Anglo-Russian precious mining company Polymetal International has reported strong production results for the fourth quarter of 2022, and met its full-year production guidance of 1.7-million gold-equivalent (GEO)

In a statement for the fourth quarter and full year 2022 production results, Polymetal CEO Vitaly Nesis says that 2022 presented “unprecedented challenges” for the company.

“Nevertheless, Polymetal met original production guidance and maintained solid safety performance. In 2023, we are targeting stable production and return to free cash flow generation,” Nesis indicates.

The company’s full-year 2022 GE production amounted to 1.71-million ounces, a year-on-year increase of 2% and in line with the original production guidance of 1.7-million ounces.

First full year of operations at Nezhda, in Russia, and initial production at Kytyn compensated for declining grades at mature assets.

Fourth-quarter output grew by 16% year-on-year to 540 000 oz driven by Nezhda contribution and strong grades at Kyzyl.

POX-2 and other development projects progressed in line with the revised schedules. This year will be marked by the launch of Voro flotation plant and start of mining at Prognoz in Russia.

Revenue for full year 2022 stood at $2.8-billion, a year-on-year decrease of 3% on the back of lower average gold and silver prices.

Fourth-quarter revenue was up by 30% year-on-year to $1-billion as the company sold down metal and concentrate inventory accumulated in the previous quarters.

The remaining gap between production and sales is expected to close during the course of first half 2023.

In the fourth quarter, net debt decreased by $0.4-billion to about $2.4-billion on the back of strong positive free cash flows from unwinding of working capital.

The company expects full-year total cash costs (TCC) and all-in sustaining cash costs (AISC) to be within the announced guidance range of $900 to $1 000 /GE oz and $1 300 to $1 400 /GE oz, respectively.

Capital expenditure is also estimated within the guidance range of $725 to $775-million.

No fatal accidents among the group’s employees and contractors occurred in 2022. Lost time injury frequency rate (LTIFR) among the company’s workforce for the full year decreased by 17% year-on-year to 0.10. Days lost due to work-related injuries (DIS) fell by 42% year-on-year to 877.

2023 OUTLOOK
The company reiterates its current production guidance for FY 2023 of 1.7-million ounces of GE.

Polymetal expects its costs to be in the ranges of $950 to $1 000/GE oz for TCC and $1 300 to 1 400/GE oz for AISC.

A minor year-on-year increase is mostly owing to domestic inflation, stronger rouble, and royalty increase in Kazakhstan.

Capital expenditures are expected to be about $700-million to $750-million.

Major investment projects include POX-2, Albazino in Russia power line, Voro in Russia flotation, and Prognoz.

ASSET HOLDING STRUCTURE
Meanwhile, the company has continued to evaluate all available options to modify its asset holding structure to maximise shareholder value.

Further to the announcement on September 22, the company has progressed the evaluation of a potential re-domiciliation of the parent company, Polymetal International, to jurisdiction deemed to be “friendly” by the Russian Federation, a move which could unblock the ability to execute further corporate actions.

Based on the initial analysis, the company is of the view that a re-domiciliation into the Astana International Financial Centre (AIFC), a financial hub in Astana, Kazakhstan, is the preferred jurisdiction, taking into account the group’s significant operations and presence in the region, the AIFC legal system, tax regime and the ability to execute such a re-domiciliation.

Should the company proceed with a re-domiciliation to the AIFC, its primary listing may move to AIX where its ordinary shares will be traded with the new ISIN. The company will look to ensure continuous liquidity of trading.

The evaluation of the re-domiciliation process continues to be ongoing and will, in any event, be subject to a number of conditions. No decision has been made in relation to the various options available to the company.

The Company confirms that any actions will be compliant with all applicable international sanctions, counter-sanctions and regulatory requirements.