(Reuters) – Polymetal has decided to postpone several projects amid Western sanctions on Russia after the gold and silver miner reported a 4% year-on-year increase in first-quarter revenue to $616 million due to higher gold prices.
The Western sanctions imposed on Moscow after it sent its troops to Ukraine on Feb. 24 put “tremendous pressure” on Polymetal in the first quarter, the London-listed company said. It has not been directly targeted by the sanctions.
“The Board and management continue to actively explore options to adjust company asset ownership structure to preserve shareholder value and address the needs of other stakeholders,” Vitaly Nesis, Polymetal’s CEO said in a statement.
Polymetal, Russia’s second largest gold producer after Polyus, said it had rationalised its investment plans, with the result that its POX-2 project, a processing plant in Russia, will face a six-month delay due to supply chain challenges and is now expected to start production in the second quarter of 2024.
The company also suspended its Pacific POX project and is currently evaluating options to re-site this processing facility in Kazakhstan. The start of construction at its Veduga gold deposit was delayed by 12-18 months.
Polymetal, which has postponed a decision on a 2021 final dividend until August, said 2022 capital expenditure was currently expected at $650 million amid shrinking scope for investment scope and inflationary pressures.
Polymetal raised its total cash cost guidance to $850-950 per ounce from the previous range of $850-900, due to inflation in Russia and escalation of logistical costs.
Its guidance for production of gold equivalent – a mix of gold and other metals – now stands at 1.65 million ounces in 2023, 1.7 million ounces both in 2024 and in 2025 and 1.8 million ounces in 2026.
Polymetal’s production of gold equivalent fell by 6% to 372,000 troy ounces in the first quarter, the company said, adding that it was on track to produce 1.7 million ounces in 2022.
The company’s shares were up around 5%. [.L]
(Reporting by Reuters, Editing by Louise Heavens and Jane Merriman)