Patience is gold

Reach for the Middle Kingdom

At the end of 2014, Russia increased gold production by 9% to 272 tons and became the second producer after China with its production of 465,7 tons. We went around Australia and the USA. Such, while preliminary, estimates are given in the analytical report of Thomson Reuters GFMS. According to the Union of Gold Producers of Russia, in 2013, 254,2 tons of gold were produced in the Russian Federation, taking into account the concentrate sent for export (6,495 tons). Last year, for example, the country produced 254,5 tons. According to the materials of the Ministry of Finance, published in early February, gold production amounted to 287,98 tons, including: mined gold - 232,185 tons, associated gold - 16,88 tons, secondary gold - 38,9 tons. In the Far Eastern Federal District, the production of mined gold amounted to 127,3 tons, followed by the Siberian Federal District with 90,2 tons. According to the head of the Ministry of Natural Resources of the Russian Federation, Sergei Donskoy, the 300-ton milestone may be passed this year.

World production of gold by the end of 2014 year (according to GFMS)

Gold mountains in ruble equivalent

Saving the industry came from where not expected. Instead of measures of integrated support of miners, an impressive list of which the representatives of the Union of Gold Producers offered to the government, instead of reducing production in other gold-mining countries, the ruble collapsed.

“The selling price of gold has almost doubled in rubles. I'll tell you about the example of one of the medium-sized companies in the Far East with revenues of 3-4 billion rubles. Their production cost in 2013 was 1430 rubles, the average selling price was 1415 rubles, that is, they were at a loss. In 2014, the cost is exactly the same, and the sale price is 1500 rubles. And this year what they have already sold is the average price of 3600 rubles at the same cost, ”says Chaba Zentai, a member of the VTB Management Board. According to him, after the devaluation of the ruble, the gold mining sector of the Far East "feels good, this industry is even winning at the moment," says Chaba Zentai, board member of VTB Bank.

In December last year, analysts of the investment holding FINAM noted that the year has developed quite well for the industry. It started at 1290 rub. For one gram, and ends at a level higher than 2200 rubles., That is, in ruble terms, gold has grown by 75%. The weakening of the ruble by 60% spurred demand for metal as an insurance asset. In addition, the Russian Central Bank set a record for gold purchases, increasing them by half compared to the 2013 year. The stocks of monetary gold in the international reserves of the RF as of 1 January 2015 year have grown since the beginning of 2014 year by 16,5% or 171 ton - up to 1206,8 tons, according to the Bank of Russia. The value of gold in reserves increased by 15,3%, from $ 39,99 billion to $ 46,089 billion, and the share of gold in international reserves from 7,8% to 11,96%. Thus, the Central Bank bought gold for $ 6 billion.

As forecast in FINAM, the monetary authorities will continue the policy of diversifying international reserves and this year, therefore, the purchase and extraction of gold will grow. Last year, new assets in the East of Russia were provided with progress: the Omolon hub deposits in the Magadan region, as well as the Mayskoye in Chukotka and Albazino in the Khabarovsk Territory (Polymetal); Verninskoye deposit in the Irkutsk region (Polyus Gold), Albin and Malomyr in the Amur region (Petropavlovsk Plc); Double and Dome (Kinross Gold); Tabor and Berezitovoye deposits (Nordgold); White Mountain (Highland Gold Mining). Are the leaders of the industry ready to increase production in the future, will the Far East become a locomotive for the development of the industry, as the head of the Ministry of Natural Resources Sergei Donskoi predicted?

Desired booty

First, let's look at regional statistics. It will still be specified, however, from the messages of the relevant departments and companies, there is a general picture. The rating of the gold mining regions of the Far Eastern Federal District was headed by Chukotka, the Amur Region lost its position, followed by Kolyma, Yakutia and the Khabarovsk Territory.

In the Amur region, 31,6 tons of precious metal were mined. Traditionally, the leader is Petropavlovsk Plc. At the same time, the company itself met a collapse in gold prices with a net debt of about $ 950 million and is now waiting for a decision by shareholders on the restructuring of a bonded loan for $ 310 million. The thing is that the company initially built a business model at the rate of $ 1500 per ounce and was not ready to the raw material "pit". Now, as co-founder of the company Pavel Maslovsky recently stated, all management decisions are undergoing a stress test at $ 1000 per ounce. At the same time, the company does not plan any sudden movements in the near future and will develop on the existing raw material base.

The second large enterprise, owned by Nordgold, the Berezitovy mine, increased its indicators at the end of 2014 by almost 0,3 tons. The result is 4,3 tons of precious metal. The leaders, as usual, are OJSC "Priisk" Solovievsky "and CJSC" Hergu ". At the same time, "Solovyevsky" intends to extract 2016 tons of ore gold by 1,5.

In the Magadan region, 24,14 tons of gold were mined, which is 2,8 tons more than in 2013. The increase in gold production from ore deposits amounted to 2,26 tons, from placers - 547,8 tons. Polymetal, the largest subsoil user in the Magadan Region, produced 2014 tons of gold in 6,8. Sumsumanzoloto OJSC produced over 3,9 tons. A little more than a ton was mined by OOO GK Maiskaya.

In 2015, enterprises in the region expect to produce 24,5 tons of gold. As noted by the Ministry of Natural Resources and Environment of the region, this is the minimum planned level of production, which does not take into account the indicators of the Pavlik field (the development license is owned by the Arlan investment company). The mining and processing plant at Pavlik is now operating in a commissioning mode, and this year it is expected to produce at least a ton of gold. Upon reaching the design capacity, the production will be up to 6 tons per year.

The enterprises of the Khabarovsk Territory showed in 2014 a record level of production over the past ten years - 20,7 tons. According to the Ministry of Natural Resources of the region, in 2013 large projects Albazino (Polymetal) and Belaya Gora (Highland Gold Mining) were put into operation, which provided growth over the past year. The volume of ore gold production in the region amounted to 16,5 tons and exceeded the last year's figure by more than 2,5 tons.

The alluvial deposits also slightly exceeded their annual plans, having reclaimed 4,2 tons. For comparison, in 2012, 4,117 tons of gold were reclaimed. The Amur miners' artel at the Konder deposit in the Ayano-Maisky district has maintained the level of platinum production at the 2012 level - more than 3,5 tons. Silver production in 2013 was slightly lower at 89,3 tonnes.

Indicators of the Kamchatka Territory - 4,37 tons (+ 72%) of gold. The main share of production falls on primary deposits - 4,29 tons (an increase of 73,8%). The Renova Group of Companies became the leader - over 2 tons. Trans-Siberian Gold produced 1,32 tons of gold.

Gold production in the main gold-mining regions of Russia (generalized data).

It remains to see out to the end

The company was summed up by incorrect data from the Soviet period, on which the block model of the field, prepared in 2011, was based. They accounted for up to 60% of all intelligence information. After a second audit, the data of which was released in February, gold reserves fell by 49% to 16,2 million ounces of gold (with a metal grade of 1,6 g / t). The resources are estimated at 36,8 million ounces (with a content of 1,5 g / t), a decrease compared to 2011 data was 38%. “The revision of the field development project is planned to be completed in mid-2015, negotiations with potential partners continue. The ongoing design work is aimed at minimizing current capital costs and optimizing the infrastructure already built, ”the company says.

According to Polyus' plans, after the launch of the third stage of GOK, gold production at Natalka should be 1,6 million ounces, which is comparable to the current performance of the whole company. According to Sergei Kashuba, the shift in the timing of Natalka's launch will not have a significant impact on the industry, but for the Magadan region this will be sensitive: huge expectations were associated with the project. Representatives of the industry say privately that the example of Poluys Gold is indicative in terms of where ambitious megaprojects can lead, not based on thorough geological survey and thorough financial planning.

Petropavlovsk Plc reduced production by 15,7% compared to 2013 - to 624,4 thousand ounces (19,42 tons). However, the decline in performance is due to the sale of remote and high-cost assets. For 2015, the plan is 680-700 thousand ounces (21,15-21,77 tons). As already mentioned, Pavel Maslovsky announced the maintenance of the current production volumes with a systematic reduction of the company's debt. Highland Gold Mining (HGM) reported on the growth of indicators to 258,9 thousand ounces, which is 8 tons (+ 10,8%). The company predicts an increase in production in 2015 by 4-10% to 270-285 thousand ounces (8,4 - 8,9 tons).

Thus, the previously taken course of systematic growth of production continues, but does not promise any breakthroughs. At the same time, the devaluation of the ruble against the dollar continues to have a beneficial effect on gold mining, leading companies confirm. Polymetal estimates cash costs for 2014 at $ 625-675 / gold equivalent and total cash costs of $ 900-950 / gold equivalent, which is lower than expected in early 2014 (cash costs of $ 700-750 and total costs - $ 975-1025). The ruble share in the prime cost of products manufactured by Polymetal is about 60-70%.

According to monitoring data from the London Bullion Market Association (LBMA), at the end of the first half of 2014, with an average gold price of $ 1,29 thousand per ounce, Polymetal's average production cost (total cash costs, TCC) was $ 627 / ounce , Polyus Gold has $ 662 / oz, Nordgold has $ 708 / oz, Kinross has $ 734 / oz. All-in sustaining costs (AISC, total costs) in the first half of the year for Kinross was $ 988 / oz, Polymetal $ 938 / oz, Polyus Gold $ 905 / oz and Nordgold $ 899 / oz.

At the same time, the average price of gold in 2014, according to the Union of Gold Producers, was $ 1267 per ounce. By the end of this year, the organization expects a price in the range of $ 1300-1350 per ounce, with an increase of 3-7% - investment demand for metal can support prices. At the same time, Thomson Reuters GFMS predicts a decline of 8% to $ 1170 per ounce. The consensus forecast of analysts surveyed by the LBMA is $ 1211 an ounce (down 4,4%).