"The first quarter of 2016 showed a further cost reduction of 10 percent, supported by the ruble devaluation and our cost-cutting initiatives," he told CNBC on the sidelines of the St Petersburg International Economic Forum (SPIEF).
"We will strive to fight inflation and keep costs low going forward."
According to the gold miner's latest financial data for 2015, Polyus Gold's total cast cost per ounce was $424, down 28 percent from the previous year and its all-in sustaining production cost (AISC) per ounce sold was $610 per troy ounce of gold, a 26 percent reduction from the previous year. Meanwhile, Polyus' output increased 4 percent in 2015 from the previous year.
The metric of "all-in sustaining costs" or AISC was developed by the World Gold Council and launched on January 1 2014 as a way to provide further transparency into the costs associated with producing gold. AISC is an extension of existing "cash cost" metrics and incorporate costs related to sustaining production.
According to other preliminary 2015 data on the world's top 10 gold producers collated by Mining.com, its nearest rival producer in terms of cost was Australian-based Newcrest Mining with costs of $762 per troy ounce in 2015.
Nevertheless, nine out of the top 10 global gold producers had dramatically cut costs in 2015 from the year before amid a bearish gold market that had been hit by expectations of steady U.S. interest rate hikes which was serving to squeeze miners' profit margins.
Gold demand reached 1,290 tons in the first quarter of 2016, a 21 percent increase year-on-year, making it the second largest quarter on record, the World Gold Council said in May. This increase was driven by huge inflows into exchange traded funds (ETFs) – 364 tons – "fuelled by concerns around the shifting global economic and financial landscape," it said.
In addition, the safe-haven asset has benefited in 2016 from wider risk aversion in markets, a weaker dollar and the continuation of easy monetary policy and low interest rates. An ounce of gold is currently trading $1,284 as of Friday morning.
Grachev said that the price was certainly "going in the right direction." "We think that short term (the price) will be linked to monetary policy easing which is not going to finish that fast as many had predicted, hopefully rates will stay where they are for some time."
"The other side on the long-term perspective is that we see the supply diminishing so there will be a natural support for price at least at the current levels or maybe higher." He noted that South African production had fallen four times the level seen 10 years ago.