Russian miner Polymetal got off to a cracking start in the first half by increasing gold, silver and copper production by a total of 48 per cent year on year to 501,000 gold-equivalent ounces. That, coupled with a 14 per cent rise in the price of gold, has sparked a rally in the shares - which looks set to continue.
Still, it's not all good news. While cash profits rose 53 per cent to $380m (£240m), net earnings slipped 2 per cent to $149m - reflecting foreign exchange-related losses and higher taxes. Moreover, mining companies generally are struggling with soaring operating costs and Russian gold miners are being particularly hard hit as a consequence of deteriorating ore quality and domestic inflation. Accordingly, Polymetal's total cash costs rose 8 per cent year on year to $691 per gold equivalent - although, encouragingly, they did fall 4 per cent compared with last year's second half. This was helped by the successful ramp up of new mines, Omolon and Albazino, which are part of management's plan to raise output to 1m gold equivalent ounces this year from 810,000 ounces in 2011.
Broker Morgan Stanley forecasts EPS of $1.40 for 2012 (80¢ in 2011).
POLYMETAL INTERNATIONAL (POLY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 977p | MARKET VALUE: | £3.77bn | |
| TOUCH: | 976-978p | 12-MONTH HIGH: | 1,195p | LOW: 748p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 482¢ | NET DEBT: | 54% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 545 | 211 | 42.0 | nil |
| 2012 | 767 | 221 | 37.0 | nil |
| % change | +41 | +5 | -12 | - |
£1=$1.58 | ||||
