Polymetal's profit dropped in the first half of the year as a strong Russian rouble pushed costs higher.
The FTSE 250 company's revenue rose 15 per cent from the previous year to $683m, driven by production growth. Gold sales increased 19 per cent compared with the year before while silver sales dropped five per cent.
Polymetal's stock rose 3.75 per cent to 981p in morning trading in line with gold producers Randgold Resources and Fresnillo as the price of gold shot up to a near-10-month high.
The Russian gold miner's net debt increased to $1.6bn during the period as it pulled out the stops on capital expenditure. The firm said it reached peak spending on its Kyzyl project as it funded intensive construction activities in the first half.
Free cash flow generation is expected to be skewed towards the second half as Polymetal is anticipating higher production and a seasonal working capital drawdown.
Polymetal, which has mines in Russia, Kazakhstan and Armenia, fell out of the FTSE 100 index in 2013.
Vitaly Nesis, chief executive of Polymetal, said:
Our stable operational results in the first half of the year largely offset the negative impact of a stronger Russian rouble on our financial performance while free cash flow declined, as expected, primarily due to the peak capex required to advance the Kyzyl project.
We expect stronger production, lower costs and materially higher cash flow generation in the second half of the year.