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Q2 2018 production results

26 July 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 second quarter and six months ended June 30, 2018.

HIGHLIGHTS

  • Polymetal produced 324 Koz of gold equivalent (GE) in the second quarter of 2018, up 17% year-on-year. Volumes at Svetloye and Amursk POX combined with improved grades at Omolon drove the strong performance. Gold production for the quarter was 232 Koz, up 22% year-on-year. Silver production grew by 2% to 6.8 Moz year-on-year.

  • GE production for the first six months of 2018 was 619 Koz, an 11% increase year-on-year and fully in line with guidance. Stronger production in the 2H will be driven by traditional seasonal concentrate de-stockpiling at Mayskoye, as well as first contributions from the recently launched Kyzyl operation.

  • Kyzyl produced first concentrate in June, one month ahead of schedule. The operation is expected to ramp up to full throughput capacity (150 Kt per month) and reach design recoveries (86%) by October 2018. The company plans to produce 80 Koz of payable gold at Kyzyl this year.

  • Gold sales for the quarter increased by 17%, which largely offset a 7% decline in silver sales as the Company generated a total of US$ 435 million in revenues, up 13% compared to previous year.

  • During the quarter the Company generated significant free cash flow. Net debt increased by approximately US$ 75 million as the company paid US$ 129 million of final dividends for FY2017 (US$ 0.30 per share). As in prior 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 drawdowns.

  • Polymetal is pleased to report that no fatalities occurred in the quarter. The Group’s LTIFR improved to 0.17 versus 0.19 in Q2 2017. As part of a continuous effort improve across health and safety metrics, in Q2 we have implemented two new standards – voice reporting of near-misses to improve communication underground, and an incident recording system to improve the efficiency of preventive measures.

  • The Company remains on track to meet its FY 2018 production guidance of 1.55 Moz of gold equivalent at TCC of US$ 650-700/GE oz and AISC of US$ 875-925/GE oz. Due to the seasonality of revenues, both TCC and AISC are expected to be at the higher end of the guidance range for the first half of the year. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group’s Rouble-denominated operating costs. Polymetal will announce its half-yearly financial results on 22 August 2018.

“Another strong quarter puts us into a very comfortable position vis-a-vis our guidance for 2018”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “With Kyzyl launched ahead of schedule, the focus is now on its smooth ramp-up and the completion of the POX debottlenecking project.”

 

3 months ended Jun 30,

% change1

6 months ended Jun 30,

% change1

 

2018

2017

2018

2017

 

 

 

 

 

 

 

Waste mined, Mt

32.1

29.5

+9%

60.9

55.1

+11%

Underground development, km

31.5

28.9

+9%

64.4

53.8

+20%

Ore mined, Kt

3,352

3,277

+2%

6,541

6,590

-1%

Open-pit

2,156

2,198

-2%

4,191

4,402

-5%

Underground

1,196

1,079

+11%

2,350

2,189

+7%

Ore processed, Kt

3,905

3,443

+13%

6,967

6,286

+11%

Production

 

 

 

 

 

 

Gold, Koz

232

190

+22%

446

389

+15%

Silver, Moz

6.8

6.6

+2%

12.7

12.8

-0%

Copper, Kt

0.9

0.5

+72%

1.6

1.0

+66%

Zinc, Kt

1.6

1.2

+32%

3.0

2.3

+30%

Gold equivalent, Koz2

324

278

+17%

619

558

+11%

Sales

 

 

 

 

Gold, Koz

239

203

+17%

445

380

+17%

Silver, Moz

7.3

7.8

-7%

12.1

12.4

-3%

Copper, Kt

1.2

0.5

+158%

1.5

0.5

+171%

Zinc, Kt

1.4

1.7

-17%

2.3

2.2

+3%

Revenue, US$m3

435

385

+13%

789

683

+16%

Net debt, US$m4

1,653

1,578

+5%

1,653

1,421

+16%

Safety5

 

 

 

 

 

 

LTIFR

0.17

0.19

-11%

0.16

0.15

+7%

Fatalities

0

1

-100%

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 31 March 2018 (for the three months period) and 31 December 2017 (for the six months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
(6) NA = not available, NM – not material

PRODUCTION BY MINE

 

3 months

ended Jun 30,

%

change1

6 months

ended Jun 30,

%

change1

 

2018

2017

2018

2017

 

 

 

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

 

 

 

Dukat

76

79

-4%

155

158

-2%

Albazino-Amursk

63

40

+58%

153

108

+41%

Omolon

54

43

+27%

86

93

-8%

Mayskoye

-

4

-100%

-

9

-100%

Varvara

31

27

+18%

66

55

+19%

Voro

28

33

-13%

54

58

-7%

Svetloye

45

26

+69%

53

26

+101%

Okhotsk

12

12

-3%

25

24

+5%

Kapan

15

14

+1%

27

25

+8%

TOTAL

324

278

+17%

619

558

+11%

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

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Thursday, 26 July 2018 at 10:00 London time (12:00 Moscow time).

To participate in the call, please dial:

8 800 500 98 63 access code 95582454# (free from Russia), or

0808 238 9671 (free from the UK), or

+1 646 722 4913 (free from the US), or

follow the link: http://polymetal260718-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://polymetal260718-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 418779146#, from 12:30 Moscow time Thursday, 26 July, till 12:30 Moscow time Thursday, 2 August, 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. +44.20.7016.9506

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