Russian Gold Miners to Cut 2014 Production after Price Decline

gold downs

(Reuters) – Two Russian gold miners – Petropavlovsk and Nord Gold – design to slash output in 2014 as they aim on cost decrease after a fall in the gold cost, they said on Thursday.

Many gold producers were strike by a 28% drop in the price of gold last year – its biggest annual decrease in 32 years – prompting miners to cut charges, hold up new projects and hedge, trading their production forward.

Peter Hambro, Petropavlovsk head person, notified Reuters “The miners were excavation at the highest possible cost because the gold price was going up and when it stopped going up, they had to decrease that. So that means that they will mine less gold,”

Petropavlovsk anticipates its 2014 gold production to down turn 16% year-on-year to 625,000 troy ounces after it sold high-cost alluvial assets, the company said in a declaration.

Its peer Nord Gold is aiming at 2014 output in the range of 870,000 to 920,000 ounces of gold matching, compared to 924,400 ounces in 2013.

Petropavlovsk is adept to sell 279,100 ounces at a price of $1,429 per ounce and 65,115 ounces at $1,250 ounce this year in line with its ahead sales agreements, the company said.

“We determined that it would be shrewd to have about 50% of our one-year production hedged,” Hambro added.

In 2014, gold will not push much smaller than its current grades of around $1,250 per ounce, according to the agreement estimate in the newest Reuters poll.

Petropavlovsk this year designs to decrease money charges for hard-rock production by 5% to $950 per ounce. Its net debt dropped 11%, year-on-year, to $945 million as of the end of December, underneath analysts’ anticipations, some of them said in their notes.

Nord Gold, controlled by businessman Alexei Mordashov, said its yield down turn this year would be mostly due to smaller degrees at its Bissa mine in Burkina Faso. The company’s income dropped 5% year-on-year to $329 million in the fourth quarter.

“Management is focused on accomplishing increased effectiveness at all its mines to reduce costs,” Nord Gold said in a declaration.

Two other Russian gold manufacturers are furthermore improbable to support the country’s output growth: its biggest gold miner, Polyus Gold, has lately delayed the start of its key project by a year until summer 2015. Its competitor Polymetal plans to hold 2014 output flat.

Russia’s 2013 gold output was expected to increase by 6% year-on-year to 240 tonnes (7.7 million troy ounces), according to the Gold Industrialists’ amalgamation.

The union plans to prepare an approximate for the country’s 2014 gold output next month after the genuine facts and figures for last year is released, Sergei Kashuba, the head of the amalgamation, said on Thursday.