Polymetal prefers dividends to reducing debt, to discuss dividend policy in Oct
MOSCOW. Aug 31 (Interfax) - Polymetal International will not pay interim dividends for the first half of 2012, but believes that the ability to pay dividends in future is more of a priority than reducing its debt, the precious metals miner's chief executive, Vitaly Nesis said in a conference call.
The company's current dividend policy does not call for paying interim dividends, Nesis said, adding that the principles of dividend policy would be discussed by Polymetal's board of directors at a meeting in the first half of October.
Asked what the company's priority was - reducing its debt or paying out special dividends, Nesis said the decision depends on whether there are any M&A deals by the end of the year. However, in general the preference can be given to increasing cash flow and dividends, he said.
The company is prepared to reduce its debt level, but does not see a need for this at the moment, believing it to be comfortable, Nesis said.
The company's net cash flow will reach $200 million-$300 million (not including dividends) by the end of the year, Nesis said.
Net cash flow from operations doubled year-on-year to $158 million in the first half of 2012, while capital expenditures dropped 20% to $171 million. Polymetal believes cash flow will continue to grow in the second half, as substantial inventory at Dukat, Omolon and Albazino will be reduced, while capex will continue to fall.
Polymetal paid dividends of $0.20 per share, or a total of $77 million, for 2011. Polymetal's dividend policy, approved in 2011, calls for paying out at least 20% of net profit on the condition that the net debt/EBITDA ratio is below 1.75. The company's board of directors planned to consider paying additional dividends at the end of this year.
The company's net debt/EBITDA ratio was 1.3 at the end of the first half, down from 1.4 at the end of 2011. The net debt increased by 15% to $1.014 billion, 61% of which was long-term.
Polymetal International plc is the Jersey-registered holding company for OJSC Polymetal , Russia's top silver miner and one of the country's biggest gold producers. The company has operations in Magadan and Sverdlovsk regions, Khabarovsk Territory, Chukotka and in Kazakhstan. The company's principal beneficiaries are Alexander Nesis' IST Group (17.9%), Petr Kellner's PPF Group (20.86%), Alexander Mamut (10.12%), Alexander Mosionzhik's MBC Development (4.44%), and the former director of Baltiysky Zavod shipyard Oleg Shulyakovsky (4.27%).