Polymetal slashes dividend

Specifically, costs of production increased, metals prices fell and earnings were squeezed. Indeed, a 20-30 per cent fall in precious metals prices caused underlying net profit to fall by nearly three-quarters year-on-year to $117m - despite having increased production of gold and silver by 21 per cent. As the company's dividend policy is to pay out approximately 30 per cent of its underlying net income, the dividend was also slashed and there was no repeat of 2012's special payout. There was a large non-cash impairment charge, too - $366m (£220m) this year - from writing down goodwill and the book value of mining assets.

Thankfully, Polymetal's gold mines are good quality, so it's in little danger of going out of business. Its operating costs are running in the region of $745 an ounce, leaving a decent gross margin with gold hovering temperamentally at around $1,300 an ounce. Still, once administrative, exploration and other hidden costs are considered, Polymetal's all-in sustaining cash cost is a less impressive $1,086 an ounce.

Broker Canaccord Genuity forecasts cash costs to fall slightly this year on rising production, giving adjusted EPS of 70¢ in 2014 (from 53¢ in 2013).