Polyus PJSC (MIC:PLZL) released its production results for the third quarter on Tuesday. The stock was up approximately 2.5% to 4,310.00 Russian rubles ($65.5) per share on the Moscow Exchange.
The Russian miner produced 691,000 ounces of gold during the quarter, reflecting a 7.6% increase year over year. The total gold output was made on a total volume of 12.67 million tonnes of ore mined and 10.4 million tonnes of ore processed during the quarter. The volume of ore processed increased 5% on a year-over-year basis thanks to improved capacity rates at its mill facilities.
The Moscow-based gold producer operates six mines. The Olimpiada and Blagodatnoye operations are based in the Krasnoyarsk region of Siberia. The Verninskoye and Alluvials are located in the Irkutsk region of Siberia. The Kuranakh mine is based in northeast Siberia and the Natalka mine is located in the Magadan region.
At $1,209 per ounce of gold sold, revenues are estimated to be $821 million for the third quarter.
The ongoing increase in the throughput at some of the mines, together with the completion of the production ramp-up at the Natanka mine, may propel total gold production for the full year beyond 2.425 million ounces, which is the upper limit of the guidance. Polyus also forecasts it will not produce less than 2.375 million ounces of gold.
Considering all the catalysts, I recommend current investors hold Polyus because the commodity is not expected to be particularly supportive over the coming weeks.
On Monday, the stock was trading slightly above the 200-, 100- and 50-day simple moving average lines and the midpoint of the 52-week range of $48.56 to $79.35. The market capitalization is approximately $8.66 billion.
Polyus is one of the world's largest gold producers. Its operations are situated in one of the most prolific mining areas of Russia. The company is extracting the precious metal from open-pit reserves. As of Dec. 31, Polyus had approximately 60 million ounces of gold in proven and probable reserves.
The company also disclosed that net debt has decreased 5.6% to approximately $3.03 billion from the previous quarter.
According to three analysts, the average target price is approximately $78.55 per share. The estimates range between $49.34 and $98.09 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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