Polymetal International : Q1 2019 production results

Polymetal International plc reports record production for the first quarter ended 31 March 2019.

'Strong contribution from Kyzyl and steady operational results at other mines drove a big jump in Q1 production', said Vitaly Nesis, Group CEO of Polymetal. 'Kyzyl's performance demonstrates both Polymetal's project development capability and the asset's huge potential for cash flow generation'.

HIGHLIGHTS

· The Company's Q1 gold equivalent ('GE') production grew 27% year-on-year to 374 Koz as Kyzyl exceeded design throughput and recovery and enjoyed positive grade reconciliation. Meanwhile, a grade-driven increase in production at Omolon offset the disposals of Okhotsk and Kapan. Gold equivalent production from continuing operations was 369 Koz, up 37% year-on-year.

· Q1 gold production was up 41% over the previous year at 302 Koz, while silver production was down 15% due to the planned grade decline at the Dukat underground mine. The share of gold production increased to 81% of the Group's total output.

· Kyzyl continued to demonstrate an excellent operating performance in Q1 with flotation recoveries climbing up to 89% in March, while gold production was 78 Koz with 92 Koz produced in concentrate.

· Revenues increased 28% year-on-year to US$ 454 million, largely driven by a 41% uptick in gold sales compared to the prior year.

· Full-scale construction activities have commenced at both the Nezhda and POX-2 projects which are expected to start up in Q4 2021 and H2 2023 respectively.

· The Company is on track to produce 1.55 Moz of GE in 2019 and reiterates its full-year cost guidance: the TCC range of US$ 600-650/ GE oz while the AISC range is US$ 800-850/ GE oz. The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group's operating costs.

· We are saddened to report a fatal accident that occurred on 8 March at our Mayskoye operation. An underground development driller died following injury from the rotating part of the rig. In response, the Company decided to complete a comprehensive review of behavioural safety risks and potential mitigation approaches.

· Net debt increased 12% during the quarter to US$ 1,704 million as at 31 March 2019, primarily due to seasonal advance purchases of diesel fuel and other consumables. On the other hand, compared to 31 March 2018, the relative leverage level has improved as 8% y-o-y increase in net debt was outpaced by the growth of profitability metrics on the back of a 28% increase in revenue. Free cash flow generation in 2019 will, as is usual for Polymetal, be weighted towards the second half of the year on the back of higher production volumes and seasonal working capital drawdowns.

· As previously announced, the final dividend for 2018 of US$ 0.31 per share (approx. US$ 146 million) will be paid on 24 May 2019.

· The Company will host its annual Analyst and Investor Day on 24 April 2019 in London to provide an operating asset review and exploration update.

	3 months ended Mar 31,		% change1
	2019	2018
Waste mined, Mt	37.6	28.8	+30%
Underground development, km	28.2	32.8	-14%
Ore mined, Mt	4.2	3.2	+32%
Open-pit	3.2	2.0	+57%
Underground	1.0	1.2	-12%
Ore processed, Mt	3.4	3.1	+13%
Production
Gold, Koz	302	214	+41%
Silver, Moz	5.1	6.0	-15%
Copper, Kt	0.9	0.7	+18%
Gold equivalent, Koz2	374	295	+27%
Sales
Gold, Koz	291	206	+41%
Silver, Moz	4.7	4.8	-4%
Copper, Kt	0.4	0.3	+38%
Revenue, US$m3	454	354	+28%
Net debt, US$m4	1,704	1,518	+12%
Safety5
LTIFR	0.24	0.15	+60%
Fatalities	1	1	0%
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 2018 (5) LTIFR = lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

	3 months ended Mar 31,		% change
	2019	2018
GOLD EQ. (KOZ)1
Kyzyl	78	-	NA
Dukat	78	79	-1%
Albazino-Amursk	81	90	-10%
Omolon	53	31	69%
Mayskoye	5	-	NA
Varvara	38	35	8%
Voro	27	26	3%
Svetloye	9	8	10%
TOTAL (continuing operations)	369	270	+37%
Okhotsk	-	13	-100%
Kapan	52	12	-60%
TOTAL (including discontinued operations)	374	295	+27%

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 Thursday, 18 April 2019 at 12:30 London time (14:30 Moscow time).

To participate in the call, please dial:
8 800 500 98 63 access code 95198051# (free from Russia), or

44 203 009 24 83 (free from the UK), or

1 646 722 49 12 (free from the US), or

follow the link: http://polymetal180419-live.audio-webcast.com. Please be prepared to introduce yourself to the moderator or register.

Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://polymetal180419-live.audio-webcast.com. A recording of the call will be available immediately after the call at 44 20 3364 5147 (from within the UK), 1 646 722 4969 (USA Toll Free) and 7 495 249 16 71 (from within Russia), access code 418844238#, from 15:00 Moscow time Thursday, 18 April, till 15:00 Moscow time Thursday, 25 April, 2019.