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Polymetal: Q3 2022 production results

Polymetal International plc (POLY)
Polymetal: Q3 2022 production results
02-Nov-2022 / 10:00 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

2 November 2022

 

 

 

Polymetal International plc

Q3 2022 production results

Polymetal reports solid production results for the third quarter of 2022.

“In Q3, Polymetal stayed on track to meet our full year guidance of 1.7 Moz GE. The Company has successfully completed the restructuring of its sales channels and started to unwind accumulated inventory. We expect strong positive free cash flows in Q4”, said Vitaly Nesis, Group CEO of Polymetal.

HIGHLIGHTS

  • There have been no fatal accidents during the first nine months of 2022 among Polymetal’s workforce and contractors (similar to 9M 2021). In Q3 2022, four minor lost-time incidents were recorded among employees. Lost time injury frequency rate (LTIFR) for the first nine months of 2022 stood at 0.09, a year-on-year (y-o-y) decrease of 18%.

  • Q3 gold equivalent (GE) production grew by 7% y-o-y to 490 Koz driven by Nezhda contribution which offset output reductions at Mayskoye (timing of shipments) and Kyzyl (grade). GE output for the first nine months of 2022 declined by 2% y-o-y to 1,187 Koz.

  • All construction projects, including POX-2, progressed in line with the revised schedules (refer to further detail within the POX-2 section below) despite continuing supply chain challenges. Kytyn heap leach, part of Albazino hub, delivered first production of 13 Koz in September.

  • During the first nine months of 2022, a total of 198 Koz of finished goods inventory was accumulated across the Group’s Russian mines. In late Q3 2022, export sales resumed at full speed and the management expects the gap between production and sales to be closed by the end of the year.

  • Revenue for the quarter was down by 13% y-o-y to US$ 714 million, while 9M revenue decreased by 16% to US$ 1,762 million. The decline is attributable to inventory accumulation as well as lower metal prices.

  • Net debt at the end of Q3 stood at approximately US$ 2.8 billion (stable since Q2), while by the end of October it decreased to US$ 2.7 billion driven by working capital release.

  • The Company reiterates its 2022 full-year production guidance of 1.7 Moz GE and maintains its TCC and AISC guidance of US$ 900-1,000/GE oz and US$ 1,300-1,400/GE oz, respectively.

  • Initial guidance for 2023 and 2024 envisages stable production of 1.7 Moz per annum, which is contingent on supply chain risks. Cost guidance for 2023 will be provided in late January 2023 together with the 2022 full year production results.

 

 

 

 

 

 

 

 

 

 

 

OPERATING HIGHLIGHTS

 

 

 3 months ended

Sep 30,

% change1

9 months ended

Sep 30,

% change1

 

2022

2021

2022

2021

 

 

 

 

 

 

 

Waste mined, Mt

52.1

54.1

-4%

162.1

152.0

+7%

Underground development, km

25.6

24.2

+6%

74.5

70.5

+6%

Ore mined, Mt

5.5

4.1

+35%

14.9

11.6

+29%

Open-pit

4.4

3.1

+44%

11.9

8.7

+37%

Underground

1.1

1.0

+7%

3.1

2.9

+6%

Ore processed, Mt

5.2

4.1

+26%

13.6

11.7

+16%

Average GE grade processed, g/t

3.7

3.6

+5%

3.5

3.7

-5%

Production

 

 

 

 

 

 

Gold, Koz

427

401

+7%

1,014

1,037

-2%

Silver, Moz

5.0

4.5

+10%

13.8

13.9

-1%

Gold equivalent, Koz2

490

457

+7%

1,187

1,210

-2%

Sales

 

 

 

 

 

 

Gold, Koz

360

406

-11%

816

1,002

-19%

Silver, Moz

6.3

4.6

+39%

15.1

12.6

+20%

Revenue, US$m3

714

819

-13%

1,762

2,093

-16%

Net debt, US$m4

2,781

2,801

-1%

2,781

1,647

+69%

 

 

 

 

 

 

 

LTIFR (Employees)5

0.11

-

NA

0.09

0.11

-18%

Fatalities

0 

0

NA

 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 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously). Discrepancies in calculations are due to rounding.

(3) Calculated based on the unaudited consolidated management accounts.

(4) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 30 June 2022 (for the three months period) and 31 December 2021 (for the nine months period).

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

(6) DIS – days lost due to work-related injuries.

 

PRODUCTION BY MINE

 

 3 months ended Sep 30,

%

change

9 months ended Sep 30,

%

change

 

2022

2021

2022

2021

 

 

 

 

 

 

 

GOLD EQ. (KOZ)1

 

 

 

 

 

 

Kazakhstan

133

140

-5%

377

433

-13%

Kyzyl

82

93

-12%

217

275

-21%

Varvara

51

47

+9%

160

157

+2%

Russia

356

317

+12%

809

778

+4%

Dukat

64

60

+6%

191

195

-2%

Albazino

71

67

+7%

166

190

-12%

Omolon

58

63

-9%

142

161

-12%

Nezhda

45

-

NA

106

-

NA

Svetloye

33

31

+7%

76

84

-10%

Voro

27

22

+21%

66

63

+5%

Mayskoye

59

75

-21%

63

85

-26%

TOTAL

490

457

+7%

1,187

1,210

-2%

Notes: (1) Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously). Discrepancies in calculations are due to rounding.

CONFERENCE CALL AND WEBCAST

The Company will hold a conference call and webcast on Wednesday, 2 November 2022 at 11:00 London time (14:00 Moscow time).

Please complete the registration using the link to participate in the call. Dial-in details will be sent to you via email after registration.

To participate in the webcast follow the link: https://www.webcast-eqs.com/polymetal20221102.

Enquiries

Investor Relations

Polymetal

Evgeny Monakhov
Timofey Kulakov
Kirill Kuznetsov

ir@polymetalinternational.com


+44 20 7887 1475 (UK)

+7 812 334 3666 (Russia)

 

 

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 Sep 30,

% change

9 months ended Sep 30,

% change

 

2022

2021

2022

2021

MINING

 

 

 

 

 

 

Waste mined, Mt

20.6

21.2

-3%

62.3

62.0

+0%

Ore mined (open pit), Kt

558

574

-3%

1,689

1,672

+1%

 

 

 

 

 

 

 

PROCESSING

 

 

 

 

 

 

Ore processed, Kt

565

550

+3%

1,651

1,683

-2%

Gold grade, g/t

5.6

6.1

-7%

5.1

6.2

-18%

Gold recovery

89.2%

88.4%

+1%

88.7%

89.1%

-0%

Concentrate produced, Kt

28.9

28.9

+0%

78.3

98.1

-20%

Concentrate gold grade, g/t

98.4

102.3

-4%

95.0

94.3

+1%

Gold in concentrate, Koz1

92

95

-4%

239

297

-20%

 

 

 

 

 

 

 

Concentrate shipped, Kt

16

10

+59%

42

58

-28%

Payable gold shipped, Koz

30

20

+54%

78

106

-26%

 

 

 

 

 

 

 

Amursk POX

 

 

 

 

 

 

Concentrate processed, Kt

14

19

-25%

35

44

-21%

Gold grade, g/t

136.8

133.8

+2%

134.0

133.9

+0%

Gold recovery

94.1%

93.1%

+1%

94.3%

92.1%

+2%

Gold produced, Koz

52

74

-29%

139

170

-18%

 

 

 

 

 

 

 

TOTAL PRODUCTION

 

 

 

 

 

 

Gold, Koz

82

93

-12%

217

275

-21%

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.

At Kyzyl, y-o-y production fell on the back of the planned grade decline towards the reserve average. Grade increased q-o-q as mining shifted from historical underground workings to the higher quality ore blocks.

Concentrate and dore sales and shipments (both domestic and to China) have normalized and the Company expects to fully release the accumulated inventories by year-end.

VARVARA

 

 3 months ended Sep 30,

% change

9 months ended Sep 30,

%

change

 

2022

2021

2022

2021

MINING

 

 

 

 

 

 

Waste mined, Mt

10.8

11.2

-3%

32.1

30.7

+4%

Ore mined (open pit), Kt

963

908

+6%

3,032

2,815

+8%

 

 

 

 

 

 

 

PROCESSING

 

 

 

 

 

 

Leaching

 

 

 

 

 

 

Ore processed, Kt

823

830

-1%

2,421

2,387

+1%

Gold grade, g/t

1.7

1.6

+7%

1.7

1.6

+2%

Gold recovery1

91.0%

89.9%

+1%

90.6%

88.8%

+2%

Gold production (in dore), Koz

41

38

+10%

128

122

+5%

 

 

 

 

 

 

 

Flotation

 

 

 

 

 

 

Ore processed, Kt

197

133

+48%

567

508

+12%

Gold grade, g/t

2.9

2.9

+0%

2.8

2.8

+3%

Recovery1

86.4%

88.4%

-2%

89.4%

85.4%

+5%

Gold in concentrate, Koz

10

9

+5%

32

35

-9%

 

 

 

 

 

 

 

TOTAL PRODUCTION

 

 

 

 

 

 

Gold, Koz

51

47

+9%

160

157

+2%

Note:

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

At Varvara, quarterly gold production was up by 9% y-o-y to 51 Koz mostly driven by better grades of Komar ore and larger volumes of higher-grade third party feed through the leaching circuit. Flotation circuit also increased its output on the back of recovery of processing volumes after long maintenance in Q3 2021.

Varvara Mine has become the first company in Kazakhstan (and third in Polymetal after Voro and Amursk POX) which was certified for full compliance under the International Cyanide Management Code by the International Cyanide Management Institute (ICMI).

 

DUKAT

 

 3 months ended Sep 30,

% change

9 months ended Sep 30,

% change

 

2022

2021

2022

2021

MINING

 

 

 

 

 

 

Waste mined, Mt

1.2

0.9

+37%

3.1

1.9

+60%

Underground development, km

12.3

10.9

+13%

35.9

33.7

+6%

Ore mined, Kt

659

631

+5%

1,894

1,913

-1%

    Open pit

120

92

+30%

336

316

+6%

    Underground

539

538

+0%

1,558

1,598

-2%

 

 

 

 

 

 

 

PROCESSING

 

 

 

 

 

 

Omsukchan concentrator

 

 

 

 

 

 

Ore processed, Kt

500

516

-3%

1,521

1,537

-1%

Grade

 

 

 

 

 

 

Gold, g/t

0.4

0.4

-7%

0.5

0.5

+6%

Silver, g/t

226

219

+3%

235

243

-3%

Recovery1

 

 

 

 

 

 

Gold

82.8%

83.9%

-1%

83.4%

84.9%

-2%

Silver

85.5%

84.0%

+2%

85.2%

86.2%

-1%

Production

 

 

 

 

 

 

Gold, Koz

5

6

-11%

21

20

+3%

Silver, Moz

3.0

3.0

+1%

9.5

10.1

-6%

 

 

 

 

 

 

 

Lunnoye plant

 

 

 

 

 

 

Ore processed, Kt

120

121

-0%

353

358

-1%

Grade

 

 

 

 

 

 

Gold, g/t

1.5

1.8

-13%

1.8

1.6

+12%

Silver, g/t

199

239

-17%

195

236

-18%

Recovery1

 

 

 

 

 

 

Gold

89.4%

90.0%

-1%

90.5%

90.5%

+0%

Silver

94.2%

94.4%

-0%

93.4%

93.2%

+0%

Production

 

 

 

 

 

 

Gold, Koz

5

6

-13%

19

17

+11%

Silver, Moz

0.7

0.9

-18%

2.1

2.5

-18%

 

 

 

 

 

 

 

Primorskoye

 

 

 

 

 

 

Ore shipped, Kt

6.4

-

NA

6.4

-

NA

Production

 

 

 

 

 

 

Gold, Koz

2

-

NA

2

-

NA

Silver, Moz

0.4

-

NA

0.4

-

NA

 

 

 

 

 

 

 

TOTAL PRODUCTION

 

 

 

 

 

 

Gold, Koz

12

12

-0%

41

37

+11%

Silver, Moz

4.1

3.8

+7%

12.0

12.6

-5%

Notes:

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

In Q3, silver production at Dukat grew by 7% y-o-y to 4.1 Moz due to higher grade from Perevalnoye ore at Omsukchan concentrator as well as contribution from Primorskoye. Planned contraction in gold production at both processing circuits was compensated by Primorskoye output.

Primorskoye delivered first batches of high-grade direct-shipment ore to third-party customers. The Company also started milling Primorskoye ore at the Omsukchan concentrator (without beneficiation) for further sales to off-takers as concentrate.

 

ALBAZINO

 

 3 months ended Sep 30,

% change

9 months ended Sep 30,

% change

 

2022

2021

2022

2021

MINING

 

 

 

 

 

 

Waste mined, Mt

8.2

5.7

+45%

22.5

16.3

+38%

Underground development, km

5.2

4.5

+16%

14.8

11.7

+26%

Ore mined, Kt

1,170

581

+101%

3,007

1,530

+97%

Open pit

936

382

+145%

2,360

958

+146%

Underground

234

199

+18%

648

572

+13%

 

 

 

 

 

 

 

PROCESSING

 

 

 

 

 

 

Albazino concentrator

 

 

 

 

 

 

Ore processed, Kt

465

458

+2%

1,372

1,329

+3%

Gold grade, g/t

3.3

4.3

-22%

3.3

4.2

-22%

Gold recovery1

87.5%

89.4%

-2%

86.8%

88.8%

-2%

Concentrate produced, Kt

35.1

37.6

-7%

100.2

104.1

-4%

Concentrate gold grade, g/t

38.7

46.7

-17%

38.8

47.6

-19%

Gold in concentrate, Koz2

44

57

-23%

125

159

-22%