Polymetal International plc

Preliminary results for the year ended 31 December 2014

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's preliminary results for the year ended 31 December 2014.

FINANCIAL HIGHLIGHTS

·      Revenue for the year ending 2014 was US$ 1,690 million, largely unchanged from 2013 ("year-on-year") despite average realised gold and silver prices decreasing 7% and 18% respectively year-on-year. The price decline was mostly offset by 7% increase in the volume of gold equivalent sold during the period.  

·      Group Total cash cost¹ ("TCC") was US$ 634/gold equivalent ounce ("GE oz"), down 15% from 2013 levels due to a robust operational performance, resulting in higher average grades processed and increased throughputs across the portfolio, coupled with significant Russian Rouble depreciation against the US dollar. Total cash costs in the second half of the year increased slightly by 2% to US$ 641/GE oz versus the first half of 2014 driven by production from Mayskoye with cost levels higher than the Group average.

·      All-in sustaining cash costs¹ decreased by 18% year-on-year to US$ 893/GE oz as a result of reduction in total cash costs during the period, combined with increased production levels and associated reduction in per ounce sustaining capital expenditure at operating mines.

·      Adjusted EBITDA¹ was US$ 685 million, an increase of 15% year-on-year, driven predominantly by strong cost performance and production growth offsetting the decline in commodity prices. Adjusted EBITDA margin was 41% compared to 35% in 2013.

·      Underlying net earnings for the year (adjusted for the after-tax amount of impairment charges/reversals and foreign exchange loss) were US$ 282 million (2013: US$ 179 million). As a result of non-cash foreign exchange losses, the Group recorded a net loss for the year of US$ 210 million in 2014 (2013: US$ 198 million).

·      Net debt of US$ 1,249 million (including the liability for the special dividend payable), an increase of 20% versus 2013 levels as the Company raised an additional US$ 318.5 million of debt for the acquisition of the Kyzyl gold project in Kazakhstan (completed on September 4, 2014), while continuing to generate free cash flow and pay dividends. Net debt/Adjusted EBITDA was 1.82 (31 December 2013: 1.75). Free cash flow for the year¹ was US$ 306 million, an increase of more than two-fold compared to 2013.

·      A final dividend of US$ 0.13 per share representing 30% of the Group's underlying net earnings for 2H 2014 is proposed by the Board, which, in accordance with the current dividend policy, has the discretion to declare regular dividend at the Net debt/Adjusted EBITDA ratio above 1.75. This will bring total dividend declared for the period to US$ 0.41 per share, or US$ 173 million.

OPERATING HIGHLIGHTS

·      In 2014 Polymetal increased its gold equivalent ("GE") production by 12% to 1.43 Moz and exceeded both its original production guidance of 1.3 Moz of GE by 10% and the updated production guidance of 1.365 Moz by 5%. This achievement was mostly driven by the full ramp-up of Mayskoye and strong operational delivery at Dukat and Omolon.

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1)     The definition and calculation of non-IFRS measures used in this report, including Adjusted EBITDA, Total cash costs, All-in sustaining cash costs, Underlying net earnings, Net debt, Free cash flow and the related ratios, are explained in the "Financial Review" section below.

·      The Company reiterates its production guidance of 1.35 Moz of GE for 2015 and 2016. In 2015, Polymetal expects a lower TCC of US$ 575-625 per GE oz and AISC of US$ 750-800 per GE oz. Capital expenditure in 2015 is expected to total approximately US$ 240 million (including exploration, capitalised stripping and spending on the Kyzyl project). This guidance is heavily dependent on the RUB/USD exchange rate, inflation in Russia, and oil price dynamics and is based on management's current estimates of these variables in 2015.

·      Ore Reserves increased by 63% to 21.6 Moz of GE as a result of Kyzyl acquisition (+6.7 Moz) and updated Ore Reserves estimates at several of our operating mines and exploration projects including, among others, Albazino underground, Svetloye, Kutyn, Veduga. Average Ore Reserves grade increased by 16% to 4.3 g/t GE.

"I am pleased to report robust cost performance and cash flow generation in a year which was challenging in terms of market conditions", said Vitaly Nesis, CEO of Polymetal, commenting on the results. "This resilient performance, combined with our strong balance sheet position, allows us to progress on further growth opportunities while generating meaningful cash returns to our shareholders".

The full version of the press release is in attached PDF.

http://www.rns-pdf.londonstockexchange.com/rns/8063I_-2015-3-30.pdf 

PRESENTATION AND WEBCAST

Polymetal will hold a conference call and webcast on Monday, March 30, 2015 at 10:30 am London time (12:30 pm Moscow time).

To participate in the call, please dial:

8 10 8002 4902044 (toll-free from Russia), or

0808 109 0700 (toll-free from the UK), or

1 866 966 5335 (toll-free from the US), or

+44 (0) 20 3003 2666 (from outside the UK, the US and Russia), or follow the link:

http://webcast.instinctif.tv/795-1028-14478 

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://webcast.instinctif.tv/795-1028-14478. A recording of the call will be available immediately after the call at 0800 640 1726 (from within the UK) and +44 0 (20) 3350 6902 (from all countries), access code 8844176#, from 3:30 pm Moscow time Monday, March 30, till 18:30 pm Moscow time Thursday, April 30, 2015.

Enquiries

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.