Polymetal CEO Vitaly Nesis
JOHANNESBURG (miningweekly.com) – A stronger Russian rouble has offset the double-digit production growth that precious metals miner Polymetal achieved in 2017, resulting in lower earnings before interest, taxes, depreciation and amortisation (Ebtida) and net earnings.
The mining company, which operates in Russia, Kazakhstan and Armenia, on Monday reported a 15% revenue increase to $1.8-billion for 2017, but said that the gains were eroded by currency movements, resulting in adjusted Ebitda falling by 2% to $745-million.
Net earnings decreased by 10%, from $395-million in 2016, to $354-million in 2017.
The rouble, which strengthened as a result of an oil price rally and stabilising macroeconomic conditions in Russia, has a significant impact on the company’s operating costs. Total group cash costs jumped 15% to $658/oz of gold equivalent and were at the lower end of the company’s updated guidance of $650/oz to $675/oz.
CEO Vitaly Nesis said the group delivered “robust earnings” for the year and added that he was pleased with the strong operational performance.
Full-year gold-equivalent production increased by 13% to 1.43-million ounces, beating its initial production guidance of 1.4-million ounces. The company is forecasting production of 1.55-million ounces of gold equivalent for 2018 and 1.7-million ounces for 2019, with output skewed towards the second half of both years.
Total cash costs would increase to between $650/oz and $700/oz of gold equivalent, while all-in sustaining costs are forecast to be in the range of $875/oz to $925/oz of gold equivalent.
The anticipated increase in costs is as a result of rising domestic diesel prices and further potential strengthening of the rouble.
Polymetal’s capital expenditure reached $383-million in 2017, which Nesis said had reached its peak ahead of the launch of the Kyzyl project in the third quarter of this year.
DIVIDEND
Meanwhile, the board has proposed a final dividend of $30c a share, amounting to about $129-million, which represents about 50% of the group’s underlying net earnings for the second half of 2017.
This will bring the total dividend declared for the period to $44c an ordinary share, or $189-million and the dividend yield to 3.7% calculated based on an average share price in 2017. The three-year average dividend yield now amounts to 4.3%.
The final dividend will be subject to shareholder approval at the April 25 annual general meeting.