JOHANNESBURG (miningweekly.com) – Russia’s top gold producer, Polyus, on Thursday reported a 5% drop in third-quarter net profit to $371-million, reflecting the impact of a gain on derivatives and investments in the prior period, as well as finance costs.

The company, which is listed on the LSE, said adjusted net profit increased by 1% year-on-year to $298-million, while adjusted earnings before interest, tax, depreciation and amortisation rose by 7% year-on-year to $475-million.

Polyus reported revenue of $744-million, which is 5% higher than the prior-year revenue, as sales increased by 10% owing to higher production.

The miner sold 578 000 oz of gold in the September quarter, compared with 527 000 oz in the same period of 2016.  Gold production increased from 555 000 oz in the third quarter of 2016 to 642 000 oz in the period under review, driven by higher production volumes at the Olimpiada, Verninskoye and Kuranakh mines.

Total cash costs decreased by 6% to $380/oz, despite the rouble strengthening.

Capital expenditure (capex) doubled to $224-million in the third quarter, from $109-million in the corresponding period, reflecting higher maintenance capex, as well as the ongoing construction works at Natalka and brownfield development projects.

Natalka, in Russia’s Far East, is the group’s main development. Polyus spent $126-million on Natalka in the third quarter, taking expenditure for the nine-month period to $305-million. Mining activity at Natalka was relaunched in January this. The company started hot commissioning in early September and said that production would be fully ramped up by the end of next year.

With production at Natalka ramping up next year, and the majority of the brownfield development projects coming to an end this year, Polyus said it expected gold output of 2.35-million to 2.40-million ounces in 2018 and 2.80-million ounces in 2019.