Polymetal (POLY) has delivered on its pitch as a large-scale, low-cost gold miner in 2019. The Russia-focused company has just built a new mine and the added production-boosted adjusted cash profits by 38 per cent to $1.1bn (£860m). All-in sustaining costs were ahead of guidance, at $866 a gold equivalent ounce, but this was only a 2 per cent year-on-year increase.
At the same time, gold sales grew 14 per cent to 1.4m ounces (oz) and the average realised gold price was up 13 per cent to $1,411 an oz.
The company is still holding onto a hefty debt load after building the Kyzyl mine, but its net debt-to-adjusted cash profits ratio fell from 1.92 times in the first half of 2019 to 1.38 times at the end of the year. While this was driven by the cash profit increase, gross debt was also down 9 per cent year on year to $1.7bn.
Polymetal is now past the major Kyzyl spending, but it has two new projects that will draw capital expenditure for the next two years. The Nezhda mine, which was almost half-finished at the end of 2019, and POX-2 plant will be in action by 2022, when the company says it can get production up to 1.85m oz gold equivalent, up from last year’s 1.6m oz.
Consensus forecasts compiled by Bloomberg have cash profits climbing again in 2020, to $1.2bn.
| POLYMETAL (POLY) | ||||
| ORD PRICE: | 1,296p | MARKET VALUE: | £6.1bn | |
| TOUCH: | 1,295-1,296p | 12-MONTH HIGH: | 1,393p | LOW: 755p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 410ȼ | NET DEBT: | 77%* | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2015 | 1.44 | 276 | 52 | 51 |
| 2016 | 1.58 | 564 | 93 | 42 |
| 2017 | 1.82 | 443 | 82 | 44 |
| 2018 | 1.88 | 426 | 79 | 48 |
| 2019 | 2.25 | 618 | 102 | 82** |
| % change | +20 | +45 | +37 | +71 |
| Ex-div: | 7 May | |||
| Payment: | 29 May | |||
| £1=$1.29 *Includes $32m in lease liabilities, **Includes 20ȼ special dividend paid on 5 March 2020 | ||||
