This is an interesting era to be a UK-listed, dollar-earning, Russia-based precious metals miner. As Polymetal International (POLY) dropped its full-year numbers, US Secretary of State Rex Tillerson got in ahead of the White House to directly implicate the Kremlin in the Salisbury spy-poisoning scandal. Within a day, Trump had fired Mr Tillerson, sending gold and silver prices into a spin. Meanwhile, Theresa May talked up the sanction threat, and Polymetal shares edged up.
It’s hard to determine whether this Le Carré-esque backdrop is enough to dissuade investors from Polymetal – which unlike many large Russian resource groups is neither state owned, nor possessed of an oligarch-dominated shareholder list. That’s not to say there aren’t risks. In 2017, a 15 per cent strengthening of the rouble caused a similar increase in total cash costs to $658 (£471) per gold-equivalent ounce, in turn cancelling out the contribution 13 per cent production growth might have made to adjusted cash profits.
Do this while pushing up capital expenditure 41 per cent to $383m and increasing the dividend to 50 per cent of underlying net earnings, and net debt is liable to increase. At nearly two times adjusted cash profits, the balance sheet is stretched, but we are told spending has peaked, and the prize – Kyzyl – is both imminent and on track. Numis expects full-year pre-tax profit of $446m and EPS of 83¢.
| POLYMETAL INTERNATIONAL (POLY) | ||||
| ORD PRICE: | 764p | MARKET VALUE: | £3.29bn | |
| TOUCH: | 763-765p | 12-MONTH HIGH: | 1,100p | LOW: 730p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 304¢ | NET DEBT: | 109% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 1.71 | -158 | -51.0 | 9 |
| 2014 | 1.69 | -138 | -53.0 | 41 |
| 2015 | 1.44 | 276 | 52.0 | 51 |
| 2016 | 1.58 | 564 | 93.0 | 42 |
| 2017 | 1.82 | 443 | 82.0 | 44 |
| % change | +15 | -21 | -12 | +5 |
| Ex-div: | 10 May | |||
| Payment: | 23 May | |||
| £1=$1.39 | ||||
