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Q3 2018 production results

15 October 2018

Polymetal International plc reports its production results for the third quarter and nine months ended September 30, 2018.

“We quickly and efficiently ramped up Kyzyl to full capacity”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “The other assets in our portfolio demonstrated a steady performance which leaves us well placed to outperform our original production guidance”.

HIGHLIGHTS

  • Polymetal produced 447 Koz of gold equivalent (GE) in the third quarter of 2018, down 5% year-on-year as large volumes of concentrate produced at Kyzyl (36 Koz of gold) and Mayskoye (34 Koz of gold) are to be shipped and booked as production in the fourth quarter. Gold production for the quarter was 356 Koz, down 4% year-on-year, while silver production decreased by 10% to 6.7 Moz as a result of planned grade declines at Dukat.  GE production for the first nine months of 2018 was 1,066 Koz, a 4% increase year-on-year and in line with production guidance.

  • Kyzyl successfully ramped up to full throughput capacity of 150 Kt per month with a recovery rate of 86%. Concentrate shipments to Amursk POX and to off-takers in China commenced and are expected to match production once the new railway spur is commissioned in October. Since the start-up Kyzyl delivered 47 Koz of gold in concentrate of which 10 Koz was booked in production, and is likely to exceed its production guidance of 80 Koz of payable gold shipped for 2018. The Company will be hosting a site visit at Kyzyl on October 18-19, 2018.

  • Q3 revenue was down 16% year-on-year to US$ 459 million on the back of lower metal prices and lower sales volumes due to the build-up of working capital in the form of concentrate. Gold sales volumes totalled 321 Koz, while silver sales totalled 5.3 Moz.

  • Net debt increased to US$ 1.8 billion due to the build-up of working capital as the company paid US$ 78 million in regular dividends for 1H 2018 (US$ 0.17 per share). The Company expects to generate the bulk of free cash flow in 2018 in the fourth quarter on the back of de-stockpiling at Kyzyl and Mayskoye. Consequently, a meaningful reduction in net debt is expected to be recorded in Q4.

  • Polymetal had no fatalities in Q3 and recorded a meaningful improvement in the Group’s LTIFR for the second consecutive quarter and year-on-year.

  • Effective from 24 September, Polymetal was the first Russian company to join the Dow Jones Sustainability Index, ranking 8th among other mining companies in the index series. The Company also improved its Sustainalytics rating, coming in 1st among 47 mining companies worldwide, which made it eligible for the highest available discount on the interest rate on its ING US$ 80 million sustainability performance-linked loan.

  • Polymetal is likely to exceed its FY 2018 production guidance of 1.55 Moz of GE by up to 50 koz of GE. The Company reiterates its production guidance of 1.7 Moz for 2019 and 1.8 Moz for 2020 and notes that the guidance will be revised in the event of non-core asset disposals.

  • Given the recent weakness of the Rouble and Tenge against the US dollar, it is likely that the Company will outperform its cost guidance of US$ 650-700/GE oz for Total Cash Costs (“TCC”) and US$ 875-925/GE oz for All-in Sustaining Cash Costs (“AISC”).

  • The Company will host an Analyst and its inaugural ESG Day on 12 November 2018 in London to provide an update on key development projects and a comprehensive overview of Polymetal’s ESG approach and practices.

 

3 months ended Sep 30,

% change1

9 months ended Sep 30,

% change1

 

2018

2017

2018

2017

 

 

 

 

 

 

 

Waste mined, Mt

33.6

29.7

+13%

94.5

84.7

+12%

Underground development, km

31.2

30.0

+4%

96.8

83.9

+15%

Ore mined, Mt

3.6

3.1

+19%

10.2

9.6

+6%

Open-pit

2.5

2.0

+26%

6.7

6.4

+5%

Underground

1.2

1.1

+7%

3.5

3.3

+8%

Ore processed, Mt

4.4

3.7

+19%

11.4

10.0

+14%

Production

 

 

 

 

 

 

Gold, Koz

356

370

-4%

801

759

+6%

Silver, Moz

6.7

7.4

-10%

19.4

20.2

-4%

Copper, Kt

0.9

0.9

-2%

2.5

1.9

+33%

Zinc, Kt

1.4

1.3

+3%

4.3

3.6

+20%

Gold equivalent, Koz2

447

470

-5%

1,066

1,028

+4%

Sales

 

 

 

 

Gold, Koz

321

363

-12%

766

742

+3%

Silver, Moz

5.3

5.8

-8%

17.4

18.2

-4%

Copper, Kt

0.5

0.8

-37%

1.9

1.3

+49%

Zinc, Kt

2.1

1.2

+76%

4.4

3.5

+29%

Revenue, US$m3

459

546

-16%

1,248

1,229

+2%

Net debt, US$m4

1,819

1,653

+10%

1,819

1,421

+28%

Safety5

 

 

 

 

 

 

LTIFR

0.07

0.11

-36%

0.13

0.14

-7%

Fatalities

0

0

0%

1

1

0%

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 30 June 2018 (for the three months period) and 31 December 2017 (for the nine months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Tuesday, 16 October 2018 at 11:00 London time (13:00 Moscow time).

To participate in the call, please dial:
8 800 500 98 63 access code 92230744# (free from Russia), or
+44 203 009 24 75 (free from the UK), or
+1 646 722 49 11(free from the US), or

follow the link: http://polymetal161018-live.audio-webcast.com 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://polymetal161018-live.audio-webcast.com. A recording of the call will be available immediately after the call at +44 20 3364 5147 (from within the UK), +1 646 722 4969 (USA Toll Free) and +7 495 249 16 71 (from within Russia), access code 418793738#, from 13:30 Moscow time Tuesday, 16 October, till 13:30 Moscow time Tuesday, 23 October, 2018.

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Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries — “Polymetal”, the “Company”, or the “Group”) is a top-20 global gold producer and top-5 global silver producer with assets in Russia, Kazakhstan and Armenia. The Company combines strong growth with a robust dividend yield.
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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Investor Relations Contacts

Tel. +44.20.7016.9506

Eugenia Onuschenko

Tel. +44.20.7016.9503

Maryana Nesis

Tel. +7.812.313.5964

Michael Vasiliev
ir@polymetalinternational.com Media Contacts

Tel. +44.20.3727.1000

Leonid Fink
Viktor Pomichal