Russia's Polyus boosted gold output 14% to 2.902 Moz, EBITDA 51% to $3.889 bln in 2023

MOSCOW. Feb 29 (Interfax) - Polyus boosted gold production 14% to 2.902 million ounces in 2023, the Russian miner said.

Sales revenue rose 28% to $5.436 billion, the growth driven by higher production volumes and average realized refined gold price compared to the previous year. Adjusted EBITDA 51% to $3.889 billion, supported by higher gold sales volumes and lower total cash costs on a per ounce basis. TCC fell 25% to $389 per oz reflecting ruble depreciation, higher head grades at the Krasnoyarsk business unit and an increase in by-product credit of antimony-containing flotation concentrate to $35 per ounce in 2023 compared to $2 in 2022.

Analysts said in a consensus forecast for Interfax that they expected Polyus produced 2.8-2.9 Moz of gold with the emphasis on the lower bound in 2023. They also forecast $5.391 billion revenue and $3.762 billion EBITDA.

Polus said gold production could fall to 2.7-2.8 Moz in 2024 due mainly to lower grades tonnes Olimpiada. Capex guidance is $1.55 billion-$1.7 billion, up from $1.04 billion in 2023. TCC is also expected to grow, to $450-500 per oz.

Net debt including derivatives tripled to $7.339 billion during 2023 as the result of a buyback. The net debt/adjusted EBITDA ratio increased to 1.9x at the end of 2023, compared to 0.9x at the end of 2022, but was still below the 2.5x threshold for dividends.

Polyus plans to announce the AGM date as well as the dividend recommendation "over the course of the next several months."

Polyus has strong results, but weak prospects for 2024, according to analysts from the My Investments Telegram channel. "We are cautious about Polyus shares due to the drop in production in 2024, absence of short-term drivers, as well as expected increase in operating costs. We also note weak dividend prospects in the coming years against the backdrop of the approaching capex cycle," they said.

The report is moderately positive, BCS said: revenue results are in line with expectations, and EBITDA above expectations and the consensus. "As for dividends, we are waiting for the AGM. If the company decides to pay 30% of EBITDA for the second half of 2023 as per dividend policy, then we can expect 650 rubles per share, which implies 5.8% dividend yield," BCS analysts said.

Tinkoff Investments analysts estimate potential dividends at approximately 740 rubles per share with yield of 6.7% against the current price. "Nevertheless the payment of these dividends is in doubt given the increasing debt burden in 2023 and expected high capex in the coming years, in particular due to plans to develop the Sukhoi Log field," they said.

Polyus operating and financial highlights:

H2 2023 H2 2023/H1 2023 H2 2023/H2 2022 2023 2023/2022 Total gold output, koz 1,454 0% -1% 2,902 14% Gold sold, koz 1,647 31% 17% 2,908 20% TCC, $/oz 380 (5%) (34%) 389 (25%) AISC, $/oz 747 (2%) (32%) 754 (23%) $ mln Sales revenue 3 050 28% 27% 5 436 28% Profit for period 1 171 2,1x 6,8x 1 729 12% Adjusted net profit 1 360 29% 88% 2 413 59% Adjusted EBITDA 2 202 31% 63% 3 889 51% Adjusted EBITDA margin 72% 1 pp 16 pp 72% 11 pp Net operating cash flow 1 824 71% 55% 2 892 54% Capex 640 60% (13%) 1 040 (7%)

Polyus is Russia's leading gold miner. It develops hard rock and alluvial gold deposits in the Krasnoyarsk Territory, Irkutsk and Magadan Regions, and Yakutia.