Page 180 - RusRPTApr21

EBITDA up 57% y/y. The company declared a final 2020 DPS of $0.89/share (4.4% dividend yield). In 2021, management expects stable output and an elevated cost base. Sova Capital said in a note:
Polymetal reported an expectedly strong set of 2020 results, surprising us with its generous final 2020 DPS of $0.87/share. The Russian gold and silver producer reported a small decline in its 2020 TCC dynamics (-3% y/y, $638/oz) due to FX (Russian ruble and Kazakhstani tenge) tailwinds. Thanks to the 27% y/y growth in the gold price, the company’s 2020 EBITDA was up 57% y/y, with the EBITDA margin rising to 59% vs. 48% in 2019.
We note the company’s stable AISC (+1% y/y) and 34% y/y growth in capex, while FCF more than doubled last year (+138% y/y). Polymetal’s BoD proposed a final DPS of $0.89/share ($419mn), which comprises a final 2020 DPS of $0.74/share (representing 50% of the company’s underlying net income in 2H20) and a special DPS of $0.15/share, equating the total 2020 dividend payout to the company’s 2020 FCF. The recommended DPS implies a 4.4% dividend yield. The record date for the final 2020 dividend is set for 7 May.
Ending 2020 on a high note. The company reported zero fatalities among its workforce and contractors during operations in 2020. The company achieved several ESG benchmarks and re-affirmed its leading position in various ESG rankings, lowering its water consumption and increasing its share of recycled water, as well as lowering its greenhouse gas emissions and energy intensity. TCC stability was achieved via inflationary factors (a higher mining tax, inflation and COVID-19-related costs) that were counterbalanced by cost improvement measures and FX tailwinds. Voro (lower grades due to mining sequence) and Varvara (processing of third-party ore feeds) saw their TCCs rise the most in 2020 (+27% y/y and +30% y/y, respectively) while Omolon (-25% y/y) and Mayskoye (-24% y/y) experienced the greatest declines.
Outlook for 2021: Higher costs but stable production. Management expects COVID-19-related costs to be around $5mn per month, adding $35mn/oz to the estimated 2021 AISC. Polymetal pre-announced most of its operational guidance for 2021 when it reported its 2020 operational results, with TCC expected to rise to $700-750/oz in 2021 vs. $638/oz in 2020, AISC expected to reach $925-975/oz vs. $874/oz in 2020, and ND/EBITDA to be below 1.0x vs. 0.8x at YE20
Petropavlovsk’s own-feed gold production at Pioneer, Albyn, Malomir and Elga fell 19% y/y to 55koz in January-February, comprising 9.5koz at Albyn (-65% y/y), 15.9koz at Pioneer (-8% y/y), 24.8koz at Malomir (+7% y/y) and 4.8koz at new Elginskoye mine. Assuming a 19% y/y decline rate for March, the company’s own-feed production might reach 82koz in 1Q21 (and
180 RUSSIA Country Report April 2021 www.intellinews.com