Polymetal International plc (LON:POLY) reported record production for the first quarter ended 31 March 2019.
“Strong contribution from Kyzyl and steady operational results at other mines drove a big jump in Q1 production”, said Vitaly Nesis, Group CEO of Polymetal. “Kyzyl’s performance demonstrates both Polymetal’s project development capability and the asset’s huge potential for cash flow generation”.
HIGHLIGHTS
The Company’s Q1 gold equivalent (“GE”) production grew 27% year-on-year to 374 Koz as Kyzyl exceeded design throughput and recovery and enjoyed positive grade reconciliation. Meanwhile, a grade-driven increase in production at Omolon offset the disposals of Okhotsk and Kapan. Gold equivalent production from continuing operations was 369 Koz, up 37% year-on-year.
Q1 gold production was up 41% over the previous year at 302 Koz, while silver production was down 15% due to the planned grade decline at the Dukat underground mine. The share of gold production increased to 81% of the Group’s total output.
Kyzyl continued to demonstrate an excellent operating performance in Q1 with flotation recoveries climbing up to 89% in March, while gold production was 78 Koz with 92 Koz produced in concentrate.
Revenues increased 28% year-on-year to US$ 454 million, largely driven by a 41% uptick in gold sales compared to the prior year.
Full-scale construction activities have commenced at both the Nezhda and POX-2 projects which are expected to start up in Q4 2021 and H2 2023 respectively.
The Company is on track to produce 1.55 Moz of GE in 2019 and reiterates its full-year cost guidance: the TCC range of US$ 600-650/ GE oz while the AISC range is US$ 800-850/ GE oz. The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group’s operating costs.
We are saddened to report a fatal accident that occurred on 8 March at our Mayskoye operation. An underground development driller died following injury from the rotating part of the rig. In response, the Company decided to complete a comprehensive review of behavioural safety risks and potential mitigation approaches.
Net debt increased 12% during the quarter to US$ 1,704 million as at 31 March 2019, primarily due to seasonal advance purchases of diesel fuel and other consumables. On the other hand, compared to 31 March 2018, the relative leverage level has improved as 8% y-o-y increase in net debt was outpaced by the growth of profitability metrics on the back of a 28% increase in revenue. Free cash flow generation in 2019 will, as is usual for Polymetal, be weighted towards the second half of the year on the back of higher production volumes and seasonal working capital drawdowns.
As previously announced, the final dividend for 2018 of US$ 0.31 per share (approx. US$ 146 million) will be paid on 24 May 2019.
The Company will host its annual Analyst and Investor Day on 24 April 2019 in London to provide an operating asset review and exploration update.
