Russia-focused Polymetal on Thursday announced a new capital expenditure (capex) guidance for 2021, on the back inflationary cost pressures and the acceleration of a new silver project to take advantage of the favourable market.

The company increased its capex guidance from $560-million to between $675-million and $725-million. An updated capex guidance for 2022 to 2025 would be announced in November, the miner said.

Polymetal spent $375-million on capex in the first half of 2021, up 55% on the $242-million of the first half of 2020.

The company said that the new guidance for 2021 reflected not only continuing macroecnomic pressures and inflation, but also scope changes, including the cost of the feasibility study for POX-3 and the acceleration of the Veduga gold and Prognoz silver project.

Polymetal on Thursday announced the development of an openpit mine at Prognoz, in Yakutia, with a total upfront capex of $105-million, comprising $20-million spending this year for engineering and mine preparation and $85-million in 2022 to 2024.

The company opted to process ore through the Nezhda concentrator, which is 675 km away, instead of building a processing facility on site.

“Fast-track development significantly reduces capex requirements and project execution risk, while bringing cash flows forward and lowering environmental footprint,” said CEO Vitaly Nesis.

Production has been brought forward by at least three years.

Conventional openpit mining will start with prestripping in the third quarter of next year, with first ore mined in the first quarter of 2023. The mine will produce an average of 250 000 t/y of ore at 600 g/t silver.

On average, Prognoz will produce 6.5-million ounces of payable silver-equivalent production from 2023 to 2041, at an all-in sustaining cost of $13.8/silver-equivalent ounce.

Meanwhile, Polymetal reported a 12% increase in half-year revenue to $1.27-billion, driven by higher metal prices. Gold equivalent (GE) production was 714 000 oz, a marginal year-on-year decrease. Gold sales remained stable year-on-year at 595 000 oz, but lagged production by 40 000 oz mainly owing to concentrate in transit build-up at Kyzyl. Silver sales were down 19% to eight-million ounces, owing to a lag between silver concentrate production and sales.

Net earnings were $419-million, compared with $376-million, with basic earnings a share of $0.89 each. Underlying net earnings increased by 15% to $422-million.

Polymetal said it remained on track to produce 1.5-million ounces of GE this year at an all-in sustaining cost of $925/GE to $975/GE.