Half-year report for the six months ended 30 June 2022

In the light of recent developments, and in the interests of preserving shareholder value, the Board and the Special Committee have decided to consider all possible options available for divestment of JSC Polymetal and its subsidiaries.

More details

22 September 2022

“Polymetal continued to maintain operational stability in 1H 2022 despite operating in a persistently challenging external environment. Significant disruption in traditional supply chains and sales channels constrained cash flow generation and led to an increase in net debt. The management team continues to focus on ensuring long-term business viability and value creation”, said Vitaly Nesis, Group CEO, commenting on the results.


  • In 1H 2022, revenue decreased by 18%, totalling US$ 1,048 million (1H 2021: US$ 1,274 million), of which US$ 443 million (42%) was generated from operations in Kazakhstan and US$ 605 million (58%) from operations in the Russian Federation. Average realised gold and silver prices tracked market dynamics: gold price increased by 4% while silver price decreased by 14%. Gold equivalent (“GE”) production was 697 Koz, a 7% decrease year-on-year. Gold sales decreased by 23% year-on-year to 456 Koz, while silver sales increased by 9% to 8.7 Moz. Gold sales lagged production due to the bullion inventory accumulated across the Group’s mines located in the Russian Federation.  This gap between sales and production is expected to start closing during Q3 as the Company ramps up export sales to various Asian markets.

  • Group Total Cash Costs (“TCC”)1 for 1H 2022 were US$ 853/GE oz, at the lower end of the Group’s full-year guidance of US$ 850-950/GE oz, while being up 20% year-on-year, predominantly due to the sharp increase in domestic inflation and escalation of logistical costs, combined with the planned grades decline in ore processed at Albazino and Kyzyl. Cost performance was significantly affected by the Rouble/USD exchange rate fluctuations, with average rate of 76.2 RUB/USD versus the current level of 60 RUB/USD. Exchange rate dynamics will drive cost performance for H2 2022, as inflationary pressures in the Russian Federation cool down.

  • All-in Sustaining Cash Costs (“AISC”)1 amounted to US$ 1,371/GE oz, up 34% year-on-year, 6% above the upper end of the full-year guidance range of US$ 1,200-1,300/GE. The increase above TCC dynamics reflected the Group’s need to shift to suboptimal equipment supply sources, coupled with inflationary pressures and accelerated procurement of equipment and critical spare parts. Year-on-year dynamic was also impacted by capitalised stripping at the newly launched Nezhda mine, as well as accelerated stripping at Omolon (Burgali deposit) and Albazino (Kutyn development).

  • Adjusted EBITDA1 was US$ 426 million, a decrease of 35%, against a backdrop of higher costs and lower sales volumes. Of this, US$ 270 million (63%) was earned from operations in Kazakhstan and US$ 156 million (37%) earned from operations in the Russian Federation.The Adjusted EBITDA margin decreased by 11 percentage points to 41% (1H 2021: 52%).

  • Underlying net earnings2 were US$ 203 million (1H 2021: US$ 422 million). As a result of lower EBITDA and non-cash impairment charges (the post-tax amount of US$ 564 million), the Group recorded a net loss for the period of US$ 321 million in 1H 2022, compared to a US$ 419 million profit in 1H 2021.

  • Capital expenditure was US$ 373 million3, marginally lower compared with US$ 375 million in 1H 2021 but above original expectations, reflecting accelerated purchases and contractor advances for ongoing projects (most notably, POX-2), combined with inflationary and logistical pressures on the sustaining capex (US$ 178 million in 1H 2022 compared with US$ 127 million in 1H 2021). This was partially offset by the shrinking investment scope, suspension of Pacific POX project and revision of execution timeline for Veduga. The Company currently expects its FY2022 capex to be in the range of US$ 725-775 million.

  • Net operating cash outflow was US$ 405 million (1H 2021: US$ 358 inflow), on the back of working capital build-up of US$ 624 million. This includes positive cash flow of US$ 140 million from operations in Kazakhstan and negative cash flow of US$ 545 million from operations in the Russian Federation. The Group reported negative free cash flow1 of US$ 630 million (1H 2021: US$ 27 million).

  • Net debtincreased to US$ 2,800 million during the period (31 December 2021: US$ 1,647 million), representing 2.27x of the LTM Adjusted EBITDA (1H 2021: 1.05x). The increase in net debt was driven by unsold metal inventory accumulation, accelerated purchases of equipment and spares, funding of the critically important contractors and suppliers, and upward US$ re-valuation of Rouble-denominated debt.

  • Polymetal continues to target its original 2022 production guidance of 1.7 Moz of gold equivalent.  The key risk to production guidance is represented by COVID-related lockdowns and logistical constraints in China. On the back of the significant change in exchange rate assumptions (from 70 RUB/USD to 60 RUB/USD for the rest of the year), the Company updates its FY 2022 cost guidance range to US$ 900-1,000/GE oz and US$ 1,300-1,400/GE oz for TCC and AISC, respectively.

(1) The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to compliment measures that are defined or specified under International Financial Reporting Standards (IFRS). For more information on the APMs used by the Group, including justification for their use, please refer to the “Alternative performance measures” section below.
(2) Adjusted for the after-tax amount of impairment charges, write-downs of metal inventory, foreign exchange gain and other change in fair value of contingent consideration.
(3) On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.


The Board has carefully evaluated the liquidity and solvency of the business in light of multiple external uncertainties. Taking into account significant decline in operating cash flows, challenges in establishing new sales channels and the short-term liquidity headwinds, the Board decided to permanently cancel full-year 2021 dividend. Given the continuing impact of these external uncertainties, the Board does not propose any interim 2022 dividends to allow the Group to strengthen its cash position and enhance its resilience in a highly volatile environment.

Payment of dividends in the future will also depend on the ability to unblock shares which are currently held through the National Settlement Depositary (NSD), which the Company estimates to be, in aggregate, approximately 22% of the Company’s issued share capital. Until a solution is found, the Board is not minded to propose any corporate action or dividend in which such a sizeable proportion of the Company’s shareholder base cannot participate.

Polymetal has today announced its intention to conduct an exchange offer. The exchange offer invites shareholders whose rights have been affected by the sanctions imposed on NSD, subject to fulfilling eligibility criteria, to tender such shares for exchange, in consideration for the issuance of a certificated share, on a one-for-one basis.  

The exchange offer is subject to shareholder approval at a General Meeting which will be held at 10am (BST) on Wednesday 12 October 2022 at etc.venues Fenchurch Street, 8 Fenchurch Place, London.

Further details of the exchange offer can be found in the Company’s announcement in connection with the exchange offer, as well as the shareholder circular and notice of General Meeting, which has been published today.


As previously announced, the Company has been considering a potential modification of its asset holding structure which would ensure distinct ownership in the various jurisdictions in which the Company operates.

On 19 July 2022, the Company announced that it was evaluating the potential disposal of the Company’s assets located in the Russian Federation (the Potential Transaction), with the primary objective of restoring shareholder value by seeking to allow the market to appropriately value the Company’s Kazakhstani assets and de-risk its ongoing operations.

On 5 August 2022, a Decree of the President of the Russian Federation #520 (the Decree) was issued. The Decree imposes a prohibition, unless explicit presidential authorisation is obtained, on the sale of certain Russian assets, including all gold mining companies, if such assets are owned or controlled by residents of countries which the Russian Federation considers “unfriendly”. The jurisdiction of Jersey, where Polymetal International plc is incorporated, is currently included in the list of jurisdictions deemed to be ”unfriendly” by the Russian Federation.

The Company has taken steps to analyse the impact, including any legal implications, that the Decree may have on the Company’s ability to proceed with the Potential Transaction. Following initial discussions with its legal advisers, management believes that the Decree has added significant restrictions on its ability to execute such a transaction.

The Company continues to evaluate all available options to modify its asset holding structure in order to maximise shareholder value. Potential transaction structure include, among others, a potential re-domiciliation of the parent company, Polymetal International plc, to a “friendly” jurisdiction, a move which could unblock the ability to execute further corporate actions. No decision has been made in relation to the various options available to the Company.

The Company confirms that any actions will be compliant with all applicable international sanctions, counter-sanctions and regulatory requirements.

A further announcement will be made as appropriate.

Financial highlights1

1H 2022

1H 2021

% сhange

Revenue, US$m




Total cash cost2, US$ /GE oz




All-in sustaining cash cost2, US$ /GE oz




Adjusted EBITDA2, US$m




Average realised gold price3, US$ /oz




Average realised silver price3, US$ /oz




Net (loss)/earnings, US$m




Underlying net earnings2, US$m




Return on Assets2, %




Return on Equity (underlying)2, %




Basic (loss)/earnings per share, US$




Underlying EPS2, US$




Dividend declared during the period4, US$ /share




Dividend proposed for the period5, US$ /share




Net debt2, US$m




Net debt/Adjusted EBITDA




Net operating cash flow, US$m




Capital expenditure, US$m




Free cash flow2, US$m




Free cash flow post-M&A2, US$m




(1) Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.
(2) Defined in the “Alternative performance measures” section below.
(3) In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are calculated as revenue divided by gold and silver volumes sold, excluding effect of treatment charges deductions from revenue.
(4) 1H 2021: Final dividend for FY 2020 paid in May 2021.
(5) 1H 2021: Interim dividend for FY2021.
(6) As at 31 December 2021.
(7) On a last twelve months basis. Adjusted EBITDA for 2H 2021 was US$ 805 million.


  • No fatal accidents occurred among Group workforce and contractors during the first half of the year (consistent with 1H 2021). Lost time injury frequency rate (LTIFR) for 1H 2022 decreased by 53% year-on-year (y-o-y) to 0.08 (0.17 in H1 2021).

  • The Group’s 1H 2022 gold equivalent (“GE”) production  decreased by 7% year-on-year to 697 Koz. Lower grades and planned long maintenance shutdown at the Amursk POX reduced output from Kyzyl and Albazino, more than offsetting fresh contribution from Nezhda. Stronger production forecast in the 2H 2022 will be driven by seasonal concentrate de-stockpiling at Mayskoye, as well as release of accumulated metal inventory at Omolon, Dukat  and Svetloye. The Group remains on track to meet its FY2022 production guidance of 1.7 Moz of gold equivalent.

  • At POX-2, installation of concentrates pulp blending vessels, intensive cyanidation reactor and slurry cooling section was complete. Thickener installation continues. The plant start-up is expected Q2 2024 according to the revised schedule.

1H 2022

1H 2021

% сhange

Waste mined, Mt




Underground development, km




Ore mined, Mt












Ore processed, Mt




Average grade processed, GE g/t





Gold, Koz




Silver, Moz




Gold equivalent, Koz1





Gold, Koz




Silver, Moz




Gold equivalent, Koz2




Health and safety









(1) Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for 2021 restated accordingly (120:1 Au/Ag conversion ratio was used previously).
(2) Based on actual realised prices.
(3) LTIFR = lost time injury frequency rate per 200,000 hours worked.

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Polymetal will release the Group’s H1 2022 financial results on Thursday, September 22.

The Company will hold a conference call and webcast on Thursday, 22 September 2022 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:

From the UK:
+44 330 165 4012 (local access)
0800 279 6877 (toll free)

From the US:
+1 929 477 0324 (local access)
0800 458 4121 (toll free)

If you wish to join the call from Russia please use the webcast link below.

To participate in the call from other countries please choose one of the local lines above.

Conference code: 2499630

To participate in the webcast follow the link: https://www.webcast-eqs.com/polymetal2022092212.

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

A recording of the call will be available at +44 (0)330 165 3993 (from the UK), +1 719 457 0820 (from the USA), access code 2499630, from 15:00 London time Thursday, 22 September, till 15:00 London time Thursday, 29 September 2022. Webcast replay will be available on Polymetal’s website (www.polymetalinternational.com) and at https://www.webcast-eqs.com/polymetal2022092212.

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