Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries – “Polymetal”, the “Company”, or the “Group”) is pleased to announce the Group’s preliminary results for the year ended 31 December 2016.
- 2016 revenue increased 10% over 2015, totaling US$ 1,583 million. Average realised gold and silver prices increased by 8% and 11%, respectively. Gold sales were 880 Koz, up 2% year-on-year, while silver sales were 30.7 Moz, down 2% year-on-year, in line with production volume dynamics.
- Group Total cash costs1 (“TCC”) were US$ 570/gold equivalent ounce (“GE oz”), up 6% from 2015 levels and within our original guidance of US$ 550-575/GE oz.
- All-in sustaining cash costs1 (“AISC”) amounted to US$ 776/GE oz, up 6% year-on-year, slightly above the guidance range of US$ 700-750/GE oz and driven mostly by an increase in TCC during the period and the appreciation of the Russian Rouble against the US dollar in the second half of the year.
- Adjusted EBITDA1 was US$ 759 million, an increase of 15% year-on-year, on the back of higher commodity prices and stable production. The Adjusted EBITDA margin was 48% compared to 46% in 2015.
- Net earnings2 were US$ 395 million versus US$ 221 million in 2015, reflecting an increase in EBITDA and the impact of foreign exchange gains driven by the strengthening of the Russian Rouble. Underlying net earnings (adjusted for the after-tax amount of write-down of metal inventory to net realisable value, foreign exchange gains/losses and change in fair value of contingent consideration liability) were US$ 382 million (2015: US$ 291 million), up 31% year-on-year.
- Capital expenditure was US$ 271 million3, up 32% compared to 2015 but below the reduced guidance of US$ 310 million, due to favourable exchange rate dynamics in the beginning of the year. The Group is on track with the construction of Kyzyl and the POX debottlenecking project.
- In the course of 2016, the Company continued to generate significant pre-acquisition free cash flow1, which amounted to US$ 257 million (2015: US$ 263 million). Net debt of US$ 1,330 million as at 31 December 2016 remained broadly unchanged over the previous year, bringing the Net debt/Adjusted EBITDA ratio at 31 December 2016 down to 1.75x versus 1.97x as at 31 December 2015.
- A final dividend of US$ 0.18 per share (approx. US$ 77 million) representing 30% of the Group’s underlying net earnings for 2H 2016 is being proposed by the Board in accordance with the current dividend policy. This will bring total dividend declared for the period to US$ 179 million.
- Polymetal delivered a strong performance in 2016, producing 1.27 Moz of gold equivalent which is slightly above the production guidance of 1.26 Moz. A strong finish to the year was driven by a solid performance at Omolon and our new operations – Svetloye (Okhotsk hub), Komar (Varvara) and Kapan.
- Gold production was 890 Koz, up 3% year-on-year, while silver production decreased 9% to 29.2 Moz compared to 2015. Gold sales generally followed production dynamics.
- While the total number of fatalities for the year decreased to four compared to six in 2015, Polymetal remains committed to the implementation of additional measures in order to fully eliminate fatalities at all of its operations. A Critical Risks Management system will be introduced in 2017 that will complement existing safety measures and help reduce the risk of injuries across the business.
- The Company reconfirms its production guidance for 2017 and 2018 of 1.40 Moz and 1.55 Moz of gold equivalent, respectively. Traditionally, production in both years will be skewed towards the H2.
- TCC for 2017 are expected to be in the range of US$ 600-650/GE oz and AISC at US$ 775-825/GE oz, 10% and 3% above 2016 levels, respectively. The increase is due to rising domestic diesel prices and the strengthening of the Russian Rouble on the back of rising global oil prices.
1The definition and calculation of non-IFRS measures used in this report, including Adjusted EBITDA, Total cash costs, All-in sustaining cash costs, Underlying net earnings, Net debt, Free cash flow and the related ratios, are explained in the “Financial Review” section below.
2 Profit for the financial period.
3On a cash basis.
“I am delighted to report robust earnings for the year on the back of a strong operating performance”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “Delivering solid free cash flows and dividends reaffirms the strength of our strategy and allows us to advance our long-term project pipeline while sustaining cash returns to our shareholders”.
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Polymetal will hold a conference call and webcast on Wednesday, March 15, 2017 at 9:30 am London time (12:30 pm Moscow time).
To participate in the call, please dial:
8 10 800 249 020 44 (free from Russia), or
0808 109 0700 (free from the UK), or
+1 866 966 5335 (free from the US), or
+44 (0) 20 3003 2666 (Standard International Access),
or follow the link: http://webcast.instinctif.tv/795-1028-17991/en.
Please be prepared to introduce yourself to the moderator or register.
Webcast replay will be available on Polymetal’s website (www.polymetalinternational.com) and at http://webcast.instinctif.tv/795-1028-17991/en. A recording of the call will be available immediately after the call at +44 (0) 20 8196 1480 (from within the UK), 1 866 583 1035 (USA Toll Free) and +7 (8) 495 249 9840 (from within Russia), access code 8525867#, from 15:30 Moscow time Wednesday, March 15, till 15:30 Moscow time Wednesday, March 22, 2017.
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