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Q1 Production Results

19 April 2017

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries – “Polymetal”, the “Company”, or the “Group”) is pleased to announce the Group’s production results for the first quarter ended March 31, 2017.

HIGHLIGHTS

  • Polymetal produced 280 Koz of gold equivalent (GE) in Q1 2017 which is an 8% increase over Q1 2016. A strong performance at Omolon and contributions from our newly acquired operations - Komar (Varvara) and Kapan added to the positive momentum in the period.
  • Gold production for the quarter increased 18% over 2016 to 199 Koz, while, as expected, silver production decreased 15% due to the anticipated grade decline at Dukat.
  • Gold and silver sales in the period lagged production due to the traditional shutdown of Russian refineries in January, and a seasonal increase of concentrate in transit from Dukat to off-takers. This working capital accumulation is expected to reverse by Q4 2017.
  • At Kyzyl, construction and pre-stripping activities are progressing in line with the project schedule. Kyzyl is on track to produce its first concentrate in Q3 2018.
  • The Сompany is pleased to report that the introduction of a new Critical Risks Management system is now complete, contributing to a material improvement in the Company’s safety performance in Q1 2017 with LTIFR of 0.12, a 37% decrease compared to the prior year period, and no fatalities.
  • Net debt increased from US$ 1,329 million as at 31 December 2016 to US$ 1,506 million as at 31 March 2017, due to the lag between production and sales, seasonal advance purchases of diesel fuel, and increased spending at Kyzyl. As in prior years, free cash flow generation will be skewed towards the second half of the year, with input from Mayskoye concentrate sales and seasonal heap leach production at Svetloye.
  • The Company reconfirms its production guidance of 1.40 Moz of gold equivalent in FY2017 at total cash costs of US$ 600-650/ GE oz and all-in sustaining cash costs of US$ 775-825/GE oz. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group’s Rouble-denominated operating costs.

“We are pleased to report a strong start to the year with a solid set of production results that were further enhanced by our recently acquired assets”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “We remain on track to deliver on our production and cost targets for the current year”.

  3 months ended Mar 31,  
   2017 2016 % change1
Waste mined, Mt  25.5  13.7  +86%
Underground development, km  24.9  20.2  +24%
 Ore mined, Kt  3,314  2,998  +11%
    Open-pit  2,203  2,191  +1%
    Underground  1,110  807  +38%
 Ore processed, Kt  2,843  2,506  +13%
Production
    Gold, Koz 199 169 +18%
    Silver, Moz 6.1 7.2 -15%
    Copper, Kt 0.5 0.2 +88%
    Zinc, Kt 1.1 - NA5
    Gold equivalent, Koz2 280 260 +8%
Sales
    Gold, Koz 176 162 +9%
   Silver, Moz 4.6 6.5 -28%
    Copper, Kt 0.1 - NA
    Zinc, Kt 0.5 - NA
Revenue, US$m3 298 286 +4%
Net debt, US$m4 1,506 1,329 +13%
Safety6
    LTIFR 0.12 0.19 -37%
    Fatalities - - 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 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.
(3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges.
(4) Non-IFRS measure, based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents. Comparative information is presented for 31 December 2016.
(5) NA = not available.
(6) LTIFR =lost time injury frequency rate per 200,000 hours worked.

Please find the full version of the press release here.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday, April 19, 2017 at 14:00 am London time (16:00 pm Moscow time).

To participate in the call, please dial:
8 10 800 204 140 11 access code 85704505# (free from Russia), or
+44 20 3367 9456 (free from the UK), or
1 855 402 7762 (free from the US), or
follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4483.

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

Webcast replay will be available on Polymetal’s website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4483. A recording of the call will be available immediately after the call at +44 20 3367 9460 (from within the UK), 1 877 6423 018 (USA Toll Free) and +7 495 745 79 48 (from within Russia), access code 307897#, from 16:00 Moscow time Wednesday, April 19, till 16:00 Moscow time Wednesday, April 26, 2017.

Enquiries

Media

Investor Relations

FTI Consulting
Leonid Fink
Jenny Payne

+44 20 3727 1000

Polymetal
Evgenia Onuschenko
Maryana Nesis
Michael Vasiliev

ir@polymetalinternational.com

+44 20 7016 9503 (UK)

+7 812 313 5964 (Russia)

Joint Corporate Brokers

Morgan Stanley
Sam McLennan
Richard Brown

Panmure Gordon
Adam James
Tom Salvesen

+44 20 7425 8000

 

+44 20 7886 2500

RBC Europe Limited
Tristan Lovegrove
Marcus Jackson

+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.

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