Polymetal keeps a lid on costs in 2012

Polymetal, the Russian gold producer and one the world's largest silver miners, managed to hold back on costs in 2012 despite a strong rise in revenue, prompting the firm to raise its payout ratio to shareholders.

Polymetal, the Russian gold producer and one the world's largest silver miners, managed to hold back on costs in 2012 despite a strong rise in revenue, prompting the firm to raise its payout ratio to shareholders.

Polymetal saw 40% growth in revenues from $1,326m to $1,854m (Credit Suisse: $1,843m), which was driven mainly by a 33% increase in gold equivalent sold. The company said that in addition to "robust" production growth, metal sales exceeded output for both gold and silver due to destockpiling of concentrate inventories at the Dukat project.

Total gold equivalent production was up 31% year-on-year at 1.06m ounces, exceeding the original guidance of 1.0m by 6.0%.

"These excellent results were driven by stable performance at all mature mines, with a notable improvement achieved at Dukat, and successful ramp-up at Omolon and Albazino," the company said.

2013 guidance is for 1.2m ounces of gold equivalent production.

The firm's Amusk POX hub, Polymetal's largest project, poured first gold in 2012 and is currently undergoing the ramp-up period but this process has been slower than planned due to "certain problems". The POX plant is expected to reach full capacity by the fourth quarter.

Cash costs over 2012 remained broadly flat at $703/GE oz "as a result of intense management focus on cost control despite external and inflationary cost pressures".

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 47% year-on-year to $918m, above of Credit Suisse's $909m forecast. However, basic earnings per share were 103 cents, up 30% from 79 cents the year before but under forecasts as the company booked tax provisions of $116m in respect of prior years.

The company declared a final dividend of 31 cents per share in 2012 (2011: 20 cents), representing 30% of net earnings, up from the 20% payout ratio indicated the year before. The company also paid a 50 cents special dividend in January.

"We have demonstrated strong financial performance for the year driven by excellent operational performance and tight cost and capital discipline", said Vitaly Nesis, Chief Executive Officer.

"This success is marked by stable total cash costs, increasing margins and returns on capital, as well as increased free cash flow generation on the back of completion of our major growth projects. We are committed to delivering the value created to shareholders, by proposing a final dividend which, combined with special dividends, will result in a sector-leading yield combined with solid growth profile".

Recommended

Has the “jam tomorrow” bubble popped already?
Stockmarkets

Has the “jam tomorrow” bubble popped already?

Fund managers have had a good year so far. John Stepek looks at what to expect from markets until year end.
6 Dec 2021
Three stocks that should profit from the dash for digital growth
Share tips

Three stocks that should profit from the dash for digital growth

Professional investor Christopher Versace of the Digital Infrastructure and Connectivity UCITS ETF picks three digital growth stocks to buy now.
6 Dec 2021
JD Wetherspoon: why investors should head to the pub
Trading

JD Wetherspoon: why investors should head to the pub

Pub group JD Wetherspoon is a solid operator, and is due a bounce when the pandemic eases. Matthew Partridge picks the best way to play it.
6 Dec 2021
Share tips of the week – 3 December
Share tips

Share tips of the week – 3 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
3 Dec 2021

Most Popular

Bubbles grow in global property markets as house prices continue to rise
Property

Bubbles grow in global property markets as house prices continue to rise

House prices grew by 6% in the year to mid-2021 in 25 global cities, with the German property market in particular showing signs of overheating.
3 Dec 2021
Investing in time
Sponsored

Investing in time

SPONSORED CONTENT – Watch collecting can be addictive and expensive, but it can also be a very sound investment strategy
3 Dec 2021
Three safe bets on the growing online gambling sector
Share tips

Three safe bets on the growing online gambling sector

Professional investor Aaron Fischer, creator of the Fischer Sports Betting and iGaming ETF, picks three of his favourite online gambling stocks.
29 Nov 2021