Polymetal has delivered an inaugural dividend payment as part of its maiden set of full-year figures since listing in November. A stellar year for precious metals prices underpinned strong profit growth and cash generation, but anyone contemplating buying into the FTSE 100-listed Russian miner will need to take account of its rising cost base.
Polymetal operates gold and silver mines throughout four regions of Russia, in addition to the Varvarinskoye gold-copper deposit in Kazakhstan. Gold production was flat last year, but this was offset by significant increases for both silver and copper, resulting in an 8 per cent annual increase in equivalent gold production to 810,000 ounces. And with average realised prices for gold and silver increasing by 26 and 73 per cent, respectively, this fed through to a 47 per cent rise in adjusted cash profits to $624m (£388m). However, profits were held in check due to steep rises in labour, materials and fuel costs that increased cash operating costs by two-thirds during the period.
Assuming plans to ramp up output to 1m ounces of gold equivalent go to plan this year, analysts at Canaccord expect a rapid rise in earnings and cash flow. The broker forecasts EPS of 184¢ and free cash flow of 100¢ in 2012, rising to 207¢ and 174¢, respectively, in 2013.
| POLYMETAL INTERNATIONAL (POLY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 943p | MARKET VALUE: | £3.6bn | |
| TOUCH: | 943-945p | 12-MONTH HIGH: | 1,195p | LOW: 875p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 432¢ | NET DEBT: | 48% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 0.93 | 306 | 67.0 | nil |
| 2011 | 1.33 | 409 | 79.0 | 20 |
| % change | +43 | +33 | +18 | - |
Ex-div: 16 May Payment: 18 Jun £1=$1.61 | ||||
