Q3 2020 production results

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

OPERATING HIGHLIGHTS

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

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.