Polymetal (LON: POLY): Should you buy this Anglo-Russian miner now?

March 29, 2022 03:21 PM BST | By Rishika Raina
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  • Anglo-Russian miner Polymetal has started assessing a range of options to provide its shareholders with the maximum possible gains.
  • The group is considering a demerger of its Kazakh mines to protect its international business from the impact of the war.

Leading Anglo-Russian mining company Polymetal International plc (LON: POLY), which has been in the spotlight since the Russian invasion of Ukraine, has announced that it has started assessing a range of options to provide its shareholders with the maximum possible gains. Reportedly, the group is considering a demerger of its Kazakh mines to protect its international business from the impact of the war.

Coping with the impact of the war

Polymetal International plc is engaged in the mining of precious metals, and it is a globally leading producer of gold and silver. The group operates in Russia and Kazakhstan and has recently expressed its intention to split its Kazakh mines to safeguard its international business from the impact of Western sanctions on Russia.

Even though no Western sanctions have been imposed on Polymetal, its shares had lost considerable value since 24 February, when Russia-related stocks started being sold off as sanction fear gripped the market. Though, Polymetal’s bullion sales have been impacted by the Western sanctions as the sales of bullion have been traditionally carried out through Russian financial institutions. Many shareholders have exited Polymetal recently, along with the sovereign wealth fund of Norway. As per reports, Polymetal believes that the splitting and separate listing of its Russian and Kazakh businesses would help in reducing the overall impact of the war on its operations.

The Russian miner intends to offer the maximum potential gains to its shareholders, and thus, it is exploring options to do so. The options may even include altering the asset holding structure of the company, and the management will have to work hard to sustain its performance.

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Polymetal planning demerger of Kazakh mines

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Polymetal’s performance update

Polymetal has generated a revenue of US$2.89 billion in the 2021 financial year, while its net earnings stood at US$904 million, down by 15%. Gold equivalent production was worth 1.7 million troy ounces in 2021. Two of its mines in Kazakhstan accounted for 558,000 ounces out of this.

Polymetal International plc, which was an FTSE100 constituent, has been ejected from the blue-chip index due to significant tumbling of its share prices. With a market cap of £1,150.91 million, Polymetal International plc’s shares were trading at GBX 306.10, up by 25.97%, at around 11:00 AM (GMT+1) on 29 March 2022.

The stocks as of 29 March 2022 are down by 77.91% and offers a good entry point if the company is seriously looking to stabilize and ramp up its business.

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Polymetal aims to sustain its business while offering the maximum gains to its shareholders, and it is planning to take the necessary measures for the same. The potential demerger of its Kazakh mines may help the company to protect its global operations from the impact of the ongoing geopolitical tensions.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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