Polymetal Operations in Russia and Kazakhstan Continue Despite Sanctions – Update

By Joe Hoppe

Polymetal International PLC said on Wednesday that all of its operations in Russia and Kazakhstan continue uninterrupted and still expects to pay a final dividend, despite sanctions imposed on Russia and some Russian companies after the invasion of Ukraine. by the country.

The Russian mining company said its operational scope and production forecast remained stable, although it was reviewing non-essential investment projects to preserve liquidity and minimize risk.

The company also noted that it does not consider itself an entity owned or acting on behalf of anyone connected to Russia, with respect to other European Union sanctions changes that came into effect on March 1. . Its free float is 75.2%. , its main stakeholders being the Cypriot company ICT Holding Ltd. and US investment management firm BlackRock Inc.

Sales of bullion and concentrates from Kazakhstan — a country whose operations account for 48% of Polymetal’s net profits and 40% of its gold equivalent reserves — are continuing as normal, he said.

In Russia, Polymetal sells silver concentrate mainly to Kazakhstan and East Asia, and refractory gold concentrate to Kazakhstan and China. He said he received assurances from buyers that all existing contracts were in good standing, although bullion sales in Russia were affected by the sanctions.

Domestic demand for gold in Russia was supported by the decision of the Russian central bank to resume gold purchases.

The company said it had approximately $400 million in cash and near cash with unauthorized financial institutions. It said that with strong cash flow from Kazakhstan, it has enough reserve to meet its obligations over the next 12 months without new borrowings, and it maintains $1.0 billion in credit lines. not drawn from unsanctioned financial institutions.

However, he warned that Russia’s high interest rates – with the central bank raising rates to 20% on February 28 – should affect his average cost of debt for 2022 as he expects a sharp rise in interest rates. interest for all new borrowings denominated in Russian rubles and foreign currencies.

The company said it currently intends to pay its final dividend of $0.52 per share as proposed on March 2, but reserves the discretion to reassess it to ensure liquidity. He said it was currently unclear whether he would be able to pay dividends from Russian subsidiaries at the holding company level, given restrictions on Russian legal entities paying dividends to foreign persons.

Polymetal said it continues to believe targeted sanctions against it are unlikely, but not impossible, and has begun proactive contingency planning.

Write to Joe Hoppe at joseph.hoppe@wsj.com

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