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Russia's Polymetal cuts 2019 gold production guidance

Polymetal International PLC cut its 2019 gold production guidance to 1.55 million ounces from 1.7 Moz as it continues to sell minor assets to focus on larger projects in Russia and Kazakhstan for long-term efficiency, London's Financial Times reported Nov. 12, citing CEO Vitaly Nesis.

The company now expects to reach 1.7 million ounces of annual gold production in 2022, with no other M&A planned until then.

The company expects to close the about US$30 million sale of the Khakanja gold project in Russia in the fourth quarter of 2019 and to close the US$55 million sale of the Kapan gold mine in Armenia to Chaarat Gold Holdings Ltd. in the first quarter of 2019.

"We are shrinking the quantity of assets and focus on quality," Nesis said. "We are not so much in need of additional funds, we have a rather strong free cash flow. But we have too many assets in the portfolio, and the management's focus gets scattered on them all."

Polymetal also expects investment in terms of dollars to drop nearly 5% in 2019 to US$365 million due to the Russian ruble weakening against the dollar.

The company expects a 5% rise in overall CapEx in 2019 as it ramps up output at the recently launched Kyzyl gold mine in Kazakhstan and works to begin production at its Nezhdaninskoye gold project in 2021.

Earlier this month, the company sold the Svetlobor platinum exploration project in Russia.