Solidcore expects 2024 profit growth due to higher prices
Gold producer Solidcore, formerly known as Polymetal International, plans to increase profits in 2024 thanks to higher gold prices, CEO Vitaly Nesis said on Friday.
The Kazakhstan-based company posted a 73% year-on-year jump in adjusted EBITDA to $346 million for the first half of 2024, driven by higher sales volumes and higher gold prices.
Revenue rose 79% to $704 million and its average realized gold price was up 17%.
Gold prices powered higher on Friday, setting records, on expectations of US interest rate cuts.
“The price of gold is significantly higher this year than last year. Therefore, we expect the year-on-year dynamics in terms of profitability to be significantly positive,” Nesis told Reuters.
“…However, we also note that we expect capital costs to increase significantly year-on-year, and mainly against the backdrop of the start of active implementation of the Ertis POX” project.
“We expect positive FCF for the year”, he added, referring to free cash flow.
The company does not expect comparable results in the second half of 2024, given the impact of de-stockpiling from January to June, which is not likely to be repeated in the near future, it said in a statement.
Solidcore, the second-largest gold miner in Kazakhstan, reaffirmed its forecast to produce 475,000 gold equivalent ounces in 2024.
The company’s Russian business came under US sanctions in 2023 after Moscow sent troops into Ukraine in February 2022. The group sold its Russian assets, which represented about 70% of output and more than 50% of core earnings.
The company plans to double output to 1 million ounces of gold equivalent by 2029 through acquisitions in Central Asia and will halt dividends while pursuing that goal, it said in June.
The company confirmed planned investments of more than $1 billion in 2025-2029 focused on the Ertis POX project.
Doubling production will require significant additional investment in M&A, and the amount will become clear by the end of this year, the CEO said.
Access to Western finance remains difficult due to sanction risks, including those linked to the Moscow exchange listing, but the company is working on raising funds, including via equity, Nesis added.
Last year the company re-domiciled to Kazakhstan from Jersey, de-listed from the London Stock Exchange and listed on the Central Asian nation’s Astana International Exchange.
In June, Solidcore applied to delist from the Moscow Exchange due to US sanctions on the exchange. Delisting is expected to happen on Oct. 15.