ural. As the
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result electricity tariff for CZP in H1 2014 was 1.81 rubles per kWh while in H1 2013 - 2.23 rubles per kWh," the
statement reads.
"Besides cost of sales for H1 2014 includes adjustment for the expense for electricity transmission services
accrued for the period from May 1, 2013, until December 31, 2013, for the amount of 359 million rubles due to
termination of litigation between JSC CZP and JSC FSK," Chelyabinsk Zinc Plant said.
"The average LME zinc price in H1 2014 increased by 6% as compared to the relevant period of the previous
year and amounted to $2,051/tonne. The average LME lead quotes decreased by 3.5% to $2,101/tonne. US
Dollar/Russian ruble average exchange rate increased by 13% to 34.98 rubles/US Dollar," the company said.
Chelyabinsk Zinc Plant is the leading Russian zinc and zinc alloys producer. It produced 166,357 tonnes of
salable SHG zinc in 2013, 4% more than in 2012.
Urals Mining and Metals Company (UMMC) teamed up with Russian Copper Company (RCC) to take CZP over
in the fall of 2009. They acquired 100% of NF Holdings B.V., which owned 58% of CZP. CZP has said UMMC
owns 47% of NF Holdings and that RCC owns 37%. In February 2014, United Capital Partners (UCP) President
and Managing Partner Ilya Sherbovich acquired 15.46% of CZP voting shares.
Rostec, Shenhua agree $10 bln in coal mining, power projects
MOSCOW. Sept 4 (Interfax) - The Rostec state corporation and Chinese Shenhua have agreed projects in coal
mining and power generation involving $10 billion in investment, Rostec reported.
The projects will see development of industrial and logistical infrastructure in Siberia and the Far East,
cooperation in investment and joint development of coal fields and associated infrastructure.
Rostec also plans to build generating capacity at the fields and high-voltage transmission lines to export
electricity to China.
Russian international reserves down $0.3 bln in week
MOSCOW. September 4 (Interfax) - Russia's international reserves fell $0.3 billion to $465.8 billion in the week
to August 29, the Central Bank said on Thursday.
The reserves stood at $461.1 billion on August 22.
They consist of highly liquid financial assets at the disposal of the CB and Russian government, including foreign
currency, monetary gold, special drawing rights, the reserve position at the IMF and other reserve assets.
Russia boosts gold production, concentrate exports 24% in 7M
MOSCOW. Sept 4 (Interfax) - Combined gold production and gold concentrate exports in Russia grew 23.7%
year-on-year in January-July 2014 to 149.951 tonnes, the Gold Producers Union said, quoting preliminary data.
Production of ingots from mined gold grew 15.4% to 118.202 tonnes, from byproduct gold - 6.6% to 9.792 tonnes
and from secondary gold - 134% to 18.503 tonnes.
Production of gold concentrates with subsequent export or sale in Russia grew 109.7% to 3.454 tonnes.
Russia cuts aluminum exports 20%, copper up 5%, nickel - 0.6% in 7M
MOSCOW. Sept 4 (Interfax) - Russian aluminum exports fell 19.7% year-on-year in January-July 2014 to 1.68
million tonnes, the Federal Customs Service (FCS) said.
The exports fell in value by 17.4% to $3.262 billion.
Aluminum exports to non-CIS countries fell 19.4% to 1.639 million tonnes and 17% to $3.179 billion. Exports to
CIS countries fell nearly a third in both tonnage and value, to 40,900 tonnes and $82.8 million.
Nickel exports rose 0.6% in tonnage and copper exports were up 5.1%.
Russian aluminum, copper and nickel exports and imports in Jan-July 2014:
Overall exports
Non-CIS CIS
'000 tonnes
$ mln
Copyright © 2014 by Interfax-Kazakhstan news agency
'000 tonnes
$ mln
'000 tonnes
$ mln
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Export
Unprocessed aluminum
1 679.4 3 262.2 1 638.5 3 179.4 40.9
Change from 2013
-19.7% -17.4% -19.4% -17%
Unprocessed nickel
120.2
1 912.4 120
1 905.8 0.2
6.5
Change from 2013
0.6%
-3.1% -.6%
-3.2% -
27.4%
Refined copper 119.7
809.5
116.5
3.2
16.3
Change from 2013
5.1%
-6.5% 8.7%
-4%
-52.2% -59%
Aluminum ores and concentrates
39.3
10.3
9.8
2.3
Change from 2013
19.1%
22.6% 23%
793.2
82.8
-29.1% -27.7%
Import
37
25.6% -21%
0.5
-16.7%
Russia boosts ferrous metal exports 1.15% in 7M
MOSCOW. Sept 4 (Interfax) - Russian ferrous metal exports rose 1.15% year-on-year in tonnage in January-July
2014, the Federal Customs Service (FCS) said.
The exports rose 1% in value.
Exports to non-CIS countries was up 3.75% in tonnage and 4.2% in value. Exports to the CIS fell 10% and
17.5%, respectively.
Russian ferrous metal and related exports in January-July 2014:
Commodity
'000 tonnes
$ mln
$ mln
Non-CIS, '000 tonnes
Iron ores and concentrates
13 682.3 1 350.4 11 821.8
Jan-July 2014/Jan- July 2013
-6.25% 0
Bituminous coal
85 998.5 6 856.0 80 001.8
8.9%
Coke and semi-coke
-7.3%
-1.6%
Ferroalloys
1 256.1 207.7
715.0
-29.8% -9%
-32.2% -4.9% -26.4%
120.0
541.1
15 073.6
3.75% 4.2%
-10.1% -17.5%
2 492.5
977.3
2 400.1 934.8
92.4
21.8%
23.5%
20.4% 22.1% 76.7% 63.2%
544.4
1 139.5 515.5
1 084.5 28.9
3.9%
6.4%
6.9%
Flat carbon steel products
5.7%
4.6%
-0.02% 3.1%
9.6%
7.5%
87.7
8 543.0 12
549.9
55.0
-7.4% -3.2%
43.4
-67.3% -69%
4 637.1 2 708.2 3 667.1 2 038.6 970.0
1.7%
30.5%
42.6
7 526.7 3 776.3 7 444.3 3 733.0 82.4
0.45%
tonnes
10.4% -0.9% -8.1% -8.5%
-1%
-2.2%
'000
6 277.3 5 996.7 578.7
1.15%
Semi-finished carbon steel products
CIS,
1 182.1 1 860.4 168.3
-7.7% -3.2% 4.4%
Ferrous metals (excluding pig iron, ferroalloys, scrap and waste)
6 844.9
2 523.7 1 698.1
Pig iron
$ mln
-7%
669.6
-12.7%
Ferrous metal imports fell 10% in tonnage in January-July. Imports from non-CIS countries fell 5% and imports
from the CIS rose 13%. Imports in value fell 13% overall, including a fall of 7% from non-CIS countries and 19%
from CIS countries.
Russian ferrous metal and related imports in January-July 2014:
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Commodity
'000 tonnes
Commodity
Bituminous coal
$ mln
Non-CIS, '000 tonnes
12 648.5 354.5
18.2%
Ferrous metals 3 621.2
-5.1%
26.1
5.1
$ mln
CIS,
12 622.4
'000
tonnes
349.4
-12.9% -91.5% -93.2% 21.45% 5.2%
3 241.6 1 233.7 1 593.2 2 387.6 1 648.4
-6.2%
-6.5% -9.1% -4.4% -3.3%
Ferrous metals, excluding pig iron, ferroalloys, scrap and waste 3 232.6 2 741.7 1 186.4 1 470.6 2 046.2 1 271.1
Bituminous coal
-10.1% -12.8% -4.6% -7.4% -13.1% -18.2%
414.1
Ferrous metals -23.5%
720.2
189.3
-27.9% -33%
458.9
224.8
261.3
-28.4% -13.2% -27.1%
Since 2012, all figures (totals and breakdown by commodities) have included trade with Belarus and
Kazakhstan.
Ukraine cuts steel output 11% in 8M
KYIV. Sept 1 (Interfax) - Ukraine reduced crude steel production 11% year-on-year in January-August 2014 to
19.693 million tonnes, the Metallurgprom association told Interfax, quoting preliminary data.
Rolled steel output fell 11% to 17.349 million tonnes and pig iron production fell 6% to 18.203 million tonnes.
Production in August alone totaled 1.646 million tonnes for steel, 1.491 million tonnes for rolled steel and 1.503
million tonnes for pig iron, compared with 2.463 million tonnes, 2.195 million tonnes and 2.245 million tonnes
respectively in July.
The industry had planned to boost output 5.6% in 2014 to 34.5 million tonnes for steel, 5% to 30.5 million tonnes
for rolled product and 3.1% to 30 million tonnes for pig iron.
Last year Ukrainian enterprises boosted steel production 1% to 32.684 million tonnes, output of rolled product was flat at
29.038 million tonnes and pig iron production was up 2% to 29.111 million tonnes.
Nesis ups stake in Polymetal to 19.86%
MOSCOW. Sept 10 (Interfax) - Powerboom Investments Limited, the beneficiary of which is Alexander Nesis,
has bought an additional 2.75% stake in Polymetal, the gold and silver miner said in a statement.
The acquisition boosts Nesis's stake in the company from 17.11% to 19.86%.
At closing price on the LSE on Monday, the stake that Nesis just bought is worth 58.7 million pounds ($94.6
million), and his whole stake 423 million pounds ($682 million).
Polymetal closed the acquisition of the Kyzyl gold project in Kazakhstan at the beginning of September. Some of
the consideration - $300 million - was paid in Polymetal shares. As a result the selling party Sumeru Gold, which
is controlled by Timur Kulibayev, the Kazakh president's son-in-law, received a 7.45% stake in Polymetal. The
stakes of the other shareholders were di-luted: PPF Group from 20.5% to 18.97%, Alexander Nesis from 18.49%
to 17.11% and Alex-ander Mamut from 9.95% to 9.21%.
"We have confidence in the outlook for Polymetal and support management's strategy to de-velop the business,
particularly the Kyzyl deal. Also, the favorable market situation was con-ducive to the increase in the stake," a
representative of Nesis's ICT Group told Interfax.
Later in the week Vitalbond Limited, Mamut, bought an additional 0.93% of shares in Polymetal.
As a result of the deal, firms controlled by Mamut increased their combined stake in Polymetal from 9.21% to
10.13%.
Meanwhile, Peter Kellner's PPF Group has sold 1,764,121 shares in gold and silver miner Po-lymetal since
March this year, it follows from a statement filed by the company.
This represents 0.42% of the company's existing charter capital.
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The stake has a current market value, based on Polymetal's share price on the LSE on Tuesday, of 9.1 million
pounds or approximately $14.7 million.
As of March 30, 2014, PPF owned 79,840,437 shares in Polymetal or a 20.5% stake. This stake subsequently
decreased to 78,076, 316 shares or 20.047%, but the dates of the transaction were not disclosed. As a result of
Polymetal's recent acquisition of the Kyzyl gold project in Kazakh-stan, PPF's stake was diluted to 18.55%.
The whole 18.55% stake has a market value of 400.9 million pounds or $646.6 million.
Deutsche Bank also reduced its stake in Polymetal, from 27,490,896 shares to 27,356,413 shares. The deal took
place on Friday, September 5, Polymetal said in a statement on the deal. The current market value of the sold
share package - a 0.03% stake - amounts to 691,000 pounds or $1.1 million. Now Deutsche Bank's stake in
Polymetal amounts to 6.5% at 140.5 mil-lion pounds or $226.6 million.
Polymetal closed the acquisition of the Kyzyl gold project in Kazakhstan at the beginning of September. Some of
the consideration - $300 million - was paid in Polymetal shares. As a result the selling party Sumeru Gold, which
is controlled by Timur Kulibayev, the Kazakh presi-dent's son-in-law, received a 7.45% stake in Polymetal. The
stakes of the other shareholders were diluted.
Polymetal is Russia's largest silver producer and one of the country's largest gold miners. The London-and
Moscow-listed Polymetal's free float is over 50%. The company has operations in Magadan and Sverdlovsk
regions, Khabarovsk Territory and Chukotka, all in Russia; and in Kazakhstan.
GV Gold, Kopy Goldfields targeting 40,000-60,000 oz gold per year at Krasny field
MOSCOW. Sept 9 (Interfax) - OJSC Vysochaishy (GV Gold) and Sweden's Kopy Goldfields plan to produce
40,000-60,000 ounces of gold per year at the Krasny field in the Irkutsk region, Kopy Goldfields said in materials.
This is a preliminary estimate. Capacity will be specified in the course of the feasibility study.
It was thought gold production might begin in 2017, but latest indications are that this will be possible late 2016.
The companies signed a deal to create a JV to develop the Krasny project in early August. GV Gold received
controlling stake of 51%, while the remaining 49% went to Kopy Goldfields.
The JV is aiming to finalize exploration and prove reserves in the second part of 2015.
The first stage of exploration began in July this year and is due to be rounded off by late No-vember. Interim
results are in line with expectations, with the gold grading varying from 1.16 to 3.76 g/t. Exploration will be
considered a success if reserves of 280,000-373,000 oz gold at 2 g/t are proven. First stage costs are estimated
at $3 million.
The main objective of this stage two is pre- feasibility studies (PFS). It also includes gold proc-essing tests and a
recovery study, engineering drilling for PFS, as well as Russian GKZ reserves and JORC reporting. The budget
for stage two is $3 million. The stage is scheduled for comple-tion in July 2015, not including timing for the GKZ
reporting.
GV Gold is covering the total budget of the $6-million exploration program. GV Gold has, however, the right to
stop further exploration following completion of stage one.
GV Gold has said in would invest $7 million in the initial stages, of which $6 million will be spent on exploration
and $1 million on covering debt. The company may pay Kopy Goldfields another $2 million in the future
depending on the results of exploration.
Krasny is located close to GV Gold's main existing gold projects in the Irkutsk region. Its prob-able resources are
estimated at 43 tonnes (1.37 million oz) and around a third of them near sur-face (up to 200 meters). GV Gold
plans to accelerated follow-up exploration and put the deposit commercially on stream.
Kopy Goldfields, headquartered in Stockholm, owns 11 licenses to gold ore sections in the Lena gold province in
the Irkutsk region's Bodaibo district.
Kopy Goldfields spent 2.1 million Swedish krona ($300,000) on exploration in H1 2014, which was 83.3% less
than in January-June 2013. Amid difficult conditions on the gold market, the company lowered investment
activities and focused on the GV Gold deal, Kopy Goldfields said in a report. Net loss doubled to 13.1 million
krona, or $1.9 million.
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Manas Resources receives environmental approval to develop Shambesai field
MOSCOW. Sept 8 (Interfax) - Thy Kyrgyz government has approved the sanitary protection zone (SPZ) for the
Manas Resources' Shambesai gold project in the Kyrgyz Republic, the com-pany said in a statement.
"In December 2012, Manas was awarded a Mining and Development License for the Shambesai Gold Project
which secured legal tenure over the deposit area and permits the completion of the design, construction and
commissioning phases of the project. Manas also obtained the approval for Shambesai's development concept
by the Urban Development Council (UDC) of the Ka-damjai Region of the Batken Oblast, allowing the Company
to proceed to full design develop-ment," the company has previously said on its website.
"Approval of the SPZ for Shambesai is an important milestone for the project as we now enter the final stages of
permitting with only design related submissions remaining. We will now complete the design, infrastructure and
construction permitting in anticipation of project financ-ing, and also finalize our ongoing discussions with the
local community," Managing Director Stephen Ross is quoted in the most recent statement as saying.
The company was initially planning to begin the industrial development of Shambesai in 2014. It was reported
that production could begin in late 2014 or early 2015. Overall capex are esti-mated at $47.2 million. Manas
Resources has already spent $12.1 million on the project in 2013, the company said in a presentation.
Gold reserves at the Shambesai field total 277,000 ounces, based on JORC standards. Manas Resources also
owns the license for geological exploration at the Obdilla field in Kyrgyzstan. Combined reserves at the two fields
total 1.184 million ounces.
Gold mining enterprise robbed in Kyrgyzstan
OSH. Sept 8 (Interfax) - Two armed men have beaten security guards of the Fonta gold ore de-posit and took
precious metals, the Internal Affairs Department of the Jalal-Abad region in southern Kyrgyzstan told Interfax on
Monday.
"Unknown individuals in a Toyota Prado vehicle entered the premises of the enterprise and while threatening
with firearms, they made security guards open the quarters, where gold was stored, loaded the metal and fled,"
an Internal Affairs Department representative said.
About five kilograms of gold was stolen, however it is impossible to determine the exact weight for now, the
representative said.
As a result of the attack, one security guard sustained a gunshot wound, two others, including security head and
section head, were beaten and sustained serious trauma, the representative said.
"All people injured were hospitalized and a criminal case was opened over the attack, urgent search and
interception measures were introduced, posts were set up in the region but presuma-bly the attackers could
have hidden in mountains," the representative said.
China to invest $30 mln in Tajik cathode plant
DUSHANBE. Sept 11 (Interfax) - Chinese company General Nice Investment will invest $30 million in the
construction of a cathode production plant for state-owned Tajik aluminum com-pany Talco, the Tajik State
Investment Committee told Interfax.
The relevant agreement was signed in Dushanbe on the sidelines of a Shanghai Cooperation Or-ganization
business forum.
The new plant will be located at Talco in Tursunzad, which is 50 kilometers west of Dushanbe. It is due to be
launched in the first quarter of 2016.
"During the first phase, capacity will be 30,000 tonnes and later it will go up to 50,000 tonnes," the committee
said. Cathode blocks will not just be used to produce aluminum in Tajikistan, it will also be exported to Russia
and other countries.
General Nice Investment Limited was established in 1992. It is part of the General Nice Group holding and has
headquarters in Hong Kong. Assets are estimated at $8 billion.
The state-owned Talco, built in 1975 with French technology, is central Asia's biggest smelter and is capable of
producing 517,000 tonnes of aluminum per year. The smelter used to be known as Tadaz, and became a unitary
enterprise in April 2007.
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Talco produced 216,400 tonnes of metal in 2013, down 20.6% year-on-year.
Severstal shareholders approve 2.14 ruble/share dividend for H1
MOSCOW. Sept 11 (Interfax) - The shareholders of Severstal voted at an extraordinary general meeting on
September 10 to accept dividends of 2.14 rubles per common share for the first half of 2014, the Russian
steelmaker said in a statement.
This would be up 5.4% from the dividend of 2.03 rubles the company paid a year earlier.
Severstal posted a net loss of $761 million for the first half, including $661 million in the sec-ond quarter. This
includes an anticipated noncash loss on the sale of the company's North Amer-ican assets - Severstal Dearborn
LLC, Severstal Columbus LLC and PBS Coals Ltd., tentatively estimated at $1.066 billion, as well as an
exchange rate gain of $199 million. Without these fac-tors, Severstal would have had a net profit of $206 million
in the second quarter.
The register of shareholders for receipt of dividends will be closed on September 22.
The company paid shareholders a dividend of 2.43 rubles per share for the first quarter of 2014.
Severstal Management will be headed by current Severstal CEO and principal shareholder Alexei Mordashov
effective January 1, 2015.
Severstal's charter capital consists of 837,718,660 common shares with par value of 0.01 rubles. Mordashov
owns 79.2% of the company and the remaining shares are in free float.
Severstal is a vertically integrated steel company with assets in Russia, Europe, Africa and Ukraine.
Latvia selling Liepajas metalurgs to Ukrainian KVV Group for 107 mln euro
RIGA. Sept 10 (Interfax) - The bankruptcy administrator at Latvian steel maker Liepajas meta-lurgs has selected
Ukraine's KVV Group as the purchaser. The administrator, Haralds Velmers, told a government meeting on
Tuesday that KVV Group, which offered 107 million euro for the main production facility, beat out one other bid,
from Russian businessman Igor Shamis' United Group.
"The bids from both investors were almost identical in terms of price, but for us the terms of payment and
fulfillment of commitments to creditors were key. All the more so since the pay-ment is deferred. The price
offered by the buyer will cover a significant portion of creditor de-mands. In addition, KVV Group during talks
firmly committed to resuming production opera-tions," Velmers said, adding that the preliminary agreement,
which stipulates the first payment, would be signed on Wednesday.
Following the government meeting, Velmers told journalists that United Group had submitted a higher bid, but
that KVV offered better terms.
KVV Group will make a "significant first payment" and then pay the rest of the purchase price over 10 years, said
Karlis Krastins, the head of Prudentia, which providing consulting services for the deal. KVV Group also offered
corporate guarantees from the parent company, bank guarantees and asset pledges, and affirmed that it is not
associated with the former shareholders of Liepajas metalurgs.
The agreement will be signed on September 26-27. Production operations are scheduled to re-sume before
year-end.
Former shareholders in Liepajas metalurgs Sergei Sakharin, Ilya Segal and Kirov Lipman re-quested a bailout
from the government last year. However, the government refused, saying it saw no need to provide money to a
private sector company, let alone one with non-transparent financing mechanisms and perpetually feuding
owners. The enterprise was declared bankrupt in November 2013.
The main owner of KVV Group (Kyiv), formed in October 2010, is UK-based Gefest Invest-ments Limited. The
group operates a network of scrap metal processors. It previously delivered significant volumes of scrap to MMK
Ilyich and Zaporizhstal plant.
Mechel aiming to raise $2 bln-$3 bln in 2-3 yrs with asset sales – paper
MOSCOW. Sept 10 (Interfax) – Mechel, a Russian steel and coal company that is struggling under a heavy debt
burden, is willing to consider selling any one of its assets and hopes to raise $2 billion-$3 billion in the next two
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to three years, the company’s CEO, Oleg Korzhov said in an interview with business daily Vedomosti published
on Wednesday.
“Until now, Mechel, not counting the stake in [coal project] Elga, worked on selling noncore or loss-making
assets. We managed this task. Now we’re considering options of selling not only noncore and loss-making
assets, but also the sale of those assets that we considered strategically important. We’re prepared to
compromise and part with them in the current situation. We’ve made a plan for the sale of these assets and
expect that even with a pessimistic forecast we’ll be able to sell assets for $2 billion-$3 billion over two or three
years. Overall, taking into account the sale of the road, changes in the market situation, the sale of assets, we’ll
be able to pay down $4 billion-$5 billion of debt. This will enable us to reach a debt to EBITDA ratio of 4-5 in four
to five years, which is acceptable for banks and is an acceptable ratio for a normally operating company,”
Korzhov said.
He said the company is willing to talk to any potential buyer about any one of its assets.
“Such negotiations are underway, we understand the circle of assets and interested parties, un-derstand what
might be interesting, to whom and for what kind of money. Therefore, when we talk about the amount of $2
billion-$3 billion we already understand what we can offer and to whom and sell for what kind of money. This list
is far bigger than just up to 50% in Elga,” Kor-zhov said, without saying what stage the negotiations are at.
He also did not rule out that the company might sell all or part of the Chelyabinsk Metal-lurgical Plant.
“We’re prepared to consider various options. We don’t want to sell an asset in which we invest-ed so much
energy and effort, but if there will be a good offer, then why not?” Korzhov said.
Asked if there is a deadline by which Mechel has to reach an agreement with banks, with which it has been
negotiating for six months already, Korzhov said there is no deadline as such for when a decision on
restructuring has to be made.
“But considering that we currently have overdue debt on interest to banks, we should resolve the issue as
quickly as possible. Right now we’re virtually not doing anything else except looking for compromise options,
proposing them to banks, meeting, discussing with banks at the gov-ernment level in order to find a compromise
solution faster, because everyone is interested in a speedy resolution of the issue…And I really hope that we will
make progress before the end of September and a concrete, mutually beneficial decision will be made,” Korzhov
said.
The Mechel group includes controlling stakes in steel, coal mining and energy companies, as well as commercial
ports. Creditor banks hold 27.2% of Mechel shares as collateral from the 67.4% of the group’s common shares
that are owned by companies controlled by Igor Zyuzin.
The group is now restructuring its assets with a focus on the mining business.
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