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 frequency rate (LTIFR) among the Group's employees stood at 0.10, a 60% decrease over Q1 2021 as there were three incidents recorded (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 in Kazakhstan).
Q1 gold equivalent production ('GE') decreased by 6% year-on-year (y-o-y) to 372 Koz as planned grade decline at Albazino and Svetloye more than offset first material contribution from Nezhda. Sales were lower by 50 Koz primarily due to concentrate inventory accumulation at Nezhda and Kyzyl.
Revenue for the quarter grew by 4% y-o-y to US$ 616 million underpinned by higher gold prices and on the back of large historical sales/production gap in Q1 2021.
Net debt rose to roughly US$ 2.0 billion on the back of higher working capital needs. The Company moved swiftly 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 import restrictions on arsenic also played a role.
The Company revises its Total cash cost (TCC) guidance to US$ 850-950/GE oz (US$ 950-1,050/GE oz in Russia and US$ 700-800/oz in Kazakhstan) compared with the previous guidance range of US$ 850-900/GE oz. AISC guidance is revised to US$ 1,200-1,300/GE oz (US$ 1,350-1,450/GE oz in Russia and US$ 900-1,000/oz in Kazakhstan) compared with the previous guidance range of US$ 1,100-1,200/ GE oz. Cost increases predominantly relate to various impacts of economic sanctions against Russia including domestic inflation, sharp escalation of logistical costs and the 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 chain challenges and now is expected to start production in Q2 2024. All other major projects (Kutyn, Prognoz, Urals flotation) 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 is currently evaluating options to re-site the facility in Kazakhstan. Commencement of Veduga construction as well as a number of other smaller scale projects have also been delayed by 12-18 months. CAPEX guidance for the full-year 2022 is therefore revised to US$ 650 million (US$ 580 million in Russia and US$ 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, 1.8 Moz for 2026.
The decision on 2021 final dividend was postponed until August 2022 as reported earlier.
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.
Contact:
Tel: +44.20.7887.1475
POLYMETAL INTERNATIONAL PLC 