DJ Polymetal: Report on payments to governments for the year 2019
Polymetal International plc (POLY)
Polymetal: Report on payments to governments for the year 2019
15-Jun-2020 / 09:00 MSK
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Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY
Date 15 June 2020
Polymetal International plc
Report on payments to governments for the year 2019
Polymetal issues the report on payments to government for the year ended 31 December 2019.
INTRODUCTION
This Report provides an overview of the payments to governments made by Polymetal
International plc and its subsidiary undertakings (hereinafter referred to as "Polymetal")
for the year 2019 as required under the UK's Report on Payments to Governments Regulations
2014 (as amended in December 2015). These UK Regulations enact domestic rules in line with
Directive 2013/34/EU (the EU Accounting Directive (2013)) and apply to large extractive
companies, whose securities are publicly listed on a UK-regulated stock market, that are
involved in the exploration, prospection, discovery, development and extraction of minerals,
oil, natural gas deposits or other materials. This Report is also intended to satisfy the
requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in
the United Kingdom.
BASIS OF PREPARATION
Legislation
This report is prepared in accordance with The Reports on Payments to Governments Regulations
2014 as enacted in the UK in December 2014 and as amended in December 2015.
Reporting entities
This Report includes payments to governments made by Polymetal. Payments made by entities
over which Polymetal has joint control or significant influence are excluded from this
Report.
Activities
Payments made by Polymetal to governments arising from activities involving the exploration,
prospection, discovery, development and extraction of minerals are disclosed in this Report.
It excludes payments related to refining activities made to the refineries owned by the
government agencies and any payments which are not directly attributable to the production
and exploration activities.
Government
Government includes any national, regional or local authority of a country, and includes a
department, agency or entity that is a subsidiary of a government.
Project
Payments are reported at project level except that payments that are not attributable to a
specific project are reported at legal entity level. Project is defined as operational
activities which are governed by a single contract, or licence agreement, and form the basis
for payment liabilities with a government. If such agreements are substantially
interconnected, those agreements are to be treated as a single project.
"Substantially interconnected" means forming a set of operationally and geographically
integrated contracts, or licence agreements that are signed with a government giving rise to
payment liabilities. Indicators of integration include, but are not limited to, geographic
proximity, the use of shared infrastructure and common operational management.
License agreements are aggregated for the purposes of reporting as a single project only when
those legal agreements have substantially similar terms and are both geographically and
operationally integrated.
Payments
The information is reported under the following payment types:
Income taxes
These are taxes paid by Polymetal on its income and profits in accordance with legislation
enacted in the applicable jurisdiction. Payments are reported net of refunds. Value added
tax, personal income taxes, social taxes, property taxes are excluded.
The maximum income tax in Russia is set at 20% and is allocated between federal budget and
the budgets of the relevant constituent regions. In 2019 and 2018 the following proportion
was applied: 3% to the federal budget, whereas 17% allocated to the regional budgets. From 1
January 2017 Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the
decreased statutory income tax rate of 17% for the operations held in the Special Economic
Zone of the Russian Far East, as well as decreased mining tax rate (paying at 60% of the
standard mining tax rates). In return for obtaining this tax relief the members of the
regional free economic zone are obliged to invest 50% of their tax savings each year in the
Special Economic Zone Development Program. From 1 January 2017 Svetloye LLC has received tax
relief as Regional Investment Project and is entitled to the statutory income tax rate of 0%
up to 2021, as well as decreased Mining tax rates.
In Kazakhstan and Armenia income taxes are set at 20% and there are no regional or local
income taxes in these countries.
Mining tax
Mining tax is a royalty payable in Russian Federation, Kazakhstan and Armenia, which is
calculated based on the value of the precious metals extracted in the period. This value is
usually determined based on the realised selling price of precious metals or, in case if
there were no sales during the period, cost of production of metals extracted (Russian
Federation) or the average market price (Kazakhstan) during the period. Royalty payable in
Armenia is calculated as a percentage of actual sales during the reporting period.
Mining tax in Russia is levied at federal level, and then is reallocated between federal and
respective regional budgets based on the following proportion: 40% of total tax collected to
the federal budget, 60% to regional budgets. Mining tax and royalties in Kazakhstan and
Armenia are levied at republican level.
Licence fees
These are fees and other sums paid as consideration for acquiring a licence for gaining
access to an area where extractive activities are performed. Administrative government fees
that are not specifically related to the extractive sector, or to access to extractive
resources, are excluded. No significant licence fees individually more than 86,000 GBP were
paid during the year ended 31 December 2019.
Rental fees
The land in the Russian Federation and Kazakhstan on which the Group's production facilities
are located is owned by the state. The Group leases this land through operating lease
agreements.
Other payments
Other payments include payments made and social commitments in accordance with subsoil
contracts attributable to the Kyzyl project and investment in the Special Economic Zone
Development Program of Omolon Gold Mining Company LLC and Magadan Silver JSC.
Cash and in-kind payments
Payments are reported on cash basis. No in-kind payments were made during years ended 31
December 2019 and 31 December 2018.
Materiality Level
Any payment, whether made as a single payment or as a series of related payments, below GBP
86,000 within a financial year is excluded from this Report.
Payments made to a governments by a joint ventures or associates of the Group in proportion
to the company's interest in the respective venture or associate are insignificant to this
Report based on materiality level set.
Exchange Rate
Relevant payments are made by Polymetal in Russian Rubles, Kazakh Tenge and Armenian Dram and
for the purpose of this Report are translated to the US Dollar based on the foreign exchange
rate at the relevant monthly average rate.
PAYMENTS PER GOVERNMENT
FOR THE YEAR 2019
Government Income Mining Rental Licence Other1 Total
tax fees
000'$ tax fees
Russia 84,619 70,396 2,727 29 12,235 170,0
06
Kazakhstan 19,057 45,326 44 - 8,016 72,44
3
Total 103,67 115,72 2,771 29 20,251 242,4
6 2 49
PAYMENTS PER
PROJECT1
Entity Project Country/ Region Income Mining Rental Licence Other1 Total
Government tax fees
000'$ tax fees
Gold of Northern Voro Russia Svedlovskaya 26,568 9,101 103 - 46 35,81
Urals CJSC oblast' 8
Svetloye LLC Svetloye Russia Khabarovskiy - 2,189 348 5 48 2,590
Kray
Magadan Silver Dukat Russia Magadanskaya 27,962 15,881 747 2 7,970 52,56
JSC oblast' 2
Mayskoye Gold Mayskoye Russia Chukotka - 12,380 71 11 20 12,48
Mining Company Autonomous 2
LLC Okrug
Omolon Gold Omolon Russia Magadanskaya 11,390 10,450 319 4 3,825 25,98
Mining Company oblast' 8
LLC
Albazino Albazino Russia Khabarovskiy 16,007 18,940 608 7 239 35,80
Resources Ltd Kray 1
GRK Amikan LLC Veduga Russia Krasnoyarskiy 2,692 1,455 265 - 23 4,435
Kray
South-Verkhoyansk Nezhda Russia Yakutia - - 266 - 64 330
Mining Company
JSC
Varvarinskoye JSC Varvara Kazakhstan n/a 15,528 3,791 11 - 556 19,88
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6
Komarovskoye Komar Kazakhstan n/a 3,076 7,483 - - - 10,55
Mining Company 9
LLC
Bakyrchik Mining Kyzyl Kazakhstan n/a 450 34,052 30 - 7,435 41,96
Venture LLC 7
Inter Gold Kazakhstan n/a - - 3 - 25 31
Capital LLC
Total 103,67 115,72 2,771 29 20,251 242,4
6 2 49
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 3,522 for Omolon
Gold Mining Company LLC and kUS$ 7,945 for Magadan Silver JSC.
PAYMENTS PER
GOVERNMENT
FOR THE YEAR
2018
Government Income Mining Rental Licence Other1 Total
tax fees
000'$ tax fees
Russia 94,652 68,408 2,161 130 9,643 174,9
94
Kazakhstan 9,611 15,898 60 - 5,425 30,99
4
Armenia 388 13,241 228 - 12 13,86
9
Total 104,65 97,547 2,449 130 15,080 219,8
1 57
PAYMENTS PER
PROJECT1
Entity Project Country/ Region Income Mining Rental Licence Other1 Total
Government tax fees
000'$ tax fees
Gold of Voro Russia Svedlovskaya 25,962 8,180 83 - 79 34,30
Northern oblast' 4
Urals CJSC
Okhotskaya Okhotsk Russia Khabarovskiy 8,328 5,751 301 34 42 14,45
Mining and Kray 6
Exploration
Company LLC
Svetloye LLC Svetloye Russia Khabarovskiy - 290 3 33 326
Kray
Magadan Dukat Russia Magadanskaya 34,420 14,527 604 45 5,111 54,70
Silver JSC oblast' 7
Mayskoye Gold Mayskoye Russia Chukotka 12,322 6 25 12,35
Mining Autonomous 3
Company LLC Okrug
Omolon Gold Omolon Russia Magadanskaya 6,929 8,603 403 31 4,230 20,19
Mining oblast' 6
Company LLC
Albazino Albazino Russia Khabarovskiy 19,013 19,025 474 17 123 38,65
Resources Ltd Kray 2
Varvarinskoye Varvara Kazakhstan n/a 4,701 2,370 11 - 444 7,526
JSC
Komarovskoye Komar Kazakhstan n/a 3,004 5,333 11 - 467 8,815
Mining
Company LLC
Bakyrchik Kyzyl Kazakhstan n/a 1,906 8,195 34 - 4,489 14,62
Mining 4
Venture LLC
Inter Gold Kazakhstan n/a - - 4 - 25 29
Capital LLC
Kapan MPC Kapan Armenia n/a 388 13,241 228 - 12 13,86
CJSC 9
Total 104,65 97,547 2,449 130 15,080 219,8
1 57
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 4,172 for Omolon
Gold Mining Company LLC and kUS$ 4,979 for Magadan Silver JSC.
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
Panmure
Gordon
+44 20 7886
2500
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.
ISIN: JE00B6T5S470
Category Code: PGR
TIDM: POLY
Sequence No.: 69654
EQS News ID: 1069471
End of Announcement EQS News Service
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