Russian gold miner Polymetal has increased its capital expenditure (capex) guidance for 2021, which is partly owing to limited availability and sharp increases in construction labour costs.
The company says Covid-related travel restrictions in Central Asian countries, which are the traditional source of most of its construction workforce, are driving the labour cost increases.
London-listed Polymetal’s capex guidance for the year is $560-million – a $75-million increase compared with the previous guidance. The miner spent about $590-million on capex in 2020.
Despite significant Covid-related disruptions and slowdowns, Polymetal reports that construction and development activities at its Nezhda and POX-2 projects are on schedule.
At Nezhda, the processing plant building has been completed and most of the key equipment installed. Ore mining is ongoing and first ounces are expected this year.
At POX-2, the autoclave building framework, concentrate storage facility and most of the concrete work for desorption/electrolysis building and oxygen station are complete.
In 2020, the board also approved construction of the Voro flotation plant, the startup of which is planned for the first quarter of 2023, and the Kutyn heap leach project, part of the Albazino operations, with a startup date of the second quarter in 2023.
Meanwhile, CEO Vitaly Nesis states that 2020 was a successful year for Polymetal, despite the pandemic.
The group improved its safety performance and achieved zero fatalities.
"The company beat production guidance, enjoyed record free cash flow and continued to execute development projects on schedule," he says, announcing Polymetal's fourth-quarter and year-end results.
Gold equivalent output amounted to 1.60-million ounces, a 4% year-on-year increase and 4% above the original production guidance of 1.5-million ounces.
Revenue jumped by 28% to $2.9-billion while fourth-quarter revenue was up 31% year-on-year to $0.8-billion on the back of higher gold sales and higher metal prices.