26th Aug 2020 08:21
(Alliance News) - Polymetal International PLC on Wednesday announced it has doubled its interim dividend as a much higher gold price boosted performance.
The average realised gold price for Russia and Kazakhstan-focused gold and silver producer Polymetal was USD1,551 per ounce in the six months ended June 30, a 25% jump from USD1,332 per ounce a year before. The average realised silver price also was higher, up 10% at USD16.7 per ounce from USD15.2.
Gold equivalent production rose 4% to 723,000 ounces in the half year, while gold sales came to 595,000 ounces, down 1% year-on-year due to "a lag between gold concentrate production and sales" expected to close in the second half.
Silver sales fell 4% to 9.9 million ounces.
Revenue jumped 17% to USD1.14 billion from USD941 million, and net earnings more than doubled to USD381 million from USD153 million.
Basic earnings per share came to USD0.81, far higher than USD0.33 the previous year.
Underling net earnings close to doubled to USD373 million from USD188 million.
With these strong results and in accordance with its dividend policy of paying 50% of underlying net earnings , Polymetal declared a USD0.40 per share interim dividend, twice its USD0.20 per share dividend the year before.
This amounts to USD189 million, half the firm's interim underlying net income, but is still significantly below its hard ceiling of a net debt to adjusted earnings before interest, tax, depreciation and amortisation ratio of less then 2.5 times.
In its first half its net debt to adjusted Ebitda ratio was 1.31 times, down from 1.38 times the prior year. Net debt was higher, however, at USD1.69 billion from USD1.48 billion at the end of 2019.
Polymetal also has amended its dividend policy, replacing its special dividend with a modified policy for final dividend payment.
Under the new policy, it will pay out a minimum final dividend amounting to 50% of underlying net income for the second half of the year, subject to its hard ceiling. Moreover, it will have discretion to increase the final dividend to a maximum annual payout of 100% of free cash flow, provided this exceeds underliyng net income. The interim dividend will stay at 50% of underlying net income for the first half.
Chief Financial Officer Maxim Nazimok said: "Our updated divided policy responds to the market's request for higher transparency. We remain committed to providing superior sustainable dividends and returning cash flows to our shareholders."
In terms of outlook, Polymetal said it is on course to meet its production guidance for 2020 of 1.5 million ounces of gold equivalent. It also maintained its guidance range of USD650 to USD700 per gold equivalent ounce of total cash costs and USD850 to USD900 gold equivalent per ounce of all-in sustaining cash costs.
This guidance reflects that cost benefits in dollar terms from the depreciation of the Russian rouble and Kazakh tenge are being counterbalanced by Covid-19 related costs, plus a higher mining tax due to rising gold and silver prices.
In the first half, total cash costs amounted to USD638 per gold equivalent ounce, down 4% year-on-year and 2% under guidance. All in sustaining cash costs fell 3% to USD880 per gold equivalent ounce, within guidance.
Chief Executive Vitaly Nesis said: "We are pleased to report a strong financial performance in the first half of the year amidst a challenging global backdrop. Favourable commodity prices and our tight cost control, as well as the impact of foreign exchange and improved grades, drove a significant increase in the group's earnings, cash flow and dividends. Importantly, we've been able to minimise the impact of the Covid-19 pandemic on our people, communities, and operations. Our key development projects continue to progress on schedule."
Shares in Polymetal were up 0.2% at 1,956.50 pence in London on Wednesday morning.
By Anna Farley; [email protected]
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