REG-Polymetal International plc Polymetal: Q1 2022 production results and guidance update
25/04/2022 07:15
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Polymetal International plc (POLY)
Polymetal: Q1 2022 production results and guidance update
25-Apr-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 25 April 2022
Polymetal International plc
Q1 2022 production results and guidance update
Polymetal reports solid production results for the first quarter of 2022
and updated production and cost guidance.
"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.
• The Company will host its virtual Analyst & Investor Day today at
11:00 London time (13:00 Moscow time). Please follow the link to join
1 https://www.webcast-eqs.com/polymetal20220425.
OPERATING HIGHLIGHTS
3 months ended Mar 31, % change1
2022 2021
Waste mined, Mt 55.0 45.4 +21%
Underground development, km 23.9 23.0 +4%
Ore mined, Mt 4.3 3.8 +14%
Open-pit 3.3 2.8 +18%
Underground 1.0 1.0 +4%
Ore processed, Mt 4.1 3.6 +13%
Average GE grade processed, g/t 3.5 4.0 -13%
Production
Gold, Koz 315 337 -6%
Silver, Moz 4.5 4.6 -2%
Gold equivalent, Koz2 372 394 -6%
Sales
Gold, Koz 268 280 -4%
Silver, Moz 4.4 3.7 +17%
Revenue, US$m3 616 593 +4%
Net debt, US$m4 1,978 1,647 +20%
Safety
LTIFR (Employees)5 0.10 0.25 -60%
Fatalities 0 0 NA
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 80:1 Au/Ag conversion ratio and excluding base metals.
Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion
ratio was used previously).
(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 2021.
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
PRODUCTION BY MINE
3 months ended Mar 31, %
2022 2021 change
GOLD EQ. (KOZ)1
Kyzyl 82 89 -8%
Dukat 66 66 -1%
Varvara 57 60 -4%
Albazino 56 77 -27%
Omolon 40 47 -16%
Nezhda 30 - NA
Voro 20 22 -10%
Svetloye 19 27 -30%
Mayskoye 3 6 -55%
TOTAL 372 394 -6%
Notes: (1) Based on 80:1 Au/Ag conversion ratio and excluding base metals.
Comparative data for 2021 restated accordingly 120:1 Au/Ag conversion
ratio was used).
CONFERENCE CALL AND WEBCAST
The management will discuss Q1 production results during the Analyst &
Investor Day today at 11:00 London time (13:00 Moscow time). Please follow
the link to join 2 https://www.webcast-eqs.com/polymetal20220425.
Enquiries
Investor Relations
Polymetal 3 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.
KYZYL
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 20.7 20.2 +2%
Ore mined (open-pit), Kt 584 556 +5%
PROCESSING
Ore processed, Kt 551 563 -2%
Gold grade, g/t 4.8 6.0 -20%
Gold recovery 87.7% 88.8% -1%
Gold in concentrate, Koz1 73 96 -24%
Concentrate shipped, Kt 10.8 27.0 -60%
Payable gold shipped, Koz 20 46 -57%
Amursk POX
Concentrate processed, Kt 14 12 +13%
Gold recovery 94.6% 92.4% +2%
Gold produced, Koz 62 43 +44%
TOTAL PRODUCTION
Gold, Koz 82 89 -8%
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.
(2) To be further processed at Amursk POX.
In Q1, gold production at Kyzyl contracted by 8% as the mining was focused
on the eastern part of the pit with lower grade (where historical
underground workings are located), and due to concentrate stockpiling to
form batches with sufficiently low arsenic content to be shipped to China.
The inventory is expected to be drawn down in the following quarters.
DUKAT OPERATIONS
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 0.9 0.4 +122%
Underground development, km 11.6 11.7 -1%
Ore mined, Kt 633 645 -2%
Open-pit 107 104 +3%
Underground 527 542 -3%
PROCESSING
Omsukchan concentrator
Ore processed, Kt 515 513 +1%
Grade
Gold, g/t 0.7 0.5 +42%
Silver, g/t 249 252 -1%
Recovery1
Gold 83.7% 83.2% +1%
Silver 84.9% 86.8% -2%
Production
Gold, Koz 9 6 +42%
Silver, Moz 3.4 3.5 -4%
Lunnoye plant
Ore processed, Kt 115 116 -0%
Grade
Gold, g/t 1.9 1.5 +28%
Silver, g/t 185 252 -27%
Recovery1
Gold 91.5% 91.7% -0%
Silver 92.7% 92.2% +1%
Production
Gold, Koz 6 5 +26%
Silver, Moz 0.7 0.9 -24%
TOTAL PRODUCTION
Gold, Koz 15 11 +35%
Silver, Moz 4.0 4.4 -8%
Notes: (1) Technological recovery, includes gold and silver within
work-in-progress inventory.
Dukat Q1 gold production was above the plan as the Company reached
high-grade ore blocks at the Dukat mine. Silver output was lower in line
with the budget.
At Primorskoye, the Company will be stockpiling ore to ship it by sea to
customers during the navigation period in H2 2022.
Waste mined jumped y-o-y due to mining of crown pillar at the Dukat open
pit.
VARVARA
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 11.0 9.5 +16%
Ore mined, Kt 957 1,056 -9%
PROCESSING
Leaching
Ore processed, Kt 769 764 +1%
Gold grade, g/t 1.7 1.7 +1%
Gold recovery1 89.6% 86.4% +4%
Gold production (in dore), Koz 45 46 -2%
Flotation
Ore processed, Kt 179 190 -6%
Gold grade, g/t 2.8 2.5 +12%
Recovery1 88.5% 84.6% +5%
Gold in concentrate, Koz 11 13 -14%
TOTAL PRODUCTION
Gold, Koz 57 60 -4%
Note: (1) Technological recovery, includes gold and copper within
work-in-progress inventory. Does not include toll-treated ore.
At Varvara, gold recovery at the leaching circuit improved by 4 p.p. y-o-y
following flowsheet improvements. At the flotation plant, grade and
recoveries increased driven by larger volumes and better quality of
third-party ore.
Mine's gold production contracted y-o-y on the back of high base of Q1
2021 when significant work-in-progress was released.
ALBAZINO
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 7.2 5.1 +41%
Underground development, km 4.6 3.3 +40%
Ore mined, Kt 772 495 +56%
Open-pit 569 308 +85%
Underground 203 187 +9%
PROCESSING
Albazino concentrator
Ore processed, Kt 453 427 +6%
Gold grade, g/t 3.2 4.3 -25%
Gold recovery1 86.7% 88.7% -2%
Gold in concentrate, Koz2 41 52 -22%
Amursk POX
Concentrate processed, Kt 43.2 48.3 -11%
Gold grade, g/t 44.3 52.8 -16%
Gold recovery 96.5% 96.5% -0%
Gold produced, Koz 56 77 -28%
TOTAL PRODUCTION
Gold, Koz 56 77 -28%
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, production decreased by 28% y-o-y on the back of depletion of
high-grade Anfisa pit as well as negative recovery rate dynamics
attributable to the increase of share of oxidised ore from Ekaterina mine.
Waste and ore mining volumes were higher driven by Kutyn and Farida
development. Underground development advanced due to ramping-up of
Ekaterina and Anfisa underground mines.
Kutyn construction progressed on schedule, the project is 80% completed.
The Company expects heap leaching to start-up in Q3 2022.
AMURSK POX
3 months ended Mar 31, % change
2022 2021
Concentrate processed, Kt 58 60 -4%
Albazino 43 44 -2%
Kyzyl 14 12 +13%
Nezhda 1 0 NA
Mayskoye 0 0 +1%
Veduga 0 4 -100%
Gold recovery 95.5% 94.9% +1%
Average gold grade, g/t 64.9 69.6 -7%
Total gold produced2, Koz 120 121 -1%
Albazino 56 67 -17%
Kyzyl 62 43 +44%
Mayskoye 2 1 +61%
Veduga - 9 -100%
Nezhda 1 - NA
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.
POX production was stable. The plant processed the first test batch of
Nezhda's gold flotation concentrate demonstrating sufficient recoveries.
OMOLON OPERATIONS
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 1.8 0.3 +466%
Underground development, Km 3.0 2.7 +13%
Ore mined, Kt 104 73 +43%
Open-pit - - NA
Underground 104 73 +43%
PROCESSING
Kubaka Mill
Ore processed, Kt 212 212 +0%
Grade
Gold, g/t 5.8 6.9 -16%
Silver, g/t 24 23 +5%
Recovery1
Gold 92.9% 92.8% +0%
Silver 75.8% 77.8% -3%
Gold production, Koz 37 45 -18%
Silver production, Moz 0.1 0.1 -3%
Birkachan Heap Leach
Ore stacked, Kt - 45 -100%
Gold grade, g/t - 1.0 -100%
Gold production, Koz 1 1 +146%
TOTAL PRODUCTION
Gold, Koz 38 45 -16%
Silver, Moz 0.1 0.1 -1%
Note: (1) Technological recovery, includes gold and silver within
work-in-progress inventory.
Gold production at Omolon decreased by 16% y-o-y on the back of the
planned decline in grade processed.
Waste mine jumped as the development of Burgali open pit progressed, while
ore mining there will recommence in Q3 2022. Underground ore mining was
higher due to above-the-budget associated ore volumes.
NEZHDA
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 4.9 5.3 -7%
Ore mined, Kt 604 346 +75%
PROCESSING
Ore processed, Kt 484 - NA
Grade
Gold, g/t 3.7 - NA
Silver, g/t 30.5 - NA
Recovery1
Gold 73.2% - NA
Silver 74.7% - NA
Gold in concentrate, Koz 42 - NA
Silver in concentrate, Moz 0.4 - NA
Concentrate shipped, Kt 1.1 - NA
Payable gold in concentrate, Koz 26 - NA
Amursk POX
Concentrate processed, Kt 1.1 - NA
Gold grade, g/t 39.6 - NA
Gold recovery 88.1% - NA
Gold produced, Koz 1 - NA
TOTAL PRODUCTION
Gold, Koz 27 - NA
Silver, Moz 0.2 - NA
At Nezhda, first concentrate was shipped to off-takers. The concentrator
achieved design throughput on planned grade. Recovery remained lower than
design by 3-4 percentage points as the Company targeted higher improved
market liquidity for its products against the backdrop of further
tightening in Chinese arsenic restrictions
VORO
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 3.4 0.6 +481%
Ore mined, Kt 76 11 +570%
PROCESSING
CIP
Ore processed, Kt 246 260 -5%
Gold grade, g/t 2.1 2.2 -3%
Gold recovery1 85.7% 83.9% +2%
Gold production, Koz 18 20 -8%
Heap Leach
Ore stacked, Kt - - NA
Gold grade, g/t - - NA
Gold production, Koz 1 2 -69%
TOTAL PRODUCTION
Gold, Koz 19 22 -11%
Note: (1) Technological recovery, includes gold within work-in-progress
inventory.
At Voro, quarterly gold production contracted due to lower volumes of
third-party and Pesherny feedstocks as well as a decrease in volumes
processed.
Voro flotation plant construction is 70% completed. Start-up is targeted
for Q1 2023
SVETLOYE
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 1.6 0.7 +144%
Ore mined (open pit), Kt 369 390 -5%
PROCESSING
Ore stacked, Kt 312 282 +11%
Gold grade, g/t 1.9 4.8 -61%
Gold recovery 80.8% 82.1% -2%
Gold production, Koz 19 27 -30%
TOTAL PRODUCTION
Gold, Koz 19 27 -30%
Gold production at Svetloye recorded a 30% y-o-y decrease on the back of
stacking of stockpiled low-grade ore from depleted Lyudmila main pit.
Full-year grade is expected to normalize.
Waste mined increase is attributable to development of a new pit at
Lyudmila (Nadezhda - launched in 2021), new pushback (Stage 3) at the Emmy
pit.
MAYSKOYE
3 months ended Mar 31, % change
2022 2021
MINING
Waste mined, Mt 1.0 0.9 +8%
Underground development, km 4.7 5.1 -7%
Ore mined, Kt 195 191 +2%
Open-pit 13 13 -1%
Underground 183 178 +3%
PROCESSING
Ore processed, Kt 230 217 +6%
Gold grade, g/t 5.6 6.2 -9%
Gold recovery1 90.8% 92.5% -2%
Gold in concentrate, Koz2 38 40 -6%
Amursk POX
Gold produced in dore from concentrate 2 1 +61%
(POX), Koz
Gold produced in dore from carbon, Koz3 1 5 -76%
TOTAL PRODUCTION
Gold, Koz 3 6 -55%
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-taker or dore production at Amursk POX.
(3) Gold produced from carbon at Amursk POX.
Gold in concentrate production at Mayskoye decreased on the back the
planned grade decline. Full-year average grade is expected to be roughly
stable y-o-y.
Mayskoye haulage project (ore transportation by conveyor) is on track for
launch in Q3 2022. Paste backfill plant construction is postponed by one
year due to supply chain challenges.
POX-2
At POX-2, construction of metal frameworks at the autoclave servicing area
and slurry cooling section as well as sandwich panels' construction at the
high bay area is in progress. Concentrate preparation equipment and
vessels at slurry mixing neutralization areas are being installed.
Thickener installation is ongoing. Foundation works for the CIL equipment
and preparation for technological pipelines installation at the downstream
section are in progress. Construction of 16 MW boiler house completed.
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
fully ramp-up in Q2 2024.
SUSTAINABILITY, HEALTH AND SAFETY
No fatal accidents occurred among Group employees and contractors in Q1
2022 (none did in Q1 2021). Group's lost time injury frequency rate
(LTIFR) decreased by 60% y-o-y to 0.10 (0.25 in Q1 2021). Three incidents
resulting in lost time injuries occurred among Group employees and another
three - among contractors, with all of the injuries classified as minor.
Each incident was followed by proper investigations aimed at improving
safety of workplaces.
In Q1, Polymetal published its Sustainability Performance Data 2021 (GRI
and SASB) and climate report in accordance with TCFD, which accompanied
the Integrated Annual Report 2021 for the year ended 31 December 2021.
Following the recent geopolitical developments, Sustainalytics has
increased Polymetal's ESG Risk Rating from 15.9 (Low Risk) to 21.9 (Medium
Risk), while MSCI ESG Ratings has downgraded Polymetal's ESG Rating from
AA to B.
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ISIN: JE00B6T5S470
Category Code: MSCH
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.: 157149
EQS News ID: 1333649
End of Announcement EQS News Service
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