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Polymetal International plc (POLY)
Polymetal: Q1 2020 production results
20-Apr-2020 / 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 20 April 2020
Polymetal International plc
Q1 2020 production results
Polymetal reports solid production results for the first quarter ended 31
March 2020
"Q1 was a strong start to the year for the Company, delivering steady
performance amidst unprecedented global disruption and uncertainty", said
Vitaly Nesis, Group CEO of Polymetal. "In light of the global COVID-19
pandemic we have been taking significant measures to keep our employees,
suppliers, contractors, and other counterparties healthy and safe, and to
maintain continuous operations. So far we have been proven to be
successful in mitigating any impact".
HIGHLIGHTS
• There were no fatal accidents during the quarter either among
Polymetal employees or at the Company's contractors. LTIFR improved by
71% year-on-year (y-o-y) to 0.07 as only two minor injuries were
recorded.
• The Company's Q1 gold equivalent ("GE") production grew by 5% y-o-y to
391 Koz as strong performance at Kyzyl, Svetloye and Varvara more than
offset planned grade declines at Omolon and Voro.
• Quarterly revenue increased by 9% y-o-y to US$ 494 million on the back
of higher gold prices. Sales volumes decreased by 7% y-o-y due to the
COVID-related slowdown of concentrate shipments to China, which have
fully normalised since early March.
• Net debt grew to US$ 1.66 billion primarily due to seasonal advance
purchases of diesel fuel and other consumables and low sales volumes.
Free cash flow generation in 2020, as seen historically, will be
weighted towards the second half of the year driven by seasonal
working capital drawdowns.
• Construction and development activities at Nezhda and POX-2 projects
progressed on schedule.
• The Company confirms its 2020 production guidance of 1.6 Moz of GE.
Management acknowledges material devaluation of Russian Rouble and
Kazakh Tenge since the beginning of the year. However, given the
highly volatile macroeconomic background, we currently maintain the
full-year guidance of US$ 650-700/GE oz for TCC and US$ 850-900/GE oz
for AISC. The guidance will be revisited along with 1H results.
• Polymetal remains committed to its dividend policy and does not intend
to change the previously announced final dividend recommendation of
US$ 0.42 per share or US$ 197 million in total for FY 2019, which is
due to be paid on 29 May 2020 (subject to the AGM approval on 27 April
2020). This will take the total dividend paid for 2019 to US$ 0.82 per
share or US$ 385 million in aggregate.
• The Company will host its annual Analyst & Investor Day and ESG
Investor Presentation on 28 April 2020 in the format of conference
call and webcast.
COVID-19 UPDATE
Health and safety
• No cases of COVID-19 have been registered within Polymetal so far.
• Health and safety of our employees and other people is our top
priority. Strict precautionary procedures are in place at all
production sites, including daily temperature checks, regular medical
surveillance and isolation of new shifts (at remote sites). Polymetal
has organised isolated accommodation for potential placement of
patients with suspicion of COVID-19, enhanced hygiene protection in
public spaces and increased control over disinfection and
sterilisation measures. Adequate medical supplies are in place at all
locations.
• Off-site offices are currently manned by skeleton crews tasked with
minimum maintenance of essential information and financial systems.
Most of the work and communication is conducted remotely from home.
Personal meetings and business trips have been cancelled.
• Polymetal has started to provide financial support for medical
institutions in all regions of operation. The Company is purchasing
mobile X-Ray and anesthetic-respiratory equipment, oxygen
concentrators, ventilators and other medical supplies for Chukotka
district hospital, Magadan regional hospital, medical facilities in
Yakutsk, and 10 other municipal hospitals in Russia and 4 in
Kazakhstan.
Sales
• Sales and refining activities remain unaffected. Refineries in Russia
and Kazakhstan continue to operate normally. Concentrate shipments to
China by sea and by rail are back to regular schedule after temporary
suspension of shipments in February.
• Although the Central Bank of Russia decided to temporarily suspend
gold purchases, commercial banks in Russia continue to buy bullion. No
negative signs of demand repercussions for domestic producers are
present. The Company also maintains the ability to directly export
bullion abroad.
Business continuity
• Both Russia and Kazakhstan have imposed various self-isolation
requirements that differ among regions. Continuous operations and
strategic industrial companies (including Polymetal) are allowed to
continue operating.
• In both countries, Polymetal has had no interruptions either in
production or supply chain. The vast majority of operating consumables
and spares are sourced domestically and in China.
• At Nezhda, all critical equipment has been shipped by vendors.
Installation support and start-up services can be performed by
domestic crews or remotely. Project delay risks are thus minimal.
• Should the lockdown measures in response to the COVID-19 pandemic be
tightened further, some operations and development projects remain
exposed to the actions countries have taken or may take, including:
◦ Ability to bring employees across the border between Russia and
Kazakhstan (materially relevant for Dukat).
◦ Ability to change shifts at remote sites while observing
inter-regional quarantine restrictions in Russia and Kazakhstan.
◦ Delivery of key equipment for the POX-2 depends on the duration
of industrial lockdowns in Belgium, Italy, and France. Project
schedule may slip if such restrictive measures continue for more
than 3 to 4 months.
Liquidity and funding
• In order to further mitigate potential risks, Polymetal has
proactively secured medium-term (6 to 9 months) funding to establish a
cash cushion for a potential liquidity gap. Currently the Company has
$565 million of cash on its balance sheet and continue to maintain US$
600+ million of available credit lines for any additional
requirements.
3 months ended Mar 31, % change1
2020 2019
Waste mined, Mt 39.9 37.6 +6%
Underground development, km 23.1 28.2 -18%
Ore mined, Mt 3.9 4.2 -7%
Open-pit 2.9 3.2 -8%
Underground 1.0 1.0 -2%
Ore processed, Mt 3.5 3.4 +2%
Production
Gold, Koz 324 301 +8%
Silver, Moz 4.9 5.0 -1%
Gold equivalent, Koz2 391 371 +5%
Sales
Gold, Koz 271 291 -7%
Silver, Moz 4.7 4.7 +1%
Revenue, US$m3 494 454 +9%
Net debt, US$m4 1,661 1,479 +12%
Safety
LTIFR5 0.07 0.24 -71%
Fatalities 0 1
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 2019.
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
PRODUCTION BY MINE
3 months ended Mar 31, %
2020 2019 change
GOLD EQ. (KOZ)1
Kyzyl 109 78 +39%
Albazino 78 81 -5%
Dukat 76 76 +0%
Varvara 45 38 +20%
Omolon 42 53 -20%
Svetloye 21 9 +133%
Voro 20 27 -26%
Mayskoye 0 5 -93%
TOTAL (continuing operations) 391 367 +7%
Kapan - 52 -100%
TOTAL (including discontinued operations) 391 371 +5%
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 Monday, 20 April 2020
at 12:00 London time (14:00 Moscow time).
To participate in the call, please dial:
From the UK:
+44 330 336 9104 (local access)
0800 358 6374 (toll free)
From the US:
+1 646 828 8195 (local access)
888 378 4398 (toll free)
From Russia:
+7 495 213 1765 (local access)
8 800 500 9271 (toll free)
To participate from other countries, please dial any of the local access
numbers listed above.
Conference code: 971224
To participate in the webcast follow the link:
1 https://webcasts.eqs.com/polymetal20200420.
Please be prepared to introduce yourself to the moderator or register.
A recording of the call will be available at +44 207 660 0134 (from the
UK), +1 719 457 0820 (from the USA) and 8 10 800 2702 1012 (from Russia),
access code 8636392, from 17:30 Moscow time Monday, 20 April, till 17:30
Moscow time Monday, 27 April 2020. Webcast replay will be available on
Polymetal's website ( 2 www.polymetalinternational.com) and at
3 https://webcasts.eqs.com/polymetal20200420.
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
Polymetal
4 ir@polymetalinternational.com
FTI Consulting Evgeny
+44 20 Monakhov +44 20 7887 1475 (UK)
Leonid Fink 3727
1000 Timofey
Viktor Pomichal Kulakov
+7 812 334 3666 (Russia)
Kirill
Kuznetsov
Joint Corporate Brokers
+44 20
Morgan Stanley & Co. 7425
International plc 8000
RBC Europe
Andrew Foster Limited
Richard Brown Marcus +44 20 7653 4000
Jackson
Panmure Gordon
Jamil Miah
James Stearns +44 20
7886
2500
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.
KYZYL
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 19.2 15.9 +21%
Ore mined, Kt 523 522 +0%
PROCESSING
Ore processed, Kt 526 476 +10%
Gold grade, g/t 8.0 6.9 +17%
Gold recovery 87.2% 86.8% +0%
Concentrate produced, Kt 35.7 29.8 +20%
Concentrate gold grade, g/t 101.4 96.0 +6%
Gold in concentrate, Koz1 116.4 91.9 +27%
Concentrate shipped, Kt 20.8 19.6 +6%
Payable gold shipped, Koz 41.3 50.7 -19%
Amursk POX
Concentrate processed, Kt 16 8 +100%
Gold grade, g/t 135.8 118.3 +15%
Gold recovery 91.8% 94.4% -3%
Gold produced, Koz 67.2 27.4 +146%
TOTAL PRODUCTION
Gold, Koz 108.6 78.1 +39%
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.
In Q1, Kyzyl continued to demonstrate material positive grade
reconciliation - the average gold grade in ore processed grew by 17% y-o-y
to 8.0 g/t, well above the mine plan. The company expects the average
grade at Kyzyl to normalize in Q2.
POX recovery fell as more material with medium-carbon grade was diverted
to Amursk from China following COVID-related shipment delays in February.
ALBAZINO
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 4.8 5.5 -13%
Underground development, Km 3.1 2.3 +32%
Ore mined, Kt 517 480 +8%
Open-pit 360 362 -1%
Underground 157 118 +33%
PROCESSING
Albazino concentrator
Ore processed, Kt 445 425 +5%
Gold grade, g/t 4.5 4.4 +1%
Gold recovery1 85.6% 83.7% +2%
Concentrate produced, Kt 35.9 35.6 +1%
Concentrate gold grade, g/t 48.1 44.5 +8%
Gold in concentrate, Koz2 55.6 50.9 +9%
Amursk POX
Concentrate processed, Kt 46 53 -14%
Gold grade, g/t 53.6 51.6 +4%
Gold recovery 96.4% 95.2% +1%
Gold produced, Koz 77.5 81.3 -5%
TOTAL PRODUCTION
Gold, Koz 77.5 81.3 -5%
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, gold in concentrate production was up 9% y-o-y on the back of
higher grades and recoveries. This was driven by the lower base in Q1 2019
attributable to more complex metallurgy and lower grade from Ekaterina-1.
Underground mine productivity at Albazino increased by 33% y-o-y due to
continued underground development at Olga ore zone and increased mining
fleet. The Company plans to fully ramp up underground mining at
Ekaterina-2 this year.
Reported gold production for the quarter decreased by 5% y-o-y as Albazino
and third-party concentrate were supplanted by Kyzyl concentrate at the
POX plant.
AMURSK POX
3 months ended Mar 31, % change
2020 2019
Concentrate processed, Kt 62 61 +1%
Albazino 41 45 -10%
Kyzyl 16 8 +100%
Veduga 1 4 -67%
Other1 3 3 -0%
Gold recovery 94.2% 95.0% -1%
Average gold grade, g/t 74.9 60.3 +24%
Average sulphur grade 14.2% 12.7% +12%
Total gold produced2, Koz 144.7 108.7 +33%
Kyzyl 67.2 27.4 +146%
Albazino 59.7 66.5 -10%
Veduga 14.4 12.8 +12%
Other 3.4 2.0 +67%
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.
Amursk POX achieved the record quarterly throughput and gold production of
62 Kt and 145 Koz respectively on the back of larger volumes from Kyzyl.
The operation copes well with relatively high-carbon incremental material
from Kyzyl although the introduction of this off-specification feedstock
led to a moderate decrease in the recovery y-o-y.
DUKAT OPERATIONS
3 months ended Mar 31, % change
2020 2019
MINING
Underground development, Km 11.3 15.2 -26%
Ore mined, Kt 539 603 -11%
PROCESSING
Omsukchan concentrator
Ore processed, Kt 513 513 +0%
Grade
Gold, g/t 0.5 0.6 -15%
Silver, g/t 286 284 +1%
Recovery1
Gold 84.5% 86.2% -2%
Silver 86.0% 87.2% -1%
Production
Gold, Koz 6.3 7.4 -15%
Silver, Moz 3.9 3.9 +0%
Lunnoye plant
Ore processed, Kt 116 116 +0%
Grade
Gold, g/t 1.5 1.5 +3%
Silver, g/t 269 268 +0%
Recovery1
Gold 90.7% 86.2% +5%
Silver 91.4% 90.2% +1%
Production
Gold, Koz 5.1 4.7 +8%
Silver, Moz 0.9 0.9 +1%
TOTAL PRODUCTION
Gold, Koz 11.3 12.1 -6%
Silver, Moz 4.8 4.8 +0%
Note: (1) Technological recovery, includes gold and silver within
work-in-progress inventory.
At Dukat, silver production exceeded expectations due to higher than
planned grade supported by lower underground dilution. As a result,
quarterly silver output remained largely unchanged y-o-y despite
discontinuation of mining from the relatively high-grade Goltsovoye mine.
VARVARA
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 10.2 11.2 -9%
Ore mined, Kt 782 961 -19%
PROCESSING
Leaching
Ore processed, Kt 734 752 -2%
Gold grade, g/t 1.5 1.5 +1%
Gold recovery1 87.0% 85.3% +2%
Gold production (in dore), Koz 34.7 31.4 +10%
Flotation
Ore processed, Kt 129 147 -12%
Grade
Gold, g/t 3.1 1.1 +180%
Copper 0.32% 0.57% -45%
Recovery1
Gold 85.7% 79.3% +8%
Copper 83.6% 91.9% -9%
Production
Gold (in concentrate), Koz 8.7 2.6 +234%
Copper (in concentrate), Kt 0.3 0.7 -55%
Veduga ore toll processed, Kt2 30 33 -8%
Total ore processed, Kt 893 931 -4%
TOTAL PRODUCTION
Gold, Koz 43.3 34.0 +28%
Copper, Kt 0.3 0.7 -55%
Note: (1) Technological recovery, includes gold and copper within
work-in-progress inventory. Does not include toll-treated ore.
(2) To be further processed at Amursk POX.
At Varvara, Q1 gold output increased by 28% y-o-y to 43 Koz driven by
larger volumes of high-grade third-party ore in the flotation circuit.
All mining at Varvara is focused on waste for the new TSF construction.
OMOLON OPERATIONS
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 0.9 1.3 -30%
Underground development, Km 3.3 3.2 +3%
Ore mined, Kt 802 648 +24%
Open-pit 689 533 +29%
Underground 113 115 -2%
PROCESSING
Kubaka Mill
Ore processed, Kt 213 220 -3%
Grade
Gold, g/t 6.9 7.9 -13%
Silver, g/t 14 22 -39%
Recovery1
Gold 92.1% 94.2% -2%
Silver 83.8% 72.9% +15%
Gold production, Koz 41.5 51.5 -19%
Silver production, Moz 0.1 0.1 -41%
Birkachan Heap Leach
Ore stacked, Kt - 54 -100%
Gold grade, g/t - 1.2 -100%
Gold production, Koz - - NA
TOTAL PRODUCTION
Gold, Koz 41.5 51.5 -19%
Silver, Moz 0.1 0.1 -41%
Note: (1) Technological recovery, includes gold and silver within
work-in-progress inventory.
At Omolon, gold production declined by 19% to 41 Koz on the back of
increased processing volumes of lower-grade open-pit ore from Yolochka.
Mining at the deposit is now complete, mining fleet and mining camp are
being re-located to Olcha where step-out drilling identified near-surface
reserves sufficient for a 6-month mining campaign.
In March, Polymetal completed sale of Sopka assets including low-grade ore
stockpiles from Sopka, Dalneye and Oroch deposits as well as mining and
exploration licenses for Sopka, Dalneye, and Irbychan. Mining at the
properties ceased in 2018.
In February, the Company started construction of the new dry-stack TSF
which is expected to be launched in Q4 2021. The facility has the capacity
of 5.9 mln m3 which implies 12 years of stacking at 850 Ktpa Kubaka mill
throughout. The project CAPEX is estimated at RUB 1.5 billion (US$ 24
million at the budget exchange rate).
MAYSKOYE
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 1.1 1.2 -9%
Underground development, km 5.5 5.5 -1%
Ore mined, Kt 261 218 +20%
Open-pit 78 64 +23%
Underground 183 155 +18%
PROCESSING
Ore processed (sulphide ore), Kt 227 219 +4%
Gold grade, g/t 5.7 5.7 +1%
Gold recovery 91.2% 83.8% +9%
Gold in concentrate, Koz2 38.2 33.4 +15%
Gold produced in dore from concentrate 0.3 - NA
(POX), Koz
Gold produced in dore from carbon, Koz3 - 4.6 -100%
Payable gold in concentrate shipped to - - -
off-takers, Koz
TOTAL PRODUCTION
Gold, Koz 0.3 4.6 -93%
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-takers or dore production at Amursk POX.
(3) Gold produced from carbon at Amursk POX.
At Mayskoye, gold in concentrate produced increased by 15% y-o-y to 38 Koz
due to better recoveries driven by flowsheet improvements (rougher
concentrate re-grinding).
SVETLOYE
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt 0.7 0.4 +82%
Ore mined (open pit), Kt 346 413 -16%
PROCESSING
Ore stacked, Kt 308 184 +67%
Gold grade, g/t 4.4 4.9 -10%
Gold recovery 80.8% 80.7% +0%
TOTAL PRODUCTION
Gold, Koz 21.3 9.2 +133%
At Svetloye, stacking volumes and leach kinetics continued to be
positively impacted by warmer winter. This resulted in a 133% y-o-y jump
in quarterly gold production to reach 21 Koz.
VORO
3 months ended Mar 31, % change
2020 2019
MINING
Waste mined, Mt - 0.4 -100%
Ore mined, Kt 41 269 -85%
PROCESSING
Voro CIP
Ore processed, Kt 269 249 +8%
Gold grade, g/t 2.2 3.4 -37%
Gold recovery1 82.1% 87.0% -6%
Gold production, Koz 17.8 22.3 -20%
Voro Heap Leach
Gold production, Koz 2.3 4.8 -52%
TOTAL PRODUCTION
Gold, Koz 20.1 27.0 -26%
Note: (1) Technological recovery, includes gold within work-in-progress
inventory.
At Voro, open-pit mining was completed in January and the CIP plant turned
to processing lower-grade stockpiles which resulted in 26% y-o-y decrease
in quarterly gold production to 20 Koz.
DEVELOPMENT UPDATE
At Nezhda, construction and mining activities are progressing on schedule.
Construction within the concentrator was focused on the installation of
internal walls and structural steel for the equipment installation.
Installation of apron feeder and flotation cells commenced. The SAG mill
and the first two (out of eight) gensets arrived on site. Foundations for
the power plant and the boiler house were completed.
At POX-2, detailed engineering and contracting of auxiliary equipment is
ongoing. Autoclave vessel construction completed and the testing program
initiated. The vessel is expected to arrive in Q3 subject to no
interruption due to the COVID-19.
Polymetal entered into an offtake agreement with Blackham Resources, an
Australian gold mining company, to purchase refractory gold concentrate
from Wiluna mine which will be available for processing at POX-2 during
2023-2027.
SUSTAINABILITY, HEALTH AND SAFETY
In Q1, there were no fatalities neither among Polymetal employees nor the
Сompany's contractors. Our LTIFR stood at 0.07, a 71% decline over 0.15 in
Q1 2018. There were two minor work-related incidents recorded across the
Group (6 incidents in 2019).
Safety remains a top priority for Polymetal and the Company reaffirms its
commitment to further improvements across health and safety metrics to
achieve our zero harm target in relation to our employees, as well as our
suppliers and contractors.
PERSONNEL
Tagir Ibragimov (41) was appointed as Managing Director at Mayskoye. He
joined Mayskoye in 2015 as Deputy Chief Engineer for Drilling and Blasting
Operations. Most recently he was Head of the Mine and Deputy Chief
Engineer for Production. Mr. Ibragimov graduated from Kazakh National
Technical University with a degree in mining.
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ISIN: JE00B6T5S470
Category Code: MSCH
TIDM: POLY
Sequence No.: 59037
EQS News ID: 1024621
End of Announcement EQS News Service
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