Polymetal boosted as investors flock to safe havens

The miner delivered a solid set of half-year results, with production up just over a fifth to 756,000 gold equivalent ounces (oz) and the all-in sustaining cost (AISC) flat at $904 an oz (£732). Polymetal’s run up the London Stock Exchange charts comes from the gold price rally that began in June, which had little impact on the first-half numbers. The expected split in first- and second-half earnings looks as though it will be the reverse of last year, when prices fell in the last six months at the time production peaks. 

This weighting will work in Polymetal’s favour this time. The company could even overtake its full-year production guidance of 1.55m gold equivalent ounces if it again manages to up gold equivalent ounces between the halves, as it did in 2018.

The company said costs would come down in the second half to reach the $800-$850 per gold equivalent oz level guided for the full year. The new Kyzyl mine was the standout on a cost basis with an AISC of $510 an oz. 

Polymetal’s revenue primarily comes from gold, with 604,000 oz sold during the period, but silver is also important to the company and the higher prices since July (around $18 an oz, compared with the first-half average of $15 an oz) will boost cash flow alongside the higher gold price. The higher production and lower costs are likely to go towards a higher dividend thanks to the policy of handing over 50 per cent of underlying net earnings to shareholders. Polymetal first entered the FTSE 100 in 2011 when gold was at $1,800 an oz, but fell out as the metal fell from historic highs. It made a brief return in 2016 but lost its spot when Donald Trump’s election did not send investors scurrying to gold as anticipated. 

Consensus estimates for full-year cash profit and reported EPS compiled by Bloomberg are $985m and 109¢, respectively, climbing to $1.1bn and 125¢ in 2020.