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GV Gold Operating Results for FY 2018

  • One of Russia’s fastest-growing gold companies, with gold output up by 85% in less than two years since the launch of two strategic projects
  • Gold production grew year-on-year at all of the Company’s business units
  • Record operating results are further evidence of a well-considered growth strategy, with double-digit year-on-year increases in gold production for the second year in a row
  • Successful geological exploration formed the foundation for sustainable future growth, including in the first half of 2019
  • The licence for development of the promising Svetlovsky ore field will support growth at the Company’s Irkutsk business unit, which accounts for over 60% of GV Gold’s output
  • Net debt fell by more than half to USD 72 million as a result of the Company’s balanced financial policy
  • New dividend policy is in line with industry best practice

GV Gold (Vysochaishy, PJSC), together with its subsidiaries (“GV Gold”, “Vysochaishy” or “the Company”), today announces its operational results for the 12 months ended 31 December 2018.

FY 2018 Highlights

  • Gold production reached 304.3 koz of gold in FY 2018, which not only represents a new record but is higher than upper end of the Company’s own guidance (280-300 koz). GV Gold has delivered a second year of growth that is unprecedented in the industry, nearly doubling production compared to 2016.
  • Production sites launched in 2017 have delivered strong operating results: the Taryn mine increased output by 62% year-on-year and production at the Ugakhan mine was up by 284% year-on-year. The Bolshoy Kuranakh placer deposit set a new record with 17.4 koz of gold production.
  • Production at the Vysochaishy mine was stable year-on-year at 130.7 koz of gold, with significantly higher volumes of processing and recoveries, which fully mitigated the decline in average grade and enabled the company to maintain output on the same level as last year.
  • The Ugakhan and Taryn processing plants reached and even exceeded nameplate capacity, which drove the 40% year-on-year increase in ore processing to 8,210 kt for FY 2018.
  • Successful completion of geological exploration laid the foundation for sustainable future growth at all of the Company’s business units. The Company spent an estimated USD 27 million on geological exploration in 2018.
  • Revenue from gold sales is estimated at USD 357 million, a 32% year-on-year increase[1].
  • Net debt at the end of 2018 is estimated at USD 72 million, which is less than half of the USD 176 million in net debt that the Company reported at the end of 2017[2].
  • In 2018 the Company adopted a new dividend policy that aims to pay out at least 30% of EBITDA based on IFRS accounts, and the Company declared its first dividends based on its 9M 2018 results.
  • Publication of FY 2018 IFRS financial results is planned for the end of March 2019.

2019 Guidance

  • The Company has successfully completed a major investment cycle, completed key strategic projects, and plans to focus on organic growth at its existing assets.
  • The expansion of the resource base and increase in production capacities at the Taryn and Ugakhan mines, combined with further optimisation of operations at all assets will enable the company to continue on its growth trajectory. In 2019, the Company plans to produce 305-325 koz of gold.

Statement from CEO German Pikhoya:

"GV Gold’s performance in 2018 has positioned the Company as one of the most dynamic players in the sector. We are confidently moving toward our goal of becoming one of Russia’s top five gold producers. We have successfully completed a large-scale investment cycle, a key result of which was the launch of two strategic projects. By ramping up production capacities, the Company has reached an entirely new level, practically doubling gold production from 164 koz in 2016 to 304 koz in 2018.

"The main drivers of growth during the period were the Taryn and Ugakhan processing plants, which delivered exceptional results. At the same time, work was also undertaken in other areas. In the past year we carried out the most expansive geological exploration programme in the Company’s history. As a result of this work, we expect to extend the lifespan of our flagship Vysochaishy mine, as well as the Marakan mine, through 2024. We plan to publish the results in the first half of 2019.

"Another important accomplishment was the acquisition of the licence for development of the promising Svetlovsky ore field in the eastern part of the Bodaibinsk ore field, a project which we are considering for the development of our Irkutsk business unit.

"In the past year there were several important transformations with regards to corporate governance. There were changes to the shareholder structure of GV Gold, a new board of directors was elected, and the top management team was further strengthened. Employees of the Company’s business units were nearly all moved over to a rotational work basis.

"The Company approved a new dividend policy and continues to pay record high dividends in the amount of 30% of EBITDA based on our IFRS accounts.

“In addition, we continued to optimize our debt profile, reducing net debt practically in half to $72 million as of 31 December 2018.

“I am grateful to the entire team at GV Gold group companies for their professional teamwork and their commitment to delivering strong results throughout the course of the year. By developing our assets, we are not only laying the path for the Company to achieve its strategic objectives, but we are also making an important contribution to the development of the regions where we operate, as well as cementing Russia’s position as one of the largest gold producing countries in the world.”


Consolidated Operational Results

For the second year in a row, GV Gold demonstrates double-digit gold production growth. In 2018, GV Gold’s production totaled 304.3 koz, including gold in concentrate. Total gold production grew by 36% y-o-y, to a great extent due to improving operational efficiency across all production facilities of the Company and to the fact that Taryn and Ugakhan plants reached their designed capacity.

In 2018, the ore throughput totaled 8.2 Mt (+40% y-o-y), with the Ugakhan plant having attained its designed capacities. Despite an average grade decrease at the Golets Vysochaishy site, the Company’s gold production remained at the same level owing to higher throughput and recovery at Mills 2 and 3.


GV Gold Operational Highlights
Q4 2018 Q4 2017 Y-o-Y Q3 2018 Q-o-Q 2018 2017 Y-o-Y
Rock moved, kt 13,975 10,373 35% 10,401 34% 44,959 39,910 13%
Stripping, kt 11,217 8,772 28% 8,806 27% 36,967 35,527 4%
Ore mined, kt 2,759 1,601 72% 1,595 73% 7,993 4,383 82%
Stripping ratio, t/t 4.1 5.5 -25% 5.5 -25% 4.6 8.1 -43%
Ore processed, t 2,447 2,051 19% 2,229 10% 8,210 5,854 40%
Refined gold production, koz 71.3 79.0 -10% 80.3 -11% 266.3 209.1 27%
Gold contained in concentrate, koz 12.6 9.3 35% 12.2 3% 38.0 15.4 147%
Total gold production, koz 83.9 88.3 -5% 92.5 -9% 304.3 224.5 36%

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Operating results are preliminary and can be adjusted during the financial results preparation, including the 2018 annual report, which is to be approved by the Board of Directors and the Shareholders Meeting in accordance with the established law procedure.

Contacts

Investor Relations

Vasily Migunov, Deputy CEO for IR and Capital Markets

+7 495 287 88 40
vvm@gvgold.ru

Press Office

Tatiana Demyanova, Deputy CEO for Public Relations

+7 495 287 88 40
dtv@gvgold.ru


Forward Looking Statements

This release may contain “forward-looking statements” regarding GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries. The words “will”, “can”, “must”, “should”, “will continue”, “possibility”, “believes”, “expects”, “intends”, “plans”, “estimates” and other similar phrases are largely indicators of forward-looking statements. Forward-looking statements contain elements of risk and uncertainty, as a result of which actual results can differ dramatically from the figures listed in the forward-looking statements. Forward-looking statements contain statements regarding future capital expenditures, strategies for business operations and management, as well as development and expansion of GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries. Many of those risks and uncertainties pertain to factors that cannot be controlled or quantified by GV Gold (Vysochaishy, PJSC) and (or) its subsidiaries, so the content of the statements should not be treated as definitive because it is provided strictly as at the date of the statement. GV Gold (Vysochaishy, PJSC) and (or) any of its subsidiaries does not make any commitment and does not plan to provide updates to the forward-looking statements, except where required by applicable law.


[1] Unaudited figures based on consolidated management accounts.

[2] Based on preliminary data from consolidated management accounts. In respect to the Company, “net debt” means the aggregate of the following amounts as at the end of each reporting period:

a) outstanding principal amount of debt;
b) outstanding principal amount of bonds, promissory notes, debt instruments and other securities of similar nature;
c) principal amount of financial leases;
d) fixed or minimum amount of the premium payable at redemption of the securities listed in the subparagraph b) above.