DJ Polymetal: Q4 and full year 2020 production results
Polymetal International plc (POLY) Polymetal: Q4 and full year 2020 production results 29-Jan-2021 / 10:00 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 29 January 2021 Polymetal International plc Q4 and full year 2020 production results
Polymetal reports strong production results for the fourth quarter and twelve months ended December 31, 2020.
"2020 was a successful year for Polymetal despite the COVID pandemic. We improved our safety performance and, crucially, achieved zero fatalities. The Company beat production guidance, enjoyed record free cash flow and continued to execute development projects on schedule", said Vitaly Nesis, Group CEO of Polymetal. "In 2021, we expect first ounces from Nezhda and will make every effort to minimize the impact of the second wave of the pandemic on our safety, production, and cash flows".
HIGHLIGHTS - No fatal accidents among Group workforce or its contractors occurred in 2020 (compared with two employee fatalities
and one contractor fatality in 2019). Lost time injury frequency rate (LTIFR) among the Group's employees decreased
by 37% year-on-year (y-o-y) to 0.12. - In 2020, the Company started to use the DIS metric (days lost due to work-related injuries) as the main Health and
Safety KPI. For the full year, DIS amounted to 1,583 days, a 10% decrease compared to 2019. Polymetal will also
continue to report its LTIFR going forward. - The Company's FY2020 gold equivalent ("GE") output amounted to 1,559 Koz, a 4% increase y-o-y and 4% above the
original production guidance of 1.5 Moz. Strong contribution from Kyzyl, Varvara and Albazino offset planned grade
declines at Svetloye and Voro. Q4 GE production was roughly stable y-o-y and stood at 358 Koz. - Revenue in 2020 jumped by 28% to reach USUSD 2.9 billion while Q4 revenue was up 31% y-o-y to USUSD 0.8 billion on the
back of higher gold sales and higher metal prices. The lag between gold production and sales has been closed. - The Company expects full-year Total Cash Costs ("TCC") to be below the original guidance of USUSD 650-700/GE oz.
Sharp devaluation of domestic currencies (RUR and KZT) outweighed additional COVID-related costs and price-driven
increase in royalties. All-in Sustaining Cash Costs ("AISC") are expected to be within the guidance range of USUSD
850-900/GE oz as the Company has accelerated pre-stripping and mine fleet renewals against the backdrop of higher
commodity prices. - Polymetal generated strong quarterly free cash flow resulting in Net Debt reduction to USUSD 1.35 billion as at the
end of 2020, Net Debt/EBITDA is expected to be below 1x. For the full year, Net Debt decreased by USUSD 128 million
and the Company paid USUSD 480 million of dividends implying record annual FCF. - Construction and development activities at Nezhda and POX-2 progressed on schedule despite significant challenges
posed by COVID-related disruptions and slowdowns. At Nezhda, processing plant building was completed and most of
the key equipment installed. Ore mining is ongoing. At POX-2, the autoclave building framework, concentrate storage
facility and the majority of concrete work for desorption/electrolysis building and oxygen station were completed. - In 2020, the Board approved construction of the Voro flotation plant (start-up in Q1 2023) and Kutyn heap leach
project, a part of Albazino operations (start-up in Q2 2023). - CAPEX for the full year is expected to amount to approximately 10% higher than guidance at USUSD 590 million. The
increase is mostly related to:
- Accelerated spending across project portfolio in a bid to neutralize the impact of the pandemic on project
schedules and
- Substantial increase in capitalized stripping aimed at ensuring operational flexibility and production
stability against the backdrop of heightened epidemiological risks.
2021 OUTLOOK - The Company reiterates its current production guidance of 1.5 Moz of GE for FY2021 and 1.6 Moz of GE for FY2022. - TCC in 2021 is expected to be in the range of USUSD 700-750/GE oz. The y-o-y TCC increase will be driven by:
- Rouble and Tenge appreciation compared to average 2020 levels.
- Increasing domestic diesel fuel price driven by higher Brent oil prices.
- Above-CPI wage inflation in the mining industry.
- Full-year impact of COVID-related measures.
The guidance remains contingent on the Rouble/Dollar and Tenge/Dollar exchange rates and Brent oil price. - Capital expenditures in 2021 are expected to be approximately USUSD 560 million. A USUSD 75 million increase compared
to the previous guidance is driven by:
- Limited availability and sharp increases in construction labor costs. This factor is driven by COVID-related
travel restrictions with Central Asian countries, a traditional source of the majority of construction
workforce.
- Sharp increases in domestic diesel fuel and steel prices.
- Higher EUR/USD exchange rate (imported processing and mining equipment mainly sourced from the EU).
- Construction of on-site observatory facilities for personnel at remote sites.
As a result, AISC in 2021 is expected to average USUSD 925-975/GE oz. The Company will continue to prioritize timely project execution over cost optimization in its projects.
COVID-19 UPDATE - There were 80 active cases of COVID-19 as at 25 January 2021 across the Group. We regret to report that five of our
employees (four in 2020 and one in 2021) died of the disease or its consequences. - Epidemiological situation in the Company remains under control. Operations and development projects are unaffected
so far. - Strict precautionary procedures which were previously implemented including mandatory isolation of new arrivals and
restrictions on meetings and travel, are maintained at all production sites and offices. These restrictions are
currently expected to continue into full year of 2021. - Polymetal is prepared to start vaccination of its employees and is currently awaiting for the Russian Sputnik-V
vaccine to become broadly available. - Polymetal continues to provide varied financial and operational support to healthcare facilities across all regions
of its presence with USUSD 3.4 million spent in 2020. The main areas of assistance include purchasing PPE, medical
supplies, and specialized diagnostic equipment. - The Company estimates COVID-related cash expenses in 2021 at approximately USUSD 5 million per month with the
majority recorded as operating costs. This translates into approximately USUSD 35 per GE ounce in AISC.
COVID-19 STATISTICS AS OF 25.01.2021
Employees Russia Kazakhstan Group Tests administered 31,679 16,521 48,200 C-19 positive tests 1,120 331 1,451 Active cases 48 32 80 Died 4 1 5 In hospital 1 1 2 Hospitalised since the start of the pandemic 187 20 207 Average headcount 9,432 2,633 12,065
OPERATING HIGHLIGHTS
3 months ended Dec 31, 12 months ended Dec 31,
% change1 % change1
2020 2019 2020 2019
Waste mined, Mt 44.0 39.8 +10% 166.8 158.6 +5%
Underground development, km 22.6 25.6 -12% 90.0 105.8 -15%
Ore mined, Mt 3.54 4.21 -16% 15.76 17.22 -8%
Open-pit 2.49 3.13 -20% 11.60 13.02 -11%
Underground 1.05 1.07 -2% 4.17 4.20 -1%
Ore processed, Mt 3.7 3.5 +3% 15.4 15.0 +3%
Average GE grade processed, g/t 3.9 4.0 -3% 3.9 3.8 +2%
Production
Gold, Koz 322 312 +3% 1,402 1,316 +6%
Silver, Moz 4.4 5.2 -16% 18.8 21.6 -13%
Gold equivalent, Koz2 358 355 +1% 1,559 1,496 +4%
Sales
Gold, Koz 386 374 +3% 1,392 1,366 +2%
Silver, Moz 5.2 5.7 -9% 19.3 22.1 -13%
Revenue, USUSDm3 846 643 +31% 2,865 2,245 +28%
Net debt, USUSDm4 1,351 1,610 -16% 1,351 1,479 -9%
Safety5
LTIFR (Employees) 0.16 0.18 -11% 0.12 0.19 -37%
DIS (Employees)6 1,583 1,760 -10%
Fatalities
Employees 0 0 NA 0 2 -100%
Contractors 0 1 -100%
Average headcount 12,065 11,611 +4%
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2021 02:01 ET (07:01 GMT)
DJ Polymetal: Q4 and full year 2020 production -2-
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 120:1 Au/Ag conversion ratio (prior to Q2 2020, Polymetal used 80:1 Au/Ag ratio) and excluding base metals (previously were included). Historical comparative data restated accordingly. (3) Based on the unaudited consolidated management accounts. (4) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 30 Septemeber 2020 (for the three months period) and 31 December 2019 (for the twelth months period). (5) LTIFR = lost time injury frequency rate per 200,000 hours worked. (6) DIS - days lost due to work-related injuries.
PRODUCTION BY MINE
3 months ended Dec 31, % 12 months ended Dec 31, %
2020 2019 change 2020 2019 change
GOLD EQ. (KOZ)1
Kyzyl 67 90 -25% 382 343 +11%
Albazino 56 30 +88% 261 241 +8%
Omolon 57 54 +6% 210 196 +7%
Dukat 48 47 +2% 199 206 -3%
Varvara 28 33 -14% 159 137 +16%
Mayskoye 61 52 +16% 139 129 +8%
Svetloye 28 27 +7% 120 134 -11%
Voro 12 22 -46% 89 106 -16%
TOTAL (continuing operations) 358 355 +1% 1,559 1,493 +4%
Kapan - - NA - 3 -100%
TOTAL (including
358 355 +1% 1,559 1,496 +4%
discontinued operations)
Notes: (1) Based on 120:1 Au/Ag conversion ratio (prior to Q2 2020, Polymetal used 80:1 Au/Ag ratio) and excluding base metals (previously were included). Historical comparative data restated accordingly.
CONFERENCE CALL AND WEBCAST
Polymetal will hold a conference call and webcast on Friday, 29 January 2021 at 11:00 London time (14:00 Moscow time).
To participate in the call, please dial:
From the UK:
+44 (0) 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 10 800 2867 5011 (toll free)
To participate from other countries, please dial any of the local access numbers listed above.
Conference code: 3973919
To participate in the webcast follow the link: https://www.webcast-eqs.com/polymetal20210129.
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 3973919, from 17:30 Moscow time Friday, 29 January, till 17:30 Moscow time Friday, 5 February 2021. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at https://www.webcast-eqs.com/polymetal20210129.
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
Polymetal ir@polymetalinternational.com
FTI Consulting
Evgeny Monakhov +44 20 7887 1475 (UK)
Leonid Fink +44 20 3727 1000
Timofey Kulakov
Viktor Pomichal
Kirill Kuznetsov +7 812 334 3666 (Russia)
Joint Corporate Brokers
Morgan Stanley & Co. International plc +44 20 7425 8000
Andrew Foster
RBC Europe Limited
Richard Brown
Marcus Jackson +44 20 7653 4000
Panmure Gordon Jamil Miah
Daniel Norman
+44 20 7886 2500
John Prior
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 Dec 31, 12 months ended Dec 31,
% change % change
2020 2019 2020 2019
MINING
Waste mined, Mt 19.7 17.6 +12% 77.7 67.5 +15%
Ore mined (open-pit), Kt 486 440 +10% 2,041 2,000 +2%
Gold grade, g/t 7.2 7.4 -2%
PROCESSING
Ore processed, Kt 488 510 -4% 2,004 2,000 +0%
Gold grade, g/t 7.8 7.6 +3% 7.9 7.1 +11%
Gold recovery 88.6% 88.0% +1% 88.0% 87.8% +0%
Concentrate produced, Kt 40 35 +16% 151 125 +21%
Concentrate gold grade, g/t 83.4 98.6 -15% 92.9 100.8 -8%
Gold in concentrate, Koz1 108 110 -2% 450 404 +11%
Concentrate shipped, Kt 16 14 +18% 84 68 +25%
Payable gold shipped, Koz 28 28 -1% 160 155 +3%
Veduga ore toll processed, Kt2 61 - NA 92 - NA
Amursk POX
Concentrate processed, Kt 10 16 -42% 53 52 +3%
Gold grade, g/t 136.8 134.1 +2% 142.6 128.1 +11%
Gold recovery 91.7% 91.4% +0% 92.0% 92.4% -0%
Gold produced, Koz 39 62 -37% 222 188 +18%
TOTAL PRODUCTION
Gold, Koz 67 90 -25% 382 343 +11%
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.
(2) To be further processed at Amursk POX.
Kyzyl Q4 production was down 25% y-o-y to 67 Koz as the planned shutdown at the Amursk POX delayed some of the ounces to 2021. The Company expects continued grade normalization towards the reserve average in 2021 as mining progresses to lower levels. Veduga ore processing will be discontinued in Q1 2021.
Full-year production increased by 11% y-o-y to 382 Koz and exceeded the budget on the back of higher grades, particularly in 1H 2020.
In 2021, the Company plans to implement a debottlenecking project at the concentrator's thickening and drying sections by installing an additional belt filter, drying drum and second thickener, which will allow it to achieve 2.2 Mtpa throughput and partially compensate for the expected grade decline.
Kyzyl Ore Reserves added 2.2 Moz to reach 10.3 Moz of gold following an initial reserve estimate at East Bakyrcik in November. Mining at East Bakyrchik is expected to commence in 2031.
(MORE TO FOLLOW) Dow Jones Newswires
January 29, 2021 02:01 ET (07:01 GMT)
