Polymetal 2016 Production Flat But Revenue Rises 10%

Checking The Gross Margin Score on Polymetal International Plc (LSE:POLY)

LONDON (Alliance News) – Polymetal International PLC on Thursday said gold equivalent production was a touch higher year-on-year in 2016 whilst sales revenue rose by 10%, as the miner reiterated its production guidance for both 2017 and 2018.

Polymetal shares were down 3.3% to 903 pence per share early Thursday morning.

The miner’s operations in Russia, Kazakhstan and Armenia kept full year production broadly flat in 2016 at 1.3 million ounces. That was the result of a 3% rise in gold production to 890,000 ounces, a 9% fall in silver production to 29.2 million ounces, a 76% lift in copper production to 1,500 tonnes and zinc production of 2,900 tonnes, versus nil in 2015.

Polymetal reported a total of four fatalities in 2016, down from six in 2015.

Polymetal reiterated its production target for 2017 of 1.40 million ounces and for 2018 at 1.55 million ounces. Both years will see output skewed toward the second half of the year, the miner said.

Total revenue for 2016 increased 10% to USD1.58 billion from USD1.44 billion a year earlier. Gold sales increased by 2% year-on-year to 880,000 ounces, silver sales fell 5% to 30.7 million ounces, copper sales fell 36% to 1,600 tonnes and zinc sales of 2,800 tonnes compares to nil in 2015.

Pre-acquisition cashflow in the year amounted to USD250 million. Dividends of USD64 million, or 15 cents per share, were paid from that cashflow, taking the total dividend for 2016 to USD158 million, or 37 cents per share.

“The company confirms its commitment to pay final dividends for 2016 in accordance with the regular dividend policy,” said Polymetal.

“Polymetal continues to deliver a strong operating performance, driving solid cash flow and meaningful dividend payments. 2016 is the fifth consecutive year that the company meets its production guidance”, said Vitaly Nesis, chief executive.

Cash costs in 2017 should be USD600 to USD650 per ounce and an all-in sustaining cash cost of USD775 to USD825 per gold equivalent ounce. That is higher than the 2016 cash cost guidance range of USD525 to USD575 per ounce and the AISC of USD700 to USD750 per ounce, primarily due to the expected impact from foreign exchange and because of rising diesel prices.

Capital expenditure in 2017 will be USD370 million, USD30 million higher than previous guidance. Additional investments will be directed towards the new project pipeline including Nezhda, Prognoz, and Viksha, it said.

Net debt at the end of 2016 stood at USD1.32 billion versus USD1.29 billion at the end of 2015, rising 2% over the course of the year.