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Polymetal International plc (POLY)

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Thursday 22 April, 2021

Polymetal International plc

Polymetal: Q1 2021 production results

Polymetal International plc (POLY)
Polymetal: Q1 2021 production results

22-Apr-2021 / 09:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


 

 

Release time

 

IMMEDIATE  LSE, MOEX, AIX: POLY / ADR: AUCOY

Date

22 April 2021

 

Polymetal International plc

Q1 2021 production results

 

Polymetal reports solid production results for the first quarter ended March 31, 2021.

 

"In Q1 2021, Polymetal delivered strong production, strong free cash flow, and steady progress across development projects", said Vitaly Nesis, Group CEO of Polymetal. "COVID-related construction cost inflation remains a pressing concern despite gradual improvements in the epidemiological situation".

HIGHLIGHTS

  • No fatal accidents occurred among Group workforce and contractors in Q1 2021 (consistent with Q1 2020). Lost time injury frequency rate (LTIFR) among the Group's employees stood at 0.25 (0.07 in Q1 2020) as there were seven lost-time accidents mostly related to falling or being hit by an object.
  • Gold equivalent ("GE") production in Q1 grew by 3% year-on-year (y-o-y) to 375 Koz. All-time highest quarterly production from Varvara and strong performance across other assets offset the planned grade-driven decline at Kyzyl.
  • Revenue for the quarter increased by 20% y-o-y to US$ 593 million on the back of higher gold and silver prices. A traditional lag between silver concentrate production and sales at Dukat is expected to close in H2 2021 as well as a lag in gold sales primarily related to Dore from Kyzyl conсentrate.
  • Net Debt decreased by US$ 29 million during the quarter to US$ 1.32 billion as Polymetal generated positive quarterly free cash flow despite seasonal inventory accumulation.
  • Construction and development activities at Nezhda and POX-2 projects progressed on schedule even amid continued tightness in the construction contractor market and COVID-related cross-border travel restrictions. Nezhda is scheduled to achieve mechanical completion on September 1, 2021 and produce first concentrate on November 1, 2021.
  • Polymetal confirms its 2021 production guidance of 1.5 Moz of GE. It also maintains the full-year cost guidance of US$ 700-750/GE oz for TCC and US$ 925-975/GE oz for AISC. The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics.
  • The Company will host its annual Analyst & Investor Day including ESG presentation on 27 April 2021 in Moscow (for full details please refer to our website), where our mid-term GHG emission reduction targets will be announced.

OPERATING HIGHLIGHTS

 

3 months ended Mar 31,

%

change1

 

2021

2020

 

 

 

 

Waste mined, Mt

45.4

39.9

+14%

Underground development, km

23.0

23.1

-0%

Ore mined, Mt

3.77

3.89

-3%

Open-pit

2.79

2.90

-4%

Underground

0.98

0.99

-1%

Ore processed, Mt

3.59

3.51

+2%

Average grade in ore processed, g/t

3.8

4.2

-10%

Production

 

 

 

Gold, Koz

337

324

+4%

Silver, Moz

4.6

4.9

-7%

Gold equivalent, Koz2

375

365

+3%

Sales

 

 

 

Gold, Koz

280

271

+3%

Silver, Moz

3.7

4.7

-21%

Revenue, US$m3

593

494

+20%

Net debt, US$m4

1,321

1,351

-2%

Safety

 

 

 

LTIFR5

0.25

0.07

+257%

Fatalities

0

0

NA

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 31 December 2020.

(5) LTIFR = lost time injury frequency rate per 200,000 hours worked among Polymetal employees.

PRODUCTION BY MINE

 

3 months ended Mar 31,

%

change

 

2021

2020

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

Kyzyl

89

109

-18%

Albazino

77

78

-1%

Varvara

60

43

+38%

Dukat

48

52

-7%

Omolon

47

42

+11%

Svetloye

27

21

+26%

Voro

22

20

+8%

Mayskoye

6

0

NA

TOTAL

375

365

+3%

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.

 

 

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Thursday, 22 April 2021 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:

From the UK:

+44 (0) 330 336 9126 (local access)

0800 358 6377 (toll free)

From the US:

+1 646 828 8143 (local access)

800 263 0877 (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: 1505703

To participate in the webcast follow the link: https://www.webcast-eqs.com/polymetal20210422.

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

A recording of the call will be available at +44 (0) 207 660 0134 (from the UK), +1 719 457 0820 (from the USA) and 8 10 800 2702 1012  (from Russia), access code 1505703, from 15:30 London time Thursday, 22 April, till 15:30 London time Thursday, 29 April 2021. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at https://www.webcast-eqs.com/polymetal20210422.

 

About Polymetal 

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.

Enquiries

Media

 

Investor Relations

FTI Consulting

Leonid Fink

Viktor Pomichal

+44 20 3727 1000

Polymetal

Evgeny Monakhov

Timofey Kulakov

Kirill Kuznetsov

[email protected]

+44 20 7887 1475 (UK)

 

+7 812 334 3666 (Russia)

Joint Corporate Brokers

 

Morgan Stanley & Co. International plc

Andrew Foster

Richard Brown


Panmure Gordon

Daniel Norman

John Prior

+44 20 7425 8000

 

 

 

 

+44 20 7886 2500

RBC Europe Limited

Marcus Jackson

Jamil Miah

+44 20 7653 4000

 

 

Forward-looking statements

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.

 

 

KYZYL

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

20.2

19.2

+5%

Ore mined (open-pit), Kt

556

523

+6%

 

 

 

 

PROCESSING

 

 

 

Ore processed, Kt

563

526

+7%

Gold grade, g/t

6.0

8.0

-26%

Gold recovery

88.8%

87.2%

+2%

Concentrate produced, Kt

35

36

-2%

Concentrate gold grade, g/t

85.0

101.4

-16%

Gold in concentrate, Koz1

96

116

-18%

 

 

 

 

Concentrate shipped, Kt

27

21

+29%

Payable gold shipped, Koz

46

41

+12%

 

 

 

 

Amursk POX

 

 

 

Concentrate processed, Kt

12

16

-25%

Gold grade, g/t

137.3

135.8

+1%

Gold recovery

92.4%

91.8%

+1%

Gold produced, Koz

43

67

-36%

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

89

109

-18%

Note: (1) For information only; not considered as gold produced and therefore not reflected in the table representing total production. It will be included in total production upon shipment to off-taker or dore production at Amursk POX.

(2) To be further processed at Amursk POX.

Mining volumes continued to increase without addition of new equipment as the "Hot Seat" fleet productivity program yielded material results. Grade processed declined towards the open-pit reserve average.

The concentrator delivered record quarterly throughput, while recovery increased by 2 p.p. y-o-y following the debottlenecking of thickening and drying sections. These improvements partially balanced the planned grade decline.

 

ALBAZINO

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

5.1

4.8

+6%

Underground development, km

3.3

3.1

+6%

Ore mined, Kt

495

517

-4%

Open-pit

308

360

-14%

Underground

187

157

+19%

 

 

 

 

PROCESSING

 

 

 

Albazino concentrator

 

 

 

Ore processed, Kt

427

445

-4%

Gold grade, g/t

4.3

4.5

-5%

Gold recovery1

88.7%

85.6%

+4%

Concentrate produced, Kt

33

36

-9%

Concentrate gold grade, g/t

49.5

48.1

+3%

Gold in concentrate, Koz2

52

56

-6%

 

 

 

 

Amursk POX

 

 

 

Concentrate processed, Kt

48

46

+6%

Gold grade, g/t

52.8

53.6

-1%

Gold recovery

96.5%

96.4%

+0%

Gold produced, Koz

77

78

-1%

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

77

78

-1%

Notes: (1) To concentrate.

 (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production after Dore production at the Amursk POX.

Underground mining volumes increased as Ekaterina underground mine ramped up stoping volumes while the new Anfisa underground mine below the main open pit accessed ore.

Open-pit ore mining reduced as the focus shifted to the pre-stripping of the new Farida open pit. The final pushback commenced at the Anfisa open pit.

Recovery at the concentrator improved by 3 p.p. as ore mix shifted to less clayey ores from deeper underground levels.

Construction activities at the Kutyn heap leach project are progressing on schedule with basic site infrastructure and access road completed.

 

MAYSKOYE

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

0.9

1.1

-12%

Underground development, km

5.1

5.5

-8%

Ore mined, Kt

191

261

-27%

Open-pit

13

78

-84%

Underground

178

183

-3%

 

 

 

 

PROCESSING

 

 

 

Ore processed, Kt

217

227

-5%

Gold grade, g/t

6.2

5.7

+8%

Gold recovery

92.5%

91.2%

+1%

Gold in concentrate, Koz2

40

38

+5%

 

 

 

 

Gold produced in dore from concentrate (POX), Koz

1

-

NA

Gold produced in dore from carbon, Koz3

5

-

NA

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

6

-

NA

Notes:  (1) To concentrate.

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production upon sale to off-taker or dore production at Amursk POX.

(3) Gold produced from carbon at Amursk POX and Voro.

Open-pit mining of oxidised ore at Zone 1 recommenced with the next pushback enabled by favorable commodity price environment. Processing will start in Q2 2021.

Underground ore grade continued to improve as focus shifted to timely and precise backfill activities needed to limit dilution.

All of the excavations for the new underground material handling system have been completed. The installation of the conveyor frame has commenced. The launch of the system is planned for Q2 2022.

 

AMURSK POX

 

3 months ended Mar 31,

% change

 

2021

2020

Concentrate processed, Kt

60

62

-2%

  Albazino

44

41

+9%

  Kyzyl

12

16

-25%

  Veduga

4

1

+177%

  Other1

-

3

-100%

Gold recovery

94.9%

94.2%

+1%

Average gold grade, g/t

69.6

74.9

-7%

Average sulphur grade

13.5%

14.2%

-5%

Total gold produced2, Koz

121

145

-17%

  Albazino

67

60

+13%

  Kyzyl

43

67

-36%

  Veduga

9

14

-35%

  Mayskoye

1

0

+220%

   Other1

-

3

-100%

Notes: (1) Purchased concentrates which are included in reportable production in the Albazino segment.

  (2) For information only. Already accounted for in production at operating mines. Excluding gold produced from Mayskoye loaded carbon.

Amursk POX Q1 gold output decreased by 17% y-o-y to 121 Koz on the back of lower volumes of Kyzyl concentrate introduced into feed relative to high base of 2020. Recovery rate was marginally higher as more Albazino concentrate was processed.

 
VARVARA

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

9.5

10.2

-6%

Ore mined, Kt

1,056

782

+35%

 

 

 

 

PROCESSING

 

 

 

Leaching

 

 

 

Ore processed, Kt

764

734

+4%

Gold grade, g/t

1.7

1.5

+13%

Gold recovery1

86.4%

87.0%

-1%

Gold production (in dore), Koz

46

35

+33%

 

 

 

 

Flotation

 

 

 

Ore processed, Kt

190

129

+47%

Gold grade, g/t

2.6

3.1

-19%

Recovery1

84.6%

85.7%

-1%

Gold in concentrate, Koz

13

9

+54%

 

 

 

 

Veduga ore toll processed, Kt2

-

30

-100%

 

 

 

 

Total ore processed, Kt

954

893

+7%

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

60

43

+37%

Note: (1) Technological recovery, includes gold and copper within work-in-progress inventory. Does not include toll-treated ore.

(2) To be further processed at Amursk POX.

Quarterly gold production hit a record 60 Koz driven by high grade leach ore from Komar, higher processed volumes, and significant release of work-in-progress inventory. Total quarterly ore processed was also highest in the concentrator's 13-year operating history.

Flotation circuit grades fell as more own ore was processed compared with the stable quantities of third-party material.

 

 

 

DUKAT OPERATIONS

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

0.4

-

NA

Underground development, km

11.7

11.3

+4%

  incl. Primorskoye

0.5

-

NA

Ore mined, Kt

645

539

+20%

  Open-pit

104

-

NA

  Underground

542

539

+0%

 

 

 

 

PROCESSING

 

 

 

Omsukchan concentrator

 

 

 

Ore processed, Kt

513

513

-0%

Grade

 

 

 

Gold, g/t

0.5

0.5

-1%

Silver, g/t

252

286

-12%

Recovery1

 

 

 

Gold

83.2%

84.5%

-2%

Silver

86.8%

86.0%

+1%

Production

 

 

 

Gold, Koz

6

6

+1%

Silver, Moz

3.5

3.9

-10%

 

 

 

 

Lunnoye plant

 

 

 

Ore processed, Kt

116

116

-0%

Grade

 

 

 

Gold, g/t

1.5

1.5

-2%

Silver, g/t

252

269

-6%

Recovery1

 

 

 

Gold

91.7%

90.7%

+1%

Silver

92.2%

91.4%

+1%

Production

 

 

 

Gold, Koz

5

5

+2%

Silver, Moz

0.9

0.9

-5%

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

11

11

+1%

Silver, Moz

4.4

4.8

-9%

Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory.

Dukat experienced planned decline in silver grades as mining focus continues to shift to mechanized stoping at very narrow veins, with higher dilution.

At a satellite high-grade Primorskoye underground mine, development commenced with first direct-shipment silver ore expected to be mined in Q2 2021.

Open-pit mining of crown pillars and near-surface vein off-shoots re-commenced after the depleted mining voids at several large ore bodies have been completely backfilled by underground development waste.

 

OMOLON OPERATIONS

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

0.3

0.9

-66%

Underground development, Km

2.7

3.3

-19%

Ore mined, Kt

73

802

-91%

  Open-pit

-

689

-100%

  Underground

73

113

-35%

 

 

 

 

PROCESSING

 

 

 

Kubaka Mill

 

 

 

Ore processed, Kt

212

213

-1%

Grade

 

 

 

Gold, g/t

6.9

6.9

-1%

Silver, g/t

23

14

+68%

Recovery1

 

 

 

Gold

92.8%

92.1%

+1%

Silver

77.8%

83.8%

-7%

Gold production, Koz

45

41

+8%

Silver production, Moz

0.1

0.1

+86%

 

 

 

 

Birkachan Heap Leach

 

 

 

Ore stacked, Kt

45

-

NA

Gold grade, g/t

1.0

-

NA

Gold production, Koz

0.6

-

NA

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

45

41

+10%

Silver, Moz

0.1

0.1

+88%

Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory.

Following the completion of open-pit mining at Olcha and Birkachan, the pre-stripping of the new pit at Burgali, 120 km from the Kubaka mil, commenced in Q1.

Heap leach stacking started earlier than usual following the commissioning of the new semi-mobile crushing unit supplied by Metso.

 

SVETLOYE

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

0.7

0.7

-7%

Ore mined, Kt

390

346

+13%

 

 

 

 

PROCESSING

 

 

 

Ore stacked, Kt

282

308

-9%

Gold grade, g/t

4.8

4.4

+10%

Gold production, Koz

27

21

+26%

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

27

21

+26%

At Svetloye, quarterly gold production was up 26% y-o-y to 27 Koz as higher grade attributable to work-in-progress release offset lower stacking volumes and slower leach velocity caused by very cold weather. Ore mining started in the new Lyudmila pit.

VORO

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

580

-

NA

Ore mined, Kt

11

-

NA

 

 

 

 

PROCESSING

 

 

 

CIP

 

 

 

Ore processed, Kt

260

269

-3%

Gold grade, g/t

2.2

2.2

+2%

Gold recovery1

83.9%

82.1%

+2%

Gold production, Koz

20

18

+10%

 

 

 

 

Heap Leach

 

 

 

Ore stacked, Kt

-

-

NA

Gold grade, g/t

-

-

NA

Gold production, Koz

2

2

-14%

 

 

 

 

TOTAL PRODUCTION

 

 

 

Gold, Koz

22

20

+7%

Note: (1) Technological recovery, includes gold within work-in-progress inventory.

Open-pit mining commenced at Pesherny, a satellite deposit 15 km from Voro.

Oxidized ore from Saum has been introduced to the feed at the CIP plant. The facility will continue to process mostly stockpiled ore from Voro as mining was completed in 2020.

High commodity prices and low copper TCs prompted the management to re-evaluate the option of direct-shipping high-grade ore from Saum to third-party concentrators for tolling. The decision will be taken in Q2 2021 and may lead to accelerated exploitation of that deposit.

The construction of the new flotation plant is in full swing with all concrete works completed and the steel framework installed. The majority of main equipment has arrived on site.

 

 

NEZHDA

Mining and construction activities are progressing on schedule. The processing plant is scheduled to achieve mechanical completion on September 1, 2021 and produce first concentrate on November 1, 2021.

In Q1, the Company continued installation of main and auxiliary equipment (rotary drum driers, press filters, conveyors, pumps, electrical power equipment), process pipelines and utility systems. Diesel gensets and coal-powered boiler-house have been commissioned.

Project activities currently focus on wiring, process control and instrumentation, and ventilation. More than 900 construction contractors are currently on site in addition to approximately 500 Polymetal employees.

The construction of the power line by the independent investor (UVES) linking the site to the grid is in full swing though it progressed slower than expected in Q1 due to extremely cold weather.

 

3 months ended Mar 31,

% change

 

2021

2020

MINING

 

 

 

Waste mined, Mt

5.3

-

NA

Ore mined, Kt

346

-

NA

POX-2

Construction has proceeded on schedule despite acute shortages of general construction workforce in Russia and significant difficulties in bringing expat representatives of equipment manufacturers on site due to COVID-related cross-border travel restrictions.

Foundation construction for high-pressure and CIL circuits is in progress. Installation of metal frameworks for oxygen station and downstream circuit is nearing completion. Construction of repair shops and storage depots is ongoing. Construction of 100 kV power substation commenced.

SUSTAINABILITY, HEALTH AND SAFETY

There were no fatal accidents during the first three months of 2021 either at Polymetal or at the Company's contractors. LTIFR among the Group's employees for the period stood at 0.25, in comparison with 0.07 during the first 3M 2020. There were seven incidents among employees (two in Q1 2020) including six minor and one severe incident, as well as one minor incident with a contractor worker. There were three cases of falling, three cases of a hit by an object (including a severe one at Albazino) and a case of falling rock, mostly related to safety breach by employees. The Company investigated each of the cases separately and held safety briefings with employees.

Q1 was also marked with a couple of external recognitions which confirms our success as a responsible company: inclusion in the Sustainability Yearbook 2021 by S&P Global and the 46th place in the 100 Most Sustainably Managed Companies worldwide ranking by the Wall Street Journal (WSJ).

COVID-19 UPDATE

 

Russia

Kazakhstan

Group

Change for the quarter

 

 

 

 

 

Since the start of the pandemic

 

 

 

 

Tests administered

56,351

23,653

80,004

+ 31,804

C-19 positive tests

1,424

354

1,778

+327

Hospitalised

253

24

277

+70

Died

4

1

5

-

As of 20.04.2021

 

 

 

 

Active cases

10

5

15

 

In hospital

2

0

2

 

Headcount as at 01.04.2021

10,158

2,796

12,966

 

 

Epidemiological situation in the Company remains under control. Operations and development projects are unaffected so far. There were 15 active cases of COVID-19 as at 20 April 2021 across the Group. All precautionary measures effective in 2020 will continue into full year of 2021. The Company estimates COVID-related cash expenses at approximately US$ 5 million per month with the majority recorded as operating costs. This translates into roughly US$ 35 per GE ounce in AISC.



ISIN: JE00B6T5S470
Category Code: MSCH
TIDM: POLY
LEI Code: 213800JKJ5HJWYS4GR61
Sequence No.: 100402
EQS News ID: 1187402

 
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