DJ Polymetal: Q1 2022 production results and guidance update
Polymetal International plc (POLY) Polymetal: Q1 2022 production results and guidance update 25-Apr-2022 / 09:00 MSK Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY Date 25 April 2022 Polymetal International plc Q1 2022 production results and guidance update
Polymetal reports solid production results for the first quarter of 2022 and updated production and cost guidance.
"Devastating war in Ukraine and immense sanctions put tremendous pressure on Polymetal in Q1. The Company continues to operate safely and profitably and is fully focused on ensuring business continuity and long-term viability. It is with these objectives in mind that the Board was forced to postpone dividend decision and rationalize investment plans", said Vitaly Nesis, Group CEO of Polymetal. "The Board and management continue to actively explore options to adjust company asset ownership structure to preserve shareholder value and address the needs of other stakeholders".
HIGHLIGHTS
-- No fatal accidents occurred among Group workforce and contractors in Q1 2022. Lost time injury frequencyrate (LTIFR) among the Group's employees stood at 0.10, a 60% decrease over Q1 2021 as there were three incidentsrecorded (seven in Q1 2021) resulting in minor lost-time injuries.
-- The Company reconfirms its FY 2022 production guidance of 1.7 Moz GE (1.2 Moz in Russia, 0.5 Moz inKazakhstan).
-- Q1 gold equivalent production ("GE") decreased by 6% year-on-year (y-o-y) to 372 Koz as planned gradedecline at Albazino and Svetloye more than offset first material contribution from Nezhda. Sales were lower by 50Koz primarily due to concentrate inventory accumulation at Nezhda and Kyzyl.
-- Revenue for the quarter grew by 4% y-o-y to USUSD 616 million underpinned by higher gold prices and on theback of large historical sales/production gap in Q1 2021.
-- Net debt rose to roughly USUSD 2.0 billion on the back of higher working capital needs. The Company movedswiftly to increase stocks of critical consumables and spares to address supply chain issues related to sanctions.Seasonal concentrate inventory accumulation and the need to blend materials to comply with Chinese importrestrictions on arsenic also played a role.
-- The Company revises its Total cash cost (TCC) guidance to USUSD 850-950/GE oz (USUSD 950-1,050/GE oz inRussia and USUSD 700-800/oz in Kazakhstan) compared with the previous guidance range of USUSD 850-900/GE oz. AISCguidance is revised to USUSD 1,200-1,300/GE oz (USUSD 1,350-1,450/GE oz in Russia and USUSD 900-1,000/oz in Kazakhstan)compared with the previous guidance range of USUSD 1,100-1,200/ GE oz. Cost increases predominantly relate to variousimpacts of economic sanctions against Russia including domestic inflation, sharp escalation of logistical costs andthe need to shift to suboptimal supply sources.
-- POX-2 is likely to experience a 6-month slippage from the original schedule mostly due to supply chainchallenges and now is expected to start production in Q2 2024. All other major projects (Kutyn, Prognoz, Uralsflotation) are in the advanced stage of construction and will be continued according to the original plans.
-- Following a thorough project review, the Company suspended indefinitely its Pacific POX project and iscurrently evaluating options to re-site the facility in Kazakhstan. Commencement of Veduga construction as well asa number of other smaller scale projects have also been delayed by 12-18 months. CAPEX guidance for the full-year2022 is therefore revised to USUSD 650 million (USUSD 580 million in Russia and USUSD 70 million in Kazakhstan)reflecting both shrinking investment scope and inflationary pressures.
-- Medium-term production guidance now stands at: 1.65 Moz for 2023, 1.7 Moz for 2024, 1.7 Moz for 2025, 1.8Moz for 2026.
-- The decision on 2021 final dividend was postponed until August 2022 as reported earlier.
-- The Company will host its virtual Analyst & Investor Day today at 11:00 London time (13:00 Moscow time).Please follow the link to join https://www.webcast-eqs.com/polymetal20220425.
OPERATING HIGHLIGHTS
3 months ended Mar 31,
% change1
2022 2021
Waste mined, Mt 55.0 45.4 +21%
Underground development, km 23.9 23.0 +4%
Ore mined, Mt 4.3 3.8 +14%
Open-pit 3.3 2.8 +18%
Underground 1.0 1.0 +4%
Ore processed, Mt 4.1 3.6 +13%
Average GE grade processed, g/t 3.5 4.0 -13%
Production
Gold, Koz 315 337 -6%
Silver, Moz 4.5 4.6 -2%
Gold equivalent, Koz2 372 394 -6%
Sales
Gold, Koz 268 280 -4%
Silver, Moz 4.4 3.7 +17%
Revenue, USUSDm3 616 593 +4%
Net debt, USUSDm4 1,978 1,647 +20%
Safety
LTIFR (Employees)5 0.10 0.25 -60%
Fatalities 0 0 NA
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 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously).
(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 2021.
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
PRODUCTION BY MINE
3 months ended Mar 31, %
2022 2021 change
GOLD EQ. (KOZ)1
Kyzyl 82 89 -8%
Dukat 66 66 -1%
Varvara 57 60 -4%
Albazino 56 77 -27%
Omolon 40 47 -16%
Nezhda 30 - NA
Voro 20 22 -10%
Svetloye 19 27 -30%
Mayskoye 3 6 -55%
TOTAL 372 394 -6%
Notes: (1) Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly 120:1 Au/Ag conversion ratio was used).
CONFERENCE CALL AND WEBCAST
The management will discuss Q1 production results during the Analyst & Investor Day today at 11:00 London time (13:00 Moscow time). Please follow the link to join https://www.webcast-eqs.com/polymetal20220425.
Enquiries
Investor Relations Polymetal ir@polymetalinternational.com Evgeny Monakhov +44 20 7887 1475 (UK) Timofey Kulakov Kirill Kuznetsov +7 812 334 3666 (Russia)
Forward-looking statements
DUE TO THE RECENT MASSIVE DDOS ATTACKS, OUR WEBSITE MAY BE TEMPORARILY UNAVAILABLE, THOUGH WE WILL CONTINUE DISTRIBUTION AND PUBLISHING ALL OUR ANNOUNCEMENTS THERE. THEY WILL BE FULLY AVAILABLE WHEN THE SITE RETURNS TO NORMAL OPERATION.
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
2022 2021
MINING
Waste mined, Mt 20.7 20.2 +2%
Ore mined (open-pit), Kt 584 556 +5%
PROCESSING
Ore processed, Kt 551 563 -2%
Gold grade, g/t 4.8 6.0 -20%
Gold recovery 87.7% 88.8% -1%
Gold in concentrate, Koz1 73 96 -24%
Concentrate shipped, Kt 10.8 27.0 -60%
Payable gold shipped, Koz 20 46 -57%
Amursk POX
Concentrate processed, Kt 14 12 +13%
Gold recovery 94.6% 92.4% +2%
Gold produced, Koz 62 43 +44%
TOTAL PRODUCTION
Gold, Koz 82 89 -8%
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.
In Q1, gold production at Kyzyl contracted by 8% as the mining was focused on the eastern part of the pit with lower grade (where historical underground workings are located), and due to concentrate stockpiling to form batches with sufficiently low arsenic content to be shipped to China. The inventory is expected to be drawn down in the following quarters.
DUKAT OPERATIONS
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 0.9 0.4 +122%
Underground development, km 11.6 11.7 -1%
Ore mined, Kt 633 645 -2%
Open-pit 107 104 +3%
Underground 527 542 -3%
PROCESSING
Omsukchan concentrator
Ore processed, Kt 515 513 +1%
Grade
Gold, g/t 0.7 0.5 +42%
Silver, g/t 249 252 -1%
Recovery1
Gold 83.7% 83.2% +1%
Silver 84.9% 86.8% -2%
Production
Gold, Koz 9 6 +42%
Silver, Moz 3.4 3.5 -4%
Lunnoye plant
Ore processed, Kt 115 116 -0%
Grade
Gold, g/t 1.9 1.5 +28%
Silver, g/t 185 252 -27%
Recovery1
Gold 91.5% 91.7% -0%
Silver 92.7% 92.2% +1%
Production
Gold, Koz 6 5 +26%
Silver, Moz 0.7 0.9 -24%
TOTAL PRODUCTION
Gold, Koz 15 11 +35%
Silver, Moz 4.0 4.4 -8%
Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory.
Dukat Q1 gold production was above the plan as the Company reached high-grade ore blocks at the Dukat mine. Silver output was lower in line with the budget.
At Primorskoye, the Company will be stockpiling ore to ship it by sea to customers during the navigation period in H2 2022.
Waste mined jumped y-o-y due to mining of crown pillar at the Dukat open pit.
VARVARA
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 11.0 9.5 +16%
Ore mined, Kt 957 1,056 -9%
PROCESSING
Leaching
Ore processed, Kt 769 764 +1%
Gold grade, g/t 1.7 1.7 +1%
Gold recovery1 89.6% 86.4% +4%
Gold production (in dore), Koz 45 46 -2%
Flotation
Ore processed, Kt 179 190 -6%
Gold grade, g/t 2.8 2.5 +12%
Recovery1 88.5% 84.6% +5%
Gold in concentrate, Koz 11 13 -14%
TOTAL PRODUCTION
Gold, Koz 57 60 -4%
Note: (1) Technological recovery, includes gold and copper within work-in-progress inventory. Does not include toll-treated ore.
At Varvara, gold recovery at the leaching circuit improved by 4 p.p. y-o-y following flowsheet improvements. At the flotation plant, grade and recoveries increased driven by larger volumes and better quality of third-party ore.
Mine's gold production contracted y-o-y on the back of high base of Q1 2021 when significant work-in-progress was released.
ALBAZINO
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 7.2 5.1 +41%
Underground development, km 4.6 3.3 +40%
Ore mined, Kt 772 495 +56%
Open-pit 569 308 +85%
Underground 203 187 +9%
PROCESSING
Albazino concentrator
Ore processed, Kt 453 427 +6%
Gold grade, g/t 3.2 4.3 -25%
Gold recovery1 86.7% 88.7% -2%
Gold in concentrate, Koz2 41 52 -22%
Amursk POX
Concentrate processed, Kt 43.2 48.3 -11%
Gold grade, g/t 44.3 52.8 -16%
Gold recovery 96.5% 96.5% -0%
Gold produced, Koz 56 77 -28%
TOTAL PRODUCTION
Gold, Koz 56 77 -28%
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 decreased by 28% y-o-y on the back of depletion of high-grade Anfisa pit as well as negative recovery rate dynamics attributable to the increase of share of oxidised ore from Ekaterina mine.
Waste and ore mining volumes were higher driven by Kutyn and Farida development. Underground development advanced due to ramping-up of Ekaterina and Anfisa underground mines.
Kutyn construction progressed on schedule, the project is 80% completed. The Company expects heap leaching to start-up in Q3 2022.
AMURSK POX
3 months ended Mar 31,
% change
2022 2021
Concentrate processed, Kt 58 60 -4%
Albazino 43 44 -2%
Kyzyl 14 12 +13%
Nezhda 1 0 NA
Mayskoye 0 0 +1%
Veduga 0 4 -100%
Gold recovery 95.5% 94.9% +1%
Average gold grade, g/t 64.9 69.6 -7%
Total gold produced2, Koz 120 121 -1%
Albazino 56 67 -17%
Kyzyl 62 43 +44%
Mayskoye 2 1 +61%
Veduga - 9 -100%
Nezhda 1 - NA
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.
POX production was stable. The plant processed the first test batch of Nezhda's gold flotation concentrate demonstrating sufficient recoveries. OMOLON OPERATIONS
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 1.8 0.3 +466%
Underground development, Km 3.0 2.7 +13%
Ore mined, Kt 104 73 +43%
Open-pit - - NA
Underground 104 73 +43%
PROCESSING
Kubaka Mill
Ore processed, Kt 212 212 +0%
Grade
Gold, g/t 5.8 6.9 -16%
Silver, g/t 24 23 +5%
Recovery1
Gold 92.9% 92.8% +0%
Silver 75.8% 77.8% -3%
Gold production, Koz 37 45 -18%
Silver production, Moz 0.1 0.1 -3%
Birkachan Heap Leach
Ore stacked, Kt - 45 -100%
Gold grade, g/t - 1.0 -100%
Gold production, Koz 1 1 +146%
TOTAL PRODUCTION
Gold, Koz 38 45 -16%
Silver, Moz 0.1 0.1 -1%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory.
Gold production at Omolon decreased by 16% y-o-y on the back of the planned decline in grade processed.
Waste mine jumped as the development of Burgali open pit progressed, while ore mining there will recommence in Q3 2022. Underground ore mining was higher due to above-the-budget associated ore volumes.
NEZHDA
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 4.9 5.3 -7%
Ore mined, Kt 604 346 +75%
PROCESSING
Ore processed, Kt 484 - NA
Grade
Gold, g/t 3.7 - NA
Silver, g/t 30.5 - NA
Recovery1
Gold 73.2% - NA
Silver 74.7% - NA
Gold in concentrate, Koz 42 - NA
Silver in concentrate, Moz 0.4 - NA
Concentrate shipped, Kt 1.1 - NA
Payable gold in concentrate, Koz 26 - NA
Amursk POX
Concentrate processed, Kt 1.1 - NA
Gold grade, g/t 39.6 - NA
Gold recovery 88.1% - NA
Gold produced, Koz 1 - NA
TOTAL PRODUCTION
Gold, Koz 27 - NA
Silver, Moz 0.2 - NA
At Nezhda, first concentrate was shipped to off-takers. The concentrator achieved design throughput on planned grade. Recovery remained lower than design by 3-4 percentage points as the Company targeted higher improved market liquidity for its products against the backdrop of further tightening in Chinese arsenic restrictions
VORO
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 3.4 0.6 +481%
Ore mined, Kt 76 11 +570%
PROCESSING
CIP
Ore processed, Kt 246 260 -5%
Gold grade, g/t 2.1 2.2 -3%
Gold recovery1 85.7% 83.9% +2%
Gold production, Koz 18 20 -8%
Heap Leach
Ore stacked, Kt - - NA
Gold grade, g/t - - NA
Gold production, Koz 1 2 -69%
TOTAL PRODUCTION
Gold, Koz 19 22 -11%
Note: (1) Technological recovery, includes gold within work-in-progress inventory.
At Voro, quarterly gold production contracted due to lower volumes of third-party and Pesherny feedstocks as well as a decrease in volumes processed.
Voro flotation plant construction is 70% completed. Start-up is targeted for Q1 2023
SVETLOYE
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 1.6 0.7 +144%
Ore mined (open pit), Kt 369 390 -5%
PROCESSING
Ore stacked, Kt 312 282 +11%
Gold grade, g/t 1.9 4.8 -61%
Gold recovery 80.8% 82.1% -2%
Gold production, Koz 19 27 -30%
TOTAL PRODUCTION
Gold, Koz 19 27 -30%
Gold production at Svetloye recorded a 30% y-o-y decrease on the back of stacking of stockpiled low-grade ore from depleted Lyudmila main pit. Full-year grade is expected to normalize.
Waste mined increase is attributable to development of a new pit at Lyudmila (Nadezhda - launched in 2021), new pushback (Stage 3) at the Emmy pit.
MAYSKOYE
3 months ended Mar 31,
% change
2022 2021
MINING
Waste mined, Mt 1.0 0.9 +8%
Underground development, km 4.7 5.1 -7%
Ore mined, Kt 195 191 +2%
Open-pit 13 13 -1%
Underground 183 178 +3%
PROCESSING
Ore processed, Kt 230 217 +6%
Gold grade, g/t 5.6 6.2 -9%
Gold recovery1 90.8% 92.5% -2%
Gold in concentrate, Koz2 38 40 -6%
Amursk POX
Gold produced in dore from concentrate (POX), Koz 2 1 +61%
Gold produced in dore from carbon, Koz3 1 5 -76%
TOTAL PRODUCTION
Gold, Koz 3 6 -55%
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 upon sale to off-taker or dore production at Amursk POX.
(3) Gold produced from carbon at Amursk POX.
Gold in concentrate production at Mayskoye decreased on the back the planned grade decline. Full-year average grade is expected to be roughly stable y-o-y.
Mayskoye haulage project (ore transportation by conveyor) is on track for launch in Q3 2022. Paste backfill plant construction is postponed by one year due to supply chain challenges.
POX-2
At POX-2, construction of metal frameworks at the autoclave servicing area and slurry cooling section as well as sandwich panels' construction at the high bay area is in progress. Concentrate preparation equipment and vessels at slurry mixing neutralization areas are being installed. Thickener installation is ongoing. Foundation works for the CIL equipment and preparation for technological pipelines installation at the downstream section are in progress. Construction of 16 MW boiler house completed.
POX-2 is likely to experience a 6 month slippage from the original schedule mostly due to supply chain challenges and now is expected to fully ramp-up in Q2 2024.
SUSTAINABILITY, HEALTH AND SAFETY
No fatal accidents occurred among Group employees and contractors in Q1 2022 (none did in Q1 2021). Group's lost time injury frequency rate (LTIFR) decreased by 60% y-o-y to 0.10 (0.25 in Q1 2021). Three incidents resulting in lost time injuries occurred among Group employees and another three - among contractors, with all of the injuries classified as minor. Each incident was followed by proper investigations aimed at improving safety of workplaces.
In Q1, Polymetal published its Sustainability Performance Data 2021 (GRI and SASB) and climate report in accordance with TCFD, which accompanied the Integrated Annual Report 2021 for the year ended 31 December 2021.
Following the recent geopolitical developments, Sustainalytics has increased Polymetal's ESG Risk Rating from 15.9 (Low Risk) to 21.9 (Medium Risk), while MSCI ESG Ratings has downgraded Polymetal's ESG Rating from AA to B.
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ISIN: JE00B6T5S470 Category Code: MSCH TIDM: POLY LEI Code: 213800JKJ5HJWYS4GR61 OAM Categories: 3.1. Additional regulated information required to be disclosed under the laws of a Member State Sequence No.: 157149 EQS News ID: 1333649 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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April 25, 2022 02:00 ET (06:00 GMT)
