The total revenue for all enterprises of the gold mining company (in Russia and Kazakhstan) decreased from $2.89 billion to $2.8 billion, or by 3%, compared to 2021. It is the Kazakhstani projects of the company – Kyzyl and Varvara hub – that brought shareholders $933 million, which is 5% less, the company’s press service reports.
According to the data from the report, the volume of gold production over the past year increased slightly. All enterprises received 1.7 million ounces of gold equivalent (up 2%). There are two main reasons for the drop in revenue: a decrease in average prices for gold by 2%, silver by 12% and a sharp increase in production costs. It has become 29% more expensive to mine gold-bearing ore, process it to a concentrate (powder with a high gold content) – $942 per ounce (in 2021 it was $730).
According to Group CEO Vitaly Nesis, in 2022 Polymetal faces unprecedented external challenges. “Sanctions on Russia have had a huge impact on inflation, supply chains and sales channels. As a result, the level of costs and working capital increased significantly. Nevertheless, the company is in a stable position, we expect a recovery in cash flows and a decrease in net debt during the year,” said the head of the company.
In connection with these events, the Board of Directors of the gold mining company Polymetal recommended not to pay dividends for the results of 2022.
In 2023, the company also plans to produce 1.7 million ounces of gold equivalent. According to forecasts, due to inflation and an increase in the mineral extraction tax in Kazakhstan, the cost of producing one ounce will increase further to 950 – 1 thousand dollars.
One of the most discussed plans of Polymetal this year will be the possible legal relocation of the parent company to Kazakhstan, to the site of the Astana International Financial Center (AIFC). This is necessary to preserve shareholder value and restore the ability to pay dividends to shareholders. In the report, Polymetal experts emphasize that the decision to move has not yet been made. Even if this happens, Polymetal intends to look for options to continue trading securities on the London Stock Exchange.