Q2

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 production results for the second quarter and six months ended June 30, 2017.

HIGHLIGHTS

  • Polymetal produced 278 Koz of gold equivalent (GE) in Q2 2017, a 6% increase year-on-year. Strong performances at Varvara and Kapan, as well as contributions from the Svetloye heap leach at Okhotsk more than offset a planned grade decline at Dukat and the impact of the scheduled maintenance shutdown at the Amursk POX plant that was successfully completed in May.
  • GE production for 1H 2017 was at 558 Koz, up 7% year-on-year and in line with the 2017 production plan. Materially stronger production is expected in the 2H and will be driven by the seasonal concentrate de-stockpiling at Mayskoye, heap leach production at Svetoye, and higher throughput at the Amursk POX plant.
  • Gold production for the quarter was 190 Koz, up 12% over the previous year, while silver production was down 6% to 6.6 Moz.
  • Gold and silver sales for the quarter increased by 29% and 19% respectively, generating US$ 385 million in revenues, an increase of 26% over the previous year. The timing gap between production and sales was largely eliminated over H1.
  • At Kyzyl, full-scale construction activities are progressing in line with the project schedule. During the quarter, foundations for the mill and other processing equipment have been completed. The tailings facility diversion dike was finalized, with activities now focused on lining of the tailings pond.The project remains on track to produce first concentrate in Q3 2018.
  • We regret to report the death of one of our employees at Varvara as a result of a fire that broke out in the laboratory on April 30. Guidelines and procedures are now in place to prevent similar occurrences.
  • Net debt increased marginally from US$ 1,506 million as at March 31, 2017 to US$ 1,583 million as at June 30, 2017 while the Company paid out US$ 77 million in final dividends for FY2016 (US$ 0.18 per share) and has actively invested in construction of Kyzyl. As in prior years, free cash flow generation will be significantly stronger in the second half of the year driven by higher production and the traditional seasonal working capital drawdown.
  • The Company remains on track to meet its FY2017 production guidance of 1.4 Moz of gold equivalent at TCC of US$ 600-650/GE oz and AISC of US$ 775-825/GE oz. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group’s Rouble-denominated operating costs. Polymetal will announce its half-yearly financial results on 29 August 2017.

“Polymetal has delivered a solid operational performance in Q2 2017 and is on track to meet its FY 2017 guidance”, said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. “In addition, it is great to see that our recent acquisitions, Komar and Kapan, are demonstrating strong results.”

3 months, ended Jun 30, 6 months, ended Jun 30
2017  2016 % change1 2017 2016 % change1
Waste mined, Mt 29.5  25.5  +44% 55.1 34.3 +61%
Underground development, km 28.9  23.6  +23% 53.8 43.7 +23%
 Ore mined, Kt 3,277  2,734  +20% 6,590 5,732 +15%
    Open-pit 2,198 1,852  +19% 4,402 4,043 +9%
    Underground 1,079 883  +22% 2,189 1,689 +30%
 Ore processed, Kt 3,443  2,778  +24% 6,286 5,285 +19%
Production
    Gold,Koz 190 169 +12% 389 338 +15%
    Silver,Moz 6.6 7.0 -6% 12.8 14.2 -10%
    Copper, Kt 0.5 0.7 -26% 1.0 1.0 +4%
    Zinc, Kt 1.2 0.7 +73% 2.3 0.7 +222%
    Gold equivalent, Koz2 278 262 +8% 558 522 +7%
Sales
    Gold, Koz 203 157 +29% 380 319 +19%
    Silver, Moz 7.8 6.5 +19% 12.4 13.0 -4%
    Copper, Kt 0.5 0.1 +254% 0.5 0.1 +310%
    Zinc, Kt 1.7 0.2 NM6 2.2 0.2 NM6
Revenue, US$m3 385 307 +26% 683 593 +15%
Net debt, US$m4 1,583 1,506 +5% 1,583 1,329 +19%
Safety5
    LTIFR 0.19 0.17 +12% 0.15 0.18 -17%
Fatalities 1 2 -50% 1 2 -50%

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 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.
(3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges.
(4) Non-IFRS measure based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents and includes the liability for dividend payable. Comparative information is presented for 31 March 2017 (for the three months period) and 31 December 2016 (for the six months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.
(6) NA = not available, NM – not material.

Please find the full version of the press release here.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Tuesday, July 25, 2017 at 14:00 am London time (16:00 pm Moscow time).

To participate in the call, please dial:
8 10 800 204 140 11 access code 73174863# (free from Russia), or
+44 20 3367 9456 (free from the UK), or
1 855 402 7761 (free from the US), or
follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4801.

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://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4801. A recording of the call will be available immediately after the call at +44 20 3367 9460 (from within the UK), 1 877 642 3018 (USA Toll Free) and +7 495 745 79 48 (from within Russia), access code 310094#, from 16:00 Moscow time Tuesday, July 25, till 16:00 Moscow time Tuesday, August 1, 2017.

Enquiries

Media Investor Relations
FTI Consulting
Leonid Fink
Jenny Payne
+44 20 3727 1000 Polymetal
Evgenia Onuschenko
Maryana Nesis
Michael Vasiliev
ir@polymetalinternational.com

+44 20 7016 9503 (UK)

+7 812 313 5964 (Russia)

Joint Corporate Brokers
Morgan Stanley
Sam McLennan
Richard Brown

Panmure Gordon
Adam James
Tom Salvesen

+44 20 7425 8000

+44 20 7886 2500

RBC Europe Limited
Tristan Lovegrove
Marcus Jackson
+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.