Polymetal, Preliminary results for the year ended 31 December 2022

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Algemeen advies 17/03/2023 09:12
Polymetal International plc (“Polymetal” or the “Company”) announces the Group's preliminary results for the year ended 31 December 2022.

“In 2022, the Company was subject to extraordinary and unprecedented external challenges. Despite these adverse circumstances, Polymetal managed to maintain operational stability and achieve excellent safety performance. Nonetheless, international sanctions against Russia have had a huge impact on domestic inflation, supply chains and sales channels. As a result, costs have risen and working capital requirements ballooned with cash flow plummeting. We start 2023 from a position of relative strength and expect the resumption of free cash flows and a reduction in net debt over the course of the coming year”, said Vitaly Nesis, Group CEO, commenting on the results.


In 2022, revenue decreased by 3%, totalling US$ 2,801 million (2021: US$ 2,890 million), of which US$ 933 million (33%) was generated from operations in Kazakhstan and US$ 1,868 million (67%) from operations in the Russian Federation. Average realised gold price decreased by 2% while silver price decreased by 12%, both almost tracking market dynamics. Gold equivalent (GE) production was 1,712 Koz, a 2% increase year-on-year (y-o-y). Gold sales decreased by 1% y-o-y to 1,376 Koz, while silver sales increased by 6% to 18.5 Moz. Disruption in sales channels resulted in a huge gap between production and sales in Q2-Q3 2022, but was largely eliminated in Q4 2022. The remaining gap is expected to close during the course of 1H 2023.

Group Total Cash Costs (TCC)1 for 2022 were US$ 942/GE oz and within the Group’s guidance of US$ 900-1,000/GE oz, although representing an increase of 29% y-o-y, which was predominantly due to double-digit domestic inflation and the appreciation of Rouble/USD exchange rate. Escalation of logistical costs and sharp increases in the price of consumables caused by the imposition of sanctions (explosives, equipment spares, cyanide) also impacted the Group’s TCC.

All-in Sustaining Cash Costs (AISC)1 amounted to US$ 1,344/GE oz, up 31% y-o-y, which was within the Group’s guidance of US$ 1,300-1,400/GE and also driven by the same factors as above.

Adjusted EBITDA1 was US$ 1,017 million, 31% lower than in 2021, as costs rose and metals prices declined. US$ 478 million (47%) of Group EBITDA originated in Kazakhstan and US$ 539 million (53%) in the Russian Federation. The Adjusted EBITDA margin decreased by 15 percentage points to 36% (2021: 51%).

Underlying net earnings2 were US$ 440 million (2021: US$ 913 million). As a result of a lower Group EBITDA and non-cash impairment charges (a post-tax amount of US$ 653 million), the Group recorded a net loss for the period of US$ 288 million in 2022, compared to profits of US$ 904 million in 2021.

Capital expenditure was US$ 794 million3, up 5% compared with US$ 759 million in 2021 and 2% above the guidance range of US$ 725-775 million, reflecting accelerated purchases and contractor advances for ongoing projects (most notably, Amursk POX-2), combined with inflationary and logistical pressures on imported equipment, materials and services.

Net operating cash inflow was US$ 206 million (2021: US$ 1,195 million), on the back of inventories build-up of US$ 473 million. This includes positive cash flow of US$ 337 million from operations in Kazakhstan and negative cash flow of US$ 131 million from operations in the Russian Federation. The Group reported negative free cash flow1 of US$ 445 million in 2022 (2021: positive US$ 418 million).

Net debt1 increased to US$ 2,393 million during the period (31 December 2021: US$ 1,647 million), representing 2.35x of the Adjusted EBITDA (2021: 1.13x). The increase in net debt was driven by the decline in profitability, the persistently high capital intensity of the business and a very significant expansion in working capital.

(1) The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to complement measures that are defined or specified under International Financial Reporting Standards (IFRS). For more information on the APMs used by the Group, including justification for their use, please refer to the “Alternative performance measures” section below.
(2) Adjusted for the after-tax amount of impairment charges, write-downs of metal inventory, foreign exchange gain and other change in fair value of contingent consideration.
(3) On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.


The Board has carefully evaluated the liquidity and solvency of the business in light of multiple external uncertainties. Taking into account the Group’s leverage (2.35x Net debt/EBITDA, materially above the level of 1.5x target leverage ratio and the significant level of uncertainty regarding external factors, the Board has decided not to propose any dividend for 2022 in order to allow the Group to maintain strategic and operating flexibility in a highly volatile and uncertain external environment.

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