OREANDA-NEWS. September 21, 2011.
Financial highlights
Gold sales amounted to USD 901,752 thousand in H1 2011, up 48% compared to H1 2010 resulting from a combination of increased sales volumes and higher realised gold prices, reported the press-centre of Polyus Gold:

Sales volumes were 629 thousand troy ounces compared to 524 thousand troy ounces in H1 2010.

The weighted-average gold selling price was USD 1,433 per troy ounce, up 24%.

Total cash costs per ounce grew by 14% and 20% on a rouble and USD basis, respectively, affected mainly by growth in costs for consumables and spares, an increase in mining tax charges on the back of gold price growth as well as increased labour costs and power consumption.

EBITDA in H1 2011 was USD 398,644 thousand, an increase of 61%.

Group net cash of USD 347,669 thousand, up USD 184,861 thousand on year end as a result of strong operating cash inflow and withdrawal of funds from available-for-sale equity investments.

Production and project development
The Group’s operating units produced 611 thousand troy ounces of refined gold in H1 2011, up 21% on H1 2010, primarily the result of:

the ramp-up of production at the Blagodatnoye mine (launched in July 2010);

successful implementation of the Group’s production process optimization programme at its key production unit – the Olimpiada mine;

an upgrade of the mining fleet at the Group’s alluvial deposits; and ongoing modernization at the production facilities in Kazakhstan.

Capital expenditures increased 15% to USD 170,339 thousand, with the major investments into construction of the Blagodatnoye and Verninskoye mines, modernisation of production facilities at Olimpiada and upgrading of operating assets in Kazakhstan.

Substantial progress was made in H1 2011 in the implementation of the Verninskoye mine construction with the mine commissioning and ramp-up planned for the end of 2011, in accordance with the approved schedule. The Group is progressing the development of Natalka and in July 2011 the construction subsidiary of Polyus Gold, CJSC Polyus Stroy, prepared the project plans and the detailed budget of the first stage of the Natalka development for submission
to the Board of Polyus Gold.

Corporate update
As previously communicated, the Group has commenced preparation for a move to the Premium Listing segment of the Official List.

Successful completion of the reorganization of OJSC Polyus Gold together with KazakhGold on 25 July 2011 and subsequent launch of the OJSC Polyus Gold mandatory tender offer.

Extension until 12 October 2011 of the 1st tranche completion of the Restated and Amended Principal Agreement with AltynGroup relating to the disposal of the KazakhGold operating assets.