25 January 2023

Polymetal (the “Company” or the “Group”) reports strong production results for the fourth quarter of 2022 and meets full-year production guidance of 1.7 Moz GE.

“2022 presented unprecedented challenges for our company. Nevertheless, Polymetal met original production guidance and maintained solid safety performance. In 2023, we are targeting stable production and return to free cash flow generation”, said Vitaly Nesis, Group CEO of Polymetal.

HIGHLIGHTS

  • No fatal accidents among the Group’s employees and contractors occurred in 2022. Lost time injury frequency rate (LTIFR) among the Company’s workforce for the full year decreased by 17% year-on-year (y-o-y) to 0.10. Days lost due to work-related injuries (DIS) fell by 42% y-o-y to 877.

  • The Company’s FY 2022 gold equivalent (“GE”) production amounted to 1,712 Koz, a y-o-y increase of 2% and in line with the original production guidance of 1.7 Moz. First full year of operations at Nezhda and initial production at Kytyn compensated for declining grades at mature assets. Q4 GE output grew by 16% y-o-y to 540 Koz driven by Nezhda contribution and strong grades at Kyzyl.

  • POX-2 and other developement projects progressed in line with the revised schedules. 2023 will be marked by the launch of Voro flotation plant and start of mining at Prognoz.

  • Revenue for FY 2022 stood at US$ 2.8 billion, a y-o-y decrease of 3% on the back of lower average gold and silver prices. Q4 revenue was up by 30% y-o-y to US$ 1.0 billion as the Company sold down metal and concentrate inventory accumulated in the previous quarters. The remaining gap between production and sales is expected to close during the course of H1 2023.

  • In Q4, net debt decreased by US$ 0.4 billion to approximately US$ 2.4 billion on the back of strong positive free cash flows from unwinding of working capital.

  • The Company expects full-year Total Cash Costs (“TCC”) and All-in Sustaining Cash Costs (“AISC”) to be within the announced guidance range of US$ 900-1,000/GE oz and US$ 1,300-1,400/GE oz, respectively. CAPEX is also estimated within the guidance range of US$ 725-775 million.

2023 OUTLOOK

  • The Company reiterates its current production guidance for FY 2023 of 1.7 Moz of GE.

  • Polymetal expects its costs to be in the ranges of US$ 950-1,000/GE oz for TCC and US$ 1,300-1,400/GE oz for AISC1. A minor y-o-y increase is mostly due to domestic inflation, stronger rouble, and royalty increase in Kazakhstan.

  • Capital expenditures are expected to be approximately US$ 700-750 million. Major investment projects include POX-2, Albazino power line, Voro flotation, and Prognoz.

Based on 65 RUB/USD, 450 KZT/USD rates, 7% inflation in Russia and 9% in Kazakhstan.

UPDATE ON THE POTENTIAL MODIFICATION OF ASSET HOLDING STRUCTURE

  • As previously announced, the Company has continued to evaluate all available options to modify its asset holding structure in order to maximise shareholder value.

  • Further to the announcement on 22 September 2022, the Company has progressed the evaluation of a potential re-domiciliation of the parent company, Polymetal International plc, to jurisdiction deemed to be “friendly” by the Russian Federation, a move which could unblock the ability to execute further corporate actions.

  • Based on the initial analysis, the Company are of the view that a re-domiciliation into the Astana International Financial Centre (AIFC), a financial hub in Astana, Kazakhstan, is the preferred jurisdiction, taking into account the Group’s significant operations and presence in the region, the AIFC legal system, tax regime and the ability to execute such a re-domiciliation.

  • Should the Company proceed with a re-domiciliation to the AIFC, The Company’s primary listing may move to AIX where its Ordinary Shares will be traded with the new ISIN. The Company will look to ensure continuous liquidity of trading.

  • The evaluation of the re-domiciliation process continues to be ongoing and will, in any event, be subject to a number of conditions. No decision has been made in relation to the various options available to the Company. There can therefore be no certainty that the Company will proceed with, or ultimately complete, a re-domiciliation nor any certainty as to which jurisdiction would be ultimately selected were it to proceed.

  • The Company confirms that any actions will be compliant with all applicable international sanctions, counter-sanctions and regulatory requirements.

OPERATING HIGHLIGHTS


 

 

3 months ended

Dec 31,

%

change1

12 months ended

Dec 31,

%

change1

 

2022

2021

2022

2021

 

 

 

 

 

 

 

Waste mined, Mt

49.0

53.9

-9%

211.1

205.9

+3%

Underground development, km

23.5

25.0

-6%

98.0

95.5

+3%

Ore mined, Mt

4.5

4.1

+11%

19.5

15.6

+24%

    Open-pit

3.5

3.0

+17%

15.4

11.7

+32%

    Underground

1.0

1.1

-6%

4.1

4.0

+3%

Ore processed, Mt

4.7

4.1

+15%

18.3

15.8

+16%

Average GE grade processed, g/t

3.9

4.0

-2%

3.6

3.8

-4%

Production

 

 

 

 

 

 

    Gold, Koz

451

385

+17%

1,450

1,422

+2%

    Silver, Moz

7.2

6.5

+10%

21.0

20.4

+3%

    Gold equivalent, Koz2

540

467

+16%

1,712

1,677

+2%

Sales

 

 

 

 

 

 

    Gold, Koz

560

384

+46%

1,376

1,386

-1%

    Silver, Moz

3.5

4.9

-29%

18.5

17.5

+6%

Revenue, US$m3

1,039

798

+30%

2,801

2,890

-3%

Net debt, US$m4

2,393

2,781

-14%

2,393

1,647

+45%

 

 

 

 

 

 

 

LTIFR5

0.12

0.16

-25%

0.10

0.12

-17%

DIS6

 

 

 

877

1,516

-42%

Fatalities

 

 

 

 

 

 

    Employees

0

0

NA

0

0

NA

    Contractors

0

0

NA

0

1

-100%

Average headcount

 

 

 

14,694

13,268

+11%

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 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously). Discrepancies in calculations are due to rounding.
(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 Septenber 2022 (for the three months period) and 31 December 2021 (for the twelve months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked. Company employees only are taken into account.
(6) DIS – days lost due to work-related injuries. Company employees only are taken into account.

PRODUCTION BY MINE

 

3 months ended Dec 31,

%

change

12 months ended Dec 31,

%

change

 

2022

2021

2022

2021

 

 

 

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

 

 

 

Kazakhstan

164

125

+31%

541

558

-3%

Kyzyl

113

85

+34%

330

360

-8%

Varvara

51

40

+27%

211

198

+7%

Russia

376

342

+10%

1,170

1,120

+5%

Dukat

101

96

+6%

292

291

+0%

Albazino

64

59

+8%

230

249

-8%

Omolon

56

55

+2%

199

217

-8%

Nezhda

42

21

+96%

133

21

+518%

Mayskoye

57

54

+6%

120

139

-14%

Svetloye

28

26

+9%

104

109

-5%

Voro

28

30

-10%

93

93

+0%

TOTAL

540

467

+16%

1,712

1,677

+2%

Notes:
(1) Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously). Discrepancies in calculations are due to rounding.

CONFERENCE CALL AND WEBCAST

The Group’s management will discuss production results during the Analyst and Investor Day on Wednesday, 25 January 2023, at 12:00 GMT (15:00 Moscow time) at the Queen Elizabeth II Centre – Broad Sanctuary, London, SW1P 3EE. To join the webcast please follow the link https://edge.media-server.com/mmc/p/oym5gsx7.

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