29th Mar 2016 10:15
LONDON (Alliance News) - Polymetal International PLC shares were being sold on Tuesday despite the FTSE 250 miner turning to profit in 2015, allowing Polymetal to significantly increase its dividend for the year.
Polymetal shares were trading down 4.6% to 671.96 pence per share on Tuesday, the third worst performer in the mid-cap index.
The gold and silver miner operating in Russia and Kazakhstan said it will pay a dividend totalling 51.0 cents for 2015, representing a 24% rise from the 0.41 cents paid in 2014, after the company turned a profit in the year.
The dividend for 2015 is comprised of an interim dividend of 8.0 cents, a final dividend of 13.0 cents, and an already-declared special dividend of 30.0 cents. The 2014 dividend also included a 20.0 cent special dividend.
The increase means dividend payments totalled USD216.5 million in 2015, up from the USD172.8 million spent the year before.
Polymetal moved out of the red and into the green in 2015, reporting a USD275.8 million pretax profit in the year compared to the USD137.9 million loss reported in 2014.
The profit resulted mostly from Polymetal's foreign exchange loss shrinking to USD132.9 million in the year from USD559.3 million in 2014, thanks to favourable movements of the the Russian rouble and Kazakh tenge against the dollar.
Polymetal had already reported its revenue for the year, revealing a 15% year-on-year fall to USD1.44 billion from USD1.69 billion, as lower production costs were not enough to offset declines of 8% in gold prices and a 17% in silver prices, combined with a fall in production.
Net operating cashflow was down 5% year-on-year to USD490.0 million from USD518.0 million, whilst free cashflow in 2015 was 14% lower year-on-year at USD263.0 million from USD306.0 million.
That resulted in gross profit falling to USD661.9 million from USD706.3 million, but a severe reduction in other costs pushed operating profit up to USD479.1 million from USD436.0 million.
The dramatic cut to some expenses led other operating costs to total just USD51.2 million in 2015 from USD131.9 million year earlier. Those costs were driven down primarily by exploration costs being cut by more than half to USD24.0 million from USD50.5 million, taxes halving to USD11.6 million from USD22.2 million, and lower costs elsewhere.
Those savings made from foreign exchange and operating costs were partly offset by finance costs doubling to USD80.1 million from the USD40.6 million in 2014, a result of net debt rising 4% year-on-year to USD1.29 billion.
That means net debt was 1.97 times higher than adjusted earnings before interest, tax, depreciation and amortisation of USD658.0 million in 2015, compared to 1.82 times higher than adjusted Ebitda of USD685.0 million in 2014.
Polymetal reported net earnings of USD221.0 million in 2015, swinging from a USD210.0 million net loss in 2014. Underlying earnings, which exclude certain exceptional items, rose to USD296.0 million from USD282.0 million in 2014.
Polymetal spent USD224.0 million in capital expenditure, which was flat from the USD223.0 million spent in 2014 but below the company's USD240.0 million budget for the year.
Production was down 3% to 1.27 million ounces of gold equivalent in 2015 from 1.31 million ounces produced in 2014, but sales dropped at a steeper rate of 7% to 1.28 million ounces from 1.37 million ounces.
Gold equivalent production fell due to a 9% year-on-year fall in gold production and a 49% fall in copper production, partly offset by a 12% lift in silver production during the year. Although production was down, Polymetal said it was the fourth year that the company beat its guidance, producing 4% more than anticipated.
Production fell from all but one of Polymetal's seven producing operations, with the Dukat hub in Russia reporting a 14% rise whilst the other operations saw production fall by between 3% and 32%.
As the miner combats the fall in commodity prices, Polymetal managed to reduce its all-in sustaining cash cost by 18% in 2015 to USD733 per gold equivalent ounce, which was also lower than the original guidance range of USD750 to USD800 per ounce.
However, Polymetal reaffirmed its plans to produce less in 2016, estimating production of 1.23 million ounces of gold equivalent, and said the all-in sustaining cash cost will remain within the region of USD700 to USD750 per ounce.
Polymetal also said it remains on track to produce 1.3 million ounces of gold equivalent in 2017.
Polymetal did not reaffirm Tuesday its guidance for the subsequent years beyond 2017, but in February had said production would be in the region of 1.4 million ounces in 2018 before rising to 1.5 million ounces in 2019. Polymetal also said last month that production in 2020 would be in the region of 1.6 million ounces of gold equivalent.
By Joshua Warner; [email protected]; @JoshAlliance
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