2023-10-31 11:34:05
Shares of the gold mining company Polymetal International fell by 3.96%, to ₽526, in trading on the Moscow Exchange as of 13:29 Moscow time. By 14:07 Moscow time, the decline slowed to 3.05%, and the price recovered to ₽530.9 per security.
The company’s shares fell amid reports that Polymetal may return to dividends by the end of 2023. The head of the company, Vitaly Nesis, talks regarding this reported on a conference call with investors and analysts on the group’s operating results for the third quarter of 2023. The decision on dividends will depend on progress in the sale of Russian assets, Vitaly Nesis said.
Such statements, most likely, might upset bidders, since previously the company did not rule out that payment was possible by the end of this year, commented market reaction in Finam.
The company’s policy requires a minimum dividend of 50% of adjusted net income while maintaining a net debt to adjusted EBITDA ratio below 2.5x. The maximum dividend amount can be up to 100% of free cash flow if it is greater than 50% of adjusted net income.
At the end of 2022 and 2021, the company did not accrue or pay dividends. The last time Polymetal paid dividends for the first half of 2021 was $0.45 per share. The company allocated a total of $213 million for payments to shareholders.
Polymetal also published operating results for the third quarter of 2023. Production increased by 12% year-on-year and by 20% quarter-on-quarter – to 508 thousand ounces of gold equivalent once morest the backdrop of increased production of the Ural assets, Maiskoye and Dukat. The company confirmed its production forecast for 2023 in the amount of 1.7 million ounces in gold equivalent (1.2 million ounces in Russia and 500 thousand ounces in Kazakhstan).
Tinkoff Investments analysts maintain a neutral view on the gold miner’s shares amid uncertainty regarding the possible sale price of Russian assets, as well as the method and timing of restoring the rights of shareholders whose securities are stored at NSD.
The key point in Polymetal’s investment case is the sale of Russian assets, said Promsvyazbank analyst Alexey Golovinov. Management reported that the proceeds would be used, among other things, for dividends. However, the PSB expert does not exclude that the completion of the transaction should be expected no earlier than the end of next year. In addition, all indications are that gold prices are at the beginning of a long-term growth phase. Together with the sale of assets in Russia, this will allow Polymetal to accumulate enough cash to actively develop its business in a new jurisdiction, Kazakhstan. PSB considers Polymetal’s shares interesting for investment. The target share price over a 12-month horizon is RUB 790.
Polymetal International is Russia’s largest silver producer and one of the main gold miners. The group’s portfolio includes ten production assets and three major development projects. The company’s enterprises are located in the Magadan and Sverdlovsk regions, Khabarovsk Territory, Yakutia, Chukotka and Kazakhstan.
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