DJ Polymetal International plc: Q1 2019 Production results
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Polymetal International plc (POLY) Polymetal International plc: Q1 2019 Production results 18-Apr-2019 / 09:00 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 18 April 2019 Polymetal International plc Q1 2019 production results Polymetal International plc reports record production for the first quarter ended 31 March 2019. "Strong contribution from Kyzyl and steady operational results at other mines drove a big jump in Q1 production", said Vitaly Nesis, Group CEO of Polymetal. "Kyzyl's performance demonstrates both Polymetal's project development capability and the asset's huge potential for cash flow generation". HIGHLIGHTS ? The Company's Q1 gold equivalent ("GE") production grew 27% year-on-year to 374 Koz as Kyzyl exceeded design throughput and recovery and enjoyed positive grade reconciliation. Meanwhile, a grade-driven increase in production at Omolon offset the disposals of Okhotsk and Kapan. Gold equivalent production from continuing operations was 369 Koz, up 37% year-on-year. ? Q1 gold production was up 41% over the previous year at 302 Koz, while silver production was down 15% due to the planned grade decline at the Dukat underground mine. The share of gold production increased to 81% of the Group's total output. ? Kyzyl continued to demonstrate an excellent operating performance in Q1 with flotation recoveries climbing up to 89% in March, while gold production was 78 Koz with 92 Koz produced in concentrate. ? Revenues increased 28% year-on-year to US$ 454 million, largely driven by a 41% uptick in gold sales compared to the prior year. ? Full-scale construction activities have commenced at both the Nezhda and POX-2 projects which are expected to start up in Q4 2021 and H2 2023 respectively. ? The Company is on track to produce 1.55 Moz of GE in 2019 and reiterates its full-year cost guidance: the TCC range of US$ 600-650/ GE oz while the AISC range is US$ 800-850/ GE oz. The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group's operating costs. ? We are saddened to report a fatal accident that occurred on 8 March at our Mayskoye operation. An underground development driller died following injury from the rotating part of the rig. In response, the Company decided to complete a comprehensive review of behavioural safety risks and potential mitigation approaches. ? Net debt increased 12% during the quarter to US$ 1,704 million as at 31 March 2019, primarily due to seasonal advance purchases of diesel fuel and other consumables. On the other hand, compared to 31 March 2018, the relative leverage level has improved as 8% y-o-y increase in net debt was outpaced by the growth of profitability metrics on the back of a 28% increase in revenue. Free cash flow generation in 2019 will, as is usual for Polymetal, be weighted towards the second half of the year on the back of higher production volumes and seasonal working capital drawdowns. ? As previously announced, the final dividend for 2018 of US$ 0.31 per share (approx. US$ 146 million) will be paid on 24 May 2019. ? The Company will host its annual Analyst and Investor Day on 24 April 2019 in London to provide an operating asset review and exploration update. 3 months ended Mar 31, % change1 2019 2018 Waste mined, Mt 37.6 28.8 +30% Underground 28.2 32.8 -14% development, km Ore mined, Mt 4.2 3.2 +32% Open-pit 3.2 2.0 +57% Underground 1.0 1.2 -12% Ore processed, Mt 3.4 3.1 +13% Production Gold, Koz 302 214 +41% Silver, Moz 5.1 6.0 -15% Copper, Kt 0.9 0.7 +18% Gold equivalent, 374 295 +27% Koz2 Sales Gold, Koz 291 206 +41% Silver, Moz 4.7 4.8 -4% Copper, Kt 0.4 0.3 +38% Revenue, US$m3 454 354 +28% Net debt, US$m4 1,704 1,518 +12% Safety5 LTIFR 0.24 0.15 +60% Fatalities 1 1 0% 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 31 December 2018 (5) LTIFR = lost time injury frequency rate per 200,000 hours worked. PRODUCTION BY MINE 3 months ended Mar 31, % change 2019 2018 GOLD EQ. (KOZ)1 Kyzyl 78 - NA Dukat 78 79 -1% Albazino-Amursk 81 90 -10% Omolon 53 31 69% Mayskoye 5 - NA Varvara 38 35 8% Voro 27 26 3% Svetloye 9 8 10% TOTAL (continuing 369 270 +37% operations) Okhotsk - 13 -100% Kapan 52 12 -60% TOTAL (including 374 295 +27% discontinued operations) Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios. (2) Production up to asset disposal date on 30 January 2019 CONFERENCE CALL AND WEBCAST Polymetal will hold a conference call and webcast on Thursday, 18 April 2019 at 12:30 London time (14:30 Moscow time). To participate in the call, please dial: 8 800 500 98 63 access code 95198051# (free from Russia), or +44 203 009 24 83 (free from the UK), or +1 646 722 49 12 (free from the US), or follow the link: http://polymetal180419-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://polymetal180419-live.audio-webcast.com. A recording of the call will be available immediately after the call at +44 20 3364 5147 (from within the UK), +1 646 722 4969 (USA Toll Free) and +7 495 249 16 71 (from within Russia), access code 418844238#, from 15:00 Moscow time Thursday, 18 April, till 15:00 Moscow time Thursday, 25 April, 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 Timofey Kulakov Michael Vasiliev Joint Corporate Brokers Morgan +44 20 7425 RBC +44 20 7653 4000 Stanley 8000 Europe Limited Andrew Foster Marcus Jackson Richard Brown Jamil Miah 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 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
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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 Mar 31, % change 2019 2018 MINING Waste mined, Mt 15.9 13.8 +15% Ore mined, Kt 522 74 +610% PROCESSING Ore processed, Kt 476 - NA Gold grade, g/t 6.9 - NA Gold recovery 86.8% - NA Concentrate produced, 29.8 - NA Kt Concentrate gold 96.0 - NA grade, g/t Gold in concentrate, 91.9 - NA Koz1 Concentrate shipped, 20 - NA Kt Payable gold shipped, 50.7 - NA Koz Amursk POX Concentrate 8 - NA processed, Kt Gold grade, g/t 118.3 - NA Gold recovery 94.4% - NA Gold produced, Koz 27.4 - NA TOTAL PRODUCTION Gold, Koz 78.1 - 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. For a full quarter, Kyzyl operated above its nameplate throughput capacity thanks to the relative softness of near-surface ore. Grade mined exhibited positive reconciliation versus geological model due to the presence of small high-grade ore pods and lenses. The Company launched a study to re-optimize the open pit under updated operational and economic assumptions with results, including the update Ore Reserves assessment, to be presented in Q4 2019. The average recovery rate was 86.8% with continued optimization of the circuit pointing to the potential increases going forward. The Company is evaluating targeted investments in hydrocyclones and concentrate filtering area to de-bottleneck the concentrator given better than expected ore hardness. The Chinese off-take market continues to be volatile, however the high grade of Kyzyl concentrates helps ensure steady demand for material from a variety of customers in both Eastern and Western China. DUKAT OPERATIONS 3 months ended Mar 31, % change 2019 2018 MINING Underground 15.5 14.4 +7% development, Km Ore mined, Kt 603 595 +1% PROCESSING Omsukchan concentrator Ore processed, Kt 513 484 +6% Grade Gold, g/t 0.6 0.5 +1% Silver, g/t 284 314 -10% Recovery1 Gold 86.2% 86.2% -0% Silver 87.2% 87.8% -1% Production Gold, Koz 9.2 7.3 +27% Silver, Moz 4.0 4.2 -7% Lunnoye plant Ore processed, Kt 116 113 +2% Grade Gold, g/t 1.5 1.3 +15% Silver, g/t 268 358 -25% Recovery1 Gold 86.2% 85.2% +1% Silver 90.2% 91.8% -2% Production Gold, Koz 4.7 4.0 +18% Silver, Moz 0.9 1.2 -23% TOTAL PRODUCTION Gold, Koz 13.9 11.2 +24% Silver, Moz 4.9 5.4 -10% The underground mines at Dukat, Goltsovoye and Lunnoye continued to operate at full capacity during the quarter, which translated into a slight year-on-year increase in ore mined volumes. Gold output at the Dukat hub increased 24% year-on-year to 13.9 Koz, as the Omsukchan concentrator continued to process ore from gold-rich veins at the deeper levels of Dukat and from Lunnoye. Silver output was down 10% over the previous year to 4.9 Moz as record concentrator throughput failed to offset planned grade decline at the underground mine. At Lunnoye, quarterly processing volumes remained flat, while gold production increased 18% year-on-year as higher grade material from Zone 5 was processed through the mill. Silver production on the other hand, declined 6% to 0.9 Moz with the 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 resource tonnage. This prompted a re-consideration of the previously proposed underground mining method. As a result, the start of stoping has been delayed to Q4 2019. ALBAZINO 3 months ended Mar 31, % change 2019 2018 MINING Albazino Waste mined, Mt 5.5 5.1 +8% Underground 2.3 2.4 -2% development, Km Ore mined, Kt 480 452 +6% Open-pit 362 345 +5% Underground 118 108 +9% Veduga1 Waste mined, Mt 1.7 - NA Ore mined (open-pit), 45 - NA Kt PROCESSING Albazino concentrator Ore processed, Kt 425 419 +1% Gold grade, g/t 4.4 5.3 -16% Gold recovery2 83.7% 86.5% -3% Concentrate produced, 35.6 33.9 +5% Kt Concentrate gold 44.5 57.1 -22% grade, g/t Gold in concentrate, 50.9 62.2 -18% Koz3 Amursk POX Concentrate 53 50 +6% processed, Kt Gold grade, g/t 51.6 57.2 -10% Gold recovery 95.2% 97.3% -2% Gold produced, Koz 81.3 89.9 -10% TOTAL PRODUCTION Gold, Koz 81.3 89.9 -10% Notes: (1) Based on 100% (2) To concentrate (3) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production after dore production at the Amursk POX At Albazino, gold in concentrate production fell 18% to 51 Koz on the back of lower grades and recoveries driven by more complex metallurgy and lower grade from Ekaterina-1. This, in turn, also impacted total gold output which was down 10% year-on-year at 81.3 Koz. Underground mine productivity continued to improve with ore mined up 9% year-on-year following the full transition to partially cemented waste backfill that was completed last year. Underground development at the new Ekaterina-2 underground mine is underway. Ore mining is expected to commence in Q4 2019. Once the new production areas are in production average grades through the mill are planned to increase. AMURSK POX 3 months ended Mar 31, % change 2019 2018 Concentrate processed, 61 50 +22% Kt Albazino 45 44 +2% Purchased feedstock1 3 6 -43% Veduga1 4 - NA Kyzyl 8 - NA Average gold grade, g/t 60.3 57.2 +5% Average sulphur grade 12.7% 8.2% +55% Total gold produced2, 108.7 89.9 +21% Koz Notes: (1) Included in reportable production at Albazino (2) For information only. Already accounted for in production at operating mines. Amursk POX operated at full capacity and achieved record quarterly production of 109 Koz. Increasing recoveries from low-carbon Kyzyl concentrate will be the focus of optimization initiatives for the rest of the year. OMOLON OPERATIONS 3 months ended Mar 31, % change 2019 2018 MINING Waste mined, Mt 1.3 1.0 +30% Underground 3.2 3.2 +1% development, Km Ore mined, Kt 648 385 +69% Open-pit 533 293 +82% Underground 115 92 +25% PROCESSING Birkachan Heap Leach
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