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Q2 2019 production results

24 July 2019

Polymetal reports strong production for the second quarter and the six months ended June 30, 2019.

“Excellent results from Kyzyl drove our production growth while other operations delivered strong performances”, said Vitaly Nesis, Group CEO of Polymetal.“

HIGHLIGHTS

  • The Company’s Q2 gold equivalent (“GE”) production grew 19% year-on-year to 384 Koz as Kyzyl delivered at full capacity with 81 Koz of gold produced in the quarter. GE production from continuing operations was up 29% year-on-year.

  • Q2 gold production was up 30% over the previous year at 302 Koz. Silver production was down 11% at 6.0 Moz on the back of asset disposals.

  • GE production for H1 2019 was 756 Koz, up 22% year-on-year. We expect stronger production in 2H driven by seasonal concentrate de-stockpiling at Mayskoye.

  • Revenue for Q2 increased 13% year-on-year to US$ 492 million, with gold sales rising 31% on strong production. Silver sales fell 22% due to a temporary logistical lag between production and sales to be eliminated in H2.

  • The Company is well positioned to meet its full-year 2019 production guidance of 1.55 Moz of GE and reiterates its cost guidance: TCC of US$ 600-650/ GE oz and AISC of US$ 800-850/ GE oz1.

  • Polymetal generated significant free cash flow in Q2. Net debt remained unchanged during the quarter at US$ 1,700 million as of 30 June 2019, while the Company paid US$ 146 million of final dividends for FY 2018 (US$ 0.31 per share). As in previous years, we expect significantly stronger free cash flow generation in the second half of the year on the back of higher production volumes and seasonal working capital drawdown.

  • We are saddened to report a fatal accident that occurred on 10 May 2019. A pump station operator died at Omolon. The Company’s risk management activities increasingly focus on behavioral and cultural issues underpinning unsafe labor practices. We remain committed to our strategic objective of zero fatalities.

  • At Nezhda, mining activities focused on constructing pit access roads. Construction proceeded according to schedule with the concentrator building comfortably on track for full winterization by the time the cold season starts in November. The project is expected to start up in Q4 2021.

  • At POX-2, detailed engineering of the facility is in full swing. All long-lead equipment has been contracted. Site preparation activities including deforestation and topsoil removal are in progress. The project is on track for launch in H2 2023.

Note: (1) The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group’s operating costs.

 

 

3 months ended June 30,

% change1

6 months ended June 30,

% change1

 

2019

2018

2019

2018

 

 

 

 

 

 

 

Waste mined, Mt

40.0 

32.1

+25%

77.6

60.9

+27%

Underground development, km

26.1

31.8

-18%

54.3

64.4

-16%

Ore mined, Mt

4.3

3.4

+30%

8.6

6.5

+31%

Open-pit

3.3

2.2

+53%

6.5

4.2

+55%

Underground

1.0

1.2

-13%

2.1

2.4

-12%

Ore processed, Mt

4.1

3.7

+11%

7.6

7.0

+8%

Production

 

 

 

 

 

 

Gold, Koz

302

232

+30%

602

446

+35%

Silver, Moz

6.0

6.8

-11%

11.0

12.7

-14%

Copper, Kt

0.6

0.9

-38%

1.4

1.6

-13%

Gold equivalent, Koz2

384

324

+19%

756

619

+22%

Sales

 

 

 

 

 

 

Gold, Koz

314

239

+31%

604

445

+36%

Silver, Moz

5.6

7.3

-22%

10.3

12.1

-15%

Copper, Kt

0.7

1.2

-44%

1.0

1.5

-30%

Revenue, US$m3

492

435

+13%

946

789

+20%

Net debt, US$m4

1,700

1,704

-0%

1,700

1,518

+12%

Safety5

 

 

 

 

 

 

LTIFR

0.22

0.17

+29%

0.23

0.16

+44%

Fatalities

1

0

+1

2

1

+1

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, 2:1 Pb/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 31 March 2019 (for the three months period) and 31 December 2018 (for the six months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

 

3 months

ended June 30,

%

change

6 months

ended June 30,

%

change

 

2019

2018

2019

2018

 

 

 

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

 

 

 

Kyzyl

81

-

NA

159

-

NA

Dukat

82

76

9%

158

155

2%

Albazino-Amursk

55

63

-13%

136

153

-11%

Omolon

46

54

-16%

99

86

15%

Mayskoye

-

-

NA

5

-

NA

Varvara

39

31

24%

76

66

16%

Voro

29

28

3%

57

54

4%

Svetloye

52

45

16%

61

53

15%

TOTAL (continuing operations)

384

297

+29%

751

568

+32%

Okhotsk

-

12

-100%

-

24

-100%

Kapan

-

15

-100%

5

27

-82%

TOTAL (including discontinued operations)

384

324

+19%

756

619

+22%

Notes:     (1) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios.

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CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday,
24 July 2019 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:
8 800 500 98 63 access code 34668237# (free from Russia), or
44 203 009 24 80 (free from the UK), or
1 646 722 49 14 (free from the US), or
follow the link: https://webcasts.eqs.com/polymetal20190724. 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 https://webcasts.eqs.com/polymetal20190724. A recording of the call will be available immediately after the call at 442033645147 (from within the UK), +16467224969 (USA Toll Free) and 74952491671 (from within Russia), access code 418860357#, from 14:30 Moscow time Wednesday, 24 July, till 14:30 Moscow time Wednesday, 31 July, 2019.

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Polymetal International plc (LSE, MOEX: POLY, AIX: 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 and Kazakhstan. 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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Kilill Kuznetsov
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