Polymetal International plc: Q1 2019 Production...

Polymetal International plc (POLY) Polymetal International plc: Q1 2019 Production results 18-Apr-2019 / 09:00 MSK Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.     Release time   IMMEDIATE                             LSE, MOEX: POLY / ADR: AUCOY Date 18 April 2019   Polymetal International plc Q1 2019 production results   Polymetal International plc reports record production for the first quarter ended 31 March 2019.   "Strong contribution from Kyzyl and steady operational results at other mines drove a big jump in Q1 production", said Vitaly Nesis, Group CEO of Polymetal. "Kyzyl's performance demonstrates both Polymetal's project development capability and the asset's huge potential for cash flow generation". HIGHLIGHTS The Company's Q1 gold equivalent ("GE") production grew 27% year-on-year to 374 Koz as Kyzyl exceeded design throughput and recovery and enjoyed positive grade reconciliation. Meanwhile, a grade-driven increase in production at Omolon offset the disposals of Okhotsk and Kapan. Gold equivalent production from continuing operations was 369 Koz, up 37% year-on-year. Q1 gold production was up 41% over the previous year at 302 Koz, while silver production was down 15% due to the planned grade decline at the Dukat underground mine. The share of gold production increased to 81% of the Group's total output. Kyzyl continued to demonstrate an excellent operating performance in Q1 with flotation recoveries climbing up to 89% in March, while gold production was 78 Koz with 92 Koz produced in concentrate. Revenues increased 28% year-on-year to US$ 454 million, largely driven by a 41% uptick in gold sales compared to the prior year. Full-scale construction activities have commenced at both the Nezhda and POX-2 projects which are expected to start up in Q4 2021 and H2 2023 respectively. The Company is on track to produce 1.55 Moz of GE in 2019 and reiterates its full-year cost guidance: the TCC range of US$ 600-650/ GE oz while the AISC range is US$ 800-850/ GE oz. The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group's operating costs. We are saddened to report a fatal accident that occurred on 8 March at our Mayskoye operation. An underground development driller died following injury from the rotating part of the rig. In response, the Company decided to complete a comprehensive review of behavioural safety risks and potential mitigation approaches. Net debt increased 12% during the quarter to US$ 1,704 million as at 31 March 2019, primarily due to seasonal advance purchases of diesel fuel and other consumables. On the other hand, compared to 31 March 2018, the relative leverage level has improved as 8% y-o-y increase in net debt was outpaced by the growth of profitability metrics on the back of a 28% increase in revenue. Free cash flow generation in 2019 will, as is usual for Polymetal, be weighted towards the second half of the year on the back of higher production volumes and seasonal working capital drawdowns. As previously announced, the final dividend for 2018 of US$ 0.31 per share (approx. US$ 146 million) will be paid on 24 May 2019. The Company will host its annual Analyst and Investor Day on 24 April 2019 in London to provide an operating asset review and exploration update.     3 months ended Mar 31, % change1   2019 2018         Waste mined, Mt 37.6 28.8 +30% Underground development, km 28.2 32.8 -14% Ore mined, Mt 4.2 3.2 +32% Open-pit 3.2 2.0 +57% Underground 1.0 1.2 -12% Ore processed, Mt 3.4 3.1 +13% Production       Gold, Koz 302 214 +41% Silver, Moz 5.1 6.0 -15% Copper, Kt 0.9 0.7 +18% Gold equivalent, Koz2 374 295 +27% Sales       Gold, Koz 291 206 +41% Silver, Moz 4.7 4.8 -4% Copper, Kt 0.4 0.3 +38% Revenue, US$m3 454 354 +28% Net debt, US$m4 1,704 1,518 +12% Safety5       LTIFR 0.24 0.15 +60% Fatalities 1 1 0% Notes: (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.  (2) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.  (3) Calculated based on the unaudited consolidated management accounts. (4) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 31 December 2018 (5) LTIFR = lost time injury frequency rate per 200,000 hours worked. PRODUCTION BY MINE   3 months ended Mar 31, % change   2019 2018         GOLD EQ. (KOZ)1       Kyzyl 78 - NA Dukat 78 79 -1% Albazino-Amursk 81 90 -10% Omolon 53 31 69% Mayskoye 5 - NA Varvara 38 35 8% Voro 27 26 3% Svetloye 9 8 10% TOTAL (continuing operations) 369 270 +37% Okhotsk - 13 -100% Kapan 52 12 -60% TOTAL (including discontinued operations) 374 295 +27% Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Au conversion ratios.                 (2) Production up to asset disposal date on 30 January 2019 CONFERENCE CALL AND WEBCAST Polymetal will hold a conference call and webcast on Thursday, 18 April 2019 at 12:30 London time (14:30 Moscow time). To participate in the call, please dial: 8 800 500 98 63 access code 95198051# (free from Russia), or [phone] (free from the UK), or [phone] (free from the US), or  follow the link: http://polymetal180419-live.audio-webcast.com. Please be prepared to introduce yourself to the moderator or register. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://polymetal180419-live.audio-webcast.com. A recording of the call will be available immediately after the call at [phone] (from within the UK), [phone] (USA Toll Free) and [phone] (from within Russia), access code 418844238#, from 15:00 Moscow time Thursday, 18 April, till 15:00 Moscow time Thursday, 25 April, 2019. Enquiries Media   Investor Relations FTI Consulting Leonid Fink Viktor Pomichal [phone] Polymetal Eugenia Onuschenko Timofey Kulakov Michael Vasiliev                    [e-mail] [phone] (UK) [phone] (Russia) Joint Corporate Brokers   Morgan Stanley Andrew Foster Richard Brown Panmure Gordon Charles Lesser James Stearns [phone]       [phone] RBC Europe Limited Marcus Jackson Jamil Miah [phone]     FORWARD-LOOKING STATEMENTS THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED   KYZYL   3 months ended Mar 31, % change   2019 2018 MINING       Waste mined, Mt 15.9 13.8 +15% Ore mined, Kt 522 74 +610%         PROCESSING       Ore processed, Kt 476 - NA Gold grade, g/t 6.9 - NA Gold recovery 86.8% - NA Concentrate produced, Kt 29.8 - NA Concentrate gold grade, g/t 96.0 - NA Gold in concentrate, Koz1 91.9 - NA         Concentrate shipped, Kt 20 - NA Payable gold shipped, Koz 50.7 - NA         Amursk POX       Concentrate processed, Kt 8 - NA Gold grade, g/t 118.3 - NA Gold recovery 94.4% - NA Gold produced, Koz 27.4 - NA         TOTAL PRODUCTION       Gold, Koz 78.1 - NA Note:   (1) For information only; not considered as gold produced and therefore not reflected in the table representing total production. It will be included in total production upon shipment to off-taker or dore production at Amursk POX. For a full quarter, Kyzyl operated above its nameplate throughput capacity thanks to the relative softness of near-surface ore. Grade mined exhibited positive reconciliation versus geological model due to the presence of small high-grade ore pods and lenses. The Company launched a study to re-optimize the open pit under updated operational and economic assumptions with results, including the update Ore Reserves assessment, to be presented in Q4 2019. The average recovery rate was 86.8% with continued optimization of the circuit pointing to the potential increases going forward. The Company is evaluating targeted investments in hydrocyclones and concentrate filtering area to de-bottleneck the concentrator given better than expected ore hardness. The Chinese off-take market continues to be volatile, however the high grade of Kyzyl concentrates helps ensure steady demand for material from a variety of customers in both Eastern and Western China.   DUKAT OPERATIONS   3 months ended Mar 31, % change   2019 2018 MINING               Underground development, Km 15.5 14.4 +7% Ore mined, Kt 603 595 +1%         PROCESSING       Omsukchan concentrator       Ore processed, Kt 513 484 +6% Grade       Gold, g/t 0.6 0.5 +1% Silver, g/t 284 314 -10% Recovery1       Gold 86.2% 86.2% -0% Silver 87.2% 87.8% -1% Production       Gold, Koz 9.2 7.3 +27% Silver, Moz 4.0 4.2 -7%   Lunnoye plant       Ore processed, Kt 116 113 +2% Grade       Gold, g/t 1.5 1.3 +15% Silver, g/t 268 358 -25%   Recovery1       Gold 86.2% 85.2% +1% Silver 90.2% 91.8% -2% Production       Gold, Koz 4.7 4.0 +18% Silver, Moz 0.9 1.2 -23%   TOTAL PRODUCTION       Gold, Koz 13.9 11.2 +24% Silver, Moz 4.9 5.4 -10% The underground mines at Dukat, Goltsovoye and Lunnoye continued to operate at full capacity during the quarter, which translated into a slight year-on-year increase in ore mined volumes. Gold output at the Dukat hub increased 24% year-on-year to 13.9 Koz, as the Omsukchan concentrator continued to process ore from gold-rich veins at the deeper levels of Dukat and from Lunnoye. Silver output was down 10% over the previous year to 4.9 Moz as record concentrator throughput failed to offset planned grade decline at the underground mine. At Lunnoye, quarterly processing volumes remained flat, while gold production increased 18% year-on-year as higher grade material from Zone 5 was processed through the mill. Silver production on the other hand, declined 6% to 0.9 Moz with the depletion of high-grade areas of Zone 7. Goltsovoye mine is approaching the end of its economic life with underground development expected to cease in Q3 2019 and ore mining to end in early 2020. At Perevalnoye, positive exploration results led to a significant increase in average ore body widths and resource tonnage. This prompted a re-consideration of the previously proposed underground mining method. As a result, the start of stoping has been delayed to Q4 2019.   ALBAZINO   3 months ended Mar 31, % change   2019 2018 MINING       Albazino       Waste mined, Mt 5.5 5.1 +8% Underground development, Km 2.3 2.4 -2% Ore mined, Kt 480 452 +6% Open-pit 362 345 +5% Underground 118 108 +9%         Veduga1       Waste mined, Mt 1.7              -   NA Ore mined (open-pit), Kt 45              -   NA         PROCESSING       Albazino concentrator       Ore processed, Kt 425 419 +1% Gold grade, g/t 4.4 5.3 -16% Gold recovery2 83.7% 86.5% -3% Concentrate produced, Kt 35.6 33.9 +5% Concentrate gold grade, g/t 44.5 57.1 -22% Gold in concentrate, Koz3 50.9 62.2 -18%         Amursk POX       Concentrate processed, Kt 53 50 +6% Gold grade, g/t 51.6 57.2 -10% Gold recovery 95.2% 97.3% -2% Gold produced, Koz 81.3 89.9 -10% TOTAL PRODUCTION       Gold, Koz 81.3 89.9 -10% Notes:  (1) Based on 100% (2) To concentrate (3) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production after dore production at the Amursk POX At Albazino, gold in concentrate production fell 18% to 51 Koz on the back of lower grades and recoveries driven by more complex metallurgy and lower grade from Ekaterina-1. This, in turn, also impacted total gold output which was down 10% year-on-year at 81.3 Koz. Underground mine productivity continued to improve with ore mined up 9% year-on-year following the full transition to partially cemented waste backfill that was completed last year. Underground development at the new Ekaterina-2 underground mine is underway. Ore mining is expected to commence in Q4 2019. Once the new production areas are in production average grades through the mill are planned to increase.    AMURSK POX   3 months ended Mar 31, % change   2019 2018 Concentrate processed, Kt 61 50 +22%     Albazino 45 44 +2%     Purchased feedstock1 3 6 -43%    Veduga1 4 - NA     Kyzyl 8 - NA Average gold grade, g/t 60.3 57.2 +5% Average sulphur grade 12.7% 8.2% +55% Total gold produced2, Koz 108.7 89.9 +21% Notes: (1) Included in reportable production at Albazino                 (2) For information only. Already accounted for in production at operating mines. Amursk POX operated at full capacity and achieved record quarterly production of 109 Koz. Increasing recoveries from low-carbon Kyzyl concentrate will be the focus of optimization initiatives for the rest of the year. OMOLON OPERATIONS   3 months ended Mar 31, % change   2019 2018 MINING               Waste mined, Mt 1.3 1.0 +30% Underground development, Km 3.2 3.2 +1% Ore mined, Kt 648 385 +69%     Open-pit 533 293 +82%     Underground 115 92 +25%         PROCESSING       Birkachan Heap Leach       Ore stacked, Kt 54 - NA Gold grade, g/t 1.2 - NA         Kubaka Mill       Ore processed, Kt 220 206 +7% Grade       Gold, g/t 7.9 4.8 +65% Silver, g/t 22 30 -25% Recovery1       Gold 94.2% 95.2% -1% Silver 72.9% 78.5% -7% Gold production, Koz 51.5 30.4 +69% Silver production, Moz 0.1 0.1 +56% TOTAL PRODUCTION       Gold, Koz 51.5 30.4 +69% Silver, Moz 0.1 0.1 +56% Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory Q1 gold output increased 69% year-on-year as higher-grade ore from Olcha was introduced to the feed. Ore transportation from Olcha takes place every other year to reduce spending on winter road maintenance. 127 Kt of ore with the average grade of 9.3 g/t gold was trucked from Olcha during the 2019 cold season.   Fully outsourced open-pit mining restarted at Birkachan with the goal to supplant ore from Sopka open pit which will be fully depleted in Q2 2019. The Birkachan seasonal heap leach operation restarted with 54 Kt of ore stacked during the quarter. Material contributions from the heap leach circuit are expected in H2 2019. MAYSKOYE   3 months ended Mar 31, % change   2019 2018 MINING       Waste mined, Mt 1.2 0.6 +105% Underground development, km 5.5 6.1 -9% Ore mined, Kt 218 178 +23% Open-pit 64 21 +197% Underground 155 157 -1%         PROCESSING       Ore processed (sulphide ore), Kt 219 203 +8% Gold grade, g/t 5.7 5.0 +12% Gold recovery 83.8% 88.1% -5% Gold in concentrate, Koz2 33.4 28.8 +16%         Gold produced in dore from concentrate (POX), Koz - - - Gold produced in dore from carbon, Koz3 4.6 - +100% Payable gold in concentrate shipped to offtakers, Koz - - -         TOTAL PRODUCTION       Gold, Koz 4.6 - +100%  Notes: (1) To concentrate (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in   total production upon sale to off-taker or dore production at Amursk POX (3) Gold produced from carbon at Amursk POX At Mayskoye, gold in concentrate increased 16% year-on-year to 33 Koz on the back of higher processing volumes and improved grades. This more than offset a drop in recoveries as the plant processed metallurgically challenging ore with high antimony content. Recovery is expected to improve in Q2 after the adjustment in reagent addition rates and locations. Successful conversion of resources at depth added 778 Koz of gold to reserves at Mayskoye. Newly defined ore bodies comprise Ore Zone 4 and are significantly different from the currently mined Ore Zones 1 and 2. They are much wider and have relatively flat dip. As a result, the Company initiated a technical study to evaluate the conversion to a cemented paste backfill with the goal of controlling dilution while mining Ore Zone 4. The results are expected in Q4 2019.  VARVARA   3 months ended Mar 31, % change   2019 2018 MINING       Waste mined, Mt 11.1 7.1 +56% Ore mined (open pit), Kt 961 675 +42%         PROCESSING       Flotation       Ore processed, Kt 147 76 +92% Grade       Gold, g/t 1.1 1.1 -2% Copper 0.57% 0.55% +4% Recovery1       Gold 68.3% 60.9% +12% Copper 91.9% 90.1% +2% Production       Gold (in concentrate), Koz 2.6 1.6 +65% Copper (in concentrate), Kt 0.7 0.4 +90%         Veduga ore toll processed, Kt2 33 12 +181%         Leaching       Ore processed, Kt 752 775 -3% Gold grade, g/t 1.5 1.5 -3% Gold recovery1 85.3% 86.4% -1% Gold production (in dore), Koz 31.4 31.2 +0%         Total ore processed, Kt 931 863 +8%   TOTAL PRODUCTION       Gold, Koz 34.0 32.8 +4% Copper, Kt 0.7 0.4 +90%   Note:  (1) Technological recovery, includes gold and copper within work-in-progress inventory. Does not include toll-treated ore (2) To be further processed at Amursk POX. In Q1, gold output at Varvara increased 4% year-on-year driven by higher processing volumes and improved flotation recoveries. Waste stripping started at the new Riverside pit at Varvara with first ore expected in Q2 2019. Most waste material from this pit will be used for the construction of the new tailings storage facility. Varvara continued to toll-treat high-grade ore from Veduga and plans to process more than 100 Kt in 2019.   VORO   3 months ended Mar 31, % change   2019 2018 MINING       Waste mined, Mt 0.4 1.1 -60% Ore mined, Kt 269 302 -11%         PROCESSING       Voro Heap Leach       Ore stacked, Kt - - NA Gold grade, g/t - - NA Gold recovery - - NA Gold production, Koz 4.8 1.6 +201%   Voro CIP       Ore processed, Kt 249 247 +1% Gold grade, g/t 3.4 3.9 -12% Gold recovery1 87.0% 80.4% +8% Gold production, Koz 22.3 24.5 -9% TOTAL PRODUCTION       Gold, Koz 27.0 26.1 +4% Note: (1) Technological recovery, includes gold within work-in-progress inventory Q1 gold production at Voro increased 4% year-on-year to 27 Koz mainly due to contributions from the heap leach operation. Higher gold recoveries partially offset a planned decline in grade at the CIP plant. Mining volumes continued to decline as the open pit nears the end of its life in Q3 2019. Exploration drilling identified substantial mineralisation below the open pit with technical studies currently underway to determine the feasibility of underground mining. SVETLOYE   3 months ended Mar 31, % change   2019 2018 MINING       Waste mined, Mt 0.4 0.1 +285% Ore mined (open pit), Kt 413 326 +27%         PROCESSING       Ore stacked, Kt 184 219 -16% Gold grade, g/t 4.9 3.8 +29% Gold recovery 80.7% 80.8% -0% Gold production, Koz 9.2 8.3 +10%         TOTAL PRODUCTION       Gold, Koz 9.2 8.3 +10%   Svetloye delivered a solid set of quarterly results with gold production up 10% to 9.2 Koz on the back of 29% increase in grade. The new solar power plant is fully operational and provided 7.3% of total electricity produced at the mine in Q1 despite seasonal challenges. At Levoberezhny (35 km from Svetloye), the results of in-fill drilling confirmed the continuity of mineralisation and the viability of using heap-leaching to recover gold.   DEVELOPMENT UPDATE At Nezhda, mining activities resumed with 2.5 Mt of pre-stripping completed during the first quarter. Construction mostly focused on auxiliary infrastructure including additional accommodation, fuel depot, explosives depot, process and potable water boreholes, as well as the warm warehouse. Pouring of concrete for the concentrator building and mill foundations has commenced. All contracts for key processing equipment have been signed including mills, flotation cells, thickeners, press filters for concentrates and tailings, and gravity concentrators. At POX-2, the focus is currently on engineering activities and equipment contracting. Contracts have been signed for the main processing equipment including the autoclave vessel (Coek Engineering), the oxygen station (Linde), as well as desorption, electrolysis, carbon reactivation and smelting units. SUSTAINABILITY, HEALTH AND SAFETY In Q1, our LTIFR stood at 0.24 (versus 0.15 in Q1 2018) with a total of 6 work-related incidents recorded across the Group (4 incidents in 2017). The increase is driven by minor incidents that occurred on site but not during the production process. We regret to report a fatality that occurred on 8 March 2019. A jumbo drill rig operator was injured by the rotating boom at the Mayskoye underground mine. We send our sincere condolences to the family, friends and colleagues of the deceased employee. The two most recent fatalities at Polymetal operations, one each in 2018 and 2019, were both related to subjective factors. As a result, the focus of our efforts to ensure safe working conditions will increasingly shift towards behavioural analysis and proactive instruments of checking and preventing potentially unsafe employee actions. Safety remains a top priority for Polymetal and the Company reaffirms its commitment to further improvements across health and safety metrics to achieve our zero harm target in relation to our employees, as well as our suppliers and contractors. Details of implemented safety and employee welfare initiatives are set out in the Sustainability Report, which can be found on our website.

ISIN:	JE00B6T5S470
Category Code:	MSCH
TIDM:	POLY
Sequence No.:	8250
EQS News ID:	801573

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End of Announcement	EQS News Service