REG-Polymetal International plc Polymetal: Business update and impact of sanctions

Polymetal International PKAnnouncement

30/03/2022 07:15

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   Polymetal International plc (POLY)
   Polymetal: Business update and impact of sanctions

   30-March-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 IMMEDIATE                                                       
   time    LSE, MOEX, AIX: POLY / ADR: AUCOY
   Date    30 March 2022

    

    

   Polymetal International plc

   Business update and impact of sanctions

   Polymetal provides a further update on  the impact of sanctions and  other
   recent developments in Russia on its business.

   At the time of writing, the Group states that:

   Sale of bullion/concentrate

     • Sales of bullion and concentrate from Kazakhstan continue as usual.
     • In Russia, sales of gold and silver concentrates continue normally  to
       East Asia and Kazakhstan. Shipments have been temporarily impacted  by
       the change of freight and logistics service providers, which is likely
       to result in higher costs.
     • Sales  of  gold  bullion   in  Russia  have   been  restored  to   new
       counterparties  on  terms  consistent  with  those  received  earlier.
       Domestic demand for gold is boosted by local retail investment.
     • The recent Central  Bank of Russia  statement that the  bank will  buy
       gold from commercial banks  at a fixed price  of RUB 5,000/g  (approx.
       US$ 1,800/oz at  the time of  the writing) is  not expected to  affect
       Group's sales price materially as gold continues to be sold at  global
       market price, both for exports and to satisfy physical retail demand.

   Liquidity & net debt

     • Net debt increased  to US$ 1.94 billion  as of 29  March (31  December
       2021: US$  1.65 billion)  mainly driven  by seasonal  working  capital
       increase and  accelerated  procurement.  94%  of  the  total  debt  is
       denominated in US dollars.
     • The Group  has  approx.  US$  0.4 bn  in  cash  and  cash  equivalents
       deposited with non-sanctioned financial institutions. In addition, the
       Company maintains  US$  0.5  billion  of  undrawn  credit  lines  from
       non-sanctioned  Russian  financial   institutions,  while   additional
       liquidity is  expected  to  become  available  in  Q2  2022  as  banks
       gradually re-open lending.
     • Lending from  Russian banks  is available  in RUB  only. RUB  interest
       rates are  23-25%  on  average  following  Central  Bank's  base  rate
       increase to 20%. The Group is utilising these facilities  occasionally
       for short-term working capital financing.

   Board

     • New five independent  directors and  a new Chair  were appointed.  The
       Board now  consists of  eight members,  of which  six are  independent
       non-executive directors, and is fully compliant with the UK  Corporate
       Governance Code  requirements.  New  Board appointments  are  out  for
       shareholder approval at the  forthcoming AGM on  25 April. Please  see
       the Board and Committees' composition at the  1 link.

   "It  is  my  opinion  that  investors,  private  and  institutional,  that
   collectively control over 75%  of this company deserve  a Board that  will
   lead the company  through this  turbulent time,  preserving and  hopefully
   rebuilding the  value  of  their  investment as  well  as  protecting  the
   livelihood of  thousands of  employees, contractors,  suppliers and  other
   stakeholders", said Riccardo Orcel, Chair of the Board.

   Operations and development projects

     • Polymetal operations in  Russia and  Kazakhstan continue  undisrupted.
       Production guidance for 2022 of 1.7 Moz of GE remains in place.
     • Group's scope  of operational  activities  is stable.  Operating  cash
       costs (TCC)  guidance is  under review  given significant  changes  in
       prices for certain  key materials  and equipment as  well as  exchange
       rate volatility.
     • The Company  has completed  the review  of non-sustaining  development
       project schedules and  budgets. The primary  objective of this  review
       was  risk  assessment  against  the  backdrop  of  current  sanctions,
       including those self-imposed by Polymetal's commercial counterparties.
       The key decisions taken  are listed below with  the updated CAPEX  and
       AISC guidance to be provided at Capital Markets Day on April 25.

          ◦ Projects in advanced stages of development or nearing completion
            (Kutyn, Urals flotation, Prognoz) are on track to be commissioned
            on schedule (Q3 2022, Q4 2022, and Q1 2024 respectively).
          ◦ POX-2 is expected to experience 3-6 month slippage from the
            original schedule mostly due to logistical challenges.
          ◦ Early-stage projects (Veduga, Mayskoye backfill, Maminskoye) are
            delayed by one year. Pacific POX project has been suspended
            indefinitely with studies under way to potentially re-site the
            facility in Kazakhstan.
          ◦ Brownfield exploration schedule and volumes remain unchanged.
            Greenfield exploration budgets were reduced by 50% (mostly
            affecting junior JVs).

   Inventories & supplies

     • No material changes  since the  last update. Please  see the   2 link.
       Procurement  processes  continue  to   be  adapted  for  the   current
       environment. Increases in safety stock levels for critical consumables
       and spares are in progress.

   Dividends

     • The Board and  the management continue  to re-evaluate the  stability,
       liquidity  and  solvency  of  the  business,  including  its  dividend
       recommendation,  in  light  of  significant  funding  and   regulatory
       uncertainty.
     • The Board also carefully  monitors the MOEX  trade re-opening and  the
       developments related  to National  Settlement Depositary  -  Euroclear
       operations which  are critical  to delivering  dividends to  Polymetal
       shareholders trading through MOEX (approx. 22% of issued share capital
       as  of  1  March).  The   ability  to  distribute  dividends  to   all
       shareholders in  an  equitable way  will  be  one of  the  factors  in
       finalising the dividend decision.

    Listing

     • POLY shares continue to be listed  on three exchanges: LSE, MOEX,  and
       AIX. Trading  of  shares on  MOEX  (for Russian  residents  only)  was
       re-opened on 29 March. Trading on LSE and AIX continues.

   Sanctions compliance

     • Sanctions announced in the period between 9 March and 30 March did not
       have a  material  impact on  the  business  of the  Group.  The  Group
       complies rigorously with all relevant legislation and is  implementing
       comprehensive  measures  to   observe  all  applicable   international
       sanctions. The scope and  impact of any  new potential sanctions  (and
       any countersanctions)  are yet  unknown. However,  they might  further
       affect key Russian financial institutions as well as mining companies.
       Polymetal believes  that  targeted  sanctions on  the  company  remain
       unlikely, but  are  not  impossible.  Contingency  planning  has  been
       initiated proactively to maintain business continuity.

   Capital controls

     • No material changes since the last update. Please see the  3 link.

   Further updates will be provided in due course.

   Enquiries

       Investor Relations
   Polymetal         4 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.

    

    

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   ISIN:           JE00B6T5S470
   Category Code:  MSCM
   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.:   152333
   EQS News ID:    1314977


    
   End of Announcement EQS News Service

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References

   Visible links
   1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=f776a5688808ac30e28fdde6aec39663&application_id=1314977&site_id=reuters8&application_name=news
   2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c8fa334e2ce02cc03137e7273874059c&application_id=1314977&site_id=reuters8&application_name=news
   3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c8fa334e2ce02cc03137e7273874059c&application_id=1314977&site_id=reuters8&application_name=news
   4. mailto:ir@polymetalinternational.com


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