REG-Polymetal International plc Polymetal: Report on payments to governments for the year 2019
15/06/2020 07:05
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Polymetal International plc (POLY)
Polymetal: Report on payments to governments for the year 2019
15-Jun-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 15 June 2020
Polymetal International plc
Report on payments to governments for the year 2019
Polymetal issues the report on payments to government for the year ended 31 December 2019.
INTRODUCTION
This Report provides an overview of the payments to governments made by Polymetal International plc and its subsidiary undertakings
(hereinafter referred to as "Polymetal") for the year 2019 as required under the UK's Report on Payments to Governments Regulations 2014
(as amended in December 2015). These UK Regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive
(2013)) and apply to large extractive companies, whose securities are publicly listed on a UK-regulated stock market, that are involved
in the exploration, prospection, discovery, development and extraction of minerals, oil, natural gas deposits or other materials. This
Report is also intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the
United Kingdom.
BASIS OF PREPARATION
Legislation
This report is prepared in accordance with The Reports on Payments to Governments Regulations 2014 as enacted in the UK in December 2014
and as amended in December 2015.
Reporting entities
This Report includes payments to governments made by Polymetal. Payments made by entities over which Polymetal has joint control or
significant influence are excluded from this Report.
Activities
Payments made by Polymetal to governments arising from activities involving the exploration, prospection, discovery, development and
extraction of minerals are disclosed in this Report. It excludes payments related to refining activities made to the refineries owned by
the government agencies and any payments which are not directly attributable to the production and exploration activities.
Government
Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a
subsidiary of a government.
Project
Payments are reported at project level except that payments that are not attributable to a specific project are reported at legal entity
level. Project is defined as operational activities which are governed by a single contract, or licence agreement, and form the basis
for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a
single project.
"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, or licence agreements that
are signed with a government giving rise to payment liabilities. Indicators of integration include, but are not limited to, geographic
proximity, the use of shared infrastructure and common operational management.
License agreements are aggregated for the purposes of reporting as a single project only when those legal agreements have substantially
similar terms and are both geographically and operationally integrated.
Payments
The information is reported under the following payment types:
Income taxes
These are taxes paid by Polymetal on its income and profits in accordance with legislation enacted in the applicable jurisdiction.
Payments are reported net of refunds. Value added tax, personal income taxes, social taxes, property taxes are excluded.
The maximum income tax in Russia is set at 20% and is allocated between federal budget and the budgets of the relevant constituent
regions. In 2019 and 2018 the following proportion was applied: 3% to the federal budget, whereas 17% allocated to the regional budgets.
From 1 January 2017 Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of 17%
for the operations held in the Special Economic Zone of the Russian Far East, as well as decreased mining tax rate (paying at 60% of the
standard mining tax rates). In return for obtaining this tax relief the members of the regional free economic zone are obliged to invest
50% of their tax savings each year in the Special Economic Zone Development Program. From 1 January 2017 Svetloye LLC has received tax
relief as Regional Investment Project and is entitled to the statutory income tax rate of 0% up to 2021, as well as decreased Mining tax
rates.
In Kazakhstan and Armenia income taxes are set at 20% and there are no regional or local income taxes in these countries.
Mining tax
Mining tax is a royalty payable in Russian Federation, Kazakhstan and Armenia, which is calculated based on the value of the precious
metals extracted in the period. This value is usually determined based on the realised selling price of precious metals or, in case if
there were no sales during the period, cost of production of metals extracted (Russian Federation) or the average market price
(Kazakhstan) during the period. Royalty payable in Armenia is calculated as a percentage of actual sales during the reporting period.
Mining tax in Russia is levied at federal level, and then is reallocated between federal and respective regional budgets based on the
following proportion: 40% of total tax collected to the federal budget, 60% to regional budgets. Mining tax and royalties in Kazakhstan
and Armenia are levied at republican level.
Licence fees
These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities
are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive
resources, are excluded. No significant licence fees individually more than 86,000 GBP were paid during the year ended 31 December 2019.
Rental fees
The land in the Russian Federation and Kazakhstan on which the Group's production facilities are located is owned by the state. The
Group leases this land through operating lease agreements.
Other payments
Other payments include payments made and social commitments in accordance with subsoil contracts attributable to the Kyzyl project and
investment in the Special Economic Zone Development Program of Omolon Gold Mining Company LLC and Magadan Silver JSC.
Cash and in-kind payments
Payments are reported on cash basis. No in-kind payments were made during years ended 31 December 2019 and 31 December 2018.
Materiality Level
Any payment, whether made as a single payment or as a series of related payments, below GBP 86,000 within a financial year is excluded
from this Report.
Payments made to a governments by a joint ventures or associates of the Group in proportion to the company's interest in the respective
venture or associate are insignificant to this Report based on materiality level set.
Exchange Rate
Relevant payments are made by Polymetal in Russian Rubles, Kazakh Tenge and Armenian Dram and for the purpose of this Report are
translated to the US Dollar based on the foreign exchange rate at the relevant monthly average rate.
PAYMENTS PER GOVERNMENT
FOR THE YEAR 2019
Government Mining Rental Licence
Income tax fees Other1 Total
000'$ tax fees
Russia 84,619 70,396 2,727 29 12,235 170,006
Kazakhstan 19,057 45,326 44 - 8,016 72,443
Total 103,676 115,722 2,771 29 20,251 242,449
PAYMENTS PER
PROJECT1
Entity Country/ Mining Rental Licence
Project Government Region Income tax fees Other1 Total
000'$ tax fees
Gold of Northern Urals CJSC Voro Russia Svedlovskaya 26,568 9,101 103 - 46 35,818
oblast'
Svetloye LLC Svetloye Russia Khabarovskiy Kray - 2,189 348 5 48 2,590
Magadan Silver JSC Dukat Russia Magadanskaya 27,962 15,881 747 2 7,970 52,562
oblast'
Mayskoye Gold Mining Company LLC Mayskoye Russia Chukotka - 12,380 71 11 20 12,482
Autonomous Okrug
Omolon Gold Mining Company LLC Omolon Russia Magadanskaya 11,390 10,450 319 4 3,825 25,988
oblast'
Albazino Resources Ltd Albazino Russia Khabarovskiy Kray 16,007 18,940 608 7 239 35,801
GRK Amikan LLC Veduga Russia Krasnoyarskiy Kray 2,692 1,455 265 - 23 4,435
South-Verkhoyansk Mining Company Nezhda Russia Yakutia - - 266 - 64 330
JSC
Varvarinskoye JSC Varvara Kazakhstan n/a 15,528 3,791 11 - 556 19,886
Komarovskoye Mining Company LLC Komar Kazakhstan n/a 3,076 7,483 - - - 10,559
Bakyrchik Mining Venture LLC Kyzyl Kazakhstan n/a 450 34,052 30 - 7,435 41,967
Inter Gold Capital LLC Kazakhstan n/a - - 3 - 25 31
Total 103,676 115,722 2,771 29 20,251 242,449
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 3,522 for Omolon Gold Mining Company LLC and kUS$ 7,945 for
Magadan Silver JSC.
PAYMENTS PER GOVERNMENT
FOR THE YEAR 2018
Government Income Mining Rental
tax Licence fees Other1 Total
000'$ tax fees
Russia 94,652 68,408 2,161 130 9,643 174,994
Kazakhstan 9,611 15,898 60 - 5,425 30,994
Armenia 388 13,241 228 - 12 13,869
Total 104,651 97,547 2,449 130 15,080 219,857
PAYMENTS PER
PROJECT1
Entity Country/ Income Mining Rental
Project Government Region tax Licence fees Other1 Total
000'$ tax fees
Gold of Northern Urals Voro Russia Svedlovskaya 25,962 8,180 83 - 79 34,304
CJSC oblast'
Okhotskaya Mining and Okhotsk Russia Khabarovskiy 8,328 5,751 301 34 42 14,456
Exploration Company LLC Kray
Svetloye LLC Svetloye Russia Khabarovskiy 3 33 326
Kray - 290
Magadan Silver JSC Dukat Russia Magadanskaya 34,420 14,527 604 45 5,111 54,707
oblast'
Mayskoye Gold Mining Chukotka
Company LLC Mayskoye Russia Autonomous 12,322 6 25 12,353
Okrug
Omolon Gold Mining Omolon Russia Magadanskaya 6,929 8,603 403 20,196
Company LLC oblast' 31 4,230
Albazino Resources Ltd Albazino Russia Khabarovskiy 19,013 19,025 474 17 123 38,652
Kray
Varvarinskoye JSC Varvara Kazakhstan n/a 4,701 2,370 11 - 444 7,526
Komarovskoye Mining Komar Kazakhstan n/a 3,004 5,333 11 - 467 8,815
Company LLC
Bakyrchik Mining Venture Kazakhstan n/a 1,906 8,195 34 - 4,489 14,624
LLC Kyzyl
Inter Gold Capital LLC Kazakhstan n/a - - 4 - 25 29
Kapan MPC CJSC Kapan Armenia n/a 388 13,241 228 - 12 13,869
Total 104,651 97,547 2,449 130 15,080 219,857
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 4,172 for Omolon Gold Mining Company LLC and kUS$ 4,979 for
Magadan Silver JSC.
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 1 ir@polymetalinternational.com
FTI Consulting
Evgeny Monakhov +44 20 7887 1475 (UK)
Leonid Fink +44 20 3727 1000
Timofey Kulakov
Viktor Pomichal
Kirill Kuznetsov +7 812 334 3666 (Russia)
Joint Corporate Brokers
+44 20 7425 8000
Morgan Stanley & Co. International plc
Andrew Foster RBC Europe Limited
Richard Brown Marcus Jackson +44 20 7653 4000
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.
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ISIN: JE00B6T5S470
Category Code: PGR
TIDM: POLY
Sequence No.: 69654
EQS News ID: 1069471
End of Announcement EQS News Service
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References
Visible links
1. mailto:ir@polymetalinternational.com
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