* Net profit up 42 pct, foreign exchange gains help
* Plans to launch Natalka gold deposit in 2017
* Says still working on plan to increase free float
* End-2016 net debt $3.2 bln vs $364 mln yr earlier (Adds details, context)
By Polina Devitt
MOSCOW, Feb 21 (Reuters) - Polyus Gold reported a 42 percent jump in 2016 net profit to $1.4 billion on Tuesday as Russia's largest gold producer saw higher sales and gains in foreign exchange and derivatives.
Higher sales volumes and higher gold prices powered a 20 percent rise in adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) to $1.5 billion.
Revenue rose 12 percent to $2.5 billion.
Profit excluding non-cash items was largely flat at $952 million due to higher interest payments, said the company, which is controlled by the family of Russian tycoon Suleiman Kerimov.
Polyus said it expected to produce 2.075 million to 2.125 million troy ounces of gold in 2017, topping a record 1.968 million ounces in 2016.
It said it remained on track to hit its target of at least 2.7 million ounces by 2020.
This year Polyus aims to commission its Natalka gold deposit in Russia's Far East, its main greenfield project now, the company said.
Polyus in a joint venture with state conglomerate Rostec also bought the development rights for the Sukhoi Log, one of the world's largest untapped gold deposits, for 9.4 billion roubles ($162 million) in January.
In 2016, Polyus raised a credit facility to finance a $3.4 billion buyback of shares from its controlling shareholder. Polyus net debt stood at $3.2 billion at the end of 2016, up from $364 million a year earlier.
"Polyus continued to proactively manage its debt portfolio and successfully tapped the Eurobond market twice during the last four months, placing a total amount of $1.3 billion," it said.
Its capital expenditure rose 75 percent to $468 million in 2016.
On Tuesday, the company said it was still working on a plan to increase its free-float to 10 percent, declining further comment.
Polyus has said it plans a placement of 5 percent of its shares on the Moscow Stock Exchange to meet the bourse's 10 percent free float requirement.
Polyus plans to use either existing or new shares with the funds from the placement going to the company. It has also said it would consider placing global depository receipts (GDRs) in London in the future.
Polyus shares in Moscow were flat on Tuesday versus a 0.5 percent decline in the metals and mining index.
$1 = 57.8569 roubles Reporting by Polina Devitt; editing by Katya Golubkova and Jason Neely