The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
ir@polymetalinternational.com
If you haven't already watched their latest webcast regarding the Q2 results, watch it on their website and if you have any queries, e-mail Investor Relations on the above link, they are normally very quick at responding. After watching the webcast I e-mailed IR and got this response back last week.
Dear XX, good morning,
Apologies for a long delay, summer holidays is the reason.
Please see our responses below:
Q1. In the webcast Nesis mentioned 4 options that the board were considering:
Option 1 - Keep the Russian assets within Polymetal (I personally hope you choose this option, as I think this option will be more long term value for all shareholders and that dividends can start to be paid in the future).
Option 2 - Trade sale to an external buyer
Option 3 - Management buyout of the Russian assets
Option 4 - Spin off - Split the company into 2 companies
Have you thought of any other options, or is it just the 4 options above? Can Polymetal lease the Russian assets to management and once there is no threat of sanctions, let Polymetal have them back? Is the trade sale to an external buyer the last resort?
A1) These are basically four options available to us. Leasing of industrial assets isn’t applicable in this case we are advised. We wouldn’t want to be drawn on what scenario is least or most preferred. It’s yet to be determined.
Q2. One of the questions asked was 'would you keep the Russian assets’, in which Nesis replied that is the $billion question. Is it solely the threat of Polymetal being sanctioned that is the risk?
A2) There is a long list of risks and threats to the business under “do nothing” scenario. Operational, financial, regulatory, sanctions compliance. Each risk factor is material enough to worry the management team and the Board.
Q3. The low carbon concentration filtration from Kyzyl is transported to the POX plant at Amursk, which solved the complex challenge of processing refractory concentrate in house and was a real game changer for Polymetal. Also when POX 2 is built, your website states it will double refractory concentrate from Kyzyl. What will that happen with the low carbon concentration from Kyzyl if you sell POX 1 and POX 2 and what would the implications be to the gold mined from Kyzyl?
A3) It is envisaged that processing of Kyzyl concentrate will continue in Amursk POX plants even after the potential transaction at arms length terms). We don’t anticipate any changes to Kyzyl output on the back of the potential transaction.
Q4. In the Analyst and Investor Day presentation you stated you continue to blend concentration from Kyzyl and Nezhda. How would this continue to work if you sold Nezhda?
A4) Blending would continue after the potential transaction, and will run until POX2 is up and running (2Q2024)
I have just got in from work, apologies I thought the Cypress address was the Registered address, my mistake. Looks like it was just a change of address in Jersey.
Cawn I hope in time the SP get back to where it was prior to the war.
Good to see the SP is steadily rising, looking forward to the RNS on the 22/9/22 with an update on the inventory.
Not sure why yesterday's RNS didn't get much of a response on here. Increasingly businesses are incorporating related companies in Jersey as part of their strategy to facilitate a variety of specific transactions such as:
Acquisition or sale of company or its assets;
Financing;
Trading.
Benefits/ Purposes:
Easy transfer of assets;
Isolating risks;
Greater flexibility in relation to investor returns
Also The Regulations enable an eligible Jersey company (the "demerging company") to demerge into two or more companies (the "demerged companies").
Freedom to determine destination of assets and liabilities.
Spin-off: Continue to exist as a company alongside at least one other demerged company (a "spin-off" demerger).
In my opinion moving to register in Jersey is a sign they are on with the process of selling/splitting the Russian assets. Hopefully like Pandomonia and a few others have previously stated they will be able to split the company into two and we still own shares in Polymetal and the spin off company.
However If they do sell the Russian Assets, how much would we get for 9 operating mines, producing 1.2Moz of gold annually, 2 POX hubs, 3 growth projects and 6 joint ventures, how much would we get for these? Currently $2B annual revenue, they should be selling these assets for at least $6B in my opinion if they do sell.
We would then have the 2 Kazak mines producing $1B per year with no debt and cash to build the Pox 3 plant, once they find somewhere in Kazakhstan to build it and look to build more mines in other parts of Kazakhstan and other countries in the future.
Well undervalued at current SP, Revenue for the 1H, approx. £870m, nearly the same as the current Market cap currently £1.06B
25% increase in SP in the last month in the LSE and MOEX has increased 60% since the last presentation, so they must be happy over on the MOEX.
I agree with sworaf, if you have any questions e-mail customer relations, they are very quick at responding. After re-watching the webcast over the weekend (on Youtube / may still be on their website), Nesis stated two options regarding selling the Russian assets:
1. Sale to an external buyer
2. Management buyout
Which customer relations confirmed. However Nesis also said on the webcast
Option 3. Various spin offs ( we will need to wait for their next RNS regarding updates on all potential strategic opportunities for confirmation on what he meant by 'Various Spin offs)
Nesis then stated all have their advantages and disadvantages and that no decision has yet been taken and it will be a slow and long process as they evaluate the POTENTIAL (Could that be a hidden Option 4 - Keep the assets) disposal of the Russian assets.
I had several questions that I sent to customer relations on Monday and this is the response I got yesterday
'Working on answers to your questions. Please bear with us
Sincerely,
Evgeny
Yes there is risks with this share, but I am too long on Poly and I hope they can keep the business as one and are able to pay dividends to MOEX from the Russian assets and pay LSE holders from Cypress capital and revenue from the Kazak assets which was mentioned in the Investor Day presentation.
News coming out in Germany this afternoon that the German government are coming under pressure for stance on Russian sanctions. Orban has also come out to state sanctions are not working as its effecting Hungarians. Italian prime minister Draghi resigned last week. Come October their will be pressure on our Government once the gas and electric prices go up again. I hope we can see this out for Polymetal and they are able to keep the business as one. Nesis said we need to be patient, which I am happy to do and happy for them to take as long as they need to get the best long term value for Polymetal and the long term shareholders.
DYOR
Good questions asked Newdealz, I was very pleased with Nesis's honest comments and that no decision has yet been taken, it will be slowly moved forward as a long process to make sure the correct decision is made. Regarding 'it is evaluating the POTENTIAL disposal of the Company’s assets located in the Russian Federation(the Russian Assets). IF completed, the Potential Transaction would result in the Company focusing primarily on its operations in Kazakhstan, which currently produce over 500 Koz of gold per year, with revenue in 2021 of US$ 984 million.' Reads like they are disposing the Russian assets, but then the answer to your Q3 'the potential transaction mentioned in the RNS is for Russian assets only. It is our intention to leave Poly on LSE with Kazak assets only.'
No mention of the MOEX, it would not make sense to keep Polymetal listed on the MOEX with Kazak assets only, as it was the suspension of business between Euroclear and National Settlement of Depositary which meant the dividends wouldn't reach the shareholders on MOEX, which was one of the reasons why the dividends were not paid. I don't think they would sell the Russian assets to an external company, as he said they don't want to throw away all their hard work. A question was asked that a MBO (which was the most widespread in Russia) would leave the MOEX holders with nothing, which he stated would not be the case. Therefore are they looking into splitting the company with LSE holders with Kazak mines and MOEX holders with Russian Assets. MOEX holders must have been happy as SP had increased 10% Monday & 8% Tuesday on the MOEX.
April 25 (Interfax) The earliest Polymetal will be able to complete the deal is after it releases its H1 financial results. We will also get an updated AISC and capex after the H1 results. The longer they leave it, the more debt will now be paid down. I would also like to know the knock on effects to the Kazak mines if separated.
Regarding the debt structure as per their presentation, Gross debt of $2.4b as of 21 April, but they were trying to move $400m from the Cypress debt to Russia. If that happened the debt as of April would have looked like this:
Cypress $884m = $484m
Russia $1,294m = $1,694m
Kazak $190m = $190m
We know the net debt as of end of Q2 is now $2.8b, but also know the Kazak and Cypress have not been effected, so possibly the debt for Kazak and Cypress in total could be approx $700m or lower depending when or IF they split the company, but could have an annual revenue of $984m and able to pay dividends to LSE holders and 33% less shares.
I still PERSONALLY hope we can keep keep the business as one for the long term value of the SP, but Kazak assets alone look very good if not. Also what are they going to give LSE holders for losing the Russian assets IF it happens, yes they have more debt, but this is good debt as they have 8 operating mines and some outstanding projects with annual revenue of $2b.
DYOR
Big Blue why don't you re-read what I said earlier 'I said on Tuesday I hope they don't sell any assets (which he has confirmed today is an option) and can manage to continue to work around the sanctions affecting the company, but that is my personal opinion only. IF THEY CANT KEEP the company running as ONE business I would rather they split the company into Poly (R) and Poly (K) than sell assets which they stated was another option they were looking into. If you are invested here for the long term patience is the key. "
I have put the key wording in bold for you Big Blue as you seem to have missed this part out on your comment. Try not to twist what I write.
1 option is don't sell any assets. Another option is to split into Poly (R) and Poly (K), out of the options he mentioned in todays presentation I would prefer these 2 as would would KEEP the assets in either of these options. Luckily for all who are invested here, you are not on the board wanting a fire sale. They have stated this morning this wont happen. There is 1Moz of gold dug up from the Russian mines every year, approx $2B A YEAR in revenue. Their latest mine comes into operation in Q3. Of course I want the company to keep the assets if they can.
DYOR
The SP reflects the risk involved in buying this share, however Polymetal is not financed the same as what POG was. POG financed working capital with a loan from Gazprombank plus an agreement to sell gold through the bank. Future gold was the security for the working capital loan that is – a fairly common arrangement and if Gazprombank wasn't sanctioned POG would not have entered into administration. Polymetal have no such loans so will not be in the same position and they have enough spare capital to cover all debts for this year. Polymetal's revenue for the 1H of 2022 was $1,048m. Nesis also stated all inventory to be sold by end of August. I am happy that they are not going to rush into selling the assets, they are going to take their time and their focus is on the long term value of the company. Nothing has changed for me, like I said on Tuesday I hope they don't sell any assets (which he has confirmed today is an option) and can manage to continue to work around the sanctions affecting the company, but that is my personal opinion only. If they cant keep the company running as one business I would rather they split the company into Poly (R) and Poly (K) than sell assets which they stated was another option they were looking into. If you are invested here for the long term patience is the key. Need to wait for the 1H results as they stated they will then give us an updated Capex and AISC.
DYOR
J-A-B check out IC's forecasts:
https://markets.investorschronicle.co.uk/data/equities/tearsheet/forecasts?s=POLY:LSE
Out of 5 recommendations in July 2022, 2 say Buy, 2 say Outperform and 1 says Hold. Also check out IC's SP forecast, low SP forecast = £3, medium = £16 and high forecast = £25. The low SP £3 forecast is the same as Berenberg broker rating (based on the Kazak assets only).
I am looking forward to the Q2 updates on Thursday. As per the Business update operations wise still on track:
Operations and development projects
Polymetal operations in Russia and Kazakhstan continue undisrupted. Production guidance of 1.7 Moz for 2022 is maintained. Roughly $3bn in revenue this year. 1H of the year more revenue than the current market cap.
Kutyn goldmine to start from Q3 of this year. 1.1 Moz gold mine with 8 years open pit.
As per their presentation the 1st half of the year is the weakest for production, but we could still produce roughly 380koz of gold this quarter and from July the debt will start to reduce, as they stated the peak of the debt will be end of June.
Hopefully we will get an update on their liquidity as the Board and the management continuously evaluate stability, liquidity and solvency of the business in light of multiple external uncertainties. The phrase is meant to signal that the business is not out of the woods, and it's not plain sailing. They are not on autopilot kind of regime by any means. The Board is informed about the operational, regulatory, financing challenges and issues popping up on a weekly basis, and makes sure that business is braced for further expected and unexpected risk factors. Liquidity is hampered by a/ general deficit of affordable funding options, following sanctions on the biggest banks in Russia lending from unsanctioned banks is scarce b/ tightening belts from existing lenders, who have cut open credit lines and tightened lending covenants b/ gap that has opened up btw production and sales given disruptions in concentrate shipments in spring and then scramble to establish properly functioning, reliable new export channels c/ significant outlays for kit/spares as they rushed to build reserves and inventories of supplies/materials/consumables d/ extending pre-payments to key contractors, whose work is mission critical for the operations.
For me personally I don't want the split, too many assets and future mines are in Russia. I also think if the Financial Times hadn't mentioned the potential split, the board would not have said anything about this. I have faith in this excellent board to do everything possible for their shareholders. Remember this was a FTSE 100 company, its not an AIM share where they need to keep posting weekly RNS's for PI's to invest into hype. This is a top 10 in the world gold producing, $3bn a year company.
DYOR and enjoy the weather whilst it lasts
I know a few investors here were invested in POG, hope those who were invested are ok and not lost too much money. Just come out on Interfax this afternoon - Petropavlovsk in talks with two potential buyers of assets. Could Poly now buy POG's POX HUB, now POG have gone into administration.
Petropavlovsk in talks with two potential buyers of assets
MOSCOW. July 12 (Interfax) - Petropavlovsk is in talks with two potential buyers of its assets, the gold miner said in a statement.
The company has in light of difficulties servicing its debt and selling gold engaged advisers to assist the board in exploring a sale of the company's entire interests in its operating subsidiaries.
"The company has received an offer from one party to acquire and a proposal from another party expressing an interest in the acquisition of those subsidiaries. Discussions with both parties are ongoing. There can be no certainty that either will result in a sale and it is highly unlikely that there will be any return to shareholders given the level of the Group's indebtedness," the miner said.
Polymetal , Russia's largest silver producer and one of the country's biggest gold miners, considered buying Petropavlovsk's then unfinished POX Hub in 2018, national daily Kommersant reported. Polymetal offered to buy the POX Hub for $250 million, to finish building it at its own expense and to buy certain volumes of refractory ore from Petropavlovsk for the hub to process. But Polymetal itself launched the hub's first autoclave at the end of 2018. The complex now consists of four operating autoclaves with combined capacity of up to 500,000 tonnes of refractory ore concentrate per year with the possibility of adding two more.
Kommersant has also quoted sources as saying Urals Mining and Metallurgical Company or UMMC is interested in Petropavlovsk and has even submitted a request to the Federal Anti-monopoly Service. But it is unclear whether UMMC wants to buy the company itself or selected assets. UMMC declined to comment on relations with Petropavlovsk. Gazprombank has transferred the rights to a loan of $201 million for Petropavlovsk to a company connected to UMMC.
Petropavlovsk, which mines gold ore deposits in Amur Region, is one of Russia's top five gold producers. Uzhuralzoloto Group of Companies or UGC, which is controlled by Konstantin Strukov, remains Petropavlovsk's largest shareholder with about 29%.
Good post Jrewin, its basically stating at the current SP it would be a great price to pay just for the Kazak assets alone, you'd currently be paying 3x EV/EBITDA. Anything under 10x EV/EBITDA is good, 3x is excellent. 'In a way, you are buying cheap Kazakh mines, and the Russian mines are thrown in for free as an optionality for the future'. No way are they going to write off the Russian assets! The key is the FUTURE. As the next paragraph states 'Gold isn't a perishable product, and if production gets interrupted then it simply stays in the ground a bit longer. Polymetal didn't sell gold into the G7 markets anyway, which is why it shouldn't be affected by a ban. According to its June 2022 update, Polymetal's sale of gold bullion from Russia and Kazakhstan is continuing as usual'.
EasiWynns - NEW YORK, June 3 (Reuters) Burger King caught in complex legal web, thwarting Russia exit. Burger King are struggling to leave due to the legal issues. However these companies all wanted to leave Russia. Polymetal have no intention of leaving.
Newdealz - Shell already stated in May they would be leaving Russia and the Sakhalin2 project. The G7 stated on the 26/6 it would put a price cap on the Russian Oil. Did they not think Putin would just say ok and not retaliate.
Big Blue - We all know this share is a big risk, which is reflected in the current SP, otherwise the SP would still be £15+ and we all know the Russian invasion has effected plenty of private and public companies, not just in Russia. BERLIN/DUESSELDORF/HELSINKI, July 8 (Reuters) - Utility group Uniper asked the German government for a bailout on Friday, the biggest corporate casualty yet of Moscow's economic war with Europe. Uniper has asked the German Government for a rescue package stating they need 9 billion euros, more than its market value. US Secretary of State Antony Blinken said Sunday that Russia's restriction on Ukrainian grain exports may have contributed to Sri Lanka's turmoil. We're seeing the impact of this Russian aggression playing out everywhere. The Japanese companies will now lose Sakhalin2 and Japan face the possibility of blackouts as stated on the video.
Putin wants the Donbas region (or to me wants to flatten it) LONDON, July 8 (Reuters) - Russia is unlikely to withdraw from a swathe of land across Ukraine's southern coast and will defeat Ukrainian forces in the whole of the eastern Donbas region, Russia's ambassador to London told Reuters. However he also states he is willing to discuss peace talks (I think he has no intention until the Donbas is destroyed) LONDON, July 7 (Reuters) - President Vladimir Putin said on Thursday that Russia had barely got started in Ukraine and dared the West to try to defeat it on the battlefield, while insisting that Moscow was still open to the idea of peace talks. This war will end in negotiations as stated on Friday at the G7 meeting the US and Western allies tell Moscow the conflict with Ukraine must end through negotiations.
DYO
Yes Newdealz and other long term holders, I am looking forward to the Q2 updates on the 21/7/22 and will also be watching the webcast presentation on the same day. 'The Company will hold a conference call and webcast on Thursday, 21 July 2022 at 12:00 London time'
As per the Business update operations wise still on track:
Operations and development projects
Polymetal operations in Russia and Kazakhstan continue undisrupted. Production guidance of 1.7 Moz for 2022 is maintained. Roughly $3bn in revenue this year. 1H of the year more revenue than the current market cap.
Medium-term development projects (POX-2, Kutyn, Urals Flotation, Prognoz) progress as previously reported. Kutyn goldmine to start from Q3 of this year. 1.1 Moz gold mine with 8 years open pit. Urals to start Q1 2023 and Prognoz Q1 2024 - 18 years open pit. Pox-2 now Q4 2023.
As per their presentation the 1st half of the year is the weakest for production, but we could still produce roughly 380koz of gold this quarter and from July the debt will start to reduce, as they stated the peak of the debt will be end of June.
Nick have your read https://www.rferl.org/a/russia-far-east-investment-sanctions/31932039.html
Article this week regarding Poymetal which shows the effect the Russian invasion has had on a town in the far East of Russia Sovetskaya Gavan due to the sanctions on Russia. Plans by Polymetal, one of Russia's largest gold producers, to build a $730 million plant on the outskirts of the city to process ore had raised some hopes of an economic turnaround.
Now Western financial and technology sanctions imposed on Russia to punish the Kremlin for its unprovoked invasion of Ukraine have upended Polymetal's plans.
The gold company announced in April that it had "suspended indefinitely" plans to build the ore-processing plant in Sovetskaya Gavan and is now studying options to construct one in neighbouring Kazakhstan.
"As soon as I found out that the plant would not be built, to be honest, I sat down in the evening, poured myself a shot, and decided: 'Stop living with dreams. It's time for us to leave,'"
Pacific Pox will now be built in Kazakhstan as stated in their Investor presentation.
Berenberg Bank confirmed yesterday their Broker Price rating at £3 per share, but that is based only on the Kazakhstan assets and not taking into consideration any of the Russian assets. For me personally I don't want the split, too many assets and future mines are in Russia. I also think if the Financial Times hadn't mentioned the potential split, the board would not have said anything about this. I have faith in this excellent board to do everything possible for their shareholders. Remember this was a top 10 FTSE 100 company, its not an AIM share where they need to keep posting weekly RNS's for PI's to invest into hype. This is a top 10 in the world gold producing, $3bn dollar a year company.
DYOR and GLA!!
J-A-B this is the website https://capital.com/gold-miners-trade-at-pre-covid-levels-have-they-bottomed
It thinks Poly will be hit by the G7 Sanctions not buying gold, however they should have done better research as Poly doesn't sell gold to any of the G7 Countries.
Have a good night all
https://seekingalpha.com/article/4520071-polymetal-poyyf-aucoy-suspended-poly-trades-london
A good read whilst having your breakfast in the morning.
DYOR
Hi Roxy / EasiWynns. The deal was signed in 2014
https://www.theguardian.com/world/2014/may/21/russia-30-year-400bn-gas-deal-china
Its a very interesting read 'Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin University, warned that the Britain had the equivalent of only three years of North Sea gas left on the basis of current consumption and without the use of imports. "Russia's new pipeline to China will increase competition for natural gas from 2018 and will most likely increase the cost we pay for natural gas here in the EU. It will certainly increase the pressure on European countries to find alternative gas supplies," he said.
The below article was published in January prior to the invasion stating the pipeline opened in 2019.
https://www.voanews.com/a/power-of-siberia-2-pipeline-could-see-europe-china-compete-for-russian-gas-/6402242.html
'As winter bites, Europe is facing a gas shortage. A cold snap has coincided with lower volumes of gas exports from Russia, forcing a big spike in prices. Consumers and businesses across the continent are facing a steep increase in their bills, with governments scrambling to cushion the impact. And analysts warn it could soon get worse.
Moscow plans to build a new pipeline to China, which could give Russia the power to sell gas to the highest bidder, pitting Chinese and European consumers against one another.
From the frozen expanses of Siberia, Russia already is sending some natural gas to China. The "Power of Siberia 1" pipeline opened in 2019, tapping the gas fields in Russia's far east to help fuel the Chinese economy.
Europe remains Russia's largest customer by far, importing about 200 billion cubic meters of gas every year – about 30% of the continent's supply. By comparison, China purchases about 38 billion cubic meters annually.
Then the below link was posted 2 days ago regarding the impact of sanctions
https://www.energymonitor.ai/tech/networks-grids/russia-sanctions-slashes-237bn-off-eastern-europes-oil-and-gas-pipeline
“However, as opportunities in the West have diminished, opportunities in the East have opened. As a result, India and China have taken advantage of the discounted prices. India has been on a Ural oil spending spree and China has agreed to a 30-year deal to import natural gas through the Power of Siberia, with plans to extend capacity with a new pipeline in north-east China.”
It reads like its still referring to the original deal in 2014, however it looks like they are planning to extend capacity to the new pipeline.
Wrong again Big Blue! I am not a trickster, I don't know how many time I need to tell you, I am just a private investor same as majority of people on here. If you go on their website Big-Blue their is an e-mail address for Investor Relations. In the morning why don't you e-mail them the same question as I have just posted and see what response you get. You can also ask them where they are going to keep all the gold and silver in their inventory at the same time! They are very quick at responding.
Hi Roxy, this is a question I emailed Investor Relations a couple of weeks ago and this is the response:
On the 25 April Vitaly Nesis said 'We continue to believe that splitting the holding structure for assets in Russia and assets in Kazakhstan is likely to create considerable value for shareholders'. Would splitting the holding structure be a last resort? If the company splits, what would happen to my x shares, would I have x share in Poly (R) and then would I get another x shares for Poly(K)?
Asset ownership restructuring is something that we’re evaluating right now, carefully studying the pros and cons of splitting the company’s assets along geographical lines. None of this is voluntary. It’s a situation that has been forced on us by the geopolitical risks, war in Ukraine and its fallout. It’s way too early to speculate on outcomes at this stage. So forgive me for not providing a definitive answer to your question. But we do believe that restructuring should restore value destroyed by the war and subsequent devastation of Russia/West relations.
Hope this answers your questions, please let us know if we can be of further assistance.
Sincerely,
Evgeny Monakhov, CFA
Head of Investor Relations
Polymetal International
They stated in the Investors Day we would have an update at the Q2 update. I still believe they don't want to split the company and if it wasn't for the piece by the Financial Times I don't think the board would have mentioned it. Despite all the operational, regulatory and financing challenges popping up on a weekly basis they state they are still on course to produce 1.7m oz of gold this year (same as prior to the invasion).
J-O-B I could be wrong, been a while since I watched the presentation again, but when they were talking about rescuing the MOEX shareholders, I think they were talking about the MOEX shareholders who are currently cut off from receiving dividends due to the sanctions on Euroclear and National settlement of Depositary (Russia), about 22% of the shareholders.
They did state any dividend paid this year would come from profits from the Kazakhstan operations and capital from the Cypress banks, however as per the RNS last week, due to the uncertainty with availability of funds due to sanctions on Russian banks and higher working capital needs as a result of liquidity crunch and supply chain limitations I wouldn't be surprised if the dividend was suspended again. However I trust the company and the board of directors, its not their fault the SP is where it is, they are still running a world class company and keeping the shareholders updated. If you have the patience to ride it out you will all be rewarded. Only a few weeks now until Q2 update.
DYOR and GLA!!
I agree Oldapache, their were rumours at the start of last week that the G7 nations were going to sanction Russian gold, therefore the £3 Berenberg broker valuation on Friday will have taken this into account. The current SP already reflects all the impacts of the sanctions on Russia has affected Poly. It's possible to think that the broker valuation is just based on the Kazakh assets alone, the option on Russian assets coming for free.
2022 sales structure:
30% Kazakhstan - Sales not effected
33% GE in concentrate and ore Russia - Main customer Kazakhstan.
35% Gold bullion - Not selling to Russian banks, but exporting to diverse Asian markets as per their latest RNS.
2% Silver bullion Russia - Not selling silver bullion at the moment.
Only G7 nation Poly may have sold to is Japan. Only a few weeks until the Q2 update.
DYOR and GLA!
Big Blue - I was trying to be nice and tell you to look at the bigger picture instead of posting about the war 24/7 and you go straight on the attack. I used Fair Analyst as an example, I could have used Captain Swag and sure there is more users I could have used.
Only person posting in fantasy island is you. Wednesday Big Blue ' Buy target £1.55' Your true colours have come out over the last few days. No wonder you have been posting 24/7 stating Russia is toxic since April you just want to buy in at a cheaper price. After the RNS regarding the auditor you posted 30+ times yesterday calling Poly toxic, stating need to dispose of all Russian assets, Russia sending in troops to Kazakhstan to steel the gold, China's covid policy blah-blah. We all now know its because you wanted to buy in at £1.55.
Big Blue, less is more. We all know the war, sanctions, etc is effecting the business that is why the SP is at £2.14 instead of £15. However trust the company and the board of directors, its not their fault the SP is where it is, they are still running a wold class company and if you have the patience to ride it out you will all be rewarded.
Regarding Poly's debt, if you watch the presentation Nesis stated the debt will increase until end of Q2, which will be the peak of the debt and then POLY's debt should start to reduce from Q3.
DYOR and GLA!
Big Blue I don't think anyone is attacking you, but like others you need to look at the bigger picture and not focus on Russia and the invasion clouding the long term investment of this company. The link you posted this morning is one example. If you read the full article its written by Aleksey Kushch who is Kyiv-based analyst so he is going to have a Ukraine spin. a) Would Tokayev who is a close ally of Putin really want to go to war with Russia or b) “This is nothing but a game played to avoid sanctions on Kazakhstan,” a well-connected businessman in Kazakhstan’s financial capital, Almaty, told Al Jazeera on condition of anonymity. - Why would he say this, maybe because on Monday the EU - Kazakhstan Cooperation Council was held in Luxemburg so maybe it was said to avoid sanctions on Kazakhstan.
Fair Analyst kept telling you to look at the bigger picture and you kept attacking him, as you seem to do with anyone who talks about Polymetal, as seen over the last 2 days. This is a long term hold and I am sure you will get your buyout price. Personally I am here for the long term for dividends as well as share growth back to the £15+ levels. Anyone thinking its going to drastically shoot up to £15 in the next few weeks/months is in for a shock. However this is a major top 10 in the world gold mine, that is still on track to produce 1.7m oz of gold this year (Exactly the same guidance prior to the invasion) despite dealing with all the sanctions on Russia. That is at least $3bn in revenue whether it all gets sold this year or goes into next year.
They stated in the RNS yesterday the business is not out of the woods and its not plain sailing, but its good for them to be honest with the shareholders than sugar coat the picture like some companies do. Hopefully this will now gradually rise. Good Q2 next month will help the SP and hopefully it will be on a steady increase until then.
GLA to the genuine holders and DYOR.
Big Blue "I often see conflicts in the statements' Wrong, Big Blue "We are fully stocked with spare parts and necessary materials for 2022 hence there is no threat to our 2022 production guidance (1.7m oz)". Monakhov is stating they are fully stocked for their PRODUCING goldmines in order to produce 1.7m oz of gold this year.
"deep drilling slowed down due to the shortage of imported consumables and spares" Yes that is correct as per their Analyst and investor day presentation they stated delays would be expected for their growth projects as they will be using spare parts for their OPERATING mines instead of their growth projects. Some of their projects which they state we will get news in 2022 are:
Veduga a high-grade 4M oz gold mine located in Krasnoyarsk Region, the top gold producing region of Russia.
Talgiy is another gold mine at Albazino. The Mineral Resource estimate is 1.1 Moz of gold with an average grade of 3 g/t a. The initial Ore Reserve estimate is scheduled for 2022.
During last year, exploration activities were focused at the Doroninskaya area (another gold mine at Dukat). Somebody was asking about news. Monakhov has stated Veduga – now mid-2023, Talgiy – Q4 2022, Doroninskaya – Q4 2022.
Big Blue 'many Russian assets are going to be worthless' Wrong again Big Blue. Polymetal is on track to produce 1.7M oz of gold this year at an average $1800 per oz = $3,060,000,000 this year in revenue. I wouldn't say a company that could earn $3bn a year in revenue is worthless.
Big Blue 'Saga is in a spread bet syndicate' Wrong again! I am just a private investor same as the majority of people on this board.
Big Blue 'Have you got anything of actual real substance that is relative to the real world of wars and sanctions on a country the company has business assets in?
I will watch the news regarding the war, this is a Poly board for private investors who are fully aware of the risks due to the war for this share, who want to talk about Polymetal. I e-mailed Monakhov last week for assurance they are on track for production guidance and impact on sanctions as I want to be confident in my investment. I let other investors know his feedback for their assurance as majority of people here are invested in Poly just like me.
Big Blue you have posted 1000+ times on this board and nothing specific about Polymetal, but attack posters who do. I would suggest instead of being on here 24/7, to watch the Analyst and investor day presentation (as I don't think you have watched this) and if you think their is any discrepancies, e-mail Monakhov and I am confident he will e-mail you straight back. Or have you another agenda posting on this board?
As per the thread, auditor end of the month, should push up the SP, a good Q2 update July should push up the SP and any talk of dividends in August will push up the SP. I'm looking forward to the Q2 update.
DYOR
Lets get back talking about Polymetal: 'We are fully stocked with spare parts and necessary materials for 2022, given our policy of having sufficient supplies at our mine sites for at least 6-9 months of operations (covid-related protocol), hence there is no threat to our 2022 production guidance (1.7m oz). While supplies last we are actively soliciting equipment from China and are confident of securing orders for new equipment and replacement before 2023'. Lets talk about dividends, sanctions and updates on ore reserves:
Q1. In the Analyst and Investor day presentation, when asked about the dividend being paid in August, Vitaly Nesis stated if a dividend was paid it would come out of the cash reserves in Cypress and the additional cash flow from Kazakhstan. If the production guidance for this year is still 1.7m oz and you are still selling the gold as per your presentation, is it more than likely the dividends will be paid, or will it be postponed again in order to sustain the stability and liquidity of the business?
1. I hope you appreciate that I am not at liberty to give any comment, qualified or not, about likelihood of dividend payment at this stage. It would not be appropriate in the framework of selective disclosure of information, and I can only suggest that you bear with us and wait for the announcement post the Board meeting, which will discuss the dividends at the end of August.
Q2. A few more banks have been sanctioned since the Q1 update, has this affected Polymetal or have you been able to pay back your loans outstanding to the banks?
2. We’re not redeeming any loans prematurely, there’s no spare cash lying around for that. Sanctions on banks introduced in March/April or in later months have not had any impact on us save for the material disruption of the domestic bullion market in Russia, which accounted for 35% of our sales in 2021. The banks that facilitated gold purchases in Russia are under sanctions, and that has forced us into seeking alternative sales channels.
Q3. Will we be getting an updated Ore Reserve estimate at Venduga, an initial ore reserve at Talgiy and an initial mineral resource estimate at Doroninskaya area shortly?
3. No, not on the 21st July. Veduga – mid-2023, deep drilling slowed down due to the shortage of imported consumables and spares, Talgiy – Q4 2022, Doroninskaya – Q4 2022
I hope this answers your questions. Keep well, and please let us know if we can be of further assistance.
Sincerely,
Evgeny Monakhov, CFA
Head of Investor Relations
Now I could be wrong, but if they have no spare cash lying around and they haven't used the dividend money to clear any of the loans, have they ring fenced the dividend to pay a special dividend in August if they can release the funds to both the LSE and MOEX holders. We will have to wait for the announcement post the board meeting, which will discuss the dividends at the end of August.
Enjoy the weather today everyone and have a good weekend all
DYOR