23 Jun 2022 10:31

Polymetal affirms 2022 production guidance, says bullion, concentrate exports to Asia back to normal

MOSCOW. June 23 (Interfax) - Polymetal , Russia's largest silver producer and one of the country's biggest gold miners, has affirmed its production guidance of 1.7 million ounces of gold equivalent for 2022, the company said in a press release.

"Sales logistics continue to experience significant challenges due to the Covid restrictions in China and impact of the sanctions, leading to slower inventory turnover and higher selling costs. The gap between production and sales and the resulting finished goods inventory are expected to peak in September," Polymetal said.

"Sales of gold bullion and concentrates from Russian mines to diverse Asian markets returned to regular schedule after significant Covid-related slowdown in April and May. The sales terms remain broadly consistent with those received earlier," Polymetal said.

The company said it does not currently sell any of its products to the Russian Central Bank or its affiliates, directly or indirectly.

Sales of gold bullion and concentrates from Kazakhstan continue as usual, the company said.

Medium-term development projects - POX-2, Kutyn, Urals Flotation and Prognoz - are progressing as previously reported, Polymetal said, adding that the sharp ruble appreciation and continued logistical challenges are putting significant upward pressure on capital expenditures.

The company plans to announce its production results for the second quarter on July 21.

Polymetal said silver bullion inventory continues to accumulate in the absence of reliable export channels and a non-existent domestic market. Discussions are under way with a variety of commercial and industrial international buyers. Silver bullion is expected to account for less than 5% of the company's anticipated sales in 2022.

Polymetal's net debt increased to $2.3 billion as of June 1 from $2.0 billion on March 31 due to a large working capital increase and accelerated procurement; 74% of the total debt is denominated in U.S. dollars.

The Group has about $0.3 billion in cash deposited with non-sanctioned financial institutions. In addition, the company maintains $0.4 billion of undrawn credit lines from non-sanctioned banks. This amount, combined, covers expected debt repayments in the next six months, Polymetal said.

Polymetal said it is currently financing its short-term working capital requirements with U.S. dollar denominated debt at lower interest rates. The Group has recently secured $0.2 billion in new revolving credit lines and plans to sign an additional $0.3 billion revolving credit facility in June.

The company is continuing to adapt procurements to the current environment with orderly replacement of sanctioned equipment, consumables and supplies with alternatives from Russia and other countries. The majority of existing contracts with foreign suppliers continue to be honored and the company maintains significant safety stock for critical consumables and spares, Polymetal said.

Commenting on the possibility of a share buyback, the company said that the "Board and the management strongly believe that share buy-backs are presently inappropriate given short-term liquidity challenges, grave business uncertainties, and NSD challenges."

Polymetal said it will announce its full-year 2021 and interim 2022 dividend decisions at the time of first half 2022 results publication on September 22. "Significant challenges and delays in establishing new sales channels and the resulting decline in operating cash flows will be the key factor informing these decisions," the company said.