DJ Polymetal International plc: Q4 and full year 2018 production results
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Polymetal International plc (POLY)
Polymetal International plc: Q4 and full year 2018 production results
31-Jan-2019 / 10:00 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Release time IMMEDIATE LSE, MOEX: POLY / ADR: AUCOY
Date 31 January 2019
Polymetal International plc
Q4 and full year 2018 production results
Polymetal International plc reports record production for the fourth quarter
and twelve months ended December 31, 2018.
"The Company had a very strong Q4. Full-year production of 1.56 Moz of gold
equivalent (GE) exceeded the original guidance for the seventh year in a
row", said Vitaly Nesis, Group CEO of Polymetal. "Successful execution at
Kyzyl and the POX debottleneck have already translated into significant
production and free cash flow generation".
HIGHLIGHTS
? The Company's Q4 production jumped 23% year-on-year to a record 497 Koz
of GE on the back of the full ramp-up at Kyzyl. FY2018 GE production of
1,562 Koz was up 9% year-on-year exceeding our original production
guidance of 1,550 Koz.
? Following a very smooth ramp-up, Kyzyl delivered a total of 96 Koz of
gold following its launch in June, well above the original 80 Koz
guidance. 2019 will be the mine's first full-year of operation at full
capacity, with targeted production of more than 300 Koz.
? In Q4 net debt fell by US $301 million to US$ 1,518 million. Strong cash
flow from seasonal de-stockpiling at Mayskoye supported first revenues
from Kyzyl as well as proceeds from the disposal of non-core assets.
? Following Board approval and the receipt of all necessary government
approvals, open-pit mining and construction have commenced at Nezhda.
First production is expected in Q4 2021.
? Polymetal had no fatalities or major accidents in Q4. Full year safety
statistics also demonstrate a meaningful improvement year-on-year.
? Based on the actual 2018 average Rouble and Tenge exchange rates against
the US dollar, the Company expects full year costs to come in close to the
bottom of the range of its initial cost guidance of US$ 650-700/GE oz for
Total Cash Costs ("TCC") and US$ 875-925/GE oz for All-in Sustaining Cash
Costs ("AISC").
? The Board has decided that there will be no special dividend for 2018 as
free cash flow will be fully distributed to shareholders through the
regular dividend at a payout ratio of 50% of underlying net income. A
final dividend for 2018 will be proposed by the Board in March 2019 based
on full-year financial results.
? The Company will host a POX workshop on 11 February 2019 in London to
provide an update on the Amursk POX-2 project and an overview of the POX
technology.
2019 OUTLOOK
? The Company reiterates its current production guidance of 1.55 Moz and
1.6 Moz of GE for 2019 and 2020, respectively. The first full year of
production at Kyzyl and an increase in grades at Omolon are expected to
offset planned grade declines at Albazino, Voro and Dukat. Traditionally,
production in both years will be weighted towards 2H due to seasonality.
? TCC in 2019 is expected to be in the range of US$ 600-650/ GE oz while
AISC is expected to average US$ 800-850/ GE oz. The anticipated decrease
in costs will primarily be driven by the increasing share of low-cost
production from Kyzyl, as well as the disposal of high-cost Kapan and
Okhotsk. The cost guidance is contingent on the Rouble/Dollar exchange
rate and Brent oil price.
? Capital expenditures in 2019 are expected to be approximately US$ 380
million, in line with the previous guidance. Nezhda and POX-2 (subject to
Board approval) will consume roughly half of the capex budget with the
second half assigned to maintenance capital, capitalised stripping and
exploration.
3 months ended % 12 months ended %
Dec 31, change1 Dec 31, change1
2018 2017 2018 2017
Waste 32.2 29.3 +10% 126.7 114.0 +11%
mined, Mt
Underground 33.2 31.5 +5% 130.0 115.4 +13%
development
, km
Ore mined, 3.8 2.9 +29% 14.0 12.6 +11%
Mt
Open-pit 2.6 1.9 +42% 9.3 8.2 +13%
Underground 1.1 1.1 +6% 4.7 4.3 +7%
Ore 3.7 3.0 +24% 15.2 13.0 +16%
processed,
Mt
Production
Gold, Koz 414 317 +31% 1,216 1,075 +13%
Silver, Moz 5.9 6.6 -11% 25.3 26.8 -6%
Copper, Kt 1.3 0.8 +65% 3.9 2.7 +43%
Zinc, Kt 1.0 1.2 -12% 5.4 4.8 +12%
Gold 497 405 +23% 1,562 1,433 +9%
equivalent,
Koz2
Sales
Gold, Koz 432 356 +21% 1,198 1,099 +9%
Silver, Moz 8.3 8.3 +0% 25.7 26.5 -3%
Copper, Kt 1.4 1.3 +11% 3.3 2.6 +30%
Zinc, Kt 1.2 1.2 -3% 5.6 4.7 +20%
Revenue, 652 586 +11% 1,882 1,815 +4%
US$m3
Net debt, 1,518 1,819 -17% 1,518 1,421 +7%
US$m4
Safety5
LTIFR 0 0.18 -100% 0.09 0.15 -40%
Fatalities 0 1 -100% 1 2 -50%
Notes: (1) % changes can be different from zero even when
absolute numbers are unchanged because of rounding.
Likewise, % changes can be equal to zero when absolute
numbers differ due to the same reason. This note applies
to all tables in this release.
(2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au
conversion ratios.
(3) Calculated based on the unaudited consolidated
management accounts.
(4) Non-IFRS measure based on unaudited consolidated
management accounts. Comparative information is presented
for 30 September 2018 (for the three months period) and
31 December 2017 (for the nine months period).
(5) LTIFR = lost time injury frequency rate per 200,000
hours worked.
PRODUCTION BY MINE
3 months % 12 months %
ended Dec 31, change ended Dec 31, change
2018 2017 2018 2017
GOLD EQ. (KOZ)1
Kyzyl 86 - NA 96 - NA
Dukat 75 81 -7% 306 322 -5%
Albazino-Amursk 67 71 -5% 308 269 +15%
Omolon 58 64 -8% 195 202 -4%
Mayskoye 70 35 +102% 117 124 -6%
Varvara 39 42 -8% 142 130 +9%
Voro 29 31 -6% 107 120 -10%
Svetloye 23 22 +7% 136 106 +28%
Okhotsk 35 48 -25% 104 111 -7%
Kapan 13 13 +6% 51 50 +3%
TOTAL 497 405 +23% 1,562 1,433 +9%
Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.
CONFERENCE CALL AND WEBCAST
Polymetal will hold a conference call and webcast on Thursday, 31 January
2019 at 9:00 London time (12:00 Moscow time).
To participate in the call, please dial:
8 800 500 98 63 access code 58246440# (free from Russia), or
+ 44 203 009 24 83 (free from the UK), or
+ 1 646 502 51 26 (free from the US), or
follow the link: http://polymetal310119-live.audio-webcast.com. Please be
prepared to introduce yourself to the moderator or register.
Webcast replay will be available on Polymetal's website
(www.polymetalinternational.com [1]) and at
http://polymetal310119-live.audio-webcast.com. A recording of the call will
be available immediately after the call at +44 20 3364 51 47 (from within
the UK), +1 646 722 49 69 (USA Toll Free) and +7 495 249 16 71 (from within
Russia), access code 418825014#, from 12:30 Moscow time Thursday, 31
January, till 12:30 Moscow time Thursday, 7 February, 2019.
Enquiries
Media Investor Relations
FTI +44 20 3727 Polymetal ir@polymetalinternational.com
Consulting 1000
Eugenia +44 20 7016 9505 (UK)
Leonid Fink Onuschenk
o
+7 812 334 3666 (Russia)
Viktor
Pomichal Michael
Vasiliev
Joint Corporate Brokers
Morgan +44 20 7425 RBC +44 20 7653 4000
Stanley 8000 Europe
Limited
Andrew
Foster Tristan
Lovegrove
Richard
Brown Marcus
Jackson
Panmure
Gordon +44 20 7886
2500
Charles
Lesser
James
Stearns
FORWARD-LOOKING STATEMENTS
THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE,
"FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS
AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS
"TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY",
"ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN
EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES,
PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING
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STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR
NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE
COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN
WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE
NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD
CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER
MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY
UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO
REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY
CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS
ARE BASED
KYZYL
3 months ended Dec % 12 months ended %
31, chang Dec 31, chang
e e
2018 2017 2018 2017
MINING
Waste mined, 16.1 12.6 +28% 60.9 48.5 +25%
Mt
Ore mined 416 - NA 1,249 - NA
(open-pit),
Kt
Gold grade, 5.5 - NA
g/t
PROCESSING
Ore 478 - NA 914 - NA
processed,
Kt
Gold grade, 6.6 - NA 5.7 - NA
g/t
Gold 85.5% - NA 81.5% - NA
recovery
Concentrate 34 - NA 56 - NA
produced, Kt
Concentrate 79 - NA 75 - NA
gold grade,
g/t
Gold in 86.4 - NA 133.6 - NA
concentrate,
Koz1
Concentrate 40 - NA 45 - NA
shipped, Kt
Payable gold 79.3 - NA 89.3 - NA
shipped, Koz
Amursk POX
Concentrate 2 - NA 2 - NA
processed,
Kt
Gold grade, 127 - NA 127 - NA
g/t
Gold 95.5% - NA 95.5% - NA
recovery
Gold 7.0 - NA 7.0 - NA
produced,
Koz
TOTAL
PRODUCTION
Gold, Koz 86.3 - NA 96.3 - NA
Note: (1) For information only; not considered as gold produced and
therefore not reflected in the table representing total production. It will
be included in total production upon shipment to off-taker or dore
production at Amursk POX.
Kyzyl delivered a robust performance in Q4, exceeding the initial plan on
grade, throughput and production. Full-year gold production came in at 96
Koz of gold while gold in concentrate amounted to 134 Koz. The
outperformance is mainly attributable to the softer nature of the rock, as
well as the presence of small high-grade ore pods.
The new railway spur was successfully commissioned on October 19th, with the
pace of railway shipments now running at full capacity.
Offtake agreements for all concentrate production for 2019 successfully
secured despite noticeable tightening of markets in China.
DUKAT OPERATIONS
3 months ended % 12 months ended %
Dec 31, chang Dec 31, chang
e e
2018 2017 2018 2017
MINING
Dukat
Waste mined, - - NA - 0.3 -100%
Mt
Underground 8.9 8.9 +1% 35.6 33.8 +5%
development,
km
Ore mined, 404 393 +3% 1,660 1,652 +0%
Kt
Open-pit - - NA - 48 -100%
Underground 404 393 +3% 1,660 1,605 +3%
Grade
Gold, g/t 0.5 0.4 +23%
Silver, g/t 274 306 -10%
Goltsovoye
Underground 1.5 1.8 -18% 6.8 6.9 -2%
development,
km
Ore mined 49 47 +5% 193 190 +1%
(underground
), Kt
Silver 321 366 -12%
grade, g/t
Lunnoye
Underground 3.7 3.3 +11% 13.5 10.3 +31%
development,
km
Ore mined 141 143 -1% 568 573 -1%
(underground
), Kt
Grade
Gold, g/t 1.6 1.4 +18%
Silver, g/t 284 334 -15%
Perevalnoye
Underground 0.9 1.0 -6% 3.6 3.2 +11%
development,
km
Ore mined 1 - NA 5 - NA
(underground
), Kt
Silver 152 - NA
grade, g/t
TOTAL HUB
Waste mined, - - NA - 0.3 -100%
Mt
Underground 15.0 15.0 +0% 59.6 54.3 +10%
development,
km
Ore mined, 595 583 +2% 2,426 2,416 +0%
Kt
Open-pit - - NA - 48 -100%
Underground 595 583 +2% 2,426 2,368 +2%
PROCESSING
Dukat
Ore 500 517 -3% 1,995 1,979 +1%
processed,
Kt
Grade
Gold, g/t 0.5 0.5 +8% 0.5 0.4 +24%
Silver, g/t 288 316 -9% 297 321 -7%
Recovery1
Gold 86.7% 86.6% +0% 86.7% 86.3% +0%
Silver 88.0% 88.4% -0% 88.2% 88.6% -0%
Production
Gold, Koz 7.0 6.5 +7% 29.5 24.2 +22%
Silver, Moz 4.0 4.5 -11% 16.4 17.7 -7%
Lunnoye
Ore 116 114 +1% 463 460 +1%
processed,
Kt
Grade
Gold, g/t 1.5 1.2 +22% 1.3 1.2 +7%
Silver, g/t 318 320 -1% 327 352 -7%
Recovery1
Gold 84.2% 87.5% -4% 85.1% 90.3% -6%
Silver 91.7% 93.3% -2% 91.3% 92.8% -2%
Production
Gold, Koz 4.6 4.0 +13% 16.7 16.8 -0%
Silver, Moz 1.1 1.1 -6% 4.4 4.8 -9%
TOTAL
PRODUCTION
Gold, Koz 11.5 10.5 +10% 46.2 41.0 +13%
Silver, Moz 5.1 5.6 -10% 20.8 22.5 -8%
Underground mines at Dukat, Goltsovoye and Lunnoye continued to operate at
full capacity during the quarter, which translated into a slight increase in
ore mined volumes year-on-year.
Q4 gold production at the Dukat hub was up 10% over the prior year period,
while full-year production was up 13% as the Omsukchan concentrator
continued to process ore from gold-rich veins at the deeper levels of Dukat
and from Lunnoye. Quarterly silver production fell 10% year-on-year, while
full-year production was down 8% on the back of planned grade declines at
the underground mine.
At Lunnoye, quarterly processing volumes remained flat, while gold
production increased by 13% year-on-year as higher grade material from Zone
5 was processed through the mill, making up for the decline in recovery
levels. Silver production on the other hand, was down 6% to 1.1 Moz, which
is mostly attributable to depletion of high-grade areas of Zone 7.
Goltsovoye mine is approaching the end of its economic life with underground
development expected to cease in Q3 2019 and ore mining to end in early
2020.
At Perevalnoye, positive exploration results led to a significant increase
in average ore body widths and reserve tonnage. This prompted a
re-consideration of the previously proposed underground mining method. As a
result, the start of stoping has been delayed and will commence in Q4 2019.
ALBAZINO-AMURSK
3 months ended Dec % 12 months ended %
31, chang Dec 31, chang
e e
2018 2017 2018 2017
MINING
Waste mined, 5.4 5.0 +8% 21.3 19.6 +9%
Mt
Underground 2.3 2.2 +8% 9.2 7.8 +19%
development,
Km
Ore mined, 412 365 +13% 1,784 1,832 -3%
Kt
Open-pit 317 295 +7% 1,379 1,512 -9%
Underground 95 70 +36% 405 320 +27%
Gold grade, 5.2 4.7 +10%
g/t
Open-pit 5.2 4.7 +12%
Underground 5.0 4.9 +0%
PROCESSING
Albazino
concentrator
Ore 432 434 NA 1,724 1,725 -0%
processed,
Kt
Gold grade, 5.6 5.1 +8% 5.3 4.9 +8%
g/t
Gold 86.2% 87.5% -1% 85.7% 87.5% -2%
recovery1
Concentrate 37.4 35.2 +6% 143.1 140.9 +2%
produced, Kt
Concentrate 55.2 54.8 +1% 54.5 52.3 +4%
gold grade,
g/t
Gold in 66.4 62.0 +7% 250.7 237.2 +6%
concentrate,
Koz2
Amursk POX
Concentrate 39 40 -3% 170 154 +11%
processed,
Kt
Gold grade, 55.2 58.6 -6% 56.9 58.3 -2%
g/t
Gold 96.2% 97.2% -1% 96.7% 96.4% +0%
recovery
Gold 67.5 71.2 -5% 307.9 268.5 +15%
produced,
Koz
TOTAL
PRODUCTION
Gold, Koz 67.5 71.2 -5% 307.9 268.5 +15%
Notes: (1) To concentrate
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