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. Last Updated: 07/27/2016

Polyus Says Output Will Stagnate Until 2009

Polyus Gold, the country's biggest gold miner, will struggle to lift output until about 2009 as it focuses on assessing new sites, chief executive Pavel Skitovich said.

Polyus, missing out on a rally in gold prices to 27-year highs, expects production to stagnate at about 1.2 million tons through next year, Skitovich said late last week. The miner is working on "20-plus" new projects and plans to triple output by 2015, he said.

Polyus needs to "change from plans to action," said Yelena Alexeyeva, an analyst at Atria Advisors, which owns Polyus stock as part of its $300 million Russian equities fund.

Polyus shares have slipped 9 percent this year, while rival Peter Hambro Mining has jumped 13 percent because the company is able to get more of its gold above ground. Polyus, which last week raised reserve estimates by 35 percent, has the world's fourth-largest deposits of gold but ranks outside the top 10 in terms of production.

Polyus, controlled by billionaires Vladimir Potanin and Mikhail Prokhorov, expects production to pick up once the Verninskoye deposit comes on line in 2009. The company may consider seeking acquisitions and joint ventures to help accelerate total output.

"We have an internal discussion in the company how to fine-tune" plans to boost output from existing mines, Skitovich said. "Whether we go to joint ventures or mergers and acquisitions, it's an open issue."

The matter has not been discussed by the board, he said.

Polyus originally sought to boost production by 2012 before changing tack at a board meeting in September. The miner set a higher target of almost 4 million ounces by 2015, which would rank the company in the world's top five.

Polyus will not start producing gold from the Natalka field, the world's third-largest deposit, until 2013.