Polymetal postpones projects as West ramps up sanctions on Russia
Troubled Anglo-Russian miner Polymetal International (Polymetal) has delayed multiple projects amid supply chain difficulties and market volatility.
As part of its ‘rationalisation plans’, its POX-2 project – a processing plant in Russia – will face a six-month delay.
It is now expected to start production in the second quarter of 2024.
Polymetal has also suspended its Pacific POX project and is currently evaluating options to re-site this processing facility in Kazakhstan.
Meanwhile, start of construction at its Veduga gold deposit was delayed by 12-18 months.
This follows the miner opting to postpone a decision of final dividends for the year until August 2022.
More than miner issues
Polymetal has been plagued with controversies following Russia’s invasion of Ukraine in February – with the West ramping up sanctions on the country.
While the company not been placed under any restrictions, its operations have been hit with difficulties after heavy sanctions were placed on Russian financial institutions last month.
It has also suffered a mass exodus of investors since Russia’s invasion of Ukraine, with its share price plunging 88 per cent in the month following the instigation of conflict in the region.
On 8 March, the London Stock Exchange stepped in to cancel trades in Polymetal, due to concerns over erroneous transactions and enforced cancellations.
Its declining performance has resulted in the firm being booted off the FTSE 100 and the wider Russell indices.
Six of its board members have stepped down amid the market chaos, including the departure of British chair Ian Cockerill.
It recently hired Riccardo Orcel as its new chair, alongside four new non-executive directors.
The miner has also confirmed considering splitting off its Russia business from the rest of the company.
Currently, Polymeyal operates eight mines and a processing plant in Russia and Kazakhstan.
Vitaly Nesis, group chief executive of Polymetal said: “Devastating war in Ukraine and immense sanctions put tremendous pressure on Polymetal in the first quarter. The company continues to operate safely and profitably and is fully focused on ensuring business continuity and long-term viability.”
He added: “”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.”
Despite the setbacks, Polymetal has seen its revenues grow four per cent year-on-year to $616m – powered by higher gold prices and the back of large sales and production gap in the first quarter of the year.
It has also confirmed its production guidance of 1.7m ounces – 1.2m in Russian and 0.5m in Kazakhstan.
Net debt at the company rose to roughly $2bn on the back of higher working capital needs.