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Russia's Polymetal posts net loss of $321M in H122, cancels dividend

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(Kitco News) - Russia's Polymetal, a senior global producer of silver and gold, informed today that the company's H1 2022 gold equivalent (GE) production  decreased by 7% year-on-year to 697 Koz.

The company said that lower grades and planned long maintenance shutdown at the Amursk POX reduced output from Kyzyl and Albazino, more than offsetting fresh contribution from Nezhda.

Polymetal noted that stronger production forecast in the H2 2022 will be driven by seasonal concentrate de-stockpiling at Mayskoye, as well as release of accumulated metal inventory at Omolon, Dukat and Svetloye, adding that the company remains on track to meet its FY2022 production guidance of 1.7 Moz of gold equivalent.

In H1 2022, the company's revenue decreased by 18%, totalling US$ 1,048 million (H1 2021: US$ 1,274 million), of which US$ 443 million (42%) was generated from operations in Kazakhstan and US$ 605 million (58%) from operations in the Russian Federation.

All-in sustaining costs amounted to US$ 1,371/GE oz, up 34% year-on-year, 6% above the upper end of the full-year guidance range of US$ 1,200-1,300/GE.

Adjusted EBITDA was US$ 426 million, a decrease of 35%, against a backdrop of higher costs and lower sales volumes.

According to the company's statement, as a result of lower EBITDA and non-cash impairment charges (the post-tax amount of US$ 564 million), the company recorded a net loss of US$ 321 million in H1 2022, compared to a US$ 419 million profit in H1 2021.

The company's net operating cash outflow was US$ 405 million (H1 2021: US$ 358 inflow), on the back of working capital build-up of US$ 624 million.

Importantly, according to a press-release, taking into account significant decline in operating cash flows, challenges in establishing new sales channels and the short-term liquidity headwinds, the company's Board decided to permanently cancel full-year 2021 dividend.

Moreover, given the continuing impact of these external uncertainties, the company's Board does not propose any interim 2022 dividends to allow Polymetal to strengthen its cash position and enhance its resilience in a highly volatile environment, the company said.

“Polymetal continued to maintain operational stability in H1 2022 despite operating in a persistently challenging external environment. Significant disruption in traditional supply chains and sales channels constrained cash flow generation and led to an increase in net debt. The management team continues to focus on ensuring long-term business viability and value creation,” stated CEO Vitaly Nesis.

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