The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Thats why I said potential shareholders, yes I have sold out as I don’t want to set up a Kazak broker. However any positive update on the 10th May I will reinvest back into Poly.
Just waiting for confirmation we can stay on the LSE, but seems unlikely at present.
Jezza- good to know inflation is reducing and Nesis stated inventory is proceeding quite well so should have a positive quarter on cash flow and net debt should have reduced.
John - yes the current fx rate should be good for Poly.
BSR - I must have missed what Nesis said regarding Computershare in the last presentation, I didn’t hear him mention it. I know he talked about slide 17 “Update on Redom” and said they have more or less abandoned the plan to remain on the LSE with DI’s as no providers are unable or unwilling to provide such arrangements.
Nesis stated to refer to the Q&As on their website regarding the redom and it states the AIX register will not accept paper shares. What did he say about Computershare in the presentation?
https://www.polymetalinternational.com/upload/ib/1/23-01-25/2023_01_25_Polymetal_CMD.pdf
Let’s leave the war talk to another forum, we all know the war has drastically affected the SP. Let’s focus on the implications affecting Poly as a business. Apart from confirmation that Net debt has reduced and the remaining inventory being sold, what I really want to see on the 10th May is some updates from the disastrous Analyst & Investor Day presentation from the 25 Jan.
As per slide 4 - An update on funding, are they still borrowing at higher rates, due to reduced availability of USD and EUR funding due to sanctions? Is the 22% inflation in Kazakhstan affecting costs?
As per slide 5 - Update on the current situation regarding counter sanctions affecting Polymetal re: Capital controls and Corporate actions.
As per side 12 - This is the main point I want an update on which is the Post redom trading options. It looks like Option 1 GDRs doesn’t look to be happening as per their latest presentation, therefore UK investors need to know, do we need to find a broker in Kazakhstan?
As per slide 7 - Redom needs to happen in order for all dividends to be paid to all shareholders. When is the redom going to happen?
As per slide 13 - Indicative timeline. It stated in Q1 we would get an update on the finalisation of AIFC redom mechanics. No update yet (3 months after the presentation).
Q2 - General meeting to approve redom and change of listing. When is this years AGM it’s been the 26 & 27th April the last few years? Are they waiting for the shareholders exchange completing before they announce the AGM?
Slide 14 - Conclusions. Is the Company’s current jurisdictional position still unsustainable in the current environment?
Positive updates on the above is what shareholders and potential shareholders want to read.
I have took this off the telegram post, but it also sums up my current opinion:
It seems to me that people are building up hope for seriously positive news (just like January) but the next update will likely be more of the same based on short lead time since Jan & willingness of industry peers to work with POLY due to optics.
Of course nobody really knows and I hope it does find a path for any big holders who have decided moving to Kaz is a viable option for them.
I had roughly 20k shares but I have zero interest in trying to open Kaz accounts and managing foreign brokers so I sold out and took my profit.
I was disappointed doing so but the game had changed for me personally. Nobody ever went broke taking profit so whilst it was a pity all this uncertainty entered the proposition, POLY (for me personally) became a gamble with multiple unknowns rather than a steady recovery play.
We all have different plans, targets, available funds etc etc so what works for one may not work for others so it’s important that you assess your own needs / wants and stay strong in POLY or take your profit and be happy.
Do not have regrets following a crowd in either direction.
GLA
MOSCOW. March 13 (Interfax) - Companies controlled by businessman Vladislav Sviblov and Ural Mining and Metallurgical Company (UMMC) are interested in acquiring some of the Russian assets of gold and silver miner Polymetal , national daily Kommersant reported on Saturday, citing sources.
Interfax sources said there might be three groups of potential suitors.
Representatives of Sviblov are not commenting on the possibility of a deal. "We do not comment on rumors. We are not changing our previously announced strategy to redomicile in Kazakhstan," Polymetal said.
Jersey, where Polymetal is currently registered, is included in Russia's list of jurisdictions that are deemed "unfriendly," and this makes mergers and acquisitions difficult for the company, even if they only involve exiting non-key assets.
Moving to a "friendly" jurisdiction, with the Astana International Financial Center tentatively considered preferable, would potentially clear the way for Polymetal to carry out various corporate actions.
Polymetal has said it is considering splitting its Russian and Kazakh businesses. Options included selling the Russian assets to an outside party, a management buyout or a spinoff. But an asset split also requires redomiciliation.
Polymetal CEO Vitaly Nesis said at the company's Investor Day in January that now, rather than a sale, the company was leaning toward a split where shareholders would receive two shares, one for a company with assets in Kazakhstan and the other for a company with assets in Russia. In future, the split could become operational as well as legal, with the construction of a separate POX complex in Kazakhstan.
If you look at page 5 of the presentation in January they mentioned selling some of the Russian Assets:
“Current situation
Counter-sanctions
The Company's incorporation in Jersey (being an "unfriendly" jurisdiction) imposes counter-sanctions which brings about significant restrictions for corporate development initiative:
Corporate actions
• Prohibition to deal with shares of joint stock companies
* Prohibition of any transaction with shares in the Russian operating subsidiaries, including sale of gold mining assets
With these limitations the existing corporate structure is considered unsustainable”
Did Nesis say in the presentation he wanted to sell some of the underperforming mines or sell Polys part of some of the joint ventures, but they need to redomicile first before they can sell any assets.
Also as per their presentation we should get an update this month on the redom, hopefully this week.
“Indicative timeline
Q1 2023
??• Finalisation of AIFC re-domicilation mechanics”
In the RNS or the webcast on Thursday we should get an update on the Redom, update on GDRs, update on if any UK broker are willing to trade on AIX and an update on selling any Russian assets.
Should be a big week for Poly. Hope it’s all good news.
??
I am glad they are doing a webcast next week. We already know what the production results, revenue and net debt was at the end of 2022. We all know the potential of the mines and should generate approx $3B in revenue per year and dividends should be paid once Net debt reduced to about $2B and they have redomiciled before they can pay dividends.
What we all want to know is the outlook for 2023. News on the Redom. News on GDR’s, news on any UK broker’s letting UK investors invest on the AIX. If they can manage to get a bank to set up GDR’s what happens once they split the assets into Poly R and Poly K, how do UK investors get access to the Russian assets. Can we stay on the LSE? Do UK investors need to find a Kaz broker?
All these questions should be answered next week and a good response should see the SP increase.
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.
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.
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.
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.
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.
BuySellRepeat - Did Freedom Finance confirm UK Retail investors can access Freedom Finance, as someone posted a few weeks ago that you had to be in the EU to have access to a Freedom Finance account? I am still hoping H&L or any other UK broker will give us access to the AIX but no news on that front from Polymetal, hopefully we get some news this month regarding how UK investors are going to be able to invest in the whole of Polymetal moving forward.
Hi JAB, thanks it was this question I am more concerned about ‘If the LSE listing does not continue in the future, what would be your advice to U.K. shareholders to keep shares and access dividends in the future?
Answer ‘ Well, in terms of dividend access, this will still be available through kind of your holding structure through your depositories. So even if the company migrates to AlFC and for some reason, we are unable to maintain the London listing, in terms of the dividend streaming, this will be available. Basically, the advice would be if you want to
trade, then you would have to set up the infrastructure for
AIX trading through your brokers.’
Newdealz - Yes hopefully they can find a UK broker to set up the infrastructure for AIX trading. Just waiting for some clarity in an RNS.
Afternoon Ray - What is your opinion on how UK investors can hold both the Kazak and Russian assets if they are wanting to invest for long term dividends once they redom?
Looking back on their latest presentation and Q4 update again, if we want to own the whole company (so we can get dividends from the Kazak and Russian assets) do UK investors need to find a UK broker who will let you invest on the AIX or do you think UK investors will only end up with the Kazak assets now?
They have stated the dialogue with a depository bank is ongoing to issue the GDRs and they have stated they don’t see an issue with UK broker’s transacting and holding LSE listed GDRs for its clients.
What is everyone’s opinions on the possible scenarios once they redom:
1. Launch GDR for the unified company first before Redom. Don’t split the company and receive dividends from both Kazak and Russia assets.
2. UK brokers allow UK investors to invest on the AIX and therefore we can receive dividends for both Kazak and Russian assets.
3. They manage to get GDRs for the Kazak business, therefore UK investors only receive dividends from Kazak assets.
4. No access to GDRs, UK investors need to invest on AIX, if not need to sell the shares as we can’t hold share certificates for Poly once CREST remove Poly and AIX don’t facilitate certificates.
Hopefully they get access to option 1 or 2, therefore UK investors will still have access to the whole company, however due to sanctions and counter sanctions, especially after the ninth sanctions, my opinion is they may struggle to get options 1 or 2 and option 3 could be the only option for UK investors, but Poly need to use POX2 in Russia otherwise it will effect their profits from the Kazak assets resulting in smaller dividends if less profit, therefore the board may not want to split up the company which would mean UK investors need to find a broker to invest on AIX.
Hopefully we will get some news in the next few weeks regarding this (as they said ‘In terms of indicative time line, we plan to complete the preparation for the redom and the preparation of the shareholder circular for the vote to redom and change the listing in the current quarter’).
What is everyone else’s opinions how we can hold both the Kazak and Russian assets if they are wanting to invest for long term dividends?
This is my view only, but I have to agree with Big Blue “ I would say, if you want to invest in this share, do so on the basis there will be no London listing, or any western listing in the near future, nor for some years after. Be prepared to be able to manage a holding overseas in KZ, including the ability to receive dividends and liquidate if needed.”
This share is now a very big risk/ high reward, but currently just a day traders dream until the share gets suspended before they switch to GDR’s (if any brokers will permit GDR’s which at the moment is a BIG IF) or they get delisted from the LSE.
CREST won’t allow share certificates and AIX have stated they don’t deal with certificates.
The Q4 results were very good, but spoilt by:
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.
If we can’t trade on the LSE anymore we need confirmation that UK investors can invest on the AIX and which UK brokers will facilitate this. Some of you have stated Freedom Finance but that is only for EU investors not the UK.
If they do get GDR’s and stay on the LSE this will only be the Kazak assets, what will happen if they do split the assets and give you dividends in specie for Poly (R), how will you hold these shares as they won’t be listed as GDR’s and you won’t be able to get them as certificates?
If you bought into this share for long term dividends in both Russian and Kazak assets you will need to find a broker in Kazakhstan who will deal with UK private investors. This is how I now see this playing out unfortunately. I can’t see the board wanting to split the company into 2 companies and they won’t need to, if they move to AIX.
Response from IR:
thank you for your message.
Indeed, Mr Nesis confirmed in the FT interview and during today’s CMD presentation that listing on premium market of LSE does not seem to be possible following the redom. However, he did qualify this by saying that remaining on LSE (via a GDR listing on LSE) remains our priority, intention and preferred way forward. He reiterated this position answering questions from investors this afternoon.
I hope this clears up apparent confusion.
Please let me know if you have any further questions
Sincerely,
Evgeny
Good decent comments again today, which makes for decent reading. Q4 results should be good, however more important to me is the Analyst & Investor Day presentation to see what their plans are for this year and update on predicted costs for 2023, as well as an update on the move to a “friendly jurisdiction” and update on the 22% shares stuck in the NSD.
Thanks Nick, yes they managed to get Kutyn into production and they still have great mines still to come into production as well.
Are you the poster that have family in Russia? Hope they are all fine.
I have to say the comments over the last few days have mainly been very good. Just focusing on discussions regarding Polymetal.