Polyus is a gold mining company. It is the largest gold producer in Russia, one of the TOP-10 gold mining companies in the world. The main assets are located in Eastern Siberia and the Far East. In 2020 the company produced 2.8 million ounces of gold. Only Newmont, Barrick and Anglogold produced more. Polyus has 104 tons of gold reserves, more than any other company.
The company is headquartered in Moscow and was founded in 1921.
It is a large-cap company with a market capitalization of $21.8 billion. Over the past 4 years, revenue has grown 1.7 times, profit 5.4 times, and free cash flow 3.2 times. Such a strong growth is due to an increase in the price of an ounce and an increase in gold production i Polyus itself.
Multipliers:
P/E 9.3 (current average for competitors 26.3)
P/B 8 (industry average 4.2)
P/S 4.6 (industry average 4.6)
P/FCF 10.4 (industry average 22.5)
Debt of $3.6 billion with current operating cash flow of $3.1 billion
Dividends 5.5% per annum
Share Price: $81
The discounted cash flow model shows a fair price of $111.
Simply Wall Street values the company at $68.
Speaking of Polyus, it is important to note the gross profit which is 68%. The average among 47 gold mining companies is only 27%. The net margin is 47%, while the industry average is only 8%. This means that the gold goes to Polyus almost free of charge, compared to other companies. And this gives Polyus a huge advantage over other competitors.
It should also be mentioned that the company has had a huge debt since 2017 at 508% debt/equity. But the management did a good job of reducing the debt burden, and the company entered the rate hike cycle with 117% debt/equity. It’s a lot, but not for Polyus with its cash flow.

Shares are trading below the 20, 50 and 200 day averages. This is facilitated by the fall of the Russian market due to geopolitical risks. It would be good to build long-term positions in the $70 area and below, but only the FRF can help this scenario if it raises the rate quickly and sharply.
Conclusion: Polyus has an excellent high-margin business and a good financial situation. However, its profits and dividends are directly dependent on gold prices. Moreover, the Polyus chart is very similar to the price of an ounce chart. And an ounce, in turn, is highly dependent on FRF rates: the higher it is, the lower gold. Therefore, in theory, during the rate hike cycle, Polyus’s share price will be under pressure. However, firstly, the company pays large and safe dividends (bars pay nothing), and secondly, production will increase significantly in 2025 with the launch of Sukhoi Log. This will add another 1.6-1.8 million ounces of annual production, and Polyus will become one of the top three gold miners in the world.
The average P/E of Polyus over the past 5 years is 13. So the current company is still trading below average.