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Despite the recent slowdown in gold jewelry demand and tapering of central bank buying, the price of gold is not expected to see major changes and substantial volatility in the medium term, said Pavel Grachev, CEO of Polyus, the third largest gold miner in the world, based in Russia.
“We still believe the factors that generated the gold rally so far continue to persist and we do not expect major variations in the gold price going forward, at least not for the next 12 months,” Grachev told Kitco News.
While the price of gold has rallied significantly this year, not many changes are to be made in the company’s operational strategy as a result of this price increase, Grachev said.
“In short, the growth in the gold price does not really contribute to our production plans,” he said.
Polyus has operations in Siberia and the Far East. Its share price has risen by 129% year to date.
“In terms of exploration and new projects, we mainly focus on organic growth. We recently developed a number of brownfield initiatives which allowed us to increase our production from 1.6 million ounces in 2014 to [2.8 million ounces] last year,” Grachev said.
Grachev said that the company has one of the lowest cost profiles amongst the major gold producers, at $400 an ounce.
“Our plan is to maintain this level going forward on the back of growing production and the continuous control of costs,” he said.
While oil prices have fallen this year, the lower energy costs have not substantially changed the cost profile of Polyus, owing to alternative sources of energy that the company has relied on.
By David Lin
For Kitco News
