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Polymetal beats FY'16 production guidance but offset by lower silver output

Polymetal International Plc's gold equivalent production for 2016 totaled 1,269,000 ounces, beating the year's guidance of 1,260,000 ounces. The year-ago output stood at 1,267,000 ounces.

Gold production in the year rose 3% to 890,000 ounces, while silver production fell 9% to 29.2 million ounces, compared to 2015.

Sales of gold for the year increased 2% to 880,000 ounces, while silver sales declined 2% to 30.7 million ounces.

Revenue in the year increased 10% year over year to US$1.6 million, according to a Jan. 26 statement.

The company paid dividends of 37 cents per share, or US$158 million in total, during the year.

In the fourth quarter of 2016, gold equivalent output rose 21% year over year to 375,000 ounces.

Gold production in the quarter totaled 285,000 ounces, up 30% year over year, while silver production was 7.0 million ounces, down 3% from the year-ago quarter.

Revenue for the quarter jumped 34% on a yearly basis to US$524 million on the back of a 28% year-over-year jump in gold sales and a 7% increase in silver sales to 9.4 million ounces.

Polymetal reiterated its production guidance of 1.40 million gold equivalent ounces for 2017 and 1.55 million gold equivalent ounces for 2018.

The increase in production in 2017 will be driven by the Varvara, Okhotsk, ?molon and Kapan operations, which will offset the grade declines at Dukat and Voro.

Total cash costs for 2017 are expected at between US$600 per ounce and US$650 per ounce, while all-in sustaining cash costs are expected between US$775 per gold equivalent ounce and US$825 per gold equivalent ounce.

The cash cost guidance for 2016 still stands at between US$525 per ounce and US$575 per ounce, while all-in sustaining cash costs are expected between US$700 per gold equivalent ounce and US$750 per gold equivalent ounce.

The cost increase for 2017 is due to rising domestic diesel prices and strengthening of the Russian ruble on the back of oil price growth in the fourth quarter of 2016, Polymetal noted.