Polymetal Struggles to Sell Russian Gold and Silver — Update
By Jaime Llinares Taboada
Polymetal International PLC said Thursday that challenges and delays in establishing new sales channels continue, resulting in lower cash-flow generation.
The precious-metals mining company said gold sales from its Russian mines to Asian markets returned to a regular schedule after a significant coronavirus-related slowdown in April and May, with sales terms remaining in line with those received earlier. However, silver bullion inventory continues to accumulate in the absence of reliable export channels and a nonexistent domestic market.
Polymetal said it will set out its full-year 2021 and interim 2022 dividends when it posts first-half results on Sept. 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. Buybacks are “presently inappropriate” given the company’s short-term liquidity challenges and grave uncertainties, it said.
National Settlement Depositary shareholders won’t be able to receive dividends after the European Union blocked operations between Euroclear and NSD, Polymetal said.
As for mines, Polymetal said operations continue undisrupted, and reiterated full-year production guidance of 1.7 million ounces of gold equivalent.
However, the group is seeing upward pressure on capital expenditure due to the appreciation of the Russian ruble and logistical challenges.
Regarding liquidity, Polymetal said its net debt increased to $2.3 billion as at June 1 from $2.0 billion on March 31, with 74% of total debt denominated in U.S. dollars. Cash deposited with nonsanctioned banks stands at around $300 million and the company has $400 million of undrawn credit lines from nonsanctioned institutions, which covers expected debt repayments for the next six months.
The company said targeted sanctions on the company remain unlikely but not impossible, and has started contingency planning to maintain business continuity.
Polymetal is Russia’s second largest gold producer, although it also owns mines in Kazakhstan. The company is registered in the Channel Islands, and its shares are listed in London, Moscow and Astana. Its largest shareholder is ICT Group, a Russian firm.
Shares at 0714 GMT were up 2.3% at 184.15 pence.
Write to Jaime Llinares Taboada at firstname.lastname@example.org; @JaimeLlinaresT