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IN BRIEF
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*** On July 24, a year to the day since Vladimir Putin memorably promised to send Mechel's main beneficiary Igor Zyuzin "a doctor to solve the problems" at the coal and steel group, the prime minister will again meet with representatives of Russia's metallurgical industry. This time the meeting will take place in Magnitogorsk and will feature a discussion of the effectiveness of state support measures and the outlook for growth of the Russian metals sector. It is dedicated to the launch of Mill-5000 at MMK. Last year, Putin's harsh criticism of the coal pricing policy at Mechel immediately sent the company's market capitalization into a tailspin.
*** Polymetal is planning to produce about 18.2 million ounces of silver and 300,000 ounces of gold in 2009, Russia's biggest silver miner announced this week. The figures are slightly up on earlier forecasts and 2008 results. Excluding acquisitions, Polymetal plans to produce 365,000 tonnes of gold in 2010, 545,000 ounces in 2011 and 630,000 ounces in 2012, with the main source of growth in production coming from the launch of the Albazino field in the Khabarovsk territory in 2010. Albazino is to churn out 150,000 ounces of gold in 2011 and 245,000 ounces in 2012. Polymetal estimates capital expenditure to develop Albazino at $238 million, excluding VAT. The estimate is 9% above the initial estimate mainly due to increased capacity at the Amursk plant and changes in the dollar/euro exchange rate. Silver production is to total 20.7 million ounces in 2010, 25.8 million ounces in 2011 and 25.6 million ounces in 2012. The increase will come from the Dukat and Lunnoye fields reaching projected production capacity in 2011.
*** It was announced this week that the Russian Federal Antimonopoly Service (FAS) has opened a case against Ural Mining and Metallurgical Company (UMMC Holding) for abusing its dominant market position. UMMC is accused using a fixed markup on contracts for the delivery of zinc to Russian customers and of establishing discriminatory conditions for a host of customers. The case will be examined on August 26. Meanwhile, the regulator has given UMMC and Russian Copper Company clearance to buy into Russia's leading zinc producer Chelyabinsk Zinc Plant, part of the Chelyabinsk Pipe Rolling Mill (ChTPZ). UMMC will receive a 47% stake, while Russian Copper Company will acquire 37%.
*** Russia's Mechel coal and steel group said this week that it ended the first quarter of 2009 with US GAAP net losses of $690.7 million. The company had negative EBITDA of $474 million and sales revenue of $1.18 billion in the quarter. The figures were significantly worse than analysts predicted. The company had an exchange rate loss of $592 million. Only the company's mining division eked out a positive EBITDA margin. Mechel blamed the decline in the gross margin on falling demand for coking coal, which meant declining production and rising marginal costs. In the metals segment, Mechel plans to continue reducing the share of low-value-added product in output and increasing high-value-added output. Coal production was 54.5% and steel output 18% in the first half. However, in July, Mechel plans to increase the workload of its coal segment by 20%. Mechel this week also signed an agreement on the refinancing of $2.6 billion worth of short-term loans that it raised to buy coal assets in Yakutia and UK-based Oriel Resources Ltd.
*** Russian President Dmitry Medvedev paid a surprise working visit to South Ossetia this week, the first such visit since Russia recognized the breakaway republic as independent following a brief conflict with Georgia in August last year. He told his South Ossetian counterpart Eduard Kokoity that Russia will work with his republic on a number of joint projects. These are likely to include a joint geological survey in South Ossetia, starting as early as 2010. The region is believed to have lead and zinc reserves and the two leaders signed a mineral development action plan to exchange geological information. The visit was met with widespread condemnation in Georgia, with President Mikheil Saakashvili labeling it a "disgraceful" and "immoral" act. Saakashvili also suggested the timing, made shortly after U.S. President Barack Obama voiced support for Georgia in his visit to Moscow last week and the same day as Georgia signed up as a transit country to the Nabucco gas pipeline project, was far from accidental.
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Putin to meet metals industry representatives in Magnitogorsk on July 24
CHELYABINSK. (Interfax) - Prime Minister Vladimir Putin will hold a meeting with representatives of the metals industry in Magnitogorsk on July 24, the chairman of the Audit Chamber, Sergei Stepashin, said after a July 14 meeting with the heads of metals enterprises in Chelyabinsk region.
The meeting will feature a discussion of the effectiveness of state support measures and the outlook for growth of the Russian metals sector.
It is dedicated to the launch of Mill-5000 at Magnitogorsk Iron & Steel Works (MMK).
The Magnitogorsk meeting comes precisely one year after a similar meeting on the metals sector held in Norilsk Nickel. That meeting is remembered for Putin's harsh criticism of the coal pricing policy of the Mechel coal and steel group, which immediately sent the company's market capitalization into a tailspin.
Preparations for the Magnitogorsk meeting came at a session with Deputy Prime Minister Igor Sechin last week. Those present included representatives from the Economic Development Ministry, Federal Antimonopoly Service, the Federal Tax Service, Gazprom, Severstal, MMK, Novolipetsk Iron & Steel Company (NLMK), Transneft, Rosneft and Mechel.
PRECIOUS METALS
Kerimov is beneficiary of 36.9% stake in Polyus Gold, Prokhorov - 26.8%
MOSCOW. (Interfax) - Suleiman Kerimov is the beneficiary of a 36.8812% stake in Polyus Gold, Russia's leading gold producer, while Mikhail Prokhorov owns 26.8%, the company said in materials as part of a transaction with KazakhGold.
"Based on the information that Polyus Gold received from the main beneficiary owners of its shares, Prokhorov is the beneficiary of a 26.8% of all issued Polyus Gold shares (including American Depository Receipts), which are mainly owned by Bristaco Holdings Co. Limited. In addition, 5,913,100 shares in Polyus Gold, making up 3.1019% of issued shareholder capital, should be transferred to Prokhorov in early June 2009, which will increase his ownership to 29.9%," the company said.
As of June 19, Prokhorov indirectly owned 3,618,287 shares in Polyus, or a 1.8981% stake. In May, Prokhorov signed agreements canceling various transactions for the sale of 5,913,100 shares in Polyus, or 3.1019% of total capital. These shares are to be returned to Prokhorov in July, resulting in his direct ownership increasing to almost 5%.
Kerimov is the beneficiary of a 36.8812% stake in Polyus Gold. This stake is mainly owned by Wandle Holdings Limited.
"Of this 36.8812% stake, Wandle Holdings Limited sold 37,363,038 shares (24.5899%) in Polyus Gold based on repo agreements. These repo agreements envision that the buyer of Polyus shares and ADR will give Wandle Holdings Limited authority to vote using the rights offered by these shares and ADR," the statement says.
Wandle Holdings acquired approximately 30% of the company's shares and 7.3% of its ADR between April 24 and July 3, paying a total of $1.249 billion.
Prokhorov's previous partner in Polyus Gold was Vladimir Potanin's Interros.
At the company's annual general meeting on May 15, shareholders elected a new board of directors with four representatives from Kerimov's Nafta Moscow. Three representatives from Prokhorov's Onexim were elected to the board in addition to Polyus Gold general director Yevgeny Ivanov and one independent director.
PRECIOUS METALS
Polymetal aims to produce 18.2 mln ounces of silver, 300,000 ounces of gold in 2009
MOSCOW. (Interfax) - Russia's Polymetal is planning to produce about 18.2 million ounces of silver and 300,000 ounces of gold in 2009, Polymetal general director Vitaly Nesis said during a meeting with analysts on July 14.
The figures cited by Nesis are in line with the company's earlier production forecasts of 280,000-300,000 ounces of gold and 17 million-18 million ounces of silver this year. The company produced 285,000 ounces of gold and 17.2 million ounces of silver in 2008.
Excluding acquisitions, Polymetal plans to produce 365,000 tonnes of gold in 2010, 545,000 ounces in 2011 and 630,000 ounces in 2012. The main growth in gold production will come from the launch of the Albazino field in the Khabarovsk territory in 2010. Albazino is to churn out 150,000 ounces of gold in 2011 and 245,000 ounces in 2012.
Silver production is to total 20.7 million ounces in 2010, 25.8 million ounces in 2011 and 25.6 million ounces in 2012. The increase will come from the Dukat and Lunnoye fields reaching projected production capacity in 2011. Production at these two fields is to total 22.2 million ounces in 2011.
PRECIOUS METALS
Polymetal estimates capex for Albazino at $238 mln
MOSCOW. (Interfax) - Russia's top silver producer Polymetal estimates capital expenditure to develop the Albazino gold deposit in Khabarovsk territory at $238 million (excluding VAT), the company said in a July 14 statement.
Development of Albazino and construction of the Amursk POX plant is a company priority.
The estimate is 9% above the initial estimate mainly due to increased capacity at the Amursk plant and changes in the dollar/euro exchange rate.
Polymetal completed an updated version of the feasibility study for the project. The company confirms it will receive first gold from the field in 2010 and bring the mine and both plants up to designed capacity by the end of 2011.
The JORC resource totals 3 million ounces of gold at an average grade of 4.3 grams per tonne. The current estimate was completed in May 2009. The previous estimate in June 2008 put the resource at 2.3 million oz (4.8 grams per tonne).
Reserves under the new evaluation amount to 2.3 million oz at an average grade of 4.1 grams per tonne. Reserves were previously estimated to total 2.1 million oz.
"Polymetal continues to carry out geological exploration aimed at boosting Albazino's resource base to 6 million oz by the end of 2011," the statement says.
PRECIOUS METALS
Vysochaishy reduces gold production 18.8% in H1
MOSCOW. (Interfax) - Russian gold producer OJSC Vysochaishy reduced gold production 18.8% in the first half of 2009 year-on-year to 1,531.8 kilograms, although revenue in the period rose 7.8%, the company said on July 15.
Vysochaishy produced 935.1 kg (30,100 oz) in the second quarter, 56.7% more than in the first quarter, reflecting the startup of production at the B. Kuranakh placer field and increased extraction and processing of ore at Vysochaishy.
It was reported earlier that Vysochaishy produced 596.7 kg in the first quarter. Production in the first half last year amounted to 1,886 kg.
Revenue from sales of gold amounted to 1.417 billion rubles in the first half compared with 1.315 billion rubles in the same period last year.
Vysochaishy has placer and vein gold deposits in Irkutsk and Amur regions, as well as in Yakutia and Komi....
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