Marta Escribano of Salmon Mundi Capital presented her in-depth investment thesis on Polyus (Russia/UK: PLZL) at European Investing Summit 2020.

Thesis summary:

Polyus is the largest Russian gold miner and the fourth-largest globally. It has an outstanding portfolio of six operating mines and one project that could become one of the best gold mines in the world.

Polyus has the third-largest reserve and resource base globally, with 21 years of reserve life, which doubles the average of top ten global peers. Furthermore, the grade of the company’s reserves of 1.8 g/T is much higher than the sector average of 1.3 g/T.

Polyus is the lowest-cost producer among the majors in the industry at an all-in sustaining cost (AISC) of $574 pr ounce. Low costs allow Polyus to have one of the best EBITDA margins in the sector (67% in 2019 vs. sector average of 42%).

Polyus is increasing production in an industry in which growth is difficult to achieve. It brought into operation Natalka at the end of 2018 and could commence production at Sukhoil Log in 2026. The latter is the third-largest greenfield asset in the world, with 63 million ounces in resources, a forty-year mine life, and a grade of 2.1 g/T.

Polyus has been free cash flow positive throughout the cycle.

Listen to this session:

slide presentation audio recording

About the instructor:

Marta Escribano has been working in financial markets for more than a decade. She became principal analyst in 2013. Formerly she worked for three years in the Treasury Department of Banco Popular at the FX and fixed income desk. Before that, she had joined the Treasury of Inversis Bank and the international equity desk of Interdin as equity sales trader advising mostly Swiss and Italian clients. Since the beginning of her professional career she has been passionate about financial markets because they are global, changing and are related to human psychology. Her interest in the Austrian School of Economics began after reading “Money, Bank Credit and Economic Cycles” by Huerta de Soto. She holds a Bachelor´s Degree in Law from the Universidad Pontificia Comillas (ICADE; E-1) and a Master’s Degree in Financial Markets and Alternative Investments (MFIA). Her main hobbies are travelling around the world, reading philosophy books, officiating at triathlon events and running. She speaks Spanish, English, Italian and German.

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