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Q1 2018 production results

18 April 2018

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, 2018.

HIGHLIGHTS

  • Polymetal produced 295 Koz of gold equivalent (“GE”) in the first quarter of 2018, a 5% year-on-year (“y-o-y”) increase. Strong performances at Albazino, Varvara, and Svetloye more than compensated for the grade-driven decline at Omolon.

  • Gold production for the quarter increased 8% over the previous year to 214 Koz, while silver production decreased by 3% to 6.0 Moz.

  • Q1 revenues increased 19% year-on-year to US$ 354 million driven by volume growth, higher commodity prices, and lesser impact from seasonal refinery closures (compared to the previous year). Silver sales traditionally lagged production due to the seasonal increase in concentrate inventories. This working capital build-up is expected to reverse by year-end, whereas gold sales volumes were largely in line with production.

  • At Kyzyl, construction activities are anticipated to complete slightly ahead of schedule. Dry commissioning of the processing plant is expected to start on June 1st, while first concentrate production is expected on August 1st.

  • Net debt increased from US$ 1,421 million as at 31 December 2017 to US$ 1,578 million as at 31 March 2018, primarily due to the accumulation of silver inventory and seasonal advance purchases of diesel fuel and other consumables. Free cash flow generation in 2018 will, as is usual for Polymetal, be weighted towards the second half of the year.

  • The Company remains on track to produce 1.55 Moz of GE in 2018 and reiterates its annual cost guidance: total cash costs in the range of US$ 650-700/ GE oz and AISC costs in the range of US$ 875-925/GE oz. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic, which has a significant effect on the Group’s operating costs.

  • In April 2018, Polymetal increased its ownership in the Prognoz silver property to 50%, which is the largest undeveloped primary silver deposit in Russia. An updated JORC-compliant mineral resource estimate and a preliminary economic assessment for the asset will be published in Q4 2018.                                    

  • We are saddened to report a fatal accident on March 3rd, 2018 at our Kapan operation in which an underground miner died from gas poisoning. The management team are currently developing a comprehensive action plan aimed at mitigating the risks associated with air quality and efficiency of ventilation in underground mines. The first steps included the purchase of additional air monitoring equipment including the introduction of remote air quality sensors throughout our operations.

 “We got off to a steady start in 2018 with stable production results at all our mines”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “The successful launch of Kyzyl will demonstrate Polymetal’s ability to successfully deliver on new projects while continuing to efficiently run our existing operations”.

 

3 months ended Mar 31,

% change1

 

2018

2017

 

 

 

 

Waste mined, Mt

28.8

25.5

+13%

Underground development, km

32.8

24.9

+32%

Ore mined, Kt

3,190

3,314

-4%

Open-pit

2,036

2,203

-8%

Underground

1,152

1,110

+4%

Ore processed, Kt

3,061

2,843

+8%

Production

 

 

 

Gold, Koz

214

199

+8%

Silver, Moz

6.0

6.1

-3%

Copper, Kt

0.7

0.5

+58%

Zinc, Kt

1.3

1.1

+28%

Gold equivalent, Koz2

295

280

+5%

Sales

 

 

 

Gold, Koz

206

176

+17%

Silver, Moz

4.8

4.6

+4%

Copper, Kt

0.9

0.1

+1139%

Zinc, Kt

0.3

0.5

-52%

Revenue, US$m3

354

298

+19%

Net debt, US$m4

1,578

1,421

+11%

Safety5

 

 

 

LTIFR

0.15

0.12

+25%

Fatalities

1

-

+100%

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 oz Ag/Au, 5:1 t Cu/oz Au and 2:1 t Zn/oz 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 2017.
               5 LTIFR =lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

 

3 months ended March 31,

% change

(Y-o-Y)

 

2018

2017

 

 

 

 

GOLD EQ. (KOZ)

 

 

 

Dukat

80

79

+2%

Albazino-Amursk

90

68

+32%

Mayskoye

-

5

-100%

Omolon

31

51

-38%

Voro

26

26

+1%

Varvara

35

29

+21%

Svetloye

8

-

NA

Okhotsk

11

11

+0%

Kapan

12

10

+18%

TOTAL

295

280

+5%

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday, 18 April, 10:00 London time (12:00 Moscow time).

To participate in the call, please dial:
8 800 500 98 63 access code 38517108# (free from Russia), or
+44 20 3009 2463 (free from the UK), or
+1 646 502 5125(free from the US), or

follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5539 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=5539. 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 418753592#, from 12:30 Moscow time Wednesday, 18 April, till 12:30 Moscow time Wednesday, 25 April, 2018.

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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. +44.2070.169.506

Eugenia Onuschenko

Tel. +44.20.7016.9503

Maryana Nesis

Tel. +7 812 313 5964

Michael Vasiliev
ir@polymetalinternational.com Media Contacts

Tel. +44.2037.271.000

Leonid Fink
Viktor Pomichal