The sustained weakness of the Russian rouble against the dollar had a "meaningful positive impact" for precious metals miner Polymetal International (POLY) in the first half. As a result of the currency moves, as well as reduced depreciation charges at the Omolon mining complex, cash costs fell to $552 per gold equivalent ounce, down 12 per cent year on year. All-in sustaining cash costs, which include projected capital spending, fell even more sharply. This prompted a reduction in all-in cost guidance for the full year from $750-$800 an ounce to $700-$750.
But revenues also fell as a result of weak precious metal prices and flat production. Gold sales fell 7 per cent to $427m, while silver sales fell 17 per cent to $220m. The upshot was that adjusted cash profits slipped 4 per cent to $297m for the half, even as margins improved.
Management reiterated its production guidance of 1.35m oz of gold equivalent for the full year, even though production in the first half totalled 371,000 oz. Traditionally, more gold is generated in the second half as stockpiles of metal concentrate at the Mayskoye mining complex are reduced. Unlike many other commodity groups, Polymetal also maintained its guidance for capital expenditure, at $240m for the year.
House broker RBC Capital Markets expects pre-tax profits of $269m for the year, leading to EPS of 44¢ a share, compared with losses of $138m in 2014.
| POLYMETAL INTERNATIONAL (POLY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 467p | MARKET VALUE: | £2bn | |
| TOUCH: | 466.7-468.3 | 12-MONTH HIGH: | 634p | LOW: 424p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 221¢ | NET DEBT: | 132% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit (£m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 727 | 141 | 26 | 8 |
| 2015 | 648 | 158 | 23 | 8 |
| % change | -11 | +12 | -12 | - |
Ex-div: 3 Sep Payment: 25 Sep £1=$1.58 | ||||
