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Polyus is the largest gold mining company in Russia and one of the largest in the world by reserves. Its deposits are located in Krasnoyarsk Krai, the Irkutsk and Magadan regions, and Yakutia. The shares trade on the Moscow Exchange under the ticker PLZL.
The business is simple to describe and hard to execute: the company mines ore, extracts gold from it and sells the metal at the world price. It has no control over the price at all — which means the only lever for managing profit is the cost of producing an ounce.
Here the company has a structural advantage: the gold grade of the ore at its key deposits is above the industry average, and mining is done by the open-pit method — from a pit, not an underground mine. In terms of all-in costs per ounce, Polyus consistently ranks among the lowest-cost producers in the world.
The main growth project is the development of one of the largest undeveloped gold deposits on the planet. It is capable of doubling production, but requires many years of investment before the first ounce.
Open pits and processing plants in Krasnoyarsk Krai, the Irkutsk and Magadan regions, and Yakutia.
Gold mining from alluvial deposits — historically the first line of business in the industry.
Development of a large undeveloped deposit capable of increasing production significantly.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It mines gold-bearing ore, extracts gold from it at processing plants and sells the metal. It is the largest gold miner in Russia.
Because of the quality of its deposits: the gold grade of the ore is above the industry average, and mining is done by the open-pit method — from a pit. Underground mining, all else being equal, is noticeably more expensive.
On three variables: the world gold price, the rouble exchange rate and the company's own production costs. The company does not control the first two, so competition in the industry is above all about low costs per ounce.