Polymetal International plc (POLY)
Polymetal: Q1 2020 production results
20-Apr-2020 / 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 20 April 2020
Polymetal International plc
Q1 2020 production results
Polymetal reports solid production results for the first quarter ended 31
March 2020
"Q1 was a strong start to the year for the Company, delivering steady
performance amidst unprecedented global disruption and uncertainty", said
Vitaly Nesis, Group CEO of Polymetal. "In light of the global COVID-19
pandemic we have been taking significant measures to keep our employees,
suppliers, contractors, and other counterparties healthy and safe, and to
maintain continuous operations. So far we have been proven to be successful
in mitigating any impact".
HIGHLIGHTS
? There were no fatal accidents during the quarter either among Polymetal
employees or at the Company's contractors. LTIFR improved by 71%
year-on-year (y-o-y) to 0.07 as only two minor injuries were recorded.
? The Company's Q1 gold equivalent ("GE") production grew by 5% y-o-y to
391 Koz as strong performance at Kyzyl, Svetloye and Varvara more than
offset planned grade declines at Omolon and Voro.
? Quarterly revenue increased by 9% y-o-y to US$ 494 million on the back
of higher gold prices. Sales volumes decreased by 7% y-o-y due to the
COVID-related slowdown of concentrate shipments to China, which have fully
normalised since early March.
? Net debt grew to US$ 1.66 billion primarily due to seasonal advance
purchases of diesel fuel and other consumables and low sales volumes. Free
cash flow generation in 2020, as seen historically, will be weighted
towards the second half of the year driven by seasonal working capital
drawdowns.
? Construction and development activities at Nezhda and POX-2 projects
progressed on schedule.
? The Company confirms its 2020 production guidance of 1.6 Moz of GE.
Management acknowledges material devaluation of Russian Rouble and Kazakh
Tenge since the beginning of the year. However, given the highly volatile
macroeconomic background, we currently maintain the full-year guidance of
US$ 650-700/GE oz for TCC and US$ 850-900/GE oz for AISC. The guidance
will be revisited along with 1H results.
? Polymetal remains committed to its dividend policy and does not intend
to change the previously announced final dividend recommendation of US$
0.42 per share or US$ 197 million in total for FY 2019, which is due to be
paid on 29 May 2020 (subject to the AGM approval on 27 April 2020). This
will take the total dividend paid for 2019 to US$ 0.82 per share or US$
385 million in aggregate.
? The Company will host its annual Analyst & Investor Day and ESG Investor
Presentation on 28 April 2020 in the format of conference call and
webcast.
COVID-19 UPDATE
Health and safety
? No cases of COVID-19 have been registered within Polymetal so far.
? Health and safety of our employees and other people is our top priority.
Strict precautionary procedures are in place at all production sites,
including daily temperature checks, regular medical surveillance and
isolation of new shifts (at remote sites). Polymetal has organised
isolated accommodation for potential placement of patients with suspicion
of COVID-19, enhanced hygiene protection in public spaces and increased
control over disinfection and sterilisation measures. Adequate medical
supplies are in place at all locations.
? Off-site offices are currently manned by skeleton crews tasked with
minimum maintenance of essential information and financial systems. Most
of the work and communication is conducted remotely from home. Personal
meetings and business trips have been cancelled.
? Polymetal has started to provide financial support for medical
institutions in all regions of operation. The Company is purchasing mobile
X-Ray and anesthetic-respiratory equipment, oxygen concentrators,
ventilators and other medical supplies for Chukotka district hospital,
Magadan regional hospital, medical facilities in Yakutsk, and 10 other
municipal hospitals in Russia and 4 in Kazakhstan.
Sales
? Sales and refining activities remain unaffected. Refineries in Russia
and Kazakhstan continue to operate normally. Concentrate shipments to
China by sea and by rail are back to regular schedule after temporary
suspension of shipments in February.
? Although the Central Bank of Russia decided to temporarily suspend gold
purchases, commercial banks in Russia continue to buy bullion. No negative
signs of demand repercussions for domestic producers are present. The
Company also maintains the ability to directly export bullion abroad.
Business continuity
? Both Russia and Kazakhstan have imposed various self-isolation
requirements that differ among regions. Continuous operations and
strategic industrial companies (including Polymetal) are allowed to
continue operating.
? In both countries, Polymetal has had no interruptions either in
production or supply chain. The vast majority of operating consumables and
spares are sourced domestically and in China.
? At Nezhda, all critical equipment has been shipped by vendors.
Installation support and start-up services can be performed by domestic
crews or remotely. Project delay risks are thus minimal.
? Should the lockdown measures in response to the COVID-19 pandemic be
tightened further, some operations and development projects remain exposed
to the actions countries have taken or may take, including:
? Ability to bring employees across the border between Russia and
Kazakhstan (materially relevant for Dukat).
? Ability to change shifts at remote sites while observing
inter-regional quarantine restrictions in Russia and Kazakhstan.
? Delivery of key equipment for the POX-2 depends on the duration of
industrial lockdowns in Belgium, Italy, and France. Project schedule may
slip if such restrictive measures continue for more than 3 to 4 months.
Liquidity and funding
? In order to further mitigate potential risks, Polymetal has proactively
secured medium-term (6 to 9 months) funding to establish a cash cushion
for a potential liquidity gap. Currently the Company has $565 million of
cash on its balance sheet and continue to maintain US$ 600+ million of
available credit lines for any additional requirements.
3 months ended Mar 31, % change1
2020 2019
Waste mined, Mt 39.9 37.6 +6%
Underground 23.1 28.2 -18%
development, km
Ore mined, Mt 3.9 4.2 -7%
Open-pit 2.9 3.2 -8%
Underground 1.0 1.0 -2%
Ore processed, Mt 3.5 3.4 +2%
Production
Gold, Koz 324 301 +8%
Silver, Moz 4.9 5.0 -1%
Gold equivalent, 391 371 +5%
Koz2
Sales
Gold, Koz 271 291 -7%
Silver, Moz 4.7 4.7 +1%
Revenue, US$m3 494 454 +9%
Net debt, US$m4 1,661 1,479 +12%
Safety
LTIFR5 0.07 0.24 -71%
Fatalities 0 1
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 2019.
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
PRODUCTION BY MINE
3 months ended Mar 31, %
change
2020 2019
GOLD EQ. (KOZ)1
Kyzyl 109 78 +39%
Albazino 78 81 -5%
Dukat 76 76 +0%
Varvara 45 38 +20%
Omolon 42 53 -20%
Svetloye 21 9 +133%
Voro 20 27 -26%
Mayskoye 0 5 -93%
TOTAL (continuing 391 367 +7%
operations)
Kapan - 52 -100%
TOTAL (including 391 371 +5%
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 Monday, 20 April 2020
at 12:00 London time (14:00 Moscow time).
To participate in the call, please dial:
From the UK:
+44 330 336 9104 (local access)
0800 358 6374 (toll free)
From the US:
+1 646 828 8195 (local access)
888 378 4398 (toll free)
From Russia:
+7 495 213 1765 (local access)
8 800 500 9271 (toll free)
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