Q4 and full year 2018 production results

Polymetal International plc reports record production for the fourth quarter and twelve months ended December 31, 2018. 

“The Company had a very strong Q4. Full-year production of 1.56 Moz of gold equivalent (GE) exceeded the original guidance for the seventh year in a row”, said Vitaly Nesis, Group CEO of Polymetal. “Successful execution at Kyzyl and the POX debottleneck have already translated into significant production and free cash flow generation“.

HIGHLIGHTS

• The Company’s Q4 production jumped 23% year-on-year to a record 497 Koz of GE on the back of the full ramp-up at Kyzyl. FY2018 GE production of 1,562 Koz was up 9% year-on-year exceeding our original production guidance of 1,550 Koz.

• Following a very smooth ramp-up, Kyzyl delivered a total of 96 Koz of gold following its launch in June, well above the original 80 Koz guidance. 2019 will be the mine’s first full-year of operation at full capacity, with targeted production of more than 300 Koz.

• In Q4 net debt fell by US $301 million to US$ 1,518 million. Strong cash flow from seasonal de-stockpiling at Mayskoye supported first revenues from Kyzyl as well as proceeds from the disposal of non-core assets.

• Following Board approval and the receipt of all necessary government approvals, open-pit mining and construction have commenced at Nezhda. First production is expected in Q4 2021.

• Polymetal had no fatalities or major accidents in Q4. Full year safety statistics also demonstrate a meaningful improvement year-on-year.

• Based on the actual 2018 average Rouble and Tenge exchange rates against the US dollar, the Company expects full year costs to come in close to the bottom of the range of its initial 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 Board has decided that there will be no special dividend for 2018 as free cash flow will be fully distributed to shareholders through the regular dividend at a payout ratio of 50% of underlying net income. A final dividend for 2018 will be proposed by the Board in March 2019 based on full-year financial results.

• The Company will host a POX workshop on 11 February 2019 in London to provide an update on the Amursk POX-2 project and an overview of the POX technology.

2019 OUTLOOK

• The Company reiterates its current production guidance of 1.55 Moz and 1.6 Moz of GE for 2019 and 2020, respectively. The first full-year of production at Kyzyl and an increase in grades at Omolon are expected to offset planned grade declines at Albazino, Voro and Dukat. Traditionally, production in both years will be weighted towards 2H due to seasonality.

• TCC in 2019 is expected to be in the range of US$ 600-650/ GE oz while AISC is expected to average US$ 800-850/ GE oz. The anticipated decrease in costs will primarily be driven by the increasing share of low-cost production from Kyzyl, as well as the disposal of high-cost Kapan and Okhotsk. The cost guidance is contingent on the Rouble/Dollar exchange rate and Brent oil price.

• Capital expenditures in 2019 are expected to be approximately US$ 380 million, in line with the previous guidance. Nezhda and POX-2 (subject to Board approval) will consume roughly half of the capex budget with the second half assigned to maintenance capital, capitalised stripping and exploration.

PRODUCTION BY MINE

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, 31 January 2019 at 9:00 London time (12:00 Moscow time). 

To participate in the call, please dial:
8 800 500 98 63 access code 58246440# (free from Russia), or
+44 203 009 24 75 (free from the UK), or
+1 646 502 51 26; (free from the US), or

follow the link: http://polymetal310119-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://polymetal310119-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 418825014#, from 12:30 Moscow time Thursday, 31 January, till 12:30 Moscow time Thursday, 7 February, 2019.

Download full version in PDF