DJ Polymetal: Q3 2019 production results
Polymetal International plc (POLY) Polymetal: Q3 2019 production results 24-Oct-2019 / 09:00 MSK Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY Date 24 October 2019 Polymetal International plc Q3 2019 production results Polymetal reports solid production results for the third quarter and nine months ended September 30, 2019. "Continued strong performance at Kyzyl is driving our production dynamics. We now expect to exceed our full-year production guidance", said Vitaly Nesis, Group CEO of Polymetal. HIGHLIGHTS ? In Q3, the Company's gold equivalent ("GE") production grew by 7% year-on-year to 476 Koz driven by Kyzyl contributing 94 Koz. Following the successful completion of several improvement projects, Kyzyl concentrator achieved steady-state throughput of 2.0 Mtpa, 11% above the original design. ? Quarterly gold production gained 13% while silver output contracted by 20% on the back of 2018 asset disposals and planned grade decline at Dukat. ? GE production for the first nine months of 2019 increased 16% to 1,232 Koz. Polymetal is likely to exceed its full-year production guidance of 1,550 Koz by up to 50 Koz. ? Q3 revenue increased by 43% to US$ 656 million on the back of higher sales volumes and prices. The seasonal gap between production and sales has been closed. ? The Company notes cost increases from royalties driven by commodity prices yet maintains its cost guidance for 2019: TCC of US$ 600-650/GE oz and AISC of US$ 800-850/GE oz. ? Net Debt of US$ 1.7 billion as of 30 September 2019 remained largely unchanged compared to 30 June 2019. The Company generated significant free cash flow and paid a regular semi-annual dividend of US$ 94 million (US$ 0.20 per share). ? Construction and development activities at the Nezhda and the POX-2 projects continued on schedule. ? In Q3, Polymetal had its ESG ratings upgraded - MSCI ESG Ratings score improved from BBB to A, and ISS-Oekom Corporate Rating was raised to C+. Furthermore, the Company was reaffirmed as a member of the Dow Jones Sustainability Index and FTSE4Good Index Series. 3 months ended % 9 months ended % Sep 301, change2 Sep 301, change2 2019 2018 2019 2018 Waste 41.3 33.6 +23% 118.9 94.5 +26% mined, Mt Underground 25.9 31.2 -17% 80.2 96.8 -17% development , km Ore mined, 4.5 3.6 +22% 13.0 10.2 +28% Mt Open-pit 3.4 2.5 +36% 9.9 6.7 +48% Underground 1.1 1.2 -7% 3.1 3.5 -11% Ore 3.9 4.4 -12% 11.5 11.4 +1% processed, Mt Production Gold, Koz 402 356 +13% 1,005 801 +25% Silver, Moz 5.4 6.7 -20% 16.4 19.4 -16% Copper, Kt 0.6 0.9 -36% 2.0 2.5 -21% Gold 476 447 +7% 1,232 1,066 +16% equivalent, Koz3 Sales Gold, Koz 388 321 +21% 992 766 +30% Silver, Moz 6.1 5.3 +15% 16.4 17.4 -6% Copper, Kt 1.0 0.5 +109% 2.0 1.9 +5% Revenue, 656 459 +43% 1,602 1,248 +28% US$m4 Net debt, 1,702 1,700 +0% 1,702 1,518 +12% US$m5 Safety LTIFR6 0.11 0.07 +57% 0.15 0.13 +15% Fatalities 0 0 NA 2 1 +1 Notes: (1) Including discontinued operations. (2) % 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. (3) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios. (4) Calculated based on the unaudited consolidated management accounts. (5) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 30 June 2019 (for the three months period) and 31 December 2018 (for the nine months period). (6) LTIFR = lost time injury frequency rate per 200,000 hours worked. PRODUCTION BY MINE 3 months % 9 months % ended Sep 30, change ended Sep 30, change 2019 2018 2019 2018 GOLD EQ. (KOZ)1 Kyzyl 94 10 NM 253 10 NM Dukat 75 77 -2% 233 231 +1% Albazino-Amursk 75 88 -15% 211 241 -12% Omolon 49 50 -3% 148 136 +8% Mayskoye 72 47 +52% 76 47 +62% Varvara 37 37 -1% 113 103 +10% Voro 28 23 +20% 85 78 +9% Svetloye 46 59 -22% 107 112 -4% TOTAL 476 392 +21% 1,227 959 +28% (continuing operations) Okhotsk - 44 NA - 68 NA Kapan - 11 NA 5 38 NA TOTAL 476 447 +7% 1,232 1,066 +16% (including discontinued operations) Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios. CONFERENCE CALL AND WEBCAST Polymetal will hold a conference call and webcast on Thursday, 24 October 2019 at 12:00 London time (14:00 Moscow time). To participate in the call, please dial: From the UK: +44 330 336 9411 (local access) 0800 279 7204 (toll free) From the US: +1 929 477 0324 (local access) 800 458 4121 (toll free) From Russia: +7 495 646 9190 (local access) 8 10 8002 867 5011 (toll free) To participate from other countries, please dial any of the local access numbers listed above. Conference code: 2360288 To participate in the webcast follow the link: https://webcasts.eqs.com/polymetal20191024. Please be prepared to introduce yourself to the moderator or register. A recording of the call will be available immediately after the call at +44 20 7660 0134 (from the UK), +1 719 457 0820 (from the USA) and 8 10 8002 702 1012 (from Russia), access code 2360288, from 17:30 Moscow time Thursday, 24 October, till 17:30 Moscow time Thursday, 31 October, 2019. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com [1]) and at https://webcasts.eqs.com/polymetal20191024. About Polymetal Polymetal International (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is the top-20 global gold producer and top-5 global silver producer with assets in Russia and Kazakhstan. The Company combines strong growth with a robust dividend yield. Enquiries Media Investor Relations FTI +44 20 3727 Polymetal ir@polymetalinternational.com Consulting 1000 Evgeny +44 20 7887 1475 (UK) Leonid Fink Monakhov Viktor Timofey Pomichal Kulakov +7 812 334 3666 (Russia) Kirill Kuznetsov 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 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
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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 % 9 months ended Sep % Sep 30, 30, chan ge change 2019 2018 2019 2018 MINING Waste mined, 17.5 16.1 +9% 49.9 44.8 +11% Mt Ore mined 527 436 +21% 1,560 833 +87% (open-pit), Kt PROCESSING Ore 502 362 +39% 1,490 436 NM processed, Kt Gold grade, 7.5 5.1 +45% 7.0 4.7 +49% g/t Gold 88.3% 78.7% +12% 87.7% 75.3% +16% recovery Concentrate 31.4 20.4 +54% 89.7 21.7 NM produced, Kt Concentrate 104.8 69.1 +52% 101.7 67.7 +50% gold grade, g/t Gold in 105.9 45.2 +134% 293.3 47.2 NM concentrate, Koz1 Concentrate 17.2 5.4 +220% 54.2 5.4 NM shipped, Kt Payable gold 35.8 10.0 +259% 127.0 10.0 NM shipped, Koz Amursk POX Concentrate 15 - NA 35 - NA processed, Kt Gold grade, 125.9 - NA 125.3 - NA g/t Gold 91.7% - NA 92.9% - NA recovery Gold 58.2 - NA 126.5 - NA produced, Koz TOTAL PRODUCTION Gold, Koz 94.0 10.0 NM 253.5 10.0 NM 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 continued to exceed budget on throughput and grade. Gold in concentrate in Q3 was 106 Koz while payable gold production amounted to 94 Koz. Q3 is expected to be the last quarter with significant positive grade reconciliation. Starting from Q4 mining will continue beyond the near-surface area with significant high-grade lenses and the average grade will revert to open-pit reserve average. The Chinese market for refractory concentrates is continuing to tighten. In response, the Company moved to increase the share of gold contained in low-carbon concentrate processed at Amursk POX to 70% (versus 50% planned). This drove POX recoveries lower, but will ensure higher production and lower costs at Kyzyl at the expense of reducing 3rd-party concentrate processing. Following the successful completion of several improvement projects, Kyzyl concentrator achieved steady-state throughput of 2.0 Mtpa, 11% above the original design. Several initiatives are under way to evaluate pushing throughput to 2.1 Mtpa level by H2 2020. Polymetal Engineering is finalizing a FS-level technical study to re-optimize the open pit under updated operational and economic assumptions. The results, including the updated Ore Reserves estimate, will be presented on November 11 at the Analyst and Investor Day. DUKAT OPERATIONS 3 months ended % 9 months ended Sep % Sep 30, chang 30, e change 2019 2018 2019 2018 MINING Underground 15.0 14.9 +1% 45.0 44.5 +1% development, km Ore mined, 642 610 +5% 1,894 1,831 +3% Kt PROCESSING Omsukchan concentrator Ore 506 500 +1% 1,535 1,496 +3% processed, Kt Grade Gold, g/t 0.5 0.6 -15% 0.5 0.6 -5% Silver, g/t 282 296 -5% 291 300 -3% Recovery1 Gold 86.7% 87.0% -0% 86.1% 86.8% -1% Silver 86.8% 88.6% -2% 86.8% 88.2% -2% Production Gold, Koz 7.2 8.2 -13% 21.6 22.5 -4% Silver, Moz 3.9 4.0 -4% 12.1 12.4 -2% Lunnoye plant Ore 116 120 -3% 348 347 +0% processed, Kt Grade Gold, g/t 1.4 1.4 +1% 1.4 1.3 +9% Silver, g/t 241 310 -22% 258 330 -22% Recovery1 Gold 91.4% 85.7% +7% 87.6% 85.4% +3% Silver 94.5% 91.4% +3% 91.5% 91.1% +0% Production Gold, Koz 4.9 4.6 +6% 14.0 12.2 +15% Silver, Moz 0.9 1.1 -20% 2.7 3.3 -19% TOTAL PRODUCTION Gold, Koz 12.0 12.8 -6% 35.6 34.7 +3% Silver, Moz 4.7 5.1 -8% 14.8 15.7 -6% Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory. At Dukat, quarterly silver and gold production were down 8% and 6% year-on-year respectively. The decline was driven by the Omsukchan concentrator processing larger volumes of lower-grade ore as well as by planned reduction in silver grade at Lunnoye mostly attributable to the depletion of higher-grade Zone 9. Given the significant increase in the silver price, management is evaluating the postponement of the mine closure at Goltsovoye by bringing marginal stopes and areas into production. Such a development will enable full utilization of the Dukat concentrator in 2020. ALBAZINO 3 months ended Sep % 9 months ended Sep % 30, chang 30, chang e e 2019 2018 2019 2018 MINING Albazino Waste mined, 5.7 5.5 +4% 16.8 16.0 +5% Mt Underground 2.9 2.2 +28% 7.7 6.9 +12% development, Km Ore mined, 571 442 +29% 1,596 1,372 +16% Kt Open-pit 418 348 +20% 1,184 1,062 +11% Underground 153 94 +62% 412 310 +33% PROCESSING Albazino concentrator Ore 447 431 +4% 1,303 1,291 +1% processed, Kt Gold grade, 4.8 5.4 -11% 4.4 5.2 -15% g/t Gold 86.9% 84.9% +2% 85.9% 84.5% +2% recovery1 Concentrate 36.8 36.8 -0% 106.0 105.7 +0% produced, Kt Concentrate 51.0 54.1 -6% 46.6 54.3 -14% gold grade, g/t Gold in 60.3 64.0 -6% 158.9 184.3 -14% concentrate, Koz2 Amursk POX Concentrate 45 49 -8% 135 131 +3% processed, Kt Gold grade, 51.2 56.1 -9% 50.5 57.3 -12% g/t Gold 96.5% 96.6% -0% 95.2% 96.9% -2% recovery Gold 74.7 87.6 -15% 211.1 240.4 -12% produced, Koz TOTAL PRODUCTION Gold, Koz 74.7 87.6 -15% 211.1 240.4 -12% Notes: (1) To concentrate. (2) 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, production dynamics continued to be affected by lower-grade ore from the Ekaterina-1 open pit. Quarterly production of gold in concentrate decreased by 6% year-on-year. However, a 62% jump in underground ore mined ensured positive quarter-on-quarter grade dynamics despite challenging ground conditions thanks to careful customization of mining methods to specific stope conditions. AMURSK POX 3 months ended % 9 months ended % Sep 30, change Sep 30, change 2019 2018 2019 2018 Concentrate 60 49 +22% 171 131 +30% processed, Kt Albazino 41 44 -6% 122 115 +6% Kyzyl 15 - NA 35 - NA Mayskoye - 1 -100% - 1 -100% Other1 3 5 -27% 13 16 -17% Gold 94.3% 96.6% -2% 94.3% 96.9% -3% recovery Average gold 70.3 56.1 +25% 66.0 57.3 +15% grade, g/t Average 12.5% 9.3% +34% 12.8% 8.7% +47% sulphur grade Total gold 132.9 87.6 +52% 337.5 240.4 +40% produced2, Koz Albazino 62.5 72.2 -13% 178.5 202.7 -12% Kyzyl 58.2 - NA 126.5 - NA Other1 12.2 15.4 -21% 32.6 37.7 -14% Notes: (1) Veduga and purchased concentrates which are included in reportable production in the Albazino segment. (2) For information only. Already accounted for in production at operating mines. Q3 gold production at the Amursk POX increased by 52% year-on-year driven by the introduction of high-grade Kyzyl concentrate to the feed. By implementing tight feed management procedures, the POX team managed to increase the recovery ratio in comparison with the previous quarter and stabilize it at the level above 94%. In Q2, the beginning of processing of large quantities of Kyzyl concentrate had significantly changed the operating parameters and led to a decline in recoveries. Increased volumes of high-grade low-carbon Kyzyl concentrate displaced 3rd
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