Polymetal reports strong production results for the fourth quarter and twelve months ended December 31, 2019.
'A strong Q4 allowed Polymetal to exceed both original and updated guidance for the eighth year in a row. Robust production and positive gold price dynamics drove strong free cash flow generation', said Vitaly Nesis, Group CEO of Polymetal. 'Stable operating performance should ensure steady and significant dividend flow while planned progress with execution of Nezhda and POX-2 projects will enable us to resume production growth in 2022'.
HIGHLIGHTS
The Company's FY2019 gold equivalent ('GE') production amounted to 1,614 Koz, an increase of 3% over 2018 and 4% above the original production guidance of 1.55 Moz. A strong contribution from Kyzyl more than compensated for disposals against the backdrop of stable results from the rest of the portfolio. Production from continuing operations grew by 14% year-on-year to 1,609 Koz GE.
Safety performance in 2019 deteriorated both in terms of frequency of lost-time injuries and the number of fatalities. Management expects the Board to consider and approve significant safety-related changes to the remuneration structure for all levels of the Company management together with a comprehensive action plan focused on impacting the behavior and attitudes of the employees. Our goal remains zero fatalities.
Q4 GE output was 383 Koz, 15% below Q4 2018 production from continuing operations, mainly as a result of limited throughput at the POX plant in the reporting quarter due to scheduled downtime which was part of the POX-2 project activities.
Gold production for the full year was up 8% while silver output contracted by 15% on the back of asset disposals and planned grade decline at Dukat.
Full-year revenue jumped by 19% to reach US$ 2.2 billion on the back of higher volumes and metal prices. Q4 revenue increased by 1% to US$ 643 million as lower volumes were offset by increasing prices.
The Company expects full-year costs to be close to the top of the range of its cost guidance of US$ 600-650/GE oz for Total Cash Costs ('TCC') and US$ 800-850/GE oz for All-in Sustaining Cash Costs ('AISC'). The main factors driving this guidance are: stronger Rouble, higher royalties driven by higher metal prices, and higher domestic diesel prices.
In Q4, Polymetal generated strong free cash flow resulting in Net Debt reduction to US$ 1.48 billion as at the end of 2019. The Company expects Net Debt/EBITDA ratio to be lower than the target level of 1.5x.
2020 OUTLOOK
The Company reiterates its current production guidance of 1.6 Moz of GE for each of FY2020 and 2021.
TCC in 2020 is expected to be in the range of US$ 650-700/GE oz while AISC is expected to average US$ 850-900/GE oz. The expected increase over 2019 cost levels is driven by the current appreciation of the Russian rouble and increased domestic diesel fuel price, as well as increased royalties on the back of continued strong gold and silver price performance. The guidance remains contingent on the Rouble/Dollar exchange rate and Brent oil price.
Capital expenditures in 2020 are expected to be approximately US$ 475 million. The US$ 50 million increase compared to the previous estimate is driven by accelerated pre-stripping at Nezhda, several environmentally driven investments, as well as stronger Rouble.
About Polymetal
Polymetal International plc (LSE, MOEX: POLY, AIX: POLY, ADR: AUCOY) (together with its subsidiaries - 'Polymetal', the 'Company', or the 'Group') is a top-20 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.
Contact:
Tel: +44.20.7887.1475
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