POLY.L Share Chat (POLY)

POLY should start to perk up a bit in the next few days:
Gold price holding up and may even be bottoming out and starting another upward trajectory
USD Ruble excahnge rate at pre-war level
POLY dodging yet another round of EU sanctions
POLY mgt have repeatedly said that production levels are normal
POLY preliminary results out on 16th March
Results should confirm good year of trading with reduction in debt helped by POLY unable to pay divis
On the negative side there remains this issue of re-domiciliation which may yet not happen as the war reaches the endgame in coming months. One can see desire for peace on all sides, but question is how and when do we get it started?

Gold price is strong and the FX rate is good, regarding the results we already know Revenue was $2.9B, net debt $2.4B and production grew to 1,712 koz and average interest rate was 5%. We all know the company has great assets with great reserves, however the main worry, which is why the SP has declined over the last month was from the RNS on the 25 Jan.
‘Should the Company proceed with a re-domiciliation to the AIFC, The Company’s primary listing may move to AIX where its Ordinary Shares will be traded with the new ISIN. The Company will look to ensure continuous liquidity of trading.’

I would also say there are currently more negatives as per their presentation on the same day. Re read the sentences they put in bold on their presentation.
Sanctions and Counter sanctions have affected Funding,
‘Reduced availability of USD and EUR funding due to sanctions. Polymetal is currently borrowing at higher rates in local currencies and CNY with local banks.’
It will take them 3 years to transition away from European mining fleet.
‘Counter-sanctions
The Company's incorporation in Jersey (being an "unfriendly" jurisdiction) imposes counter-sanctions which brings about significant restrictions for corporate development initiative:

With these limitations the existing corporate structure is considered unsustainable.

Strategic rationale behind re-domiciliation
A re-domiciliation to a "friendly" jurisdiction will allow the Company to:
Enable the Company to execute other corporate actions (i.e. purchase/disposal of assets in Russia or Kazakstan) ensuring distinct ownership of its assets in Russia and Kazakhstan.
Continue steps to restore the ability to deliver dividends to all shareholders.
Avoid further unfavourable treatment domestically in Russia

Conclusions
The Company is keen to execute the re-domiciliation as soon as possible.’

Then the main worry for UK investors is how do we keep our investment in Poly once they redomicile. If they do manage to get GDRs that will only be for the Kazak assets, we need a UK broker to invest in AIX.

Meanwhile Freedom Finance Europe is now giving Retail investors access to the AIX.
So literally even if Poly delist from the LSE and redomiciles in the AiX then we can just transfer our Shares to it.
Also it was kinda given the thumbs up by POLY in the Q&A document.

Have Freedom Finance said this recently as I have just looked on their website and front page says ‘Who we are -
Freedom Finance Europe is a trusted online broker with expertise in the US, European and Asian stock markets.
We provide EU clients with everything they need for a successful investment — direct access to major stock exchanges, professional securities analytics and responsive client support.’

EU clients, no mention of UK clients

I am also not sure how many UK investors will want to move their capital out of UK broker accounts to a broker from Kazakhstan and then provide them with a notarised copy of your passport and proof of address, hence why the SP isn’t moving. As soon as we get any confirmation H&L or any other UK broker agrees to invest on the AIX then the SP will start to rise. I hope Poly can manage to talk one of them into doing this.

@BSR...I wrote to Freedom Finance Europe and I got the following reply:

From: kyc (freedomprime.co.uk)
To: You

Hello,
Thank you for reaching out to us.
We are currently in the process of establishing a separate legal entity, dedicated to the support and service of UK clients.
Therefore, we are not able to open new accounts for UK Tax residents at this moment.
As soon as the process is complete, we will be able to continue our full scope of services.
Generally speaking, yes, Freedom Finance clients have access to the AIX.
For detailed information about trading fees, please refer to our free schedule: https://freedomfinance.eu/upload/docs/2022/Appendix_11_to_General_Rules_(FEES_Schedule).pdf

Thank you very much for your interest.

@Saga - posted this a few times ive contacted freedom finance giving them my location UK and they said no problem, you must use the Kaz branch as EU can use others also, for UK must be the Kaz office which they have told me is no problem.

news article, won't help sentiment Monday.

JohnNth & Saga - to clear up the confusion us UK share holders cannot use Freedom Finance EU, we have to use the .kz office. I spoke with POLY IR who gave me this reply which is where i got the email and contact..

This will likely require a cooperation with a broker/brokers which provide access to the AIX. In the meantime if you wish to prepare in advance, you can try to reach brokers from this list https://aix.kz/clearing-settlement/aix-csd-participants/brokers-1/ . While we do not know whether each of them works with non-residents, Freedom Finance is likely to have this option. You can contact Rustem Kakenov of Freedom Finance (rustem.kakenov@ffin.kz) on this matter, or use the contact details available on their website: https://ffin.kz/en

I emailed ff.kz and this was their reply to me..

Hello *****
My name is Daulet Kozhemratov, Freedom Broker Kazakhstan.
First step, you need to open an account in Freedom Broker KZ.
Please, download Tradernet Global app(Apple store or Play market), with Tradernet Global app you can open brokerage account simply and remotely.
Fill all articles, downlod your passport with adress registration.

I wouldnt bother to go and setup an account but you may contact them to confirm this reply, there is also another broker people who have mentioned who have also said its OK, an isreali broker that operates in Kaz and is OK for UK residents.

Fingers crossed we dont need them and GDR's a go.

ATB

NDz

Thanks Newdealz for that info

@redinjun - i am surprisded at how many persons here are still asking this question this far down the road, this was the first email i sent IR striaght after the disastrous presentation. I guess most walked away with the intention to never return so have tried to ignore POLY and move on, but it appears most of our original board posters are back here and wondering whether to buy back in.

For the record bullseye's group on telegram has all these facts pinned to the top of board, not so much posting there these days only important stuff so quite easy to find. 'POLY London'

As of yet we dont know whether we will need any external broker, and even if we do it may not be Kaz so i think its best to just wait and see what they say.

@NewDealz...

Yep, after that now notorious POLY investor day, Iain posted some very useful links including brokers on the AIX, i subsequently contacted a few, (not FF tho) but only one replied but understandably, as it was only a couple days after POLY declared its intentions to redomicile they could not provide much guidance.

And agree with you, and like Iain said, until POLY come to a firm decision its unlikely we will get any clarity from brokers; either in Kaz or UK.

So it is indeed a waiting game - holding our nerve - which becomes increasingly more fraught as the macro-geo politics context of the conflict seems to be escalating; not to mention the pressure cooker of debt in Western economies.

I am in the process of trying to establish a few key facts from various sources about what options may be available to us given a number of different scenarios. This is such a complex situation that I shall not post any information until I have it all. I am quite sure that it will transpire as more of an update rather than anything definitive but what I post will be factual and clear and not opinion, gossip or hearsay. I hope to be able to update in two to three days.

This is from Finam website yesterday ‘ Since the release of our idea to buy Polymetal shares of December 27, 2022 and as of the middle of March 6, 2023, the company's shares have increased on the Moscow Exchange by 36.9% and at the same time retain the growth potential of 51.0% to our target price of 773.7 rubles. The company's shares, in our opinion, retain the potential for recovery growth after last year fell stronger than the market due to a large share in free-float of foreign investors who sold Russian shares. Polymetal's market capitalization still does not correspond to an objective assessment of the company's business, even taking into account the structural risks associated with UK resident status.
Polymetal managed to build its own export logistics and showed strong results in the 4th quarter of 2022. The company is working on changing the registration with from Jersey to a more friendly jurisdiction, presumably to Kazakhstan, where the company has mining assets and listed on the stock exchange of the International Financial Center of Astana. Redom will allow the company to return to paying dividends, reduce structural risks, its expectation remains a driver for Polymetal shares.’

All looking good if you are investing on the Moex, especially once the redom will allow the return to paying dividends where as LSE is -4.96% YTD

I emailed IR at the start of Feb, the full response is on the Poly London telegram group pinned. These are some questions we are still waiting for an update from:

Have you managed to get any UK brokers to accept trading Polymetal on the AIX, I.e HL or are any willing to let you have GDRs?

No, our efforts in this regard are ongoing. GDRs, if listed, will be trading on LSE and we don’t see an issue with a UK broker transacting and holding LSE-listed GDRs for its clients.

Have you found a depositary bank to issue the GDRs?

We have no update re: this process. The dialogue with a depository bank is ongoing.

If UK investors manage to stay on the LSE with GDRs once the company splits the assets how would UK investors receive the shares for the Russian side as you previously stated we would receive them via dividends in specie but would you get GDRs for the Russian part or would the ninth sanctions on Russia prevent this?

This is yet to be confirmed.

Also can you please clarify, is your preference to get GDRs before the Redomicile as the presentation stated you wanted to Redom ASAP, how you you get GDRs first and how would that work as I thought the GDR’s would be for the Kazakhstan assets?

Our preference is to launch GDR program for the unified company first, and then proceed with the redom vote. However, if GDR listing is impossible, we will proceed with the redom without it. GDRs for Kazakhstan assets will be listed (hopefully on LSE) post redom and post the split.

Hopefully we will get some updates soon regarding the above questions. Positive news will see the SP rise again.

@Sagacity...Thanks for the update.

IF and when the company splits, according to Finam, Russian business alone could be worth £8.60; probably the Kaz business could be worth nearly the same, giving combined value in excess of 15 quid a share. Have I got this right?
I accept there's lot of ifs and buts...........

Hi John, not quite right. 773.7 Rubbles or £8.52 is the value for the whole of the business. Once they redomicile MOEX and AIX investors will still have access to the whole of the business.

Due to sanctions and Counter sanctions from the UK and EU, it will only affect UK investors on the LSE as we may not be able to invest in the Russian assets of Polymetal as per the RNS on the 25th Jan which stated:
“Further to the announcement on 22 September 2022, the Company has progressed the evaluation of a potential re-domiciliation of the parent company, Polymetal International plc, to jurisdiction deemed to be “friendly” by the Russian Federation, a move which could unblock the ability to execute further corporate actions.
Based on the initial analysis, the Company are of the view that a re-domiciliation into the Astana International Financial Centre (AIFC), a financial hub in Astana, Kazakhstan, is the preferred jurisdiction, taking into account the Group’s significant operations and presence in the region, the AIFC legal system, tax regime and the ability to execute such a re-domiciliation.
Should the Company proceed with a re-domiciliation to the AIFC, The Company’s primary listing may move to AIX where its Ordinary Shares will be traded with the new ISIN. The Company will look to ensure continuous liquidity of trading.”

My opinion is the SP will stay flat until we get an update if UK brokers can invest on AIX, or an update regarding a depository bank that will facilitate GDRs but that will only be for Kazak assets as they will have a new ISIN, however LSE may not allow GDRs due to the Russian assets

It’s a waiting game, but looks to be a lot of hoops to jump through for the board to keep invested on the LSE, they could just turnaround and say we have to invest on Moex or AIX. That is the big worry for me that we may end up coming off the LSE altogether. I’m not prepared to find a Kazak broker and many other PI’s may feel the same.

Thanks Sagacity; finding a Kaz broker is a work-in-progress but should be doable as some brokers already serve EU clients. Further I do have an issue with valuation you ahve supplied especially now that POLY have witheld 2 years worth of divis, gold is still trading at near record levels and the company have said the production is at near normal levels. When the conflict started simmering in November 2019, the price was around £15 so I find the new £8.52 way off the mark, though significantly higher than teh current £2.30.

Sorry I meant November 2021..............

Are people forgetting a couple of billion debt? Me thinks that makes the current sp a bit over blown.

Big debt during high interest rate period and the company declares borrowing costs outside the west are much higher. 200 with all the uncertainty and risk is being generous.

https://www.telegraph.co.uk/news/2023/03/07/dangerously-low-uk-ammunition-stocks-put-ukraines-resupply-risk/

Oh dear the west are running out of ammo now blue.

John - This is not my valuation, but from Finam who are an investment banking company in Moscow.

Or you could refer to Berenberg Bank valuation on the 3 November that quoted £3.

However this was before the horrendous RNS and presentation on the 25 January.

I don’t think the 2 years of dividends have been put to one side, this would have been used on the current cash flow, buying spare parts before the sanctions hit etc etc.

As per their presentation interest rates are on average 5%, but they have also stated fixed rates are due to end and currently having to borrow at much higher rates domestically as they can’t get loans from European banks anymore.

Until we get more clarification from the board on GDRs etc I would say £2.30 is the support level at present.

For 2020 POLY paid $481m in divis and $67m in debt interest. Gold prices have held to 2020 levels since and production and sales is normal. No divis paid for 2021 and 2022 so one can 'assume' there's an extra $900m knocking about somewhere IF not spent on capital expenditure in Russia which we've been led to believe have been accelarated.
Does this make sense?

Why would you fish out an article on defence committee observation about munitions inventory just for me? What do you expect me to do about it? And why don't you comment on the vast quantities in transit and temporary storage on route, the overseas stockpiles and comment on the fact that most of UK munitions are not used by Ukraine as they are configured for NATO weapons, not Soviet/Russian/Ukrainian weapons?

Did you just send me the click-bait to get a commission to have me sign up to get past a pay wall at the Telegraph? I suspect you too didn't get past the implied message behind the headline and tag line. I can well imagine how the rest of the story goes and what the actual words used by the SC are!!

The accounts are there to see, they've enough cash in hand to cover debt payments for the year ahead, (600 mill I think they've got in hand) there's no back pocket full of money sadly. They DO have high carbon already mined reserves waiting to be POX-ed when it's up to full speed, and that's not showing on the balance sheet yet, but I can't imagine it's a hugely significant amount like 900 mill. Debt in 2022 rocketed, and repayments will peak this year and 2024, though they're looking to raise credit or bonds in Russia to spread payments out. The outlook IMO is very rosy end of 2024 onwards, assuming redom and a freeing up of exploration permits in Russia. I'm still very happy to get a small dividend near term and wait for the show to get back on the road.

" though they're looking to raise credit or bonds in Russia to spread payments out. The outlook IMO is very rosy"

Sit back and think about this. If everything is so rosy and there are mountains of cash swilling around as some on here would have us believe, why would any new credit or, gawd forbid, new corporate bonds be need?