Q3 2020 production results

22 October 2020

Polymetal reports strong production results for the third quarter of 2020. 

“In Q3 the Group continued to exceed production budget and generated massive cash flows on the back of a seasonal release of working capital”, said Vitaly Nesis, Group CEO of Polymetal. “We remain vigilant and focused to protect our employees, contractors, and local communities as the COVID-19 pandemic remains a crucial risk for Polymetal”.

HIGHLIGHTS

  • There were no fatal accidents during the first nine months of 2020 either at Polymetal or at the Company’s contractors. LTIFR among the Group’s employees for the period stood at 0.10, a decrease of 47% year-on-year (y-o-y). There were 8 minor incidents in total in comparison with 15 incidents during 9M 2019.

  • The Company’s Q3 gold equivalent (“GE”) production increased by 7% y-o-y to 477 Koz of GE driven by strong contributions from Omolon, Varvara, and Kyzyl. GE output for 9M 2020 months reached 1,200 Koz, an increase of 5% y-o-y.

  • Q3 revenue jumped by 35% y-o-y to reach US$ 884 million on the back of higher gold and silver prices as well as increased sales volumes. 9M revenue amounted to US$ 2,019 million, up 26% y-o-y. The lag between gold production and sales, mainly at Varvara and Kyzyl, is expected to close in Q4 2020.

  • Polymetal generated record quarterly free cash flow in Q3. Net debt was down by US$ 80 million to US$ 1.61 billion, even as the Company paid US$ 189 million of interim dividends (US$ 0.40 per share, a two-fold increase year-on-year).

  • Construction and development activities at Nezhda and POX-2 progressed on schedule. COVID-related restrictions, precautionary measures and cases of the disease on site have not slowed down project execution.

  • The Company is on track to meet its full-year 2020 production guidance of 1,500 Koz GE with COVID-related risks remaining the key source of uncertainty. TCC and AISC guidance of US$ 650-700/GE oz and US$ 850-900/GE oz respectively is also maintained.

  • Production guidance for 2021 and 2022 of 1,500 Koz and 1,600 Koz GE respectively is reiterated.

COVID-19 UPDATE

  • There were 112 active cases of COVID-19 as at 20.10.2020 across the Group. Strict precautionary procedures, previously implemented, including 14-day mandatory isolation of new shifts and limitations on meetings and travel, are maintained at all production sites and offices. These restrictions are expected to continue at least into Q2 2021.

  • Mayskoye suffered a C-19 outbreak in September. All infected persons and their contacts were transferred to observatory facilities or hospitals. Currently 18 people remain isolated on site and 8 are in hospital with 1 person in a serious condition. All mining and processing activities continued at regular pace.

  • In September, Olcha underground and open pit (part of Omolon hub) returned to production after a 5-week stoppage caused by the COVID-19 outbreak. All people infected (approximately 50) have recovered. The stoppage is not expected to result in any production or cost downgrades.

  • Russia is undergoing a second wave of the pandemic with daily infections above the previous peak levels seen in May. Some regions partially re-introduced restrictive measures. Kazakhstan lifted most of the quarantine restrictions in August following significant drops in the number of infected and intensive care admissions. The infection rates remain stable so far.

  • At the same time, governments have relaxed a number of cross-border travel restrictions allowing flights between Russia, Kazakhstan and Belarus to resume. This has facilitated bringing Kazakh employees to Dukat and Mayskoye.

  • Polymetal continues to provide varied financial and operational support to healthcare facilities across all regions of its presence with US$ 2.9 million spent so far in 2020. The main areas of assistance include purchasing PPE, medical supplies, and specialized diagnostic equipment.

  • The Company estimates additional COVID-related cash expenses at approximately US$ 3 million per month with the bulk recorded as operating costs. This translates into approximately US$ 20 per GE ounce produced in Q3.

COVID-19 STATISTICS AS OF 20.10.2020

Employees

Russia

Kazakhstan

Group

 

 

 

 

Tests administered

17,491

8,108

25,599

C-19 positive tests

390

222

612

Active cases

99

13

112

In hospital

29

0

29


OPERATING HIGHLIGHTS

 

3 months ended Sep 30,

% change1

9 months ended Sep 30,

% change1

 

2020

2019

2020

2019

 

 

 

 

 

 

 

Waste mined, Mt

43.8

41.3

+6%

122.8

118.9

+3%

Underground development, km

21.0

25.9

-19%

67.4

80.2

-16%

Ore mined, Mt

4.2

4.5

-7%

12.2

13.0

-6%

Open-pit

3.1

3.4

-10%

9.1

9.9

-8%

Underground

1.1

1.1

+2%

3.1

3.1

-0%

Ore processed, Mt

4.0

3.9

+2%

11.8

11.5

+3%

Average GE grade processed, g/t

3.8

3.9

-2%

3.9

3.8

+3%

Production

 

 

 

 

 

 

Gold, Koz

438

402

+9%

1,080

1,005

+8%

Silver, Moz

4.6

5.4

-13%

14.4

16.4

-12%

Gold equivalent, Koz2

477

447

+7%

1,200

1,141

+5%

Sales

 

 

 

 

 

 

Gold, Koz

410

388

+6%

1,005

992

+1%

Silver, Moz

4.2

6.1

-31%

14.1

16.4

-14%

Revenue, US$m3

884

656

+35%

2,019

1,602

+26%

Net debt, US$m4

1,610

1,690

-5%

1,610

1,479

+9%

Safety5

 

 

 

 

 

 

LTIFR

0.15

0.11

+36%

0.10

0.19

-47%

Fatalities

0

0

NA

0

2

-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 120:1 Au/Ag conversion ratio (prior to Q2 2020, Polymetal used 80:1 Au/Ag ratio) and excluding base metals (previously were included). Historical comparative data restated accordingly.
(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 June 2020 (for the three months period) and 31 December 2019 (for the nine months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

 

3 months ended Sep 30,

%

change

9 months ended Sep 30,

%

change

 

2020

2019

2020

2019

 

 

 

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

 

 

 

Kyzyl

102

94

+8%

314

253

+24%

Mayskoye

77

72

+7%

78

76

+2%

Albazino

65

75

-13%

204

211

-3%

Omolon

65

47

+40%

153

142

+8%

Dukat

48

51

-7%

152

159

-5%

Varvara

46

34

+35%

130

104

+25%

Svetloye

39

46

-15%

91

107

-15%

Voro

35

28

+24%

77

84

-9%

TOTAL (continuing operations)

477

447

+7%

1,200

1,138

+6%

Kapan

-

-

NA

-

3

-100%

TOTAL (including

discontinued operations)

477

447

+7%

1,200

1,141

+5%

Notes: (1) Based on 120:1 Au/Ag conversion ratio (prior to Q2 2020, Polymetal used 80:1 Au/Ag ratio) and excluding base metals (previously were included). Historical comparative data restated accordingly.

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CONFERENCE CALL AND WEBCAST

The Company will hold a conference call and webcast on Thursday, 22 October 2020 at 11:00 London time (13:00 Moscow time).

To participate in the call, please dial:

From the UK:
+44 330 336 9125 (local access)
0800 358 6377 (toll free)

From the US:
+1 929 477 0324 (local access)
800 289 0571 (toll free)

From Russia:
+7 495 213 1767 (local access)
8 800 500 9283 (toll free)

To participate from other countries, please dial any of the local access numbers listed above.

Conference code: 9476909

To participate in the webcast follow the link: https://webcasts.eqs.com/polymetal20201022.

Please be prepared to introduce yourself to the moderator or register.

A recording of the call will be available at +44 207 660 0134 (from the UK), +1 719 457 0820 (from the USA) and 88 10 800 2702 1012 (from Russia), access code 9476909, from 16:30 Moscow time Thursday, 22 October, till 16:30 Moscow time Thursday, 29 October 2020. Webcast replay will be available on Polymetal’s website (www.polymetalinternational.com) and at https://webcasts.eqs.com/polymetal20201022.

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Polymetal International plc (together with its subsidiaries — “Polymetal”, the “Company”, or the “Group”) is a top-10 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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2019