Polymetal plans to double gold production and enter new markets

Polymetal, which is set to be renamed Solidcore Resources shortly, wants to double its gold production to one million ounces by 2029. The company is also going to invest $800 million in the construction of Irtysh GMK (mining and metallurgic company), Polymetal said in a presentation during Investor’s Day.

The Irtysh GMK is going to be located in the vicinity of the town of Pavlodar. The $800 million factory is expected to be fully operational in the first half of 2028. Once commissioned, it will be producing about 15 tons of gold per year for more than 30 years.

As Polymetal highlighted in the presentation, current business conditions prevent the company from expanding its business. For instance, Polymetal has to deal with various challenges, including insufficient exploration potential of existing fields and minimal revenue growth.

«We expect that gold production at the existing mines will be stable with slight growth. However, nobody would be happy with these production perspectives. Yes, the production is stable. Indeed, our existing assets can provide a stable cash flow now, at the current spot prices and even if gold prices are significantly lower. However, it is clear to us that this forecast isn’t enough to spark interest from global investors,» said CEO of Polymetal Vitaly Nesis.

Apart from the Irtysh GMK project Polymetal is implementing the Kyzyl (the Bakyrchyk field) and Varvarinskoye (the Varvarinskoye and Komarovskoye gold deposits) projects. However, these are not enough to achieve the twofold growth, the company said in a statement.

This is why, Polymetal wants to expand its business activities in Tajikistan, Uzbekistan, Saudi Arabia and Oman, focusing its attention on producing and processing precious and non-ferrous metals.

In order to boost its growth Polymetal bets on mergers and acquisitions along with active investments in further growth. The company also highlighted that it won’t make any dividend payouts unless reaches its goals related to stocks and gold processing. Furthermore, the gold company is going to produce green energy on its own by investing in the construction of solar and gas power stations.

Concerning mergers and acquisitions, Polymetal will buy only those assets that can add at least $100 million to its EBITDA in the case of greenfield investments and $50 million for brownfield investments.

All in all, the company’s investments in its projects in Kazakhstan will amount to more than $1 billion within five years. Moreover, Polymetal will pay off its $400 million debt within two years. 

The context. In the fall of 2022, Polymetal announced that it would move from the Island of Jersey to the Astana International Financial Center (AIFC). In August 2023, the company completed this redomiciliation. Its stocks have been traded on the Astana Stock Exchange (AIX) since August 10, 2023. In October 2023, Polymetal’s shares were added to the AIX Qazaq Index. The company’s stocks are also available on the Moscow Exchange.

In late September 2023, Nesis said the company would sell its Russian assets. This decision followed Western sanctions against the Russian subsidiary of Polymetal. As a result, the asset has been acquired by Sergei Yanchukov, owner of Mangazeya Plus, for $3.69 billion. The deal was closed in March 2023.