DJ Polymetal: Q1 2020 production results
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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To participate from other countries, please dial any of the local access
numbers listed above.
Conference code: 971224
To participate in the webcast follow the link:
https://webcasts.eqs.com/polymetal20200420 [1].
Please be prepared to introduce yourself to the moderator or register.
A recording of the call will be available at +44 207 660 0134 (from the UK),
+1 719 457 0820 (from the USA) and 8 10 800 2702 1012 (from Russia), access
code 8636392, from 17:30 Moscow time Monday, 20 April, till 17:30 Moscow
time Monday, 27 April 2020. Webcast replay will be available on Polymetal's
website (www.polymetalinternational.com [2]) and at
https://webcasts.eqs.com/polymetal20200420 [1].
About Polymetal
Polymetal International plc (together with its subsidiaries - "Polymetal",
the "Company", or the "Group") is a top-10 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
Co. Limited
Internationa
l plc
Marcus
Jackson
Andrew
Foster
Jamil
Miah
Richard
Brown
+44 20 7886
2500
Panmure
Gordon
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
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
2020 2019
MINING
Waste mined, Mt 19.2 15.9 +21%
Ore mined, Kt 523 522 +0%
PROCESSING
Ore processed, Kt 526 476 +10%
Gold grade, g/t 8.0 6.9 +17%
Gold recovery 87.2% 86.8% +0%
Concentrate produced, 35.7 29.8 +20%
Kt
Concentrate gold 101.4 96.0 +6%
grade, g/t
Gold in concentrate, 116.4 91.9 +27%
Koz1
Concentrate shipped, 20.8 19.6 +6%
Kt
Payable gold shipped, 41.3 50.7 -19%
Koz
Amursk POX
Concentrate 16 8 +100%
processed, Kt
Gold grade, g/t 135.8 118.3 +15%
Gold recovery 91.8% 94.4% -3%
Gold produced, Koz 67.2 27.4 +146%
TOTAL PRODUCTION
Gold, Koz 108.6 78.1 +39%
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.
In Q1, Kyzyl continued to demonstrate material positive grade reconciliation
- the average gold grade in ore processed grew by 17% y-o-y to 8.0 g/t, well
above the mine plan. The company expects the average grade at Kyzyl to
normalize in Q2.
POX recovery fell as more material with medium-carbon grade was diverted to
Amursk from China following COVID-related shipment delays in February.
ALBAZINO
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 4.8 5.5 -13%
Underground 3.1 2.3 +32%
development, Km
Ore mined, Kt 517 480 +8%
Open-pit 360 362 -1%
Underground 157 118 +33%
PROCESSING
Albazino concentrator
Ore processed, Kt 445 425 +5%
Gold grade, g/t 4.5 4.4 +1%
Gold recovery1 85.6% 83.7% +2%
Concentrate produced, 35.9 35.6 +1%
Kt
Concentrate gold 48.1 44.5 +8%
grade, g/t
Gold in concentrate, 55.6 50.9 +9%
Koz2
Amursk POX
Concentrate 46 53 -14%
processed, Kt
Gold grade, g/t 53.6 51.6 +4%
Gold recovery 96.4% 95.2% +1%
Gold produced, Koz 77.5 81.3 -5%
TOTAL PRODUCTION
Gold, Koz 77.5 81.3 -5%
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, gold in concentrate production was up 9% y-o-y on the back of
higher grades and recoveries. This was driven by the lower base in Q1 2019
attributable to more complex metallurgy and lower grade from Ekaterina-1.
Underground mine productivity at Albazino increased by 33% y-o-y due to
continued underground development at Olga ore zone and increased mining
fleet. The Company plans to fully ramp up underground mining at Ekaterina-2
this year.
Reported gold production for the quarter decreased by 5% y-o-y as Albazino
and third-party concentrate were supplanted by Kyzyl concentrate at the POX
plant.
AMURSK POX
3 months ended Mar 31, % change
2020 2019
Concentrate processed, 62 61 +1%
Kt
Albazino 41 45 -10%
Kyzyl 16 8 +100%
Veduga 1 4 -67%
Other1 3 3 -0%
Gold recovery 94.2% 95.0% -1%
Average gold grade, g/t 74.9 60.3 +24%
Average sulphur grade 14.2% 12.7% +12%
Total gold produced2, 144.7 108.7 +33%
Koz
Kyzyl 67.2 27.4 +146%
Albazino 59.7 66.5 -10%
Veduga 14.4 12.8 +12%
Other 3.4 2.0 +67%
Notes: (1) Purchased concentrates which are included in reportable
production in the Albazino segment.
(2) For information only. Already accounted for in production at operating
mines.
Amursk POX achieved the record quarterly throughput and gold production of
62 Kt and 145 Koz respectively on the back of larger volumes from Kyzyl.
The operation copes well with relatively high-carbon incremental material
from Kyzyl although the introduction of this off-specification feedstock led
to a moderate decrease in the recovery y-o-y.
DUKAT OPERATIONS
3 months ended Mar 31, % change
2020 2019
MINING
Underground 11.3 15.2 -26%
development, Km
Ore mined, Kt 539 603 -11%
PROCESSING
Omsukchan
concentrator
Ore processed, Kt 513 513 +0%
Grade
Gold, g/t 0.5 0.6 -15%
Silver, g/t 286 284 +1%
Recovery1
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