Company Announcements

Polymetal: Half-yearly report for the six months ended 30 June 2021

Source: EQS

Polymetal International plc (POLY)
Polymetal: Half-yearly report for the six months ended 30 June 2021

26-Aug-2021 / 09:00 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

26 August 2021

 

Polymetal International plc

Half-yearly report for the six months ended 30 June 2021

"We are pleased to report our strong financial performance on the back of favourable commodity prices and steady operational delivery during the first half of the year", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "We expect stronger production, stable cash costs within the original guidance and significant free cash flow generation for the second half and remain focused on progressing our development projects on schedule".

FINANCIAL HIGHLIGHTS

  • Revenue in 1H 2021 increased by 12% to US$ 1,274 million compared to 1H 2020 ("year-on-year") driven by higher metal prices. Average realised gold and silver prices tracked market dynamics and increased by 8% and 59%, respectively. Gold equivalent ("GE") production was 714 Koz, a marginal decrease of 1% year-on-year. Gold sales remained stable year-on-year at 595 Koz but lagged production by 40 Koz mainly due to concentrate in transit build-up at Kyzyl. Silver sales were down 19% to 8.0 Moz, due to a lag between silver concentrate production and sales, which is expected to close in 2H 2021.
  • Group Total Cash Costs ("TCC")1 were US$ 712/GE oz for 1H 2021, within the Company's guidance of US$ 700-750/GE oz, and up 12% year-on-year due to above-CPI inflation in the mining industry and full-period impact of COVID-related costs, as well as planned decline in grades processed at Kyzyl and Albazino.
  • All-in Sustaining Cash Costs ("AISC")1 amounted to US$ 1,019/GE oz, up 16% year-on-year, reflecting investments at Omolon (power complex, filtration building and mining fleet renewals) and Kyzyl (mining fleet), as well as accelerated stripping at Voro (Pescherny and Saum deposits) and Omolon (Burgali deposit). AISC are expected to decline in the second half of the year on the back of seasonally higher production and sales to meet the full year guidance of US$ 925-975/GE oz.
  • Adjusted EBITDA[1] was US$ 660 million, an increase of 8% year-on-year, driven by higher commodity prices against the backdrop of stable production. The Adjusted EBITDA margin decreased to 52% (1H 2020: 54%).
  • Net earnings[2] were US$ 419 million (1H 2020: US$ 376 million), with basic EPS of US$ 0.89 per share (1H 2020: US$ 0.80 per share), reflecting the increase in operating profit. Underlying net earnings1 increased by 15% to        US$ 422 million (1H 2020: US$ 368 million).
  • Capital expenditure was US$ 375 million[3], up 55% compared to US$ 242 million in 1H 2020, reflecting the construction at POX-2, Nezhda and Kutyn, combined with stripping at Veduga[4], Voro and Omolon. Capital expenditure levels were also affected by inflationary pressures and COVID-related costs.
  • Given the continuing macroeconomic pressures, materials and wage inflation, as well as scope changes approved by the Board, including costs of the feasibility study for POX-3 and acceleration of Veduga and Prognoz projects, Polymetal revises its FY 2021 capex guidance to US$ 675-725 million (previously US$ 560 million). The guidance for 2022-2025 will be updated during the Company's capital markets day in November 2021.
  • An interim dividend of US$ 0.45 per share (1H 2020: US$ 0.40 per share) representing 50% of the Group's underlying net earnings for 1H 2021 has been approved by the Board in accordance with the dividend policy. A final dividend for 2020 of US$ 0.89 per share (total of US$ 421 million) was paid in May 2021.
  • Net debt1 increased to US$ 1,827 million during the period (31 December 2020: US$ 1,351 million), representing 1.05x of the last twelve months Adjusted EBITDA, significantly and favourably below the Group's target leverage ratio of 1.5x.  The increase in net debt was mainly driven by accelerated capital expenditures combined with seasonal working capital build-up.
  • Operating cash flow increased by 22% year-on-year to US$ 358 million, however free cash flow ("FCF")3 represented a US$ 27 million outflow, compared to a US$ 54 million inflow a year earlier, driven by higher capital expenditure. As usual, FCF is expected to be stronger in the second half of the year due to seasonally higher production and working capital release.
  • Polymetal is on track to meet its 2021 production guidance of 1.5 Moz of gold equivalent. The company maintains its 2021 guidance range of US$ 700-750/GE oz and US$ 925-975/GE oz for TCC and AISC, respectively. This guidance remains contingent on the RUB/USD and KZT/USD exchange rates which have a significant effect on the Group's local currency denominated operating costs.

 

Financial highlights[5]

1H 2021

1H 2020[6]

Change, %

Revenue, US$m

1,274

1,135

+12%

Total cash cost[7], US$/GE oz

712

638

+12%

All-in sustaining cash cost3, US$/GE oz

1,019

880

+16%

Adjusted EBITDA3, US$m

660

610

+8%

 

 

 

 

Average realised gold price[8], US$/oz

1,793

1,661

+8%

Average realised silver price4, US$/oz

26.5

16.7

+59%

 

 

 

 

Net earnings, US$m

419

376

+11%

Underlying net earnings3, US$m

422

368

+15%

Return on Assets3, %

 24%

 23%

+1%

Return on Equity (underlying)3,%

 24%

 23%

+1%

 

 

 

 

Basic EPS, US$/share

0.89

0.80

+11%

Underlying EPS, US$/share

0.89

0.78

+14%

Dividend declared during the period[9], US$/share

0.89

0.62

+44%

Dividend proposed for the period[10], US$/share

0.45

0.40

+13%

 

 

 

 

Net debt3, US$m

1,827

1,351

+35%

Net debt/Adjusted EBITDA

1.05[11]

0.80

+32%

 

 

 

 

Net operating cash flow, US$m

358

294

+22%

Capital expenditure, US$m

375

242

+55%

Free cash flow3, US$m

(27)

54

 NM[12]

Free cash flow post-M&A3, US$m

(29)

55

NM

 

 

COVID-19 IMPACT ON THE GROUP's PERFORMANCE TO DATE

  • As of the date of this press release, there are 64 active cases of COVID-19 among Polymetal's workforce.
  • In July 2021, the Kubaka processing plant site (Omolon hub) suffered a significant COVID-19 outbreak. Management responded quickly to isolate the infected individuals and evacuated those who had symptoms or exhibited potentially risky pre-conditions with no impact on production. As of the date of this press release, there are 41 active cases of COVID-19, mostly among construction and drilling contractors.
  • Other operations and projects continue undisrupted. All precautionary measures, including extensive testing and observatory periods, are maintained at all sites.
  • Voluntary vaccinations continue at the Group's sites and offices, with 30% of employees having received at least one vaccination across different mine sites.

operating AND ESG HIGHLIGHTS

  • There were no fatal accidents during the first half of the year (consistent with H1 2020) among Polymetal's workforce and the Company's contractors. Unfortunately, on 18 July 2021 a drilling contractor lost his life at the Saum open-pit mine, part of Voro operations.
  • LTIFR in 1H 2021 stood at 0.17 with ten lost-time injuries, in comparison with 0.07 and four cases a year earlier.
  • GE production in 1H 2021 was 714 Koz, down 1% year-on-year, mostly due to the planned grade declines at Kyzyl and Albazino. Stronger production forecast in the 2H 2021 will be driven by seasonal concentrate de-stockpiling, notably at Mayskoye and Dukat. The Group remains on track to meet its FY2021 production guidance of 1.5 Moz of gold equivalent.
  • Construction and development activities at Nezhda and POX-2 projects have progressed on schedule amid continued tightness in the construction contractor market and COVID-related cross-border travel restrictions.
  • In June 2021, Vigeo Eiris (part of Moody's ESG solutions), a global leader in ESG assessments, data, research and analytics, raised Polymetal's overall ESG score from 48 to 69 (out of 100) which corresponds with the Advanced level, the highest on the company's ranking scale. The new score places Polymetal in second place out of 43 in the Mining & Metals sector and 22nd place in the global ranking universe (4,939 companies).
  • In August 2021, Polymetal's MSCI ESG Rating has been upgraded to AA from A. This places Polymetal among the companies with the highest ESG Rating in the Precious Metals sector. MSCI has highlighted Polymetal's safety initiatives and improvements, robust governance structure and business ethics practices, active engagement with local communities and robust approach to mitigating the risk of dam-related incidents.
  • The reporting period was also marked with a couple of other external recognitions, which confirms our success as a responsible company: Polymetal took 7th place in Russia's 30 most eco-friendly companies rating and second place among metals and mining companies in Russia by Forbes.

 

 

 

1H 2021

1H 2020

Change, %

 

 

 

 

 

Waste mined, Mt

 

98.0

79.1

+24%

Underground development, km

 

46.3

46.4

-0%

Ore mined, Mt

 

7.5

8.1

-7%

Open-pit

 

5.6

6.0

-7%

Underground

 

1.9

2.0

-5%

Ore processed, Mt

 

7.6

7.8

-3%

Average grade processed, GE g/t

 

3.6

4.0

-9%

Production

 

 

 

 

Gold, Koz

 

 635

 642

-1%

Silver, Moz

 

 9.4

 9.8

-4%

Gold equivalent, Koz[13]

 

 714

 723

-1%

Sales

 

 

 

 

Gold, Koz

 

 595

 595

+0%

Silver, Moz

 

 8.0

 9.9

-19%

Gold equivalent, Koz[14]

 

 721

 695

+4%

Average headcount

 

13,062

  12,083

+8%

Health and safety

 

 

 

 

LTIFR[15]

 

 0.17

 0.07

+143%

Fatalities

 

 -

 -

n/a

Corporate update

  • There were no material transactions during 1H 2021.

 

Conference call and webcast

The Company will hold a conference call and webcast on Thursday, 26 August 2021 at 09:00 London time (11:00 Moscow time).

To participate in the call, please dial:

From the UK:

+44 203 984 9844 (local access)

+44 800 011 9129 (toll free)

From the US:

+1 718 866 4614 (local access)

+1 888 686 3653 (toll free)

From Russia:

+7 495 283 9858 (local access)

To participate from other countries, please dial any of the local access numbers listed above.

Conference code: 785872

To participate in the webcast follow the link: https://mm.closir.com/slides?id=785872.

Please be prepared to introduce yourself to the moderator or register.

A recording of the call will be available at the same numbers and webcast link listed above within an hour after the call and until 2 September 2021.

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 Consulting

Leonid Fink

Viktor Pomichal

+44 20 3727 1000

Polymetal

Evgeny Monakhov

Timofey Kulakov

Kirill Kuznetsov                   

ir@polymetalinternational.com

+44 20 7887 1475 (UK)

 

+7 812 334 3666 (Russia)

Joint Corporate Brokers

 

Morgan Stanley & Co. International plc

Andrew Foster

Richard Brown


Panmure Gordon

John Prior

Rupert Rearden

+44 20 7425 8000

 

 

 

 

+44 20 7886 2500

RBC Europe Limited

Marcus Jackson

Jamil Miah

+44 20 7653 4000

 

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.

 

 

 

 

 


[1] The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to compliment measures that are defined or specified under International Financial Reporting Standards (IFRS). For more information on the APMs used by the Group, including justification for their use, please refer to the "Alternative performance measures" section below.

[2] Profit for the period.

[3] On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.

[4] Operated by Amikan.

[5] Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.

[6] Restated due to a change in accounting policy. Starting from 1 January 2021, exploration and evaluation (E&E) expenses costs are capitalised into assets only when mineral resources are published; and before that are expensed as incurred.  Previously capitalised E&E assets with no mineral resource estimation were written off via retrospective adjustments to the 2020 income statement and balance sheet amounts brought forward. This note applies to all comparative data for 2020 in this release.

[7] Defined in the "Alternative performance measures" section below.

[8] In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are calculated as revenue divided by gold and silver volumes sold, excluding the effect of treatment charges deductions from revenue.

[9] 1H 2021: Final dividend for FY 2020 paid in May 2021. 1H 2020: Special and final dividend for FY 2019 paid in 2020.

[10] 1H 2021: interim dividend for FY2021. 1H 2020: interim dividend for FY2020.

[11] On a last twelve months basis. Adjusted EBITDA for 2H 2020 was US$ 1,074 million.

[12] Not meaningful.

[13] Based on 120:1 Au/Ag conversion ratio.

[14] Based on actual realised prices.

[15] LTIFR = lost time injury frequency rate per 200,000 hours worked.


Attachment

File: Polymetal: Half-yearly report for the six months ended 30 June 2021


ISIN: JE00B6T5S470
Category Code: IR
TIDM: POLY
LEI Code: 213800JKJ5HJWYS4GR61
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 120782
EQS News ID: 1228966

 
End of Announcement EQS News Service

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