A new beginning
Founded by the ICT Group (Alexander Nesis) in Saint Petersburg, Polymetal was formed with an objective to build a highly professional Russian mining company that will capitalise on the opportunity to revive a series of inactive assets left over from Soviet era exploration using state-of-the-art technology at all stages, from exploration to bullion production. In the same year, Polymetal completes its first major acquisitions with the Voro, Khakanja and Yurievskoye gold and silver deposits.
During this period, on the back of preparations for the launch of our existing operations, Polymetal continues to grow its portfolio across Russia and acquires the Lunnoye silver mine in 1999 and the abandoned Dukat silver mine and concentrator in 2000. Open-pit mining commences at Voro (1999), one of our first greenfield projects, followed by the launch of a heap leaching circuit in 2000 and start of mining operations at Lunnoye (2000), Dukat (2001) and Khakanja (2002) deposits.
A transformational year
Polymetal starts the year by launching the Voro expansion project followed by commissioning of the Khakanja processing plant in the fourth quarter. With this success, the company enters a new stage in its development. Meanwhile, Vitaly Nesis is appointed as our new CEO.
In 2004, Polymetal becomes the first Russian gold and silver producer to begin direct export of precious metals in line with obtained licenses from the Russian Ministry of Economic Development and Trade. In the same year, Polymetal records a prominent increase in production (gold production up 55% and silver 47%, compared with 2003) and a decrease in total cash costs below the global average. As a result, the company joins the ranks as a top Russian gold producer and one of the world’s leading silver producers.
Strengthening our position
Polymetal completes the construction and commissioning of the first generation of assets by forming base production units in key regions of operations. The company then proceeds with the formation of a new growth portfolio with a second generation of assets and acquires the Albazino exploration licence and enters into a Joint Venture with Ashanti Gold for the exploration of Veduga.
In November 2005, control over Polymetal was acquired by Nafta Moskva and 2006 Polymetal starts preparing to go public with an IPO on the Russian and international markets.
Polymetal goes public with 24.8% of its shares on the London and Russian Stock Exchanges an important turning point which serves as proof of compliance with international standards of corporate governance, placing a quality mark on its portfolio of assets.
In addition, Polymetal fully meets its forecasted production for the year and maintains its position as the leading primary silver producer in Russia. The company launches expansion projects and the Dukat and Voro processing plants and continues to grow its portfolio of exploration licenses. A JORC-compliant reserve estimate is published and comprises 3.7 Moz of gold and 416 Moz of silver (9 GE Moz).
Setting records (Record Financial and Operational Performance)
Despite the substantial drop in silver prices and the onset of the global financial crisis in the second half of the year, Polymetal had a very strong year financially, with its highest ever growth in revenues and operating income. Revenues increased by 63%, exceeding $500 million for the first time in the Company’s history.
Another key acquisition is made from the Kinross Gold Corporation (Kubaka plant and satellite exploration licences) in line with the company’s strategy to boost production capacity.
In June 2008 significant changes were made to Polymetal’s ownership structure. Nafta Moskva sold its 68% stake to a group of private investors, including ICT Group (Alexander Nesis) — the company’s founding shareholder, PPF Group (Petr Kellner) and Alexander Mamut.
Expanding our Portfolio
This proved to be another great year for Polymetal. At the outset, Polymetal made a series of key acquisitions: the Mayskoye gold deposit, Sopka Kvartsevaya gold and silver deposit, Dalniy mineral deposit, Goltsovoye silver mine, and the Varvara gold and copper mine in Kazakhstan together with its processing facility. Polymetal’s stock is included in the MSCI (Morgan Stanley Capital International) index and the A1 MICEX Quotation List.
Polymetal records an impressive growth rate throughout the year, with its highest ever annual gold output of 444 Koz and a 25% increase in gold equivalent production. Revenues increase by 65% to $925 million with adjusted EBITDA up by 77% to $429 million. Polymetal is included into the FTSE Gold Mines Index.
The first gold dore bar was poured at the Kubaka plant (Omolon hub), a year ahead of schedule. Avlayakan and Kirankan gold and silver deposits and the Svetloye gold deposit (promising stand-alone exploration projects), all located in the Khabarovsk territory were acquired.
Joining the FTSE 100
2011 proved to be a remarkable year for Polymetal, both operationally and in terms of corporate development. Polymetal completes a Premium Listing on the London Stock Exchange and enters the FTSE 100 index, raising US$ 763 million from the IPO.
There have also been significant developments in our operations with the completion of the Amursk POX facility, construction of Mayskoe, and most notably, the first concentrate shipments to Chinese off-takers from the newly commissioned Albazino property.
First gold poured in Amursk POX PLANT and first dividends
Polymetal’s Amursk POX — the first operating pressure oxidation plant in Russia — was commissioned, delivering first gold production in April 2012.
Polymetal demonstrates a strong operational performance throughout the year with a 31% increase in gold equivalent production, and a substantial expansion of its resource base driven by a significant increase in resources at Albazino and the acquisition of the Olcha mine. No less important for the year is the implementation of a new dividend policy, raising the payout ratio to 30% and introducing special dividends. The total dividend pay-out during the year — $0.71 per share.
Resilient Performance and discovery of PGMS
Polymetal exceeds its original annual production guidance for the second consecutive year, producing 1,2 Moz of gold equivalent, up 21% year-on-year. The Amursk POX hub and Mayskoe plant achieve full capacity and design recovery in the fourth quarter, marking the completion of a major investment cycle to bring the second generation of assets into production. Polymetal discovers Viksha — a large PGM area in the Karelian region of Russia and completes the acquisition of the Maminskoye gold deposit.
Polymetal’s ordinary shares are listed on the Moscow Stock Exchange.
Acquiring a World-Class Asset and consecutively beating the guidance
In 2014, Polymetal announces its largest ever acquisition of the Kyzyl gold deposit in Kazakhstan for a total of $618 million. With gold reserves of 6.7 Moz at 7.5 g/t (JORC), Kyzyl is one of the world’s largest deposits, increasing Polymetal’s gold reserves by a remarkable 50% and is expected to contribute more than 300 Koz of GE production per year. In addition, Polymetal once again demonstrates strong production results, beating all estimates for the third consecutive year.
Ambitious growth plan and consistent dividends
Polymetal completes the feasibility study for the Kyzyl project and begins construction with a goal to produce first gold in 2018 and add high-grade low-cost 300 Koz production in 2019.
Polymetal pays a special dividend for a third time in the company’s history out of free cash flow and announces a new JV with Polyus Gold to explore the Nezhda gold property in the Yakutia region — the fourth largest gold deposit in Russia.
Further growth in Kazakhstan and Armenia
Polymetal starts the year with the acquisition of Glencore’s Komarovskoye gold deposit which has direct railway access to the company’s Varvara processing plant. Shortly after, and for the first time in its history, Polymetal expands its operations into Armenia through the acquisition of the Kapan operating mine and processing plant from Dundee Precious Metals. Our continued investments into exploration resulted in a discovery of a large PGM deposit at Viksha with 9.5 Moz PE resources.
Focus on sustainable development and growth
Polymetal signs its first deal with EBRD to finance the remaining construction of Kyzyl and achieves significant progress in sustainability performance that is highly rated by the leading agencies, including Sustainalytics, DJSI-Robeco SAM, FTSE4Good and WWF.
Polymetal adds a 3rd asset to its pipeline of growth opportunities by entering into the Prognoz project — the largest undeveloped silver mine in Russia with 292 Moz of silver resources (JORC).
A JORC-compliant resource estimate is published for the Nezhda gold deposit comprising 11 Moz of gold resources at 4.8 g/t, further reinforcing its status of a world-class deposit.
The focus is now on delivery of Kyzyl next year and exploration.
20th anniversary and successful launch of Kyzyl
The most significant highlight of 2018 was the successful launch and ramp-up flagship mine in Kazakhstan — Kyzyl. The asset delivered 96 Koz of payable production in 2018, a significant beat on the original 2014 guidance of 80 koz. Already in its first half-year after the launch, Kyzyl made a substantial contribution to an overall 2018 production of 1.56 Koz and was the principal factor behind gold equivalent production growth of 9%.
We continued to streamline our portfolio and completed the sale of our stake in Dolinnoye and disposed of Kapan, Okhotsk and Sveltobor, which have collectively generated US$ 108 million of proceeds.
As for sustainability, 2018 was marked by several important milestones: a sizable reduction in injury frequency rates; installation of first renewable energy sources at our remote sites in the Russian Far East; establishment of best practice human rights and climate change policies; and became the first company in the FSU included in the Dow Jones Sustainability Index
20th anniversary is available here.