Russian precious metals miner Polymetal expects the gold price to break above $2,000 per ounce later this year around the time of U.S. presidential elections, while its own output is set to rise due to new operations after a flat 2011.
Gold prices hit a peak above $1,920 in September last year, but have since fallen back and were around $1,660 on Thursday. The metal could face headwinds in 2012, but some analysts expect it to regain its strength and break through $2,000 at the end of this year.
Polymetal's Chief Executive Vitaly Nesis, whose company joined London's prestigious FTSE 100 index in December, agreed.
I believe gold will definitely try to break through $2,000 per ounce, closer to the end of the year as the United States (votes), Nesis said in an interview.
Nesis said he expected metals prices to remain volatile in 2012, as in 2011, but said even a sharp drop in gold and silver prices did not pose a significant risk for the miner.
I believe that the only possibility that precious metals prices decline is tied to an overall decline in commodities, and that would also lead to the depreciation of the rouble and the decline of our costs, Nesis told Reuters. So we are well protected naturally.
Polymetal expects 2012 gold output of between 590,000 and 640,000 ounces, up from 443,000 ounces last year. Silver output is expected at between 21 million and 23 million ounces this year, up from 19.9 million.
That will take total annual gold equivalent production to over 1 million ounces.
New operations being brought onstream and ramped up include the Amursk pressure oxidation (POX) facility, the first in Russia to use the POX method to recover gold from refractory ore concentrates, and Omolon, in Russia's Far East, where a winter road is now fully operational.
First gold pour at Amursk is expected in March.
Nesis said the risks to ramp-up targets were well contained.
Obviously until the POX plant is up and running we can't really say the risk is not there, but I believe it is limited. If you ask me to determine the maximum risk, it is probably a delay of 4 to 6 weeks, during the start-up or achievement of design parameters, he said. It is there, but relatively insignificant compared with the size of the company.
In the fourth quarter of 2012, the company produced 6.4 million ounces of silver, up from 3.9 million ounces. It achieved gold output of 136,000 ounces, up from 119,000 ounces in the fourth quarter of 2010.
Polymetal is one of several Russian miners that have shifted to a London listing, aiming for increased investor interest and a stronger acquisition currency, and others are waiting in the wings. Rival Polyus Gold is expected to join its peers on the FTSE 100 later this year.