New Speculation: Polymetal

[Hornblower]

I think I wrote a post about POLY a few months ago. Today, I took the plunge & bought some equity.

Bought on 19th Aug for £2.38 per share (mkt cap just under £1B).
I have invested 1/2 a unit. If it continues to perform as expected I may increase my holdings by another 1/2 unit in the future.

What is it? A Jersey-based gold/silver miner that is listed in London, though the mines are situated in Russia & Kazakhstan.
Previously a member of the FTSE100, In late 2020 the shares peaked at over £20 per share (mkt cap of £9.5B). It's price collapsed after the Russian invasion of Ukraine earlier this year, falling as low as £1.21 per share. The dividend was suspended earlier this year, however operations in both countries have continued largely unaffected with 1.7 million ounces of gold continuing to be produced per year. (They are one of the top 10 gold producers in the world).

There were threats of delisting from the LSE & around having access to banking services. These seem to have receded now, with the shares up 28% in the past month. The board also announced in late July that they are exploring splitting the Russian operation off from the Kazakhstan to realise value to POLY holders.

They've also experienced some supply chain issues due to Covid restrictions in China.

Why buy it?

It is now on an incredibly low P/E ratio. If it can maintain earnings, we should see a substantial price increase as this normalises over time. You're getting a cheap Khazakh mining operation, with the entire Russian mining operation thrown in for free (two-thirds of the mining operations are in Russia).

Their main markets aren't in the EU, or US. There's always willing buyers of gold; Russia, China, India & other countries continue to stockpile the metal.

If geo-political tensions continue to increase, gold may shoot up in value as a safe asset.

If they resume dividends at their previous rate of £1.32 a share, it would be giving yield above 50%! This is probably unlikely to happen, more likely they will restart divi payments at a lower rate & de-risk by holding more cash on hand. However, divi resumption should signal to the market that 'normal service has resumed' and may cause a substantial revaluation to the upside.

If/when the Ukraine conflict ends we should see a gradual normalisation of relations, & removal of sanctions against Russia over time.

It's a bet that the stock is priced too low due to emotions, rather than because of future prospects.


My expectations & when I'll sell:
This isn't something that I want to put in the sock drawer & forget about for a decade. I'll consider selling once the share price starts to normalise against it's peers. If this plays out as hoped, I may end up with a multi-bagger.

What if I'm wrong?
A sudden de-listing, or an increase in sanctions, or political pressure causing problems around banking would be the largest risks I'd say. That's why I'm only committing 1/2 an investing unit.


Hornblower

[Bouleversee]

I can't make my mind up whether to add more. I bought my first holding shortly after Covid arrived when everyone was telling us to buy gold. IIRC I almost doubled my money on the original holding and I added more but then came Putin's military exercises aka war and the price slumped. I am currently losing around £11k, almost 79% of my total purchase costs, which is very disappointing. I think I'll wait till it is on a definite upward trend before risking any more capital.

[Hornblower]

https://seekingalpha.com/article/4501031-polymetal-international-it-takes-grit-to-buy-this-26-percent-dividend-made-of-gold?

[TheMotorcycleBoy]

Polymetal announces that the Board of Directors postpones the decision on 2021 final dividend payment.

The Board has reviewed significant changes in operating conditions that the Group has encountered in the last few weeks. As a result of this consideration the Board has concluded that it is no longer appropriate to recommend or declare the 2021 final dividend payment that was due to be put to shareholders for approval at the Annual General Meeting on 25 April 2022 and has decided to postpone the decision on the dividend payment to August 2022 (along with interim dividend decision for 1H 2022) due to

Mounting uncertainty with availability of funds due to sanctions on Russian banks and economy.

Higher working capital needs as a result of liquidity crunch and supply chain limitations.

Balance sheet constraints imposed by lower credit availability as well as significantly higher cost of funding.

The resolution in respect of the 2021 final dividend payment that was due to be put to shareholders for approval at the Annual General Meeting on 25 April 2022 will therefore be withdrawn accordingly.

https://www.polymetalinternational.com/ ... 3-04-2022/

[TheMotorcycleBoy]

Also what happens if the whole operation just gets "acquired" by the Russian Regime?

Like they did to all their foreign obligations 100 years back:

https://en.wikipedia.org/wiki/Repudiati ... Revolution

Way too high risk for me!

[Bouleversee]

Polymetal announces that the Board of Directors postpones the decision on 2021 final dividend payment.

The Board has reviewed significant changes in operating conditions that the Group has encountered in the last few weeks. As a result of this consideration the Board has concluded that it is no longer appropriate to recommend or declare the 2021 final dividend payment that was due to be put to shareholders for approval at the Annual General Meeting on 25 April 2022 and has decided to postpone the decision on the dividend payment to August 2022 (along with interim dividend decision for 1H 2022) due to

Mounting uncertainty with availability of funds due to sanctions on Russian banks and economy.

Higher working capital needs as a result of liquidity crunch and supply chain limitations.

Balance sheet constraints imposed by lower credit availability as well as significantly higher cost of funding.

The resolution in respect of the 2021 final dividend payment that was due to be put to shareholders for approval at the Annual General Meeting on 25 April 2022 will therefore be withdrawn accordingly.

https://www.polymetalinternational.com/ ... 3-04-2022/

August has been and gone. Has there been any further announcement re divs. which I could really do with.

[Hornblower]

Follow-up post:

I held the share for 7 months & then sold.
Buy price: £2.378
Sale price: £2.548

Analysis: It was a speculation that could have had a fantastic pay-out if the geopolitical situation had turned out differently. I sold once there was talk of a London delisting of the company.

[Bubblesofearth]

Follow-up post:

I held the share for 7 months & then sold.
Buy price: £2.378
Sale price: £2.548

Analysis: It was a speculation that could have had a fantastic pay-out if the geopolitical situation had turned out differently. I sold once there was talk of a London delisting of the company.

Why follow-up now rather than when you made the sale?

BoE

[Hornblower]

Why follow-up now rather than when you made the sale?

Because I have been reviewing my transactions inside my ISA & decided to give some closure to this thread rather than leave it 'dangling'.

Hornblower