Polymetal International reports solid production results for the first quarter

Gold Mining

Polymetal International plc (LON:POLY) today announced its Q1 2020 production results.

“Q1 was a strong start to the year for the Company, delivering steady performance amidst unprecedented global disruption and uncertainty”, said Vitaly Nesis, Group CEO of Polymetal. “In light of the global COVID-19 pandemic we have been taking significant measures to keep our employees, suppliers, contractors, and other counterparties healthy and safe, and to maintain continuous operations. So far we have been proven to be successful in mitigating any impact”.


  • There were no fatal accidents during the quarter either among Polymetal employees or at the Company’s contractors. LTIFR improved by 71% year-on-year (y-o-y) to 0.07 as only two minor injuries were recorded.
  • The Company’s Q1 gold equivalent (“GE”) production grew by 5% y-o-y to 391 Koz as strong performance at Kyzyl, Svetloye and Varvara more than offset planned grade declines at Omolon and Voro.
  • Quarterly revenue increased by 9% y-o-y to US$ 494 million on the back of higher gold prices. Sales volumes decreased by 7% y-o-y due to the COVID-related slowdown of concentrate shipments to China, which have fully normalised since early March.
  • Net debt grew to US$ 1.66 billion primarily due to seasonal advance purchases of diesel fuel and other consumables and low sales volumes. Free cash flow generation in 2020, as seen historically, will be weighted towards the second half of the year driven by seasonal working capital drawdowns.
  • Construction and development activities at Nezhda and POX-2 projects progressed on schedule.
  • The Company confirms its 2020 production guidance of 1.6 Moz of GE. Management acknowledges material devaluation of Russian Rouble and Kazakh Tenge since the beginning of the year. However, given the highly volatile macroeconomic background, we currently maintain the full-year guidance of US$ 650-700/GE oz for TCC and US$ 850-900/GE oz for AISC. The guidance will be revisited along with 1H results.
  • Polymetal remains committed to its dividend policy and does not intend to change the previously announced final dividend recommendation of US$ 0.42 per share or US$ 197 million in total for FY 2019, which is due to be paid on 29 May 2020 (subject to the AGM approval on 27 April 2020). This will take the total dividend paid for 2019 to US$ 0.82 per share or US$ 385 million in aggregate.
  • The Company will host its annual Analyst & Investor Day and ESG Investor Presentation on 28 April 2020 in the format of conference call and webcast.


Health and safety

  • No cases of COVID-19 have been registered within Polymetal so far.
  • Health and safety of our employees and other people is our top priority. Strict precautionary procedures are in place at all production sites, including daily temperature checks, regular medical surveillance and isolation of new shifts (at remote sites). Polymetal has organised isolated accommodation for potential placement of patients with suspicion of COVID-19, enhanced hygiene protection in public spaces and increased control over disinfection and sterilisation measures. Adequate medical supplies are in place at all locations.
  • Off-site offices are currently manned by skeleton crews tasked with minimum maintenance of essential information and financial systems. Most of the work and communication is conducted remotely from home. Personal meetings and business trips have been cancelled.
  • Polymetal has started to provide financial support for medical institutions in all regions of operation. The Company is purchasing mobile X-Ray and anesthetic-respiratory equipment, oxygen concentrators, ventilators and other medical supplies for Chukotka district hospital, Magadan regional hospital, medical facilities in Yakutsk, and 10 other municipal hospitals in Russia and 4 in Kazakhstan.


  • Sales and refining activities remain unaffected. Refineries in Russia and Kazakhstan continue to operate normally. Concentrate shipments to China by sea and by rail are back to regular schedule after temporary suspension of shipments in February.
  • Although the Central Bank of Russia decided to temporarily suspend gold purchases, commercial banks in Russia continue to buy bullion. No negative signs of demand repercussions for domestic producers are present. The Company also maintains the ability to directly export bullion abroad.

Business continuity

  • Both Russia and Kazakhstan have imposed various self-isolation requirements that differ among regions. Continuous operations and strategic industrial companies (including Polymetal) are allowed to continue operating.
  • In both countries, Polymetal has had no interruptions either in production or supply chain. The vast majority of operating consumables and spares are sourced domestically and in China. 
  • At Nezhda, all critical equipment has been shipped by vendors. Installation support and start-up services can be performed by domestic crews or remotely. Project delay risks are thus minimal.
  • Should the lockdown measures in response to the COVID-19 pandemic be tightened further, some operations and development projects remain exposed to the actions countries have taken or may take, including:
    • Ability to bring employees across the border between Russia and Kazakhstan (materially relevant for Dukat).
    • Ability to change shifts at remote sites while observing inter-regional quarantine restrictions in Russia and Kazakhstan.
    • Delivery of key equipment for the POX-2 depends on the duration of industrial lockdowns in Belgium, Italy, and France. Project schedule may slip if such restrictive measures continue for more than 3 to 4 months.

Liquidity and funding

  • In order to further mitigate potential risks, Polymetal has proactively secured medium-term (6 to 9 months) funding to establish a cash cushion for a potential liquidity gap. Currently the Company has $565 million of cash on its balance sheet and continue to maintain US$ 600+ million of available credit lines for any additional requirements.


Polymetal will hold a conference call and webcast on Monday, 20 April 2020 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:

From the UK:

+44 330 336 9104 (local access)

0800 358 6374 (toll free)

From the US:

+1 646 828 8195 (local access)

888 378 4398 (toll free)

From Russia:

+7 495 213 1765 (local access)

8 800 500 9271 (toll free)

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

Conference code: 971224

To participate in the webcast follow the link: https://webcasts.eqs.com/polymetal20200420.

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 8 10 800 2702 1012 (from Russia), access code 8636392, from 17:30 Moscow time Monday, 20 April, till 17:30 Moscow time Monday, 27 April 2020. Webcast replay will be available on Polymetal International’s website (www.polymetalinternational.com) and at https://webcasts.eqs.com/polymetal20200420.

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