Polymetal International : Q4 Production Results

26 January 2017

Polymetal International plc (LSE, MOEX: POLY; ADR: AUCOY) (together with its subsidiaries - 'Polymetal', the 'Company', or the 'Group') announces the Group's production results for the fourth quarter and twelve months ended December 31, 2016.

HIGHLIGHTS

• Polymetal regrettably reports two fatal accidents in the quarter: at Varvara on 8 October 2016 and at Okhotsk on 6 October 2016. While the total number of fatalities for the year has decreased to four compared to six in 2015, we cannot view this result as satisfactory. Polymetal remains committed to the implementation of additional measures to fully eliminate fatalities at all of its operations.
• Polymetal delivered a strong performance in Q4 2016, producing 375 Koz of gold equivalent (GE), a 21% increase on 310 Koz produced in Q4 2015. This brings total gold equivalent production for the year to 1,269 Koz, slightly above the production guidance of 1,260 Koz. A strong finish to the year was driven by solid performance at Omolon and contribution from new operations - Svetloye (Okhotsk hub), Komar (Varvara) and Kapan.
• Gold production for the quarter was at 285 Koz, up 30% year-on-year, while silver production was 7.0 Moz, down 3% from 2015.
• For 12 months, gold production was 890 Koz, up 3% year-on-year, while silver production was 29.2 Moz, a decrease of 9% compared to 2015.
• In 2016, the Company generated significant pre-acquisition free cash flows of approximately US$250 million and paid out special dividends of US$ 64 million (US$ 0.15 per share), which brings the total amount of dividends declared and paid during 2016 to US$ 158 million (US$ 0.37 per share). The Company confirms its commitment to pay final dividends for 2016 in accordance with the regular dividend policy.
• Net debt as at 31 December 2016 decreased to US$ 1,329 million from US$ 1,469 million as of 30 September, and remained broadly unchanged year-on-year.
• At Kyzyl, construction activities are in line with the project schedule, with the first deliveries of processing equipment arriving on site. Permitting is 100% complete. Kyzyl remains on track to produce its first concentrate in Q3 2018.

'Polymetal continues to deliver a strong operating performance, driving solid cash flow and meaningful dividend payments. 2016 is the fifth consecutive year that the Company meets its production guidance', said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. 'In 2017, we will continue to focus on delivering free cash flows and dividends, moving Kyzyl towards completion, and advancing our long-term project pipeline'.

2017 OUTLOOK

• The Company reconfirms its production guidance for 2017 and 2018 of 1.40 Moz and 1.55 Moz of gold equivalent, respectively. Traditionally, production in both years will be skewed towards the H2. The increase in production in 2017 will be driven by Varvara (Komar), Okhotsk (Svetloye), Оmolon, and Kapan. This should offset the grade declines at Dukat and Voro.
• Cash costs for 2017 are expected in the range of US$ 600-650 per ounce and all-in sustaining cash costs at US$ 775-825/GE oz, above unchanged 2016 guidance of US$ 525-575 per ounce and US$ 700-750 per ounce, respectively. The increase is due to rising domestic diesel prices and strengthening of the Russian rouble on the back of oil price growth in the fourth quarter of 2016.
• The capital expenditure guidance for 2017 is US$ 370 million, an increase of US$ 30 million compared to the previous guidance. Additional investments will be directed towards the new project pipeline including Nezhda, Prognoz, and Viksha.

Please find the full version of the press release here.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Thursday 26 January 16:00 Moscow time (13:00 London time).

To participate in the call, please dial:
8 10 800 204 140 11 access code 46089424# (free from Russia), or
[phone] (free from the UK), or
[phone] (free from the US), or
any of the above numbers (from outside the UK, the US and Russia) or follow the link:
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4235.

Please be prepared to introduce yourself to the moderator or register.

Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4235. A recording of the call will be available immediately after the call at [phone] (from within the UK), [phone] (from within the US) and [phone] (from within Russia), access code 306231#, from 17:00 Moscow time Thursday, January 26, till 17:00 Moscow time Thursday, February 2, 2017.

Media		Investor Relations
FTI Consulting Leonid Fink Jenny Payne	[phone]	Polymetal Maxim Nazimok Evgenia Onuschenko Maryana Nesis	[e-mail] [phone] (Russia) [phone] (UK)
Joint Corporate Brokers
Morgan Stanley Sam McLennan Richard Brown	[phone]	RBC Europe Limited Tristan Lovegrove Marcus Jackson	[phone]

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, 'FORWARD-LOOKING STATEMENTS'. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS 'TARGETS', 'BELIEVES', 'EXPECTS', 'AIMS', 'INTENDS', 'WILL', 'MAY', 'ANTICIPATES', 'WOULD', 'COULD' OR 'SHOULD' OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED.

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