Integrated Annual
Report 2022
About this report
Integrated Annual Report 2022
Since 2021, instead of issuing standalone Sustainability and Annual Reports,
we have published an Integrated Annual Report containing all the relevant
disclosures. When disclosing information, we aim to address various stakeholder
information needs and demonstrate how Polymetal creates sustainable value over
time (read more on page 44).
Reporting scope and boundaries
This report covers Polymetal International plc’s policies,
business approach, strategic decisions and performance
across its operations. The reporting scope aligns with our
financial statement and includes our subsidiaries, associates
and joint ventures. It presents information for the reporting
period from 1 January to 31 December 2022 and provides
comparative data for previous years. To read more about our
significant subsidiaries refer to page 176. Sustainability-
related information is limited for assets that are not yet
operating due to the early stage of data collection
procedures integration or the immateriality of such data.
Reporting standards
This report is prepared in accordance with the UK Code,
the FCA’s Disclosure Guidance and Transparency Rules
sourcebook and the FCA’s Listing Rules (as applicable), as
well as with the Global Reporting Initiative (GRI) Standards,
the Metals & Mining Sustainability Accounting Standard
published by the Sustainability Accounting Standards
Board (SASB) and the recommendations of the Financial
Stability Board’s Task Force on Climate-related Financial
Disclosures (TCFD). We inform our reporting process by
using the International Integrated Reporting Council’s (IIRC)
International Framework and are committed to
continuously improving the adoption of integrated thinking
and reporting.
External assurance
We remain committed to transparent and verifiable
information disclosure. The financial statements were
prepared in compliance with the applicable laws and
International Financial Reporting Standards (IFRS) as
adopted by the UK and as issued by the International
Accounting Standards Board (IASB), and were audited
jointly by MHA MacIntyre Hudson (an independent member
of Baker Tilly International Limited) as Group auditor and
AO Business Solutions and Technologies as component
auditor. Ernst & Young Advisory LLP (EY) provided limited
assurance over sustainability-related information prepared
in accordance with the GRI Standards and SASB’s Metals &
Mining Sustainability Accounting Standard, as well as over
climate-related information disclosed in accordance with
the TCFD.
For more information,
visit our website:
polymetalinternational.com
Polymetal International plc is a leading precious
metals mining group, operating in Kazakhstan and
Russia. A major employer in its regions of operation,
Polymetal is one of the most sustainable
and responsibility-driven companies in the sector.
Appendices
218
Alternative performance
measures
Reserves and Resources
Group production statistics
Financial highlights
Non-financial information
statement
Independent practitioner’s
assurance report
Sustainability data
TCFD, GRI and SASB
content indices
Glossary
Shareholder information
Contacts
220
229
229
230
231
234
251
260
264
265
Strategic report
About this report
04
06
At a glance
08 Where we operate
SINED’s statement
10
Group CEO’s statement
12
Business model
16
Stakeholder engagement
18
Market review
20
Our strategy
22
Capital allocation
24
Key performance indicators
26
Operating review
28
Sustainability
44
45
46
50
56
62
76
80
How we manage sustainability
Material issues
Health and Safety
Employees
Environment
Climate change
Communities
Ethical business
84
96
Financial review
Risks management
130
Board of Directors
Senior management
Governance
112
114
116 Corporate governance
Audit and Risk
124
Committee report
Safety and Sustainability
Committee report
Remuneration Committee
report
Nomination Committee report
Going concern and longer-term
viability
155 Directors’ report
158
150
153
132
Directors’ responsibility
statement
Financial statements
162
172
Independent auditor’s report
Consolidated financial
statements
Notes to the consolidated
financial statements
176
04
05
05
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 At a glance
Retaining a leading industry position
Polymetal’s commitment to innovation and sustainability has enabled it to adapt
and retain its position as a pre-eminent precious metals group. In addition to its
investments in ten gold and silver mines in Kazakhstan and Russia, it has made
good progress with its two development projects, which will help underpin the
future benefits for its stakeholders.
Polymetal today
Top 10
Top 10
world gold producer
world silver producer
10 operations
across 2 countries
Leader
in refractory ore
processing
Production1
(GE Koz)
Premium LSE
+AIX and MOEX listing
2
development projects
Our asset base
Ore Reserves
27.3 Moz of GE
average grade 3.6 g/t
Additional resources
25.8 Moz of GE
average grade 4.5 g/t
Sustainability
0
Fatalities
(2021: one contractor
fatality)
91%
Water recycled
and reused
(+1 p.p.)
-15%
1.53
1.55
1.59
1.55
1.64
1.50
1.68
1.60
1.71
1.70
2018
2019
2020
2021
2022
1 Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for
prior years restated accordingly (120:1 Au/Ag conversion ratio was used previously).
Actual
Guidance
21%
female employees
(no change)
-30%
targeted reduction in GHG
intensity by 2030
(baseline 2019, Scope 1 and 2)
ESG performance rating:
67/100 (advanced),
rank in sector: 2/41
S&P Global Bronze Class
Sustainability Award
reduction in GHG intensity
(baseline 2019, Scope 1 and 2)
Overall Score:
4.4/5.0
ESG Risk Rating:
22.4 (Medium Risk)
Key financial figures
$2,801m
Revenue
(-3%)
$942/GE oz
Total cash cost
(+29%)
$1,017m
Adjusted EBITDA1
(-31%)
$440m
Underlying net profit1
(-52%)
What distinguishes Polymetal
1 Focus on
high‑grade assets
` Read more on pages 8, 30‑43, 220‑227
Return on investment in the precious metals industry is driven on grades and
mining conditions. We achieve better returns and lower risks from our project
portfolio by setting appropriate thresholds on head grades and largely focusing
on open-pit mines.
2 Leading competence
in treatment of
refractory ores
` Read more on pages 13, 17, 21, 22, 36, 117
3 Strong capital discipline
` Read more on pages 12, 17, 19, 22, 84‑95,
109
Polymetal has been developing refractory ore deposits since 2007. Our pressure
oxidation (POX) processing hub in Amursk, which is now undergoing a major
expansion through the construction of Amursk POX-2 facility, was key to extracting
value from Albazino, Mayskoye, and, more recently, Kyzyl and Nezhda. Moreover, as
more and more gold resources globally tend to be refractory, our technological
expertise in environmentally friendly refractory ore processing will be a key strategic
advantage, including being in the market buying third-party feedstock.
We engender a strong focus on capital discipline throughout the business;
maximising risk-adjusted return on capital is our priority in all investment
decisions. By prioritising high-return investments, we have created a resilient
business that generates significant capital return across cycles and acts as
a platform for sustainable growth.
4 Commitment
to sustainability
` Read more on pages 8, 13, 17, 18, 21, 22,
27, 44, 130
5 Investing in exploration
` Read more on pages 21, 22, 30‑43, 93
Maintaining high standards of ESG is one of our strategic pillars. We ensure this
through impact assessment and responsible capital allocation, which means
investing in green and more efficient technologies, delivering tangible socio-
economic value to communities and creating safe and inclusive workplaces.
Investment in both greenfield and near-mine exploration provides us with a cost-
effective increase in our reserve base and, along with successful acquisitions,
is the key source of our long-term growth.
6 Operational excellence
` Read more on pages 12, 14, 22, 28‑40
We pride ourselves on our operational excellence and delivering on our promises.
Despite challenging trading conditions, we beat our production guidance for the
11th consecutive year.
1 Defined in the Alternative performance measures section on pages 218-219. Reconciliation to IFRS measures on pages 90-91.
06
Polymetal International plc Integrated Annual Report & Accounts 2022
Polymetal International plc Integrated Annual Report & Accounts 2022
07
Where we operate
Investing in the long term
Alongside our ten operations in Kazakhstan and Russia,
we are making good progress on our two major development
projects, Amursk POX-2 and Veduga, and continue to invest
in brownfield and grassroots exploration. We also have further
growth opportunities on the horizon with a feasibility study
planned next year for POX-3 in Kazakhstan.
Nezhda
Reserves 6.5 GE Moz
2052 Life of mine
103 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 42
190
licensed properties
Viksha
St. Petersburg
2
countries
+ Moscow
Russia
Voro
Reserves 1.7 GE Moz
2043 Life of mine
22 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 41
10
operations
11
time zones
14,694
employees
+ Yekaterinburg
Veduga
+ Kostanay
+
Krasnoyarsk
Kazakhstan
Astana
+
+ Pavlodar
Semey
+
Varvara
Kyzyl
Reserves 2.0 GE Moz
2039 Life of mine
212 GHG emissions
Reserves 9.3 GE Moz
2050 Life of mine
206 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 33
(Scope 1+2), kt CO2e
` Full asset review on page 32
Pevek +
Mayskoye
Omolon
Reserves 1.8 GE Moz
2036 Life of mine
47 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 40
Reserves 0.7 GE Moz
2031 Life of mine
91 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 35
Dukat
Reserves 47 SE Moz
2028 Life of mine
112 GHG emissions2
(Scope 1+2), kt CO2e
` Full asset review on page 34
Svetloye
Reserves 0.3 GE Moz
2026 Life of mine
56 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 39
+ Evensk
Prognoz
+ Magadan
+ Yakutsk
+ Okhotsk
+ Ulya
Kutyn
+ Vanino
+ Khabarovsk
+ Nakhodka
Albazino
Amursk POX
Amursk POX‑2
Reserves 2.0 GE Moz
2041 Life of mine
122 GHG emissions
(Scope 1+2), kt CO2e
` Full asset review on page 38
Processing: POX + cyanidation
225 Concentrate
capacity (Ktpa)
62 GHG emissions
(Scope 1+2), kt Co2e
` Full asset review on page 36
Processing: POX + cyanidation
300 Concentrate
capacity (Ktpa)
2024 Launch
` Full asset review on page 37
1 Ore Reserves in accordance with the Company’s ownership
equal to 59.45% comprise 2.4 Moz.
Including Primorskoye.
2
Key:
Operating mine
Development projects
Further growth
opportunities
Competence centre
+ City/town
Sea port
Find out more:
Grid under construction
Grid access
Projected renewable
energy sources
Renewable
energy source
` Dry tailings storage facilities projects, read more on page 75
` GHG emissions reduction, read more on pages 13, 21, 45, 62, 72, 74
` Green energy implementation, read more on pages 32, 34, 39, 41,
45, 62, 67, 72, 74
` Biodiversity, read more on pages 45, 60
` Charity, read more on pages 17, 18, 78, 87
Development projects
Further growth opportunities
Veduga
Amursk POX-2
POX-3
4.0 Ore reserves (GE Moz)1
2043 Life of mine
2027 Launch
300 Concentrate
capacity (Ktpa)
2024 Launch
250-300 Concentrate
capacity (Ktpa)
2028 Launch
` Full asset review on page 43
` Full asset review on page 37
` Full asset review on page 37
08
Polymetal International plc Integrated Annual Report & Accounts 2022
Polymetal International plc Integrated Annual Report & Accounts 2022
09
SINED’s statement
Resilience in unprecedented times
Our ultimate goal is still
to retain the trust of all
our stakeholders by preserving
the fundamental value of
the business.”
Evgueni Konovalenko
Senior Independent Non-Executive Director
2022 was a year that can only be described as unparalleled
in the challenges that it brought for the Company and its
operating environment. The Russia-Ukraine conflict created
geopolitical instability and disruptions in supply chains with
the reverberations felt around the globe. Taken together,
these factors piled pressure on capital markets and
significantly increased volatility and uncertainty for business
and financial markets worldwide, but was particularly felt by
the metals and mining sector. In the light of these
unprecedented challenges, I am pleased to report that
Polymetal was able to continue its operations and sales
without any significant interruption. The Board and
management remain vigilant to addressing any new issues
should they emerge.
Strictest compliance
Last year was also unprecedented in terms of the number
and range of sanctions that were imposed by various
jurisdictions against the Russian Federation and counter-
sanctions imposed by the Russian Federation in return. The
Company’s approach to these impositions have not been
taken lightly and has prompted the introduction of additional
compliance controls and procedures. The Group complies
rigorously with all relevant legislation and has implemented
comprehensive measures to observe all applicable
sanctions. Notwithstanding the Group’s ongoing
compliance, the restraints that the sanctions and counter-
sanctions measures have placed on the day-to-day
functioning of the Group, not only on its interaction with
commercial and financing partners but also among its
Shareholders and its own subsidiaries, have been, and
continue to be, increasingly challenging. The effects of
these external measures are to the detriment of the Group’s
ability to grow, develop and therefore, represent
shareholder value. The continuing geopolitical situation and
ensuing economic pressure are undoubtedly beyond the
Company’s control but we are totally committed to meeting
all international regulatory requirements and continued
compliance with all applicable sanctions and counter-
sanctions.
Preserving shareholder value
Against this backdrop, our ultimate goal is still to retain the
trust of all our stakeholders by preserving the fundamental
value of the business. This intention, however, may not
currently seem to be reflected in the Polymetal share price,
which remains severely depressed and only a small fraction
of where it stood before the start of the conflict.
We continue to evaluate all available options to modify the
Group’s asset-holding structure in order to maximise
shareholder value. As previously announced, this includes,
as the preferred option, the potential re-domiciliation of the
parent company, Polymetal International plc, into the Astana
International Financial Centre (AIFC), a financial hub in
Astana, Kazakhstan, taking into account the Group’s
significant operations and presence in the region, the AIFC
legal system, tax regime and the ability to execute such a
re-domiciliation. The key objective of any re-domiciliation
will be to preserve shareholder value, restore our ability to
pay dividends and increase the strategic flexibility to
conduct our operations, as well enabling us to pursue
different strategic developments for the Kazakhstan and
Russian businesses.
The evaluation process is ongoing and management
continue to make progress on preparing for such a
corporate action. The evaluation of the re-domiciliation
process continues and will, in any event, be subject to a
number of conditions. No decision has been made and
there can therefore be no certainty that the Company will
proceed with, or ultimately complete a re-domiciliation.The
Company confirms that any actions will be compliant with
all applicable international sanctions, counter-sanctions and
regulatory requirements and the Company will continue to
take into consideration the interests of its stakeholders prior
to making a decision.
Further announcements in relation to the Group’s efforts to
restore shareholder value and modify the Group’s asset-
holding structure will be made when appropriate.
Wellbeing of our employees and local communities
We are committed to protecting the health and well-being of
our employees and local communities.
We believe that it is important, whatever activities we
undertake, that we mine responsibly, minimise the inevitable
environmental footprint and make a positive contribution to
employees, local communities, national and regional
governments, and supply chains in the areas where we
operate.
I would like to take this opportunity to formally say thank
you to all our employees for their resilience and hard work,
to local communities for their goodwill, to investors for their
continued backing and to my Board colleagues for their
unwavering support. 2022 has been a difficult and
challenging year for everyone and I look forward to the year
ahead with the hope of more settled and certain times.
Evgueni Konovalenko
Senior Independent Non-Executive Director
Decision on dividend
The Board has carefully evaluated the liquidity and solvency
of the business in light of multiple external uncertainties.
Net debt increased to $2,393 million during the year
(31 December 2021: $1,647 million), representing a Net
debt/Adjusted EBITDA ratio of 2.35x (2021: 1.13x),
significantly above the Group’s target leverage ratio of 1.5x.
Free cash flow was negative at $445 million.
Taking into account the significant decline in operating cash
flows, material limitations on access to capital and the
current liquidity and operational challenges facing the
business, the Board has decided not to propose 2022
full-year dividend. This will allow the Group to strengthen its
balance sheet position and enhance its resilience in a highly
uncertain and challenging environment. The Board
understands the importance of dividend payments to
shareholders and hope that deleveraging and a return to
positive free cash flow generation in 2023 will put us in a
position to consider resuming dividend payments.
Board composition
Polymetal successfully replaced members who left the
Board during 2022. The Board now consists of eight
members, six of whom are Independent Non-Executive
Directors. We believe that the Board and its Committees
have the appropriate balance of skills, experience,
independence and knowledge of the business to make a
valuable contribution to the Company’s development and
corporate governance. We are also pleased to have
retained a high level of diversity within the Board.
Considering the ongoing evaluation of the available options
to modify the Group’s asset-holding structure in order to
maximise shareholder value, the Board will look to appoint
a new Chair once the ongoing work and execution of
restoring shareholder value is finalised. This will ensure the
forward looking focus of such an appointment will enable us
to pursue different strategic developments for the Russian
and Kazakhstan businesses.
10
11
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Group CEO’s statement
Solid performance despite
severe external pressures
Against a challenging backdrop,
we have once again
demonstrated that, with the strength
of Polymetal’s team and by working
together, we can still remain on track.”
Vitaly Nesis
Group CEO
2022 unexpectedly placed extraordinary and
unprecedented external challenges on Polymetal’s
operations. In the conditions of unrelenting stress and
dramatic volatility, the team demonstrated the resilience of
our business by meeting our original production guidance,
pushing on with the majority of development projects, and
maintaining a solid safety performance.
Our performance against a challenging backdrop
The Company’s gold equivalent production amounted to
1,712 Koz, a year-on-year increase of 2%, and above our
pre-conflict production guidance of 1.7 Moz. The first
full-year of operations at Nezhda and initial production at
Kutyn compensated for declining grades at our mature
assets.
Operational resilience
The Russia-Ukraine conflict uprooted traditional
relationships and ways of doing business for Polymetal, yet
we managed to adapt to the new reality.
Many industry participants, suppliers and contractors
withdrew from the Russian market. In response, we sourced
sufficient inventories and secured both operational
consumables and equipment from alternative supply routes,
largely in Asia. We also completely reshaped the sales
channels for our Russian assets, while ensuring full
compliance and delivering near-full reduction in
accumulated product stockpiles by the year end.
So far, we have addressed all issues of critical importance
for our operations and development projects. Unless there
is further substantial tightening of the sanctions regime,
supply chain issues are unlikely to affect our production
guidance.
Revenue decreased by 3%, mostly due to lower metal
prices. Despite the initial gap between production and sales
mid-year, caused by the disruption in sales channels,
we almost completely closed this gap in Q4 by establishing
commercial relationships with new non-sanctioned
counterparties. We expect to eliminate any remaining
difference during the first half of 2023.
Given accelerated inflationary pressures in the global
economy, we are satisfied that the total cash costs at
$942/GE oz were within the cost guidance of
$900-1,000/GE oz. The year-on-year increase of 29% has
obviously left a negative impact on our profitability for 2022.
All-in sustaining costs (AISC) were $1,344/GE oz, also within
the guidance range of $1,300-1,400/GE oz.
Capital expenditure experienced even greater pressure from
the disruptions in the global supply chains and, as a result,
total spend for the full year was $794 million, just 2% above
the upper end of the guidance range ($725-775 million).
Our net debt stood at $2.4 billion, driven mainly by working
capital requirements in a difficult sales and procurement
environment and inflationary pressures, both in operational
and capital expenditure. The net debt/Adjusted EBITDA
ratio by the end of the year was 2.35x. We have accrued a
very strong cash position of $633 million, which more than
covers our short-term refinancing needs.
In Q3 2022, 24 months after the Board approved the project
and six months ahead of the initial plan, we successfully
completed construction and commissioning activities at the
Kutyn heap leach facility. Total production by the year end
amounted to 52 Koz of gold.
In 2023, we plan to commission and start production at the
Voro flotation plant in Q2 and to produce first ore at
Prognoz in Q4.
Creating value for stakeholders and contributing to a safer
environment remain key priorities. We reduced our GHG
emissions intensity by 15% during 2022, compared with our
2019 baseline, and remain on track to achieve our goal of
a 30% reduction in GHG emissions intensity by 2030.
Belief in our capabilities
We are living in the world where changes are more rapid
than ever and uncertainty is unprecedented. In 2022, once
again, the Polymetal team has shown that by working
together we are capable of overcoming novel challenges. I
want to assure all people who have ties with our company
that we will make every effort to continue delivering on our
plans and aspirations.
Vitaly Nesis
Group Chief Executive Officer
Despite the challenging backdrop, underlying net earnings
were $440 million (2021: $913 million). As a result of a lower
Group EBITDA and the increase in real discount rate
increase for Russian assets from 8% in 2021 to 14.1% in
2022 driven by increased country risk premium, a total
pre-tax impairment charge of $801 million (equivalent to a
post-tax amount of $653 million), the Group recorded a net
loss for the period of $288 million in 2022, compared to
profits of $904 million in 2021.
Safety is our No. 1 priority at all times
We are responsible for the safety at work of more than
14 thousand employees and expect the same approach
and standards to be upheld by our contractors. Importantly,
for the third year in a row, we had no fatalities among Group
employees; in 2022, there were also no fatalities among
contractors (2021: 1 fatality). The attention and resources
that the Polymetal team has committed to industrial safety
is also demonstrated in the improvement in work-related
injuries: in 2022, LTIFR decreased by 17% from 0.12 to 0.10,
as reported in 2021.
Progress with development projects
Amursk POX-2, currently the key project in our pipeline, saw
significant negative impact from sectoral sanctions on
imports of specific equipment and materials. Nevertheless,
we progressed construction while delaying the target
start-up date by six months to Q2 2024. As of 1 January
2023, the overall project completion rate is 83%,
engineering and contracting has been completed and the
vast majority of equipment is already on site.
The Amursk POX-2 facility will enable us to both confirm our
global leadership in pressure-oxidation technology and
enable us to treat more than 90% of our refractory flotation
material in-house. The resulting decline in operating costs
and reduction in working capital requirements are expected
to result in significant cash flow tailwinds in both 2024 and
2025.
The POX-3 project, in the feasibility study stage, was mostly
targeted at providing adequate capacity to process material
from Veduga and to treat refractory concentrates from third
parties. Given the reality of sanctions, the Company made
the decision to re-site the project to Kazakhstan to cater
mostly for concentrate produced at Kyzyl. A prefeasibility
study for the facility at the new location will be completed in
Q2 2024. Veduga was also delayed with first production
now expected in the first half of 2027.
12
13
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Group CEO’s statement 2022 achievements
Stability maintained under extreme
external pressures
Operations continued undisrupted
Faced by significant logistical and supply chain
challenges during 2022, caused by the Russia-Ukraine
conflict, Polymetal’s team once again displayed its
resilience and worked together to adapt to the ever-
changing situation. Our operations continued
uninterrupted and we were able to deliver on our
original production guidance and maintain a solid
safety performance.
` Read more in the Market review on page 20
We consistently deliver a strong
operating performance
Under extreme external pressures, beyond our control,
we worked hard to maintain our operational stability and
achieved a 2% increase in gold equivalent production at
1,712 Koz, which was above our production guidance of
1.7 Moz. Declining grades at our more mature assets were
boosted by the results from Nezhda’s first full year of
operations and Kutyn’s initial production.
Focused on a safety‑positive culture
We operate in a high-risk industry and our commitment to
the safety at work of our 14,694 employees is paramount.
There were no fatalities among Group employees for the third
consecutive year and LTIFR decreased by 17% to 0.10,
a validation of strong leadership and risk processes, which
both promote a zero-harm culture.
` Read more in the Operating review on page 28
` Read more in the Sustainability section on page 46
Investing in future growth
Our long-term strategy is to grow the business through our
pipeline and exploration projects. We completed the Kutyn
heap leach project ahead of schedule, producing 52 Koz of
gold in 2022. Production will start at the Voro flotation plant in
2023. First gold production is expected at our major
investment, Amursk POX-2, in Q2 2024 and at Veduga
in 2027.
Sustainability remains key to
our operations
We are committed to creating value for all our stakeholders
while also taking action to minimise the environmental
impacts of our business. Increased renewable energy
consumption to 30% and energy-efficiency initiatives, such
as heat utilisation systems and solar panels, resulted in
a reduction in our GHG emissions intensity in 2022 of 15%,
compared with our 2019 baseline.
` Read more in the Operating review on page 31
` Read more in the Sustainability section on page 44
14
15
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Business model
Defining our capabilities for the future
Our business model, based on key competencies and driving sustainable
value, has proved its resilience in difficult times and assurance for the future.
Our purpose
Deliver long-term
value to all stakeholders
through responsible
and efficient mining.
Our capitals
Financial
We aim to maintain the liquidity and
preserve the Company’s balance
sheet strength.
` Read more on pages 13, 24, 84
Natural
Portfolio of high-grade reserves; water,
energy and fuel to run our operations.
` Read more on pages 220, 237, 244
Human
14,694 employees; attracting and retaining
high-potential employees across
Kazakhstan and Russia; nurturing young
leaders to manage further growth.
` Read more on pages 46, 48, 54, 79
Manufactured
Robust performance of our operating mines
by driving continued operating improvement;
a strong growth pipeline; continuous
extension of life-of-mine by investing
in near-mine exploration.
` Read more on pages 28‑43
Intellectual
Investment in skills and expertise; use of
leading technologies in refractory gold
processing (POX); selective mining;
development of know-how.
Social and relationship
Constructive relationships with
local government and communities;
transparent and productive dialogue
with stakeholders.
` Read more on pages 22, 52, 112, 114
` Read more on pages 18, 45, 76, 80
Factors determining
long‑term growth
Our values
Market trends and
opportunities
` Read more on page 20
Risk management
and sustainability
` Read more on page 96
Governance
` Read more on page 111
16
Delivering on our promises Excelling through teamwork
and trust
Putting safety at the heart
of our business
Leading through
sustainability and
innovation
Our outputs
Our products
` Read more on pages 28‑29
1,450 Koz
Gold production
21 Moz
Silver production
1,712 Koz
GE production
Our footprint
` Read more on pages 56, 59, 74
1,082 Kt
CO2e emissions
(Scopes 1 and 2)
3,344 th. m3
Fresh water withdrawal
15.5 Mt
Tailings waste
e
M i n
Tr ansport
Process
Develo p
al leaders h i p
in refractory o r e
proces si n
b
Glo
e
r
lo
p
x
E
M
orga
e
a
nin
nic
g
f
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r
u
l
o
w
t
h
R
C
e
l
o
c
l
s
e
/
a
i
m
g
Our
strategy
` Read more on
page 22
H
o
i
f
m
i
g
h
E
p
S
a
c
t
G
t
s
ta
S
u
s
t
a
i
n
a
ndards
a
s
s
e
ss
hrough
ment
bility at the core o f a l
` Read more on pages 4 4 , 1 2 0
et
e
h
u st liquidity
M aintaining
d b alance s
s s aspects
r
a
b
o
n
e
s i n
b u
l
Our outcomes
For society
` Read more on pages 18, 51,
77, 78
$669m
of wages and benefits
$23.2m
of social investments to
local communities
46%
of purchases
sourced locally
For nature
` Read more on pages 58, 61, 72
For business
` Read more on pages 22, 38, 42
15%
decrease in GHG
intensity (Scopes 1
and 2), 2019 baseline
Nezhda
ramp-up
and successful
Kutyn launch
49%
decrease in fresh water
withdrawal intensity for ore
processing, 2019 baseline
33
new licensed properties
873 ha
of new forest planted
Global
leadership in pressure
oxidation technology
17
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Stakeholder engagement
Responding
to our
stakeholders
Our licence to operate relies
on the goodwill of a diverse
range of stakeholders and
we engage with them to
understand their concerns
and, more importantly, to
respond proactively. We
invite feedback through a
number of different
channels, which helps us to
identify our material impacts
and informs our decision-
making about future
operations.
Factors set out in section 172 of the
Companies Act 2006 are considered at
Board level and also form part of the Group
culture. By following this decision-making
process, together with the Company’s
purpose, vision and values as well as its
strategic priorities, the Board aims to
ensure that its decisions are fair, consistent
and predictable. See more on Board
stakeholder engagement on page 123.
Employees
Communities
Capital providers
Suppliers, contractors
and customers
Government/local
authorities
Key topics in 2022
Key topics in 2022
Key topics in 2022
Key topics in 2022
Key topics in 2022
• Health and safety
• Human rights
• Compliance with relevant ESG standards
• Support of local healthcare institutions
• Infrastructure development
• Financial contributions and
and best practices
• Salaries, benefits and social packages
• Equal career and professional
development opportunities
• Working and living conditions
• Internal communication
• Training and professional development
How we engage across the Group
• Employee satisfaction survey
• Worker councils and their
representatives
in-kind donations
• Human rights
• Grievance mechanisms
• Skills development and local
employment
• Environmental and health impacts
• Local culture, lifestyle, language and
traditions
• Procurement from local businesses
How we engage across the Group
• Grievance mechanisms (telephone,
• Internal Hotline, website, intranet and
email, etc.)
feedback mechanism
• Meetings and face-to-face
communication with management
• Performance reviews
• Employee questions to the Group CEO
and Board with internally published
responses
How we engage at Board level
• Safety and Sustainability Committee
reviews overall safety statistics to spot
any emerging trends and discuss
preventive actions
• Nomination Committee reviews an HR
report twice yearly, including employee
survey results, and monitors talent
management programmes. In 2022, the
Board endorsed a new employee
mentoring programme
• Opinion polls and questionnaires
• Public hearings
• In person and online meetings with
Company representatives, including
annual results meetings and site visits
• Press conferences and Q&As
• Working groups
• Corporate disclosure: website,
sustainability reports, media
How we engage at Board level
• Annual review of social engagement with
communities
• Review of corporate responsibility,
community activities and volunteering
programmes
• Social investments included in all
strategic presentations
• Review of general approach to social
• Remuneration Committee benchmarks
investments
overall salary trends and sets
remuneration for the executive team,
taking into account remuneration
practices in the Group
How we respond
• Ongoing dialogue with local communities
• Social investments in the development of
• The Board interacts with Group
territories
employees both during Board and
Committee meetings, at site trips and by
way of regular e-mails
• Ensuring the rights of indigenous
communities and supporting them to
flourish
• Board engagement with targeted groups
• Engaging local suppliers in procurement
• Financial and operational performance
and business resilience
• Potential impact of international
sanctions on sales and projects
development
• Capital allocation and dividends
• Alignment of shareholder and
management interests
• Investment projects development
• Mergers and acquisitions
• Refinancing; attracting new long-term
financing
• Sustainability performance and
climate-change targets
• Health and safety
• Resource base diversification beyond
gold and silver
How we engage across the Group
• Integrated Annual Report
• Timely information disclosures via
corporate website and accredited news
agency websites
• Supply chain resilience and transparency
• Compliance with Polymetal’s standards
and policies, with a focus on safety,
environmental stewardship and labour
practices
• Financial performance
• Supply chain risks caused by sanctions
and logistics issues
How we engage across the Group
• Direct correspondence
• Contractual relationships
• Meetings and training
• Industry conferences and exhibitions
How we engage at Board level
• Supply chain strategy overview
• Regular monitoring of robustness and
costs
• Regulatory compliance, including all
applicable sanctions and counter-
sanctions
• Taxes
• Labour issues
• Health and safety
• Environmental responsibility
• Infrastructure and community
development
• Local employment
How we engage across the Group
• Working groups and meetings
• Direct correspondence
• Engaging with external legal advisors
• Industry conferences
How we engage at Board level
• Review of applicable tax regulations in
• Ensuring that suppliers apply the same
areas of operation
health, safety and environmental
protocols as Polymetal’s employees
• Implementation of governance tools in
• Implementation of relevant policies,
including sanctions policy
• Monitoring the implementation
of environmental practices
• Shareholder meetings with Board and
the supply chain
Committee Chairs
• Capital Markets Days and other
conferences
• Annual General Meetings
• Quarterly update from the Head of
Investor Relations
How we engage at Board level
• Annual General Meetings
• Capital Markets Days and other
conferences
• Presentations and conference calls for
institutional and individual investors
• Direct communication
How we respond
• Corporate governance
system that meets stock exchange
requirements
• Financial and operational KPIs
• Transparent Dividend Policy and capital
• Supervising the drafting and
• Review of social investment programmes
How we respond
• Social partnership agreements
• Ensuring best practice in labour
relations, environmental management
and safety, and communicating them to
the authorities
• Transparent tax payments and disclosure
• The strictest compliance with all
applicable sanctions and counter-
sanctions
` Read more on pages 82, 83
implementation of procurement policies,
the Supplier Code of Conduct and other
Group policies
• Monitoring the development of ESG
evaluation criteria for suppliers
• Modern Slavery Statement review
(including transparency in the
supply chain)
How we respond
• Logistics routes optimisation
• Procurement centralisation
• Reconfiguring the pool of potential
suppliers for our operations in Russia to
ensure the availability of principal
consumables and equipment
• Reverse engineering practice for critical
inventories
• Full compliance with business ethics
standards
procedures and training
` Read more on page 76
management
• Setting the same safety requirements for
• Risk management system
• Financial discipline and sufficient liquidity
contractors as for our employees
• Developing questionnaires to assess
maintenance
` Read more on pages 24, 84
suppliers against ESG criteria
` Read more on pages 20, 28, 81, 82
of employees
How we respond
• Ensuring safe working conditions
• Salaries comparable with or above
industry levels
• Effective system of personnel
development, improving professional and
managerial skills
• Providing favourable social and living
conditions for employees
• Offering volunteering programmes
• Collaborating with universities to ensure
the talent pipeline
• Open dialogue and feedback
mechanisms
` Read more on page 50
18
19
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Market review
Global and local markets in 2022
Significant volatility in both gold and silver prices, throughout 2022, was due to
geopolitical tensions caused by the Russia-Ukraine conflict, worldwide inflation and
China’s continuing zero-Covid restrictions.
Global trends
Commodity price volatility
Throughout 2022, a combination of geopolitical tension,
inflationary fears and a zero-Covid policy in China contributed
towards considerable anxiety among international markets, which
led to significant volatility in both gold and silver prices. In March,
following Russia-Ukraine conflict, LBMA gold and silver prices hit
an annual maximum of $2,039/oz and $26.2/oz, respectively.
Conversely, the minimum values for metals were reached in the
second half of 2022, due to aggressive monetary tightening by
various central banks. In September, gold slumped to $1,618/oz,
as silver reached the bottom at $17.8/oz. Average 2022 metal
prices were $1,800/oz for gold (2021: $1,799/oz) and $21.8/oz for
silver (2021: $25.2/oz).
Worldwide inflation
The tightening financial conditions in most regions, Russia-
Ukraine conflict and the lingering COVID-19 pandemic all
weighed heavily on the global inflation. In addition to demand-pull
factors, ongoing geopolitical tension and sanctions on Russia
fuel contributed towards elevated energy prices. 2022 global
inflation reached 9% (Russia – 12%, Kazakhstan – 20%, United
States – 6.5%).
Local currencies
Although economic sanctions were implemented against Russia,
the average annual Rouble rate stood firm at 68.6 RUB/$
(2021: 73.7 RUB/$) due to contracted demand for the hard
currency, with a slight fall to 70.3 RUB/$ at the end of the year.
Consistent geopolitical tension within the CIS region, which
strengthened the Dollar, as well as a decline in Kazakhstani oil
production, subsequently contributed to a weak average Tenge
of 461 KZT/$ (2021: 426 KZT/$), closing the year at 463 KZT/$.
Kazakhstan GDP grew 3%, while the Russian economy
contracted by 3% on the back of sanction impact.
Implications for Polymetal and responses
Revenue decreased 3% year-on-year to $2,801 million due to
lower average gold and silver prices. A surge in global inflation
and the Rouble strengthening caused significant pressure on
cash costs. TCC were at $942/oz (2021: $730/oz) and capital
expenditure was $793 million (2021: $759 million), although
TCC and AISC stayed within the Company’s guidance, while
capital expenditure was slightly higher.
` Read more on page 84
Sanction risks
In 2022, a great number of Western sanctions were imposed on
Russia, Russian companies, banks and individuals, which
affected ongoing business, investment projects, international
trade, financing and other areas of business in Russia. Russia, in
turn, introduced counter-sanctions, which included restricted
capital movements and corporate actions against residents of
“unfriendly” jurisdictions.
Implications for Polymetal and responses
The Group adheres strictly to all relevant laws and has
implemented comprehensive measures to ensure compliance
with all international sanctions and counter-sanctions. While
Polymetal believes that targeted sanctions against the
Company are unlikely, they cannot be completely ruled out.
Polymetal has announced its intention to re-domicile to
a “friendly” jurisdiction in order to enable the Company to
undertake business activites such as modifications to the
asset-holding structure to ensure distinct ownership between
its assets in Kazakhstan and Russia.
` Read more on pages 10, 99, 106, 154
Supply chain disruptions
In 2022, the Western countries imposed sanctions against Russia
prohibiting the export of industrial goods and technologies.
Implications for Polymetal and responses
The lack of access to consumables, spare parts and
equipment has posed a risk to the Company’s operations and
development projects, including in Kazakhstan. Procurement
has been largely adapted to the current environment by
replacing sanctioned and self-sanctioned equipment,
consumables, and spare parts with alternatives within Russia
and from other countries. Most existing contracts with foreign
suppliers continue to be honoured, and the Company has
accumulated significant reserve stock of critical items.
` Read more on pages 12, 81, 101
Sales channels restructuring
As a result of the sanctions imposed against Russian gold, the
traditional sales structure was significantly affected. Covid-related
restrictions in China also contributed to disruptions in
concentrate shipments.
Implications for Polymetal and responses
During the first half of 2022, Polymetal accumulated 130 Koz
of GE in gold and silver bullion inventory. The bulk of it was
successfully sold during the second half of the year through
the newly established, alternative sales channels. This
enabled Polymetal to stabilise revenue dynamics and
normalise net debt level.
` Read more on pages 12, 29, 85, 86
Mining industry trends
Gold and silver demand
In 2022, gold demand increased by 18% to 4,741 tonnes, the
strongest in over a decade. Although jewellery consumption
decreased by 3% to 2,086 tonnes, investment demand rose 10%
to 1,107 tonnes, with a 2% increase in demand for gold bars and
coins. ETF holdings fell by a smaller amount compared with 2021
(-110 tonnes vs -189 tonnes). Fear of a global crisis sparked
demand from the central banks, hitting the highest level since
1967, totalling 1,136 tonnes compared with 450 tonnes in 2021.
Total annual gold supply increased 2% to 4,755 tonnes, with mine
production reaching a four-year high of 3,612 tonnes.
Although 2022 was a turbulent year for silver, advances in
technology and green infrastructure, as well as geopolitical
tension, kept demand intact. Support also came from investors
fearing high inflation, recessionary concerns and buying-on
price dips.
The social licence to operate
Mining activities frequently take place in remote locations with
limited infrastructure and economic options. Many mining sites
are located near populated areas, indigenous communities and
environmentally sensitive regions. In order to obtain operating
permits and maintain sustainable operations, mining companies
must contribute to local communities through job creation, tax
payments and environmental responsibility.
Implications for Polymetal and responses
We remain open and transparent with our stakeholders.
The level of public interest in our operations is increasing.
Ongoing, rigorous engagement, plus regular feedback, helps
us maintain our social licence to operate and reduce risk.
` Read more on page 18
Global reserves depletion
The world’s major gold miners have seen a decline in their
economically minable gold reserves over the past ten years, as
exploration budgets continue to shrink. Acquisitions to replenish
reserves or bolster production have become the preference of
many.
Implications for Polymetal and responses
Polymetal relies on strategic exploration rather than
acquisition.
The Company carries out brownfield and grassroots
exploration, including joint ventures with junior explorers, and
successfully replaces depleted reserves through the addition
of new discoveries and reserves at existing mines. We have
a pipeline of ambitious exploration projects, which we expect
to contribute further to our reserves base and increase
life-of-mine.
` Read more on pages 30, 220
Reducing environmental impacts
There is an increasing call for companies, particularly those
deemed high polluters (like mining), to take action to reduce
negative environmental impacts. Carbon footprint, water
discharge, biodiversity, reforestation, tailings safety and cyanide
management are key focus areas. Stakeholders expect best
practice and standards for these as well as ambitious emission
and net-zero targets.
Implications for Polymetal and responses
Polymetal remains committed to its environmental
and climate strategy.
Greenhouse gas emissions intensity reduced by 15% in 2022,
compared with the 2019 baseline, and can be attributed to
increasing our renewable energy consumption (30% of total
energy consumption) and also to energy efficiency initiatives,
such as improving heat utilisation systems and the
introduction of solar plants.
In 2022, the share of water we reused and recycled amounted
to 91% of the total water consumption at our sites (compared
with 90% in 2021). In 2022, fresh water intensity for ore
processing decreased by 49% (compared with the 2019
baseline) to 138 m³/1000 t of ore processed.
` Read more on pages 56, 58, 62, 72
Global refractory processing
demand
Asia Pacific maintains its status as the largest region in the
refractory market. China, however, is actively tightening its
environmental regulations and began restricting refractory
concentrate imports, which will increase the demand for
refractory processing elsewhere.
Implications for Polymetal and responses
Polymetal prioritises refractory gold in its strategy.
Refractory ores make up 74% of Polymetal’s ore reserves and
are likely to increase. Our Amursk POX plant, Russia’s largest
(by production), processes refractory concentrates using
low-impact environmental technology. Our larger Amursk
POX-2 investment will more than double processing capacity
and allow processing of double refractory materials,
eliminating the dependence on and higher costs of Chinese
offtake. We have initiated a feasibility study for a third plant,
POX-3, to meet third-party demands and the extension of our
own reserve base and would allow to achieve operational
independence of the Kazakh operations.
` Read more on pages 7, 13, 31, 36
20
21
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Our strategy
Driven by excellence and responsibility
We are unwavering in our pursuit of growth to create value
and accountability for our actions.
Our strategic priorities
Meaningful organic growth
Build and advance long-term growth pipeline
We want to secure high-quality sources of long-term growth
through advancing development projects, investing in our own
greenfield exploration programme and extending life-of-mine by
investing in near-mine exploration. We are actively looking at targets
within the Former Soviet Union where we can create value with our
core competencies. This will allow us to generate free cash flow
and translate it into significant dividends.
Global leadership in refractory ore processing
Unlocking the value of refractory reserves
Excelling in environmentally friendly refractory ore processing, we
aim to process 100% of the Company’s refractory ore in-house.
High standards of ESG through impact assessment
Maintain high standards of corporate governance
and sustainable development
Maintaining high standards of corporate governance and
sustainable development gives us a licence to operate and the
much-needed trust of all stakeholders. Health and safety at our
operations is a key priority.
Maintaining robust liquidity and balance sheet
Strong balance sheet provides resilience to our
value creation strategy
We aim to maintain the liquidity and preserve the Company’s
balance sheet strength which in turn will provide us with flexibility
for further growth and resumption of dividend payments.
Risks
• Production risk
• Construction and
development risks
• Supply chain risk
• Exploration risk
• Production risk
• Construction and
development risks
• Supply chain risk
• Market risk
• Health and safety risk
• Environmental risk
• Human capital risk
• Supply chain risk
• Market risk
• Currency risk
• Liquidity risk
Capital allocation
Our strategy is built upon strong
capital discipline.
Remuneration
The link between performance
and remuneration is key.
` Read more on page 24
` Read more on page 132
Our focus in 2023
• The Company targets stable production and reiterates its
current production guidance of 1.7 Moz of GE in 2023.
• Strong contribution from Kutyn, Nezhda and the Voro
flotation plant, compensating for the planned grade-driven
decrease in production at Dukat, Albazino and Varvara.
• At Prognoz, conventional open-pit mining will commence
with the first ore mined in Q4 2023.
• We plan to complete several investment projects at existing
operations in 2023, which will help drive cost levels down in
2024. At Mayskoye, the backfill plant construction project
will enter full-scale construction in 2023.
• The scope of operational activities and capital project
advancement is not expected to change materially.
• Keeping Amursk POX-2 construction on track for launch
in 1H 2024. The start-up of the gravity concentrate
processing circuit is planned for Q1 2023. This will allow
full in-house processing of gravity concentrates from
Nezhda.
• Subject to Board approval, the investment decision for
POX-3 is expected in Q2 2024, potential start-up
in H2 2028 and would enable operational independence
of Kazakh operations.
• Ultimate goal of zero fatalities and LTIFR ≤ 0.2 at
•
all operations.
Improve equality and diversity, with at least 33% of women
in the Talent Pool.
• Follow our 2030 GHG emissions and freshwater intensity
reduction trajectories.
• Ensure tailings safety and continuous transition to dry
stacking.
• Compliance with global and local best practice.
• Deleveraging and maintaining a comfortable leverage
level of less than 2x Net Debt/ Adjusted EBITDA.
• Return to positive free cash flow generation.
• All of the 2023 debt repayments are well covered by
available cash balances.
Performance in 2022
1.71 Moz GE
produced in 2022, up 2% year‑on‑
year and in line with original
guidance
27.3 GE Moz
at 3.6 g/t
Ore reserves at 1 January 2023
Amursk POX-2
project is 83%
complete
We advanced construction of Amursk
POX‑2, which will fully de‑risk
our business model by bringing all
concentrate processing in‑house and
eliminating our dependence on
concentrate offtake from Q2 2024.
Engineering and contracting has
been completed and the vast majority
of equipment is already on site.
-15%
reduction in GHG intensity (baseline
2019, Scope 1 and 2)
0
fatalities
Kutyn
First production six
months ahead of the
original schedule
Nezhda
First full year of
operations
POX-3
We made a decision to
relocate POX‑3 from
Russia to Kazakhstan due
to sanction limitations,
found an alternative site
and will complete the
feasibility study there in
2024. The project will
allow for processing own
high‑ and low‑carbon
concentrate from Kyzyl
and third‑party gold
concentrates.
$23.2m
invested in social projects
External recognition of
ESG efforts with high
scores from
Sustainalytics,
FTSE4Good, Vigeo Eiris,
ISS ESG Corporate Rating
$633m
Cash deposited with non‑sanctioned
financial institutions
2.35x
Net debt/Adjusted EBITDA
5%
The average cost of debt
supported by our ability
to negotiate competitive
margins given the
excellent credit history of
the Group
1 Excluding water for non-technological purposes.
22
23
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Capital allocation
Managing working capital management,
liquidity and investment
In a highly uncertain and challenging environment, our ultimate goal is to
preserve the fundamental value of the business and deliver future dividends
to our shareholders.
Our capital allocation priorities
Strong balance sheet
and liquidity
Dividends
We aim to maintain a liquidity
and financing structure that
will enhance the robustness
of our business in the current
tough climate.
Paying dividends to all
shareholders was once
formulated as the
fundamental mission of the
Company and we are working
diligently to restore this
ability in light of multiple
external uncertainties.
Disciplined,
strategic growth
investments
By prioritising high‑return
investments that provide
development optionality, we
have created a successful
and resilient business that
generates significant capital
return across cycles and
acts as a platform for
sustainable growth.
Strong balance sheet and liquidity
We believe that a strong balance sheet provides
resilience to our value-creation strategy. We aim to
maintain the liquidity and financing structure that will
enhance the robustness of our business in the
current tough climate.
We maintain sufficient undrawn credit lines in various
currencies, which provide refinancing optionality and a
strong cash position in order to maintain operational,
stability. We stress test our liquidity through modelling
and forecasting different scenarios.
In 2022, Polymetal’s leverage increased to 2.35x Net
debt/Adjusted EBITDA (2021: 1.13x). Net debt increased
by $0.7 billion to $2.4 billion during the year. The increase
in net debt was driven by unsold metal inventory
accumulation, accelerated purchases of equipment and
spares, funding of critically important contractors and
suppliers, and upward Dollar re-valuation of Rouble-
denominated debt. Notably, despite unprecedented
challenges for the Company, in the second half of 2022,
net debt decreased by $0.4 billion on the back of strong
positive free cash flows from the unwinding of working
capital.
Our cash position increased by 52% to $633 million at
31 December 2022, allowing the business to be more
sustainable in the challenging macroeconomic
environment.
The total debt will mature as follows: 17% in 2023; 24% in
2024; 19% in 2025, 40% in 2026 and beyond. The portion
of debt maturing in 2023 is fully covered by available cash
balances, while the Company will focus on securing new
long-term debt over the course of 2023 to cover the
refinancing needs of 2024 and beyond.
` Read more on pages 84, 95
Dividends
Disciplined, strategic growth investments
Paying dividends to all shareholders was once
formulated as the fundamental mission of the Company
and we are working diligently to restore this ability.
Our Dividend Policy stipulates a minimum 50% pay-out of
underlying net earnings, paid each half year (subject to
absolute Net debt/ previous 12-months’ Adjusted EBITDA
ceiling of 2.5x). In addition, the Board has discretion to
increase the final dividend for the second half year to a
maximum annual pay-out of 100% of free cash flow. In
making this decision, the Board considers, among other
factors, the macroeconomic outlook, debt position and
future investment requirements of the Group.
From free cash flow from 2012 to 2021 totalling $2.7 billion,
Polymetal has paid out $2.6 billion in annual dividends to
shareholders since the IPO.
In 2022, the Group’s free cash flow was negative for the first
time since 2011 and amounted to $445 million, while the
Group’s leverage increased to 2.35x Net Debt/EBITDA,
somewhat above the comfort level of 2.0x.
The Board carefully evaluated the liquidity and solvency of
the business in light of multiple external uncertainties.
Taking into account a significant decline in operating cash
flows, challenges in establishing new sales channels faced
by the Group in 2022 and the short-term liquidity
headwinds, the Board decided to permanently cancel the
full-year 2021 dividend. Given the continuing impact of
these external uncertainties, the Board will not propose any
interim or final 2022 dividends to allow the Group to
strengthen its cash position and enhance its resilience in
a highly uncertain climate.
` Read more on pages 11, 84, 157
We ensure that we create long-term strategic value for
our shareholders, employees and communities.
By prioritising high-return investments that provide
development optionality, we have created a successful
and resilient business that generates significant capital
return across cycles and acts as a platform for
sustainable growth.
Our strategy is to operate a portfolio of high-quality and
long-life assets that support low-carbon and climate-
change-resilient growth, from which we will deliver
sustainable shareholder returns. In 2022, we were focused
on business continuity and advancement of the key
strategic projects.
• We revised the portfolio and execution timeline of growth
projects based on the changes in operating environment.
• Amursk POX-2 and other development projects
progressed in line with revised schedules. In Q3 2022,
we successfully completed the construction and
commissioning activities at Kutyn heap leach facility.
• 2023 will be marked by the launch of the Voro flotation
plant and start of mining at Prognoz.
• Despite external pressures, we pursue value creation
through joint ventures with junior explorers
• We created social value for our employees and
communities through social investments.
In 2022, capital expenditure was $793 million
(2021: $759 million). This comprised $378 million
(2021: $418 million) of development capital expenditure,
$115 million (2021: $140 million) of stripping and
underground development capital expenditure, $275 million
(2021: $188 million) of sustaining capital expenditure and
$24 million (2021: $12 million) invested in exploration. Much
of the year’s increases relate to high inflation and continued
logistical challenges exerting significant upward pressure on
capital expenditure.
` Read more on pages 31, 43, 93
24
25
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Key performance indicators
Year-on-year performance
Financial
Revenue
($m)
-3%
Total cash costs1
All-in sustaining cash costs1
($/GE oz)
+29%
+30%
Capital expenditure
($m)
+5%
Total cash costs
All-in sustaining cash costs
1,344
Sustainability
GHG intensity
(kg/GE oz)
Operating
-15%
Fresh water
withdrawal intensity2
(m³/Kt of processed ore)
-11%
Gold equivalent
production3
(Koz)
+2%
3,000
2,000
1,000
2,865
2,890
2,801
1,200
900
600
300
1,030
942
874
730
638
800
600
400
200
759
794
558
800
600
400
200
730
677
632
300
200
100
171
155
138
2,000
1,500
1,000
500
1,637
1,677
1,712
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
Top-line indicator, heavily dependent on
commodity prices but also driven by the
delivery of production volumes.
In 2022, revenue decreased by 3%
year-on-year to $2,801 million. Despite the
initial gap between production and sales in
Q2-Q3 2022 caused by disruption in sales
channels, the Group almost completely
eliminated it in Q4 to a new set of
counterparties.
High-grade, full capacity utilisation and
continued operational improvement, as well
as foreign exchange rates and oil price are
the key drivers behind total cash costs
(TCC) per ounce.
Our rigorous approach to all investment
decisions ensures tight controls on capital
expenditure, boosting the return on capital
invested for shareholders and the
sustainable development of the business.
TCC were $942/GE oz, up 29% year-on-
year, owing to sharp increase in domestic
inflation and escalation of logistical costs,
combined with the planned grade declines
in ore processed. AISC increased by 31% to
$1,344/GE oz, driven by the same factors.
Capital expenditure was $794 million, up 5%
year-on-year, reflecting accelerated
purchases and contractor advances for
ongoing projects (most notably, Amursk
POX-2), combined with inflationary and
logistical pressures on the sustaining capex.
In line with the goals of the Paris
Agreement, we seek to decarbonise our
operations by switching to low-carbon
electricity supplies and mining fleet,
generating more solar energy and
improving energy efficiency. We aim to
reduce our GHG intensity by 30% by 2030
and develop long-term goals further. In
2022, we reduced our GHG intensity
(Scope 1 and 2) by 7% year-on-year and by
15% compared with 2019 baseline.
Our approach is to minimise fresh water
withdrawal by recycling water at our plants
and capturing mine water and storm run-off
for further reuse. Alongside monitoring
water use volumes, we take full
responsibility for the efficient treatment of
water that we discharge to local water
bodies. In 2022, our freshwater intensity
decreased by 11% year-on-year and by
49% compared with 2019 baseline.
Annual target for gold equivalent (GE)
production is an indicator to the market of
our confidence in delivering stable and
reliable growth.
In 2022, gold equivalent output amounted
to 1,712 Koz, a 2% increase year-on-year
and in line with the original production
guidance of 1.7 Moz.
Relevance to strategy
Relevance to strategy
Relevance to strategy
Relevance to strategy
Relevance to strategy
Relevance to strategy
Meaningful organic growth
Meaningful organic growth
Global leadership in refractory
ore processing
High standards of ESG
through impact assessment
High standards of ESG
through impact assessment
Meaningful organic growth
KPI linked to executive remuneration
KPI linked to executive remuneration
KPI linked to executive remuneration
KPI linked to executive remuneration
KPI linked to executive remuneration
Adjusted EBITDA1
($m)
-31%
Dividends proposed
for the year
($/share)
-25%
Underlying net earnings1
($m)
-52%
Lost time injury
frequency rate (LTIFR)
-17%
Share of female
employees
(%)
Stable
Ore reserves
(Moz)
-9%
2,000
1,500
1,000
1,661
1,464
1,017
1.5
1.0
0.5
1.29
0.97
2020
2021
2022
2020
2021
1,200
900
600
300
0
2022
1,052
913
440
0.15
0.10
0.05
0.12
0.12
0.10
25
20
15
10
5
21
21
21
30
20
10
27.9
29.9
27.3
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
Adjusted EBITDA provides an indicator of
our ability to generate operating cash flows
from the current business.
In 2022, Adjusted EBITDA decreased by
31% year-on-year to $1,017 million, against
a backdrop of higher costs.
Taking into account the Group’s leverage
(2.35x Net debt/EBITDA, above the
comfortable level of 1.5x), significant level of
uncertainty and continuing impact of the
external pressures, the Board has decided
not to propose any dividend for 2022 in
order to allow the Group to enhance its
resilience in a highly volatile environment.
Underlying net income is a comprehensive
benchmark of our core profitability,
excluding foreign exchange gains/losses,
impairments and one-off non-recurring
items.
Underlying net earnings in 2022 decreased
by 52% to $440 million, reflecting the
decrease in operating profit.
An improvement in the health and safety
record at our operations, with a goal of zero
fatalities, is a key priority. There were no
fatal accidents in 2022. However, lost-time
incidents still took place among Polymetal’s
workforce and contractors. Lost time injury
frequency rate (LTIFR) among the Group’s
employees in 2022 decreased to 0.10.
We value a diversity of views and
backgrounds among our employees,
aiming to attract more women to careers in
the male-dominated mining industry. Our
diversity action plan sets gender diversity
targets for our existing development
programmes (such as Talent Pool and
Research and Development Conference)
and introduces new initiatives to inspire
women into leadership roles. In 2022, the
proportion of women in our workforce
remained at 21% (2021: 21%).
Extending life-of-mine through near-mine
exploration and new discoveries from
greenfield exploration both contribute to
the Company’s long-term growth
prospects.
In 2022, Group Ore Reserves decreased by
9% to 27.3 Moz of GE, mostly due to
mining depletion, partially offset by the
successful exploration results at Omolon
and Voro hubs. Polymetal GE grades
continue to be one of the highest within the
sector globally.
Relevance to strategy
Relevance to strategy
Relevance to strategy
Meaningful organic growth
Maintaining robust liquidity
and balance sheet
Maintaining robust liquidity
and balance sheet
Relevance to strategy
Relevance to strategy
Relevance to strategy
High standards of ESG
through impact assessment
High standards of ESG
through impact assessment
Meaningful organic growth
1 Defined in the Alternative performance measures section on pages 218-219. Reconciliation to IFRS measures on pages 90-91.
2 Excluding water for non-technological purposes.
3 Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for previous years restated accordingly (120:1 Au/Ag conversion ratio was used previously).
26
27
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review
Delivering on production guidance while
maintaining safety standards
Polymetal met the unprecedented circumstances of 2022 head on with uninterrupted
operations that enabled the Company to both deliver on its original production guidance
and maintain a solid safety performance.
Solid performance despite severe
external pressures
In 2022, despite significant logistical and supply chain
challenges, operations continued undisrupted. The
Company’s gold equivalent (GE) production for the year
amounted to 1,712 Koz, an increase of 2% over 2021 and in
line with the original production guidance of 1.7 Moz.
Kazakhstan’s GE production declined by 3%, driven by a
planned grade decline at Kyzyl. Russian GE production grew
by 5%, on the back of the first full year of operations at
Nezhda and initial production at Kutyn, compensating for
declining grades at mature assets.
Amursk POX-2 and other development projects progressed
in line with revised schedules. 2023 will be marked by the
launch of Voro flotation plant, the start of mining at Prognoz
and the commissioning of the active cyanidation section at
Amursk POX-2.
Gold production for the full year was up 2%, while silver
output increased by 3%. Gold sales of 1,376 Koz were stable
year-on-year, while silver sales were up 6% at 18.5 Moz. The
bulk of the accumulated bullion stockpile was successfully
sold down in the Middle East and China. Revenue for Q4
2022 was up by 30% year-on-year, the highest quarterly
revenue since the Company started. The Company hit the
$1 billion mark as Polymetal sold down the metal and
concentrate inventory accumulated in the previous quarters.
We expect to close the remaining gap between production
and sales during the first half of 2023.
No fatal accidents occurred among the Group’s employees
and contractors in 2022 (2021: Group 0; contractors 1). Lost
time injury frequency rate (LTIFR) among the Group’s
employees decreased by 17% year-on-year to 0.10. Days lost
due to work-related injuries (DIS) fell by 42% year-on-year to
877. Wherever possible, Polymetal applies digital
technologies to improve the safety of workplaces.
To read more about precautionary and safety procedures at
all production sites and offices, please refer to page 46.
Analysis of production results
Mining
Stripping volumes in 2022 grew by 3% to 211.1 Mt of rock
moved, driven mostly by stripping at Albaizno and
accelerated stripping activities at Omolon. At Albazino, the
waste increase was driven by the Farida pit and Kutyn
development. At Omolon, waste jumped due to stripping at
Burgali open-pit. Open-pit mining commenced at River pit
(Varvara). At Mayskoye, open-pit mining has been completed.
Underground development increased by 3% to 98 km
(2021: 96 km), mainly due to ramping-up the Ekaterina and
Anfisa underground mines at Albazino, as well as
underground development at Primorskoye (Dukat hub).
Underground mining at Burgali commenced and will replace
ore tonnage from the Burgali open-pit.
Total ore mined increased by 24% year-on-year to 19.5 Mt
(2021: 15.6 Mt), mainly on the back of ramp up at Nezhda,
supported by the Kutyn and Farida development at Albazino,
as well as the ongoing Emmy pit development at Svetloye.
Processing
The Group’s volume of ore processed increased by 16%,
compared with the previous year, to 18.3 Mt (2021: 15.8 Mt),
driven mostly by the newly launched Nezhda and Kutyn
(Albazino hub). Other mines operated at a stable pace.
The average GE grade in ore processed decreased by 4%
year-on-year to 3.6 GE g/t (2021: 3.8 GE g/t), mostly
attributable to the planned grade decline towards a reserve
average at Kyzyl (GE decreased from 6.2 g/t to 5.5 g/t, but
recoveries remained stable despite this), at Dukat (silver
grade decrease in ore processed at both flotation and
Merrill-Crow circuits) and at Albazino (gold grade in ore
processed decreased as the high-grade Anfisa open-pit was
fully depleted).
The commissioning of Kutyn heap
leach and full ramp up at Nezhda
supported a solid operational performance.”
Production and sales
In 2022, Polymetal continued to deliver a solid set of
operating results. Production grew by 2% year-on-year to
1,712 Koz GE, in line with the original production guidance of
1.7 Moz.
Kyzyl continues as the largest individual contributor to the
Group’s overall output: full-year gold production was
330 Koz, an 8% decrease year-on-year on the back of the
planned grade decline towards a reserve average. Varvara
GE output grew by 7% to reach 211 Koz, driven by the higher
Komar ore grade and better recoveries. In total, Kazakh
operations delived 541 GE Koz (32% of the Group’s
production).
GE production at Dukat remained unchanged at 292 Koz,
positively impacted by direct high-grade ore shipments from
Primorskoye, compensating for grade declines at other
mining areas. At Albazino, the total GE output was down 8%
year-on-year to 230 Koz due to the planned depletion of
Anfisa open-pit and negative recovery rate dynamics
attributable to the increase of share of oxidised ore from
Ekaterina mine. This was partially compensated by the
contribution from the recently launched Kutyn heap leach,
which delivered 52 Koz of gold. At Omolon, GE production
was down 8% year-on-year to 199 Koz on the back of a
planned grade decline; the Merrill-Crowe circuit at the
Gold equivalent production by mine in 2022
(GE Koz)
Kazakhstan
Russia
104
120
93
1,712
133
199
211
230
292
330
Kyzyl
Dukat Albazino/
Amursk
Omolon Varvara
Mayskoye Svetloye
Voro
Nezhda
Total
Kubaka mill remains idle. Gold production at Mayskoye was
14% lower year-on-year at 120 Koz, due to a decrease in
grade and recovery stemming from low-grade and highly
carbonaceous open-pit ore. In the first full year of operation,
Nezhda reached its nameplate capacity and recovery, and
delivered total annual production of 133 GE Koz.
GE production at Svetloye decreased by 5% to 104 Koz,
mostly due to the negative grade dynamics but partially
compensated by Emmy pit development, which drove
increases in ore mined and grade processed. Voro GE
production was stable at 93 Koz on the back of processing
high-grade third-party and Pesherny feedstocks.
Metal sales in 2022 were at 1,622 Koz of GE, a decrease of
1% compared with 2021. The remaining gap between
production and sales is expected to close during the first half
of 2023. While most of the sales comprised refined metals,
we continued to sell concentrates from Dukat (gold/silver),
Varvara (gold/copper), Mayskoye (refractory gold), Kyzyl
(double refractory gold), Albazino (gold) and Nezhda (gold/
silver) to offtakers. Offtake is one of our core competencies:
it allows us to maximise our margins and achieve an optimal
combination of transportation costs and treatment charges/
recoveries.
Key operating highlights
Waste mined, Mt
Underground development, km
Ore mined, Mt
Open-pit
Underground
Ore processed, Mt
Average grade in ore processed
(gold equivalent, g/t)
Production
Gold, Koz
Silver, Moz
Gold equivalent, Koz
Sales
Gold, Koz
Silver, Moz
Gold equivalent, Koz1
2022
2021 Change. %
211.1
98.0
19.5
15.4
4.1
205.9
95.5
15.6
11.7
4.0
18.3
15.8
+3%
+3%
+24%
+32%
+3%
+16%
3.6
3.8
-4%
1,450
21.0
1,712
1,422
20.4
1,677
1,376
18.5
1,622
1,386
17.5
1,640
+2%
+3%
+2%
-1%
+6%
-1%
Average headcount
14,694
13,392
+10%
Safety
LTIFR (Employees)2
DIS (Employees)3
Fatalities
Employees
Contractors
0.10
877
0.12
1 516
-17%
-42%
–
–
–
1
NA
NA
28
29
1 Based on actual realised prices.
2 LTIFR = lost time injury frequency rate per 200,000 hours worked. Company employees only are taken into account.
3 DIS – days lost due to work-related injuries. Company employees only are taken into account.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Ore Reserves and Mineral Resources as at
1 January 20231
Exploration areas and volumes
(mine site exploration excluded)²
Ore Reserves reconciliation
Operating review continued
Polymetal did not fully replace its ore depletion and recorded
declining ore reserves in 2022. The exploration season was
severely affected by the indirect impact of sanctions placed
on, amongst other things, imports of diamond drilling spares
and materials into Russia. We remain confident in the
Group’s ability to grow our high-quality reserve base due to
several upcoming Ore Reserves revaluations and estimates
and expect the resumption of the upward trend in 2023.
2023 targets
In 2023, Polymetal will continue to invest in both near-mine
and greenfield exploration projects.
The key objectives are:
• Re-evaluate Ore Reserves at Kyzyl.
• Prepare an initial Ore Reserve estimate at Talgiy (Albazino).
• Prepare an initial Ore Reserve estimate at Pavlov (Voro hub).
Ore Reserves and Mineral Resources structure
by metal as at 1 January 2023
Gold
Kazakhstan
Russia
Silver
Total
Ore Reserves Mineral Resources
90%
46%
44%
10%
100%
91%
14%
77%
9%
100%
Tonnage
Mt
Grade
GE, g/t
Content
GE, Moz
Ore Reserves
Proved
Probable
Proved+Probable
Mineral Resources
Measured
Indicated
Measured+Indicated
Inferred
68.1
165.3
233.5
26.9
55.8
82.7
94.1
Measured+Indicated+Inferred
176.8
2.8
4.0
3.6
3.6
4.1
3.9
5.1
4.5
6.0
21.3
27.3
3.1
7.3
10.4
15.4
25.8
Our
exploration
sites
Operating mine
Development
projects
Further growth
opportunities
Exploration
areas
Viksha
St. Petersburg
Tiksha
Lara
Kuolisma
Kaalamo-1
Tulos
Galka
Pesherny
Usteysky
Aduysky
Gasheninsky
Maslovsky
Pavlov
Andrey
Aramashevsky
Burgali
Kegali
Nevenrekan
Noddi
Solnechnoe
Tumaninskaya
Doroninskoye
Dukat flanks
Primorskoye
Lunnoye
Mechta
Matenvunay
Pevek +
Mayskoye
Taimyr
Pekinskaya
Prognoz
Omolon
Dukat
+ Evensk
+
Magadan
Nezhda
+ Okhotsk
+ Ulya
Yakutsk
+
Svetloye
+ Moscow
Russia
Voro
Veduga
Ekaterinburg
+
Varvara
+ Kostanay
+ Astana
Krasnoyarsk
+
Semey +
Kyzyl
Kazakhstan
Novopet
Buribay-
Mambetovsky
Ulandryk
Sveltoye flanks
Kurikan
Veduga flanks
(including
deep flanks)
Komar flanks
Baksy
Shekara
North Balkhash
Bakyrchik flanks
Nezhda flanks
Prognoz
Uzlovoy
Kutyn
Albazino
+ Vanino
Amursk POX hub
+
Khabarovsk
Syran
Urkachik
Albazino flanks
Kutyn
Birandja
Pravo-Amgunsky
PGM exploration
Exploration JV
Competence
centre
+ Regional
offices
+ City/town
Sea port
30
Russia³
Kazakhstan³
Total
Drilling, km
2022
223.1
91.1
314.2
2021
339.6
41.9
381.5
In 2022, 314.2 km (including joint ventures) of exploration
drilling were completed. As a result of the sanctions imposed
on Russia, import of drilling spare parts and materials was
restricted, leading to a substantial decrease in drilling
activities. Furthermore, as a part of budget optimisation,
Joint-venture grassroots exploration in Russia was reduced,
contributing to an the overall drop in drilling volumes.
Reserves and resources
In 2022, Group Ore Reserves decreased by 9% year-on-
year to 27.3 Moz of gold equivalent (GE), mostly due to
mining depletion. This was partially offset by the successful
exploration results at Omolon hub (Burgali and Nevenrekan),
Pesherny (Voro hub) and initial reserve estimates at Galka
and Tamunier (Voro hub). The average grade in Ore
Reserves increased by 5% year-on-year and stood at
3.6 g/t of GE. The average life-of-mine stands at 13 years.
Share of Ore Reserves for open-pit mining remained
unchanged compared to the previous year at 52%.
The share of refractory reserves grew by 3 p.p. year-on-year
to 74%.
Mineral Resources (additional to Ore Reserves) grew by 5%
year-on-year to 25.8 Moz of GE due to positive revaluation
at Kyzyl, Omolon, and Nezhda, as well as initial resource
estimates at Kegali and Tumanin (Omolon hub). The average
GE grade in Mineral Resources was up 10% year-on-year
to 4.5 g/t.
Ore Reserves and Mineral Resources summary4,5
Ore Reserves (Proved +
Probable), gold equivalent Moz
Gold, Moz
Silver, Moz
Average reserve grade, g/t GE
Ore Reserves per share, GE oz/
per share
Mineral Resources (Measured +
Indicated + Inferred), gold
equivalent Moz
Gold, Moz
Silver, Moz
Average resource grade, g/t GE
1 January
2023
1 January
2022
Change
27.3
24.7
211.3
3.6
29.9
27.1
240.2
3.5
-9%
-9%
-12%
+5%
0.058
0.063
-9%
25.8
23.1
212.9
4.5
24.6
22.3
195.7
+5%
+4%
+9%
4.1
+10%
Ore Reserves, 1 January 2022
Depletion
Revaluation
Initial Ore Reserve estimate
Change of GE conversion ratio
Ore Reserves, 1 January 2023
GE Moz
29.9
-2.1
-0.8
+0.2
+0.2
27.3
Outlook for 2023
Safety remains a top priority for Polymetal. We will continue
to focus on further improvements in health and safety
metrics and maintaining zero fatalities across our operations
and among off-site contractors conducting business on
behalf of the Group.
In 2023, we expect a stable operating performance.
The Company reiterates its current production guidance of
1.7 Moz of GE in 2023. Production will be traditionally
skewed towards the second half of the year due to
seasonality.
We expect a strong contribution from Kutyn, Nezhda and
the Voro flotation plant, compensating for grade-driven
decrease in production at Dukat, Albazino and Varvara.
We also expect the planned grade decline towards a
reserve average at Kyzyl and sustained contributions from
other mines.
At the same time, we will focus on advancing our long-term
project pipeline. At Amursk POX-2, we plan to commission
the intensive cyanidation section, complete the
infrastructure, start the cryogenic oxygen plant, complete
the installation of processing equipment and pipelines and
begin commissioning activities. The project remains on
track to be fully commissioned in Q2 2024. Voro flotation
plant is nearing completion (above 90% completion rate).
Start-up is scheduled for Q2 2023. At Prognoz,
conventional open-pit mining will commence with the first
ore mined in Q4 2023.
We plan to complete several investment projects at existing
operations in 2023, which will help drive cost levels down in
2024. At Mayskoye, the backfill plant construction project
will enter full-scale construction in 2023. Commissioning,
which will help reduce dilution and thus optimise costs, is
scheduled for 2024. Optimisation projects also include
implementation of measures aimed at increasing plant
capacity at Kyzyl from 2.2 Mtpa to 2.4 Mtpa (water pumps
upgrade, automated dispatching system), as well as Hot
Cure circuit expansion at Amursk POX for further increase
in recovery.
1 Mineral Resources and Ore Reserves in accordance with the JORC Code (2012). Mineral Resources are additional to Ore Reserves. Detailed tables for Mineral
Resources and Ore Reserves with a breakdown by deposits and metals are given below. Ore Reserves of rare earths metals are given separately and not included
in GE calculation. Mineral Resources of platinum group metals and rare earth metals are given separately and are not included in the calculation of the gold
equivalent. Discrepancies in calculations are due to rounding.
2 Discrepancies in calculations are due to rounding.
3
4 Ore Reserves and Mineral Resources from continuing operations. Base metal are not included in GE calculation as they are insignificant. Ore Reserves of rare
Including JVs with more than 50% share owned by Polymetal.
earths metals are given separately and not included in GE calculation.
5 Mineral Resources are additional to Ore Reserves. Mineral Resources of platinum group metals and rare earth metals are given separately and are not included in
the calculation of GE. Discrepancies in calculations are due to rounding.
31
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review continued
Operating assets
Kyzyl
Our major cash flow and
production contributor
Feed sources
1 Bakyrchik
Processing
Kyzyl (flotation)
1
2
Semey
330 Koz
Payable production (‑8%)
$357m
Adjusted EBITDA (‑21%)
$602/GE oz
Total cash costs (+26%)
Sales/Downstream
Concentrate to Amursk POX
Concentrate to third parties
Key exploration projects in 2022
2 Bakyrchik flanks
Amursk POX
Town
Railway
1
Kyzyl
Kostanay
4
5
2
1
3
1
Varvara
Strong production
profile
211 GE Koz
Payable production (+7%)
$177m
Adjusted EBITDA (‑1%)
$920/GE oz
Total cash costs (‑0%)
Feed sources
1 Komar
2 Varvara
Third-parties ore
Processing
Varvara (leaching for gold ore,
flotation for copper ore)
Sales/Downstream
Doré bars
Concentrate to third parties
Key exploration projects in 2022
3 Komar flanks
4 Baksy
5
Shekara
Town
Road
19%
Share in Group’s production
Location:
East Kazakhstan
Region, Kazakhstan
Managing director:
Kenbeyil Isaev
Employees: 1,484
Mining: Open-pit
(until 2035) followed
by underground
Processing:
2.2 Mtpa flotation +
Amursk POX/
concentrate offtake
Production start date:
2018
Life of mine: 2050
12%
Share in Group’s production
Employees: 1,503
Mining: Open-pit
Location:
Kostanay Region,
Kazakhstan
Managing director:
Abdurakhman Isaev
Processing:
3.2 Mtpa leaching
for gold ore, 1.0 Mtpa
flotation for copper ore
Production start date:
2007 (operated by
Polymetal since 2009)
Life of mine: 2039
Operational highlights
Innovation and efficiency
Operational highlights
2022
2021
Change
• Additional conditioning slurry tanks implemented into the
0.00
0.08
-100%
• Recently launched cleaner flotation circuit allowed for
a twofold decrease in gold losses to carbon tailings.
flowsheet
Safety
LTIFR
Mining
Waste mined, Mt
Ore mined, Kt
Gold grade, g/t
Processing
Ore processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
83.2
2,223
5.5
2,200
5.5
88.9%
83.0
2,177
6.2
2,200
6.2
88.6%
+0%
+2%
-11%
–
-12%
+0%
330
360
-8%
Operating results 2022
In 2022, Kyzyl continued to contribute one-third of the
Group’s EBITDA. Concentrator throughput was stable at the
capacity of 2.2 Mtpa. Production at Kyzyl contracted by 8%
to 330 Koz due to the planned grade decline towards the
reserve average. Gold recovery was stable despite grade
decline due to improvements in the flowsheet.
In 2023, the Company plans to implement a series of
innovative debottlenecking projects, which will allow it to
achieve 2.4 Mtpa throughput and partially compensate for
the grade decline.
32
Exploration and resources
• In 2022, exploration drilling was carried out at East
Bakyrchik and the eastern flank of the Kyzyl shear zone,
including the Sarbas and Karmen deposits. An increase
in Inferred resources has been achieved by 530 Koz with
an average grade of 7.03 g/t and a conversion into the
Measured+Indicated category of 87 Koz with a grade
of 5.13 g/t
• In 2023, further exploration at Eastern Bakyrchik sites is
planned to convert open-pit mineral resources into the
Indicated category.
Green highlights
• Purchased more than 30% of electricity from renewable
energy sources
• Six electric excavators in operation
• 90% of water used on site is in a closed cycle or treated
waste water.
Priorities for 2023
• Increase in throughput to 2.4 Mtpa
• Further expansion of tailings storage facility
• Crushing and flotation automation systems in order to
increase recovery.
Safety
LTIFR
Mining
Waste mined, Mt
Ore mined, Kt
Gold grade, g/t
Processing
Leaching
Ore processed, Kt
Gold grade, g/t
Gold recovery
Flotation
Ore processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
2022
2021
Change
0.00
0.00
n/a
43.3
3,857
1.6
42.0
3,624
1.5
3,199
1.6
90.0%
752
2.7
85.9%
3,183
1.6
88.9%
696
2.6
85.5%
+3%
+6%
+2%
+1%
+1%
+1%
+7%
+4%
+1%
211
197
+7%
Operating results 2022
Gold production at the leaching circuit increased by 11%
due to larger processing volumes, higher grade in the
Komar ore and better recoveries after flowsheet
improvements.
Grade processed and recovery at the flotation circuit
remained high on the back of the prevailing share of
better-quality, third-party ore.
Because of the above, full-year output at Varvara increased
by 7% to 211 Koz.
Innovation and efficiency
• Varvara became the first company in Kazakhstan (and
third in Polymetal after Voro and Amursk POX) to be
certified for full compliance under the International
Cyanide Management Code by the International Cyanide
Management Institute
• Gold recovery at the leaching circuit grew following the
flowsheet improvements.
Exploration
• In 2022, at South Elevator, 7.2 km drilling has been
completed (51 drill holes). The extension of the Elevator
deposit ores to the south confirmed. The resource
potential of the site has been preliminarily assessed
• In 2023, it is planned to draw up a feasibility study and to
estimate gold reserves of the South Elevator site.
Green highlights
• A pilot railveyor project (the first one implemented in
Eurasia) was commissioned to transport incoming ore
from the railway spur to the crusher, thus reducing the
GHG emissions and ore transportation costs
• Two electric excavators at Komar mine (in addition to one
already in operation) and an electric railveyor at Varvara
mine replaced the diesel-fueled fleet in 2022
• Biological recultivation of waste rock dumps using
a hydroseeding method was carried out in 2022
• The Company has commenced the engineering for solar
power plants.
Priorities for 2023
• Construction of the second stage of tailings dam #2
• Feasibility study for solar power plant by the end of 2023.
33
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review continued
Operating assets
Dukat
Operational resilience at
Russia’s largest primary
silver mine
292 Koz
Payable production (+0%)
$175m
Adjusted EBITDA (‑31%)
$12.7/SE oz
Total cash costs (+20%)
17%
Share in Group’s production
Operational highlights
8
5
3
2
Omsukchan
4
4
6
Magadan
Feed sources
1 Lunnoye
Processing
Lunnoye
(cyanide leaching
and Merrill-
Crowe)
Sales/Downstream
Precipitate to
Omsukchan
2 Dukat
3 Perevalnoye
4
Primorskoye
Omsukchan
(flotation/gravity)
Ore to third parties
(direct shipments)
Concentrate to
third parties
Key exploration projects in 2022
4 Primorskoye
5 Dukat flanks
6 Doroninskoye
7 Lunnoye
8 Mechta
Town
Road
Sea port
Omolon
Multiple feed and flexible
processing
199 GE Koz
Payable production (‑8%)
$138m
Adjusted EBITDA (‑29%)
$960/GE oz
Total cash costs (+20%)
5
4
3
2
1
6
7
Evensk
Magadan
Feed sources
1 Birkachan
1 Birkachan
2 Tsokol
3 Burgali
Processing
Birkachan
(heap leach)
Sales/Downstream
Precipitate to
Kubaka
Kubaka (CIL,
Merrill-Crowe)
Doré bars
Key exploration projects in 2022
4 Burgali
5 Tumaninskaya
7
6
Kegali
Nevenrekan
Town
Road
Location:
Magadan Region,
Russia
Managing director:
Dmitry Galtchuk
Employees: 1,716
Mining: Open-pit,
underground
Processing:
2.0 Mtpa flotation
(Omsukchan) + 477
Ktpa Merrill-Crowe
(Lunnoye)
Production start date:
2000
Life of mine: 2028
12%
Share in Group’s production
Location:
Magadan Region,
Russia
Managing director:
Samat Kozhakaev
Employees: 1,130
Mining: Open-pit,
underground
Processing:
862 Ktpa CIP/
Merrill-Crowe
(Kubaka), 1,3 Mtpa
heap leach (Birkachan)
Production start date:
2010
Life of mine: 2031
Safety
LTIFR
Mining
Waste mined, Mt
Underground
development, km
Ore mined, Kt
Silver grade, g/t
Processing
Omsukchan
concentrator
Ore processed, Kt
Silver grade, g/t
Silver recovery
Lunnoye plant
Ore processed, Kt
Silver grade, g/t
Silver recovery
Primorskoye
Ore shipped, Kt
Gold production, Koz
Silver production, Moz
Production
Gold, Koz
Silver, Moz
2022
2021
Change
0.07
0.00
NA
4.1
2.8
+44%
46.7
2,523
301
44.7
2,615
266
+4%
-3%
+13%
2,055
266
86.0%
477
239
93.1%
-1%
-11%
-0%
-1%
-15%
+0%
–
2
0.7
NA
+359%
+300%
2,033
236
85.7%
474
204
93.2%
29.5
11
2.7
63
18.3
of high-grade silver ore for the operation. The Company
also started milling Primorskoye ore at the Omsukchan
concentrator (without beneficiation) for further sales
to offtakers as concentrate.
Waste mined increase is attributable to the mining of crown
pillars at the Dukat open-pit.
Innovation and efficiency
• Successful operation of small-scale mining equipment
for excavation and stoping
• Ice-rock backfill system implementation.
Exploration and reserves
• At Doroninskaya area, mineral resource estimate
amounted to 94.2 Koz of gold and 7,905 Koz of silver.
• 24.8 km drilling was completed at Lunnoye. As results of
the revaluation of total mineral resources, gold mineral
resources increased by 35.0 Koz GE in 2022.
Green highlights
• Full renovation of wastewater treatment facilities at Dukat
and Lunnoye mines
• Up to 95% of purchased electricity from renewable
energy sources
• 94% of water used on site is in a closed cycle or treated
waste water.
56
18.8
+13%
-3%
Priorities for 2023
• Further transition to small-scale mining equipment
Operating results 2022
In 2022, the Dukat hub produced 18.3 Moz of silver, down
3% year-on-year. Direct high-grade ore shipments from
Primorskoye compensated for grade declines at other
mining areas and provided a significant new source
at Dukat
• Completion of dry-stack tailings storage facility at the
Omsukchan concentrator
• Direct shipments of ore from Primorskoye.
Operational highlights
2022
2021
Change
Underground mining at Burgali commenced and will replace
ore tonnage from the Burgali open-pit.
Safety
LTIFR
Mining
Waste mined, Mt
Underground
development, km
Ore mined, Kt
Gold grade, g/t
Processing
Kubaka mill
Ore processed, Kt
Gold grade, g/t
Gold recovery
Birkachan heap leach
Ore stacked, Kt
Gold grade, g/t
Production
Gold, Koz
Silver, Moz
0.18
0.10
+78%
7.7
10.9
628
6.1
860
6.6
93.9%
655
1.1
192
0.5
4.9
+57%
11.8
740
6.6
862
6.7
94.8%
851
1.7
201
1.3
-7%
-15%
-7%
-0%
-1%
-1%
-23%
-37%
-4%
-59%
Operating results 2022
In 2022, gold production was 4% lower year-on-year. Kubaka
mill recorded a planned decline in gold grade and production.
It processed lower-grade silver ore and, with the Merrill-Crowe
circuit remaining idle, silver production was also down.
At the heap leach facility, depletion of the Birckachan heap
leach ore reserves resulted in lower grades, while stacking
volumes also declined year-on-year due to rehandling of the
previously stacked ore.
Innovation and efficiency
• Flowsheet improvements at Kubaka stabilised gold recovery
• Achieved design capacity for the dry tailings facility
• Modernisation of the water discharge system
at Glavny mine.
Exploration and reserves
• At Burgali, an increase by 219 Koz of GE compared to
the last year’s estimate. The feasibility study was
prepared and the gold reserves of 353 Koz, with an
average grade of 9.0 g/t and silver reserves of 1,083 Koz,
with an average grade of 27.6 g/t were approved.
• At Nevenrekan, the increase in the mineral resources of
gold amounted to 28.6 Koz of GE.
• At Kegali, mineral resources were estimated at 101 Koz
of GE with an average grade of 7.9 g/t.
Green highlights
• The 2.5 MWh solar power plant reached planned
capacity and now generates 20% of the required
electricity for Kubaka mill
• Full transition from wet tailings storage to a safer method
of dry stacking completed
• More than 50% of heat consumption comes from a heat
recovery system
• 79% of water used on site is in a closed cycle or treated
waste water.
Priorities for 2023
• Start of underground mining at Burgali
• Construction of the infrastructure needed to commission
Nevenrekan mine.
34
35
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review continued
Operating assets
Amursk POX
Global competence
in refractory ore
processing
392 Koz
Total gold production through
POX (‑16%)
191 Kt
Concentrate processed (‑11%)
94.8%
POX recovery
1
Vanino
Khabarovsk
Nakhodka
Feed sources
1 Albazino
2 Mayskoye
3 Kyzyl
4 Nezhda
Third parties concentrate
Processing
Amursk POX (POX +
cyanidation)
Sales/Downstream
Doré bars
Town
Road
Railway
3
Sea port
Water route
2
4
1
Amursk
POX
Operational highlights
Safety
LTIFR
Processing
Concentrate
processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz¹
Employees: 646
Location:
Khabarovsk Region,
Russia
Managing director:
Vadim Kipot
Processing:
High-temperature
POX, intensive
cyanidation
Production start date:
2012
2022
2021
Change
0.00
0.43
-100%
Innovation and efficiency
• Recovery level increased by 0.5% on the back of slurry
conditioning adjustments.
Green highlights
• 85% of heat consumption is from the heat
recovery system
191
63.0
94.8%
214
72.0
94.3%
-11%
-13%
+0%
• 81% of water used on site is in a closed cycle or treated
waste water
• 100% of tailings are now dry-stacked.
Priorities for 2023
• A Hot Cure circuit expansion to further increase
POX recovery
• Construction of a two-circuit condensate cooling system
• Processing concentrate from Kyzyl, Albazino and
Nezhda with designed recoveries.
392
466
-16%
2022 performance
The decrease in annual POX production was due to the
decline in grade in the feedstock sourced from Kyzyl and
Albazino. The plant continued to process Nezhda’s
low-carbon gold flotation concentrate with a reasonable
average recovery of 95% for the year.
The volume of Albazino concentrate processed was down
by 7% at 132 Kt. The average gold grade in concentrate
was 39.7 g/t, down 19% year-on-year. Recoveries from
Albazino concentrate were stable year-on-year at 96.5%,
exceeding the design level.
48 Kt of high-grade low-carbon Kyzyl concentrate was
processed during 2022 (2021: 55 Kt), with an increased
recovery level of 93.8% (2021: 92.2%).
The operation meets ISO 14001 and 45001 requirements
for environmental and safety management.
1 For information only. Already accounted for in production at operating mines.
36
Amursk POX-2
Ensuring strategic
security by unlocking
the value of refractory
reserves
600 Koz
Expected annual gold production
300 Ktpa
of refractory concentrates
Concentrate capacity
$100-150/oz
cost benefit
Feed sources
1 Mayskoye
4 Nezhda
2 Kyzyl
5 Voro
3 Albazino
Third parties
Processing
Amursk POX-2 (POX +
cyanidation)
Sales/Downstream
Doré bars
Vanino
Khabarovsk
Nakhodka
1
4
3
POX-2
5
Town
Road
Railway
2
Sea port
Water route
Location:
Khabarovsk Region,
Russia
Processing:
High-temperature
POX, intensive
cyanidation
Production start date:
Q1 2024
Full ramp-up:
Q2 2024
2022 highlights
The project is now 83% complete. All the construction, in
terms of buildings, is already done and internal building
works have now commenced. The project remains on track
to be fully commissioned in Q2 2024, in line with revised
schedule which accounts for new geopolitical complexities.
Priorities for 2023
• Start-up of intensive cyanidation circuit for
gravitational concentrates
• Start of cryogenic oxygen plant
• Completion of processing equipment and
pipelines installation
The installation of cable structures and equipment in the
power unit section of the downstream circuit has been
completed and voltage was successfully supplied for
commissioning the intensive cyanidation section (expected
in Q1 2023). The installation of pipelines and connection of
technological equipment are nearing completion. The
carbon-in-leach (CIL) thermal circuit has been completed
and the High Bay heating and ventilation systems are being
installed (steam conditioning section). The construction of
metal frameworks and concrete works for installing
technological equipment in the CIL and High Bay sections
continues.
Green highlights
• The environmental footprint of the Company’s value
chain will decrease significantly because of the
substantial reduction in air pollution, water usage and
solid toxic waste.
• Amursk POX-2 will create 400+ new jobs with a focus on
providing local career opportunities for engineers and
technical staff, and encouraging young talent.
• Complete supervised installation/construction of intense
cyanidation circuit and commission in first half of 2023 to
start processing Nezhda gravity concentrate
• POX mechanical completion and start of commissioning
activities.
POX-3
The Company is now evaluating the construction of a new
POX facility in Kazakhstan, located in a developed industrial
region with good infrastructure and aimed at processing its
own high- and low-carbon concentrate from Kyzyl as well
as third-party gold concentrates.
The flowsheet is identical to Amursk POX-2 with minor
changes based on the results of detailed engineering.
Subject to Board approval, the investment decision is
expected in Q2 2024 and the potential start-up in the
second half of 2028. It will allow for the full operational
independence of the Kazkh operations from Russian
(inter-company) and Chinese offtake.
37
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review continued
Operating assets
Albazino
Successful Kutyn launch
230 GE Koz
Payable production (‑8%)
$121m
Adjusted EBITDA (‑40%)
$1,079/GE oz
Total cash costs (+34%)
13%
Share in Group’s production
Operational highlights
Safety
LTIFR
Mining
Waste mined, Mt
Underground
development, km
Ore mined, Kt
Gold grade, g/t
Albazino
concentrator
Ore processed, Kt
Gold grade, g/t
Gold recovery
Kutyn heap leach
Ore processed, Kt
Gold grade, g/t
Production
Gold, Koz
2022
2021
Change
0.21
0.30
-28%
30.6
23.0
+33%
19.1
3,849
2.7
1,843
3.2
86.4%
902
3.9
16.9
2,259
3.8
1,777
4.4
89.1%
–
–
+13%
+70%
-30%
+4%
-29%
-3%
NA
NA
229
248
-8%
Operating results 2022
At Albazino, ore processed at the Albazino concentrator
increased by 4% to 1,843 Kt, above nameplate capacity.
Full-year production declined by 8% to 229 Koz of gold as
the largest high-grade Anfisa open-pit was fully depleted.
This was largely offset due to the contribution from the
recently launched Kutyn heap leach, which contributed
52 Koz of gold into the total production. Full heap-leach
processing capacity of 1.3 Mtpa of ore will be reached
38
4
2
3
2
1
Kherpuchi
Nikolaevsk-
on-Amur
Oglongi
Amursk
POX
Khabarovsk
Vanino
1
Feed sources
1 Albazino
2 Kutyn
Processing
Albazino
(flotation)
2
Kutyn
Kutyn
(heap leach)
Sales/Downstream
Concentrate
to POX
Dore bars
Key exploration projects in 2022
2 Kutyn
3 Urkachik
4
Syran
Town
Road
Sea port
Water route
Location:
Khabarovsk Region,
Russia
Employees: 1,910
Mining: Open-pit,
underground
Processing:
1.8 Mtpa flotation + POX and
CIL processing at Amursk,
Production start date:
2009
Life of mine: 2041
Managing director:
Alexey Sharabarin
1.3 Mtpa heap leach/
Merrill-Crowe at Kutyn
in 2023. Average annual output from 2023 to 2030 will be
approximately 100 Koz of gold with an average AISC of
approximately $950/oz.
Accelerated development was made possible by effective
planning, tight project management and creative
approaches to emerging supply chain issues.
Innovation and efficiency
• Construction of a grid power line to the Albazino
production site
• Construction of the tailing storage facilities #2.
Exploration and reserves
• At the Talgiy section of the Urkachik area, the JORC-
compliant mineral resource estimate was completed and
amounted to 958 Koz of gold at an average grade
of 3.0 g/t for open-pit and 5.2 g/t for underground.
• At Kutyn, mineral resources increased by 62 Koz and the
112 Koz converted to a higher category.
Green highlights
• More than 60% of heat consumption now comes from
heat recovery system
• 88% of water used on site is in a closed cycle or treated
waste water
• Renovation of collecting ponds to improve the treatment
of discharged water in 2022.
Priorities for 2023
• Achieving full heap-leach processing capacity at Kutyn
• Winter road and additional heap-leach pads construction
at Kutyn
• Construction of the power line linking Albazino to the grid.
Okhotsk
Ulya
2
1
Svetloye
Generation of sustained
cash‑flow
Feed sources
1 Svetloye
Processing
Svetloye
(heap leach)
Sales/Downstream
Dore bars
104 GE Koz
Payable production (‑5%)
$76m
Adjusted EBITDA (‑45%)
$893/GE oz
Total cash costs (+86%)
6%
Share in Group’s production
Operational highlights
Key exploration projects in 2022
2 Svetloye flanks
1
Town
Road
Sea port
Location:
Khabarovsk Region,
Russia
Employees: 641
Mining: Open-pit
Processing:
1.3 Mtpa heap
leaching circuit
Production start date:
2016
Life of mine: 2026
Managing director:
Gennady Fukalov
Safety
LTIFR
Mining
Waste mined, Mt
Ore mined, Kt
Gold grade, g/t
Processing
Ore stacked, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
2022
2021
Change
0.35
0.16
+119%
6.2
2,542
2.3
1,404
3.1
80.8%
4.6
1,800
2.1
1,404
3.0
81.2%
+38%
+41%
+8%
+0%
+6%
-0%
103
109
-5%
Operating results 2022
Gold production contracted by 5% year-on-year driven by
grade dynamics during the first nine months of 2022.
Ongoing Emmy pit development drove increases in ore
mined (up 41% year-on-year) and grade processed (up 6%
year-on-year). Ore mining also advanced.
The increase in waste mined is attributable to the
development of a new pit, Nadezhda, as well as new
pushback (Stage 3) at the Emmy pit.
Innovation and efficiency
• Increased average monthly productivity at the open-pit
• Several technical measures aimed at increasing the
productivity of mining dump trucks
• Replacement of the pump equipment aimed at
increasing stacking volumes.
Exploration
• In 2022, exploration activities included prospecting,
appraisal and core drilling, with 9 km of holes drilled.
21,000 m³ of surface mining was completed.
• In 2023, the plan is to continue prospecting and
exploration activities on the flanks of Larisa, Emmy and
Yelena ore zones to evaluate previously identified ore
zones and to trace gold mineralisation down dip and
along the strike.
Green highlights
• 76% of water on site is used in a closed cycle
• More than 6% of electricity generated from renewable
energy sources (solar and wind energy)
• Food waste recycling systems.
Priorities for 2023
• Stable production and high grade ore from deep levels of
Emmy pit
• New heap-leach pads construction.
39
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Operating review continued
Operating assets
Mayskoye
Long‑life high‑grade
refractory gold mine
120 GE Koz
Payable production (‑14%)
$42m
Adjusted EBITDA (‑62%)
$1,343/GE oz
Total cash costs (+38%)
Feed sources
1 Mayskoye
Processing
Mayskoye (flotation)
Sales/Downstream
Concentrate to Amursk POX
Concentrate to third parties
Town
Road
Railway
Sea port
Water route
1
Pevek
1
1
Amursk POX
7%
Share in Group’s production
Location:
Chukotka, Russia
Managing director:
Tagir Ibragimov
Employees: 1,004
Mining: Open-pit/
underground
Processing:
912 Ktpa flotation,
Amursk POX,
third-party offtake
Production start date:
2013
Life of mine: 2036
Operational highlights
Safety
LTIFR
Mining
Waste mined, Mt
Underground
development, km
Ore mined, Kt
Gold grade, g/t
Processing
Ore processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
2.6
21.3
839
5.7
925
5.6
82.8%
2022
2021
Change
0.22
0.34
-34%
3.7
-30%
Innovation and efficiency
• Conveyor system has been fully ramped up. Upon full
ramp-up, the project is expected to cut costs (AISC by
up to $150/oz). Importantly, it frees up the substantial
fleet of underground trucks, which can be used to
support other mines in the absence of sanctions-related
fleet replacement.
19.5
781
5.7
901
5.7
86.9%
+9%
+7%
-0%
+3%
-2%
-4%
Green highlights
• Launched low-carbon, electricity-powered underground
conveyor system for ore transportation and reduced
GHG emissions
• Trials of four units of electric underground vehicles
(in addition to three operating ones)
• 96% of water used on site is in a closed cycle or treated
waste water.
120
139
-14%
Operating results 2022
Annual output was 14% lower year-on-year due to decrease
in recovery, attributable to higher than expected carbon
content with lower sulphide and higher iron grades in the
oxide ore. Average grade is roughly stable year-on-year.
Open-pit mining at Mayskoye has been completed.
Priorities for 2023
• Higher production and processing high recovery
sulphide ores
• Advancing the full-scale construction of the backfill plant:
delivering equipment and commodities, starting
equipment installation, accessing ore reserves.
Commissioning, which will help reduce dilution and thus
optimise costs, is scheduled for 2024.
2
6
Karpinsk
3
1
4
Serov
3 Pesherny
Nizhny Tagil
5
Ekaterinburg
Voro flotation
(flotation/gravity)
Concentrate
to Amursk POX-2
Concentrate
to third parties
Amursk POX-2
Feed sources
1 Voro
2 Saum
Third parties
concentrate
Processing
Voro (
Merrill-
CIL,
Crowe)
Sales/Downstream
Doré bars
Key exploration projects in 2022
4 Andrey
6
Maslovsky
5 Aramashevsky
Town
Road
Railway
Location:
Sverdlovsk Region,
Russia
Managing director:
Boris Balykov
Employees: 952
Mining: Open-pit
Processing:
1.05 Mtpa CIP circuit
Production start date:
2000 (HL), 2005 (CIP)
Life of mine: 2043
Voro
On track with new
flotation circuit
93 GE Koz
Payable production (+0%)
$75m
Adjusted EBITDA (‑14%)
$918/GE oz
Total cash costs (+23%)
5%
Share in Group’s production
Operational highlights
Safety
LTIFR
Mining
Waste mined, Mt
Ore mined, Kt
Gold grade, g/t
Processing
Ore processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
2022
2021
Change
0.00
0.00
NA
10.1
330
4.4
1,030
2.6
81.4%
9.1
456
3.8
1,049
2.2
85.0%
+11%
-28%
+14%
-2%
+19%
-4%
91
91
-0%
Operating results 2022
In 2022, production at Voro was stable at 91 Koz. CIP plant
recorded higher grade but lower recoveries due to the
processing of transitional ore from Peshernoye.
Mining at Saum was discontinued on the back of
deteriorating economics (strong Rouble and higher rail
tariffs).
Voro flotation plant is 90% completed. Start-up is expected
in Q2 2023 (previous plan was 2027). It will help to bring
forward cash flows from high-grade polymetallic deposits,
such as Peshernoye, Galka and Saum.
Innovation and efficiency
• At the flotation plant, major processing equipment has
been installed and the concentrator building has been
fully winterised
• Modernisation of the equipment at the heap leach area in
order to increase the productivity for tailings processing
at the new plant.
Exploration and resources
• At Andrey deposit, the initial mineral resource estimate
amounted to 4.3 Moz of gold with an average grade of
2.0 g/t containing 275 Koz of gold (follow-up appraisal).
In 2023, Polymetal will complete a feasibility study
according to the Russian GKZ standards along with ore
reserves estimate.
• In 2023, at Pavlov deposit, Russian-standard feasibility
study will be completed and ore reserves will be
reported. The Company also plans to continue
prospecting at the flanks.
Green highlights
• Purchased up to 95% of electricity from renewable
energy sources
• 99% of water used on site is in a closed cycle or treated
waste water
• 100% of tailings are now dry-stacked.
Priorities for 2023
• Flotation plant start-up in Q2 2023 and ramp-up
• Preparation for underground mining at Peshernoye.
40
41
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Development assets
Veduga
Production from large high‑grade
asset due in 2027
Development
Veduga project timeline had to be delayed by 12 months
with first production now expected in the first half of 2027.
This schedule optimisation will reduce capital commitments
for 2023 and allow for a thorough selection of processing
equipment to ensure full compliance with all applicable
sanctions and flexible construction planning.
Veduga is accessible by an all-year road and has direct
access to the federal power grid.
200 Koz
Annual gold production
4.0 Moz of gold
Ore Reserves at 3.9 g/t
Exploration
• In 2022, exploration drilling was carried out at the deep
horizons of ore body 1 to evaluate its mineralisation
potential along the strike and down dip. Total drilling
volume amounted to 10.1 km. In 2022, the updated
mineral resource estimate recorded an increase of
700 Koz of gold. Exploration activities continues to
outline the ore mineralisation down dip.
• In 2023, Polymetal will evaluate reserves from Veduga
deep levels and to approve Russian-standard reserves
estimate (GKZ).
Operating review continued
Operating assets
Nezhda
Successful ramp‑up
and first full year of
operation
133 GE Koz
Payable production
$38m
Adjusted EBITDA
$1,138/GE oz
Total cash costs
8%
Share in Group’s production
Operational highlights
Feed sources
1 Nezhda
2 Prognoz
Processing
Nezhda (flotation/gravity)
Sales/Downstream
Amursk POX-2
Concentrate to third parties
Key exploration projects in 2022
3 Nezhda flanks
2
3
1
Yakutsk
Nizhny Bestyakh
1
Amursk POX-2
Town
Road
Railway
Location:
Republic of Sakha
(Yakutia), Russia
Managing director:
Oleg Pavlov
Employees: 929
Mining: 28 years
(18 years of conventional
open-pit mining
2019-2036, 10 years of
underground mining
2037-2046)
Processing:
Flotation/Gravity
concentration +
offtake/Amursk POX
Production start date:
2021
Life of mine: 2052
Timeline
2023
2024
2025
2026
2027
Completion of re-marketing, advances for
long-lead items
Start of construction
Green highlights
• Two electric excavators are planned
• 92% of water used is treated waste water.
Delivery of the main technological equipment.
Winterisation of the main concentrator building
Priorities for 2023
• Completion of marketing, advances for long-lead items.
Completion of equipment assembling
First production and full ramp up
Safety
LTIFR
Mining
Waste mined, Mt
Ore mined, Kt
Gold grade, g/t
Processing
Ore processed, Kt
Gold grade, g/t
Gold recovery
Production
Gold, Koz
Silver, Moz
2022
2021
Change
0.00
0.13
-100%
18.1
2,654
3.0
2,011
4.0
75.5%
22.0
1,192
2.2
344
3.7
73.0%
111
1.8
20
0.1
-18%
+123%
+35%
NA
+9%
+3%
NA
NA
2022 performance
In the first full year of operation, Nezhda reached its
nameplate capacity and recovery. Total annual production
amounted to 111 Koz. The Company expects the output to
increase as soon as the gravity concentrate is redirected
from Voro and Dukat to the intensive cyanidation section of
Amursk POX-2 (launch planned for Q2 2023) and flotation
concentrate processed at the Amursk POX-2 after its
launch in the first half of 2024. Low-carbon concentrate is
currently processed at Amursk POX and high-carbon
mostly stockpiled.
The recovery rate at the concentrator is gradually heading
towards the design level as the Company implements
technological improvements. Grade in ore processed
increased according to the mine plan.
42
Mining activity at the Nezhda open-pit was temporarily
suspended from the beginning of December 2022 for four
months in order to optimise costs. Sufficient ore stockpiles
are available to ensure full productivity at the flotation plant
for several months.
Exploration
In 2022, exploration activities were focused on ore zone 3
and Zarechnoye. 1.56 km of core drilling and 16,700 m³ of
tranches were completed. The results confirmed the
presence of ore mineralisation in ore zone 3.
Green highlights
• The 110-kV line linking Nezhda mine to the regional grid,
powered by a combination of hydro and gas, has been
successfully commissioned. The diesel-powered gensets
that were previously used have been transferred to
stand-by emergency mode
• Sourced energy from the federal power grid to decrease
GHG emissions and avoid diesel power generation
• 100% of tailings are now dry-stacked.
Priorities for 2023
• Increase in throughput to 2.2 Mtpa
• Processing Nezhda gravity concentrate at the Amursk
POX intense cyanidation circuit
• Construction of the second stage of dry cake storage.
Prognoz
First ore to be mined from one of the
world’s largest and high‑grade silver
mines in 2023
Development
The annual mine capacity will amount to 250 Kt of ore with
average silver grade of approximately 600 g/t.
Ore will be processed through the 2.2 Mtpa Nezhda
concentrator. Silver recovery to high-grade, clean silver-lead
concentrate is expected to average 89%. Ore will be
trucked by winter road from Prognoz to the Nezhda
production site (675 km) using contractors.
Life-of-mine payable silver equivalent (AgEq) in concentrate
is expected to comprise 120 Moz. Average annual payable
AgEq production in 2023-2041 is estimated at roughly 6.5
Moz with an average AISC of $13.8/AgEq oz.
Timeline
2023
2024
First ore mined.
Commissioning of infrastructure object.
Construction of winter roads, bridges
(Prognoz – Nezhda)
Transportation of ore to Nezhda.
First payable production
6.5 Ag Moz
Annual production
125 Moz of silver
Ore Reserves at 460 g/t
Exploration
• In 2022, Russian-standard feasibility study for open-pit
and underground mining was approved. The reserves
were included in the State Reserves Register.
• In 2023, Polymetal plans to explore Atyr-Moginskaya
property in order to increase Prognoz mineral
resource base.
Green highlights
• 95% of heat consumption comes from heat
recovery system.
Priorities for 2023
• First ore mined
• Commissioning of infrastructure objects
• Construction of winter roads, bridges connecting
Prognoz and Nezhda.
43
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability
ESG remains a strategic priority
Maintaining high ESG standards and monitoring our impact on stakeholders is one of
Polymetal’s strategic priorities. Doing this requires leadership from the very top of the
organisation, which is why our sustainability approach and performance are overseen
by Board-level Committees, with our Group CEO having ultimate accountability,
and ESG-related remuneration KPIs implemented across the Group.
How we manage sustainability
The Board defines business strategy, assesses risks and
monitors performance. During the year, our Board
conducted several sustainability performance reviews, as
well as approved sustainability initiatives and our reporting.
The Safety and Sustainability Committee has a mandate to
provide support to the Board on a wide range of
sustainability issues, such as health and safety, stakeholder
engagement, social impact assessment, environmental and
climate change risks. It also oversees the implementation of
short- and long-term policies and standards, making sure
that we work ethically, transparently and responsibly. Read
more on the Safety and Sustainability Committee’s activity
in 2022 on page 130.
Our Remuneration Committee sets the framework and
broad remuneration policy for the Chair, Group CEO and
the executive management team, as well as monitoring the
gender pay gap. The Nomination Committee is responsible
for recommending Board and Committee members and
ensuring that a balance of skills, knowledge, independence,
experience and diversity are reflected.
Our strict approach to sustainability issues is underpinned
by ESG remuneration KPIs that cascade down from Group
CEO and COO to mine directors, subsidiary directors and
their deputies, senior managers, heads of operational units
and other levels of employees. In addition to safety KPIs
and penalties for work-related fatalities and severe injuries,
our ESG scorecard outlines remuneration-linked targets on
GHG emissions reduction, tailings management, gender
diversity and impact on local communities (read more
on page 144).
Our contribution to the UN SDGs
By addressing the UN Sustainable Development Goals
(SDGs), we make sure that we contribute to a more
sustainable world with every business decision. Our
sustainability agenda is built around 12 SDGs that
complement and depend on each other.
With our efficient mining operations in remote regions, we
stimulate development and economic growth within
communities (SDG 8), while ensuring the health and
well-being of the people we work with (SDG 3).
We contribute to community development not only through
the taxes we pay and the jobs that we create, but also by
directly supporting local healthcare (SDG 3) and educational
institutions (SDG 4), renovating local infrastructure (SDG 9),
making charitable donations (SDG 1) and implementing
other projects that our neighbouring communities find most
relevant to them. We also contribute to these SDGs by
providing our employees with safe working conditions,
decent remuneration and professional development.
44
We oppose any kind of discrimination and particularly aim
to eliminate gender stereotypes when it comes to women
working in the mining industry (SDG 5).
We do all we can to minimise the impact of mining on
natural resources by using these resources efficiently and
taking responsibility for environmental risks (SDG 12). This
includes reducing fresh water withdrawal and ensuring
discharge water quality (SDG 6), managing waste
responsibly, reducing land use through applying dry
stacking technologies and monitoring biodiversity (SDG 15).
We also recognise that mining activities can result in
adverse consequences for the climate while, at the same
time, they are exposed to climate-related risks. Our climate
change targets and risk assessment underpin our
commitment to SDG 13.
Finally, SDG 16 and SDG 17 reflect our overall approach to
business and stakeholder engagement. We strive to work in
an ethical and fair way, and embrace partnerships for
positive change.
Relevant SDGs and material issues
` See metrics and performance in 2022 for each of the material
issues on page 45.
• Employees
• Communities
• Supply chain
• Employees
• Communities
• Water
• Communities
• Communities
• Supply chain
• Climate
change
•
Health and
safety
• Employees
• Communities
• Employees
• Supply chain
• Supply chain
• Employees
• Communities
• Water
• Waste and
pollutants
• Biodiversity
and lands
• Biodiversity
and lands
• Waste and
pollutants
All
All
Material issues
We consider sustainability issues at all stages of a mining
project, focusing on those that matter most for our
Company and stakeholders. These issues inform our ESG
agenda and disclosures, and are integrated into our
business strategy and risk management procedures. Our
materiality determination process involves both external and
internal sources:
• Identifying social and environmental impacts in the
mining sector described in academic research and
market reviews
• Analysing internal and external stakeholders
expectations
• Monitoring non-financial reporting standards such as
GRI, SASB and TCFD and reviewing peers’ reports
• Reviewing our internal risk registers and external global
risks reports
• Analysing social, economic and environmental contexts
via available sources and tools.
For each issue identified as material, we set measurable
targets and report on performance. Our list of material
issues remained unchanged in 2022.
Material issues
Targets
Performance in 2022
Status
Ensure zero fatalities
Zero fatalities (2021: 1 contractor fatality)
Health and
safety
Maintain LTIFR below 0.2
LTIFR 0.10 (2021: 0.12)
Year-on-year decrease in absent days following
accidents
43% year-on-year decrease (877 days in 2022
compared with 1,545¹ in 2021)
Maintain voluntary turnover rate below 10%
8.4% voluntary turnover (2021: 8.2%)
Employees
Improve equality and diversity, including women’s
representation of 33% in the Talent Pool in 2022
21% women in total workforce (2021: 21%); 35%
in Talent Pool (2021: 30%)
Support labour rights
80% of employees under collective agreements
30% decrease in GHG emission intensity per ounce of
gold equivalent by 2030 (Scopes 1 and 2, 2019 baseline)
15% decrease (632 kg CO₂e/oz of GE in 2022
compared with 742 kg of CO₂ e/oz of GE 2019)
35% decrease in absolute GHG emissions by 2030
(Scopes 1 and 2, 2019 baseline)
10% decrease (1,066 Kt CO₂e compared with
1,180 Kt CO₂e by our assets in 2019)²
Achieve 7% of total electricity self-generation from
renewable sources by 2025
1.1% (12,072 gigajoules generated)
55% decrease in fresh water withdrawal³ per tonne of
ore processed by 2030 (2019 baseline)
49% decrease (138 m³/Kt of processed ore in
2022 compared with 268 m³/Kt of processed
ore in 2019)
Increase share of water recycled/reused
91% of water reused/recycled (2021: 90%)
Increase share of waste reused and recycled by
backfilling overburden waste whenever possible
Achieve 50% dry-stack tailings storage of tailing total
waste by 2030 (interim target for 2022 – 12%)
By 2023 design a framework to evaluate Polymetal’s
biodiversity footprint
23% of waste reused/recycled (2021: 23%)
28% of tailings dry stacked (2021: 14%⁴)
A biodiversity standard is under development
By 2025 reforest 2,750 ha
873 ha of land reforested
Climate
change
Water
Waste and
pollutants
Biodiversity
and lands
Ensure zero community conflicts
Zero conflicts
Communities
Ensure positive engagement
839 inquires received and resolved (2021: 613)
as well as 173 letters of gratitude
Maintain the level of financial giving
$23.2m invested in social projects (2021: $20m)
50% share of regional procurement by 2024
46% (Russia: 39%; Kazakhstan: 84%)
Supply chain
ESG score for key suppliers by 2023
Key:
Target achieved
Future target on track
ESG assessment is obligatory for contractors
working on our premises and it is voluntary
for new suppliers while the suppliers pool
undergoes significant changes
1 Data for 2021 was restated due to sick leave extension for one of the injured employees.
2 Metric applies to mines within the reporting scope of the base year, namely Kyzyl, Varvara, Voro, Mayskoye, Omolon, Dukat, Svetloye, Albazino, Amursk POX and
Amursk POX-2, and Nezhda.
3 Excluding water for non-technological purposes.
4 Data for 2021 was restated due to the improvement of waste accounting procedures.
45
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Sustainability continued
Health and safety
Polymetal operates in a high-risk industry. We are responsible for
the safety at work of more than 14 thousand employees and
expect the same responsible approach from our contractors.
At a glance
17%
decrease in contractor
LTIFR
100%
operating sites
certified to ISO 45001
42%
decrease in days lost
due to work‑related
injuries
Our priorities
• Compliance with the applicable operational health
and safety legislation and international standards
• Safety culture based on risk assessment and
employee engagement
• Continuous improvement of safety management by
applying up-to-date technologies and equipment.
Which guidelines do we follow?
External: UN Global Compact, ISO 45001, EBRD
Environmental and Social Policy, Responsible Gold
Mining Principles, national occupational safety
standards.
Corporate: Health and Safety Policy, Occupational
Health and Safety Management System,
Code of Conduct.
Our approach
At Polymetal, we believe that all work-related injuries and
illnesses are preventable, and ensuring that every person
who works for and with Polymetal returns safely from work at
the end of the day is our utmost priority. The pillars of our
health and safety approach are strong leadership, a zero-
harm culture and stringent risk management.
Our CEO, COO, mine directors and other senior managers
are personally accountable for safety, with health and safety
indicators part of their remuneration-linked KPIs. They can be
subject to penalties of up to 50% of their annual bonus for
non-safety related KPIs if severe incidents or fatalities occur,
whether among contractors or our own employees.
In addition, 25% of their annual bonus is linked to the number
of days lost due to work-related injuries – a KPI that reflects
both the number and the severity of injuries. In addition,
we have banned performance-based remuneration for
employees involved in hazardous work on site in order
to eliminate situations where safety is sacrificed for
production results.
Our Occupational Health and Safety Management System is
in place across all operating sites and is audited annually for
compliance with ISO 45001. It sets rigid standards for risk
identification, safety training, equipment maintenance,
contractors engagement and emergency preparedness.
We aim to apply the same standards to our exploration sites
to ensure employee safety from the outset of any project.
Our Group-wide Health and Safety Policy promotes a zero-
harm culture that gives employees the right to refuse unsafe
work and inform the site management promptly of identified
hazards. This enables us to respond appropriately to any
concerns or suggestions about operational safety.
Risk assessment and mitigation
Risk assessment is the bedrock of how we manage health
and safety. We follow a PDCA (plan-do-check-act) approach
by annually reviewing and updating all risks, planning the
relevant risk mitigation measures, reviewing their
effectiveness and adjusting the action plan as needed. While
doing this, we take into account historic data on accidents,
lost-time incidents and near misses, along with shift-by-shift
risk assessments provided by employees and contractors.
Each industrial process and site has its own risk map and
mitigation plan, and is subject to regular safety checks.
In 2022, we conducted 13,229 safety checks, including
3,894 among our contractors.
Digitalising safety
We aim to minimise the human factor by applying digital
technologies. Positioning systems allow dispatchers see the
exact location of each worker in the mine or on the plant and
prevent them from entering hazardous areas. Similar
dispatching systems are developed for the mining fleet to
target road safety, while circular review systems on board
vehicles help drivers avoid collisions. In our underground
mines, drilling machinery is equipped with sensors that
automatically stop drilling if a worker accidentally enters the
hazardous area.
To raise the efficiency of the daily risk assessment carried out
by workers at the start of each shift, we are also transitioning
this process into a digital format. Employees are equipped
with dedicated devices with built-in safety checklists, which
they can also use to submit information about a near-miss
that occurred during the shift. These facilitate the process of
risk identification and enable site management to better
analyse and improve workplace safety. Our plans for 2023
include extending the use of digital risk assessment and
other abovementioned technologies to all operating sites
wherever possible.
If a lost-time accident takes place at our site, we investigate
the root causes by applying a ‘five whys’ approach. We
engage authorities and inform the relevant teams of the
outcomes. When the accident results in a contractor’s injury,
we formally request the involved organisation to carry out the
investigation with the participation of a Polymetal
representative. We also analyse near miss incidents that may
not have resulted in a lost-time injury but still represent a
potential safety risk, such as vehicle collisions.
Our Health and Safety Action Plan focuses on the risks that
have materialised in recent years as well as on other
common safety hazards attributed to our industry. Altogether,
these form a list of critical safety risks that include as of
today:
• jamming by a rotating mechanism
• slipping and tripping while walking
• being hit by an object
• road transportation accidents
• falling rock
• combustion and others.
Based on the list of critical safety risks, we develop an annual
action plan. For each risk, operational sites implement
mitigation activities covering administrative measures (e.g.
assigning a responsible person), risk elimination, engineering
improvements (e.g. applying digital technologies), additional
training and visualisation. In 2023, we will focus on improving
safety at our exploration sites and ensuring that all our
facilities – from work camp blocks to plants – are constructed
and equipped in compliance with rigid safety standards.
46
47
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Safety performance 2022
There were no fatal accidents in 2022. However, lost-time
incidents still took place among Polymetal’s workforce and
contractors. Most were the result of slipping or tripping
while walking or being jammed by a rotating mechanism.
In 2022, 13 lost-time incidents were recorded among
employees and 12 among contractors. Lost-time injury
frequency rate (LTIFR) for 2022 stood at 0.10 for employees
(0.12 in 2021) and 0.21 for contractors (0.09 in 2021). Days
lost due to work-related employees’ injuries for the full year
decreased by 43% year-on-year to 877 (1,545 in 2021).
While all of the incidents that took place during the year
were classified as minor, we still took responsive measures
for each by updating risk maps for relevant facilities,
providing additional instructions to employees and
encouraging contractors to carry out the investigation if the
accident involved a contractor’s worker.
Polymetal employees health and safety
Injuries, including:
Fatalities
Severe injuries
Minor injuries
LTIFR1
Days off work following accidents²
Occupational deseases and health difficulties
Near-misses
Contractor employees safety
Injuries, including:
Fatalities
Severe injuries
Minor injuries
LTIFR1
Workers engagement and safety culture
The implementation of a ‘zero-harm’ approach would not
have been possible without the engagement of each worker,
underpinned by strong leadership and regular safety training.
Our safety communication campaign involves articles and
interviews in our corporate newspaper, checklists, videos
and visual toolkits. The campaign implies active interaction of
employees at all levels across the business in the form of
contests, project proposals, non-monetary awards and
safety cross-checks between sites – all aimed at eliminating
stereotypes about safe work and highlighting the value of
human life and health in day-to-day work.
As well as offering mandatory safety training by external
accredited training centres, we use an internal virtual learning
system, OLYMPOKS. This provides training around industrial
processes, energy, environment, transport, fire, civil defence,
emergencies and first aid. In the last year, 4,513 people
attended mandatory training sessions and 7,821 attended
non-mandatory training on safety, provided externally or
internally. We strive to equip our employees with sufficient
training and tools for continual safety awareness: for
example, each site holds daily safety briefings that include
quick knowledge tests and Q&As.
When working with our contractors, we highlight safety risks
and share our expertise to help them mitigate such risks. We
regularly inspect contractor operations, collaborate with them
to resolve any issues (e.g. via our health and safety
committees) and encourage them to participate in
professional contests alongside our employees. We also train
contractors on the principles of hazard identification, risk
assessment and procedures for ongoing production control
and workplace monitoring. The requirement to regularly
identify and assess hazards and risks is now part of all
agreements with contractors.
Units
number
number
number
number
rate
number
number
number
Units
number
number
number
number
rate
2022
13
0
0
13
0.10
877
9
4,770
2022
12
0
0
12
0.21
2021
15
0
2
13
0.12
1,545
5
4,687
2021
6
1
0
5
0.09
2020
13
0
2
11
0.12
1,583
2
3,653
2020
12
0
0
12
0.24
2019
20
2
3
15
0.19
1,760
1
2,684
2019
10
1
0
9
0.20
Climbing up Hudson’s ladder:
improving safety culture’s maturity
In 2021, we conducted a survey to assess our safety
culture against the internationally recognised Hudson’s
safety maturity model. As a consequence of this, in 2022,
we approved a new health and safety communication
programme. While the results showed that our safety
culture was between the ‘Reactive’ and ‘Calculative’ levels
(2nd and 3rd levels, respectively), we are now aiming to
achieve the 4th level of ‘Proactive’ by 2025 and have
developed a roadmap towards meeting this goal. At this
level, each employee is an active contributor to the process
of ensuring safety and each manager prioritises safety
along with operational results and cost control.
The programme for 2023-2024 includes introducing safety
competencies to the job descriptions of all managing
personnel and adapting a more systematic approach to
dialogue between line managers and employees.
Dedicated focus groups will enable discussions around
safe behaviour, root-causes of accidents and dominant
health and safety risks. This will be complemented with a
range of awareness-raising events such as updated
induction training, case study competitions and employee
guest lecturing on safety in local schools.
Encouraging well‑being
The well-being of our employees is an essential part of our
HR strategy. We want our employees not only to be safe but
also to benefit from overall physical and mental health. Our
private health insurance plans allow employees access to
medical help regardless of employee location or grade and
also cover employees’ children aged below ten years without
additional fees. The insurance plan includes health
consultations, a second medical opinion, vaccination,
emergency hospitalisation and other benefits, with access to
online content covering well-being topics such as healthy
eating and stress management.
To encourage healthy living, we arrange our own fitness
facilities at operational sites and subsidise gym membership
for office workers. Additionally, we hold a range of corporate
sports events, such as hockey, tennis, volleyball and football
tournaments.
Health and well-being
Employee performance and, in turn, corporate productivity
both rely on good health and well-being. We aim to support
positive occupational health and contribute to wider
employee well-being.
Occupational health
In 2022, nine cases of occupational diseases were reported
by eight employees at our Mayskoye, Omolon and Dukat
mines. All of the employees were involved in underground
mining works and have had more than 30 years of
experience. Most of the employees with an identified
occupational disease decided to leave the Company; one of
them was offered another job in less hazardous working
conditions. All of the employees will receive appropriate
payment from the Social Insurance Fund of the Russian
Federation. To avoid such cases occurring again, third-party
organisations conduct regular assessments of working
conditions at Polymetal sites. Dedicated contractors are
responsible for ensuring the highest hygiene standards, while
employees receive regular medical check-ups (including daily
health checks with an automated health monitoring system)
and paid leave for health appointments.
1 Lost-time injury frequency rate per 200,000 hours worked.
2 Data for 2021 was restated due to sick leave extension for one of the injured employees.
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Sustainability continued
Sustainability continued
Sustainability continued
Employees
Our talented people are central to the success and resilience of
our business. Enabling them to grow, while upholding their rights
and protecting their well-being, are fundamental priorities.
At a glance
>14,000
employees
78
hours of training per
employee per year
21%
female
100%
of operating site
employees covered by
collective agreements
Our priorities
• Attracting, retaining and developing best talents
• Improving equality and diversity, including women’s
representation in leadership and Talent Pool
• Ensuring favourable working conditions and
supporting labour rights.
Which guidelines do we follow?
External: Universal Declaration of Human Rights, UN
Global Compact, ILO Declaration and ILO Conventions,
Responsible Gold Mining Principles, National Labour
Codes.
Corporate: Code of Conduct, Human Resources
Policy, Diversity Policy, Employment and Labour
Corporate Standard, Regulation on Social
Conditions and Service Quality Control, collective
agreements.
Our approach
Attracting and retaining best talents is one of today’s
challenges in the mining industry. We strive to offer fair and
inclusive working environments, competitive salaries and
professional development opportunities, while keeping
people informed and motivated through dialogue and
engagement – particularly during uncertain times.
Polymetal’s corporate culture is based on mutual trust and
respect, transparency and integrity, as well as an
unwavering drive for development and improvement.
Training and mentoring programmes are continuously
developed and updated to help employees across the
Group deepen their expertise in engineering, geology,
minerals processing, environmental protection and other
fields. We always ensure that frontline workers have access
to the same training and engagement tools as employees in
corporate offices and are not disadvantaged by the remote
location of our mining sites.
Along with talent development, we focus on employee
well-being and satisfaction. Our internal communication
system enables employees to raise any issues or concerns
without retribution and ensures that remedial steps are
taken. Complex or Group-wide issues are submitted to a
Board-level Committee for resolution.
Our integrity as a business relies on all employees and
contract workers complying with our Corporate Code of
Conduct, which outlines the ethical behaviours expected of
all stakeholders. We take a zero-tolerance approach to any
form of discrimination or harassment and promote a culture
of equal opportunity. Our commitment to diversity and
inclusion is supported by a comprehensive programme that
includes training, mentoring, talent attraction and internal
communications.
Remuneration and social benefits
We experience greater competition in the labour market and
increased demand for mining experts, while also
recognising that monetary reward plays a significant role in
employee attraction and retention. Consequently, we
monitor average salaries across our regions of operation to
ensure that Polymetal’s salaries are equal to or exceeds
them. Our performance-based compensation system
ensures fair and equal growth opportunities for employees.
For those working in hazardous environments, such as
underground operations, the remuneration system takes
account of safety before productivity. We annually align
wage growth with the inflation rate: the salary increase in
2022 was 9% for employees in Russia and 12% for those in
Kazakhstan.
Our base salaries do not differ between men and women
who perform the same function. However, there are still
variations in the type of work typically performed by male
and female employees, resulting in a 2022 gender pay gap¹
of 23% (2021: 22%). To manage this pay gap, we closely
monitor the proportion of women at various levels or
departments and actively encourage more women step into
leadership roles (read more on our gender diversity
programme on page 53).
For employees with families, we offer paid parental leave for
up to three years and subsidise nursery fees, after-school
activities and holiday camps. We also provide those
working in remote locations and their families with a free
‘health holiday’ every two years. Financial aid is made
available for employees in cases of illness or other
emergencies, as well as for those applying for mortgages or
retiring (see our Employment and Labour Corporate
Standard).
Given that nearly half of our employees work on a fly-in/fly-out
basis, we pay particular attention to providing comfortable
living conditions, including hygiene, well-being and leisure.
Training and talent development
Re-skilling and upskilling employees while providing each
and every one with opportunities to share and implement
their ideas helps us fill the talent gaps and keep up with
technological changes.
In 2022, we intensified collaboration with higher education
institutions and colleges. To feed our talent pipeline, we
need to bridge the gap between academic education and
our job requirements. We are partnering with top
universities in our regions of operation to launch joint
educational programmes on digital technologies in mining
(read more on local employment programmes in the
Communities chapter on page 79).
Polymetal salaries compared to regional wages
Polymetal
Polymetal (men)
Polymetal (women)
Regional
Mining industry
Salaries in Russia, 2022
Minimum salaries comparison
Salaries in Kazakhstan, 2022
Minimum salaries comparison
Average salaries comparison
Average salaries comparison
Polymetal minimum salaries are 89% higher than the regional minimum in Russia and 110% in Kazakhstan.
1 Measured as average male wage minus average female wage divided by the average female wage.
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Sustainability continued
We leverage our strong in-house expertise in geology,
exploration, construction, metal processing, ecology and
other aspects of mining by providing employees across the
Group with online training and in-person workshops. Our
training programme for geologists continues; this covers
theory and practice on geochemical modelling, big data
analytics, exploration methods, resources classification and
ore processing.
A new training programme for our procurement managers
has been developed in order to help them purchase goods
and services, and arrange logistics in today’s highly volatile
environment. Another new development is an online training
course on mining for non-mining specialists, such as
financial and accounting teams. These lectures are included
as part of induction training and intended to give attendees
a better understanding of the industry.
Alongside hard skills, we also help our employees develop
soft skills: an operational management training course
based on real-life case studies was launched for line
managers. We further enhanced our wider employee
programmes and engagement events, such Talent Pool,
Best-in-Profession Competition and the Research and
Development Conference.
Mentoring and succession planning
As well as training programmes, we continue to invest in
tools to empower our employees and increase internal
mobility. Our Talent Pool is designed to develop future
leaders and helps us meet most of our staffing needs
internally. Any suitably qualified employee can apply for a
vacancy or to join the Talent Pool. A variety of assessment
procedures are used to train future leaders, including
360-degree evaluations, assessment centres and
competency-based interviews. All participants receive
feedback and a personal development plan. In 2022, the
Talent Pool consisted of 573 employees and 19% of them
gained a promotion. We focused on creating a pool of
internal candidates for leadership roles in engineering,
construction, mine management and finance.
Succession planning is no less crucial when it comes to
senior management positions. We support potential
candidates for these roles with a training schedule that
includes operational and strategic management, critical
thinking, communications and change management.
In 2022, as part of our aim to move from a traditional
‘top-down’ approach in talent development, we launched
a corporate mentorship programme. Like the Talent Pool
programme, it enables a better flow of knowledge and
expertise within the Company, with mentees
communicating with their mentors to discuss their career
goals and how they would achieve them.
Sharing knowledge across the Group
Deployment of innovation requires a change in mindset,
including active cross-functional collaboration. Our
ProgressorLAB initiative brings together talented and
creative employees from different Polymetal sites in working
groups to problem solve on topics such as geological
surveying, engineering, operational efficiency and data
analytics. To date, 116 people are registered as participants
in ProgressorLAB group projects and 51 people as experts.
All employees have access to the corporate Knowledge
Base, which contains practical case studies of investment
project implementation, industrial trials results and best
operational efficiency solutions as suggested by other
employees. This experience exchange helps employees
across the Group solve challenging mining, processing,
Research and Development Conference
Every year, our Research and Development Conference
brings together young talent from across the Group to
present new ideas for possible implementation in
production. Each participant is assigned a mentor to
consult before presenting the project to the expert jury at
the conference. The projects selected for implementation
are those that balance originality with practical applicability
and efficiency. These are also included in the Company’s
Knowledge Base as part of the essential intellectual capital
of the Group.
In 2022, the participants presented 50 improvement
projects in geology, mining, processing, environmental
impact reduction and safety, with a particular focus on
innovation and digitalisation. Of these projects, 40% were
selected for further development and implementation.
“I was feeling a bit nervous before presenting my project to
the jury, but a training session on public speaking on the
opening day of the conference was really helpful. I plan to
participate in next year’s event as well – perhaps as a
mentor for someone else,” said Ksenia Emelyanova,
laboratory assistant at Omolon and originator of one of the
winning projects on a new method of sample analysis.
safety and other tasks. Over the last two years, there was
a 30% increase in the number of annual user sessions.
to be raised anonymously to be dealt with by the relevant
department (read more on page 81).
Nourishing competitive culture
Our Best-in-Profession Competition has been running since
2015, with approximately 1,000 Group employees taking
part annually. The competition helps to award the most
skilled employees, drive their motivation, share corporate
best practice and promote working professions. In 2022,
1,161 employees and contractors’ workers took part in skills
competitions.
The Best-in-Profession Competition tests knowledge and
practical skills with a particular focus on safety and
environmental management. It helps to identify knowledge
gaps and develop refresher training plans, especially for
safety rules. Polymetal encourages contractors to
participate in the skill competitions alongside Company
employees to give them an opportunity to get a better feel
of the Polymetal’s safety culture.
To encourage more employees to compete, the Company is
continuously looking for ways to enhance the Best-in-
Profession Competition. For example, competitions for
geologists and surveyors now include executing tasks using
Datamine software.
Diversity and inclusion
We value a diversity of views and backgrounds among our
employees, as set out in our Diversity and Inclusion Policy.
We do not discriminate on any grounds, be they gender, race,
religion, disability or political affiliation. When advertising a role
and recruiting candidates, assessors specify qualification
requirements and avoid any conscious or unconscious bias
when interviewing people. Remuneration decisions are based
purely on competence for the role, regardless of any other
attribute. We monitor discrimination-related incidents via our
feedback systems, such as our Hotline, which enables issues
In order to eliminate workplace bias, empower diverse
teams and attract and retain people with different
backgrounds, we have adopted a five-year Diversity and
Inclusion Programme, which includes training and
engagement activities, diversity metrics and targets,
collaboration with educational institutions and ongoing
internal communication.
Equality and inclusion issues are raised at each meeting of
the Nomination Committee, and diversity-related KPIs have
been established for our CEO and other senior leaders.
Gender equality
We monitor the proportion of women at each level, in key
departments and among the participants in development
programmes. While the number of women employed in
2022 remained at 21% of the total workforce (2021: 21%),
female representation in the Talent Pool increased to 35%
(2021: 30%) and to 34% among participants of the
Research and Development Conference (2021: 23%).
We also track the gender pay gap and the number of
female applicants for our job vacancies.
We continue our efforts around equal access to technical
education, removing the barriers to career growth and
promoting female leadership within and outside the Group.
As one of the co-founders of the Women in Mining Russia
organisation, we aim to encourage more women to enter
our industry and progress to leadership roles. We actively
promote this through motivating online workshops,
networking with female leaders from peer companies and a
cross-industry competition: Talented Women Award. Held
for the second consecutive year in 2022, the competition
attracted 388 applications from 40 companies within the
mining, manufacturing, chemical and oil and gas industries.
Gender diversity by employee level
Total workforce
Management
21%
Male
Female
22%
Male
Female
79%
78%
Qualified personnel
41%
Male
Female
59%
Workers
12%
Male
Female
88%
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Workforce engagement at various management levels
• Direct Line
• Meeting with Young
•
Leaders
Employee target group
(Female Chief Engineer
programme)
` Read more on pages 151‑152
Board of
Directors
Group
leadership
•
Employees survey
(every two years)
Direct Line (Group CEO)
•
• Hotline
• E-mail address
Communication
channels
•
Quarterly meetings with
workforce
• Dedicated walk-in sessions
•
Meetings with Young
Leaders and Talent Pool
participants
Site
management
Branch
managers
•
Regional universal
phone number
• Pulse survey
• Newspaper • Intranet • Information boards
• Brochures, posters, video • WhatsApp messenger, corporate e-mail • Meetings
According to surveys among both our employees and
members of Women in Mining Russia, women tend to
experience difficulties visualising their future career path
and talking about their achievements, despite the high level
of professionalism. To overcome this, we encourage our
female employees to participate as lecturers at various
conferences, thematic forums and as guest lecturers in
universities. This has led to recognition in the media with
more than 40 expert interviews published in 2022 that
featured Polymetal female employees. For 2023, we plan to
launch a dedicated section on female leadership within our
internal portal in order to enhance networking and
educational opportunities.
We partner with universities to attract at least 20% female
interns annually and we support the STEM+E Awards of the
National University of Science and Technology, a
competition for young women from technical universities.
We also introduced mentoring support for new parents
returning to work and launched online training around
diverse culture in decision-making, which is now part of
induction training.
Inclusive environment
We understand that different types of physical and mental
disability require a tailored approach to hiring and it is our
responsibility to create an inclusive environment for those
with special needs. Being an employer of 66 people with
disabilities, we collaborate with a specialist recruitment
agency that matches candidates with disabilities with
employers that provide accessible work places, even in
remote regions. In 2022, we developed an interactive online
course on inclusion practices to help colleagues build better
and more efficient relationships with people with special
physical or mental needs, providing an informed definition
to disability and warning about the risks of possible bias at
work. This has also been added to the induction
programme for new employees.
Age diversity
Our workforce is comprised of 16% of those aged 50 and
above, who are the major source of expertise and
mentorship in many areas. We offer flexible hours and
remote work or redirect them from physically demanding
jobs towards teaching and mentoring younger colleagues.
Our generous corporate medical insurance programme
covers all employees and helps them take care of their
health.
Employees by age group
16%
16%
68%
Under 30 years old
30–50 years old
Over 50 years old
Communications and engagement
Our internal feedback system allows us to understand
employee concerns and provide a timely response.
Employees can send confidential feedback through a
variety of channels, including a corporate Hotline (telephone
or email – it can be anonymous), messenger app or a
meeting with their manager. All employees are made aware
of these channels at their induction and they are easy to find
within corporate media. In 2022, we received 1,629
enquiries to these channels, with topics raised primarily
including living and working conditions, social benefits and
remuneration. Each enquiry is investigated and remedied as
appropriate. We also conduct a quarterly analysis of all
reported issues and share anonymised responses to the
most frequent enquiries in our Company newsletter,
corporate portal, info-boards and at meetings.
Topics dominating employee enquiries
(%)
513
4
6
33
14
1,629
enquiries received
and responded
Living conditions
Work conditions and equipment (PPEs, tools, etc.)
Remuneration
Social benefits¹
Health and safety
Company's business strategy
Training and development
15
18
Corporate events, professional contests and sport
Other²
Headcount and turnover
Headcount in Russia
Headcount in Kazakhstan
Group turnover, %
15,000
14,000
12,000
12,000
10,000
9,000
8,000
6,000
6,000
4,000
3,000
2,000
11,611
12,064
11,611
12,065
13,392
13,392
8.2
14,694
6.5
5.8
6.5
5.8
8.2
8.4
2019
2020
2021
2019
2020
2021
2022
10%
8%
12%
10%
6%
8%
4%
6%
4%
2%
2%
А Group-wide survey is held every two years – the next one
is planned for 2023. It aims to assess employee perceptions
of our corporate culture, with the results used to continually
improve our workplaces in line with our core values. In
addition to this, throughout the year, we ask employees for
feedback on a variety of issues, from on-site living and
leisure facilities to new training programmes.
Another tool that helps us engage employees and provide
them opportunities to make a positive impact is corporate
volunteering. The volunteering movement has been
developing in more than 20 cities in Kazakhstan and Russia
and in 2022 it included more than 2,800 Polymetal’s
employees. We have opened a Volunteer School to educate
those interested on the correct and efficient way to organise
and participate in volunteering events. Today our volunteers
not only participate in projects initiated by the Company, but
also launch their own projects aimed at positive social or
environmental impact. Read more on our volunteering
projects on page 78.
Freedom of association
We acknowledge the right of our employees to join
organisations that protect and support their interests.
This includes the right to elect representatives in
accordance with the laws and practices of the countries
where we operate. In 2022, 80% of all employees and 100%
of operating site staff were covered by collective bargaining
agreements. At each operating site, employees have set up
Workers’ Councils, with employee representatives elected
to the Commissions for Regulation of Social and Labour
Relations to facilitate discussion between employees
and Polymetal.
Headcount and turnover
Our average headcount in 2022 increased by 10% to
14,694 employees, with more than half working on a fly-in/
fly-out basis at remote sites. Our voluntary turnover rate
slightly increased to 8.4% in 2022, compared with 8.2% in
2021. The voluntary turnover within assets in Russia is 9.4%
while in Kazakhstan it accounts for 4.6%. The increased
turnover in Russia is mainly driven by that of development
projects like Veduga and Kutyn, as the teams are often
unstable at early stages of a project. We continue to
develop digital systems that enable better tracking and
analysis of people-related metrics that would, in turn,
enable better decision-making about our HR policy.
54
55
1
2
Including questions on the private health insurance scheme.
Including questions related to relations with other employees and managemens and questions on Covid-19 vaccination.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Sustainability continued
Sustainability continued
Environment
As temporary stewards of valuable land, we have the responsibility
to do everything within our power to ensure a safe environment for
local communities and to conserve natural resources for future
generations.
464 ha
of land rehabilitated
At a glance
91%
of water is reused or
recycled
28%
of tailings are dry‑
stacked
Our priorities
• Environmental impact monitoring across all sites with
the focus on efficient use of resources
• Achieving a target of 55% decrease in fresh water
withdrawal per tonne of ore processed by 2030
(baseline 2019)
• Transition from tailings dams to a safer technology of
dry stacking: achieve 50% dry-stack tailings storage
by 2030
• Eliminating adverse biodiversity impacts at each
stage of the life-of-mine.
Which guidelines do we follow?
External: UN Global Compact, ISO 14001, EBRD
Environmental and Social Policy, International Cyanide
Management Code, the Global Industry Standard on
Tailings Management, Responsible Gold Mining
Principles, World Bank Guidelines and Policies, Science
Based Targets for Nature, ICMM and IUCN guidelines.
Corporate: Code of Conduct, Environmental Policy,
Environmental Management System, Tailings and
Hydraulic Facilities Management Policy,
Mine Closure Policy.
56
Our approach
While we understand that the impact of the mining industry
on the environment is inevitable, minimising our
environmental footprint is one of our strategic goals. We do
this through monitoring, efficient resource use and
innovation. Our Environmental Policy is implemented on the
ground through the Group-level Environmental
Management System (EMS) along with specific systems for
cyanide, tailings and mine closure management.
The EMS includes rigorous controls to avoid the
contamination of water, air and land, as well as adverse
impacts on biodiversity and noise pollution. It helps us set
targets, consistently measure performance and ensure
compliance with national legislation. While acknowledging
that certain environmental risks may affect the Company’s
operational results and reputation, we have developed a
rigorous risk assessment system within our EMS.
Environmental management plans are annually reviewed at
each operating site and prioritise preventative actions over
compensatory ones.
We see ourselves as long-term stewards of natural
resources and are committed to mitigating environmental
risks at each stage of the life-of-mine cycle. At the design
stage, all potential environmental concerns are taken into
account through the multi-stakeholder procedure of an
Environmental Impact Assessment. Once a facility is
operational, impacts are monitored by local environmental
teams, with environmental compliance subject to regular
checks by governmental bodies, our internal audit function
and third-party experts. Finally, we plan ahead for mine
closure and restoration activities to ensure that our
infrastructure does not cause harm to people or the
environment after the life-of-mine end.
We recognise the importance of environmental awareness
and feedback mechanisms. Each site aims to deliver
environmental training annually to at least 25% of its
engineering and technical staff, as well as to at least two
representatives of contracting organisations. All
stakeholders are able to comment on our approach or
report concerns or grievances formally and anonymously,
through such mechanisms as public hearings and direct
mail. All feedback is formally logged and actioned. In 2022,
we received 18 enquiries related to our impact on the
environment, all of which were resolved.
Environmental expectations also extend to our contractors,
particularly those working at our sites. Our contracts
stipulate penalties for non-compliance, notably around
pollution, packaging, noise and emergency preparedness.
Once a supplier is contracted with us, we conduct periodic
formal assessments and audits for environmental
compliance and best practice. All contractors are inducted
into our EMS and are required to demonstrate responsible
practices and continual improvement. In 2022, we carried
out 264 environmental checks of more than 100 contractor
organisations.
Water stewardship
Water is a critical input for our processing activities. Our
operating facilities are designed and constantly upgraded to
minimise fresh water withdrawal and ensure safe water
discharge.
Monitoring water quantity and quality is one of the key areas
of our EMS. Climate change and its projected physical
impacts on our operations amplify the importance of water
risk monitoring. We continuously improve our water
efficiency through metering and auditing our water use,
while also carefully managing the quality of discharge water.
The majority of the water we use is consumed by our plants
during ore processing, with most of it circulating in a closed
water cycle. Some operations consume additional water
purchased from local utility companies. As a last resort,
we utilise local or state authority permits to extract limited
quantities from rivers, dams and groundwater aquifers.
However, we never withdraw water from surface sources
in environmentally sensitive areas or where eco- and
bio-services are of great importance to local or indigenous
communities. Water usage is monitored via meters or,
when not possible, estimations based on operating time
of pumps.
As water is a resource we all share, working with the
community is central to our approach. We recognise
access to safe and clean water as a salient human rights
issue. We assess possible water risks in each of our
operating regions, with feedback mechanisms to allow
people to raise issues without fear of reprisal and with the
assurance that their concern will be fully investigated. We
also partner with local governments and community
organisations to support long-term water security, including
funding infrastructure projects.
Water risks are identified and assessed by environmental
teams at operating sites as part of our EMS and Climate
Change Management System. EMS risks are managed on a
one-year time horizon based on historical data around, for
example, incidents of pollution or water excess, as well as
plant technology data. Medium- and long-term risks, such
as flooding or shifts in precipitation, are assessed within our
Climate Change Management system, in line with IPCC
climate change projections (read more in the Climate
Change chapter, page 62). The most salient risks are
subject to financial assessment. To assess risks, we use the
World Resources Institute (WRI) Aqueduct tool, which
evaluates water-related risks at catchment level and
identifies potential water-scarce locations.
Baseline water stress¹ in regions of operation according to
the World Resources Institute (WRI) Aqueduct tool
Mayskoye
Medium – High
Voro
High
Varvara
High
Veduga
Medium – High
Kyzyl
Low
Prognoz
Medium – High
Nezhda
Low
Omolon
Medium – High
Dukat
Low
Svetloye
Low
Albazino
Low
Amursk POX hub
Low
Key:
No data
Low – Medium (10–20 %)
Extremely High (>80 %)
Arid or low water use
Medium – High (20–40 %)
Operating asset
Low (<10 %)
High (40–80 %)
1 Baseline water stress measures
the ratio of total water
withdrawals to available
renewable surface and
groundwater supplies.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Water stress risk: reducing fresh water use
According to the Aqueduct tool, approximately half of our
operating assets are located in areas with water stress
classified as low or low-to-medium, while the others are
located in high and medium-to-high areas (see the map on
page 57). To minimise the impact of water stress on our
business and reduce our impact on local ecosystems, we
reduce fresh water withdrawals by using water in a closed
cycle at flotation plants and capturing waste water that has
naturally seeped into our mines and rainwater (e.g. for
irrigation to suppress dust). Overall, 91% of our on-site
water consumption is via a closed cycle of treated waste
water. Closed water cycle systems serve as the blueprint for
all our new processing facilities. Our vision is to eliminate
fresh water withdrawal for processing in regions of high
water stress.
Our water programme is underpinned by an ambitious
target to reduce fresh water use for processing per unit
of production by 55% by 2030, compared with the 2019
baseline. In 2022, we decreased our fresh water intensity
for ore processing by 49%, compared with 2019,
to 138 m³/1,000 t.
Fresh water withdrawal
(thousand m3)
Fresh water for ore processing
Fresh water for non-technological purposes
3,484
3,484
3,480
3,480
3,344
3,344
4,919
5,000
5,000
4,000
4,000
3,000
3,000
2,000
2,000
1,000
1,000
2019
2020
2019
2020
2021
2021
2022
2022
Fresh water withdrawal for technological purposes
(m3/Kt of processed ore)
268
268
171
171
155
155
138
138
2019
2019
2020
2020
2021
2021
2022
2022
300
300
200
200
100
100
58
Water quality risk: monitoring and treatment
Alongside monitoring water use, we take full responsibility
for the effective treatment of the water that we discharge to
local water bodies. Untreated water discharge can occur as
a result of heavy rainfall or disruption to the waterproofing
layer in cake storage, collecting ponds or other facilities.
To mitigate this, we monitor the integrity of our facilities and
their water levels. We purchase additional pumps if needed
and swiftly update emergency response plans where
required (read more on tailings facilities safety on page 59).
Finally, we look for ways to use excess water in production
processes on an ongoing basis. With regard to water
treatment, we rigorously ensure all discharge is purified
using mechanical, physico-chemical and biological
processes. In addition, we monitor the quality of water
bodies upstream and downstream to ensure zero
contamination. Monitoring includes laboratory testing for
nitrites, nitrates, ammonium, heavy metals, salts
and cyanides.
In 2022, we took the following steps to improve our water
treatment:
• fully renewed waste-water treatment facilities in
Mayskoye, Dukat and Lunnoye mines
• renovated collecting ponds infrastructure at Albazino
• installed treatment facilities at the Kutyn development
project
• started the automatisation of discharge monitoring
systems at Komarovskoye mine (this will be completed
in 2023).
In 2023, new collecting ponds and treatment facilities will be
launched at Albazino and Nezhda.
Water use in 2022
m³
37.8m
total water
consumed
3.3m
fresh water
30.7m
recycled water
in processing
3.8m
waste water
91%
of total water
consumed is
recycled
Waste management
Waste is an inherent by-product of the entire mining
industry, which generates significant quantities of mineral
waste, such as overburden rock and tailings, as well as
relatively small quantities of non-mineral and hazardous
substance waste. With our circular economy mindset, we
are committed to minimising the materials we use, reusing
and recycling waste, on-site or off-site by accredited
organisations.
In 2022, the proportion of waste recycled was 23%
(2021: 23%). For the waste we cannot reuse or recycle,
we ensure that disposal will not pose a risk to the
ecosystem. At all sites, formal measures are in place to
ensure the environmentally safe disposal of waste and these
are clearly communicated to employees.
Tailings and overburden waste
Mineral waste, such as tailings and overburden, comprises
more than 99% of our overall waste generated by weight.
We store our mineral waste at rock dumps and tailings
storage facilities (TSFs – tailings dams and dry stack
facilities). Such waste is usually classified as non-hazardous
and reused or disposed of at our own sites.
We operate eight tailings dams and four dry stacking
facilities in Kazakhstan and Russia, and are carrying out
technical closure works at one tailing dam. To minimise their
environmental impact, we use protective lining, drainage
systems, wastewater treatment plants and water collectors.
Each TSF is rigorously monitored and inspected daily, with
checks on pipelines, pump stations, water levels and dams.
Their current state is reviewed monthly by management,
while compliance with safety regulations is regularly
checked by government agencies: in 2022, government
inspections took place at six different sites in Kazakhstan
and Russia. Our studies have confirmed that any
emergency failure at our dams would have no impact on
settlements, buildings, structures or facilities where
communities or employees may be present.
To further improve tailings safety and minimise the risk of
dam failure, we are moving towards dry stack storage
methods. After tailings dehumidification, water returns to
the production cycle. Our dry cake storage technology
excludes affecting ground and surface water, as well as the
surrounding area. We currently store 72% in dams and 28%
as dry cake, but we are gradually increasing dry stacking as
this significantly reduces the risk of water contamination. In
2022, we completed the transition from wet tailings disposal
to dry stacking at Omolon, which we began in 2021. Dry
stacking is also in place at Amursk POX, Voro and Nezhda,
and we plan to start applying this technology at Dukat by
2024. Our target is for 50% of all our tailings to be stored in
this way by 2030. We are committed to ensuring the
compliance of all our operations with the Global Industry
Standard on Tailings Management and, in 2022, we
updated our full disclosure on TSFs, which is available on
our website.
To reduce mineral waste disposal, we backfill overburden in
developed chambers and use it for the construction and
maintenance of roads and operating sites. For example, we
are planning to use tailings from our Mayskoye processing
plant as backfill for underground mines starting from 2024.
This will enable the reuse of up to half of the volume of
tailing waste generated at the site.
Active tailings storage facilities by type
Upstream
Downstream
Centreline
Dry stack
4
4
1
3
Non‑mineral waste
We take measures to recycle non-mineral waste where
possible, including paper, plastic and metal – either at our
own sites or by accredited organisations: in 2022, 65% of
our non-mineral waste was either recycled or reused. All our
production sites are equipped with recycling bins for
separate waste collection and, in 2022, we launched food
waste recycling at Albazino and Svetloye. The food waste
will be recycled into an organic animal feed additive and a
soil fertiliser for use in land reclamation. In addition to
fostering a circular economy, this reduces GHG emissions
and air pollution from solid waste dumps.
To minimise plastic waste, we also now reuse, where
possible, the large bags for storing ore concentrate.
Non-recyclable solid and industrial wastes are neutralised
and stored at our special waste polygons or landfilled by
external companies. We employ environmental monitoring
at all our special waste polygons to gauge the quality of air,
surface and ground waters, and soils.
Air emissions
Many of our core activities generate nitrogen, sulphur
oxides and inorganic dust. Our environmental teams
continually monitor these gases and particulates to ensure
high air quality standards. To minimise the impact of our
operations on air quality, we apply irrigation, dust separation
and shield technologies. Across our vehicle and mining
equipment fleet, we monitor compliance with quality
standards and apply cutting-edge technologies. Our boiler
houses and processing plants are equipped with industrial
air filters that remove particles and gases from the air. We
use heat recovery technology to convert wasted heat from
diesel generators, thus reducing emissions resulting from
fuels (read more on energy efficiency at page 75).
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Cyanide management
The handling of cyanide, used as a leaching agent when
recovering gold from ore, is rigorously controlled at every
step to protect our people and avoid any release into
the ecosystem.
Our Cyanide Management System ensures a consistent
approach to cyanide handling, procurement, transportation,
storage, processing, decommissioning, employee safety,
emergency response, training and engaging stakeholders.
It is now implemented at all operating sites where cyanide is
used. Our approach involves identifying all associated
hazards, strictly controlling cyanide levels in our tailings,
engaging with third-party cyanide producers and
transporters and monitoring air, soil, surface and ground
water. We design, construct and monitor tailings dams to
avoid cyanide effluent and share all data with public
authorities (and other stakeholders on request).
Polymetal is a signatory of the Cyanide Management Code.
Our Amursk POX, Voro and, starting from 2022, Varvara
operation are fully certified as gold mining companies and,
separately, as cyanide transporters.
Environmental compliance
In 2022, government agencies inspected all our operating sites
in Kazakhstan and several sites in Russia, including
unscheduled onsite audits at Amursk POX and Saum (Voro
hub) and online preventive checks at Mayskoye, Albazino and
Dukat. In Kazakhstan, all the disclosed non-compliances have
been resolved as recommended by the regulator. In Russia,
several non-compliances were disclosed at our Saum site,
mainly in relation to insufficient environmental monitoring and
waste accounting procedures. Following the audit, we
appealed against these results by providing the relevant
supporting documentation. The audit at Amursk POX
highlighted the risk of untreated water discharge during the
rainy season and we have committed to installing an additional
water collector on site. Total fines amounted to approximately
$6,200 and had no significant effect on business.
Biodiversity and land
From the outset of a mining project, we determine
biodiversity impacts using an Environmental Impact
Assessment that includes engagement with environmental
organisations and local communities. We then conduct
ongoing, site-specific biodiversity monitoring, which
involves studies of flora and fauna near our mining sites,
in collaboration with local biodiversity experts. In addition to
scientific monitoring, we have developed a framework to
promptly report on any cases related to biodiversity,
focusing on those that lead to any wildlife harm or
mortalities (three such cases took place in 2022).
In accordance with the Science Based Targets for Nature
Initial Guidance for Business, we have identified land use
change from mining and related infrastructure as the main
pressure on biodiversity, water bodies and natural carbon
sinks. IUCN Guidelines for Planning and Monitoring
Corporate Biodiversity Performance helped us to identify
the priorities related to protected areas and species. See
how we consider biodiversity impacts at all stages of mine
life below.
Protected territories
It is beholden on all mining companies to avoid areas of high
biodiversity importance in order to minimise their
environmental impact. Polymetal already operates a no-go
policy for World Heritage Sites, Ramsar Sites and legally
designated protected areas and adjacent territories. Our
Committee for Ore Reserves requires each new project to
assess its proximity to and potential impact on protected areas
before making an investment decision. Currently, the only
legally designated protected area that is adjacent to
Polymetal’s operations is a territory of traditional nature use
near our Omolon operation, where we pay increased
environmental fees in compliance with the legislation (find out
more about our indigenous communities’ engagement on
page 76).
Protected species
The impact on Red List species, habitats and ecosystems is
determined during the Environmental Impact Assessment at
the start of each project. When operations begin, the mining
site submits an annual biodiversity report, which lists rare,
protected and hunted species found at the site and adjacent
territory. We have measures in place to protect species at our
sites, which span every aspect from project exploration to
site closure.
At exploration stage:
• using aerial photography and lighter drilling equipment to
reduce physical disturbance of land;
• plugging drill holes to prevent small mammals becoming
trapped;
• reclaiming trenches and roads that are no longer
needed.
Considering biodiversity at all life‑of‑mine stages
Exploration
Design and construction
Operation
Mine closure
Polymetal’s Committee for
Ore Reserves evaluates
biodiversity-related risks for
each potential site, including
proximity to protected areas
and migratory routes,
presence of protected
species and value for
Indigenous Minorities of the
North.
Environmental Impact
Assessment (EIA) is
developed in collaboration
with scientific organisations
in accordance with local
legislation, followed by public
hearings. EIA is part of the
design project, which is
approved by state authorities
to start construction.
Annual biodiversity
management plans specify
measures to mitigate the
impact and to improve
biodiversity monitoring.
Mine-closure plan ensures
the environmental safety of
mines, buildings, tailing
storage and other
infrastructure. Rehabilitation
solutions include soil
placement, planting and
offsetting aqua diversity.
60
At construction stage:
• permitting passage only on designated roads without
disturbing additional land.
At operation stage:
• installing animal deterrents at waste polygons, grid lines
and tailing storage facilities;
• surrounding open-pits with waste rock walls to prevent
animals from falling in;
• reducing light pollution by using lights directed
downwards to avoid confusing birds in flights;
• adopting safe-and-clean technologies, such as dry
stacking of tailings;
• dust suppression;
• cleaning water protection zones and coastal strips of
local water bodies, an employee volunteering initiative;
• installing road signs to warn about wild animals at and
outside the site on surrounding territories;
• prohibiting fishing and hunting as well as gathering of
Red List plants by employees;
• educating and engaging employees and communities.
At closure stage:
• rehabilitating the land by sowing and planting native
grasses and trees;
• ensuring safety and stability of the structures.
In 2022, external experts carried out six biodiversity studies
to analyse our impact on species and ecosystems at
Veduga, Mayskoye, Nezhda, Kutyn and two sites within our
Voro hub. Additionally, in the Khabarovsk region, Polymetal
sponsored a scientific expedition to the Bologna Reserve to
study the unique population of oriental storks in the Amur
Basin. Polymetal’s employees participated in the expedition
alongside independent biodiversity experts.
Rare and protected species’ habitats in areas
affected by Polymetal operations
IUCN Red List of
Threatened Species
Number of species in
the direct impact area
(found at the site)
Number of species
in the indirect
impact area (found
up to 1 km away
from the site)
Least concern
Near threatened
Vulnerable
Endangered
Critically endangered
National Red Lists
Red Data Book of the
Russian Federation
Red Data Book of
Kazakhstan
Endemic species
270
695
7
6
0
0
6
11
1
15
21
4
5
52
6
3
Reforestation
Forests provide homes and food for species, a natural water
cycle and serve as carbon capture and storage. Since
mining in boreal zones requires felling trees, Polymetal has
developed a strategy to compensate for any deforestation.
In line with applicable legislations, within three years after
disturbing an area of land, we are committed to planting
native tree species in an area of equal size in the same
region, as selected by the local government.
In 2022, we planted 1.8 million saplings of pine, larch and cedar
on almost 900 hectares of land in five regions of Russia.
By 2025, we aim to plant at least 2,750 hectares in Russia
(predominantly in the Russian Far East region) and Kazakhstan.
When carrying out reforestation works, we use saplings that
are at least two years old and, for at least three years after
planting, we tend the trees to support healthy growth.
Mine closure
Once we have finished working in a particular area, we are
committed to comprehensive land rehabilitation, focusing
on the reparation of any environmental damage caused by
our operations. In 2022, we did not close any mines or
plant. Nonetheless, we continued to prepare for the
end-of-life at all our sites. Our priority is to reduce social and
environmental risks associated with closure or transfer to
other organisations for further use. This may involve
applying technologies to assess and safeguard a site, as
well as raising employee awareness about the importance
of responsible mine closure planning.
Green Ideas Contest: implementing the
best environmental projects
In 2022, the Company held the second corporate Green
Ideas Contest, aimed at selecting the best projects that
seek to resolve the most acute environmental problems
at our sites or in our regions of operation. It also raises
employees’ environmental awareness and encourages
them to contribute to Polymetal’s sustainability strategy.
This year we received 150 ideas from employees across
all our operations, double the number of entries in the
first year.
We select projects with the ambition to transform land
and water areas into cultural and environmental spaces
and raise the eco-efficiency of our operations. The
projects cover not only areas that have been disturbed
by Polymetal’s operations but also those damaged by
the previous owners and acquired by the Company
along with mining and construction licences.
The following projects were selected as this year’s
winners and are now in the process of being
implemented:
• Landscaping of the natural spring area located near
Zhuravlevka village in Kazakhstan. A landscaping plan
was developed for the spring area and the area has
been cleared. We are hoping to include the spring on
the list of tourist sites in the Beimbet Mailin District.
The project will be completed by September 2023.
• Revegetation of disturbed areas at Prognoz
(Yakutia). The revegetation project for the disturbed
lands at Prognoz featured an experiment conducted
by the Company and the Kola Scientific Centre of
the Russian Academy of Sciences, which helped to
select an approach to revegetation. The third stage
of the project is now underway: creating suitable
grass turfs using the hydroponic method.
• Automated emission control system to minimise
energy use for concentrate drying at the Albazino
plant. Data is currently being collected and analysed
with plans to launch the system during 2023.
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Sustainability continued
Climate change
Global climate change will require us to be more resilient and
forward-thinking. This means innovating in extraction to minimise
greenhouse gas (GHG) emissions, while assessing the effects
of a changing climate.
27%
share of heat
utilisation systems in
total heat consumption
At a glance
15%
decrease in GHG
emissions intensity
compared with 2019
30%
share of renewable
electricity in total
electricity
consumption
Our priorities
• 30% decrease in GHG emission intensity per ounce
of gold equivalent by 2030 (Scope 1+2, 2019
baseline)
• 35% decrease in absolute GHG emissions by 2030
(Scope 1+2, 2019 baseline)
• Achieve 7% of total electricity self-generation from
renewable sources by 2025
• Develop a Scope 3 target and net-zero approach by
the end of 2023.
Which guidelines do we follow?
External: The Paris Agreement, TCFD, GHG Protocol,
Science Based Targets initiative, ISO 14001, ISO 50001,
EBRD Environmental and Social Policy, Responsible
Gold Mining Principles, World Bank Guidelines and
Policies.
Corporate: Climate Policy, Climate Management
System, Environmental Policy, Environmental
Management System, Energy Policy.
Our approach
Climate change calls for global action to minimise the
human impact on the climate and to accelerate the
transition to a low-carbon economy. We support the
initiatives from countries that joined the Paris Agreement to
reduce GHG emissions and strive to build a climate resilient
strategy for the long-term horizon, and follow our path to
carbon neutrality.
Accepting the need to take urgent action to mitigate
human-made impacts on the climate, we are committed to
reducing our own impact and developing an approach to
potential carbon neutrality. However, we believe that
decarbonisation is not a goal in itself – it is only one tool in
limiting climate change. Therefore, in our strategy, we are
focused on those projects that comprehensively reduce our
GHG emissions and net impact on water resources and
biodiversity.
In 2022, we adhered to our climate targets of reducing our
direct and energy-related emissions, and we are gradually
implementing our Climate Action Plan. In our Climate
Strategy, we give unconditional priority to real
decarbonisation projects and state that offsetting is
reserved only for hard-to-abate or residual impacts that
cannot be avoided at the current level of technological
development. Thus, in 2022, we began designing new solar
power plants with a total capacity of up to 40 MW and
a reforestation project in Kazakhstan. As a part of our
Climate Action Plan, these are the next steps towards
carbon neutrality and will reduce carbon emissions in
Kazakhstan by 20%.
The transition to a low-carbon economy is impossible
without close collaboration along the entire value chain.
Therefore, we encourage our partners, contractors and
suppliers to apply the same strict standards to reduce their
carbon footprint as we do ourselves. We have also started a
process of implementing additional requirements and
conditions in contracts with our offtakers and buyers of the
finished product aimed at making the process of climate-
related data exchange smoother and more transparent. We
are confident that these improvements in our value chain
(both upstream and downstream) will enable us to set
Scope 3 goals and to develop a detailed net-zero plan by
the end of 2023.
Resilience and future‑proofing
Building long-term resilience is a strategic priority. Many of
our assets are located in regions where potential climate
change could have a significant impact on our operations.
By introducing cutting-edge technologies, adapting to
climate risks and gradually reducing our carbon footprint,
we both mitigate our impact on the environment and
improve our resilience to the threats of climate change.
The changes that are taking place require us to assess and
monitor climate-related risks and opportunities thoroughly.
Our approach to climate-related risks analysis includes both
qualitative and financial assessment of climate risks and
opportunities in different horizons and climatic scenarios,
and is fully integrated into our Risk Management System.
We use climate risk assessments and corresponding
metrics when developing existing assets, making strategic
decisions on new projects and updating our Climate Action
Plan. In 2022, in line with our corporate Climate
Management System (CMS), we updated the in-depth
assessment of the climate-related risks and opportunities
and developed action plans for the key risks of each asset.
Energy consumption by source
(% of total consumption)
8 21
23
3
35
27
66
Diesel
Electricity purchased
Coal for heat
Natural gas for heat
Other (including solar and wind
power plants, petrol and waste oils)
Diesel
Diesel for transport and mobile machinery
Diesel for electricity generation
Diesel for heat
The Polymetal Climate Strategy
The seriousness of global climate change challenges all
those in society to build resilience. To this end, we adapt
our strategy by employing advanced technologies and
continually improving operational performance. At the same
time, evaluating our impact and risk exposure is ongoing.
Often located in remote regions, we operate in five different
climatic zones in Russia, including European Russia,
Western and Central Siberia, the Far East, Yakutia and
Chukotka, and in the northern regions of Kazakhstan. Each
of these areas has its own microclimate. In addition, some
Russian assets are located in the permafrost region. Since
permafrost zones are especially vulnerable to climate
change, we pay special attention to the safety of our
facilities there and meticulously monitor all soil changes as
indicators of potential climatic disturbance to the ground
and foundations of our assets.
Acknowledging the significant impact of climate change and
the volatility of climate factors, we identify, assess and
manage climate risks and opportunities on an ongoing
basis. Our corporate Climate Management System and
Corporate Standard for assessing climate risks and
1 Specific near-term targets.
Looking ahead, climate change remains a source of risk but
also opportunity. The energy transition and development of
renewable energy sources bring decarbonisation potential,
as well as opening up prospects for non-ferrous metals
markets (namely in technology sectors). We are, therefore,
continually expanding the resource base of our operating
projects, as well as considering new projects for the
development of copper deposits. In the long term, we
expect an increase in demand for this metal to underpin
capacities of renewable energy sources and energy storage
systems.
In summary, our in-depth assessment of climate risks and
opportunities, combined with an action plan, ensures that
we are moving forward with robustness and confidence.
GHG intensity reduction target
Scope 1 + Scope 2 emissions intensity per GE oz,
share of baseline 2019
Baseline
-2%
742
kg CO2e
per GE oz
730
kg CO2e
per GE oz
-9%
-15%
677
kg CO2e
per GE oz
632
kg CO2e
per GE oz
-30%
519
kg CO2e
per GE oz
2019
2020
2021
2022
2030
2025
2026
2027
2028
2029
2030
opportunities establish a mandatory assessment of climate
risks and opportunities for all of our existing sites and
development projects. Every three years, we plan to
conduct an in-depth analysis, including the revision of
climate scenarios, while monitoring and updating key risks
and opportunities is ongoing with twice-yearly reporting.
In line with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), we conduct
scenario analysis for climate-related risks and opportunities.
We do so for three climate scenarios, based on the
Intergovernmental Panel on Climate Change (IPCC) and
International Energy Agency (IEA) scenario models:
• Sustainable development scenario: a fast transition to
a low-carbon economy, limiting the global average
temperature rise to 1.5°C above pre-industrial levels
(Shared Socioeconomic Pathway – SSP1-1.9 model by
IPCC and Net Zero Emissions by 2050 Scenario (NZE)
by IEA).
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Risks and opportunities framework
Corporate
Task Force on
Climate Change
Site level
(site management
teams)
Development and
actualisation of:
• Approaches and
assumptions
• Climate-change
scenarios
• Timeframes
Physical risks
identification and
assesment:
• Chronic risks
• Acute risks
Corporate level
(executive office)
Transitional risks
and climate
opportunities
identification and
assessment
• Policies
• Economy
• Markets
• Social
• Technology
Board level
and Board
Committees
Data
consolidation
and reporting
Strategic
decision-making
• Paris Agreement scenario: limiting the rise in global
average temperature to well below 2°C above pre-industrial
levels (SSP1-2.6 model by IPCC and Net Zero Emissions/
Announced Pledges scenarios (NZE / APS) by IEA).
• Business-as-usual scenario: a slow transition to a
low-carbon economy with the developing countries
lagging far behind; the global average temperature rise is
well above 2°C relative to pre-industrial levels (SSP2-4.5/
SSP3-7.0/SSP4-8.5 models by IPCC and Stated Policies
scenario (STEPS) by IEA).
To ensure a consistent approach, all analysis methods,
climate scenarios and assumptions are the same for all
assets and are recorded in the Corporate Standard.
Responsibility for maintaining the relevance of scenario
models sits with the Corporate Task Force on Climate
Change, which includes our Group CEO, CSO, COO, CFO
and Sustainability, Environmental, Audit and Risks and
Corporate Reporting teams.
Assessment of climate risks and opportunities is integrated
into our corporate risk management system and covers all
levels of management. In line with TCFD guidelines, we
consider physical and transitional climate risks, as well as
climatic opportunities, across three time horizons:
• Short-term looks up to one year ahead and covers the
operational planning and goalsetting phases.
• Medium-term is between one and five years ahead and
corresponds to the period of technical and economic
modelling.
• Long-term enables us to assess potential climate
changes and their impact on assets throughout the
entire life cycle.
Physical risks are identified through a bottom-up process
by site management teams. This enables us to consider the
climatic and technological features of each asset and to
develop an optimal set of mitigation measures.
As transitional climatic risks and opportunities have a
complex impact on the entire Company, their assessment is
carried out at corporate level.
Risk owners assess risks and opportunities by assigning
them a probability of occurrence and a potential financial
impact. To integrate climate risks with the corporate risk
management system, the assessment methodology and
thresholds for climate risks are fully consistent with the
parameters for corporate risks. Climate-related risks and
opportunities identified are consolidated at corporate level,
and top risks and opportunities are reported to the
Corporate Task Force on Climate Change (from 2023 these
reports will be submitted twice a year). A consolidated
climate risks report is also shared with the Risk
Management Team to communicate the data once a year to
the Board of Directors and Board Committees.
Climate-related trends – and the risks and opportunities
identified as arising from them – inform our Climate Strategy
and Action Plan. This is co-ordinated by the Corporate Task
Force on Climate Change and reviewed by the Safety and
Sustainability Committee and the Audit and Risk
Committee.
Physical risk assessments primarily form the basis of
strategic decisions on the development of our sites and
increasing their long-term resilience (read more on
pages 65-66). Transitional risk assessments are used to
assess the Company’s exposure to new carbon regulation
and to develop a decarbonisation and carbon-neutrality
strategy (read more on page 67).
Climatic opportunities are taken into account when
assessing the decarbonisation potential of low-carbon
technologies, as well as the potential of development
projects and new business areas, such as expanding
copper production (read more on pages 67-68).
Key climate risks
Evaluation of climate risks is an integral part of our strategy
and decision-making across project life cycles, from
scoping to operations and reclamation. Acknowledging the
importance of such risks and the volatility of climate factors,
we have conducted a scenario analysis, which we are
integrating into our Climate Management System.
The risk analysis complies with recent TCFD guidance, and
includes three climate scenarios that correspond to the
baseline goals of the Paris Agreement. The analysis is based
on IPCC future-oriented climate models (SSPs). These SSPs
address the changes of GHG concentrations in the
atmosphere and associated environmental, economic and
social changes. For a deeper analysis of transitional risks, our
assessment also includes IEA scenario models, which
consider strategic shifts in global politics and the economy.
Together, these models, alongside academic research, enable
us to credibly evaluate potential climate-related impacts on our
assets, including physical and transitional risks.
By analysing three scenarios and three time horizons, we
deliver a comprehensive assessment of potential impact of
climate change. To integrate the results into our risk
management system and develop mitigation measures, we
align with our Paris Agreement scenario. Our climate goals and
action plan are also aligned with this.
In 2022, we updated our climate risk assessment and
identified key material risks for each asset and for Polymetal
as a whole. The results identified all material climate risks as
low or medium. When integrating assessments into our risk
management system, climate risk was identified among
emerging risks (read the Risk management overview on
pages 96-110 and detailed information on material climate-
related risks on pages 246-248).
While evaluating the potential impact of climate change on
the Group, we also consider the impact on our supply
chain. Thus, the climate risks affecting our transport
infrastructure and logistics are included in the risk registers
of each of the assets (if they were assessed as relevant
during the scenario analysis). Such risks include potential
disruptions in the supply of goods, materials and equipment
due to climatic factors, damage to critical transport
infrastructure, bad shipping conditions etc. We are also
aware of potential climate risks associated with the
exposure of our suppliers’ production sites to extreme
weather events. To address these risks, and avoid
downtime due to potential delays or supply disruptions,
there is a reserve stock of goods, materials and spare parts
at all our assets . In addition, our Procurement Policy
includes procedures that eliminate dependence on a single
supplier and guarantee the stability of supply even if climate
risks materialise at one of our suppliers.
As of the end of 2022 and in the short term, the current
impact of climate-related issues on the financial position of
the Company, based on the target scenario, is assessed as
insignificant and does not exceed 1% of Adjusted EBITDA¹.
We also do not expect any impairment related to climate risks
on our assets. But, taking into account the potential impact
of global warming, we continue to monitor our risk exposure.
If risk levels rise to high or extreme, they will be reviewed by
our Corporate Task Force on Climate Change and the Audit
and Risk Committee, following which they may be included in
our list of principal risks.
The physical risks associated with the melting of permafrost,
as well as the transitional risks associated with national and
international carbon regulation, are the most likely to increase
in the long term. We are particularly attentive to these risks
and we have developed preventive adaptation measures.
Thawing permafrost
As 45% of Polymetal’s total gold and silver Proved and
Probable Reserves are situated in permafrost regions of
Russia, we consider potential permafrost degradation as
one of the most significant climate-related physical risks
and pay particular attention to its mitigation. While melting
does not directly affect the volume of silver and gold
reserves, it can significantly impact mining conditions,
logistics and building codes and requirements. For
example, destabilised building foundations could result in
bearing capacity failure and damaged building structures,
unacceptable operating conditions or the complete collapse
of buildings and structures, leading to financial and
environmental damage and potential injury or loss of life.
Other risks to our operations associated with permafrost
thawing include the reduced operational time of winter
roads and ice crossings, as well as increased water levels
during floods or longer flooding seasons.
When assessing permafrost-related risks, we use the
results of climate studies and our own observations.
Despite the fact that these risks are currently low and our
assets are fully resilient to possible negative events in the
short and medium terms, scenario analysis showed that, in
the long term, permafrost thawing may significantly affect
our operations. According to our modelling, damage from
geocryological risks could reach 3-5% of Adjusted EBITDA
and, in a negative scenario, become a high-level risk. That
is why we are already taking preventive measures.
We mitigate permafrost-related risks through regular
monitoring and compliance with design, construction and
operational regulations. Monitoring includes field
observations of foundation soils, the temperature regime
inside buildings and building structure movements. Upon
detecting any signs of thawing and defects in building
structures, we inform all involved parties and take
appropriate remedial measures. In 2022, based on a
comprehensive inventory of all of our buildings and
structures located in the permafrost areas along with
information about the parameters of these facilities, as well
as operating and soil conditions, we implemented a unified
corporate standard for monitoring and controlling the
condition of soils and foundations in potentially vulnerable
areas of permafrost.
64
65
1 Defined in the Alternative performance measures on page 219.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Material climate risks in Paris Agreement Scenario
(medium-term horizon)
y s i c a l
c h r onic and acute risks
h
P
Average
temperature
rises
Shifts in
precipitation
patterns
Hurricanes
Change in
hydrological
cycles
Cold waves
Permafrost-
related risks
Implementation
of environmental
insurance
Reputational
risks
Human
capital risk
R
e
p
u
t
a
t
i
o
n
National
carbon
regulation
Cross-border
carbon tax
al
g
d le
Policy a
n
Requirements for
renewable usage
Tightening of
construction
standards
Technology
Increase in the
cost of carbon-
intensive
resources
e t
k
r
M a
Transitional r i s k s
Unchanged risks
Emerging risks
Long-term potential
of emerging risks
Not relevant but
traceable risks
Low risk
Medium risk
High risk
Extreme risk
The standard includes a geotechnological monitoring
system for all buildings, constructions and facilities on
permafrost, which is to be applied at all stages of operation
(from design and construction to operation and
reclamation):
• For each asset in permafrost areas a working group on
permafrost issues is to be set up under the leadership of
the asset’s Chief Engineer.
• The working group develops a register of objects at risk
and an appropriate monitoring plan.
• Under this plan, a network of sensors and instruments
will monitor the temperature of frozen soils, the depth of
seasonal thawing, the dynamics of cryogenic processes,
fluctuations in the level of groundwater and changes in
their composition.
• This will also cover continuous monitoring of the
settlement, rolls and state of operating buildings and
structures, preparation of conclusions on the technical
condition of the bases and foundations of these and the
presentation of engineering solutions and
recommendations for their ongoing safe operation.
• A periodic systematisation and analysis of collected data
will be undertaken to prevent potential negative
phenomena.
Permafrost-related risks assessment is also embedded in
our management systems for tailings storage facilities (TSF)
and fuel storage facilities:
• All TSFs and fuel storage facilities are designed taking
permafrost conditions into consideration.
• We conduct regular external and internal monitoring of
these facilities.
• We apply a strict zero-tolerance approach to any
regulatory deviations at facilities that are potentially
environmentally hazardous.
• The logistics of fuel and lubricants supply are carefully
planned to determine optimal minimum storage volumes.
• Emergency drills are carried out for fuel-spill scenarios.
All these measures allow us to adapt to the potential
degradation of permafrost and ensure long-term resilience
to climate change and key physical climate risks.
Carbon regulation
We believe that the development of carbon markets and the
improvement of carbon accounting systems, as well as the
promotion of renewable energy, can help mitigate climate
change. At the same time, regulatory changes entail certain
risks for the business.
The emerging mechanisms for national carbon adjustment
and potential cross-border carbon taxes are the key
significant transitional risks. In the medium and long term,
we expect the introduction of transboundary regulatory
controls as well as national carbon regulations.
Kazakhstan and Russia aim to become carbon neutral by
2060: Kazakhstan adopted its decarbonisation strategy in
February 2023 and Russia is actively developing a national
carbon strategy. We expect that the introduction of carbon
regulation at a national level will follow to align with these
commitments. Currently our GHG emissions, whether
Scope 1, Scope 2 or Scope 3, are not subject to national
carbon taxes or quotas. The first taxes and mandatory
quotas for the most carbon-intensive industries may be
introduced in Kazakhstan and Russia as early as 2025-
2026, with all large industrial enterprises covered by 2030.
The implementation of the Carbon Border Adjustment
Mechanism (CBAM) by the EU is also a significant medium-
and long-term risk. From 2026, EU importers in the most
carbon-intensive industries, namely iron and steel, cement,
fertiliser, aluminium and electricity generation, will buy
carbon certificates corresponding to the carbon price that
would have been paid if the goods had been produced
under the EU’s carbon pricing rules. Despite the fact that
the precious metals mining industry does not currently
come under the CBAM, it may be incorporated from
2026–2030 and beyond. Moreover, China may introduce a
similar carbon tax in the future and is one of our key
consumers of concentrate. We closely monitor CBAM and
similar international initiatives and will reassess our direct or
indirect exposure should further changes be implemented.
According to updated IEA forecasts¹, carbon prices in
advanced economies with net-zero pledges will reach
$135-140 per ton of CO₂ by 2030. For emerging markets
and developing economies with net-zero pledges, it could
be more than $40. Given our own decarbonisation
trajectory, the risks associated with national and cross-
border carbon taxes could amount to 3–5% of our Adjusted
EBITDA in the long term.
The risks of carbon regulation not only affect existing
assets, but also our development projects. When making
strategic decisions, we include these risks in economic
assessments using an internal carbon price of $40 per ton
of CO₂, which is in line with IEA forecasts and expert
estimates for the carbon price level on the Russian and
Kazakh future carbon markets. In that way, while approving
the development of new projects, the Polymetal Board
reviews carbon metrics and potential carbon tax impacts.
Carbon taxes and internal carbon prices are also
considered for our key green projects, as part of the
stress-testing of our long-term Climate Action Plan.
Our main tool for mitigating regulatory risk is transparency in
our climate disclosure, as well as adherence to carbon
targets. By reducing our emissions and introducing
a Climate Action Plan, we mitigate our impact and enhance
our resilience to risk. Our Climate Strategy is designed to
reduce long-term carbon tax risks by 25–30% by
decreasing carbon intensity by 30% by 2030. In addition,
our Amursk POX-2 project paves the way for processing
larger volumes of refractory ore and replacing concentrate
exports (especially in China), which in turn would reduce the
impact of transboundary carbon regulations.
Moreover, to build resilience over the 2030–2050 time
horizon, we are developing a corporate strategy for carbon
neutrality. We had planned to complete this work by the
beginning of 2023; however, in 2022, significant changes in
economic and political conditions had to be taken into
account in our decarbonisation strategy. The Board of
Directors therefore decided to postpone the goal for
developing a net-zero approach. We now plan to finalise our
approach to net zero and publish our long-term climate
target in 2023.
Opportunities
Developing our own renewables
Renewable energy sources, such as solar and wind, are one
of the most promising ways to reduce risk and costs related
to fossil fuels and carbon-intensive electricity consumption.
At our remote sites, we continue to rely on diesel generation,
which in 2022 constituted about 27% of our energy
consumption. As of 2022, more than 30% of the total gold
equivalent was produced at sites without any grid connection
(Omolon, Svetloye, Albazino, Kutyn, Lunnoye and Prognoz).
This creates a high exposure to diesel price risk, as well as
GHG emissions and disruptions to logistics.
We have already had some success in the use of renewable
energy at our remote assets. For example, at Omolon and
Svetloye, where we have no grid connection and depend on
diesel generation only, we operate two solar plants with the
total capacity of 3.5 MW. We avoided about 2,300 tonnes of
CO₂e emissions by using these renewables in 2022 (2% of
Svetloye and Omolon Scope 1 and 2 emissions).
On the other hand, our grid-connected assets are also
exposed to risks associated with a high GHG intensity. Our
assets in Kazakhstan are fully electrified, but the majority of
grid electricity in those regions is coal-generated, which
leads to high indirect emissions. To address this, we plan to
build two solar power plants at Varvara and Kyzyl with a total
solar generation capacity of about 40 MW, which will allow us
to reduce our GHG emissions in Kazakhstan by more than
20% (Scope 1 and 2).
By 2028-2030, we aim to have renewable energy plants
across at least four sites – Omolon, Svetloye, Varvara and
Kyzyl – with a total capacity of up to 45 MW (a total
investment up to $100 million). We plan to achieve a total of
7% of self-generated electricity from renewable sources by
2025 and 10% by 2030. This will reduce the Group’s total
Scope 1 and 2 emissions by 10%, with estimated annual
financial savings of approximately $8-10 million by 2028–
2030 (cost savings from grid energy or fuel for diesel power
plants, as well as potential savings in carbon tax if
introduced at a national level).
1 Global Energy and Climate Model Documentation. October 2022. International Energy Agency.
66
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Low‑carbon transition metals
Demand for metals in energy-transition technologies, such
as copper, gold and silver, is likely to rise: the so-called
‘green demand’. Wood Mackenzie predicts that, by 2030,
there will be a major shortfall in the availability of copper, the
base metal used in electric vehicles and wind, solar and
battery technologies. Electric vehicles alone are expected to
account for 55% of the green demand for copper over the
next two decades¹, with the green demand for additional
copper estimated at more than 17 Mt per annum by 2040.
The price of copper fell to $7,650 per tonne in 2022
(2021: $10,032 per tonne)². However, a growing market
deficit – exacerbated by increased growth in the demand
for refined copper – is expected to underpin a rebound in
the copper price to over $11,000 per tonne within five years
in a 1.5ºC scenario³.
At Polymetal, our 2022 copper sales amounted to 3,399
tonnes (2021: some 2,093 tonnes). Our copper reserves
and resources are concentrated in several assets: Varvara
hub (Kostanay Region, Kazakhstan) and Voro (Sverdlovsk
Region, Russia). As at 1 January 2023, Proved and
Probable copper reserves were 70.5 Kt, while Measured,
Indicated and Inferred resources amounted to 164.8 Kt
(Varvara hub, Voro and Novopet project).
Given copper’s future potential, we are considering
opportunities for expanding our copper production. In
2020-2021, we acquired a 75% interest shares in the
Novopet copper project at the prospect area
Novopetrovskaya and at the Sagitovskaya licence area in
southern Bashkortostan. We expect 100 km of drill holes to
be completed in 2023, resulting in a JORC-compliant
Mineral Resources estimate.
The estimated annual financial positive impact of these
opportunities is up to $11 million by 2027 (assuming that
current sales volumes are maintained and the copper price
increases from $7,650 per tonne in 2022 to $11,000 in 2027).
Gold is also used in technologies, namely in LEDs, electric
vehicles and solar photovoltaic panels (PV). It is estimated
that 0.036 mg of gold is required for 100 candela of LED
lighting, while an electric vehicle contains 0.16–0.2 mg.
Currently, about 310 tonnes or 6.5% of global gold demand
is for technologies.⁴
Gold is one of our key mined metals: at the end of 2022,
production amounted to 1,450 Koz or 45.1 tonnes, and our
Proved and Probable gold reserves are 24,730 Koz or
769 tonnes, while Measured, Indicated and Inferred gold
resources were 23,137 Koz or 720 tonnes. With Nezhda
now operational and with first gold production expected at
Amursk POX-2 in 2024, we expect a significant increase in
gold production by 2025-2027, which will help us meet the
rising green demand from the technology sector.
Climate governance
Delivering on our strategic sustainability and climate
objectives requires leadership from the very top of the
organisation. Our approach is therefore overseen by the
Board and Board-level Committees, with our Group CEO
having ultimate accountability. During the year, our Board
conducted several climate performance reviews, tracked our
progress towards climate goals and discussed the potential
for achieving carbon neutrality.
The Safety and Sustainability Committee has a mandate to
provide support to the Board on the Group’s safety record,
sustainability performance and ethical conduct. The
Committee monitors and reviews risks and opportunities
related to climate change, and oversees our approach and
the implementation of short- and long-term Climate Strategy.
Climate change is a Board-level standing agenda item and it
was discussed at nine Board and Committee-level meetings
in 2022. Among items covered were Climate Strategy,
environmental and climate-related KPI, performance against
targets, decarbonisation potential, as well as climate-related
risks in line with TCFD and the Paris Agreement.
Climate change, as one of our key strategic issues, falls
under the executive responsibility of the Group CEO, who is
both a member of the Board and of the Sustainability
Committee. In line with the Company’s enhanced emphasis
on ESG issues, in 2022 we increased the weight of
environmental and climate goals in the ESG KPI of the Group
CEO to 10% of the total KPI (in 2021, climate and
environmental part of the ESG KPI was 5% of the total KPI).
For 2022, the Group achieved the climate component of the
KPI: reducing the intensity of GHG emissions by 15%
compared with 2019, against a target of 10%.
Climate change issues considered on the Board
and Committee level
January 2022
February 2022
Board meeting: 2021 GHG performance and
net-zero approach.
Audit and Risk Committee meeting: TCFD
disclosures review.
Remuneration Committee meeting: 2022 KPI
targets for top management discussion.
Safety and Sustainability Committee meeting:
2021 sustainability and climate performance
against targets. 2022 ESG KPI discussion.
Remuneration Committee meeting: 2021 KPI
results and 2022 KPI targets for top
management approval.
May 2022
Board meeting: 2022 sustainability and climate
performance. Net-zero target setting progress.
September 2022
Board meeting: approval of non-financial
auditor for TCFD-disclosure.
December 2022
Safety and Sustainability Committee meeting:
2022 sustainability and climate performance
(preliminary results for 2022). Preliminary
discussion of sustainability KPI results for 2022
and KPI targets for 2023-2025. Reforestation
projects.
Audit and Risk Committee meeting: Climate-
related risks review.
1 How much copper will be needed? Wood Mackenzie, Q2 2022.
2 Average annual price of copper (revenue from copper sales to the payable amount of copper in 2021 and 2022, detailed data on page 193).
3 Red metal, green demand: Copper’s critical role in achieving net zero. Wood Mackenzie, October 2022.
4 Gold Demand Trends Full Year 2022. World Gold Council, 31 January, 2023.
68
Our governance framework
The Board
The Board defines business strategy, reviews climate-related risks and opportunities and monitors performance.
Nomination
Committee
ensures a balance of
skills, knowledge,
independence,
experience and diversity
on the Board and its
Committees.
Audit and Risk
Committee
helps the Board to
monitor the integrity of
the Group’s financial
statements, and reviews
the effectiveness of the
Group’s system of
internal controls and risk
management systems,
including climate risks
integration.
Safety and
Sustainability
Committee
monitors and reviews
risks and opportunities
related to climate
change, and oversees
our approach and the
implementation of short-
and long-term Climate
Strategy.
Remuneration
Committee
is responsible for the
Group Remuneration
Policy, and for setting
pay levels and bonuses
for senior management
in line with individual
performance. Ensures
ESG KPIs are included in
remuneration packages.
Group CEO
The Group CEO takes ultimate responsibility for delivering on strategy
and operating performance, including climate-related issues.
Chief Sustainability Officer
as head of the Corporate Task
Force on Climate Change,
coordinates sustainability
initiatives and activities to ensure
transparency and long-term
value for investors and other
stakeholders.
Corporate Task Force on Climate Change
Chief Financial Officer
Coordinates issues related
to assessment of climate risks
and opportunities.
Chief Operating Officer
coordinates the implementation
of energy-efficient technologies
at operations, accounting and
monitoring of the carbon footprint
and environmental impact.
Carbon
footprint
Climate-related risks and
opportunities
Energy
efficiency
Environmental
monitoring
Heads of Operations
Our operating mines and development properties have heads of Operations, Human Resources,
Environment, and Health and Safety, who implement and monitor corporate systems,
supported by dedicated HR and engineering teams.
Regional
environment
managers and
environmental
teams
Operations
managers
Engineering
teams
Health and Safety
managers
HR teams and
training centres
69
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
To ensure consistent application and measurable results,
the climate KPI (through set climate metrics) is cascaded to
all relevant employees: Group CEO, COO, mine directors,
subsidiary directors and their deputies, senior managers in
the management company and heads of the main
operational units and their deputies.
The development and implementation of climate-related
strategy approaches and measures are the responsibility of
the Corporate Task Force on Climate Change (Task Force),
which is chaired by the CSO with other members of the
senior management team (CFO, COO). The Task Force is an
advisory body that oversees the identification, assessment
and monitoring of climate risks and opportunities, as well as
the implementation of climate goals and the calculation of
metrics against them. The Task Force reports annually to
the Group CEO on climate risks and opportunities, and also
updates the Board and its Committees on a regular basis.
In accordance with our new Climate Management System
(CMS), the collection of climate-related metrics is carried
out on a monthly basis, and monitoring and updating of
information on climate risks and opportunities is carried out
twice a year. Members of the Task Force co-ordinate on
these works.
Risk management
Risk identification approach
The process of identification, significance and materiality
assessment of climate-related risks and opportunities has
been driven by our new CMS. This bottom-up process
involves site management teams, corporate-level
management, the Group CEO and Board, and is controlled
by the Task Force.
In order to provide a unified approach to identifying and
assessing risks and opportunities, the CMS specifies
scenario analysis parameters and assessment methodology
in detail. The CMS also contains a detailed and
comprehensive register of typical climate risks and
opportunities, which will be updated every three years by
the Task Force.
Asset-level climate risk assessment is the responsibility of
each site’s production department, which identifies and
assesses physical risks. The assessment process involves
functional and operational managers and technical
specialists. It begins with an analysis of a typical climate
risks register and identification of potentially significant risks
based on expert judgement. The expert assessment
involves determining the likelihood and potential impact on
assets or the environment. Those significant risks with a
potential level defined as ‘medium’ or higher are passed on
to the next stage for detailed assessment.
Next, a scenario analysis of the identified significant climate
risks is carried out, taking into account historical climate
data and predictive climate models. As a result of scenario
analysis, an estimate of the likelihood of these risks is
obtained to assess potential damage. The financial
assessment of the risks includes damage from possible
destruction, environmental damage and fines, as well as
damage from potential downtime, and is expressed as a
ratio to the Company’s annual Adjusted EBITDA.
To take account of the climate features and the intensity of
climate change in every region of our operations, we have
selected sets of meteorological data for each asset, using
information from the national meteorological services
Roshydromet and Kazhydromet. Using this data, we have
developed climate profiles for each asset. A climate profile
contains the data on the frequency and severity of extreme
natural events, including trends and climate change over the
past 20 years. This tool, together with global IPCC research
and SSP models, gives us the means to accurately assess
the potential climate change and possible risks for each
asset. This approach is also applicable to future projects.
When assessing the potential for further operations in a new
region, an analysis of its climate profile enables us to
consider potential climate risks and regional climate features
at early stages, significantly increasing the Group’s
resilience to climate change.
After evaluating the probability and financial impact, the
assessed risks are placed on the risk matrix. Risks that fall
into the zone of medium impact and above are recognised
as material at asset level and a mitigation plan is developed.
According to the CMS, monitoring of these risks is carried
out continually with reports prepared twice a year. The
results of the scenario analysis of physical risks, action
plans and risk monitoring reports are submitted by the site
management team to the Task Force.
Transitional risk assessment is carried out at corporate
level. Responsibility for identifying and assessing risks for
each of the recommended TCFD areas is the remit of
relevant representatives of corporate management
(marketing, logistics, legal, government relations, human
resources, social development and other departments). The
distribution of responsibility is also embedded in the CMS.
Scenario analysis and financial assessment of transitional
risks is carried out according to a similar methodology with
physical risks. The results of the assessment are also
reported to the Task Force.
Since physical risks are associated with long-term climate
trends and change little in the short term, such risks will be
thoroughly reassessed once every three years. Updating
and monitoring of material physical risks are carried out
annually. Transitional climate risks are more volatile, so they
are fully reassessed annually. However, if any climate risk
materialises or a new risk is identified, the Task Force will
initiate an extraordinary review of the climate risks list.
The CSO, as head of the Task Force, is responsible for
consolidating identified material climate risks and
opportunities. An operational report on key climate risks
and opportunities is prepared twice a year. The Task Force
shares this data with the Corporate Risk Management team
at least twice a year, and with the Group CEO, Board of
Directors and Board Committees once a year.
Risks of a high or extreme level (in the medium-term horizon
of the Paris Agreement scenario) fall under review of the
Task Force and Audit and Risk Committee, following which
they may be included in the list of principal risks.
Risk matrix and risk level assessment
h
g
H
i
d
o
o
h
i
l
e
k
L
i
w
o
L
>90%
60–90%
30–60%
10–30%
<10%
1
2
3
<1%
1–5%
5–10%
10–20%
>20%
Low
Risk impact Adjusted EBITDA
High
Risk
1 BaU scenario
2 Paris Agreement scenario
3 Sustainable Development
scenario
Low risk
Medium risk
High risk
Extreme risk
Risk mitigation
Timely response to potentially high climate risks forms the
resilience of our strategy against climate change. Under the
CMS, one of the following risk-management strategies
should be established for each climate risk deemed to be of
medium level or higher:
• Risk avoidance – refusal or termination of the Company’s
activities at risk
• Risk reduction – implementation of mitigation measures
to reduce the likelihood or potential damage from the risk
• Risk transfer – insurance of potential damage
• Risk acceptance – deliberate refusal of any mitigation
measures due to their unavailability or economic
inexpediency.
These risk management strategies for material climate risks,
as well as planning the necessary mitigation measures both
at the asset and corporate levels, form our corporate
Climate Strategy. In 2022, we updated asset-level
adaptation plans and the corporate-level strategic Climate
Action Plan to address significant changes in economic and
political conditions but, at the same time, to continue
pursuing our climate goals and reducing the impact of
climate risks on the Company.
The foundations of our Climate Action Plan remain
unchanged:
• Transition to low-carbon technologies and grid
connection
• Develop our own solar and wind power plants in the
regions where we are present (where possible) and
ensure the efficient generation of electricity
• Switch to electricity supplies with the lowest available
carbon footprint
• Electrification of our mobile fleet
• Continuous work to improve the energy efficiency of all
our processes.
We have also adjusted the sequence in which we
implement our green projects and are now focused on
projects with the highest efficiency and availability of
technologies and equipment; in particular, the development
of high-capacity energy sources in Kazakhstan. In 2023, we
plan to continue implementing our medium-term mitigation
plan and to put together a detailed, long-term corporate
Climate Strategy for the period after 2030.
Metrics and targets
All of our climate-related metrics and targets cascade
throughout our corporate governance framework and are
closely linked to our climate actions and risk mitigation
efforts. Reducing operational GHG emissions is our key
climate indicator and performance against this target is
reflected in senior executive remuneration as a climate
change component of the ESG KPI for the Group CEO and
COO (10% of the total KPI and more than 60% of ESG KPI).
When setting GHG reduction targets, we take into account
best practice approaches. While absolute targets are
important in the wider context, they do not reflect efficiency
improvements. On the other hand, intensity targets help to
drive pragmatic reductions but do not necessarily lead to
reductions in absolute emissions. Therefore, we set both
intensity and absolute targets, with the intensity target being
the most important since it reflects operational expansion
and contraction, which is significant in our sector as our
projects run through a life cycle.
Our key climate-related target is to reduce GHG emission
intensity per ounce of gold equivalent by 30% by 2030
(2019 baseline, Scopes 1 and 2) and to reduce absolute
GHG emissions by 35% by 2030 (2019 baseline, covering
Scopes 1 and 2; applies to mines that were operating in the
base year, namely Kyzyl, Varvara, Voro, Mayskoye, Omolon,
Dukat, Svetloye, Albazino, Amursk POX and Amursk POX-2,
and Nezhda).
Decarbonisation is not only a way for us to reduce the
impact of key climate risks, but to make a real contribution
in the fight against climate change. To support the
sustainable deceleration of warming and stabilisation of
global temperatures, we continue to improve our approach
to carbon-footprint reduction and are committed to
developing long-term goals and achieving carbon neutrality.
We also continuously improve the accuracy and
transparency of our climate data and, in 2022, continued
following the TCFD recommendations and submitted our
energy and GHG profile to CDP (which is now available to
all subscribers on the CDP platform).
70
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
In 2022, we reduced our emission intensity by 15%
compared with 2019. This was achieved by increasing our
renewable generation (mostly due to our new solar power
plant at Omolon), a shift to green-grid energy and
implementing energy efficiency initiatives, such as
improvements made to heat utilisation systems (including
the new heat recovery system at Kutyn). Our 2022 Scope 1
absolute emissions increased compared with 2021, mainly
due to the full ramp up of Nezhda and commissioning of the
first elements of the Amursk POX-2 project, while Scope 2
absolute emissions decreased as the share of green-energy
consumption grew because we switched to renewable
energy suppliers.
Emissions from electricity and heat on-site generation, as
well as indirect emissions from purchased electricity, account
for more than half of our emissions by Scope 1 and 2.
Therefore, we also consider energy consumption and energy
efficiency metrics as climate-related. Improving our
performance in this area, we are increasing the share of
purchased clean energy, developing our own renewables
and working hard to improve energy efficiency. In this
context, we set a goal to achieve a total of 7% of self-
generated electricity from renewable sources by 2025 and
10% by 2030. In 2022, we achieved 1.1% of of renewables in
self-generated electricity, mostly due to our new solar power
plant at Omolon. Our new project for the construction of solar
power plants at Varvara and Kyzyl in Kazakhstan, with a total
capacity of about 40 MW, will allow us to exceed 10% of
renewables in self-generated electricity by 2030.
Since the issues of energy efficiency and stability of clean
electricity supply require serious analysis and must be
tailored to the specifics of each asset, these goals and
related KPIs are cascaded to the heads of the main
operational units and their deputies. They are set annually
as part of the corporate Remuneration Policy for each asset
and division, taking into account current production targets,
quality of raw materials, the capabilities of energy suppliers
and many other factors. Thus, we manage to achieve a
balance of stability and production efficiency, and
systematic improvement of the Company’s climate profile.
Key GHG metrics1
Upstream and downstream GHG emissions (Scope 3) are
not as yet included in our current targets. However, as part
of our efforts to achieve carbon neutrality, we have
requested that key contractors and consumables suppliers
provide carbon data so that we can further widen Scope 3
reporting across the most material supply chain categories.
We had planned to set a Scope 3 target and develop a
net-zero approach by the end of 2022; however, the
significant changes in economic and political conditions in
2022 had to be taken into consideration within our
decarbonisation strategy. The Board of Directors, therefore,
decided to postpone the goal for developing a Scope 3
target and net-zero approach. We now plan to finalise this
work and publish our long-term climate targets in 2023.
Climate and environment are complex multi-factorial
systems and each aspect of our activity has a direct or
indirect impact on them. Given that environment and
climate change are intrinsically linked, the issues of water
and waste management also need to be considered as
climate metrics. We pay special attention to water risks, the
safety of tailings and reducing our impact on the
ecosystems of the regions where we operate. You can read
more about our approaches, policies, goals and relevant
metrics in the field of water and waste management on
pages 56-61.
Polymetal will finance projects that support low-carbon and
climate change-resilient growth, as well as waste efficiency
and improved water management. The primary targets are
climate impact mitigation, such as increased energy
efficiency and use of renewable energy, as well as
environmental impact reduction such as reduced waste and
emissions.
Target
2022
2021
2020
2019
(base year)
GHG Scope 1 and Scope 2 emissions (market based)
Absolute emissions, Kt of CO2e
Absolute emissions dynamics, % y-o-20192
GHG intensity, kg of CO2e per GE oz3
GHG intensity dynamics, % y-o-2019
GHG Scope 3 emissions
Absolute emissions, Kt of CO2e
Absolute emissions dynamics, % y-o-2019
-35% by 2030
-30% by 2030
To be set in
2023
1,082
-10%
632
-15%
585
7%
1,135
1,179
1,198
-7%
677
-9%
546
-10%
-2%
730
-2%
625
2%
–
742
–
611
–
1 According to our Climate Policy, we account for and disclose data on GHG emissions throughout the production chain, as well as the carbon footprint of the
product according to our Greenhouse Gas Emissions Accounting Standard, based on the Guidelines for National Greenhouse Gas Inventories (IPCC, 2006) and
the following parts of the GHG Protocol: Policy and Action Standard, Scope 2 Guidance, and Technical Guidance for Calculating Scope 3 Emissions.
2 Metric applies to mines within the reporting scope of the base year, namely Kyzyl, Varvara, Voro, Mayskoye, Omolon, Dukat, Svetloye, Albazino, Amursk POX
and Amursk POX-2, and Nezhda.
3 Data on oz of gold equivalent used in the GHG emissions intensity calculation is based on 80:1 Au/Ag conversion ratio and excluding base metals. For detailed data
on gold equivalent production see page 229.
Key energy metrics
Energy consumption
Total energy, TJ
Energy intensity, GJ per Koz of GE
Energy intensity dynamics, % year-on-year
Energy structure
Target
2022
2021
2020
(base year)
2019
10,757
6,283
9,953
5,934
9,210
5,702
9,084
5,627
specific asset-level
targets and KPIs
6%
4%
1%
-1%
Renewable electricity share in self-generation, %
7% by 2025
1.1%
0.4%
0.4%
0.4%
Renewable electricity share in total electricity consumption, %
Heat utilisation systems share in total heat consumption, %
specific asset-level
targets and KPIs
30%
27%
18%
25%
3%
24%
0%
24%
Our major green initiatives relate to reducing our carbon
footprint and improving energy efficiency by grid
connection, electrification of our fleet at certain mines and
renewable energy at remote operations. Overall capital
expenditure estimate for these climate actions for 2021-
2030 is $1,100 million. This green capital expenditure is
designed to meet our 2030 climate-related goals and
incorporated into our economic models. In so doing, we
provide the Company with all the necessary financial and
management instruments to implement our Climate Action
Plan and maintain strategic resilience in the face of climate
change.
Estimated climate-related capital expenditure 2021–2030
($m)
incremental additional spending
Off-balance sheet
Included in the base case projections
(stay-in business)
1,200
1,000
800
600
400
500
300
250
200
150
50
1,100
610
90
400
50
300
210
90
300
300
Efficiency
improvements
Grid
connection
Fleet
electrification
Renewables
Total
Recognising the rapid pace of change in carbon regulation,
we conduct stress testing of our key climate projects to
assess potential risks and opportunities associated with the
tightening of national and cross-border carbon regulation.
We also constantly monitor developments in national
carbon regulation and closely monitor IEA economic and
carbon price projections to factor them into our transitional
risks assessments and keep up-to-date on the strategic
resilience of our projects to transitional risks.
We see green financing as an ideal tool to finance the
transition to a low-carbon economy and safer environment.
It also ensures responsible financing that aligns capital with
the Company’s stronger ESG performance, as well as
contributing to sustainable development by earmarking the
proceeds for green projects and expenditure.
Green financing is a natural extension of the sustainability
efforts that are conducted throughout the organisation.
More importantly, it is a tool to align the Company’s
interests and those of society at large by financing further
transition to responsible mining. It gives us trusting
relationships with our lenders and stakeholders, and pride
and commitment among our employees.
To create a standard for green financing that can be used
with a number of Polymetal’s sources of funding, we have
developed a Green Financing Framework. The Framework
establishes the terms and conditions for the management
of funds and for follow-up and reporting to lenders and
investors. Polymetal hopes to continue to broaden its lender
base by attracting like-minded creditors who seek to target
their funds towards environmentally friendly projects.
Polymetal has set up a dedicated cross-departmental
Green Financing Committee to identify and select eligible
projects for green financing. These are projects that are
aligned with national environmental, technical and legal
requirements. The Committee includes representatives from
corporate finance, sustainability, operational, energy and
environmental, procurement, design, and construction
departments, as well as, on a case-by-case basis, the
Group’s business units.
By the end of 2022, Polymetal’s portfolio of sustainability-
linked and green financing amounts to $600 million,
including the Société Générale green and KPI-linked loans
and climate transition loans signed with Raiffeisenbank and
UniCredit. Improving the transparency of green finance, we
annually publish a Green Loan Reports under the Green
Financing Framework. Thus, in the beginning of 2023, we
published another Allocation Report related to the Société
Générale 2020 $125 million green loan, which provides
information on the capital expenditure that was allocated to
our green and climate-related projects in renewables, fleet
electrification and waste and water management.
In 2023, we plan to continue improving the management of
climate projects and adjust our internal data management
system for current and projected climate actions and
mitigation measures, as well as increasing the transparency
of the Company’s financial climate-related metrics.
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Our climate actions
Actions
Risks mitigated
Switch from carbon-
intensive energy sources
• Risks related to national and cross-border carbon regulation – mitigation by reducing
the carbon footprint
• Risks related to the increase in the cost of carbon-intensive resources – mitigation by
reducing the consumption of carbon-intensive fuels
• Risks related to shifts in precipitation patterns – mitigation by reducing dependence
on fuel supplies
Grid connection:
Nezhda (launched in 2022)
Albazino (2024)
Lunnoye (Dukat hub, projected)
Mobile fleet electrification:
Mayskoye: electric ore-transportation system
(Phase 1 – launched in 2022, Phase 2 – to be
launched in 2023; underground loaders and
trucks (three units – operating, four units – in the
process of acceptance)
Varvara: electric ore-transportation system
(launched in 2022)
Kyzyl: six electro-hydraulic excavators (operating)
Komar: three electro-hydraulic excavators
(operating)
Veduga: two electro-hydraulic excavators
(2023–2024)
There are plans to launch up to 70 more electric
vehicles from 2025–2030
Electricity consumption is our major energy resource, but only a small number of our remote
mines are connected to the regional power grids. We still rely on diesel generation at remote
sites, which contributes substantially to Scope 1 GHG emissions. A key priority is to,
therefore, reduce our reliance on diesel by connecting to grid electricity sources and building
our own renewable energy projects. In 2022, we launched the new grid at Nezhda, reducing
our direct GHG emissions by approximately 40%. We are also currently implementing a
similar grid connection project at Albazino with the launch expected in 2024 and developing a
project to connect Lunnoye (Dukat hub) to grid electricity.
As our mining fleet too contributes significantly to our GHG emissions, we are gradually
replacing diesel-based vehicles with electric ones. With the electrification of the mobile fleet,
as well as the use of electric-driven ore transportation systems wherever possible, we aim not
only to reduce our carbon footprint, but also to improve air quality and reduce noise levels for
those working underground or in open-pits.
In 2022, we launched electric ore-transportation systems at Varvara and Mayskoye (Phase 1),
and added to the electrical mobile fleet at Mayskoye and Komar. In 2023–2024, we plan to
launch the Phase 2 of the electric ore-transportation system at Mayskoye, electro-hydraulic
excavators at Veduga and develop a detailed plan for mobile fleet electrification in 2025–2030
and beyond.
Renewable
self-generation
Svetloye
1 MW solar power plant launched in 2018
2 MW solar power plant, Phase 2 (projected)
Omolon
2.5 MW solar power plant launched in 2021
Varvara
23 MW solar power plant in a complex with a gas
power plant (developing, 2025)
Kyzyl
17 MW solar power plant (projected, 2025–2027)
Kutyn
3 MW solar power plant (projected)
Prognoz
1 MW solar power plant (projected).
• Risks related to national and cross-border carbon regulation – mitigation by reducing
the carbon footprint
• Risks related to the increase in the cost of carbon-intensive resources – mitigation by
reducing the consumption of carbon-intensive fuels
• Risks related to requirements for renewables usage – mitigation by developing our
own renewables
• Physical risks related to logistical disruptions at remote sites – mitigation by reducing
dependence on fuel supplies
Renewable energy sources such as solar and wind farms or hydropower plants are some
of the most promising means of reducing GHG emissions at remote sites and enhancing
resilience to potential disruptions in electricity and fuel supply. The development of these
technologies is gradually enabling their use in the regions of the Far North, which
experience extreme temperature change and snowfall.
We already use solar and wind energy with our renewable power plants at Svetloye and
Omolon and plan to achieve a total of 7% of self-generated electricity from renewable
sources by 2025 and 10% by 2030.
Our next step in the development of renewable energy sources is a project to build two
solar power plants in Kazakhstan. To ensure a stable level of generation and mitigate daily
fluctuations, a gas power plant will be built in addition to the solar plants. The total solar
generation capacity of the project will reach 40 MW, which will allow us to reduce GHG
emissions in Kazakhstan by more than 20% (Scope 1 and 2).
Water and waste
management
• Permafrost-related risks – mitigation by minimising the risk of the possibility of dam
failure
• Risks related to average temperature rises and shifts in precipitation patterns –
mitigation by reduction of fresh water withdrawal and improving resilience to droughts
Water management:
Reduction of fresh water use by 55% per tonne of
ore processed by 2030 (2019 baseline) and
increase water recycled/reused
We strive to minimise freshwater withdrawal to reduce our impact on local ecosystems and
are committed to gradually increasing the share of water reused in our processing by
setting a goal to reduce freshwater use by 55% per tonne of ore processed by 2030,
compared with 2019 levels (read more on pages 57–58).
Dry stacking of tailings:
Achieve 50% dry-stack tailings storage by 2030.
Energy efficiency
All assets:
Low-carbon and renewable energy solutions
Off-grid renewable lighting:
Albazino, Varvara
Heat recovery from diesel electricity
generation:
Dukat and Primorskoye, Omolon, Svetloye,
Prognoz, Nezhda, Albazino and Kutyn
Heat recovery from the pressure
oxidation process:
Amursk POX (operating) and Amursk POX-2
(under construction).
Tailing storage facilities (TSF) and dams are also impacted by climate risks. All our TSFs
undergo regular audits for compliance with requirements, as well as safety examinations. TSFs
are regularly monitored by our on-site environmental and engineering teams, with pipelines,
pump stations, water levels and dams inspected daily. We ensure emergency preparedness
and response procedures at all stages of TSF life, from design to operation to closure.
Increasingly, we are moving towards safer methods of waste storage, such as dry stack
(filtered cake) tailings. Dry tailing storage significantly reduces the possibility of dam failure,
drastically lowers the potential damage from such accidents, and eliminates tailings run-off.
We plan to extend it to Amursk POX-2 (2024) and Dukat (2024), and build an additional dry
stacking facility at Voro (2023). We have also committed to using dry stacking only at all
new sites. Read more on pages 59–60 and in our recent TSF Report.
• Risks related to national and cross-border carbon regulation – mitigation by reducing
the carbon footprint
• Risks related to requirements for best available technologies and tightening of
construction standards – mitigation by implementing advanced energy efficient
technologies
• Risks related to increase in the cost of carbon-intensive resources – mitigation
by reducing the consumption of carbon-intensive fuels
By optimising the energy efficiency of our operations, we decrease emissions while also
embracing a low-carbon economy. Our Climate and Energy Management Systems, alongside
our Energy Management Policy, include regular energy audits and site-level projects. Each
year, we update our Energy Efficiency Programme, which involves monitoring, metering and
reduction initiatives, in line with ISO 50001, the international standard for energy management.
Our key areas of focus are:
• Complying with all applicable regulatory requirements
• Actively reducing our carbon footprint or improving energy efficiency through innovation,
including low-carbon and renewable energy solutions
• Embedding energy efficiency into new project design, technology updates and in
equipment procurement processes
• Engaging employees through establishing and nurturing an energy efficiency culture
• Extending our energy-conscious approach to our suppliers, investors and wider
stakeholders.
We deploy heat recovery technology to convert wasted heat from diesel generation and
processing plants into electricity and heat for other premises. In 2022, 27% of our total heat
needs were met by heat recovery systems, including a new heat recovery system at Kutyn.
We also look at digital and AI solutions that can help increase resource efficiency and
decrease GHG emissions.
Nature-based projects
• Risks related to national and cross-border carbon regulation – mitigation by reducing
the carbon footprint
• Risks related to potential impact on the Company’s reputation - mitigation by restoring
and improving the environmental situation in the regions where the Company operates
Reforestation:
Russia: more than 2,000 hectares of forest
(2023-2025)
Forests are a vital asset in the fight against climate change, as well as being a habitat for wildlife
and a source of sustainable livelihoods for many communities. At Polymetal, responsible
land-use protocols mean that we only fell trees where absolutely crucial and within local laws.
Afforestation:
Kazakhstan: 1,500 hectares of new forest (the first
phase involves 750 ha, 2024-2025)
Our Climate Management standard considers both the loss of absorption after deforestation
and the compensatory measures for reforestation, together with the assessment of their
absorbing capacity in our carbon footprint.
Adhering to the principles of responsible land use, and in full compliance with national legal
norms, we develop, co-ordinate and implement compensatory reforestation.
The reforestation plans are updated and expanded annually, and restoration of lost forest
areas is carried out in the year following felling.
In 2022, we planted 1.8 million saplings of pine, larch and cedar on almost 900 hectares of
land in five regions of Russia. We adjusted our corporate reforestation programme: by 2025,
we expect to plant at least 2,000 ha of new forests in the Far East of Russia. We are also
developing our pilot afforestation project in Kazakhstan, the first phase of which involves the
planting of 750 ha by 2025. The potential absorption capacity of our reforestation and
afforestation projects is estimated to be up to 25,000 t CO₂ per annum.
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Sustainability continued
Communities
Our presence has the potential to bring significant economic and
social value to communities and countries. We build trusted
stakeholder relationships to ensure positive impacts and reduce
social risk exposure.
At a glance
$23.2m
of social investments
839
enquiries received and
resolved
40
partnership
agreements on socio‑
economic development
Our priorities
• Ensure zero community conflicts
• Ensure positive engagement
• Maintain the level of financial giving.
Which guidelines do we follow?
External: UN Global Compact, Universal Declaration of
Human Rights, UN Guiding Principles on Business and
Human Rights, UK Corporate Governance Code, EITI,
International Labour Organization Conventions, UK
Modern Slavery Act, Responsible Gold Mining
Principles, World Bank Guidelines and Policies.
Corporate: Code of Conduct, Supplier Code of
Conduct, Anti-Bribery Policy, Human Rights Policy,
Social Investment and Donation Policy, Community
Engagement Policy, Group Tax Strategy.
Our approach
Supporting local communities is an important part of our
social responsibility as a business. We contribute to the
development of neighbouring communities through socio-
economic partnerships, taxes and job creation. Ongoing and
rigorous stakeholder engagement helps us maintain our
social licence to operate.
Our Social Investment and Donation Policy aims to improve
living standards for local people and facilitate regional
economic development. It outlines our transparent approach
to community investment and lays out our monitoring
procedures and stakeholder engagement.
Taking a holistic view of society is key. Our Communities
Engagement Policy ensures that we embrace and empower
open dialogue at every site and on every project. It outlines
how we identify stakeholders and the mechanisms for
effective feedback.
The Polymetal Board of Directors and management team
annually appraise targets related to community relations.
We apply a dedicated Social Impact Assessment Tool
to robustly monitor the outcomes of our community
investments.
Engagement
Our diverse engagement channels allow us to maintain
dialogue with communities, understand their needs and plan
for social projects that are most demanded by stakeholders.
We operate a formal feedback mechanism with a guarantee
to provide a detailed response to all questions or concerns
within 14 days. In addition to providing telephone and e-mail
channels, we also hold regular public hearings, site visits and
working groups. In 2022, 1,200 people participated in our
community polls and we held 36 meetings, 18 site visits and
21 public hearings.
Overall in 2022, we received 839 community enquiries, most
of them related to financial aid, improvements to local
educational facilities and infrastructure development. We
started measuring female participation in our community
events and surveys (where gender data is available) and
revealed that, in 2022, women represented 63% of
community event attendees and survey participants.
Dzyalbu: ethnic festival of today
prime sponsor of the Dzyalbu Festival. Dzyalbu has a range
of meanings: friends, fellowship, cousins-in-law, mates,
relatives or simply you and me.
The visitors to Dzyalbu Festival are invited to enjoy the arts
and craft market, take part in northern multisports
competitions (e.g. jumping over sledges, tug of war, lasso
throwing), watch dog-sledge racing and listen to famous
national bands performing.
In 2022, over 70 IMN representatives took part in events, with
over 500 people attending the festival. Dzyalbu Festival has
become a significant inter-regional cultural event, bringing
together a significant number of representatives and creative
associations of indigenous peoples from different regions,
including the Chukchee-Eskimo Ensemble and the Song and
Dance Ensemble of the Peoples of the North. Ethnic cultural
centres from Chukotka and Kamchatka as well as the Centre
for Shor Culture in the Kemerovo Region have participated
in the festival.
In 2016, enthusiasts within the regional Association of
Indigenous Minorities and Ethnic Groups of the North put
forward a proposal for holding a biennial, ethnic festival in
Magadan. Polymetal has long supported festivities devoted
to national culture, traditions, history and sports of the
Indigenous Minorities of the North (IMN) and became the
Community enquiries by topic
(% of total enquiries)
Community investment by area
(% of total spend)
29
222
3
Charity and targeted financial assistance
21
Education
839
enquiries received
and responded
13
4
6
7
12
Infrastructure
Culture and community events
Sport and sports events
Job opportunities
Environmental education
Culture and traditions of indigenous minorities
Environmental impact
Healthcare
Other 1
1
Includes other requests for financial and in-kind help.
Indigenous people
We respect the rights of indigenous communities¹ in
accordance with recognised principles and norms of
international law and national legislation, including human
rights law. For more than 20 years, we have developed
excellent relationships with representatives of indigenous
communities, associations and reindeer-herding teams. Today,
this engagement spans five regions in Russia (Chukotka,
Magadan, Khabarovsk, Sakha/Yakutia and Sverdlovsk) where
we run programmes on preserving culture, language and
traditional lifestyles. We also provide in-kind support by
delivering food, fuel, construction materials and medicines to
remote and indigenous communities and reindeer herders, as
well as building and maintaining roads to isolated areas.
Ongoing dialogue is critical and our community engagement
system includes regular meetings and consultations with the
Indigenous Minorities of the North. Our wider corporate
feedback mechanisms are designed to pay attention to
enquiries from these groups and to provide a timely answer.
In 2022, we did not have any conflicts related to lands or
objects that represent historical or cultural value for
indigenous communities.
1
In reference to our Russia operations (Kazakh legislation does not reference this).
4 4 2
34
17
18
$23.2m
invested in social
projects
(2021: $20m)
22
Infrastructure
Healthcare
Education
Sport
Culture
Charitable donations
Indigenous minorities of the North
Social investments and impact assessment
We contribute to improving the living conditions in
communities through long-term social partnership
agreements with local authorities (40 such agreements were
active in 2022), as well as by directly financing social projects.
We invest in projects that matter most to our stakeholders,
based on their input. In 2022, this amounted to $23.2 million,
16% more than in 2021. Our strategic investments target
healthcare and active living, education, infrastructure, culture
and indigenous communities.
We deploy our Social Impact Assessment Tool to analyse the
outcomes of our social projects. In 2022, Polymetal assessed
key educational projects, since education is one of the most
relevant areas in which the Company makes social
investments. During the procedure, we evaluated 11 projects
in host regions, which were involved with renovating and
equipping educational facilities, long-term education support
programme in Amursk, career awareness project for high
school students, grants provided to senior school students in
Kazakhstan, etc.
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This year, we also reviewed a project aimed at
preserving IMN languages. More than 360
stakeholders from local communities took part in a
survey and expert interviews, with the outcomes of
our social projects scoring highly. In addition, we
received many comments and suggestions on how
we can further support education in the host regions.
The assessment results and feedback from
communities will help optimise Polymetal’s social
investment strategy.
Corporate volunteering
As a Company, not only do we invest in social
projects in regions where we operate, but we also
encourage our employees to contribute to thriving
communities through a wide range of volunteering
programmes. In 2022, around 2,800 employees
volunteered for various causes, giving their time to
social and environmental campaigns in Kazakhstan
and Russia.
Our charity project Mandarin helped make New Year
wishes come true for 764 children from single-parent
or vulnerable families and elderly people. Before the
start of the new school year, employees donated
school supplies for 755 children from socially and
economically disadvantaged families and supplies for
800 people in nursing homes. In addition to charity
projects, our employees have an option to donate
blood or to support the National Bone Marrow
Registry.
We also continued to support environmental
campaigns, including collecting batteries for recycling
and voluntarily cleaning local parks and river banks.
When organising volunteering events, we often
partner with specialist non-profit organisations to
make sure that our employees’ donations go to those
in need.
Sustainability continued
Community investment by area (% of total spend)
Healthcare
Number
of projects:
20
Funds
allocated:
$5.15m
Sports
• Purchasing an ambulance car for the Bryanka District
Hospital, North-Yenisey District, Krasnoyarsk Region,
Russia.
• Purchasing equipment and furniture for the Outpatient
Oncology Clinic, Tomponsky District, Yakutia, Russia.
• Purchasing a dental X-ray device and an ultrasound
scan device for the Hospital named after Polina
Osipenko, District named after Polina Osipenko,
Khabarovsk Region, Russia.
Number
of projects:
81
• Supporting, financing and helping to arrange and hold
more than 35 sports events (Kazakhstan and Russia)
• Renovating and equipping more than 15 sports
facilities in the regions where we operate.
• Building four new outdoor workout areas in host
regions in Kazakhstan.
• Supporting 22 sports teams, associations and
organisations in Kazakhstan and Russia.
Funds
allocated:
$3.9m
Infrastructure
Number
of projects:
105
• Renovating over ten apartment buildings in Evensk,
North-Evensk District, Magadan Region, Russia.
• Financing 19 communal service projects in host
Funds
allocated:
$7.8m
Education
Number
of projects:
158
Funds
allocated:
$4.1m
Culture
Number
of projects:
79
Funds
allocated:
$0.8m
regions in Russian and Kazakhstan.
• Renovating the Central garden square in Amursk,
•
Khabarovsk Territory, Russia.
Implementing 35 landscaping projects in host regions
in Kazakhstan and Russia.
• Renovating and equipping more than 110 education
facilities such as pre-school education, general
education and extracurricular centres in Kazakhstan
and Russia.
• Equipping a robotics room in Tobolsk School, B.
Mailin District, Kostanai Region, Kazakhstan.
• Supporting 10 environmental awareness projects in
Kazakhstan and Russia.
• Renovating and equipping 30 cultural facilities in every
host region in Kazakhstan and Russia.
• Supporting, financing and helping to hold more than
35 creative and cultural events as well as helping their
participants in Kazakhstan and Russia.
• Renovating the Inter-settlement Social and Cultural
Centre in Chumikan, Tunguro-Chumikan District,
Khabarovsk Region, Russia.
Indigenous Minorities of the North
• Supporting more than ten indigenous dance and
music teams in the Khabarovsk and Magadan
Regions and in Yakutia, Russia. Arranging travelling
for some of the team to attend the International
exhibition ‘Treasures of the North 2022’.
• Supporting a project for a virtual portal for studying
and preserving Evensk culture, crafts, traditions and
language in Topolinoye village, Tompon District, Yakut
ia, Russia.
• Supporting reindeer herders in the Far East.
• Supporting of ten inclusive projects in Khabarovsk
Region, Russia.
• Assisting disabled patients at the in-patient clinic in
Auezov village, Zharminsky District, East-Kazakhstan
Region, Kazakhstan.
• Supporting first graders from families struggling with
difficult circumstances, elderly people and veterans
through annual targeted assistance in every region
where we operate.
Number
of projects:
81
Funds
allocated:
$0.5m
Charity
Number
of projects:
107
Funds
allocated:
$1m
78
Providing mental health and leisure facilities for parents
(to attend workshops, sports or creativity events), while
volunteers take care of their children (play games, stage
shows, arrange sports competition and develop motor
skills). In 2022, 52 adults and 63 children participated in at
least one of the seven meetings held; 20 Polymetal
employees volunteered at the project events.
‘The Reboot’ is a similar project, which has been
implemented in Khabarovsk in collaboration with a
charitable organisation. The aim of the project was to
re-socialise and provide mental health support to women
caring for more than five adopted children (including
children with health disabilities). Ten women and their
13 children participated in the project. Trained teachers,
psychologists and fitness coaches worked with the women
for eight weeks, while professional performers and
teachers entertained and gave lessons to the children.
The project gave the participants an opportunity to change
their way of life and to ‘reboot’: to work out, to take
mind-set training and art-therapy sessions, and learn how
to improve financial awareness. The women took a fresh
look at parenting, improved family relations, found hobbies
and built a network of mothers with adopted children.
“Such meetings are an enormous support for us and
encourage us to take a break from our daily routines.
It is very important to have time just for yourself and be
inspired by positive emotions so that you have the
physical and emotionally resources to care for your
children and enjoy your life,” said one of the participants.
In the remote regions where we operate, it is important that
young parents, particularly those in vulnerable social
situations, have access to a supportive community, leisure
activities and mental health care. With this in mind, assisted
by volunteer employees and financial aid from the Company,
two important projects were implemented in 2022.
An employee at our Urals operation initiated the Mum’s Day
Project, which helps families with disabled children
socialise by improving both parents’ and children’s
communication skills. Polymetal is funding the club where,
each month, families meet with doctors, psychologists,
speech therapists and other professionals. It is also a good
opportunity for the parents to have some ‘me-time’
Local employment and skills development
Wherever we operate, we strive to provide local people with
job opportunities. This not only brings more targeted
economic value, but it also builds our own workforce
capacity in local priorities, cultures and ecosystems, while
reducing the financial and environmental burden of fly-in/
fly-out employment. In 2022, our local employment rate was
97% for Russia and 96% for Kazakhstan¹.
We work closely with local colleges and institutions to provide
training, development and further employment opportunities
in our communities. In collaboration with universities, we are
developing new joint educational programmes to prepare
students for working in the mining industry of the future. In
2022, 359 students joined internships (34% female), and
54 of those who took internship in the last three years went
on to employment with us.
Besides working with higher educational institutions, we raise
career awareness among local high school students. The
Company held more than 60 events in 26 settlements
located in our host regions in Kazakhstan and Russia with
over 3,500 students taking part.
At these events, future school graduates learn about the
Company, its production operations and in-demand mining
jobs, as well as about the labour market in general. Our goal
is to interest young people in working for Polymetal and to
provide information to those who want to join our team in
future.
We go above and beyond standard career guidance
meetings and organise tours for high school students around
our production sites, when we talk about the technologies
we use, arrange special quests and quizzes as well as
science competitions. This all goes in hand with investing in
school renovations, equipment and modernisation of science
laboratories and classrooms.
Career guidance is a particularly rewarding area of
volunteering. In 2022, more than 150 Polymetal professionals
participated in pro-bono projects tutoring teenage students
who are considering a career in the mining industry.
Our employees talked to them about various mining jobs,
shared their own career experiences and answered students’
questions to help them choose a future career.
1 Share of employees residing in the country of operation.
79
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Sustainability continued
Ethical business
Ensuring that we act ethically and responsibly at all organisational
levels is crucial for our business strategy. We comply with all
applicable regulations and industry best practice and expect
a similar approach from our business partners.
At a glance
385
anti‑corruption
seminars
$385m
taxes paid
46%
local procurement
Our priorities
• Zero-tolerance position in respect of conflicts of
interest, bribery, slavery and human trafficking
• The implementation of our Code of Conduct and
other policies is regularly monitored by relevant
executives and our internal audit function
• Suppliers due diligence and engagement on
ESG issues
• Responsible tax policy in compliance with national
regulations and international guidelines.
Which guidelines do we follow?
External: UN Global Compact, ISO 14001, Universal
Declaration of Human Rights, UN Guiding Principles on
Business and Human Rights, UK Corporate
Governance Code, EITI, International Labour
Organisation Conventions, UK Modern Slavery Act,
Responsible Gold Mining Principles, OECD and national
tax guidelines.
Corporate: Code of Conduct, Supplier Code of
Conduct, Procurement Policy, Anti-Bribery Policy,
Policy on Disciplinary Action for Violation of Anti-Bribery
and Corruption Procedures, Policy on use of agents,
representatives, intermediaries and contractors’ due
diligence, Fair Competition and Anti-Trust Policy, Gifts
and Entertainment Policy, Whistleblowing Policy.
80
Our approach
We are committed to doing business responsibly and expect
the same from those who work with us. We believe that our
zero tolerance of all kinds of bribery or fraud is crucial for the
long-term success of our business and communities. That is
why that, as well as complying with all applicable laws and
regulations in the countries where we operate, we implement
international best practice in our corporate policies and
standards.
The Code of Conduct (the Code) is core to our
comprehensive approach for ensuring the highest business
standards and integrity. Its main goal is to convey our core
values and basic ethical principles to all stakeholders.
The Code clearly outlines key our zero-tolerance stance on
conflicts of interest, bribery, bullying, consumption of alcohol
or drugs, and improper use of confidential and insider
information, as well as other matters of corporate behaviour.
The Code has been approved by the Board of Directors and
is regularly reviewed by the appropriate Board Committees,
according to their remit, along with monitoring management’s
reporting. The Code’s implementation is constantly
monitored by relevant executives and the internal audit
function. All employees are required to acknowledge that
they have read and understood the Code and to agree to
comply with it. The Group undertakes a number of initiatives
to enhance awareness on the Code and ethical behaviour.
In 2022, we provided appropriate training on human rights,
diversity and inclusion practices to our employees. The Code
is also supported by our policies, which cover a broad range
of issues, including the Supplier Code of Conduct and
Anti-Bribery and Corruption policies, Whistleblowing Policy
and others. These are all available on the Company’s
website.
The Company may not make a political donation to a political
party or other political organisation, or to an independent
election candidate, or incur any political expenditure, unless
such donation or expenditure is authorised by an ordinary
resolution of shareholders passed before the donation is
made or the expenditure incurred. No such donations were
made in 2022 (2021: none).
Anti-bribery and corruption
Bribery is a criminal offence in the countries in which the
Group operates. Corrupt acts expose the Group and its
employees to the risk of prosecution, fines and
imprisonment, as well as endangering the Company’s
reputation.
The Anti-Bribery and Corruption Policy extends across all of
the Group’s business dealings in all countries and territories
in which the Group operates and applies to Directors,
managers and all employees of the Group, as well as relevant
business partners and other relevant individuals and entities.
The Policy prohibits the payment, offer or authorisation of
bribes, the receipt or acceptance of a bribe or the payment,
offer or promise to pay any facilitating payments. The Board
attaches the utmost importance to this Policy and applies a
zero-tolerance approach to acts of bribery and corruption by
any of the Group’s employees or by business partners
working on the Group’s behalf. All policies and procedures
on the prevention of bribery and corruption are regularly
reviewed by the Audit and Risk Committee.
As part of the implementation of internal procedures to
comply with the international anti-corruption standards, the
Group has a comprehensive Whistleblowing Policy, which
defines the processes in place to communicate, in
confidence, concerns about possible improprieties, unethical
or illegal activities and ensures that arrangements are in place
for the independent investigation of such matters. It is
prohibited to retaliate against any individual who has reported
possible violations in good faith. Management reports twice
yearly to the Audit and Risk Committee on the
implementation of policies and procedures within the Group’s
operations, and any instances of corruption or unethical
conduct within the Group. We have not denied any personnel
access to the Audit and Risk Committee and have provided
protection to whistleblowers from adverse personnel action.
A dedicated confidential Hotline, with details available on the
website, allows anyone to anonymously report any violations
of applicable laws and regulations. All messages are
thoroughly investigated on a confidential basis and without
bias. Best efforts are used to uphold anonymity if requested
by a whistleblower. In 2022, we received 124 reports to our
dedicated confidential Hotline: 22 were validated after a full
investigation; all others were found to be either lacking
evidence or unrelated to business ethics. As part of raising
awareness of bribery and corruption risks and the principles
of the Code, in 2022, we delivered 385 seminars to high-risk
groups of employees and contractors, attended by more
than 22,000 people.
We identified four corruption-related instances during the last
year – none of which had any impact on our financial position
or operations and none involved public or government
involvement. No court cases relating to corruption were
brought against Polymetal or any of its employees.
Supply chain stewardship
As a business, we purchase materials, products and services
from more than 5,000 diverse suppliers. We encourage these
supply chain partners to meet our rigorous sustainability
standards. Our Supplier Code of Conduct outlines the
sustainability and ethical standards we expect of all supply
chain partners. It articulates our criteria around safety, labour
relations and wider social, environmental and ethical risks.
We ensure that all suppliers are familiar with the Supplier
Code.
In 2022, the geopolitical and logistical challenges pushed us
into reviewing the pool of potential suppliers for our Russian
assets to ensure the continuity of our operations and ability to
build long-term partnerships. Read more about how we
manage supply chain risks on pages 101.
81
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability continued
Supplier due diligence
We select our partners via open tender and our
e-procurement system helps enforce our Procurement Policy
by applying standards consistently across a large number of
contractors. We assess suppliers with standardised
scorecards to guarantee objectivity and fairness. Our due
diligence process includes:
• Security screening of new and existing suppliers using
open sources and conducted by our legal and security
services. Suppliers are checked on any controversies,
including human trafficking, delays in paying salaries,
legal proceedings and community issues. We also
request references from the suppliers’ customers.
We check our current suppliers at least twice a year.
• Applying the SPARK database at registration to assess
accountability based on 40 factors, including
a Consolidated Risk Indicator, Due Diligence Index,
Financial Risk Index and Payment Index.
• A pre-qualification check before an open tender involving
a questionnaire that includes information on staff
qualifications, regions where the business has a
presence and financial capabilities. Only those that have
prequalified are allowed to participate in our open
tenders.
• Selective site visits ensuring appropriate production
processes and labour conditions.
In 2022, we conducted 11,070 security checks of new
and existing suppliers for compliance with our business
ethics policies (versus 10,798 in 2021). Of these checks,
355 resulted in our refusal to work with the contractor as they
were deemed non-compliant with our standards
(351 in 2021).
Besides the obligatory checks, we engage with our suppliers
to inform them on our ESG policies and expectations: they
can be asked to fill in an online self-assessment
questionnaire on how they manage ESG issues, such as
climate change, equal pay, health and safety and community
relations. The information enables us to consider wider ESG
criteria when selecting new partners. Our human rights and
diversity training materials are available for suppliers as well.
Local procurement
Sourcing products and services locally can bring significant
socio-economic benefits to neighbouring communities.
It also reduces our own carbon miles and transport costs,
while improving operational continuity (particularly in remote
locations). In 2022, 39% of our procurement was regional in
Russia and 84% in Kazakhstan (2021: 40% and 68%,
respectively). By 2024, we plan to ensure that at least 50% of
our procurement is regional. We have introduced a location
criterion to the list of potential suppliers for sites, which will
prioritise procurement of locally produced goods.
Human rights
Whether it is the rights of our colleagues or supplier partners,
our communities or contractors, our commitment is
consistently clear. Polymetal’s approach is aligned with
universal principles of human rights. We follow the guidelines
of the Universal Declaration of Human Rights, UN Global
Compact, ILO Declaration, Responsible Gold Mining
Principles and national labour codes. In compliance with the
UK Modern Slavery Act 2015, we publish our Modern Slavery
Act Transparency Statement annually and outline our steps
to protect human rights in our business and supply chains.
We pay particular attention to regions where we exist
side-by-side with indigenous communities. We did not have
any conflicts related to lands or objects that present historical
or cultural value for indigenous communities during the year.
We assign qualified personnel in all operational regions with
responsibility for internal and external communications on
any issues related to human rights, ensuring transparent
grievance mechanisms for all our stakeholders. Our last
human rights risk assessment across the Group took place in
2021 and none of the risks identified were high or extreme,
with the majority showing as low. Having identified issues
relating to insufficient awareness of our corporate diversity
and inclusion policies, in 2022, we developed a new course
on the inclusion of people with special physical needs. We
also updated our online course on human rights to include
more practical case studies. Both courses are now included
in the induction training package for new employees and are
also available to representatives of contracting organisations.
Responsible tax policy
Through reporting and paying taxes, we strive to maintain a
transparent and responsible attitude towards our social
responsibility in the jurisdictions where we have business
activities. Total tax payments in 2022 amounted to $385
million (2021: $389 million) and are disclosed in detail in our
website’s Disclosure centre.
Our contribution goes beyond the taxes we pay. Where we
receive an opportunity to carry out regional investment
projects through the use of available tax benefits, we engage
in economic development in the region, job creation and
wide support for local communities. Wherever possible, we
seek constructive dialogue on tax matters, with
policymakers, industry and business groups, in order to
provide meaningful input and contribute to the development
of a fair, effective and stable tax system.
Our responsible approach to tax is reflected in the Group
Tax Strategy and is aimed at insuring we pay all taxes
required in a timely manner. Our Group Tax Strategy is
designed to maintain the highest standards of compliance
with the requirements of applicable tax laws, treaties,
regulations and other tax guidance, while providing adequate
controls over tax accounting and tax reporting. Management
of Group companies is responsible for compliance with the
Group Tax Strategy. We operate our Group Tax Strategy in
line with our overall business strategy and approach to
corporate governance, ethics and risk management.
Our tax strategy is implemented using specific approaches and measures adopted and developed by the Group. These
comprise proactive identification, prevention and mitigation of potential risks and lead to accuracy and timeliness in fulfilling
our tax obligations. Internal and external audits are effective in ensuring that the Group is able to achieve these goals. Open
ongoing communication with the tax authorities also acts as a valuable source of information to the prompt identification of
and response to potential risks. We apply the following approaches and measures to ensure that we maintain the highest
standards of responsible taxation and tax governance:
Material tax topic
Approach
Organisation of
controls
Rigorous tax accounting and reporting processes and controls are implemented to ensure our objectives are met.
All material operations are subject to review and approval process from multiple levels of expertise within the Group
companies, with supplementary advice from external advisors where deemed necessary.
Controls and processes are subject to regular reviews by our internal audit department and are considered by MHA
MacIntyre Hudson LLP as Group auditor jointly with AO Business Solutions and Technologies (previously AO Deloitte
& Touche CIS) as a component auditor as part of their statutory audit. Based on the results of such reviews, tax
controls may be subject to change in order to improve efficiency as required.
Each applicable change in the tax law or court practice is tested from the perspective of new controls requirement
and the Group reacts correspondingly.
The Group’s personnel responsible for tax matters are provided with access to various internal and external trainings
and seminars in order to improve their tax expertise and skills.
The Group does not operate in tax haven jurisdictions or utilise aggressive tax planning. We make sure that our tax
payouts are consistent with genuine commercial activity and that they comply with the laws and regulations of the
jurisdictions in which we operate and are consistent with our business strategy.
The approach of the Group is to interpret the tax legislation consistent with both the spirit and intention of the law.
The Group is continuously monitoring its tax strategies and tax structures to comply with the new landscape created
by base erosion and profit shifting (BEPS) initiatives, ongoing changes in Russian and Kazakhstan tax legislation and
the evolving practice of its application in courts. The Group regularly evaluates its material tax positions, which are also
subject to review by the external auditor, to ensure these are adequately reflected in the consolidated financial
statements.
Tax planning
Approach
to tax risk
management
Intra-Group
transactions
All material intra-Group transactions are subject to transfer pricing control. Our transfer pricing methodology is
compliant with OECD and local country guidelines. The Group updates this methodology annually with the
assistance of external advisors to ensure that transactions between Group companies are conducted at an arm’s
length basis.
Tax incentives
Relationships
with tax
authorities
and other
stakeholders
The main goal of our controls is to ensure that income is taxed in and benefits the economy of jurisdiction in which it
arises.
We would typically make use of tax incentives and exemptions where they are intentionally provided by law. To the
extent the Group obtains an incentive, it complies fully with the requirements of such incentives (including, for example,
the amount of investments into the project). For example, Omolon Gold Mining Company LLC and JSC Magadan Silver
are entitled to the decreased statutory income tax and MET rates as residents of the Special Economic Zone of the
Russian Far East. In return for obtaining this tax relief, they are obliged to invest 50% of their tax savings each year in
the Special Economic Zone Development Programme, amounting to $14 million in 2022 (2021: $20 million).
The Group’s approach is to promote transparent relationships with the tax authorities, and to maintain open
communication with all relevant tax authorities to ensure that all information reporting required by applicable laws is
available on a timely basis.
We seek to clarify any uncertain tax positions by requesting rulings or the official position of the Finance Ministry where
possible.
The Group is an active member of industry associations aimed at contributing to an open and constructive dialogue with
government bodies¹. This enables Group tax executives to be close to changing tax trends.
Any queries regarding taxes from the stakeholders are welcome through the contact details on Polymetal’s official
website.
A dedicated confidential hotline, with details available on the website (e-mail or phone – toll-free in Kazakhstan and
Russia), allows anyone to anonymously report any concerns about the organisation’s integrity in relation to tax.
All questions and reports are thoroughly analysed and followed up.
Our tax transparency assists us in building trust and strong relationships with the local communities in the regions where
we operate.
Transparency
and
disclosures
The tax transparency landscape has continued to develop in recent years, with new disclosure requirements
implemented, including country-by-country reporting, GRI 207 and DAC-6. The Group is compliant with all
mandatory disclosures. Where necessary, we engage external advisors to ensure the Group’s reporting is sufficient
and is compliant with global and local best practices.
82
83
1
Including Union of Gold Producers of Russia (UGPR); Chamber of Commerce and Industry of the Russian Federation; Republican Association of Mining and
Metallurgical Enterprises (AMME); the National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken” and the Russian Union of Industrialists and
Entrepreneurs (RSPP).
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review
Financial performance impacted
by inflationary and logistical pressures
• Capital expenditure was $794 million³, up 5% compared
with $759 million in 2021 and 2% above the guidance
range of $725-775 million, reflecting accelerated
purchases and contractor advances for ongoing projects
(most notably, Amursk POX-2), combined with
inflationary and logistical pressures on imported
equipment, materials and services.
• Net operating cash inflow was $206 million
(2021: $1,195 million), on the back of inventories build-up
of $473 million. This includes positive cash flow of
$337 million from operations in Kazakhstan and negative
cash flow of $131 million from operations in the Russian
Federation. The Group reported negative free cash flow¹
of $445 million in 2022 (2021: positive $418 million).
• Net debt¹ increased to $2,393 million during the period
(31 December 2021: $1,647 million), representing 2.35x
of the Adjusted EBITDA (2021: 1.13x). The increase in net
debt was driven by the decline in profitability, the
persistently high capital intensity of the business and a
very significant expansion in working capital.
• The Board has carefully evaluated the liquidity and
solvency of the business in light of multiple external
uncertainties. Taking into account the Group’s leverage
(2.35x Net debt/EBITDA, materially above the level of
1.5x target leverage ratio) and the significant level of
uncertainty regarding external factors, the Board has
decided not to propose any dividend for 2022 in order to
allow the Group to maintain strategic and operating
flexibility in a highly volatile and uncertain external
environment.
Financial highlights
• In 2022, revenue decreased by 3%, totalling
$2,801 million (2021: $2,890 million), of which $933million
(33%) was generated from operations in Kazakhstan and
$1,868 million (67%) from operations in the Russian
Federation. Average realised gold price decreased by 2%
while silver price decreased by 12%, both almost
tracking market dynamics. Gold equivalent (GE)
production was 1,712 Koz, a 2% increase year-on-year.
Gold sales decreased by 1% year-on-year to 1,376 Koz,
while silver sales increased by 6% to 18.5 Moz.
Disruption in sales channels resulted in a huge gap
between production and sales in Q2-Q3 2022, but was
largely eliminated in Q4 2022. The remaining gap is
expected to close during the course of 1H 2023.
• Group Total Cash Costs (TCC)¹ for 2022 were $942/GE
oz and within the Group’s guidance of $900-1,000/GE
oz, although representing an increase of 29% year-on-
year, which was predominantly due to double-digit
domestic inflation and the appreciation in the Rouble/
Dollar exchange rate. Escalation of logistical costs and
sharp increases in the price consumables caused by
impositions of sanctions (explosives, equipment spares,
cyanide) also impacted the Group’s TCC.
• All-in Sustaining Cash Costs (AISC)¹ amounted to
$1,344/GE oz, up 31% year-on-year, which was within
the Group’s guidance of $1,300-1,400/GE and also
driven by the same factors as above.
• Adjusted EBITDA¹ was $1,017 million, 31% lower than in
2021, as costs rose and metals prices declined.
$478 million (47%) of Group EBITDA originated in
Kazakhstan and $539 million (53%) in the Russian
Federation. The Adjusted EBITDA margin decreased by
15 percentage points to 36% (2021: 51%).
• Underlying net earnings² were $440 million
(2021: $913 million). As a result of a lower Group EBITDA
and non-cash impairment charges (a post-tax amount of
$653 million), the Group recorded a net loss for the
period of $288 million in 2022, compared with profits of
$904 million in 2021.
1 The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to complement measures that are defined
or specified under International Financial Reporting Standards (IFRS). For more information on the APMs used by the Group, including justification for their use,
please refer to the “Alternative performance measures” section below.
2 Adjusted for the after-tax amount of impairment charges, write-downs of metal inventory, foreign exchange gain and other change in fair value of contingent
consideration.
3 On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.
4 Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged
because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.
5 Defined in the “Alternative performance measures” section below.
6
In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are
calculated as revenue divided by gold and silver volumes sold, excluding effect of treatment charges deductions from revenue.
7 FY 2021: final dividend for FY 2020 paid in 2021 and interim dividend for the 1H 2021 paid in September 2021.
8 FY 2021: interim and final dividend for FY2021.
9 Based on actual realised prices.
10 Excluding effect of treatment charges deductions from revenue.
Key figures4
Revenue, $m
Total cash cost5, $/GE oz
All-in cash cost5, $/GE oz
Adjusted EBITDA5, $m
Average realised gold price6, $/oz
Average realised silver price6, $/oz
Net (loss)/earnings, $m
Underlying net earnings5, $m
Return on assets (underlying)5
Return on equity (underlying)5
Basic (loss)/earnings per share, $/share
Underlying basic EPS5, $/share
Dividend declared during the period7, $/share
Dividend proposed for the period8, $/share
Net debt5, $m
Net debt/Adjusted EBITDA
Net operating cash flow, $m
Capital expenditure, $m
Free cash flow before acquisitions/ disposals6, $m
Free cash flow post-M&A, $m
Revenue analysis
Sales volumes
Gold
Silver
Gold equivalent sold9
Sales by metal
Gold
Average realised price10
Average LBMA gold price
Share of revenues
Silver
Average realised price
Average LBMA silver price
Share of revenues
Other metals
Share of revenues
Total revenue
$m
$/oz
$/oz
$m
$/oz
$/oz
$m
$m
2021
2,890
730
1,030
1,464
1,792
24.8
904
913
26%
23%
1.91
1.93
1.34
0.97
1,647
1.13
1,195
759
418
407
2021
1,386
17.5
1,640
Change
-3%
+29%
+31%
-31%
-2%
-12%
n/a
-52%
-65%
-52%
n/a
-52%
-100%
-100%
+45%
+109%
-83%
+5%
n/a
n/a
Change
-1%
+6%
-1%
Volume
variance,
$m
Price
variance,
$m
(17)
(41)
25
(61)
2022
2,801
942
1,344
1,017
1,764
21.9
(288)
440
9%
11%
(0.61)
0.93
–
–
2,393
2.35
206
794
(445)
(473)
2022
1,376
18.5
1,622
Change
-2%
-2%
+0%
-9%
-12%
-13%
+24%
Koz
Moz
Koz
2022
2,392
1,764
1,802
85%
383
21.9
21.8
14%
26
1%
2021
2,450
1,792
1,799
85%
419
24.8
25.0
14%
21
1%
2,801
2,890
-3%
(41)
(48)
In 2022, revenue was 3% lower year-on-year at $2,801 million on the back of lower average gold and silver prices. GE sales
volume remained almost flat year-on-year, in the face of significant challenges and comprehensive sales restructuring. Gold
sales decreased marginally by 1% year-on-year. Silver sales increased by 6% due to the contribution of direct high-grade
ore shipments from Primorskoye.
Despite the initial gap between production and sales in Q2-Q3 2022 caused by disruption in sales channels, the Group
almost completely sold down accumulated metal inventory in Q4 to a new set of counterparties. The remaining gap is
expected to close in 1H 2023.
The Group’s average realised gold price was $1,764/oz in 2022, down 2% from $1,792/oz in 2021, and 2% below the
average market price of $1,802/oz, as sales were skewed towards 2H 2022 with weaker average prices. The Group’s
average realised silver price was $21.9/oz, lower by 12% year-on-year, in line with the market price of $21.8/oz.
The share of gold sales as a percentage of total revenue remained stable at 85%.
84
85
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review continued
Analysis by segment/operation
Segment
Operation
Kazakhstan
Magadan
Khabarovsk
Yakutia
Urals
Kazakhstan
Kyzyl
Varvara
Russia
Magadan
Dukat
Omolon
Mayskoye
Khabarovsk
Albazino/Amursk
Svetloye
Nezhda
Voro
Revenue, $m
Gold equivalent sold, Koz
(silver equivalent for Dukat, Moz)
2022
933
554
379
1,868
996
465
340
191
564
395
170
130
177
2021
984
608
376
1,906
1,103
476
388
239
640
447
194
–
163
Change
-5%
-9%
+1%
-2%
-10%
-2%
-12%
-20%
-12%
-12%
-12%
n/a
+9%
-3%
2022
533
322
212
2021
561
350
210
1,089
1,079
584
22.1
194
118
322
223
99
80
102
632
19.7
216
141
356
248
108
–
91
1,622
1,640
Change
-5%
-8%
+1%
+1%
-8%
+12%
-10%
-16%
-9%
-10%
-8%
n/a
+12%
-1%
Total revenue
2,801
2,890
The decrease in sales volumes during the period had a negative impact on revenues at all operating mines, except Varvara
and Voro. At Dukat, lower silver prices offset higher sales.
Nezhda contributed 80 GE Koz to the total sales, compensating for the decrease at Russian mature mines Omolon,
Mayskoye and Amursk.
Cost of sales
$m
Cash operating costs
On-mine costs
Smelting costs
Purchase of ore and concentrates from third parties
Mining tax
Costs of production
Depreciation and depletion of operating assets
Rehabilitation expenses
Total change in metal inventories
Increase in metal inventories
Write-down of metal inventories to net realisable value
(Reversal)/Write-down of non-metal inventories to net realisable value
Idle capacities and abnormal production costs
Total cost of sales
Cash operating cost structure
Services
Consumables and spare parts
Labour
Mining tax
Purchase of ore from third and related parties
Other expenses
Total cash operating cost
2022
1,513
741
567
69
136
1,836
324
(1)
(152)
(216)
65
–
6
2021
1,181
516
383
130
152
1,412
229
2
(108)
(132)
25
(1)
3
1,690
1,307
2022
$m
576
438
285
136
69
9
2022
Share
38%
29%
19%
9%
5%
1%
2021
$m
399
290
202
152
130
8
Change
+28%
+44%
+48%
-47%
-11%
+30%
+41%
n/a
+41%
+64%
+160%
-100%
+100%
+29%
2021
Share
34%
25%
17%
13%
11%
1%
1,513
100%
1,181
100%
The total cost of sales increased by 29% in 2022 to $1,690 million, reflecting a combination of factors throughout the year:
• domestic inflation (12% and 20% year-on-year in Russia and Kazakstan, respectively)
• significant growth of domestic diesel prices
• higher cost of services
• planned decrease of average grade processed
• increase in depreciation charges at all operating mines, except Varvara and Kyzyl
• 7% Rouble appreciation impacting Dollar value of Rouble-denominated operating costs
The cost of services was up 44% year-on-year, caused mostly by higher volume of transportation and drilling and blasting
services at Nezhda, Kutyn and Primorskoye, as well as inflation in the sector.
The cost of consumables and spare parts was up 51% compared to 2021, impacted by changes in procurement to
maintain supplies of critically important consumables and spares levels as well as significant inflationary pressures,
combined with a stronger Rouble.
The cost of labour within cash operating costs was up 41% year-on-year, driven by a 10% increase in average headcount
combined with annual salary increases (tracking domestic CPI inflation).
Mining tax decreased by 11% year-on-year to $136 million, mainly impacted by lower silver prices and planned grade
decline towards a reserve average at Kyzyl, Albazino and Dukat.
The decrease in purchases of third-party ore and concentrates by 47% was mostly driven by a shift to processing Saum
and Peshernoye ore at Voro hub instead of treating third-party material as in 2021.
Depreciation and depletion was $324 million, up 41% year-on-year, with a specific increase attributable to Dukat (expansion
of mining at Primorskoye), Nezhda (ramp-up) and Albazino (start of mining at Kutyn). Depreciation costs of $52 million of
depreciation cost are included within the total increase in metal inventories (2021: $23 million).
In 2022, a net metal inventory increase of $216 million (2021: $132 million) was recorded (excluding write-downs to net
realisable value). The increase was mainly represented by concentrate build-up at Nezhda, Mayskoye, Albazino and Dukat,
as well as ore stockpiled at Primorskoye (Dukat), where last shipments of ore in 2022 were canceled due to abnormally
cold weather. The Company expects the bulk of this increase to be reversed during the course of 1H 2023.
The Group recognised a $65 million write-down (2021: $25 million) to the net realisable value of heap leach work-in-
progress at Omolon, ore at Albazino and Mayskoye, concentrate and low-grade ore at Nezhda (Note 22 on page 202).
General, administrative and selling expenses
$m
Labour
Depreciation
Share based compensation
Services
Other
Total general, administrative and selling expenses
2022
242
15
13
10
30
311
2021
Change
171
10
16
8
21
226
+42%
+50%
-19%
+25%
+43%
+38%
General, administrative and selling expenses (SGA) increased by 38% year-on-year to $311 million in 2022
(2021: $226 million), mainly due to higher labour costs driven by domestic inflation, Rouble appreciation and intense
competition for qualified personnel, as well as increased headcount at the newly launched Nezhda and Kutyn sites and for
Amursk POX-2 and Prognoz development projects.
Other operating expenses
$m
Exploration expenses
Social payments
Provision for investment in Special Economic Zones
Taxes, other than income tax
Additional tax charges/fines/penalties
Change in estimate of environmental obligations
Other expenses
Total other operating expenses
2022
2021
Change
62
44
14
15
2
(2)
7
72
28
20
11
(1)
2
17
142
149
-14%
+57%
-30%
+36%
n/a
n/a
-58%
-5%
Other operating expenses decreased to $142 million in 2022 (2021: $149 million) mainly due to the reduction in exploration
costs and decrease in provision for investment in Special Economic Zones, partially offset by the increase in social
payments, notably to Kazakhstan fund “Qazaqstan halkyna” addressing health, education and assistance to socially
vulnerable groups.
86
87
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review continued
Total cash costs
In 2022, TCC were $942/GE oz, up 29% year-on-year. A sharp increase in domestic inflation and escalation of logistical
costs, combined with the planned grades decline in ore processed at Albazino and Kyzyl, and appreciation in the Rouble/
Dollar exchange rate, had an overall negative impact on cost levels.
All-in sustaining and all-in cash costs
All-in sustaining cash costs² amounted to $1,344/GE oz, up 31% year-on-year, broadly in line with TCC dynamics, coupled
with inflationary pressure and accelerated procurement of equipment and critical spare parts to build up safety stocks.
Cash cost per GE ounce, $/oz
Gold equivalent sold, Koz
silver for Dukat, Moz)
Reconciliation of AISC movements
(AISC, $/oz)
Total cash costs by segment/operation
$/GE oz
Segment
Operation
Kazakhstan
Magadan
Khabarovsk
Yakutia
Urals
Kazakhstan
Kazakhstan
Kyzyl
Varvara
Russia
Magadan
Dukat (SE oz)¹
Omolon
Mayskoye
Khabarovsk
Svetloye
Albazino/Amursk
Nezhda
Voro
Total Group TCC
2022
728
602
920
1,046
1,070
12.7
960
1,343
1,022
893
1,079
1,138
918
942
2021
Change
643
477
920
776
819
10.6
798
969
707
481
804
n/a
747
730
+13%
+26%
+0%
+35%
+31%
+20%
+20%
+38%
+45%
+86%
+34%
n/a
+23%
+29%
2022
533
322
212
2021
561
350
210
1,089
1,079
584
22.1
194
118
322
99
223
80
102
632
19.7
216
141
356
108
248
n/a
91
1,622
1,640
Change
-5%
-8%
+1%
+1%
-8%
+12%
-10%
-16%
-9%
-8%
-10%
n/a
+12%
-1%
• Kyzyl’s total cash costs were at $602/GE oz, significantly below the Group’s average level, albeit up 26% year-on-year,
because of a planned gradual grade decline towards the open-pit reserve average (12% decrease in 2022) and an 8%
decrease in sales volumes.
• At Varvara, TCC were stable year-on-year at $920/GE oz, on the back of the prevailing share of better quality third-party
ore processed at the flotation circuit, while gold recovery at the leaching circuit grew following flowsheet improvements.
Inflationary pressures were offset by Kazakhstani Tenge depreciation.
Russia
• Dukat’s total cash costs per silver equivalent ounce sold (SE oz) increased by 20% year-on-year to $12.7/SE oz². The
cost increase is attributable to the planned decrease in silver grade in ore processed, combined with domestic inflation.
• At Omolon, TCC amounted to $960/GE oz, an increase of 20% year-on-year, on the back of lower sales (10% decrease
year-on-year), also impacted by a planned grade decline at the Kubaka mill. At the heap leach facility, stacking volumes
decreased due to rehandling of the previously stacked ore, while grade was lower in line with the mine plan due to the
depletion of the Birkachan heap leach ore reserves.
• At Mayskoye, TCC were $1,343/GE oz, a 38% increase year-on-year, on the back of moderate decline of gold grade in
ore processed, combined with lower sales. Costs were additionally affected by a significantly Rouble/Dollar exchange
rate during the sales period (August-November 2022), with an average rate of 60.5 RUB/$, compared with the FY 2022
level of 68.6 RUB/$ and FY 2021 level of 73.6 RUB/$.
• At Svetloye, TCC amounted to $893/GE oz, up 86% year-on-year, mostly driven by the end of tax incentives period for
mineral extraction tax, combined with the effect of inflationary pressures and stronger Rouble, as the vast majority of
sales took place from July to November 2022 (average rate of 60 RUB/$).
• At Albazino, TCC amounted to $1,079/GE oz, up 34% year-on-year. Mining at the largest high-grade Anfisa open-pit has
been completed, which resulted in a planned 29% decline in gold grade processed.
• At Voro, TCC were $918/GE oz, up 23% year-on-year, mainly due to the treatment of high cost Peshernoye ore and
higher cost of processing the historical pile at the heap leach facility.
• TCC at the newly launched Nezhda mine were $1,138/GE oz. The Company expects the output to increase and costs to
optimise as soon as the gravity concentrate is processed at the intensive cyanidation section of Amursk POX-2 (launch
planned for Q2 2023) and flotation concentrate is processed at Amursk POX-2 after its launch in 1H 2024. Currently
low-carbon concentrate is processed at Amursk POX, while high-carbon is mostly stockpiled.
1 Dukat’s TCC per gold equivalent were $1,021/GE oz (2021: $762/GE oz) and were included in the Group TCC calculation.
2 AISC comprise total cash costs, all selling, general and administrative expenses for operating mines and head office not included in TCC (mainly represented by
head office SGA), other expenses (excluding write-offs and non-cash items, in line with the methodology used for calculation of Adjusted EBITDA), and current
period capex for operating mines (i.e. excluding new project capital expenditure (development capital), but including all exploration expenditure (both expensed and
capitalised in the period) and minor brownfield expansions). For more information refer to the Alternative performance measures section below.
107
75
874
58
32
24
20
1,344
800
600
400
200
Cost per GE oz
2021
Domestic
inflation
Change in
average
grade
processed
Sales volume
decrease
RUB and KZT
rate change
Au/Ag
ratio change
Capitalised
stripping increase
and other
Cost per GE oz
2022
All‑in sustaining cash costs by segment/operation
$/GE oz
Segment
Kazakhstan
Magadan
Khabarovsk
Yakutia
Urals
Operation
Kazakhstan
Kyzyl
Varvara
Russia
Magadan
Dukat (SE oz)
Omolon
Mayskoye
Khabarovsk
Albazino/Amursk
Svetloye
Nezhda
Voro
Total Group AISC
2022
968
852
1,144
1,387
1,376
15.8
1,279
1,743
1,347
1,091
1,461
1,758
1,282
1,344
2021
817
640
1,110
1,024
1,073
13.6
1,053
1,287
963
656
1,097
n/a
925
1,030
Change
+19%
+33%
+3%
+35%
+28%
+16%
+21%
+35%
+40%
+66%
+33%
n/a
+39%
+31%
All-in sustaining cash costs by operation:
• AISC at all operating mines generally followed TCC dynamics, and were additionally affected by the acceleration of
capital allocation for sustaining capital expenditure.
• At Voro, AISC were $1,282/GE oz, up 39% year-on-year, on the back of scheduled initial costs of the flotation circuit.
• At Nezhda, AISC were elevated due to high levels of sustaining capital expenditure in the first year of operation, including
increased capital stripping and completion of several infrastructural projects in 2022, including successful
commissioning of the 110-kV line linking Nezhda mine to the regional grid, powered by a combination of hydro and gas.
88
89
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review continued
Reconciliation of all-in costs
Cost of sales, excluding depreciation,
depletion and write-down of inventory to net
realisable value (Note 7 on page 194)
Adjusted for:
Idle capacities
Treatment charges deductions reclassification
to cost of sales
SGA expenses, excluding depreciation,
amortization and share based compensation
(Note 7 on page 194)
Adjusted for:
SGA expenses of development projects
(6)
60
133
(16)
(3)
48
92
(15)
Total cash costs
1,528
1,198
SGA expenses for Corporate and other segment
and other operating expenses
Capital expenditure excluding development
projects
Exploration expenditure (capitalised)
Capitalised stripping
All-in sustaining cash costs
Finance costs (net)
Capitalised interest
Income tax (benefit)/expense
After-tax all-in cash costs
Capital expenditure for development projects
SGA and other expenses for development assets
All-in costs
271
275
15
92
217
188
10
74
2,181
1,688
111
35
(44)
2,284
422
40
2,746
59
13
257
2,016
556
42
2,615
Total, $m
$/GE oz
2022
2021
Change
2022
2021
Change
1,357
1,077
+26%
837
657
+27%
+125%
+25%
+45%
+9%
+28%
+25%
+46%
+50%
+24%
+29%
+88%
+181%
n/a
+13%
-24%
-5%
+5%
(4)
37
82
(10)
942
167
170
9
57
(2)
29
+100%
+28%
56
+46%
(9)
730
132
115
6
45
+11%
+29%
+27%
+48%
+50%
+27%
+30%
+89%
+175%
n/a
+15%
-23%
-4%
+6%
1,344
1,030
68
22
(27)
1,409
261
25
1,694
36
8
157
1,229
339
26
1,595
Impairment charges
In accordance with IAS 36 requirements, Polymetal conducts impairment tests for its goodwill, property, plant and
equipment, other non-current assets and inventories at each reporting date. Following a real discount rate increase for
Russian assets from 8% in 2021 to 14.1% in 2022, driven by increased country risk premium, a total pre-tax impairment
charge of $801 million (equivalent to a post-tax amount of $653 million) has been recorded in the consolidated financial
statements at 31 December 2022. This is a result of impairment tests for Nezhda-Prognoz, Veduga and Kutyn, the newest
assets in the portfolio with the highest carrying values. Investment of $24 million in associate Tomtor was also provided for,
as the project was suspended indefinitely (see Note 17 on page 199). The other assets in the portfolio have sufficient
headroom of their fair values over carrying values and were not impaired.
($m)
Impairment charge
Residual value of the asset
Nezhda-Prognoz
694
650
Veduga
95
106
Kutyn
12
237
Total
801
993
Adjusted EBITDA¹ and EBITDA margin
$m
(Loss)/profit for the year
Finance cost (net)2
Income tax (benefit)/expense
Depreciation and depletion
EBITDA
Net foreign exchange loss/(gain)
Impairment of non-current assets
Impairment of investment in associate
Loss/(gain) on disposal of subsidiaries, net
Share based compensation
Change in fair value of contingent consideration liability
Write-down of metal inventories to net realisable value
Adjusted EBITDA
Adjusted EBITDA margin
Adjusted EBITDA per GE oz
Adjusted EBITDA by segment/operation
Segment
Kazakhstan
Magadan
Khabarovsk
Yakutia
Urals
Operation
Kazakhstan
Kyzyl
Varvara
Russia
Magadan
Dukat
Omolon
Mayskoye
Khabarovsk
Albazino/Amursk
Svetloye
Nezhda
Voro
2022
(288)
111
(44)
282
61
32
801
24
2
13
20
65
1,017
36%
628
2021
904
59
257
214
1,434
(5)
–
–
(3)
16
(4)
27
1,464
51%
893
Change
n/a
+88%
n/a
+32%
-96%
n/a
n/a
n/a
n/a
-19%
n/a
+139%
-31%
-15%
-30%
2022
2021
Change
539
361
177
664
353
174
138
41
197
122
76
38
75
630
452
178
983
558
253
196
109
339
202
137
–
86
-14%
-20%
-0%
-32%
-37%
-31%
-30%
-63%
-42%
-40%
-45%
n/a
-13%
+25%
-31%
Corporate and other and intersegment operations
Total Group Adjusted EBITDA
(186)
1,017
(149)
1,464
In 2022, Adjusted EBITDA decreased by 31% year-on-year to $1,017 million, with an Adjusted EBITDA margin of 36%
(2021: 51%), driven by the cost dynamics described above combined with revenue decrease due to lower sales volumes.
90
91
1 Adjusted EBITDA is a key measure of the Group’s operating performance and cash generation capacity (excluding impact of financing, depreciation and tax) and a
key industry benchmark allowing peer comparison. Adjusted EBITDA also excludes the impact of certain accounting adjustments (mainly non-cash items) that can
mask underlying changes in core operating performance. The Group defines Adjusted EBITDA (a non-IFRS measure) as profit for the period adjusted for
depreciation and amortisation, write-downs and reversals of inventory to net realisable value, share-based compensation expenses, gains and losses on disposal
or revaluation of investments in subsidiaries, joint ventures and associates, rehabilitation expenses, bad debt allowance, foreign exchange gains or losses, changes
in fair value of contingent consideration, finance income, finance costs, income tax expense and other tax exposures accrued within other operating expenses.
Adjusted EBITDA margin is Adjusted EBITDA divided by revenue.
2 Net of finance income.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review continued
Other income statement items
Polymetal recorded a net foreign exchange loss in 2022 of $32 million compared to an exchange gain of $5 million in 2021,
mostly attributable to the revaluation of the Dollar-denominated borrowings of Russian operating companies, the functional
currency of which is the Russian Rouble. This was partially offset by a foreign exchange loss on intercompany loans with
different functional currencies in lending and borrowing subsidiaries.
The Group does not use any hedging instruments for managing foreign exchange risk, other than a natural hedge arising
from the fact that the majority of the Group’s revenue is denominated or calculated in Dollars.
Income tax benefit for 2022 was $44 million compared to $257 million expense in 2021, reflecting the increase in deferred
income tax credit resulting from a deferred tax benefit of $149 million for the property, plant and equipment impairment. For
details refer to Note 16 on page 196.
Net earnings, earnings per share and dividends
The Group recorded a net loss of $288 million in 2022, compared with income of $904 million in 2021, mainly due to the
significant impairment recorded in 2022. The underlying net earnings attributable to shareholders of the parent company
were $440 million, compared to $913 million in 2021.
Reconciliation of underlying net earnings1
$m
(Loss)/profit for the financial period attributable to shareholders of the parent company
Write-down of metal inventory to net realisable value
Foreign exchange loss/(gain)
Change in fair value of contingent consideration liability
Loss on disposal of subsidiaries, net
Impairment of non-current assets
Impairment of investment in associate
Tax effect
Underlying net earnings
2022
(288)
65
32
20
2
801
24
(216)
440
2021
904
25
(5)
(4)
(3)
–
–
(4)
913
Change
n/a
+161%
n/a
n/a
n/a
n/a
n/a
n/a
-52%
Basic loss per share was $0.61 compared to $1.91 earnings per share in 2021. Underlying basic EPS² was $0.93,
compared to $1.93 in 2021.
Capital expenditure3
$m
Development projects
Amursk POX-2 (incl. POX-3)
Prognoz
Voro flotation
Veduga
Operating assets
Kutyn
Kyzyl
Nezhda
Albazino/Amursk
Omolon
Voro
Dukat
Mayskoye
Varvara
Svetloye
Corporate and other
Total capital expenditure
Sustaining
Development
Stripping and underground
development
Exploration
Total
2022
Total
2021
–
–
–
–
–
343
–
28
38
35
21
22
42
41
36
11
2
343
319
207
55
42
14
–
67
–
–
–
–
–
–
–
–
–
–
319
12
–
–
–
12
103
11
34
13
2
18
17
(1)
–
3
5
–
115
2
–
–
–
2
15
–
–
–
4
1
2
–
–
–
–
7
17
334
207
55
42
28
461
78
62
51
41
41
41
41
41
39
16
9
794
283
177
11
52
43
475
83
50
129
51
28
10
38
36
35
13
2
759
In 2022, total capital expenditure was $794 million⁴, up 5% year-on-year, and 2% above the guidance range of
$725-775 million, reflecting accelerated purchases and contractor advances for ongoing projects (most notably, Amursk
POX-2) in order to secure the project completion, combined with inflationary and logistical pressures on the sustaining
capital expenditure. This was partially offset by the shrinking investment scope and revision of the execution timeline for
Veduga, as well as a number of other smaller scale projects. Capital expenditure excluding capitalised stripping costs was
$679 million in 2022 (2021: $619 million).
1 Underlying net earnings represent net profit for the year excluding the impact of key items that can mask underlying changes in core performance.
2 Underlying basic EPS are calculated based on underlying net earnings.
3 On a cash basis.
4 On accrual basis, capital expenditure was $883 million in 2022 (2021: $870 million).
92
The major capital expenditure items in 2022 were as follows:
Development projects
• Capital expenditure at the Amursk POX-2 development project was $207 million. This mainly covered of completion of
concentrates pulp blending vessels, intensive cyanidation reactor, slurry cooling section, CIL thermal circuit and steam
conditioning section. Significant prepayments were made to equipment suppliers and key contractors to ensure project
completion according to plan. The plant start-up is expected in Q2 2024 according to the revised schedule.
• Capital expenditure at Prognoz of $55 million was mainly related to mining fleet purchases, spare parts and
consumables purchases as well as a significant infrastructure upgrade.
• The Voro flotation plant construction (capital expenditure of $42 million) is above 90% complete. Start-up is targeted
for Q2 2023.
Sustaining capital expenditure at operating assets
• Kutyn heap leach project ($67 million invested in 2022) successfully started production six months ahead of the
initial plan.
• At Dukat, capital expenditure of $42 million mainly related to the mining fleet upgrade, engineering and procurement for
the transition of the Omsukchan concentrator to dry-stack tailings as well as full renovation of wastewater treatment
facilities at Dukat and Lunnoye mines.
• Capital expenditure at Mayskoye of $41 million, mainly related to construction of infrastructure, needed to commission
the ore transportation conveyor and backfill plant. The conveyor has been fully ramped up.
• An investment of $38 million was made at Nezhda, which includes the construction of boiler house and water collection
facilities. The 110-kV line linking Nezhda mine to the regional grid, powered by a combination of hydro and gas, has
been successfully commissioned.
• At Varvara, capital expenditure of $36 million mainly related to the second stage of tailings storage facility and the pilot
railveyor project to transport incoming ore from the railway spur to the crusher, reducing greenhouse gas emissions and
ore transportation costs, as well as two electric excavators at Komar mine.
• Capital expenditure at Albazino of $35 million mostly related to mining fleet replacement, decarbonisation of the heat
supply and construction of roads to satellite deposits. Construction of the power line linking Albazino to the grid
commenced and commissioning is expected in Q2 2025.
• At Kyzyl, capital expenditure in 2022 comprised $28 million, mainly related to fleet renewal, improvements in the
flowsheet and renovation and expansion of tailings storage facility. Additional conditioning slurry tanks were
implemented into the flowsheet. The recently launched cleaner flotation circuit allowed for a twofold decrease in gold
losses to carbon tailings.
• At Voro and Omolon, capital expenditure of $22 million and $21 million respectively, mainly related to mining fleet
purchases and the construction of wastewater treatment facilities.
Exploration and stripping
• The Group continues to invest in standalone exploration projects. Capital expenditure for exploration in 2022 was
$17 million (2021: $12 million).
• Capitalised stripping and underground development costs totalled $115 million in 2022 (2021: $140 million). These are
attributable to operations where 2022 stripping ratios exceeded their life-of-mine averages during the period, in
particular: Kyzyl ($34 million), Omolon ($18 million), Voro ($17 million), Nezhda ($13 million), Veduga ($12 million) and
Kutyn ($11 million).
93
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial review continued
Cash flows
$m
Operating cash flows before changes in working capital
Changes in working capital
Total operating cash flows
Capital expenditure
Net cash inflow on asset acquisitions
Other
Investing cash flows
Financing cash flows
Net changes in borrowings
Dividends paid
Acquisition of non-controlling interest
Proceeds from royalty arrangement
Contingent consideration paid
Total financing cash flows
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
Total operating cash flows in 2022 decreased sharply
year-on-year. Operating cash flows before changes in
working capital dropped by 43% year-on-year to
$679 million, as a result of a decrease in adjusted EBITDA,
additionally impacted by the twofold increase in interest
paid in the period. Net operating cash inflow was
$206 million, compared to $1,195 million inflow in 2021,
affected by a surge in working capital.
Investment cash outflows totalling $679 million, down 14%
year-on-year, were mainly represented by capital
expenditure (up 5% year-on-year at $794 million) offset by
cash inflows on acquisitions. Cash inflows on acquisitions
comprise a cash consideration of $27 million paid for the
Galka deposit and cash acquired as a result of
consolidation of 100% interest in the Albazino power line.
As a result of the latter transaction the Group assumed debt
of $161 million and acquired corresponding cash balances
of $150 million. Cash acquired is presented within investing
activities as net cash inflow on acquisitions, with no effect
on the Group’s net debt.
A gross borrowings increase of $838 million is mostly driven
by financing of the Group’s short-term working capital
requirements.
The Group has $633 million in cash deposited with non-
sanctioned financial institutions, up 52% compared to 2021.
400
200
0
-200
-400
2022
679
(473)
206
(794)
123
(8)
(679)
838
–
(24)
–
(27)
787
314
417
(98)
633
2021
1,192
3
1,195
(759)
(5)
(24)
(788)
276
(635)
–
20
(33)
(372)
35
386
(4)
417
Change
-43%
n/a
-83%
+5%
n/a
-67%
-14%
+204%
-100%
n/a
n/a
-18%
n/a
+797%
+8%
n/a
+52%
Reconciliation of free cash flow movements 2021–2022
($m)
418
2021
(447)
Decrease in
Adjusted
EBITDA
2022
(445)
34
CAPEX
increase
(450)
Increase
in working
capital
Balance sheet, liquidity and funding
NET DEBT
Short-term debt and current portion of long-term debt
Long-term debt
Gross debt
Less: cash and cash equivalents
Net debt
Net debt / Adjusted EBITDA
The Group’s net debt increased to $2,393 million as of 31
December 2022, representing a Net debt/Adjusted EBITDA
ratio of 2.35x. The increase in net debt was driven by a
surge in working capital and upward Dollar re-valuation of
Rouble-denominated debt driven by significant Rouble
strengthening at 31 December 2022 compared with the
prior period.
The proportion of long-term borrowings of total borrowings
was 83% as at 31 December 2022 (78% as at 31 December
2021). All of the 2023 debt repayments are well covered by
available cash balances of $633 million.
The average cost of debt increased, but remained relatively
low at 5.08% in 2022 (2021: 2.9%) supported by our ability
to negotiate competitive margins given the excellent credit
history of the Group. Lending in Russia is available in
Roubles, Renminbi and Dollar, although the availability of
Dollar loans has decreased significantly due to sanctions
and Central Bank pressure on financial institutions.
31 Dec 2022
31 Dec 2021
Change
514
2,512
3,026
633
2,393
2.35x
446
1,618
2,064
417
1,647
1.13x
+15%
+55%
+47%
+52%
+45%
+109%
2023 outlook
The Group reiterates its current production guidance of
1.7 Moz of GE for FY 2023. Production will be weighted
towards 2H 2023 due to seasonality.
Polymetal expects its costs to be in the range of $950-
1,000/GE oz for TCC and $1,300-1,400/GE oz for AISC¹.
A minor year-on-year increase is mostly due to expected
domestic inflation and royalty increase in Kazakhstan.
Capital expenditure is expected to be approximately
$700-750 million. Major investment projects include Amursk
POX-2, Albazino power line, Voro flotation and Prognoz.
The Group currently forecasts positive free cash flow
in 2023.
94
95
1 Based on 65 RUB/USD, 450 KZT/USD rates, 7% inflation in Russia and 9% in Kazakhstan.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Risk management
Managing risks effectively
Our risk management framework was
designed to enable us to achieve our
strategic objectives and create sustainable
value. It has also proved its resilience during
the uncertainties and ongoing challenges
triggered by sanctions imposed on Russia
by the West.
Our approach
Meticulous risk management is a vital component of our
overall business model, helping Polymetal minimise the
risks for all its stakeholders while delivering on its strategic
objectives and creating sustainable value. We constantly
monitor macroeconomic and market volatilities, production
risks, environmental issues, the geopolitical situation and
local regulatory developments in order to assess the impact
on our risk profile, and we have appropriate risk mitigation
strategies and preventive controls in place.
The Company’s approach to risk management is also
embedded in our corporate culture. The need for a
proactive approach towards risks within day-to-day
operations is essential for safeguarding delivery on our
strategic objectives. The risk awareness culture
complements the rigorous risk management processes and
procedures.
We continuously monitor and refine our risk management
practices and internal control systems to meet the changing
requirements of the business. These systems incorporate
international best practice and adjustments to the UK Code
2018, and comply with the COSO ERM 2017 framework.
Our compliance controls are aimed at minimising risks and
preventing legal non-compliance. They are also aligned with
Polymetal’s Code of Conduct.
Our approach to assessing long-term viability, taking
account of the potential impact of the principal risks, is set
out on pages 153–154.
Risk management framework
Governance
and oversight at
corporate level
n
w
o
d
p
o
T
The Board
• Is responsible for the Group’s overall approach to risk management and internal control
• Sets the tone on risk aware culture
• Defines risk appetite and approves risk management policies and related internal controls
• Carries out a robust assessment of the Group’s emerging and principal risks
• Monitors the Group’s risk management and internal control systems and reviews their effectiveness
• Ensures sound internal and external information and communication processes.
Assist the
Board by
monitoring
principal risks
and procedures
The Board Committees
• The Audit and Risk Committee reviews the adequacy and effectiveness of the Group’s internal control and risk
management processes, considers the policies and overall process for identifying and assessing business
risks and managing their impact on the Group, develops and oversees implementation of risk management
strategies and makes recommendations to the Board
• The Safety and Sustainability Committee measures the impact of the Company’s initiatives and relevant
exposures, and liaises with the Audit and Risk Committee in monitoring sustainability risks.
` Further information on the Board and its Committees is given in the Governance section on pages 112–152.
Implementing
the Board’s
policies on risk
management
and internal
control
Support and
assurance
Executive management
• Maintains risk appetite and risk management within its remit, including monitoring principal risks
• Ensures internal responsibilities and accountabilities are clearly established, understood and embedded at all
levels of the Group to provide risk-aware decision-making
• Ensures risk-based planning and monitoring
• Is responsible for decisions on and implementation of the risk response.
Functional and operational managers
• Have overall responsibility for leading and supporting risk management within their business activities,
escalating issues when appropriate
• Have direct responsibility for the risk management processes, including relevant mitigation activities and monitoring.
Risk and compliance function
• Promotes risk management and related controls integration within the Group’s day-to-day business processes
• Facilitates the development of a risk-aware culture
• Co-ordinates and supports Group-level risk management activity and reporting
• Maintains and regularly updates the Group’s principal risks register
• Regularly reports to the Audit and Risk Committee and, as appropriate, to the Board.
Internal audit function
• Provides independent and objective assurance of the effectiveness of the risk management framework
• Monitors the risk management process and mitigation tools and actions
• Plans and executes assurance activities to ensure that there are policies and procedures in place to support
the effectiveness of the Group’s internal control system and maintains the Risk Assurance Map
• Regularly reports to the Audit and Risk Committee and, as appropriate, to the Board.
` Further information on the internal audit function is given on page 127.
p
u
m
o
t
t
o
B
96
Risk management process
Governance and culture
We have focused on maintaining a robust risk awareness culture
to promote effective risk management across all business units.
The Group’s operating structure is consistent with the nature,
size and geographic spread of the business.
It ensures management’s responsibility for the development
and implementation of risk management practices and
risk-aware decision-making by all business units within the
Group and facilitates effective risk management in achieving
the Group’s strategy and business objectives.
Strategy and objective-setting
The risk management framework is geared towards successful
and sustainable achievement of the Group’s strategic objectives.
The Group’s strategy is risk-based and the risk management
framework is aligned with our values, business goals and
objectives. Risk assessment forms an integral part of
management and planning for the whole Group.
Risk appetite, risk tolerance and key risk indicators
The risk appetite is defined as the nature and extent of risk the
Group is willing to accept in relation to the pursuit of its objectives.
The risk appetite of the Group is considered in relation to the
principal risks and their impact on the ability to meet strategic
objectives. The Board assesses the risk appetite, which is set to
balance opportunities for business development and growth in
principal areas, whilst maintaining the Group’s reputation and
taking into account stakeholders’ interests.
Risk analysis and management
We identify and assess risks at the earliest possible stage and
implement an appropriate risk response and internal controls in
advance. Our risk management procedures are designed to
delegate the responsibility for risk identification while avoiding gaps
and duplications. They are embedded into accounting and
documentation systems to identify potential risk triggers.
Risk identification comprises not only single, mutually exclusive
risks, but also multiple, linked and correlated risks. Once identified,
potential risk factors are assessed to consider quantitative and
qualitative impacts, and the likelihood of an event (see the table
on page 71). Together these create a risk profile.
When the appropriate ranking has been identified, a response to
each risk is developed and implemented, with responsibilities and
timelines are assigned.
Management assesses the effects of a risk’s likelihood and impact,
as well as the costs and benefits of possible mitigating actions to
bring the risk within acceptable tolerance levels. Risk matrices and
assurance maps are used to record, prioritise and track each risk
through the risk management process. Risk owners take
responsibility for risks, including controlling or mitigating them
at all levels and across individual business units.
The Board periodically revises the Group’s risk appetite and risk
tolerance levels of principal risks, based on the Group’s external
and internal context analysis. The Group has a zero-tolerance
approach to the following risks: fatalities; corruption; disclosure
of commercial secrets; accidents at construction; severe
violation of human rights and freedoms. In addition Polymetal
Intenational commits to the zero-tolerance to the breach of
applicable sanctions.
We implement key risk indicators (KRIs) for the Group’s principal
risks, which assist in identifying whether it is operating within or
outside its risk appetite. KRIs set the control values and provide
the data for proactive monitoring of the Group’s risk
performance. Deviation may signal risk realisation and identify
whether further action is required.
The Board carries out a robust assessment of the Group’s
principal risks, evaluating the potential impact on our business
model, operations, performance, stakeholders, our values and
solvency or liquidity. There is a particular focus on environmental
and social impacts within the communities where we operate
that is regularly discussed at joint meetings of the Audit and
Risk and Safety and Sustainability Committees to ensure that
our risk management processes cover all aspects of safety and
sustainability. The Audit and Risk Committee also reviews the
Group’s overall risk profile three times a year.
When identifying and assessing risks, the Group also draws up
a watch list of emerging risks, whose potential impact is not clear
at the present time. Emerging risks are properly identified and
monitored within the risk management process. The Board and
management review emerging risks as appropriate and at least
annually.
` To read more about emerging risks, see page 110.
Review and revision
Risk review and monitoring is performed at all stages of the
risk analysis and risk management process and contributes to
ensuring that the Group identifies and assesses changes that
may substantially affect its strategy and business objectives.
This subsequently identifies new risks and applies necessary
and timely measures, while at the same time evaluating the
effectiveness of existing risk analysis and risk management
processes. The internal audit function provides independent and
objective assurance of the effectiveness of the risk management
framework and monitors risk mitigation actions.
Communication and reporting
Ongoing risk communication and reporting processes are
embedded in Polymetal’s business operations. Risk analysis
outcomes are generated through the electronic documentation
management system and distributed, as appropriate. Risk and
internal control reports are regularly reviewed by the Audit and Risk
Committee. Relevant risk-related issues are also discussed by other
Board Committees and at Board meetings. Various communication
channels are implemented and used within and outside the Group
to obtain and share appropriate information flows from both internal
and external sources on a continuous basis.
Risk and compliance and internal audit functions provide
appropriate support and consultation on risk management
issues. Appropriate induction and ongoing training is also
provided to encourage desired behaviours and responsible
risk taking, as well as enhancing risk-awareness in required
areas. Training is tailored as appropriate for the role,
responsibilities, location and risks of the individual
employee or executive manager.
97
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
2022 developments and overview of principal risks
The risk overview below shows the residual level to which the Company is exposed once
preventive controls and mitigation measures have been applied to the principal risks.
Risk overview
Cybersecurity
risk
peration al ris k s
O
Exploration
risk
Production
risk
Construction and
development risks
Supply
chain
risk
S
u
s
t
a
i
n
Human
capital risk
a
b
il
i
t
y
r
i
s
k
s
Health and
safety risk
Environmental
risk
Legal and
compliance
risk
Political
risk
Market risk
Liquidity
risk
Taxation
risk
Currency
risk
Resource
nationalism
P
o
l
i
t
i
c
a
l
a
n
d
r
e
g
u
la
t
o
ry risks
Fin a n cial risks
Climate
change
Approach to risk assessment
Principal risks
• Could seriously affect and prevent the Group from delivering its strategic objectives
• Oversight by the Board and Board’s Committees
• Owned by the Executive Management
• Assessed and monitored at a Group level
• Identified and assessed through applying impact and likelihood a 5x5 scoring scale based on the financial
indicators (% Adjusted EBITDA) and non-financial consequences (safety, environmental, regulatory and
reputational) along with the likelihood criteria (from rare to almost certain)
• Defined risk appetite and tolerance vary depending on the risk type
• Risk response and mitigating controls are subject to internal audit review and monitoring
Functional and operational risks
• Owned by functional and operational management
• Assessed and monitored at the level of business unit, site or function. Escalated to the Executive Management
where appropriate
Sanctions implications
During 2022, none of the Group’s entities nor its significant
shareholders have been subject to the US, UK and EU
sanctions. However, constantly changing legislation and the
high level of uncertainty triggered by the conflict in Ukraine
has affected the Group’s business processes to varying
degrees given the correlation of different risk factors.
International sanctions and counter-sanctions had pervasive
impacts across a range of principal risks. In particular, they
led to a temporary bullion inventory accumulation across the
Group’s mines located in Russia and complications within
supply chain operations. This forced the Group to revise its
business priorities, including delivering on development
project schedules and budgets.
For the purpose of addressing sanctions-related restrictions,
the Company reacted quickly and applied appropriate
mitigation measures. This allowed the Group to establish new
sales channels, secure the procurement of operational
consumables and equipment, and carry out mid-term
development projects in line with revised schedules.
Potential sanctions and regulatory developments are
constantly monitored. The Board of Directors receives
appropriate updates on a timely basis. We disclosed the
effects that sanctions have had on individual risks within our
principal risks register; the details along with mitigating
actions are set out in the table on pages 100–109.
Operational risks
1 Production
2 Construction and
development1
3 Supply chain1
4 Exploration
Sustainability risks
5 Health and safety
6 Environmental1
7 Human capital
` Read more on the next pages.
Political and regulatory risk
8 Legal and compliance1
9 Political1
10 Taxation
Current emerging risks
Climate change
Resource nationalism
Cybersecurity
Financial risks
11 Market1
12 Currency1
13 Liquidity1
1 This risk was considered as part of the
viability assessment as detailed on
pages 153–154.
2022 – No change
2022 – Decreased
New principal risk
2022 – Increased
Emerging risks
Some evidence
of risk realisation
Strong evidence
of risk realisation
Low risk
Medium risk
High risk
Extreme risk
98
99
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Principal risks and uncertainties
The Group’s principal risks and related preventive controls and
mitigation strategies are set out below. Principal risks and risk
factors are assessed by the Board based on a detailed
understanding of the Company, its markets and the legal,
social, political, economic, technological, environmental and
cultural environments in which we operate, including a robust
consideration of the likelihood of the occurrence and potential
consequences of risk events.
In 2022, we validated the continued importance of our
13 principal risks. We have also disclosed the implications for
and impact on several principal risks caused by the
international sanctions.
The principal risks are those that we believe could seriously
affect and prevent the Group from delivering its strategic
objectives. A number of principal risks, such as risks related to
the operation of tailings storage facilities and risks related to
slope wall or underground mine failure could have dramatic
consequences for the Group’s prospects. Nevertheless, these
risks are highly unlikely. We treat these risks with the highest
priority and focus on the development and implementation of
relevant preventive controls and measures to mitigate the
inherent level of these risks when ensuring the Company’s
viability. Appropriate criteria have been included to the
incentive metrics of our Remuneration Policy. To read more
about ESG metrics, see page 144.
Risk key
Risk level
Risk exposure trend
Link to strategy
Low
Medium
High
Extreme
2022 – No change
New principal risk
2022 – Increased
2022 – Decreased
Meaningful organic
growth
Global leadership in refractory
ore processing
Maintaining robust liquidity
and balance sheet
High standards of ESG
through impact assessment
The order in which the risks are presented is not relevant to their significance.
Operational risks
1. Production risk
Risk description and potential effect
The key risks that may adversely affect the
Group’s ability to deliver on its production
plans are:
• Stability of open-pits and underground
mines
• Complex geotechnical conditions
• Lack of quality ore feed for processing
plants
Inability to achieve planned recoveries
•
• Lack of design and permit
documentation
• Reduced volumes of concentrate sales
(for detailed data on this risk see
page 28).
Other risks include:
• The failure of our contractors to meet
required performance and deadlines,
as well as to provide sufficient quality
of works
• Lack of key materials
• The failure of the supply chain to
procure complex logistics to remote
locations.
100
Risk level:
Risk exposure trend:
Link to strategy:
Principal areas of focus in 2022
In the context of pressures caused by
international sanctions, the Company faced
difficulties that directly or indirectly affected
production processes. In the first instance,
mines experienced difficulties with the
supply of goods and materials, mining
equipment and maintenance of Western
equipment owing to the withdrawal of foreign
key suppliers and manufacturing companies
from the Russian market. However, by
engaging alternative suppliers of mining
equipment, the Company managed to avoid
interruptions in the production process and
maintain the pace of production operations.
This was also facilitated by the
implementation of an accelerated mining
equipment programme, including the use of
dismantled equipment as spare parts for
current machinery.
In 2022, in the face of high uncertainty, the
Company was able to ensure stable work at
all mines across the portfolio and met its
production guidance. At Kutyn, production
started ahead of the previously announced
target date and production ramped up at
Nezhda.
Preventive control and mitigation
We continuously monitor the progress of
our production plans, identify and assess
relevant production risks at our
operations, develop and implement risk
management measures in a timely
manner, specifically:
• Proven procedures to develop and
approve mining plans
• Continuous tracking of key materials,
monitoring and prompt analysis of how
our contractors complete their tasks,
as well as proactively developing
alternative options
• Geomechanical surveys for open-pit
and pit-wall stability, control system for
underground mining, including Ground
Penetrating Radars (GPRs) and drones
(UAVs) used for surveys and slope
analysis, and online monitoring of
pit-wall stability and prompt wall
stabilisation
• Flood management measures to
prevent spring floods
• Detailed geomechanical modelling to
process data on grade control and
production drilling
• Monthly mine-to-model reconciliations
to achieve higher grades and minimise
dilution losses
• Geotechnical mapping based on
results of exploration, grade control
sampling and in-fill drilling
• Lab tests to optimise ore and
concentrate processing parameters.
2. Construction and development risks
Risk level:
Risk exposure trend:
Risk description and potential effect
Inability to achieve target return on capital
for large investment projects, such as
building new mines and processing
facilities or extension/refurbishment of
existing operating mines, due to:
• Capital expenditure overruns and
failure to meet construction deadlines
(including due to changes in
macroeconomic conditions)
• Delay in commissioning
• Failure to comply with design solutions
•
•
during construction
Inability to achieve design parameters
Inability to perform construction works
or to commission a construction
object.
3. Supply chain risk
Risk description and potential effect
Supply change failure could adversely
affect the Company’s business processes.
In view of the macroeconomic context and
industry-wide uncertainty, maintaining
resilient supply chains is a vital component
in ensuring the Company’s sustainable
performance. Supply chain risk also
correlates with principal risks such as
market, construction and development,
production, political and with emerging
climate change risk. Disruption or
restrictions to supply chain operations
could negatively impact operational
procurement, concentrate transportation
and planned delivery of construction and
development projects.
Link to strategy:
Preventive control and mitigation
Approval of investment projects is subject to
materiality criteria, including mandatory
approval by the Board, which ensures that
potential new assets fit the Company’s
strategic goals. The Company uses global
best practice in project management.
Project Committees, including the Company
executive team, make key financial,
technological and organisational decisions
when considering new projects. The Board
regularly reviews progress on key projects,
including completion scorecards and key
project milestones and risks.
Cross-functional project teams include
professionals from head office, regional
operations, Polymetal Engineering and
Polymetal Trading. This enables us to apply
accumulated collective experience in
exploration, design and commissioning of
mining and processing operations. Our
engineering professionals supervise full
observance of design parameters during
construction. The Company has a proven
procedure for obtaining permitting
documents. To ensure the resilient
performance of the engineering teams,
Polymetal implements a professional
assessment, development and motivation
programme.
JORC-compliant Ore Reserves estimates
for new development assets are assured by
external experts and validate all critical
feasibility study assumptions.
Principal areas of focus in 2022
To meet all project construction schedules,
the Group regularly evaluates risks,
including those related to sanctions
restrictions, and implements appropriate
mitigation measures. These measures
mainly concern procuring key equipment
and spare parts from alternative suppliers
and engaging alternative contractors.
In 2022, despite the pressures caused by
international sanctions and supply
difficulties, Polymetal successfully launched
gold production at Kutyn. The start-up was
ahead of the previously announced
target date.
The Company revised the construction
schedule for Amursk POX-2 by six months:
full commissioning is expected in Q2 2024.
The Company is confident in the feasibility
of the current plan and continues to
implement a range of risk mitigation
measures, which mainly relate to logistical
challenges.
Early-stage projects (including Veduga and
Maminskoye) have been delayed by one
year. This will reduce short-term capital
commitments and allow for a thorough
selection of processing equipment to ensure
full compliance with all applicable sanctions
and flexible construction planning. The
POX-3 project has been suspended
indefinitely with studies under way to
potentially re-site the facility in Kazakhstan.
Risk level:
Risk exposure trend:
Link to strategy:
Preventive and mitigation measures
In order to maintain the operation of a
resilient supply chain, the Company has
implemented a range of preventive
controls and mitigation measures to
address the volatile environment,
including:
• Advanced planning and ongoing
reviewing (e.g. tracking all shipments,
infrastructure outages and inclement
weather, monitoring possible sanction-
related restrictions)
• Agile stock allocations and creating
safety stocks for key inventory groups
• Reservation of production capacities
on the n-Tier suppliers level and shift to
substitute items where the risk of
supply chain interruption is high
• Calculating multiple shipment scenarios
for critical items along with a focus on
local contractors and using our own
containers in the shipment turnover
• Proactive order placing for consumed
•
materials
Implementation of immediate reporting
mechanisms, including inventory and
suppliers risk assessment on an
ongoing basis
• Monitoring all sanctions and
restrictions, and maintaining the
sanctions register
• Development of a strategy and plan for
alternative substitution of inventory and
equipment.
Principal areas of focus in 2022
During the reporting year, we focused on
adapting our supply chains to sanctions
restrictions and implementing measures to
replace sanctioned equipment and
consumables with comparable products,
mainly from Asia and Russia. We proactively
managed production demand and stocks of
critical consumables and spares to optimise
the number of order placements and ensure
on-time inventory and equipment delivery to
operations.
Polymetal responded by both increasing the
procurement of equipment and spares, and
reinforcing its relationships with critically
important contractors and suppliers through
advance payments. This allowed us to
significantly reduce the risk of supply
disruption caused by the impact of
international sanctions and counter-sanctions
on procurement and logistics.
There were no interruptions in the production
and delivery of development projects caused
by sanctions restrictions to the supply chain.
Despite the logistical challenges triggered by
the geopolitical and macroeconomic
situation, we managed to respond promptly
and effectively to any emerging issues.
Contingency planning has been in place to
ensure supply chain resilience, including the
selection of key equipment suppliers. In
addition, re-engineering practice for critical
inventories of existing production processes
was introduced.
101
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Operational risks continued
4. Exploration risk
Risk level:
Risk exposure trend:
Link to strategy:
Risk description and potential effect
Failure to discover new reserves of
sufficient magnitude or confirm existing
reserves is an inherent risk for the mining
industry:
• Tectonic fractures and rock-fracture
zones may affect the stability of the
rock mass
• Change in the form and dip angles of
ore bodies may affect the development
method and result in an increase in the
amount of planned mining works
• Underestimation and overestimation of
Mineral Resources may affect the
accuracy of production planning and
mining efficiency
• Failure to take assays and handle
•
•
samples correctly may lead to incorrect
analysis results and errors in estimates
of mineral resources
Ineffective use of available resources
and/or failure to meet targets could
adversely affect the Company’s future
performance
Improper approval of new
Ore Reserves may result in the
Company’s inability to benefit from
exploration results
• Postponement or suspension of
exploration projects could have a
significant impact on the proper
replenishment of the mineral resource
base.
Preventive control and mitigation
The Group’s Chief Geologist and
engineering teams have a strong track
record of successful greenfield and
brownfield exploration, leading to the
subsequent development of exploration
fields for commercial production.
The advancement of exploration projects
is subject to rigorous reviews through
pre-established project stage gates that
are linked to estimates of the resource
potential to be commercially developed.
We have a mine-to-model reconciliation
procedure in place to compare the actual
amount of ore mined with mineral resource
estimates. Quality assurance and quality
control procedures provide control of
works performed through control tests
and measurements. The procedures also
provide for an expert review of
technologies applied. The Company has a
system to control filing of documents with
the state authorities that enables strict
control over the time and quality of the
documentation filed.
Polymetal runs programmes to train and
develop relevant personnel and gives
priority to introducing new exploration
technologies to accelerate exploration and
improve its productivity and efficiency.
Principal areas of focus in 2022
In 2022, due to the challenging geopolitical
situation, Polymetal postponed a range of
exploration projects as a result of a revised
financing programme and business
prioritisation. The Company focused on the
most significant projects.
In 2022, Group Ore Reserves decreased by
9% to 27.3 Moz of GE, mostly due to mining
depletion. This was partially offset by the
successful exploration results at Omolon
hub (Burgali and Nevenrekan), Pesherny
(Voro hub), as well as initial reserve
estimates at Galka and Tamunier (Voro hub).
Despite a 50% reduction in greenfield
exploration budgets owing to geopolitical
factors, Polymetal is still evaluating
investment opportunities and partnering
with junior exploration companies. In 2022,
the Company held its fifth competition for
junior exploration companies as part of a
programme to explore prospective areas
and advance its long-term growth pipeline.
The average grade in Ore Reserves
continues to be one of the highest within the
sector globally at 3.6 g/t of GE.
Sustainability risks
5. Health and safety risk
Risk description and potential effect
The Group operates potentially hazardous
sites such as open-pit and underground
mines, exploration sites, processing
facilities and explosive storage facilities.
Working on the production sites may pose
a risk for our employees and contractors
due to various hazards and harmful
factors.
Risk level:
Risk exposure trend:
Link to strategy:
Preventive control and mitigation
Our approach to health and safety is about a
zero-harm culture. Safety responsibility
comes from the top: our Group CEO and
COO, alongside the HSE Director, are
formally committed to personal
accountability with health and safety
indicators making up a material part of their
annual bonus KPIs. They can be subject to
penalties of up to 50% of their annual bonus
earned for non-safety-related KPIs if severe
incidents or fatalities occur.
Each key process and location has its own
risk map and mitigation plan. We develop an
annual action plan for key risk areas and
implement mitigation activities across key
areas covering five main directions of impact:
administration, risk elimination, engineering
improvements, training and visualisation.
This includes health and fatigue monitoring,
upgrading safety equipment, route
optimisation, regular road safety inspections
and improving work and rest conditions. An
internal audit of the efficiency of health and
safety management is performed.
Our Occupational Health and Safety
Management System is audited annually for
compliance with ISO 45001.
Principal areas of focus in 2022
In 2022, there were no fatal accidents
among Polymetal employees and
contractors. LTIFR among the Group’s
employees for 2022 stood at 0.10
(0.12 in 2021).
Polymetal regularly trains not only
employees but also contractors on the
principles of hazards identification, risk
assessment and procedures for ongoing
production control and workplace
monitoring. The requirement to regularly
identify and assess hazards and risks is
included in all agreements with
contractors.
To enhance safety risk management, the
Company continues to introduce smart
technologies, such as underground mine
worker positioning systems and electric
voltage and collision warning systems.
In 2022, based on a complex analysis of
the health and safety risks and the
efficiency of the preventive control and
risk mitigation measures, the Group
assessed the health and safety risk
as “high”.
External auditors confirmed the
compliance of our Occupational Health
and Safety Management System with
ISO 45001 with no adverse audit reports.
102
103
Risk key
Risk level
Risk exposure trend
Link to strategy
Low
Medium
High
Extreme
2022 – No change
New principal risk
2022 – Increased
2022 – Decreased
Meaningful organic
growth
Global leadership in refractory
ore processing
Maintaining robust liquidity
and balance sheet
High standards of ESG
through impact assessment
The order in which the risks are presented is not relevant to their significance.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Sustainability risks continued
6. Environmental risk
Risk level:
Risk exposure trend:
7. Human capital risk
Sustainability risks continued
Risk description and potential effect
By the nature of its production processes,
the Company has an impact on the
environment. The main environmental risks
are emissions (emissions and discharges)
of pollutants, incidents at tailings storage
facilities, explosives storage and water
treatment facilities. Environmental risk
factors include natural ones: climatic,
atmospheric, hydrogeological,
geological, etc.
Environmental risk realisation may lead to
financial expenses, such as fines and
penalties, excess payments, environmental
restoration costs and statutory liability,
and an increase in social and
environmental tension.
Link to strategy:
Principal areas of focus in 2022
We have rigorous controls in place to
ensure that we meet our environmental
targets related to water use, waste and
biodiversity (read more on page 45).
In 2022, we continued to focus on our
material environmental issues:
• Actions were taken to reduce the
consumption of fresh water for process
needs, alongside the modernisation of
water treatment facilities at Mayskoye
and Dukat and reconstruction of
collecting ponds at Albazino.
• No emergencies occurred at
Polymetal’s TSFs during 2022. (More
information about all our hydraulic
structures is included in the updated
Tailing Storage Facility Management
Report published in 2022 on our
website).
• Varvara has become the first company
in Kazakhstan (and third in Polymetal)
to be certified in full compliance under
the International Cyanide Management
Code by the International Cyanide
Management Institute (ICMI).
The Group continually evaluates whether
the current measures are sufficient and
effective, develops action plans, and
reviews and implements procedures that
expose any deviations at every stage of an
operation’s life-cycle. In addition, our
environmental teams at each site promptly
deal with any community enquiries
regarding environmental impact of
production on local ecosystems.
Preventive control and mitigation
We ensure that all environmental concerns
are taken into account and properly
addressed during the design,
construction, operation and closure stages
of mines and processing facilities. We are
engaged in multifaceted measures to both
mitigate environmental risks and, where
possible, to improve ecological conditions
around our sites along with continuous
monitoring of our activities. This includes
the following:
• The Company’s Environmental
Management System is certified for
compliance with ISO 14001 at all
operating sites.¹ The Company
confirms compliance with the
requirements of the standard each year
through an environmental impact
assessment reviewed by the regulator.
• Each operation regularly identifies and
assesses environmental risks with
consolidated data analysed to evaluate
the level of the Company’s principal
environmental risk. This includes
monitoring changes in environmental
laws, standards and best practice, as
well as environmental monitoring.
• The Company continuously reduces its
fresh water use and monitors discharge
water quality to minimise its impact on
local water bodies.
• Each new project is assessed for its
proximity and potential impact on key
biodiversity areas before making an
investment decision. Periodic
biodiversity monitoring is used to track
our impact on species around existing
sites.
• Each tailings storage facility (TSF) is
rigorously monitored and inspected to
ensure ongoing control. External
experts with appropriate global
experience are engaged to undertake
regular, independent safety reviews of
our TSFs. Our studies confirm that an
emergency failure at our dams would
have no impact on settlements,
buildings, structures or facilities where
communities or employees may be
present. To further improve tailings
safety, the Company is shifting its
operations to dry-stacking technology.
• The Company implements a Cyanide
Management System to identify and
minimise the risks of potential negative
effects of cyanide on the environment
and the health of employees.
For a description of emerging climate-
change risks, refer to page 110.
Risk description and potential effect
Attraction and retention of qualified
personnel is essential to ensure
Company’s performance.
Volatile external environment posed by the
impact of the geopolitical situation
complicates the existing human resources
processes.
Inability to retain key personnel or to
recruit new personnel and insufficient
qualification of employees can affect
operations, culture and environment where
business can thrive.
Preventive control and mitigation
Our corporate culture is crucial for
delivering the long-term success of the
Company and the Board appreciates our
employees playing a key role in this
process. We aim to provide a comfortable
and effective working environment, as well
as training or further education and other
opportunities for our employees.
The main principles and approaches to
human resources strategy implementation
are based on international best practice,
generally recognised principles and rules
of domestic and international law, as
stated in our Human Resources Policy,
Diversity and Inclusion Policy, and Human
Rights Policy.
The Group has an internal
communications system enabling it to
independently monitor employee
satisfaction. There are direct lines to the
Group CEO and departmental heads.
Employee satisfaction surveys are
conducted on a regular basis with a
summary provided to the Nomination
Committee.
Our Remuneration Policy is aimed at
achieving results, motivating and retaining
all levels of personnel, prioritising
functional areas and staff shortages in the
labour market. We have incentive
programmes to help retain key employees
and offer a competitive remuneration
package and benefits, including annual
indexation of the base salary against
inflation for all employees. The Company
maintains a Talent Pool of high-potential
professionals, nurturing young leaders to
manage further growth.
Risk level:
Risk exposure trend:
Link to strategy:
Principal areas of focus in 2022
Since the beginning of the geopolitical
conflict, the Company has taken all
possible measures to ensure employees’
well-being and maintain their productivity.
Prompt feedback channels were
constantly maintained. The Company
considers the retention of employees,
including key professionals, to be of
paramount importance and implements all
available measures to maintain staffing
levels at its offices and operations. Such
measures include the formation of internal
and external pools and additional
professional training for employees.
Using a variety of communication
channels, we continued with
arrangements for employees from every
subsidiary to put questions to the
Company’s management on a wide range
of topics.
We also provided appropriate training on
human rights, diversity and inclusion
practices to our employees.
1
Except for Nezhda where the EMS was implemented in line with the standard but has not yet been certified as the operation was only launched in the end of 2021.
Risk key
Risk level
Risk exposure trend
Link to strategy
Low
Medium
High
Extreme
2022 – No change
New principal risk
2022 – Increased
2022 – Decreased
Meaningful organic
growth
Global leadership in refractory
ore processing
Maintaining robust liquidity
and balance sheet
High standards of ESG
through impact assessment
The order in which the risks are presented is not relevant to their significance.
104
105
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Political and regulatory risks
Political and regulatory risks continued
8. Legal and compliance risk
Risk level:
Risk exposure trend:
10. Taxation risk
Risk description and potential effect
Russian and Kazakhstan tax laws are
subject to frequent changes and allow for
varying interpretations.
As a result, the Group management’s
interpretation of the tax laws applicable to
the Group’s operations and activities may
be challenged by relevant tax authorities.
The Group continues to monitor the
progress on the OECD’s Base Erosion and
Profit Shifting (BEPS) action plan, including
the global corporate taxation system
reform relating to the income of
multinational enterprises, in order to
assess its impact and, if necessary, adapt
it in all countries in which the Group
operates.
The Group carries out its activities in
several jurisdictions and this gives rise to
complex rules of transfer pricing that are
linked with uncertainty and subjectivity.
Risk level:
Risk exposure trend:
Link to strategy:
Preventive control and mitigation
Our approach includes constant monitoring
and analysis of changes in Russian,
Kazakhstan and international tax laws,
law-enforcement practice and
recommendations of supervisory
authorities.
The Group takes due account of current
court practice and applies appropriate
methodological guidance and administrative
controls. The Group reviews existing
controls for their sufficiency and adapts
them if necessary.
In order to enhance methodological and
administrative control over tax
management, the Group introduced a
transfer pricing methodology, which
complies with the requirements of OECD
and local standards. The Group updates
the procedure each year to ensure that
operations between Group companies are
based on commercial terms.
To date, the Group is not aware of any
significant outstanding tax claims, which
could lead to additional taxes accrued in the
future (beyond amounts already booked or
disclosed in the Group’s financial
statements). The Group applies a
conservative approach to provisions for
probable tax liabilities.
Principal areas of focus in 2022
There were no changes in tax legislation in
the countries where the Group operates
during the reporting period that could lead
to significant change in the tax burden for
the Group in 2022.
At the same time, significant amendments
to Kazakhstan’s tax legislation were
adopted in 2022 and came into force on 1
January 2023. The key change for the
Group is a 50% increase in the MET rate
for exchange-traded metals. A further
update in the Kazakhstan Tax Code is also
planned for 2023.
However, a more difficult geopolitical
situation in 2023 could potentially lead to a
number of measures aimed at tightening
fiscal policies in Russia and to an increase
in the tax burden. No specific initiatives
have been released yet.
The Group does not currently have any
information, other than the above, on any
specific changes in tax laws that might
lead to a significant increase in the Group’s
tax burden.
Risk description and potential effect
With operations in developing countries,
such as Kazakhstan and Russia, the
Company is exposed to the risk of adverse
legislative changes that may potentially
affect its business activities.
The most sensitive areas are the regulation
of foreign investment in the development
of mineral resources at so-called strategic
deposits, private property, environmental
protection and taxation.
In recent years, the governments of
Kazakhstan and Russia have become
more consistent when introducing new
regulations and taxes, demonstrating an
awareness of investment climate issues.
Non-compliance with regulatory
requirements and guidance may cause
sanctions, loss of licences for mineral
properties and penalties, and may also
affect the reputation of the Group.
The consistent imposition of international
sanctions and counter-sanctions
complicates compliance with legal and
regulatory requirements.
9. Political risk
Risk description and potential effect
Operating in Kazakhstan and Russia
involves some risk of political instability,
which may include changes in
government, negative policy shifts and civil
unrest.
Financial and economic international
sanctions and counter-sanctions as well
as the high level of geopolitical tensions
and macroeconomic uncertainty affected
the Group’s business processes to varying
degrees, given the correlation of different
risk factors as a part of the Group’s
principal risks profile and, in particular,
reflected on the Company’s share price,
supply chain and sales channels
operation, capital flows and ability of the
Group to secure external financing.
Preventive control and mitigation
We have a successful track record of
operating in Russian and Kazakhstan
jurisdictions. The Group has implemented
monitoring and compliance-control
procedures related to applicable laws,
regulatory requirements and guidance,
corporate governance standards and the
Group’s internal policies and procedures.
A number of control procedures are
considered by the external auditor as part
of their statutory audit. Implementation of
appropriate policies and procedures is
also the target of the internal audit
function.
We follow a risk-based approach when
considering potential corporate
transactions and maintain comprehensive
procedures to ensure appropriate
corporate practices, Including timely
monitoring of sanctions legislation in
co-operation with legal advisers. We strive
to create a more favourable regulatory
environment by being a member of various
voluntary non-governmental organisations
in Kazakhstan and Russia.
Polymetal also holds membership in
mining associations in Kazakhstan and
Russia.
Link to strategy:
Principal areas of focus in 2022
In 2022, the Company maintained its overall
approach, which is aimed at ongoing
monitoring and enhancement of compliance
processes. These included a
comprehensive analysis and revision of
existing policies and procedures,
development and implementation of new
guidelines, and the introduction and
maintenance of appropriate controls,
including on international sanctions
regulations and counter-sanctions.
Legal and compliance risk was upgraded
from medium to high due to the complex
regulation on international sanctions and
Russian counter-sanctions. In particular,
Russia has adopted its own set of counter-
sanctions measures including sanctioning
persons and entities within so-called
“unfriendly” countries. Specifically, on
7 March 2022 Jersey was included on the
“Unfriendly Countries List” under Russian
law. The severity of the counter-sanctions
against entities incorporated in Unfriendly
Jurisdictions are significant and significantly
limit the Company’s present ability to
perform any type of corporate restructuring,
as are the penalties for breach.
Risk level:
Risk exposure trend:
Link to strategy:
Preventive control and mitigation
The Group actively monitors political
developments on an ongoing basis.
However, the geopolitical and
macroeconomic situation is out of
management’s control.
The Company has implemented
appropriate policies and procedures for
sanctions compliance within the Group,
which are now an integral part of our risk
management process.
Proactive engagement with existing and
potential lenders and diversification of
lending counterparties enables the
Company to maintain larger cash balances
and extend maturities on existing
borrowings.
The Company has progressed the
evaluation of a potential re-domiciliation
of the parent company, Polymetal
International plc, to a jurisdiction deemed
to be “friendly” by the Russian Federation,
a move which could unblock the ability
to execute further corporate actions.
Principal areas of focus in 2022
During 2022, none of the Group’s entities
nor its significant shareholders were subject
to the US, UK and EU sanctions. Polymetal
also believes that targeted sanctions on the
Company remain unlikely.
However, international sanctions and
counter-sanctions had pervasive impacts
across a range of principal risks, including
supply chain, production, construction and
development, legal and compliance, market
and liquidity.
For the purpose of addressing sanction-
related restrictions, the Company reacted
promptly and applied appropriate mitigation
measures. This allowed the Group to
achieve its production targets, establish new
sales channels, secure the procurement of
operational consumables and equipment,
carry out mid-term development projects in
line with revised schedules, diversify its debt
portfolio and ensure sufficient liquidity.
The scope and impact of any new sanctions
(and any counter-sanctions) is yet unknown.
However, they might further affect the
macroeconomic situation in Russia and,
consequently, mining companies.
Potential sanctions and regulatory
developments are constantly monitored.
The Board of Directors receives appropriate
updates on a timely basis.
106
107
Risk key
Risk level
Risk exposure trend
Link to strategy
Low
Medium
High
Extreme
2022 – No change
New principal risk
2022 – Increased
2022 – Decreased
Meaningful organic
growth
Global leadership in refractory
ore processing
Maintaining robust liquidity
and balance sheet
High standards of ESG
through impact assessment
The order in which the risks are presented is not relevant to their significance.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Financial risks
11. Market risk
Risk description and potential effect
Gold and silver price volatility may result in
material and adverse movements in the
Company’s operating results, revenues
and cash flows. It also poses a significant
impact on consistent cash flow generation
at operating mines.
Market risks also include the possible
inability to sell a significant amount of
concentrate and bullion due to the
sanctions restrictions and, as a result, the
disruption of existing sales channels.
Risk level:
Risk exposure trend:
13. Liquidity risk
Financial risks continued
Risk description and potential effect
The inability to raise sufficient funds to
meet current operating or ongoing
financial needs or to develop new projects
and growth.
Insufficient cash and available facilities to
fund current operating or ongoing financial
needs or to develop new projects and
growth.
Inadequate cash management in terms of
cash flow forecast, available resources
and future requirements.
Funding costs may rise on the back of
inflationary pressure and the possibility of
more restricted access to funding.
Preventive control and mitigation
To manage the liquidity risk, the Group:
• Controls its leverage and financial
covenants as well as the liquidity
cushion
• Monitors and controls cash
expenditure at all stages of a deposit
development, from the choice of a
project to its operation, in order to
ensure stable cash flow from
operations
• Refinances its debt in advance to avoid
large bullet repayments and minimise
the risk of refinancing in future
• Monitors the macroeconomic situation
in terms of availability of borrowings
• Ensures that a significant amount of
cash and undrawn facilities are
available at any given time.
Preventive control and mitigation
The Company has developed and, to the
extent necessary, implemented procedures
to ensure consistent cash flow generation at
operating mines:
• Redistribution of ore feedstock between
the deposits within a hub to achieve
higher margins due to better grade
profile, better logistics or less expensive
mining methods
• Deferring the start of production while
continuing ore stacking to achieve better
cost profiles due to the positive effects
of scale
• Asset-level cost-cutting
• Adjustment of short-, medium- and
long-term life-of-mine plans at least
annually to reflect updated commodity
prices.
Stress testing for conservative price
assumptions is performed to ensure the
resilience of operating mines in a stress
scenario and continued value creation.
Emergency response plans have been
developed.
Link to strategy:
Principal areas of focus in 2022
In 2022, metal prices experienced volatility
due to various factors. Our stress testing
factored, in particular, the adverse changes
in market prices of gold and silver to
ensure the resilience of our operating
mines in severe stress scenarios.
Revenue decreased by 3% to $2.8 billion.
The decline is attributable to inventory
accumulation as well as lower metal prices.
The possible inability to sell bullion and
concentrate has been recognised as a new
component within market risk owing to the
sanctions restrictions. The Company
mitigated the risk through ramping up the
export of gold and silver bullions and
concentrates to various Asian markets,
based on a market price that allowed the
temporary gap to close between
production and sales, and improve free
cash flow generation.
In October 2021, China introduced new
standard updates to existing regulations
relating to impurities of arsenic in imported
gold concentrates. Non-compliance leads
to 13% VAT on exported concentrate.
Polymetal will be exposed to this new
regulation until Amursk POX-2 reaches its
design capacity. Until then, the Company
will take appropriate mitigation measures
to manage arsenic content in concentrates
by controlling production processes that
include the separation of ore based on its
quality and physical blend with cleaner
concentrates.
In China, logistic conditions improved, with
the easing of Covid and transport
restrictions, and enabled the Company to
export concentrate to the country without
interruption.
Risk level:
Risk exposure trend:
Link to strategy:
Principal areas of focus in 2022
As of December 2022, the Group’s total net
debt increased by 31% to $2.4 billion
(representing 2.35x of the Adjusted EBITDA)
driven by accelerated purchases of
equipment and spares, funding of critically
important contractors and suppliers,
upward Dollar re-valuation of Rouble-
denominated debt, as well as an
accumulation of unsold metal inventory.
In 2022, the risk exposure was relatively
higher than in 2021: the Group was
operating in an elevated macro and
geopolitical environment and faced
restricted access to funding as a result of
the introduction of sanctions against the
largest financial institutions in Russia, which
also resulted in an increased average cost
of funding.
Throughout the year, Polymetal took
decisive action (including postponing
early-stage development projects, reducing
capital costs, and not paying out regular
dividends) to increase liquidity and underpin
the strength of the balance sheet,
positioning the business to navigate the
challenging environment and supporting
long-term value creation. Despite the weak
macroeconomic environment during 2022,
the Group generated cash flow from
operations of $206 million in 2022 and
successfully refinanced its short-term debt.
As of December 2022, the amount of
short-term debt was $0.5 billion, while the
Group held $0.6 billion in cash and
$0.35 billion in undrawn credit limits
(31 December 2021: $417 million and
$2.3 billion respectively).
The Group remains committed to a prudent
capital allocation and investment discipline
and will continue to manage the liquidity risk
by maintaining access to a number of
sources of funding that are sufficient to
meet anticipated funding requirements.
12. Currency risk
Risk description and potential effect
The Group’s revenues and the majority of
its borrowings are denominated in Dollars,
while the majority of the Group’s operating
costs are denominated in Russian Roubles
and Kazakh Tenge. As a result, changes in
exchange rates affect financial results and
performance.
Growth of consumable prices and
inflation, due to stable metal prices and
appreciation of the functional currencies
against the Dollar, may lead to an adverse
impact on our operations in Kazakhstan
and Russia, resulting in higher Dollar
values of local currency-denominated
operating costs and lower margins.
Preventive control and mitigation
Natural hedging is used to reduce
currency risk exposure: the Group
maintains a significant part of its loan
portfolio in Dollars, balancing financial
cash flows from revenue denominated in
Dollars.
Budget is planned based on the inflation
risk. Flexible budgeting is used to monitor
the effect of exchange rate fluctuations on
the Group’s financial results. The Group
has determined critical exchange rate
levels for its operations and is monitoring
risk against these levels.
Risk level:
Risk exposure trend:
Link to strategy:
Principal areas of focus in 2022
In 2022, the Russian Rouble experienced
significant volatility strengthening by 5%
year-to-date to 70.3 RUB/$ as at
31 December 2022 (74.3 RUB/$ as at
31 December 2021), negatively affecting the
US Dollar value of Rouble-denominated
debt. The average exchange rate in 2022
was at 68.6 RUB/$, also negatively
impacting Rouble-denominated costs (see
page 84 for details).
As at 31 December 2022, 64% of the
Group’s total debt was denominated in
US Dollars, 28% in Russian Rouble and 7%
in Chinese Renminbi. Dollar re-valuation of
Rouble-denominated debt driven by
a strong Rouble had a negative impact on
the total level of net debt.
We continuously monitor and report on
financial impacts resulting from foreign
currency movements.
108
109
Risk key
Risk level
Risk exposure trend
Link to strategy
Low
Medium
High
Extreme
2022 – No change
New principal risk
2022 – Increased
2022 – Decreased
Meaningful organic
growth
Global leadership in refractory
ore processing
Maintaining robust liquidity
and balance sheet
High standards of ESG
through impact assessment
The order in which the risks are presented is not relevant to their significance.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Risk management continued
Emerging risks
In addition to the currently identified risks, the Company has
a process of identifying and addressing emerging risks.
Emerging risks are defined as risks or combination of risks
whose potential impact is not clear at the present time but
may develop to become a principal risk in future, as well as
circumstances or trends that could significantly impact the
Company’s financial strength, competitive position or
reputation within the next five years and have a long-term
impact for several years. While the emerging risks tend to
be characterised by potentially unknown and far-reaching
impacts on industry and external environment in general,
emerging risks are particularly important in the context of
the Company’s strategic planning. Accordingly, we identify
the critical assumptions in strategic plans that could be
impacted by these emerging risks.
Emerging risks description and their potential impact on the Group
Climate
change
We recognise that global climate change represents both risks and opportunities for our business. Climate-related risks
include physical risks (e.g. potential damage induced by shifts in precipitations, hurricanes, permafrost degradation, etc.)
and transitional risks (such as carbon taxation/quotas, additional environment-related regulatory requirements, increased
costs of fossil fuel and potential negative perception of carbon-intensive industries/companies by the Company’s
stakeholders etc.).
The Company has adopted a Climate Change Strategy, which includes a comprehensive assessment of climate change
risks and opportunities, and mitigation/adaptation plans, as well as setting targets and taking specific steps to improve our
resilience to climate change. See details in the Climate Change section on pages 65-72. We have also disclosed climate-
related data in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Read
more on pages 257.
The processes for identifying, assessing and managing climate-related risks are integrated into the Group’s overall risk
management. In particular, this includes a range of criteria to consider a climate-related risk as a component of the existing
principal risk or to introduce a new one provided certain conditions are met.
In addition to the direct impact of climate risks on our operations and assets, we are also aware of the potential climate risks
associated with our supply chain (both upstream and downstream). In response to these threats, we analyse and mitigate
risks associated with our transport infrastructure. In addition, as part of our procurement strategy, we consider potential
negative climate factors and work to adapt to them as part of our supply chain management.
Resource
nationalism
This is the attempt by host states to assert greater control over natural resources in their territory by restricting
extractive industries through a variety of methods, including limitation of foreign investment in the sector, stricter
procedures for grant of licences, expropriation/nationalisation of mining assets, limitation or export duties for bullion/
concentrate export sales and/or additional taxation on the mining sector. Historically, both Kazakhstan and Russia
have maintained a safe and predictable investment climate for the hard rock mining industry. The Group actively
engages with governmental and local authorities in its regions of operation in order to monitor and address any
potential issues.
Cybersecurity Cybersecurity risks for the Group are mainly represented by risks of unauthorised access to confidential information,
bank accounts etc. as well as potential interference in automated management systems of technological processes,
corporate networks, power supply control systems and convergence of corporate and technological networks
(within any process). These risks are considered to be limited in the context of the Company’s current IT architecture
and information security systems. However, maintaining resilience to cybersecurity threats is a priority for the Group.
The Group’s strategy provides for cybersecurity risk management in accordance with the ISO/IEC 27000 series of
standards and compliance with requirements of applicable legislation. We constantly monitor current systems, control
measures and monitoring procedures, and implement stage-by-stage preparation for obtaining a certificate of
compliance with the ISO/IEC 27001 standard.
2022 was an unprecedented year in terms of cyber-attacks on the corporate infrastructure. Most of the cyber-attacks
were aimed at destroying software and disabling equipment. They did not result in downtime of critical business
processes, due to a proactive approach to building an information security system.
In 2022, Russia tightened regulations related to the safety of personal data. Core measures have been implemented in
all our operations (being personal data operators).
The Group uses an information technology management platform based on the COBIT package (Control Objectives
for Information and Related Technology), which provides a complete set of high-level requirements for effective control
of each IT process. The Group carefully monitors emerging information security threats and the management of
network and information flows and implements effective protection.
All breaches of Information Security Policies and incidents are immediately identified and eliminated. The corporate
infrastructure is automatically scanned (critical assets are scanned first). Basic protection instruments response
adequately preventing adverse consequences.
Remote access to working facilities is arranged in accordance with high cybersecurity standards. The processes for
providing and disabling access to resources have been additionally secured and automated.
In order to minimise risks related to the engagement of contractors (third parties), model contracts have been
amended to include relevant procedures for safe information exchange and Information Security Policies have been
reviewed and updated in all operations. We raise our employees’ awareness of information security and cyber hygiene
via the internal corporate network, regular newsletters, employee training and extensive training for targeted groups
within the Talent Pool.
Governance
Board of Directors
Senior management
Corporate governance
Audit and Risk Committee report
Safety and Sustainability Committee report
Remuneration Committee report
Nomination Committee report
Going concern and longer-term viability
Directors’ report
Directors’ responsibility statement
112
114
116
124
130
132
150
153
155
158
110
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Board of Directors
Committed to the highest standards
The Directors are committed to maintaining the
highest standards of corporate governance.
As a premium UK-listed company, Polymetal
International is largely compliant with the UK
Corporate Governance Code (the UK Code) —
published in July 2018. As well as complying with
the UK Code, the Company has complied with all
applicable regulations of the Astana International
Exchange (AIX) Markets Listing Rules, the Moscow
Stock Exchange and Russian securities laws.
Board independence
25%
Independent
Directors
Non-independent
Directors
75%
75%
13%
ethnic minority
Directors1
25%
women Directors
1 Although Kazakh-born, Janat Berdalina identifies
with her Central Asian heritage.
Board skills
(%)
88
100
100
88
88
Mining
Business strategy
Finance
Climate change
Governance
Vitaly Nesis S
Group Chief Executive Officer
Appointed: 2003.
Previous experience: Member of JSC
Polymetal Board, 2004–2012. CEO of
Vostsibugol, 2002–2003. Strategic Development
Director at the Ulyanovsk Automobile Plant in
2000. McKinsey in Moscow, 1999–2000.
Merrill Lynch in New York, 1997–1999.
Qualifications: BA in Economics from
Yale University. MA in Mining Economics
from St. Petersburg Mining Institute.
Evgueni Konovalenko N A R
Senior Independent
Non‑Executive Director
Appointed: 17 March 2022.
Previous experience: Has extensive
experience in investment banking: since 2005
held various executive positions in Renaissance
Capital, including Managing Director, Head of
International Equities and FICC Sales. Prior to
joining Renaissance Capital, he worked at UBS,
London at Structured Products Group and at
Merrill Lynch, New York in Mergers and
Acquisitions Group.
Qualifications: BA in Economics from
Columbia College of Columbia University, NY,
US. MBA from Solvay Business School,
University Libre de Bruxelles (ULB), Brussels,
Belgium.
Steven Dashevsky A S
Independent Non‑Executive Director
Pascale Jeannin Perez N S
Independent Non‑Executive Director
Appointed: 17 March 2022.
Previous experience: Investment professional
with more than 20 years’ experience in financial
markets. Since 1998, has held various senior
management positions in leading financial
services firms including Aton Capital, UniCredit
Securities, Kola Capital LLP. Non-executive
Director of Integra Group, 2012-2013.
Qualifications: Graduated from Baruch
College of The City University of New York
(Finance and Investments). Chartered Financial
Analyst (CFA)
Other roles: Chief Executive Officer and Chief
Investment Officer of D&P Advisors LLP (UK).
Appointed: 1 December 2022.
Previous experience: Has over 35 years of
experience in leadership roles in mining, energy
and environmental industries. Previously served
as a Director at DYD International Holding,
shareholder of a significant gold project in Ivory
coast, was Chairman and CEO of Derichebourg
Polyurbaine Group. Special adviser to High
Power Exploration Inc (HPX).
Qualifications: École Normale, degree in
Economics from University of Montpellier.
Other roles: Founder and CEO of International
Services Corporation. Government adviser to
the Republic of Liberia. Shareholder and
Member of the Board of Imperator Resources
(former Ivanhoe Gabon).
Konstantin Yanakov
Non‑Executive Director
Appointed: 29 September 2011.
Previous experience: Member of
JSC Polymetal’s Board of Directors, 2008–2012;
member of its Audit Committee. Various
positions at MDM Bank. CFO of JSC Polymetal
until 2004. Board Member at Piraeus Bank,
Inbank, Greek Organisation of Football
Prognostics, and Tiscali. Supervisory Board
Member of Rigensis Bank.
Qualifications: MBA from the London
Business School. PhD in Economics from
Russian State University of Management.
Degree in Global Economics from the
Government of Russia’s Finance Academy.
Other roles: Board Member of the East Mining
Company.
Paul Ostling R A N
Independent Non‑Executive Director
Janat Berdalina S R N
Independent Non‑Executive Director
Richard Sharko A
Independent Non‑Executive Director
Appointed: 17 March 2022.
Previous experience: Seasoned executive with
a more than 40 years’ experience. In a career
spanning 30 years with EY, he was one of the
architects of EY’s businesses in Russia and
Eastern Europe from 1991 and, ultimately, as the
Global Executive Partner (1994-2003) and Global
COO (2003-2007). After leaving EY in 2007,
he served on a number of Boards of Directors
and ran several companies. Senior Independent
Non-Executive Director Chair Audit Committee,
Chair of Remuneration and Positions Committee
of Uralkali, 2011-2022. Chair of Board of Directors
of JKX Oil & Gas PLC, 2015-2018.
Qualifications: Graduated from Fordham
University School of Law. BS in Mathematics
and Philosophy from Fordham University.
Qualified Financial Expert under SEC, LSE and
EU Regulations. Member of the American Bar
Association, New York State Bar Association,
Association of the Bar of the City of New York.
Other roles: Member of Business Council for
International Understanding (BCIU). Dean’s Planning
Council, Fordham University School of Law.
Appointed: 17 March 2022.
Previous experience: Audit, reporting, tax and
management consulting professional. She was a
Co-shareholder, Managing Partner and
President of KPMG in Kazakhstan and Central
Asia as well as a Board Member of KPMG in the
CIS for more than a decade. Janat also held
Independent Director positions at several
Kazakh entities, including Kazakhstan Stock
Exchange, National Agency for Technological
Development, KazTransGas, Kazpost. She was
an executive at the Foreign Investors’ Council in
Kazakhstan and actively participated in the
development of the Tax Code and the Law on
Auditing in the country.
Qualifications: Executive MBA from Ecole
Nationale des Ponts et Chaussees, France.
Degree in Economics from the Academy of
Management, Almaty, Kazakhstan. Degree in
International Business from Bristol University, UK.
Honorary Auditor of the Republic of Kazakhstan.
Other roles: Chair of the Board of Trustees
‘Almaty Management University’ (AlmaU) Partner
of Arizona State University, Arizona US.
Appointed: 1 December 2022.
Previous experience: Has over 39 years of
global experience in audit, financial accounting
and risk management. He was a partner at PwC
for 25 years, leading teams in various regional
offices in Europe and Russia, and engaging with
local and multinational clients. He was also on
the regional management board and
governance board as well as on the Global
Board of PwC, April 2009-2013. Additionally, he
was a Board Member on the International
Auditing and Assurance Standards Board, New
York, January 2015-December 2020.
Qualifications: Bachelor of Science in
Accounting, Loyola Marymount University, Los
Angeles, CA. Certified Public Accountant
(Retired), State of California, US.
Other roles: Board member,
Audit Committee Chair and Risk Committee
member of the bank holding company, Agri
Europe Cyprus Ltd, January 2022-present.
Key
Committee Chair
A Audit and Risk Committee
N Nomination Committee
R Remuneration Committee
S Safety and Sustainability Committee
112
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Senior management
Delivering exemplary leadership
Vitaly Nesis
Group Chief Executive Officer
Vitaly Savchenko
Chief Operating Officer
Daria Goncharova
Chief Sustainability Officer
Appointed: 2003.
Previous experience: Member of JSC
Polymetal Board, 2004–2012. CEO of
Vostsibugol, 2002–2003. Strategic Development
Director at the Ulyanovsk Automobile Plant in
2000. McKinsey in Moscow, 1999–2000.
Merrill Lynch in New York, 1997–1999.
Qualifications: BA in Economics from Yale
University. MA in Mining Economics from
St. Petersburg Mining Institute.
Appointed: 2009.
Experience: Previous roles in Polymetal:
Director of the Production Department,
2007–2009, senior production and technical
positions since 2004. Chief Underground Mine
Engineer at Priargunskoye Mining and Chemical
Company as well as various managing positions
at the mine, 1994–2003. Recipient of second-
and third-category Miner’s Glory Medal.
Qualifications: Degree with Honours in
Underground Mineral Mining engineering,
Kyrgyz Mining Institute. MBA from the UK’s
Open University Business School.
Appointed: 2015.
Experience: Previous roles in Polymetal:
corporate finance and investor relations team,
2010–2013. Business development
at GiproShakht Severstal, 2008–2009.
Qualifications: Graduate of St. Petersburg’s
Russian Presidential Academy of National
Economy and Public Administration.
Master’s in Green Management, Energy
and Corporate Social Responsibility from
Bocconi University, Milan.
Sergey Trushin
Deputy CEO, Mineral Resources
Appointed: 2010.
Experience: Previous roles in Polymetal:
Chief Geologist at the Khabarovsk Exploration
Company, 2008–2010. Chief Geologist at
Albazino Resources 2006–2008 and various
positions at Albazino Resources since 1998.
Geologist with Dalnevostochnie Resources,
1991. Geologist with the Production Geological
Association ‘Dalgeology’ and the Nizhne-
Amursk exploration expedition in the preceding
six years.
Qualifications: Degree in Geological Surveying
and Mining Engineering Exploration from the
Novocherkassk State Polytechnic Institute.
Roman Shestakov
Deputy CEO, Project Development
and Construction
Valery Tsyplakov
Managing Director, Polymetal
Engineering
Appointed: 2009.
Experience: Previous roles in Polymetal: Chief
Engineer at Gold of Northern Urals, 2007–2009.
Pit superintendent, 2006–2007. Mine
superintendent at the Okhotsk Mining and
Exploration Company, 2004–2005. Mining
engineer in the Production and Technical
Department of JSC Polymetal Management in
the preceding two years.
Qualifications: Honours degree in Open-pit
Mining from the Mining Department of
St. Petersburg State Mining Institute. MBA from
the UK’s Open University Business School.
Appointed: 2004.
Experience: Previous roles in Polymetal: Deputy
General Director for Mineral Resources, Design
and Technology and senior roles in Production
and Technology, and Technological Research
Departments, 2000–2004. Department Head
at the Soviet Union Research Institute of
Aeronautical Automation. Prior to this, a quest
scientist at Aarhus University’s Physics Institute
(Denmark). Research Fellow in the Plasma
Physics Department of the Moscow Physics and
Engineering Institute. Professional of the Institute
of Materials, Minerals & Mining (London).
Qualifications: Degree in Experimental Nuclear
Physics, Moscow Physics and Engineering
Institute. PhD in Physics and Mathematics.
Maxim Nazimok
Chief Financial Officer
Pavel Danilin
Deputy CEO, Strategic Development
Eugenia Onuschenko
Director, Corporate Finance
Appointed: 2017.
Experience: Previous roles in Polymetal:
Finance Director, 2015–2016; Chief Financial
Controller, 2011–2015. Deputy Chief Financial
Officer at Nomos Bank in 2010–2011; Director of
Business Planning and Analysis from 2009.
Head of Management and IFRS Reporting at
MDM Bank, 2008–2009. Various financial
positions at PricewaterhouseCoopers,
2003–2008.
Qualifications: BA in Economics from
St. Petersburg State University. Graduated with
distinction from the Executive MBA-Global
Programme at London Business School and
Columbia Business School. Fellow member
of ACCA.
Appointed: 2009.
Experience: Previous roles in Polymetal:
Director of Corporate Finance and Investor
Relations, Head of Corporate Finance. Head of
Corporate Finance at CJSC ICT, 2002–2003.
Deputy Head of Currency Department and Head
of Financial Resources Department at the
Kaliningrad branch of Bank Petrocommerce,
1998–2001.
Qualifications: MBA from the University of
California at Berkeley, Haas School of Business.
Degree in Economics and Management,
Kaliningrad State Technical University.
Appointed: 2009.
Experience: Previous roles in Polymetal:
Head of the Bank Financing department, Head
of Corporate Finance and Investor Relations,
2008–2009. Ernst & Young, transaction
advisory services.
Qualifications: Graduate of St. Petersburg
State University of Economics and Finance.
Bachelor’s degree in Economics and
Management from Grenoble University
Pierre-Mendes, France.
Igor Kapshuk
Chief Legal Officer
Appointed: 2015.
Experience: Previous roles in Polymetal: Head
of the Legal Department from 2005 and Deputy
Head from 2003. Deputy General Counsel, Head
of the Department for Legal Matters and Head of
Claims Department at the branch of Siberia
Energy Coal Company and at Vostsibugol
(Irkutsk), 2001–2003. Legal advisor in various
companies, 1994–2001.
Qualifications: Degree from the Law School
of Irkutsk State University.
Tania Tchedaeva
Director, Corporate Governance
and Company Secretary
Evgeny Vrublevskiy
Director of PMTL Holding Ltd, Head of
Treasury
Appointed: 2011.
Experience: Company Secretary at Orsu
Metals Corporation, 2008–2011. Various
positions in Oriel Resources plc, 2004–2008.
Qualifications: MSc in Finance from London
Business School, 2008. Fellow of ICSA: The
Governance Institute. Degree in Translation
and Interpretation from Moscow State
Linguistic University.
Appointed: 2015.
Experience: Treasury Manager at UFG Asset
Management, 2014– 2015. Treasury Manager at
Inteco Group, 2012–2014. Head of Settlements
at UniCredit Securities, 2008–2012. Various
positions with Uralsib Capital in Moscow,
2005–2008.
Qualifications: BA in Management from
Moscow State Mining University. MA in
Economics from Witte University Moscow.
Certified Treasury Professional (CTP) designation
awarded by the Association for Financial
Professionals (AFP). Advanced Certificate from
Cyprus Securities and Exchange Commission.
114
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Corporate governance
New Directors have
undergone an enhanced
induction programme to ensure their
understanding of the Company and its
business.”
Evgueni Konovalenko
Senior Independent Director
Board meeting attendance
Board member
Vitaly Nesis
Konstantin Yanakov
Evgueni Konovalenko1
Janat Berdalina1
Paul Ostling1
Steven Dashevsky1
Pascale Jeannin Perez2
Richard Sharko2
Riccardo Orcel3
Giacomo Baizini4
Ian Cockerill5
Tracey Kerr6
Ollie Oliveira6
Italia Boninelli6
Victor Flores6
Andrea Abt6
Role and structure of the Board
As of the date of this report, the Company’s Board comprises one
Executive Director and seven Non-Executive Directors. Six
members of the Board are Independent Non-Executive Directors.
The Company’s corporate governance framework safeguards
against any conflict of interest, including the complete
independence of the Audit and Risk, Nomination and
Remuneration Committees and disclosure of any related party
transactions in the financial statements, as well as preventing any
individual from having unfettered powers of decision-making.
The Board has determined that Evgueni Konovalenko, Janat
Berdalina, Paul Ostling, Steven Dashevsky, Pascale Jeannin Perez
and Richard Sharko are Independent Non-Executive Directors.
The Company at present has not appointed a Chair of the Board.
The Company considers that the Board and its Committees have
the appropriate balance of skills, experience, independence and
knowledge of the Company to enable them to discharge their
respective duties and responsibilities effectively. All Directors have
access to the advice and services of the Company Secretary and
are able to take independent professional advice, if necessary, at
the Company’s expense.
Board
meetings
15/15
14/15
11/11
8/11
11/11
11/11
1/1
1/1
6/6
10/11
3/3
3/3
3/3
3/3
3/3
3/3
1 Member from 17 March 2022.
2 Member from 1 December 2022.
3 Chair from 21 March to 28 September 2022.
4 Member until 28 September 2022.
5 Chair until 7 March 2022.
6 Member until 7 March 2022.
Further business was approved by the Board on one occasion. Several
informal meetings were held to facilitate the induction of the new Board
members.
Board site visits
Annual site visits greatly improve the Board’s understanding of
Polymetal’s operations and organisation, and are an invaluable
contribution to the Board’s evaluation of the Group’s business plan
and strategy. They also provide the Board with an opportunity to talk
with local senior management and employees about the experience
of working for Polymetal.
In 2022, the Board took the opportunity to visit the Kyzyl operation.
The Board was given an in-depth analysis of the project, met with
key employees and visited the mine.
Training
Polymetal invests significant amounts of time and money into
training employees, but it is as important that Directors continue to
develop and refresh their understanding of the Group’s activities.
Every year, as part of the site trip, the Board meets local
116
management at operations and Directors familiarise themselves
with the technology used, logistics, health and safety standards
and supplier management. The Board is kept informed of relevant
developments within the Company by way of monthly management
reports, including comprehensive information on operating and
financial performance and the progress of capital projects.
It is also essential that the Directors regularly refresh and update
their skills and knowledge with both external and internal training
as appropriate. Members of the Board individually attend seminars,
conferences and training events to keep up-to-date with
developments in key areas. Board meetings include presentations
from Group experts to ensure that the Directors have access to the
wealth of knowledge within the Company, as well as presentations
from external providers.
Board areas of focus in 2022 and link to strategy
Global leadership in refractory ore processing
• Operational update
• Quarterly and annual production results
• Price assumptions for Reserve and Resource estimates
• Mineral Resources and Ore Reserves update
• Productivity increase and cost reduction initiatives
• Supply chain: resilience, cost management and increasing efficiency
• Concentrate sales update (Nezhda, Primorskoye)
Significant organic growth
• Production and Investment Plan 2023
• Amursk POX-2 project update
• POX-3 developments
• Capital projects review, including completion progress as per schedules
• Novopetrovskoye update
• Tomtor update
• Galka update
• Svetloye strategic opportunities
• Smaller projects update (Kutyn, Northern Urals, Prognoz)
Maintaining robust liquidity and balance sheet
• Strategy review
• Approval of preliminary and annual financial results
• Annual review of effectiveness of the Company’s risk management and control systems and risk tolerance
review
• Capital allocation (including Dividend Policy review, Hedging Policy review) processing
• Budget, including use of the free cash flow
• Capital projects review, including approved expenditure levels, completion progress as per schedules, latest
forecast costs to completion
• Macro update (Russia, Kazakhstan): inflation, logistics, personnel
• Analysis of Polymetal investor positioning
• Commercial strategy
High standards of ESG through impact assessment
Integrated Annual Report review and approval
• Net Zero Strategic Framework and target setting, including Scope 3 targets and reduction plan
• Biodiversity Strategic Framework
• Sanctions compliance
•
• Modern Slavery Statement review
• Chair, Executive and Independent Non-Executive Directors’ fee review
•
• Directors’ appointment and re-appointment at the AGM and composition of Board Committees
• Convening the AGM, approval of shareholder materials
• Directors’ disclosure of interest
• Review of schedule of matters reserved for the Board and terms of reference of Committees
• Directors and Officers liability insurance renewal
Independent Non-Executive Directors’ succession planning, appointment of Directors
Statement of compliance with the UK Corporate Governance Code
The Directors are committed to maintaining high standards of corporate governance. As a premium UK-listed company, during the
year ended 31 December 2022, Polymetal International was required to comply with the UK Corporate Governance Code (the UK
Code) – available through the UK Financial Reporting Council’s website – or, where the provisions of the UK Code have not been
complied with, to provide appropriate explanations. Throughout 2022, the Company was largely in compliance with all provisions of
the UK Code. Detailed information about how Polymetal applies principles of the UK Code and areas of non-compliance are available
below and in the Corporate Governance section on the Company’s website.
As well as complying with the UK Code and London Stock Exchange listing rules, the Company has complied with respective laws
and regulations in relation to its listing on the Moscow Stock Exchange and Astana International Exchange where applicable.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Corporate governance continued
How we apply the UK Code
Section 1: Board leadership and company purpose
A A successful company is led by an effective and
entrepreneurial board, whose role is to promote the long-term
sustainable success of the company, generating value for
shareholders and contributing to wider society.
B The board should establish the company’s purpose, values
and strategy, and satisfy itself that these and its culture are
aligned. All directors must act with integrity, lead by example
and promote the desired culture.
C The board should ensure that the necessary resources are
in place for the company to meet its objectives and measure
performance against them. The board should also establish a
framework of prudent and effective controls, which enable risk
to be assessed and managed.
D In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure
effective engagement with, and encourage participation from,
these parties.
E The board should ensure that workforce policies and
practices are consistent with the company’s values and
support its long-term sustainable success. The workforce
should be able to raise any matters of concern.
Section 2: Division of responsibilities
Polymetal’s Board is in charge of ensuring the long-term success
of the Company. To achieve this, it holds regular strategic sessions
to discuss the current state of affairs and future developments.
As part of every strategic decision, the impact on all stakeholders
is reviewed thoroughly. Further information on Board topics is
discussed on page 117, and on stakeholder engagement on
page 123.
Workforce engagement is set up by way of Board engagement
with the targeted employee groups. More information on page 54.
The Board has regular discussions on Polymetal’s purpose, value
and culture, and ensures that these align with the Group strategy.
Further information on purpose and value is available on page 16.
As part of the annual budgeting process and in further discussions
throughout the year about development projects, the Board
ensures that capital allocation is aligned with the Group’s
objectives. Further information is available on pages 10, 24.
To ensure effective controls are in place, management is held to
account by the Audit and Risk Committee. Information on risks
and controls is available on page 96.
The Board ensures ongoing dialogue with all its stakeholders.
More information is available on pages 117, 123.
F The chair leads the board and is responsible for its
overall effectiveness in directing the company. They should
demonstrate objective judgement throughout their tenure and
promote a culture of openness and debate. In addition, the
chair facilitates constructive board relations and the effective
contribution of all non-executive directors, and ensures that
directors receive accurate, timely and clear information.
The Company seeks a new Chair. The SID Mr Konovalenko
ensures that Board meetings are held in a constructive manner
and that all Directors have a chance to express their opinion. There
is mutual dialogue and the Independent Non-Executive Directors
have regular meetings without management present. There is an
ongoing improvement programme for Group employees to ensure
the consistency of all papers provided to the Board.
G The board should include an appropriate combination of
executive and non-executive (and, in particular, independent
non-executive) directors, such that no one individual or small
group of individuals dominates the board’s decision-making.
There should be a clear division of responsibilities between
the leadership of the board and the executive leadership of
the company’s business.
H Non-executive directors should have sufficient time to meet
their board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
management to account.
I The board, supported by the company secretary, should
ensure that it has the policies, processes, information,
time and resources it needs in order to function effectively
and efficiently.
Information about the Board Directors and their roles is available
on page 112.
All Directors have sufficient time to devote to the business of
Polymetal. Please refer to page 122 for further information. The
broad experience of all Directors ensures constructive challenge,
strategic guidance and specialist advice.
The Board has a rolling plan to review all of the Group’s key
policies and ensure that they are in line with the Company’s
objectives. All polices are available on Polymetal’s website.
Areas of non-compliance:
• For part of the year, the position of Board Chair was vacant.
• For ten days during 2022, the Board did not have a majority of
Independent Non-Executive Directors.
• For ten days during 2022, the Nomination Committee did not
have a sufficient number of Independent Non-Executive
Directors. No meetings took place during this period.
118
Section 3: Composition, succession and evaluation
J Appointments to the board should be
subject to a formal, rigorous and transparent
procedure, and an effective succession plan
should be maintained for board and senior
management. Both appointments and
succession plans should be based on merit
and objective criteria and, within this
context, should promote diversity of gender,
social and ethnic backgrounds, cognitive
and personal strengths.
K The board and its committees should have
a combination of skills, experience and
knowledge. Consideration should be given
to the length of service of the board as a
whole and membership regularly refreshed.
L Annual evaluation of the board should
consider its composition, diversity and how
effectively members work together to
achieve objectives. Individual evaluation
should demonstrate whether each director
continues to contribute effectively.
Due to geopolitical reasons, the majority of the Board stepped down in early 2022.
New Board members were promptly appointed using various recruitment methods.
The Board will continue developing a revised succession plan, including the search
for a new Board Chair. Directors continue to be selected from a wide pool of
candidates.
Because of the major changes to the membership of the Board during 2022,
the focus was on bringing new Directors up to speed through an enhanced
induction programme. The Nomination Committee evaluates the succession needs
of the Company.
In 2022, the Board, all its Committees and individual Directors participated in an
annual internal Board evaluation to provide feedback on the operation of the Board.
Results of such evaluation are thoroughly analysed, discussed by the Board and
reflected in the Board work programme for the following year. Read more on
page 122.
Areas of non-compliance:
• Polymetal undertakes an externally facilitated Board evaluation every three
years and the next external evaluation was due to take place in 2022. However,
given the changes to the Board, it was considered prudent to postpone the
external evaluation until 2023 when the new Board has had more time to settle
into its work.
Section 4: Audit, risk and internal control
M The board should establish formal and
transparent policies and procedures to
ensure the independence and effectiveness
of internal and external audit functions and
satisfy itself on the integrity of financial and
narrative statements.
N The board should present a fair, balanced
and understandable assessment of the
company’s position and prospects.
O The board should establish procedures to
manage risk, oversee the internal control
framework, and determine the nature and
extent of the principal risks the company is
willing to take in order to achieve its
long-term strategic objectives.
The Company has a strong and highly regarded internal audit department.
Comprehensive information about the work of the internal audit department is
available on page 127. In addition, the Audit and Risk Committee regularly reviews
the work of the external auditors. An in-depth session is held annually following
completion of the annual audit. This includes separate meetings with the external
auditors, finance department and internal audit department. The Group’s
Integrated Annual Report is reviewed in detail by the Board.
The Board reviews in detail the Company’s financial statements. The process of
achieving fair, balanced and understandable assessment is described on page 124.
The Group’s Audit and Risk Committee has three sessions specifically dedicated to
risks. Principal risks are outlined on page 98.
Areas of non-compliance:
• For ten days during 2022, the Audit Committee did not have a sufficient number
of Independent Non-Executive Directors. No meetings took place during this
period.
Section 5: Remuneration
P Remuneration policies and practices should
be designed to support strategy and
promote long-term sustainable success.
Executive remuneration should be aligned to
company purpose and values, and be
clearly linked to the successful delivery of
the company’s long-term strategy.
Q A formal and transparent procedure for
developing policy on executive remuneration
and determining director and senior
management remuneration should be
established. No director should be involved
in deciding their own remuneration
outcome.
R Directors should exercise independent
judgement and discretion when authorising
remuneration outcomes, taking account of
company and individual performance, and
wider circumstances.
The Remuneration Committee of the Board reviews the KPIs of the Group CEO and
senior management annually to ensure remuneration is aligned with the Company’s
purpose and values. KPIs are aimed at achieving long-term success and, in 2019,
an ESG KPI was introduced to promote long-term sustainable success. From 2022,
an ESG metric with a weighting of 20% will also be added to PSP vesting
conditions. Further information is available on pages 144, 148.
There is a robust and transparent process for developing executive remuneration.
The Directors’ Remuneration Policy is approved every three years by shareholders
and will be put forward to shareholders for approval at the 2023 AGM. Please refer to
page 148 for more information. The Remuneration Policy for executives and
management is consistent with that of the Group CEO to ensure strategic objectives
are aligned. No Director is involved in deciding their own remuneration outcomes.
The Remuneration Committee consists of Independent Non-Executive Directors,
who apply the Remuneration Policy prudently and have discretion over bonuses
and awards.
Further information is available on page 132.
Areas of non-compliance:
• For ten days during 2022, the Remuneration Committee did not have a
sufficient number of Independent Non-Executive Directors. No meetings took
place during this period.
• The Chair of the Remuneration Committee did not serve on the Committee for
12 months prior to his appointment due to succession process.
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Our governance framework
The Board
The Board defines business strategy, assesses risks and monitors performance.
Audit and Risk
Committee
helps the Board to monitor
the integrity of the Group’s
financial statements; reviews
the effectiveness of the
Group’s system of
internal controls and risk
management systems; and
oversees the TCFD
assurance process.
Nomination
Committee
monitors the balance of skills,
knowledge, independence,
experience and diversity
on the Board and its
Committees and ensures
orderly succession to both
Board and management
positions.
Safety and
Sustainability
Committee
monitors the Group’s social,
ethical, environmental and
safety performance, and
oversees all sustainable
development issues on
behalf of the Board.
Remuneration
Committee
is responsible for Group
Remuneration Policy, and
setting pay levels and
bonuses for senior
management in line with
individual performance.
It ensures safety and
sustainability KPIs are
included in remuneration
packages.
` Further details on page 124
` Further details on page 150
` Further details on page 130
` Further details on page 132
Group CEO
The Group CEO takes ultimate responsibility for delivering on strategy and operating performance.
` See biographies on page 112
Senior management
Our senior management team provides leadership in specific areas of responsibility
` See biographies on page 114
ESG is integrated into every aspect of governance
Finance
• Ensure effective
reporting processes
• Monitor annual budgets
for ESG activities
• Ensure funds to develop
new projects (including
green and sustainability-
linked financing)
Marketing/sales
• Work closely with
offtakers and buyers of
the finished product to
ensure liquidity and
uninterrupted sales
Introduce ESG clauses
in contracts
•
Exploration/mineral
resources
• Enable long-term
economic growth
through greenfield and
brownfield exploration
• Comply with safety and
environmental standards
at exploration sites
•
Development/
construction
• Use global best practice
in design and
commission of mining
and processing
operations
Increase supply chain
efficiency through linking
production demand with
inventory levels
Operations
• Ensure consistent work
at all our mines and
production facilities
• Set safety and
•
environmental targets and
monitor performance
Increase resource
efficiency and decrease
carbon footprint
Communication
and PR
•
Identify and engage with
the majority of external
stakeholders, including
government and regional
authorities, local
communities, suppliers
and NGOs
• Foster engagement with
employees
HR
Legal
• Attract and retain talent
by providing decent
terms of employment
• Ensure employee
training and
development
• Provide fair and inclusive
work environment and
deliver on diversity
targets
•
Implement monitoring
and compliance-control
procedures related to the
provisions of applicable
laws and requirements,
including sanctions
• Ensure implementation
of recommendations of
regulators, corporate
governance standards
and the Group’s internal
policies and procedures
Roles of the Chair, Group CEO and Senior Independent Director
The Board has approved the division of responsibilities between the Chair and the Group CEO,
and defined the role of the Senior Independent Director.
Chair
Group CEO
Vitaly Nesis S
The Company seeks a new Chair. The Chair reports to the
Board and is responsible for the leadership and overall
effectiveness of the Board and for setting the Board’s agenda.
Chair’s responsibilities include:
• Effective running of the Board
• Ensuring that there is appropriate delegation of authority to
Executive Management
The Group CEO exercises his role through his Executive and/or
Director positions in the Group sub-holding companies.
He reports to the Board directly and upholds the Group’s
responsibilities to its shareholders, customers, employees and
other stakeholders.
The Group CEO’s responsibilities include:
• Developing Group strategy, including communicating annual
• Promoting a culture of openness and debate between the
Executive and Non-Executive Directors
• Ensuring that the Directors receive accurate, timely and clear
plans and commercial objectives to the Board
Identifying and executing strategic opportunities
•
• Reviewing the operational performance and strategic
information
• Ensuring that the views of the shareholders are
communicated to the Board as a whole.
direction of the Group
• Making recommendations on remuneration policies,
terms of employment and effective succession planning
for senior employees
• Ensuring effective communication with shareholders and that
appropriate, timely and accurate information is disclosed to
the market, with issues escalated promptly to the Board.
Independent
Non-Executive Directors
Janat Berdalina
Steven Dashevsky
Pascale Jeannin Perez
Paul Ostling
Richard Sharko
The Independent Non-Executive Directors
are determined to be independent in
character and judgement, and free from
relationships or circumstances that may
affect or could appear to affect their
judgement. Their role is to challenge the
strategy and scrutinise the performance
of management in meeting agreed goals
and objectives, to monitor the reporting
of the Company’s performance, to review
the integrity of financial information and
ensure that internal financial controls and
risk management systems are robust
and defensible. They determine the
appropriate level of remuneration for the
Group CEO and have a primary role in
appointing and, when necessary,
removing him.
The Board
Non-Executive Director
Konstantin Yanakov
Mr Yanakov is a Non-Independent
Non-Executive Director, who is a
representative of Powerboom Investments
Limited. Mr Nesis is the brother of the
beneficial owner of Powerboom
Investments Limited.
Save for the potential conflicts inherent in
these relationships, there are no potential
conflicts of interest between the duties
owed by the Directors or senior
management to the Company and their
private interests or other duties.
Senior Independent
Director
Evgueni
Konovalenko N A R
The Senior Independent Director (SID)
makes himself available to
all shareholders in order to hear their
views and help develop a balanced
understanding of their issues and
concerns. The Board is regularly
updated on shareholders’ opinions
following meetings with the Directors
and management.
SID’s responsibilities include:
• Being available to major
shareholders in order to listen
to their views and help develop
a balanced understanding of their
issues and concerns
• Acting as an intermediary for the
other Directors if necessary.
Separate meetings are held between the Non-Executive Directors without the Group CEO being present; between the Independent
Non-Executive Directors without the other Non-Executive Director being present. This includes both formal and informal meetings.
Heads of Operations
At our operating mines and development properties implement and monitor corporate systems,
supported by dedicated teams.
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Corporate governance continued
Board induction programme for the new Board
members
A tailored induction programme was implemented for the Board
members, who joined the Board during the last year, to enable
their participation in Board discussions with a sound
understanding of the Group’s long-term strategy, business model,
operations and governance structure. A site visit to Kyzyl took
place in September 2022; the majority of technical meetings were
held online.
Topic
Finance
Operations, H&S
Engineering
Meetings held/online presentations
where applicable
Meeting with Group CFO, Head of IFRS
Reporting, Head of Internal Audit, Head
of Corporate Finance, Head of Tax, Head
of Budgeting
Meeting with Group COO, Deputy CEO
(Mineral Resources), Deputy CEO
(Construction and Development),
Head of H&S Department
Presentation from the Head of
Engineering Department, Head of
Laboratories, Head of the Project
Department
Human capital
Meeting with the HR Department
Board evaluation
In accordance with the UK Code, the next externally facilitated
evaluation was expected to take place by the end of 2022.
However, given the changes to the Board, it was considered
prudent to postpone the external evaluation until 2023 when the
new Board has had more time to settle into its work. In 2022, the
Board conducted internal Board and Committee evaluations,
which included questionnaires filled in by Directors. General
outcomes were circulated via the Company Secretary. The
individual Committees conducted follow-up sessions and had
subsequent discussions with the Nomination Committee to ensure
the completeness of the reviews. Finally, the Board reviewed
management’s response to the results of the Board evaluation. The
results of the Board evaluation and follow-up topics were included
in the revised Board and Committee work plans for 2023.
The top Board priorities for 2023 were identified as:
• Corporate strategy:
– Re-domiciliation and potential modification of the
Company’s asset-holding structure in order to maximise
shareholder value
– Attraction of new institutional/financial partners with a more
diversified geogrpahy
– Geography business mix, portfolio management
– Strengthening balance sheet
– Dividend Policy
Meeting with Chief Sustainability Officer
• Operations:
Sustainability and
environment
Supply chain
Culture
Governance
Shareholders
Presentation from the Head of Polymetal
Trading House
Series of lunches and dinners with
Group CEO and top management
One-on-one meetings with all Directors,
meeting with Company Secretary
Meeting with shareholders as part of the
Board engagement programme
Induction
To provide a thorough induction to new Board members, they are
granted access to the induction ‘dataroom’ with information about
the Company. Upon appointment, all Directors gain electronic
access to the materials of all previous Board and Committee
meetings, Group policies, results of Board evaluations, D&O
insurance policy and financial and production results. They are
updated on corporate governance rules and practices. New
Directors familiarise themselves with the arrangements for Board
and Committee meetings and site visits, along with existing
remuneration and compensation procedures, meeting schedules
and external training options. Induction meetings are arranged to
give new Directors the opportunity to discuss appropriate issues
with fellow Directors, the Group CEO and executive team.
– Profitability and production growth
– Operational challenges especially in view of various
restrictions (i.e. sales distribution, distortion in the supply
chain, construction of new sites)
• Governance:
– Board composition
– How to maintain and/or enhance oversight effectiveness of
the Board
– Ensure environmental, social, and governance (ESG) matters
are standing items on the Board agenda
– Sustainability of exploration operations and production
– Sanctions impact and compliance, including impact on
financing
– Geopolitical and market risks analysis.
Areas for Board development included:
Improved communication between the Board and management
•
• Regular and timely updates with sufficient time to review
materials
• Further familiarisation with the business and various corporate
and operational details
• Additional function-specific, in-depth sessions.
Detailed information of the Audit and Risk Committee’s review is
available on page 129.
In accordance with corporate governance requirements, the most
recent externally facilitated evaluation was undertaken in 2019 by
Fidelio Partners, an independent Board Development and Executive
Search consultancy, who also conducted Polymetal’s 2016
evaluation. Fidelio’s relationship with Polymetal focused only on
Board effectiveness; Fidelio did not provide recruitment, search or
other advisory services and it has no connections with Polymetal or
individual Directors. Fidelio highlighted several forward-looking
themes. These have provided a focal point for the Board for the
development of implementation plans.
Board’s stakeholder engagement
Shareholders
We have a structured approach to our shareholder engagement,
which includes market updates, meetings, roadshows, shareholder
consultations and General Meetings. We ensure that shareholders’
interests are considered as part of our Board decision-making
process. The main trend for this year was an increase in
communication with retail investors, both quantitatively and
qualitatively.
Investor meetings
Despite geopolitical uncertainty, we remained committed to proactive
shareholder and investor engagement. The Company remained open
and transparent, and continued its reporting and communications
with stakeholders in the usual, regular manner, alongside additional
business updates about the current state of the Company. In 2022,
there was a significant shift in the shareholder base towards retail
with investor attention becoming more intense. We received more
calls and letters, communicated on forums and, at the same time,
dealt with questions from investors that were both insightful and
profound. Responding to this increased demand, Polymetal
organised its first virtual retail investors webinar with more than 100
retail investors participating; the Company also held over 150 online
and personal meetings with institutional investors.
Capital Markets Days
In April 2022, Polymetal held a hybrid Capital Market Day in London.
Senior management presented updates on Polymetal’s strategy and
mid-term growth outlook in the constantly changing political and
economic environment. The presentation covered current operations,
the impact of sanctions and reviewed Polymetal’s key development
projects: a video on progress to date and drone footage of major
projects was shown to investors.
Annual General Meeting
• At the AGM, the Board communicates directly with shareholders
about the business and they, in return, have an opportunity to
meet and pose questions to the Directors in attendance.
• The AGM is held in London to facilitate easier participation by
shareholders. The Board Chair and Chairs of all Board
Committees make themselves available to answer any questions
that shareholders may have.
• The Integrated Annual Report and Notice of the AGM are made
available – in printed form and on our website – at least
20 working days before the AGM to ensure that shareholders
have time to consider them in detail.
• The AGM voting results are reported via the London Stock
Exchange and on our website.
Shareholder engagement
In addition to investor meetings attended by Board Chair and some
Directors, separate engagement is arranged with our key
shareholders to discuss various areas of corporate governance.
In 2022, we listened to shareholders’ views on the changes to the
registration structure of the Company and mid-term outlook.
Additional work on restructuring is being carried out in response to
the feedback.
Board Chair, Senior Independent Director and
Committee Chairs
At the 2023 AGM, the revised Remuneration Policy will be put to
shareholders for approval. Shareholder consultation took place
ahead of the AGM with top shareholders contacted by letter
explaining the rationale behind the revised Remuneration Policy.
The Committee regularly consults with the Company’s major
shareholders, and sought their feedback on the amendments to
the revised Directors’ Remuneration Policy. The shareholder
consultation period started in January 2023 on the changes to the
implementation of the Remuneration Policy for 2023 (annual bonus
metrics) and proposed amendment to the Remuneration Policy
(addition of ESG metrics to the LTIP). The Company Secretary
responded to several e-mails clarifying details for shareholders.
The proposals received overall positive feedback and support.
All Committee Chairs offer themselves for shareholder meetings on
a regular basis.
Shareholder engagement outcomes
As a result of shareholders’ feedback, we further enhanced
disclosure, particularly focusing on providing comprehensible and
thorough feedback on the current state of the Company and the
corporate strategic initiatives. We sought to remain committed to
such matters as proactive shareholder and investor engagement,
transparency of governance, safety, ethics and environment with
our policies and protocols that govern our day-to-day operations.
We regularly publish detailed updates and FAQs in response to an
increased volume of inquiries from retail and institutional
shareholders.
Employees
A formalised approach to workforce engagement is a requirement of
the UK Code.
Polymetal has in place a comprehensive engagement system with its
employees – one of the largest stakeholder groups. It takes account
of the Group’s wide geographic spread and often extremely remote
locations and includes Direct Lines to the Group CEO and
departmental heads, large-scale employee engagement surveys once
every two years, regular pulse surveys on particular topics, dedicated
meetings with employees as well as direct Board engagement.
The Directors’ Direct Line is included in the circle of continuous
feedback for our employees and comprises: collecting questions from
the employees; distributing them between Directors;
providing feedback directly to employees and publishing responses
on information boards, the intranet and in the corporate newspaper.
Matters that require managerial input are directed to the relevant
departments. Further information on employee engagement is
available on page 54.
In addition, Directors meet with groups of employees during Board
meetings and site trips, including informal engagement.
Employee engagement outcomes
A constructive feedback process allows employees to engage
directly with Directors so that they are made aware of any concerns
among the workforce. During the reporting period, there were no
complaints or grievances relating to discrimination or violation
of human rights. The results of both Directors and managerial
engagement are disseminated to employees via the intranet
and a summary provided to the Nomination Committee.
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The Group’s liquidity position
and historical ability to
withstand global economic turbulence
has been reinforced.”
Steven Dashevsky
Chair, Audit and Risk Committee
Audit and Risk Committee
Steven
Dashevsky
Paul Ostling
Evgueni
Konovalenko
Rich Sharko
Meeting attendance
Steven Dashevsky1
8/8
Paul Ostling2
8/8
Evgueni Konovalenko3 1/1
Rich Sharko4
1/1
Giacomo Baizini5
Ollie Oliveira6
Victor Flores6
Tracey Kerr6
Andrea Abt6
8/9
3/3
3/3
3/3
3/3
1 Member from 25 April 2022, Chair from 9 November 2022.
2 From 25 April 2022.
3 From 9 November 2022.
4 From 1 December 2022.
5 Until 28 September 2022.
6 Until 7 March 2022.
Three meetings took place with external and internal
auditors without the management present.
Fair, balanced and understandable
The Integrated Annual Report provides the information necessary
for shareholders to assess the Group’s position, performance,
business model and strategy. The Board and the Audit and Risk
Committee are satisfied that the Annual Report is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy. The Committee ensured that the
Company has applied the following robust process:
• Clear instructions and a timeline are provided to all participants
in the annual reporting process. All regulatory requirements and
best practice recommendations are monitored and
communicated to the participants on an ongoing basis.
• Members of all Board Committees review the relevant sections
of the Annual Report to ensure that the key messages and
information disclosed are aligned with the Company’s strategy
and performance, and are consistent with their understanding
of the Company’s business.
• The Committee, management and external auditors hold an
early-warning conference call to review critical accounting
judgements and estimates and to discuss any significant issues
related to the consolidated financial statements in advance.
124
The Audit and Risk Committee is an independent body,
consisting only of Independent Non-Executive Directors with
relevant skills and experience in financial reporting and risk
management.
The Committee is attended (by invitation) on a regular basis
by the Board Chair, CFO, Company Secretary, Head of
Financial Control, Head of Reporting, Head of Internal Audit,
heads of legal and security departments and the statutory
auditor.
The Board considers that the composition and work of the
Audit and Risk Committee complies with the requirements of
the UK Code.
` For further detail on biographies and Board experience:
pages 112‑113.
• The Committee reviews the disclosure of Alternative
Performance Measures (APMs) to ensure appropriate
prominence of APMs and IFRS measures and their
presentation throughout the Annual Report. A guide to APMs
can be found in the “Alternative performance measures”
section on pages 218–219.
• The Committee reviews the Annual Report and financial
statements – including significant accounting issues
explained in the notes to the consolidated financial
statements, based on its knowledge, discussions,
management papers or other interactions with management,
as well as the conclusions of external auditors – and
recommends them to the Board for approval.
In mid-March, the preliminary financial statements are
approved by the Board for release to the London Stock
Exchange to ensure timely disclosure of financial information.
In late March, the Annual Report is approved by the Board for
publication on the Company’s website and circulation to its
shareholders.
•
•
Key responsibilities
Focus during 2022
Integrity of
financial
statements
• Monitoring the integrity of the Group’s
consolidated financial statements
• Reviewing financial statements, including the
consistency of accounting policies across the
Group, the methods used to account for
significant transactions, the reasonableness
of significant estimates and judgements and
the clarity and completeness of disclosure
• Approved the budget for 2022
• Reviewed and recommended for approval of financial and risk
information included in the Integrated Annual Report 2021 and
Polymetal’s half-yearly results for the six months ended
30 June 2022
• Supervised preparation of the longer-term viability statement
and the going concern assessment
• Reviewed major assumptions/risks discussion for annual
financials (goodwill, property plant and equipment and
Exploration and Evaluation (E&E) asset impairment, NRV testing
of metal inventories, significant transactions, valuation of
contingent consideration assets and liabilities, changes in
accounting policy)
• Reviewed all information in the Integrated Annual Report and
considered its accuracy/consistency with the financial
statements
• Deep dive into significant regulatory developments (BEIS White
Paper developments and audit reform status)
• Overview of corporate transactions for 2022
• Reviewed approach to discount rate calculations and
application
• Reviewed TCFD assurance status
Internal
controls and
risk
management
• Reviewing the effectiveness of the Group’s
system of internal controls and risk
management and ensuring shareholders’
interests are properly protected
• Reviewed the critical risks and exposures, including significant
judgements, findings, impairments and tax risks; discussed
emerging risks
• Reviewed legal compliance report, recent tax judgements and
• Monitoring and reviewing the effectiveness of
other potential exposures
the Group’s internal audit
• Reviewed security department’s incident reports, including
whistleblowing and reports to the external hotline
• Reviewed reporting from internal auditors on key controls and
approved internal audit plan
• Performed an in-depth review of several subsidiaries: Nezhda,
Kyzyl, Omolon
• Performed deep dive on cybersecurity risks
• Monitored the effectiveness of internal audit
• Reviewed approach to hedging and interest swaps
• Approved significant transactions
External auditor • Making recommendations to the Board on
the appointment or removal of the Group’s
external auditor
• Organised tender for the appointment of the new statutory
auditor
• Approved the terms of external audit engagement (including
• Reviewing the effectiveness of the external
scope) and the Group’s external audit plan
Policies and
procedures
audit process
• Reviewing the independence and objectivity
of the external auditor and the
appropriateness of the provision of any
non-audit services
• Reviewed audit planning report for 2022 year end
• Reviewed the actual external audit fee in 2022 and compared
with the authorised amount
• Reviewed the independence and effectiveness of the
external auditor
• Reviewed non-audit services (including interim review and
TCFD reporting)
• Reviewing the Group’s policies and
• Supervised compliance with the Company’s Anti-Bribery
procedures for preventing and detecting
bribery and fraud, and the systems and
controls in place to ensure that the Group
complies with relevant regulatory and legal
requirements
and Corruption, Whistleblowing, Treasury and other policies
and procedures
• Compliance with sanctions
• Reviewed approach to related and connected party
transactions
• Performed accounting policies review (IFRS 15 Contracts with
Customers, IFRS 16 Leases, IAS 16 Property, Plant and
Equipment, IFRS 3 Business Combinations)
• Performed an internal evaluation of the Committee and
reviewed terms of reference
• Reviewed the work plan for 2023
The principles and provisions
In the reporting period, all members of the Committee had
financial experience and competence relevant to the sector
in which the Company operates: Messrs Ostling and Sharko
have competence in accounting and Messrs Dashevsky and
Konovalenko have competence in finance. Detailed information on
the experience, skills and qualifications of all Committee members
can be found on pages 112-113. Mr Dashevsky is also a member of
the Safety and Sustainability Committee, which ensures continuity
between the workings of both Committees.
Ultimate responsibility for reviewing and approving the interim and
annual financial statements remains with the Board. The Board
considers that the Audit and Risk Committee complies with the
provisions of the UK Code, FRC Guidance on Audit Committees
and Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting.
The Committee gives due consideration to applicable laws and
regulations, the provisions of the UK Code and the requirements
of the Listing Rules.
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Significant issues related to the financial statements
The Committee assesses whether suitable accounting policies have been adopted and whether management has made appropriate
estimates and judgements. During the year, the Committee has focused in particular on the key issues and areas of judgement listed
below as being business-sensitive. The Committee has also reviewed detailed external auditor reports outlining audit work performed
and any issues identified in respect of key judgements (see the independent auditor’s report on pages 162-171).
Significant issues addressed by the Committee
How the Committee addressed the issues
Accounting Policy
The Committee co-ordinates with the management team,
independent auditor and internal auditors to monitor the choice of
accounting policies and principles and ensure compliance with
laws and regulations.
The Committee considers and discusses with management any
significant changes to accounting policies, estimates and
judgements that management has identified.
The Committee reviewed management’s analysis of IFRS 15
Contracts with Customers requirements, the existing accounting
policy, the amendments to pricing that varies based on future
market prices and subsequent adjustments (pricing and metal
content) recognised within the revenue.
The Committee examined the comprehensive analysis of Nezhda
power line lease agreement, which falls under IFRS 16 Leases.
Right-of-use asset of $118 million was recognised in July 2022.
Significant corporate transactions were also reviewed. They
represent asset acquisitions in accordance with IFRS 3 Business
Combinations. The details are set out in Note 4 on page 190.
The Committee is satisfied that the Group’s accounting policy is
acceptable under the requirements of IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors.
Impairment of cash-generating units and development assets
On a semi-annual basis, management performs a review of the
asset portfolio of operating mines and mines under construction
for indicators of impairment in accordance with IAS 36 Impairment
of Assets. The Group also assesses the recoverability of
exploration and evaluation assets based on the future success of
exploration activities under the provisions of IFRS 6 Exploration for
and Evaluation of Mineral Resources.
Recoverability of E&E assets is dependent on the expected future
success of exploration activities. The evaluation of the future
prospects of E&E assets requires significant judgement. IFRS 6
requires an assessment of impairment indicators whereby facts
and circumstances suggest that the carrying amount of an E&E
asset may exceed its recoverable amount. When such facts and
circumstances exist, an entity is required to measure, present and
disclose any impairment loss in accordance with IAS 36.
The Committee examined the comprehensive analysis prepared by
management for the Group’s current mine performance against
expectations, changes in mineral reserves and resources,
life-of-mine plans and exploration results, changes in the market
and the economic and legal environment in which the Group
operates that are usually not within its control and are expected to
affect the recoverable amount of CGUs.
Following a real discount rate increase for Russian assets from 8%
in 2021 to 14.1% in 2022, driven by increased country risk
premium, a total pre-tax impairment charge of $801 million
(equivalent to a post-tax amount of $653 million) was recorded at
31 December 2022 in respect of Nezhda, Prognoz, Veduga and
Kutyn, the newest assets in the portfolio with highest carrying
values. See Note 17 on page 199. The other assets in the portfolio
have sufficient headroom of their fair values over carrying values
and were not impaired.
Tax exposures
The Group is subject to domestic and international income tax and
mining taxes in the Russian Federation and Kazakhstan. Judgement
is required in determining the tax due when dealing with different tax
legislation.
In 2022 and 2021 no individual significant exposures were identified
as probable and therefore provided for. Management has identified a
total exposure in respect of contingent liabilities (covering taxes and
related interest and penalties) of approximately $122 million being
uncertain tax positions (31 December 2021: $157 million) which
relate to income tax Note 16 on page 196.
Longer-term viability statement
The viability statement, scenario analysis process and key risks
factored into the analysis are presented on pages 153–154.
Going concern basis in preparing the financial statements
The Directors are required to include a statement confirming that
they have a reasonable expectation that the Company will remain
solvent and be able to meet its liabilities over a period of 12 months
from the signing of the financial statements (i.e. that the Company
is a ‘going concern’).
Climate change resilience and TCFD
Climate-related risks scenario analysis and key risks factored into
the analysis are presented on pages 62, 251.
126
The Committee received updates on the status and progress of tax
audits and evaluated management’s assessment of various tax
risks and appropriateness of provisions recorded and contingent
liability disclosures made in the financial statements, where
applicable.
The review did not identify any concerns with the Group’s tax
compliance and relevant disclosure in the financial statements.
See Note 12 on page 195 and Note 16 on page 196.
The Committee exercised oversight of the viability statement
development process, including assessment of the Group’s
prospects made by management, the time horizon over which the
assessment was made, the basis of preparation and the results of
risk-scenario analysis. Additionally, the Committee challenged how
the risk of operating disruptions due to the realisation of critical risks
had been modelled in a stress scenario. See pages 153–154.
The Committee considered the Group’s liquidity and solvency risk,
and mitigating actions that management may undertake to ensure
that the Group has access to sufficient funds to meet its
obligations and continue in operation.
The Committee took into consideration the potential impact of the
sanctions against Russia, the potential implications for the Group’s
supply chain, inventory management, purchase and sales logistics
and access to capital and any contingency plans that would
address such consequences and limit any business disruption.
Based on the analysis performed, the Committee has concluded
that the Group will be able to continue as a going concern for at
least 12 months from the date of signing of the financial statements.
The Committee concluded that the scenario analysis, time horizon
and assumptions used were sufficiently severe and feasible, including
those related to the potential impact of climate change on the Group’s
financial and operating performance and future prospects, and
aligned well with the Group’s budgeting and forecasting processes,
strategy and business model. See pages 62, 251.
Internal audit (IA)
The IA Department supports the Board, through the Audit and
Risk Committee, in evaluating the Company’s and the Group’s
governance framework. It also aims to raise levels of understanding
and awareness of risk and control throughout the Group.
Internal auditors maintain organisational independence from Group
management by reporting to the Audit and Risk Committee on
substantive matters and to the Group CEO for administrative
purposes; the internal auditors additionally report their findings to the
members of the Group’s executive management. Any potential
conflicts of interest should be disclosed by the internal auditors as
they arise; internal auditors are not allowed to audit areas where they
have held operational roles in the previous 12 months.
Assessing the effectiveness of internal audit
The IA Department’s annual work plan is approved by the Audit and
Risk Committee. It is based on a risk tolerance evaluation that
ensures the achievement of the Group’s operating objectives and
focuses on the principal risks of the Group’s risk profile. The head of
IA reports to the Board through the Audit and Risk Committee. The
KPIs of the head of IA are completion of work in accordance with the
approved plan, quality of audits and the number of follow-up audits,
where agreed recommendations have been implemented.
In addition to the Audit and Risk Committee assessment, the internal
auditors use an annual self-certification process, which requires
managers throughout the Group to personally confirm the testing
of internal controls and compliance with Group policies within their
business or function, as well as the steps taken to address actual
or potential issues that are identified. The results of self-certification
as well as management response thereto are provided to the
Committee along with other reports on the IA activities.
The IA Department also performs periodic external certification.
The most recent was performed by EY and results were presented
to the Audit and Risk Committee in December 2021. EY confirmed
that the IA function generally conforms with the International
Standards for the Professional Practice of Internal Auditing, issued
by the Institute of Internal Auditors, and applies the Code of Ethics,
issued by the Institute of Internal Auditors.
Internal controls and risk management
Risk management
Given the escalation in Ukraine, the Audit and Risk Committee
continued to review management’s analysis of the Group’s exposure
to the internationally imposed and potential sanctions and its
resilience over the period of the going concern and longer-term
viability. The Group’s liquidity position and historical ability to
withstand global economic turbulence has also been considered.
With contingency planning in place to ensure business continuity,
including establishing new sales channels, engaging new suppliers
and contractors, liquidity management and debt portfolio
diversification, the Group was able to mitigate the exposure and
ensure sufficient resilience.
The Committee considered whether the description of strategy,
business model, principal risks and uncertainties and future plans
were consistent with the understanding of the Board, and whether
the controls over the consistency and accuracy of the information
presented in the Integrated Annual Report are fair and robust. Given
the escalation of geopolitical tensions and consequent economic
and financial sanctions imposed, the Committee considered
whether the potential risks to the business were appropriately and
adequately analysed and reported.
Risk management approach and risk assessment is the
responsibility of the Board and is integral to the achievement of the
Group’s strategic objectives. The Board is satisfied that there is an
ongoing process, which was operational during the year and up to
the date of approval of the Integrated Annual Report, for identifying,
evaluating and managing the principal and emerging risks faced by
the Group, as described on page 97.
The Board takes account of material changes and trends in the risk
profile, including robust assessment of the Company’s emerging
risks, and considers whether the control system, including reporting,
adequately supports the Board in achieving its risk management
objectives. The Group’s Risk Management Policy and the internal
guidelines of key business processes ensure that the procedures
are embedded in all of Polymetal’s systems and processes, and
that the Company’s responses to risk remain current and dynamic.
The Group enforces a responsible risk-awareness business culture
throughout all Group entities to identify, assess and mitigate
principal risks and to keep residual risk at an acceptable level. The
Audit and Risk Committee assists the Board with its assessment of
the Group’s principal risks and its review of the effectiveness of the
risk management process. During its meetings throughout the year,
the Committee reviews the reports on Group-level risk profiles and
controls that are in place.
The Group has implemented enterprise and operational policies and
controls to manage risks that may affect the achievement of the
Group’s strategic objectives. Transaction-level internal controls are
designed to enhance the value of operational-level objectives and
accountability of new projects and initiatives.
In conducting its annual review of the effectiveness of risk
management and the internal control system (including financial,
operating and compliance controls), the Board and Committee
consider the key findings from the ongoing monitoring and reporting
processes, management representations and independent
assurance reports. Management provides a timely response to
issues raised by internal audit. Where possible, the issues are
resolved within one reporting period.
Further details of the Group’s Risk Management Framework and risk
governance are provided on pages 96–99.
127
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Audit and Risk Committee report continued
Internal control framework and activities
The management structure of the Group and internal policies and
procedures are aimed at maintaining a robust control framework
within the Group to encourage the achievement of strategic
objectives within set risk tolerance levels. This framework includes:
• An appropriate tone set from the top (Board level), aimed at
building the appropriate control environment and ethical climate
• Management support of a comprehensive risk management
system (for more detail refer to pages 96–97)
• Strong segregation of duties including internal controls over
sensitive transactions
• Specific control activities implemented at all levels of the Group
• A periodic review of the effectiveness of internal controls.
The governance framework reflects the specific structure and
management of the Group, where authority and control are delegated
by the Board to different levels, from senior management to the
managers of the Group’s operating entities, and then cascaded
down to business and project managers as appropriate. Within this
framework, authority is delegated with clearly prescribed limits and
decisions are escalated where either project size or risk profile
require a higher level of authority. In addition to controls operating at
transaction level (production, exploration, construction, procurement),
the control framework also includes a set of general procedures for
transaction approval, financial accounting, reporting and budgeting.
The Board confirms that the actions it considers necessary have
been or are being taken to remedy any failings or weaknesses
in the Group’s system of internal controls. Based on the results
of the review of risk management and internal control activities
undertaken by the Board and the Audit and Risk Committee, the
Board considers that the risk management and internal control
systems are in accordance with the relevant principles and
provisions of the UK Code and other applicable guidance.
The Group’s Risk Management Framework is considered effective
if it complies with the following parameters:
• A special audit procedure proves that all elements of
the Risk Management Framework are consistent with the
COSO components and are in line with the Group’s Risk
Management Policy
• At least 75% of the Risk Management Framework’s elements
are assessed as ‘Strong’ or ‘Good’
• Management’s reports on internal controls demonstrate
that there are no weaknesses in the controls and Risk
Management Framework which might have significant
consequences for the Group
Internal audits carried out in accordance with the approved
internal audit plan have revealed no weaknesses in the controls
and Risk Management Framework which might have significant
consequences for the Group.
•
If one or more of the Risk Management Framework elements
are found to be inadequate, or there is direct evidence of the
ineffectiveness of the Risk Management Framework, the head
of IA function informs the executive management, and reports
to the Audit and Risk Committee and the Board of Directors,
asappropriate. No such reports were made in 2022.
External auditor
External auditor appointment and audit tender
Deloitte LLP stepped down as Group auditor in April 2022,
following the announcement on 7 March 2022 that Deloitte’s
Russian and Belarus firms would separate from the global network
of member firms of which Deloitte LLP is a part. They concluded
that they would not be able to carry out an audit of the Company
given that the majority of its assets and operations are in Russia.
The Audit and Risk Committee held a competitive tender process
in compliance with the Competition and Markets Authority
regulations, applicable regulatory requirements and Financial
Reporting Council guidance. As a result of an evaluation of the
tender participants, engaging MHA MacIntyre Hudson
(an independent member of Baker Tilly International Limited) as the
Group auditor, with JSC Business Solutions and Technologies
(previously Deloitte CIS) as the component auditor, was considered
the preferred option and recommended by the Audit and Risk
Committee for approval by the Board. MHA MacIntyre Hudson will
act until the conclusion of the 2023 AGM, when the Group auditor
will be proposed to shareholders for appointment by ordinary
resolution.
The new Group auditor’s initial engagement was the review of the
1H 2022 interim financial statements, published on 22 September
2022 and, thereafter, the annual audit for the year ending
31 December 2022.
The Company has analysed its legal position and has concluded
that the appointment of MHA MacIntyre Hudson is not
contradictory to any applicable sanctions. The Company is not an
entity or a body established in Russia and does not consider itself
to be an entity owned by or acting on behalf or at the direction of a
‘person connected with Russia’.
The Company is in compliance with the provisions of The Statutory
Audit Services for Large Companies Market Investigation
Order 2014.
Statutory auditor’s fees
($m)
Audit fees
Audit-related assurance services
(half-year financial statements review)
Other services
1.29
1.36
0.48
2020
0.03
0.24
0.50
2021
0.55
0.36
2022
0
Fees payable to the auditor for 2022 exclude any fees payable to
the overseas component auditors, as they do not meet the
definition of the auditor’s associates.
An auditor assessment is completed annually by each member
of the Audit and Risk Committee and by the CFO by way of formal
meetings and questionnaires. Feedback is also sought from the
Group CEO, other members of the finance team, divisional
management and the head of IA. The feedback from this process is
considered by the Audit and Risk Committee, and is provided both
to the auditor and to management. Action plans arising are also
reviewed by the Committee.
The effectiveness of management in the external audit process
is assessed principally in relation to the timely identification and
resolution of areas of accounting judgement, the quality and
timeliness of papers analysing those judgements, management’s
approach to the value of the independent audit, the booking of
audit adjustments arising (if any) and the timely provision of draft
public documents for review by the auditor and the Audit and
Risk Committee.
Committee evaluation
In 2022, the Committee carried out a comprehensive self-evaluation
of its performance. Members of the Committee, CFO and members
of the finance team completed a thorough assessment
questionnaire on the work of the Audit and Risk Committee and
other related issues, including external audit and the quality,
experience and expertise of the internal auditors.
Based on the assessment results, the areas that needed attention
were aggregated and incorporated into the 2023 Committee work
plan. All comments received were considered minor and the areas
for further focus included:
Areas of improvement:
induction and ongoing training
•
• better awareness of the Group policies, ensuring the
appropriate tone from the top and that policies reflects the
Company’s values established by the Board and
• clear succession plan for future Committee membership.
Additional deep-dive sessions (including by external providers) were
proposed on:
• cyber and information management
•
•
requirements for the ongoing operational resilience and
internal controls over financial reporting and plans to include a
readiness assessment.
Work with external auditor:
•
•
review of the report on the audit firm’s own internal quality
control procedures
review of the audit representation letters before signature by
management and
• what actions the auditor has taken to address any matters
identified for improvement.
Non‑audit services by the external auditors
Polymetal’s Policy on Independence and Provision of Non-Audit
Services is based on the provisions of the Revised Ethical
Standard, issued by the UK Financial Reporting Council, that
became mandatory for Polymetal from 15 March 2020.
The Audit and Risk Committee monitors the Company’s
relationship with its external auditor in relation to the provision
of non-audit services to ensure that auditor objectivity and
independence are safeguarded. The external auditors are engaged
in permitted non-audit services only, subject to the prohibited
non-audit services for public interest entities, as provided in the
Revised Ethical Standard. The 70% cap on non-audit fees remains
applicable to certain services provided by the external auditor. The
extent and nature of non-audit services performed by the external
auditor in 2022 is disclosed in Note 14 on page 196.
Pre-approval thresholds are in place for the provision of permitted
non-audit services by the external auditor. Non-audit services are
approved by management (if below $5,000), by the Chair of the
Audit and Risk Committee (if between $5,000 and $20,000),
and by the Audit and Risk Committee (if above $20,000).
Further information is available in the Policy on Independence and
Provision of Non-Audit Services on the Company’s website.
No non-audit fees were incurred in 2022.
The Audit and Risk Committee has considered information
pertaining to the balance between fees for audit and non-audit
work for the Group in 2022 and concluded that the nature and
extent of non-audit services provided do not present a threat to the
external auditor’s objectivity or independence.
Audit quality
Auditor independence
Each year, the auditors are required to confirm in writing to the
Committee that they have complied with the independence rules of
their profession and regulations governing independence, and that
they have complied with the requirements of the Company’s policy on
the provision of non-audit services. The external auditor is required to
maintain appropriate records to provide reasonable assurance that its
independence from the Company is not impaired.
Review of the effectiveness of the external audit
process and audit quality
The Audit and Risk Committee has adopted a formal framework in
its review of the effectiveness of the external audit process and
audit quality, which focuses on the following areas:
• The audit partner, with particular focus on the lead
audit engagement partner
• The audit team
• Planning and scope of the audit and identification
of areas of audit risk
• Execution of the audit
• The role of management in an effective audit process
• Communications by the auditor with the Audit and Risk
Committee, and how the auditor supports the work of the Audit
and Risk Committee
• How the audit contributes insights and adds value
• The independence and objectivity of the audit firm and the
quality of the formal audit report to shareholders.
128
129
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Safety and Sustainability Committee
Sustainability
Safety and Sustainability Committee report
We remain committed to our
safety policy and sustainability
priorities despite challenging times.”
Janat Berdalina
Chair, Safety and Sustainability Committee
The Safety and Sustainability Committee comprises four
Directors. The Committee members’ experience includes a
wide range of sustainability issues, such as health and safety,
operational risk management, environment, energy
management and climate change, including:
• Policy
• Carbon emissions reduction targets
• Climate risk management and adaptation
• Climate-related projects and relative funds
• TCFD disclosure and sustainability reporting.
Members of the Safety and Sustainability Committee attend
those sections of Audit and Risk Committee meetings dealing
with risk.
` For further details of biographies and Board experience,
see pages 112‑113.
Janat Berdalina
Vitaly Nesis
Steven
Dashevsky
Pascale
Jeannin Perez
Meeting attendance
Janat Berdalina1
1/1
Vitaly Nesis
3/3
Steven Dashevsky1
1/1
Pascale Jeannin Perez2 1/1
1 From 22 March 2022.
2 From 1 December 2022.
3 Until 7 March 2022.
Tracey Kerr3
Ian Cockerill3
Victor Flores3
2/2
2/2
2/2
Safety competence and management
The Safety and Sustainability Committee oversees the
implementation of the Group’s ‘zero-harm’ approach, which is
aimed at achieving the goal of zero fatalities and continuous
reduction of frequency and severity of lost-time injuries. This
includes improvements in risk management procedures, the
application of digital technologies and promoting a safety culture.
The Committee annually reviews critical safety risks, evaluates the
effectiveness of safety measures and monitors the investigation of
work-related incidents involving our employees or those of
contractors operating at our sites. This robust approach resulted in
zero fatalities and the decrease of LTIFR to 0.10 per 200,000 hours
worked in 2022 (2021: 0.12).
Overseeing climate strategy
In 2022, Polymetal published its second climate-change disclosure
as a part of the Integrated Annual Report. In the report, Polymetal
commits to targets based on the Paris Agreement principles (in line
with a trajectory of ‘much lower than 2°C’). To achieve these goals,
we have developed a comprehensive programme that includes a
wide range of projects and allocated sufficient funds to
implementation. We are yet to set a net zero target that fully covers
all categories of direct and energy-related indirect emissions, as well
as to set Scope 3 specific target, and intend to continue working
towards full coverage of Scope 3 emissions in order to align to the
Paris Agreement. The report also contains information on specific
projects to reduce carbon footprint at our mines, climate scenarios
and its approach to managing climate-related risks and
opportunities (including governance and strategy features).
The qualitative and quantitative data disclosed in the report
has been prepared in accordance with the recommendations of the
Financial Services Board’s Task Force on Climate-related Financial
Disclosures (TCFD) and accompanies our annual submissions under
the Carbon Disclosure Project (CDP).
The Climate Change Policy, approved in 2021, introduces an
approach for evaluating the impact caused by the changing climate
on the Group’s operations, cutting greenhouse gas emissions and
improving energy efficiency wherever the Group operates,
taking account of good international practice and the goals
of the Paris Agreement.
TCFD disclosure
This Integrated Annual Report contains full disclosure under the
TCFD requirements. The report follows the recommendations of
the disclosures under four pillars: governance, strategy, risk
management and metrics and targets. The Safety and
Sustainability Committee, jointly with the Audit and Risk
Committee, closely supervised preparation of the report. Full
information on our approach to managing climate-related risk and
opportunity, and guidance on where to find disclosures aligned to
the Financial Stability Board’s TCFD recommendations are
available in the Task Force on Climate-related Financial Disclosure
section on pages 62, 251.
Key responsibilities
Focus during 2022
Health & Safety • Receives reports from management on
• Health and safety (H&S) work plan for 2022, key risks
significant safety, health and sustainability
issues
• Oversees management’s interaction with
regulatory authorities on safety, health and
sustainability matters
• Reviews and monitors the safety, health and
sustainability performance of the Group
• Considers whether an independent audit of
processes is appropriate and reviews audit
results and findings on health, safety and
sustainability, the action plans pursuant to the
findings and the result of investigations into
significant events
• Oversees the Company’s overall approach to
sustainability, including the establishment and
periodic review of the safety, health and
sustainability strategy and policies
• Receives regular updates from management
regarding compliance with safety, health and
environmental legislation and internal targets;
commitment to the principles of the
International Council on Mining and Metals
and the UN Global Compact regarding
sustainable development and the policies and
systems in place to monitor such compliance
assessment
• H&S report for 2022
• Safety incidents and accidents
• Safety deep dives:
– Roll-out of safety culture among contractors
– Road accidents at winter roads (including contractors),
Yakutsk branch.
– Technology and innovation for safety
• Review of the sustainability-related disclosures in the Integrated
Annual Report 2021
• Carbon accounting system review and improvement
• Approach to climate strategy: climate risks and their
management, carbon footprint and ways of reducing it
• Discussion of preliminary sustainability results for 2022 and
targets for 2023-2025
• Reforestation
• Mine closure costs
Ethical conduct • Ensures that the Company consistently
• Modern Slavery Statement and implementation of the Modern
Slavery Policy
• Group policies review and recommendation for Board approval
• Review of the Committee’s performance and its terms of reference
• Review of the work plan for 2023
exhibits and promotes ethical, transparent
and responsible behaviour, engages with key
stakeholders and communities, and
contributes to the development and growth of
healthy and sustainable communities
• Monitors the effectiveness of the safety,
health and sustainability policies, systems,
risk management programmes and
processes in place
• Liaises with the Audit and Risk Committee
and internal audit function, oversees the
implementation of the safety, health and
sustainability risk management and internal
control procedures
• Reviews the benchmarking of the policies,
systems and monitoring processes
ESG remuneration components
In line with the Company’s enhanced emphasis on ESG, the KPI
structure for the Group CEO includes a 15% ESG KPI. The
sustainability/ESG KPI is defined each year by the Safety and
Sustainability Committee in line with the Group’s long-term targets
and is based on a comprehensive scorecard.
To ensure consistent application and measurable results, the ESG
KPI cascades down to all relevant employees: Group CEO, COO,
mine directors, subsidiary directors and their deputies, senior
managers in the management company and heads of the main
operational units and their deputies. Further information is available
in the Remuneration Report on pages 132-149.
130
131
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Remuneration Committee report
We believe that remuneration
should be a fair reflection of
the Company’s performance while
aligning with our stakeholders’
interests.”
Paul Ostling
Chair, Remuneration Committee
Remuneration Committee
Paul Ostling
Evgueni
Konovalenko
Janat Berdalina
Meeting attendance
Paul Ostling1
2/2 Ollie Oliveira3
Evgueni Konovalenko² 2/2 Andrea Abt⁴
Janat Berdalina2
Italia Boninelli4
2/2
2/2
2/2
2/2
The Remuneration Committee comprises three Independent
Non-Executive Directors who have no personal financial interest
in the matters to be decided, other than as a shareholder
(where applicable). The Committee is chaired by Mr Ostling and
its other members are Mr Konovalenko and Ms Berdalina.
The Board considers that the composition and work of the
Remuneration Committee complies with the requirements of
the UK Code.
` For further detail on biographies and Board experience:
pages 112‑113.
1 Chair from 19 March 2022.
2 Member from 19 March 2022.
3 Chair until 7 March 2022.
4 Member until 7 March 2022.
The main features of Polymetal’s
remuneration philosophy
Polymetal’s Remuneration Policy sets out to achieve the following:
• Structured towards long-term corporate performance,
taking into consideration the interests of all of our
stakeholders as a whole.
• Attracts and fairly rewards high-calibre directors and
executives in respect of the responsibilities undertaken
and comparable pay levels.
Incentivises management to maximise the value of Polymetal
and align the interests of executives with those of shareholders.
•
The Remuneration Committee believes that the current
pay structure for executive management is well aligned to the
strategy of maintaining stakeholder value through growth and
cash flow generation alongside a culture with high standards
of corporate governance and sustainable development for the
following reasons:
• There is a good balance between fixed and variable pay.
Variable pay represents more than 50% of the total
remuneration package for the Group CEO.
• The KPIs used are tailored to the strategic objectives and
corporate culture.
• The KPIs currently used for variable pay can be objectively
measured and are within management’s control. Use of directly
controllable KPIs ensures not only strategic alignment, but also
reinforces the motivational impact of annual bonus targets.
• Deferral of 50% of the annual bonus ensures that short-term
annual targets are not achieved at the expense of long-term
shareholder value creation.
Finally, the long-term incentive plan provides a further significant
incentive to execute the strategy of long-term value creation. It only
generates significant payouts if Polymetal excels among its peers
on delivering TSR by combining growth and dividends. This also
enables management to participate in the share price and dividend
upside, and strengthens alignment between management and
shareholders’ interests.
Proportionate remuneration
The Remuneration Committee pays particular attention to ensuring
that there are no windfall gains that award failure, are not
appropriate and do not reflect the underlying performance of the
Group. During times of high share price volatility, it is especially
important to ensure that there controls in place and apply
discretion where necessary. Caps are applied to short-term and
long-term remuneration to reduce the risk of potential excessive
gains, and malus and clawback provisions are in place.
The Committee has discretion to vary the proportion of awards.
The following measures are used:
• Annual bonus: there is a cap on the overall maximum bonus
outcome – 120% of base salary.
• Performance Share Plan (PSP): vesting is based on a GHG
emissions intensity metric (20% weighting) and relative TSR
(80% weighting), measured over four years against the
constituents of the FTSE Gold Mines Index. Peers are ranked
and the Company’s position determines vesting. No award
will vest if absolute TSR is negative, regardless of relative
performance.
• PSP: the value that can be received in the year of vesting
is limited to twice the face value of the award on grant. Any gains
above this will be forfeited before the start of the one-year
holding period.
132
Key responsibilities
Focus during 2022
Remuneration
Policy
• Determining, within agreed terms of reference,
the remuneration of the Chair and specific
remuneration packages for the Group CEO, the
Company Secretary and members of senior
management, including any pension rights and
compensation payments
• Approach to remuneration: executive remuneration strategy
and structure
• Change to the Remuneration Policy to be voted on by
shareholders at the 2023 AGM
• Annual review of the Board Chair’s fee
• Performance Share Plan (PSP) update and scheme analysis
Remuneration
of executive
management
• Making recommendations to the Board on the
Group’s policy on the remuneration of executive
management
• Approval of bonuses and deferred shares issued to the Group
CEO and senior management; confirmation that there was no
malus or clawback
Governance
and employee
benefit
structures
• Formulating suitable performance criteria for
the performance-based pay of executive
management
• Reviewing and overseeing all aspects of any
executive share scheme operated by or to be
established by the Company
• Having a duty of care to keep abreast of and
act upon changes in law, regulations and other
published guidelines or recommendations
regarding the remuneration of directors of listed
companies, including formation and operation
of share schemes
• Considering and making recommendations to
the Board concerning disclosure of details of
remuneration packages and structures, in
addition to those required by law or regulations
• Reviewing and advising the Board on any major
changes in employee benefit structures
throughout the Company or the Group
• General employee remuneration update
• Final approval of the Remuneration Report for 2021
• Remuneration governance update, feedback from shareholders
on Remuneration Committee matters
• Employee remuneration review
• Analysis of labour remuneration conditions
• Review of the Committee’s terms of reference
•
• Reimbursement Policy review
• Review of the work plan for 2022
Internal evaluation
Proposed amendments to the Remuneration
Policy
We last put our Directors’ Remuneration Policy forward for
shareholder approval in April 2020; therefore, the revised
Policy will be put forward for shareholder approval at the
forthcoming AGM. The Remuneration Committee has given
significant thought to the relevance and applicability of the
existing Policy and potential changes to the Policy in the
context of the challenging global environment and technical
implications that have arisen. We consulted with shareholders
and proxy advisors about the proposals during January 2023
and no significant concerns were raised.
Our approach to share-based payments for
the Executive Director
Overall, we believe our Policy works well without the need for
major change. The Remuneration Committee believes that the
current pay structure for executive management is well
aligned to the strategy of maintaining stakeholder value
through growth and cash flow generation, alongside a culture
with high standards of corporate governance and sustainable
development.
This is achieved, in part, through the use of share-based
payments for our Executive Director (CEO). The current Policy
includes shares as part of the deferred bonus award, whereby
50% of any annual bonus is deferred into shares and vests
annually over the following three years in equal instalments,
and as part of our PSP, with an annual grant level of 125% of
salary. Additionally, we operate using market- leading
shareholding guidelines, with the Group CEO required to hold
500% of salary in shares.
During the last year, one technical implication has arisen in
respect of our Policy. Polymetal is currently restricted from
issuing new shares to Russian residents, which significantly
limited our ability to operate our Policy as intended for the
Group CEO and for some employees.
While we believe that the current Policy previously worked
well, with these restrictions in place, we believe that two
actions are required in order to ensure that the Policy
continues to work for both shareholders and the Group CEO:
• Where it is not possible or practicable to award our
deferred bonus in shares, awards will instead be made in
cash. Any cash award that is made instead of a share
award would be deferred for a period of three years, in
line with the current approach for share-based awards.
• The existing Policy allows for the Group CEO to receive a
PSP award up to a maximum of 150% of salary, with a
default grant level of 125% of salary. For the period
where we cannot grant shares, we intend to make no
PSP awards to the Group CEO.
The proposed actions are intended to operate as a
temporary solution until such time as restrictions are lifted.
At that point, we intend to revert to the approach set out in
the current Policy.
While we recognise there is a risk that the proposed actions above
appear to significantly reduce the alignment of the Group CEO’s
pay with the shareholder experience, the Group CEO already has a
shareholding of 1,814% of salary. This is significantly above the
shareholding requirement of 500% of salary, maintaining a strong
alignment with our shareholders.
In addition, it should be noted that during the period when PSP of
125% of salary is not granted, the overall package received by the
Group CEO will be substantially reduced. While the maximum
bonus opportunity is, and will remain at, 120% of salary, no further
incentives will be available to the Group CEO while the above
restrictions are in place. This is significantly below the overall pay
opportunity available within equivalent companies.
The action of not granting any PSP awards while the restrictions
are in place requires no changes to the Policy. Under the current
wording for the Deferred Bonus in the Policy, however, the
proposed approach would not be possible. We will, therefore,
make a minor amendment to the Policy to enable a cash award
to be made, as set out above. This will be put to shareholder
vote as part of the Policy renewal at the 2023 AGM.
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Changes to the Board Chair fee
We are additionally proposing a reduction in the fee for the Board Chair for 2023 from the current level of $500,000 to $350,000. The
current fee level was set in 2020, in line with the median of the FTSE 100 companies at that time. During 2022, in considering our
remuneration arrangements for the upcoming year, a decision was taken to reduce the fee. While the scope and demands of the role
have not changed, the reduced fee of $350,000 more appropriately reflects the current size of the business.
Remuneration Policy alignment with the UK Code
When determining executive remuneration policy, the Committee is addressing the following principles as set out in the revised UK Code:
UK Code principle
How it is addressed
Clarity
Remuneration arrangements should
be transparent and promote effective
engagement with shareholders and
the workforce.
Simplicity
Remuneration structures should avoid
complexity and their rationale and
operation should be easy to
understand.
Risk
Remuneration arrangements should
ensure reputational and other risks
from excessive rewards, and
behavioural risks that can arise from
target-based incentive plans, are
identified and mitigated.
Predictability
The range of possible values of
rewards to individual directors and any
other limits or discretions should be
identified and explained at the time of
approving the policy.
Proportionality
The link between individual awards,
the delivery of strategy and the
long-term performance of the
Company should be clear. Outcomes
should not reward poor performance.
• The Group CEO interests are aligned with those of our shareholders and the Company’s
long-term objectives. 50% of the bonuses awarded each year to the Group CEO will be
deferred into either shares in the Company (or cash, where it is not possible or
practicable to award our deferred bonus in shares1) through the Deferred Share Awards
(DSA) over a period of three years and malus provisions apply to the unvested awards.
• The PSP provides an additional focus for key employees of the Group about long-term
performance. The Committee has the flexibility to set the PSP metrics each year with at
least 75% of the award being based on financial metrics. Under the current structure,
80% of the PSP is measured based on above median relative TSR, underpinned by
positive absolute shareholder returns, and therefore fully aligned with sustainable
shareholder-value creation. Starting from 2022, a GHG emissions intensity metric with a
weighting of 20% was added to PSP vesting conditions. The ESG metric is subject to an
additional underpin of zero incidents at tailing storage facilities and zero conflicts with
local communities during the four-year performance period.
• A vesting period of four years under the PSP, over which malus and clawback conditions
apply to the unvested awards, with an additional post-vest holding period of one year
(resulting in a total term of five years) ensures that management focuses on the long-term
interests of the Company and of its stakeholders.
• The minimum shareholding requirement for the Group CEO is 500% of base. The
retention of the full shareholding is required for two years post-cessation of employment.
Lock-up at the broker level to ensure compliance.
The general structure of the Directors’ Remuneration Policy is simple and straightforward,
including three main elements:
• Fixed: base salary (any increase is typically in line with the wider workforce) and pension
contributions (do not exceed the mandatory defined contribution to the statutory pension
fund, in line with the wider workforce).
• Short-term: annual bonus based on achievement of financial and non-financial KPIs.
KPIs for the senior executives’ team mirror those of the Group CEO where applicable
and include directly controllable metrics.
• Long-term incentive plan: provides a further significant incentive to execute the strategy
of long-term value creation. DSA (50% of the Group CEO’s bonus based on annual KPIs
is deferred into shares or cash2 released in equal instalments over three years) and PSP
(based on relative and absolute TSR and ESG metrics over a vesting period of four years,
followed by an additional post-vest holding period of one year).
• The Committee can use discretion in particular circumstances to override excessive
outcomes.
• The Remuneration Policy is aligned with the Group’s risk management assessment
process.
• Caps are applied to short-term and long-term remuneration to reduce the risk of
potential excessive gains, as well as malus and clawback provisions.
• The scenario analysis on page 138 provides estimates of the minimum target and
•
maximum opportunity for the Group CEO remuneration.
In addition, the effect of future share price increases on the LTIP outcome is illustrated on
page 138.
• Performance-related pay makes up a significant proportion of the remuneration package
(54% and 69% of total remuneration for target and maximum performance scenarios,
respectively), with an appropriate balance between the reward for short- and long-term
performance.
• The drivers of variable pay (KPIs) are stretching, well-aligned with the Company’s
strategic and operational objectives and cascade throughout the organisation in a way
that ensures our employees’ pay is aligned to Polymetal’s performance and to the wider
principles of the policy.
• Performance targets for all incentive plans are reviewed annually and, where appropriate,
are typically set at a level that is in line with the Company’s plans and budget.
Alignment to culture
Incentive schemes should drive
behaviours consistent with the
Company’s purpose, values and strategy.
• The KPIs used are tailored to the strategic objectives and corporate culture.
• The management KPIs include significant weighting towards sustainability metrics, with the
Group CEO’s component purposefully focused on ESG. More than 70 different ESG KPIs are
individually applied throughout the Group to the employees most able to make a difference.
1 As set out in the revised Remuneration Policy, subject to shareholder approval at the 2023 AGM, refer to page 148 for details.
2 As set out in the revised Remuneration Policy, where it is not possible or practicable to award deferred bonus in shares (subject to shareholder approval at the 2023
AGM, refer to page 148 for details).
134
Directors’ Remuneration Policy
Summary table
At the at the forthcoming AGM, the Committee will be requesting shareholder approval of the following Remuneration Policy to cover a
period of three years. The Policy will apply from the date of approval. No changes to the previous policy have been made, other than
where indicated earlier in this report on page 133.
Element and
purpose/link
to strategy
Operation
Opportunity
Performance metrics used and
period applicable
Executive Director – Group CEO
Base salary
To attract
and retain
high-calibre
executives
Pension
To provide
funding for
retirement
The Committee reviews the base
salary on an annual basis and, when
setting base salary for the following
year, takes into account general
economic and market conditions,
underlying Group performance, the
level of increases made across the
Group as a whole, the remuneration
of executives in similar positions in
companies of a similar size and
global mining peers, and individual
performance.
The Group does not fund any
pension contributions or retirement
benefits, except contributions to the
mandatory pension fund of the
Russian Federation, as required by
Russian law.
The Group pays defined
contributions to the mandatory
pension fund. This permits retiring
employees to receive a defined
monthly pension for life from the
statutory pension fund.
Not applicable.
Over the policy period, the base salary
for the Group CEO will be set at an
appropriate level within the peer group
and will increase in line with base salary
increases for the wider workforce, except
where a change in the scope of the
role occurs.
The annual base salary for the reporting
year and the current year is set out in the
Annual Report on Remuneration and on
page 148.
Pension contribution does not exceed
the mandatory contribution made to the
pension fund of the Russian Federation.
Not applicable.
Currently 10% of total pay.
Benefits
The Group does not provide any
benefits for its Group CEO.
Not applicable.
Not applicable.
Annual
bonus
To focus on
achieving
annual
performance
goals, which are
based on the
Group’s KPIs
and strategy
The annual bonus result is
determined by the Committee
after the year end, based on
performance against defined targets.
Annual bonuses are paid three
months after the end of the financial
year to which they relate.
50% of the annual bonus earned is
paid in cash and the remaining 50%
is compulsorily deferred into shares,
which are released annually to the
employee over the next three years in
equal instalments through the DSA
plan. Where it is not possible or
practicable to award the deferred
bonus in shares, awards will instead
be made in cash. Any cash award
that is made instead of a share award
would be deferred for a period of
three years, in line with the current
approach for share-based awards.
Clawback and malus conditions
apply to the DSA. No clawback is
applied to the cash part of the annual
bonus, as this provision would
contradict the labour law of the
Russian Federation.
Details of the DSA are set out on the
next page.
Target bonus opportunity – 100% of
base salary.
Maximum bonus opportunity – 120%
of base salary.
For the Group CEO the H&S metric
applies as a multiplier to the whole
bonus:
The annual bonus is earned based on the
achievement of a mix of financial and non-financial
measures over the financial year.
For 2022, performance metrics (as described in
detail on page 144) and associated weightings for
each were:
KPI
Weight
20%
• 0 fatalities or severe cases:
Production
1.2x multiplier;
• more than 0 fatalities or severe
cases, but fewer than 3 fatalities or
6 severe cases: multiplier between
0.5x and 1x;
• 3 fatalities or 6 severe cases:
0.5x multiplier.
The Committee has discretion to vary the
list and weighting of performance
metrics over the life of this Remuneration
Policy. In addition, the Committee has
discretion to vary performance metrics
part-way through a year if there is a
significant event, which causes the
Committee to believe that the original
performance metrics are no longer
appropriate.
Total cash cost
20%
Completion of new
projects on time
and within budget
25%
Health and safety
20%
ESG
15%
Total before cap on
maximum bonus
100%
Maximum %
Max achievement
150% (weighted –
30% of base salary)
Max achievement
150% (weighted –
30% of base salary)
Max achievement
110% (weighted –
27.5% of base
salary)
Max achievement
100% (weighted –
25% of base salary)
Max achievement
150% (weighted –
15% of base salary)
127.5%
There is a cap on the overall maximum bonus
outcome – 120% of base salary.
Total
100%
120% of base salary
No discretion was used in 2022.
Details of the metrics distribution for 2022 are
available on page 144.
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Element and
purpose/link
to strategy
Operation
Opportunity
Performance metrics used and
period applicable
Long‑Term Incentive Plan (LTIP)
Not applicable.
Maximum grant permitted under the plan
rules is 150% of salary per annum.
Default grant level is expected to be
125% of base salary.
The value that can be received in the
year of vesting will be limited to twice the
face value of the award on grant. Any
gains above this will be forfeit before the
start of the one-year holding period. In
certain exceptional circumstances, the
Remuneration Committee will be able to
use discretion to disapply the cap.
Outstanding award during 2019 had a
default grant level of 150% of salary.
Dividend equivalents will be received
on vested shares, reflecting the value
of dividends that have been paid during
the period from the grant date to the
vesting date.
Deferred
Share
Awards plan
(DSA)
Deferral to
encourage
retention and
alignment with
shareholders’
interests
Performance
Share Plan
(PSP)
To provide
long-term
alignment with
shareholders’
interests by
delivering
sustainable
above-market
shareholder
returns
50% of the annual bonus earned is
paid in cash and the remaining 50%
is compulsorily deferred into shares,
which are released annually to the
employee over the next three years in
equal instalments. Where it is not
possible or practicable to award our
deferred bonus in shares, awards will
instead be made in cash. Any cash
award that is made instead of a share
award would be deferred for a period
of three years, in line with the current
approach for share-based awards.
Clawback and malus provisions
apply for the unvested portion of the
DSA; the Remuneration Committee
may, at any time up to and including
vesting, reduce the number of shares
that vest, should it consider that
misconduct or fraud, material
misstatement of accounts, corporate
failure, serious reputational damage,
or failure of risk management occurs.
Dividend equivalents will be received
on vested shares, reflecting the value
of dividends that have been paid
during the period from the grant date
to the vesting date.
Under the PSP, annual rolling
conditional share awards are made
with a four-year vesting period and an
additional mandatory holding period
of one year following vesting.
Stretch performance targets reward
participants for delivering positive
absolute and superior relative TSR
performance against global peers
over the performance period.
Clawback and malus provisions
apply for the unvested portion of the
PSP, whereby the Remuneration
Committee may, at any time up to
and including vesting, reduce the
number of shares that vest, should it
consider that misconduct or fraud,
material misstatement of accounts,
corporate failure, serious reputational
damage, or failure of risk
management occurs. At the Board’s
absolute discretion, a clawback
provision could be applied in relation
to vested shares.
Retesting of the performance
conditions in future years is not
allowed under any circumstances.
For the period where we cannot
grant shares, we intend to make no
PSP awards to the Executive.
Entitlement to this deferred component is subject
to continued employment over the deferral period.
In normal circumstances, DSAs will continue until
the normal time of vesting upon cessation of
employment due to death, injury, ill-health,
disability, redundancy, retirement, or any other
circumstance which the Committee determines
(Good Leaver Circumstances). Alternatively, the
Board may determine that DSAs will vest
immediately. In both circumstances there would
be no pro-rating of the DSAs for the time from the
award date until cessation of employment or for
performance. The DSA would lapse under other
circumstances.
No performance conditions apply to the DSA
shares as they have been subject to fulfilment of
annual KPIs.
The Committee has the flexibility to set the PSP
metrics each year, with at least 75% of the award
being based on financial metrics.
Starting from 20221, vesting will be based on the
following metrics:
(1) Relative TSR (80% weighting), measured over
four years against the constituents of the FTSE
Gold Mines Index and also on the Company’s
absolute TSR.
Peers are ranked and the Company’s position
determines vesting:
• 0% vests for below median performance
• 20% vests at median performance
• 100% vests at upper quintile performance and
above
• Vesting occurs on a linear basis between
median and upper quintile performance.
No award will vest if absolute TSR is negative,
regardless of relative performance.
(2) GHG emissions intensity metric (20%
weighting). This metric is subject to an additional
underpin of zero incidents at tailing storage
facilities and zero conflicts with local communities
during the four-year performance period.
The Committee may substitute, vary or waive the
performance targets if an event occurs which
causes the Committee to consider that the target
is no longer appropriate.
The Committee has discretion to vary the
proportion of awards that vest to ensure that the
outcomes are fair and appropriate, and reflect the
underlying performance of the Group.
Use of discretion for LTIP programme (DSA and PSP)
When setting forward-looking targets, it is not always possible to predict the outcomes, especially with the quickly changing market
environment and the volatility of our sector. The Committee retains the right to exercise discretion, both upwards and downwards, to
ensure that the level of award payable is appropriate. The Committee will make adjustments to retain the original intent and challenge of
the performance measure in the event of, for example, corporate transactions, significant commodity, share price or other macroeconomic
volatility or changes to accounting standards. If any discretion is exercised, the rationale will be fully disclosed in the subsequent
Annual Report on Remuneration. For the period where we cannot grant shares, we intend to make no PSP awards to the Executive Director.
Element and
purpose/link
to strategy
Operation
Opportunity
Performance metrics used and
period applicable
Not applicable.
The minimum shareholding requirement
for the Group CEO is 500% of base
salary.
The retention of the full shareholding is
required for two years post-cessation of
employment, with lock-up at the broker
level to ensure compliance.
Fees are reviewed, but not necessarily
increased, on an annual basis.
Not applicable.
Any increase in Non-Executive Directors’
fees will normally be in line with market
levels for similar roles in UK-listed
companies, except where a change in
the scope of the role occurs. Current fee
levels are set out in the Annual Report on
Remuneration on page 149.
Long‑Term Incentive Plan (LTIP) continued
Minimum
shareholding
requirements
To strengthen
alignment
between the
interests of the
Executive
Director and
those of
shareholders
Unvested shares under the PSP or
DSA are not taken into account when
calculating progress towards the
minimum shareholding requirements.
For the purposes of determining
whether the requirements have been
met, the share price is measured at the
end of each financial year 1. Post
vesting and tax, all shares acquired
under PSP and DSA awards must be
retained until the shareholding
requirement is met.
Non‑Executive Directors
Fees for
Non-Executive
Directors
To attract
and retain
high-calibre
Non-Executive
Directors
The fees of Independent Non-
Executive Directors are set by
reference to those paid by
companies of a similar size. Fees are
set to reflect the responsibilities and
time spent by Non-Executive
Directors on the affairs of the
Company. No fees are paid to
Non-Independent, Non-Executive
Directors. Non-Executive Directors
are not eligible to receive benefits
and do not participate in incentive or
pension plans.
The following fees are paid in addition
to the Non-Executive Director base
fee: Committee Chair’s fee; Senior
Independent Director fee; Committee
membership fee; and Board,
Committee and General Shareholder
Meeting attendance fees. The
Remuneration Committee determines
the framework and broad policy for
the remuneration of the Board Chair
for approval by the Board. The
remuneration of Non-Executive
Directors is a matter for the Board
Chair and the Executive members of
the Board, i.e. the Group CEO.
Directors do not participate in
discussions relating to their own fees.
1 Prior to 2022, PSP vesting was solely based on TSR metric (100% weighting).
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Performance measures and targets
The Committee selected the performance conditions indicated in the policy table because they are central to the Company’s overall
strategy, and include the key metrics used under the annual bonus and LTIP by the Group CEO to oversee the operation of the business.
Performance targets for all of our incentive plans are reviewed annually and, where appropriate, are typically set at a level that is in line
with the Company’s plans and budget.
Illustration of application of the Remuneration Policy
The composition and structure of the remuneration package for the Group CEO under four performance scenarios (minimum performance,
target performance, maximum performance and maximum with share price appreciation) are set out in the chart below.
This chart shows that the proportion of remuneration delivered through short-term and long-term incentive schemes is in line with our
Remuneration Policy and changes significantly across the three performance scenarios. As such, the package promotes the achievement of
both short-term and long-term performance targets and drives the alignment of the Group CEO’s interests with the interests of shareholders.
Note:
Scenario values are translated at the budgeted exchange rate of 65 RUB/$.
Application of remuneration policy
Fixed elements of remuneration
Single year variable
Multiple year variable
Maximum with share price appreciation
Maximum
Target
26%
31%
47%
Minimum
29%
34%
45%
Total: $2.27m
35%
Total: $1.93m
43%
11%
Total: $1.28m
100%
Total: $0.60m
0.0
0.5
1.0
1.5
2.0
Minimum
Target
Maximum
Maximum with share
price appreciation
Fixed elements
Base salary and pension
Base salary and pension
Base salary and pension Base salary and pension
Single year variable
Performance against
quantitative KPIs is below
budget.
Non-achievement of
qualitative or non-
financial KPIs.
0% pay-out.
Performance against
quantitative KPIs is at
budgeted levels. Full
achievement of non-
financial KPIs. 100% of
base salary pay-out
(83.3% of maximum
opportunity). Includes
DSA awards.
Multiple year
variable
Share price performance
is below the median of
FTSE Gold Mines Index
constituents.
No shares vest.
Scenario is based on
125% policy awards.
Share price performance
is at median of FTSE
Gold Mines Index
constituents. Shares
equivalent to 25% of base
salary vest under the PSP
(20% of total shares
available).
Performance against
quantitative KPIs is above
budgeted levels. Full
achievement of non-
financial KPIs. 120% of
base salary pay-out
(100% of maximum
opportunity). Includes
DSA awards.
Performance against
quantitative KPIs is above
budgeted levels. Full
achievement of non-
financial KPIs. 120% of
base salary pay-out (100%
of maximum opportunity).
Includes DSA awards.
Share price performance
is in the top quintile of
FTSE Gold Mines Index
constituents. Shares
equivalent to 125% of
base salary vest under
the PSP (100% of total
shares available).
Share price performance
is in the top quintile of
FTSE Gold Mines Index
constituents. Shares
equivalent to 125% of base
salary vest under the PSP
(100% of total shares
available).
Share price appreciation of
50% has been assumed.
Approach to recruitment remuneration
The Committee’s approach to recruitment remuneration is to pay a competitive overall package, as appropriate, to attract
and motivate the right talent for the role. If an executive is promoted to the Board from within the Company, any pre-
existing awards or benefits that were made available to them prior to becoming a Director (and not in anticipation of an
imminent promotion to the Board) will be retained and allowed to vest or be provided under the original terms.
The following table sets out the various components that would be considered for inclusion in the remuneration package
for the appointment of an Executive Director. Any new Director’s remuneration package would include the same elements,
set at a level consistent with the scope of the role (at a level not exceeding that of the Group CEO as set out in the
Remuneration Policy table), and be subject to the same constraints as those of existing Executive Directors performing
similar roles, as shown below.
Area
Policy and operation
Base salary
and benefits
Pension
Annual bonus
Long-term
incentives
Replacement
awards
Other
The base salary level will be set by taking into account the experience of the individual and the salaries paid in
comparable companies. Depending on the circumstances of any particular appointment, the Committee may
choose to set the base salary below market median and increase the amount paid over a period of time to
achieve alignment with market levels for the role (with reference to the experience and performance of the
individual), subject to the Company’s ability to pay. In line with the Remuneration Policy, as set out in the
Directors’ Remuneration Policy table, no benefits will be provided to recruited Directors.
Pension contributions will be limited to the mandatory contributions required by Cypriot/Russian/Kazakh or
any other applicable law, as set out in the Directors’ Remuneration Policy table.
The Executive Director will be eligible to participate in the annual bonus scheme as set out in the Directors’
Remuneration Policy table. The maximum annual opportunity is 120% of base salary. 50% of any bonus is
deferred into shares under the DSA, subject to legal limitations, as set out in the Directors’ Remuneration
Policy table.
The Executive Director will be eligible to participate in the PSP part of the LTIP at the Remuneration
Committee’s discretion and in line with the details set out in the Directors’ Remuneration Policy table (subject
to legal limitations). The maximum annual grant permitted under the scheme rules is 150% of base salary and
the normal grant level is up to 125% of base salary. Performance measures would apply, as set out in the
Directors’ Remuneration Policy table.
The Committee will seek to structure any replacement awards so that overall they are no more generous
in terms of quantum or timing than the awards to be forfeited as a consequence of the individual joining the
Company. In determining the quantum and structure of any replacement awards, the Committee will seek
to replicate the fair value and, as far as practicable, the timing, form and performance requirements of the
forfeited remuneration. The maximum value of replacement awards is capped at 50% of the individual’s
base salary and at least 50% of any replacement award should be delivered in the Company’s shares.
Should relocation of a newly recruited Executive Director be required, reasonable costs associated with
this relocation will be met by the Company. Such relocation support may include, but not be limited to,
payment of legal fees, removal costs, temporary accommodation/hotel costs, a contribution to stamp duty and
replacement of non-transferable household items. In addition, and in appropriate circumstances, the
Committee may grant additional support in relation to the payment of school fees and the provision of tax
advice. The Company will reimburse the Executive Director for all reasonable expenses which they may incur
while carrying out executive duties.
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Policy on payment for loss of office
The Committee’s approach when considering payments in the event of termination is to take into account individual circumstances,
including the reason for termination, contractual obligations of both parties, and applicable share plan and pension scheme rules
(including any relevant performance conditions).
Vitaly Nesis is an Executive Director of Polymetal International plc and Group CEO of JSC Polymetal, a 100% subsidiary of the Group,
incorporated in Russia. Further details are set out in the current Directors’ service contracts section on page 142.
The table below summarises the key elements of the Executive Director policy on payment for loss of office.
Area
Policy and operation
Notice period
Polymetal International
Six months from Company
Six months from Director
JSC Polymetal
With immediate effect from Company
One month from Director
Compensation for
loss of office in
service contracts
Treatment of annual
bonus awards
No entitlement in respect of directorship of Polymetal International.
Up to three times average monthly salary in respect of directorship of JSC Polymetal in accordance with
provisions of the labour law of the Russian Federation.
Where an Executive Director’s employment is terminated after the end of the performance year, but before
the payment of the annual bonus is made, the Executive may be eligible for an annual bonus award for that
performance year subject to an assessment based on performance achieved over the period. No award will be
made in the event of gross misconduct. Where an Executive Director’s employment is terminated during a
performance year, a pro-rated annual bonus award for the period worked in that performance year may be
payable, subject to an assessment based on performance achieved over the period.
Treatment of
unvested DSAs
under plan rules
In normal circumstances, DSAs will continue until the normal time of vesting upon cessation of employment in
Good Leaver Circumstances. Alternatively, the Board may determine that DSAs will vest immediately. In both
circumstances, for the DSA already granted, there would be no pro-rating for time from the award date until
cessation of employment or for performance.
Treatment of
unvested PSP
awards under plan
rules
Any outstanding award will lapse at cessation of employment with the Group, unless the cessation is due to
Good Leaver Circumstances, in which case the award will usually vest as normal in accordance with the terms
of the award. Alternatively, the Committee may determine that the award will vest immediately.
The Committee will determine the proportion of the award that will vest, taking into account (where relevant)
the extent to which the performance conditions have been met or are likely to be met at the end of the
performance period, and any other factors the Committee may consider relevant.
Post-cessation
shareholding
requirement
Exercise of
discretion
Corporate event
The number of shares will also be pro-rated down to reflect the reduced service period.
The Executive Director is to retain a minimum shareholding requirement (500% of base salary or actual
shareholding if lower) for two years post-cessation of employment. Shares must be kept with a broker
who can implement blocks on trades.
Any discretion available in determining the treatment of incentives upon termination of employment is
intended only to be relied upon to provide flexibility in unusual circumstances. The Committee’s determination
will take into account the particular circumstances of the Director’s departure and the recent performance of
the Group.
In relation to PSP awards, in the event that the Company’s shares cease to trade on the London Stock
Exchange or any other recognised stock exchange (delisting) or the Directors of the Company pass a
resolution to the effect that delisting is imminent or where the Board determines that a ‘significant event’
has occurred, which may be a demerger, winding-up or compulsory acquisition of the Company, or any
other event as determined by the Board, at the discretion of the Board and, where applicable, with the
consent of the acquiring company, PSP awards will not vest but will be exchanged for new PSP awards.
In the event that the PSP awards are exchanged for new PSP awards:
• The award date of the new PSP award shall be deemed to be the same as the award date of the original
PSP award
• The new PSP award will be in respect of shares in a company determined by the Board which may include
any acquiring company
• The new PSP award must be equivalent to the PSP award and will vest at the same time and in the same
manner as the PSP award.
Where relevant, either the vesting of the new PSP award must be subject to any performance conditions which
are, so far as possible, equivalent to any conditions applying to the PSP award, or no performance conditions
will apply but the value of shares comprised in the new PSP award shall be the value of the number of shares
which would have vested under the PSP award if they had not been exchanged for new PSP awards.
DSAs shall vest immediately and shall not be pro-rated for time or performance if any of the events referred to
above occur.
Remuneration Policy for other employees
The Remuneration Policy for other members of the executive team and broader management team within the Group is consistent in both
structure and KPIs to that of the Group CEO. While the value of remuneration will vary throughout the Group, depending upon the individual’s
role, significance to the business and the level of responsibility, the remuneration of all senior executives consists of a base salary, an annual
bonus and participation in the LTIP (the PSP and DSA).
The KPI structure for all of our senior managers and key employees is tailored to individual responsibilities and performance. To reflect the
aim of zero fatalities, the bonus calculation system for the Group CEO, some senior managers and mine management has a major focus on
health and safety KPIs, adjusting bonus outcomes on all KPIs in the case of fatalities. We aim to ensure the corporate cohesiveness of the
team as well as to support individual success and development.
Operation of the DSA programme for the most senior employees mirrors the Executive Director’s arrangement set out in the policy table,
where 50% of the annual bonus is deferred into shares (if technically practicable, refer to page 136 for details) and released annually to the
employees over a period of three years.
The Remuneration Policy for the wider group of employees is aimed at aligning pay with the achievement of targeted results for each
employee. The Company’s policy on fair pay provides for the payment of additional remuneration for employees living in difficult climatic
locations and the delivery of appropriate levels of pay for different levels of work. The bonus component of remuneration for mid-level
management and operational staff is measured based upon the achievement of production targets, increasing output, the level of justified
cost savings, health and safety records and ESG metrics. In terms of pension arrangements, the Company applies a consistent approach for
the Group CEO and other employees, and adheres to the mandatory pension contributions required under applicable laws.
Polymetal is firmly committed to acknowledging and rewarding employees’ hard work and achievements. To help us attract and retain the
best candidates, we offer a competitive remuneration package and benefits, which exceed regional averages in our areas of operation.
We also aim to provide a pleasant and effective working environment as well as training or further education and other opportunities for our
employees.
Salaries are considered for annual increases based on the Company’s performance results, inflation rates and the competitive level
of salaries versus the wider market. In 2022, a 9% increase in compensation was made to the Group CEO in line with the workforce,
representing an annual scheduled inflation-based increase. Effective from 1 April 2023, a 6% increase will be made in Russia and 9% in
Kazakhstan, in line with anticipated inflation, for all personnel.
Employees up to three levels below the Board (approximately 850 employees throughout the Group) are eligible to participate in the PSP at
the discretion of the Remuneration Committee. The PSP policy default grant level is 125% of base salary for all the participants, including the
Group CEO.
Top-down approach to remuneration structure within the Group
Employee level
Group CEO
Executive Committee
Mine managing directors and senior executives
Top management/support roles
Senior managers and key personnel¹
Other employees
Maximum
bonus
percentage of
salary
Proportion of
bonus
deferred into
shares (DSA)
Number of
employees
Normal LTIP
award grant
1
7
15
20
959
13,870
120%
125%
125%
60-100%
30-60%
10-30%
50%
50%
50%
50%
n/a
n/a
125%
125%
125%
125%
125%
n/a
Statement of consideration of employment conditions elsewhere in the Group
In setting the Remuneration Policy for the Group CEO, the Committee takes into account a range of factors, including remuneration
packages and overall base salary increases awarded to the wider employee population during the year.
The Committee did not formally consult with the employees when reviewing the Policy; however, it considered feedback through our
formalised workforce engagement programme with the Board and the Group senior management. A dedicated page is set up on the
intranet to communicate to Group employees how executive remuneration aligns with the wider Company pay policy.
140
141
1 PSP participants from the pool of senior managers and key personnel are recommended by the Company and approved by the Board. Being granted options in
one year does not necessarily mean they will be granted in the following year.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Remuneration Committee report continued
Annual Report on Remuneration
Current Directors’ service contracts
Group CEO
The table below highlights key elements of the service contract of the Group CEO with JSC Polymetal, the Russian holding company of
the Group where he holds the CEO position:
Date of contract
Expiry of term
Payment in lieu of notice
Pension
1 September 2018
31 August 2023
None
None, except for defined contributions to the mandatory pension fund of the Russian Federation
At expiration of the previous five-year employment contract, on 31 August 2018, JSC Polymetal, a 100% indirect subsidiary of the
Company incorporated in Russia, entered into an employment contract with Mr Nesis as its Group CEO. The contract was renewed
on the same terms for a further period of five years.
Under the terms of the contract, the Group CEO undertakes to perform general management of JSC Polymetal and arrange for its
commercial, economic, social and other activities with a view to providing for JSC Polymetal’s further development. The employment
contract does not contain any specific grounds for early termination. The contract can be terminated at any time on one month’s notice
by Mr Nesis and with immediate effect by JSC Polymetal in accordance with Russian labour and civil law. This could result in
compensation of three average monthly salaries.
Mr Nesis entered into an appointment letter (as amended) with the Company in relation to his appointment as an Executive Director.
This appointment took effect on 29 September 2011 and was conditional on admission of shares to trading on the London Stock
Exchange. Mr Nesis does not receive any fees in respect of his appointment as a Director of Polymetal International plc but is entitled to
reimbursement of his reasonable expenses incurred in relation to carrying out his duties as a Director. The appointment of Mr Nesis as a
Director may be terminated at any time in accordance with the Articles of Association and he is subject to annual re-election at the Annual
General Meeting of shareholders. Mr Nesis can terminate his appointment as a Director on six months’ notice. He is not entitled to receive
any compensation in respect of his role as Director on termination of this appointment.
The full terms and conditions of appointment are available for inspection at the Company’s registered office in Jersey and its office
in Cyprus.
Non‑Executive Directors
Non-Executive Directors do not have service contracts and the terms of their appointment are set out in letters of appointment.
The appointment of any Non-Executive Director may be terminated at any time in accordance with the Articles of Association and they
are subject to annual re-election at the Annual General Meeting of shareholders. The appointment of each Non-Executive Director may
be terminated by either party on one month’s notice. A Non-Executive Director is not entitled to receive any compensation on termination
of their appointment. Each Non-Executive Director is subject to confidentiality restrictions without limitation in time.
The full terms and conditions of appointment of all of the Directors are available for inspection at the Company’s registered office in
Jersey and its office in Cyprus.
Dates of contract or appointment for Non-executive Directors are set out in the table below:
Director
Evgueni Konovalenko
Steven Dashevsky
Paul Ostling
Janat Berdalina
Richard Sharko
Pascale Jeannin Perez
Konstantin Yanakov
Date of appointment
Notice period
17 March 2022
17 March 2022
17 March 2022
17 March 2022
1 December 2022
1 December 2022
29 September 2011
1 month
1 month
1 month
1 month
1 month
1 month
1 month
Single total figure of remuneration (audited)
Summary
From 1 April 2022, the approved salary increase for the Group CEO was 9%, which is in line with the average increase for the rest
of our workforce.
As a result of the performance of the Company and achieving the set KPIs, as presented on page 144, the Group CEO received a bonus
of 98% of maximum opportunity for the year (which constitutes 120% of his base salary or $592,693), with 50% of bonus deferred into
shares vesting over a period of the next three years under the terms of the DSA¹.
No discretion has been used in respect of Non-Executive and Executive Directors’ remuneration throughout the reporting period.
The Group CEO is the only executive member of the Board.
1 According to the revised Policy (subject to shareholder approval at 2023 AGM), where it is not possible or practicable to award the deferred bonus in shares,
awards will instead be made in cash. Any cash award that is made instead of a share award would be deferred for a period of three years, in line with the current
approach for share-based awards.
Group CEO
The table below sets out the 2022 remuneration for the Group CEO. CEO remuneration comprises the remuneration received in his
capacity as the Group CEO of Polymetal International and in his capacity as the CEO of JSC Polymetal. The Group CEO’s remuneration is
denominated in Russian Roubles and converted to Dollars for presentation purposes. The approach to exchange rates and Russian
Rouble remuneration equivalent is set out in footnote 2 to this table.
Base salary
Taxable benefits
Annual bonus³
Long-term incentive plans⁴
Pension
Total
$
2022
2021
502,967
419,472
–
–
592,693
291,054
–
1,045,265
55,777
46,707
1,151,437
1,802,498
Non‑Executive Directors fees
Details of total fees paid to Non-Executive Directors and the Board Chair during 2022 and 2021 are set out in the table below.
Non-Executive Directors do not receive performance-related pay.
Total fees, $
Name
Andrea Abt
Victor Flores
Italia Boninelli
Ian Cockerill
Ollie Oliveira
Giacomo Baizini
Tracey Kerr
Riccardo Orcel
Paul Ostling
Evgueni Konovalenko
Steven Dashevsky
Janat Berdalina
Richard Sharko
Pascale Jeannin Perez
2021
170,797
173,000
140,000
544,000
201,000
198,000
179,000
2022
28,050
28,050
25,667
97,533
36,117
197,337
29,150
334,666
231,129
232,027
216,602
188,118
19,667
24,750
Total Non-Executive Directors fees
1,688,902
1,605,797
2 The amounts are translated at the average rates of the Russian Rouble to the Dollar for 2022 and 2021, respectively.
3 50% of the bonus received in 2022 will be deferred into 118,231 shares on 16 March 2023 at $2.69 (RUB 172) per share (using the average price for the 90-day
period ending 31 December 2022). In line with the policy disclosed on page 136, deferred shares will be released in equal tranches over a period of three years in
March 2024, March 2025 and March 2026 and are not subject to further performance conditions. Where it is not possible or practicable to award the deferred
bonus in shares, awards will instead be made in cash, refer to page 133.
In 2022, further to the vesting of the PSP awards made in 2018, vesting criteria has not been met. No shares under the PSP were issued to Mr Nesis. Further details
on PSP vesting are provided on page 145.
4
142
143
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Remuneration Committee report continued
Single total figure of remuneration – Additional information (audited)
Annual bonus targets and outcomes
The targets for annual bonus measures and performance against these targets are set out below:
Measures
Link to strategy
Weight Threshold
Target
Maximum
2022 outcome
Achievement
Achieving
production budget,
Koz
Total cash costs
per ounce of gold
equivalent
produced, $/oz
Global leadership in
refractory ore processing
Global leadership in
refractory ore
processing
20%
1,497
1,663
1,746
1,712
20%
1,051
955
907
942
Completion of new
projects, including:
Meaningful organic
growth
25%
Maintaining robust
liquidity and balance
sheet
12.5% 1 point
10 points
10 points
8.7 points
12.5% 321
292
277
331
26%
23%
11%
11%
0%
On time
Within budgets
(capital
expenditure for
investment
projects, $m)
Disability
High standards of ESG
through impact assessment
20%
1% decrease
year-on-year
>10%
decrease
year-on-year
>10%
decrease
year-on-year
42% decrease year-on-year
20%
Sustainability,
including:
High standards of ESG
through impact assessment
15%
Environment
• Decarbonisation
• Reduction of
•
fresh water use
Increased share
of dry stacked
tailings
Personnel
• Retention and
gender diversity
Social partnership
in host regions
• Career
guidance for
locals (with
focus on girls)
Total achievement
before penalty
factor
Penalty factor for
fatal/severe cases
Final achievement
for the year
10%
• Decrease GHG emissions intensity per
oz GE (Scopes 1 and 2) by 10%
compared with 2019 baseline year.
• Achieve 42% reduction of fresh water
withdrawal for technological purposes
m³/Kt of processed ore compared
with 2019
• Achieve 12% dry stacked tailings of
total tailings disposed during the
reporting year
• GHG emissions intensity
per oz GE (Scopes 1
and 2) decreased by 15%
compared with 2019
baseline year, see page 62
• Fresh water withdrawal for
technological purposes
decreased by 49%
compared with 2019,
see page 58
• Share of dry-stack tailings
achieved 28% of total
tailings disposed during
the reporting year,
see pages 56
3%
• Achieve 33% women in the Talent
• Share of women in the
Pool
Talent Pool achieved 35%,
see page 53
2%
• Launching career guidance
• Career guidance
programme in all regions of operation
• Ensuring that one-third of the total
•
number of schoolchildren participating
are girls
Involving the Company’s female
employees in career guidance lectures
(development of female leadership
and role models)
programme in host
regions has been
successfully launched,
see page 79
• 43% of the total number of
schoolchildren
participating are girls
• 92 of the Company’s
female employees
participated in career
guidance lectures
100%
n/a
n/a
0 fatalities and
0 severe cases
21%
15%
4%
2%
100%
+20%
120%
Deferred Share Awards Plan (audited)
DSA deferred shares granted in 2022
50% of annual bonus for 2021 was deferred into 8,130 shares on 2 March 2022 at $18.22 (RUB 1,322) per share (using the average price for
the 90-day period ending 31 December 2021). In line with the policy disclosed on page 136, deferred shares will be released, if technically
possible and practicable, in equal tranches over a period of three years in March 2023, March 2024 and March 2025 and are not subject to
further performance conditions.
Recipient
Deferred shares
under
Date of grant
End of deferral
period
Shares
granted
Share price period
Share price, $
Face value, $
Group CEO
DSA grant 2022
2 March 2022
March 2025
8,130 Average price for the
90-day period ending
31 December 2021
18.22
148,129
DSA deferred shares vested in 2022
In accordance with the policy, part of the award of deferred shares under the DSA, which was granted in March 2019, March 2020 and
March 2021, was expected to vest in March 2022 and to be transferred to the Group CEO, totalling 10,723 shares (including an additional
1,132 share awards for dividend equivalents). Due to inability to issue shares to the Group CEO these shares were deferred until it
becomes possible to issue the shares.
DSA deferred shares grant proposed for 2023
In addition, further to the bonus approval for the year ended 31 December 2022, the Group CEO will receive a deferred bonus award
under the terms of the DSA (50% of the annual bonus earned is paid in cash and the remaining 50% is compulsorily deferred into shares)
in March 2023. Under the normal circumstances, share awards would vest annually over the next three years in equal instalments (in
March 2024, 2025 and 2026), subject to continued service in the Group. Under the terms of the DSA, dividend equivalents will be
received on vested shares reflecting the value of the dividends which have been paid during the period from the grant date to the vesting
date. Dividend equivalents will also be paid as shares.
Summary of DSA deferred shares outstanding as of 15 March 2023
The current number of outstanding deferred shares under the DSA (following 8,130 deferred shares granted in 2022) is represented
as follows:
Name
Vitaly Nesis
Number of
shares
vested and to
be allotted in
2022, but
deferred2
4,123
2,409
3,059
–
Number of
deferred
shares granted
12,369
7,228
9,177
8,130
Additional
share awards
for dividend
equivalents
Total number
of shares
vested under
DSA grant
Outstanding
shares under
DSA grant
687
248
196
–
8,246
2,409
–
–
4,810
5,067
9,373
8,130
36,904
9,591
1,132
10,655
27,381
Position
Year of grant
Group CEO
2019
2020
2021
2022
Total
Performance Share Plan (audited)
PSP award made in 2022
Due to external conditions, no conditional awards were made to Mr Nesis in 2022.
PSP award vested in 2022
Due to external conditions, no conditional awards were vested to Mr Nesis in 2022.
Summary of PSP share options outstanding as of 15 March 2023
Name
Vitaly Nesis
Position
Year of grant/
Year of vesting
Group CEO
2018/2022
2019/2023
2020/2024
2021/2025
2022/2026
Number of
PSP share
awards
granted
55,570
60,740
34,983
20,683
–3
171,976
PSP awards
release in
2022
55,570
–
–
–
–
–
Number of
PSP shares
vested
(see above)
Outstanding
shares under
PSP grant
–
–
–
–
–
–
–
60,740
34,983
20,683
–
116,406
For the Group CEO, a multiplier of 1.2x is applied to the whole bonus provided that there are no fatalities or severe cases during the
period. This resulted in the Group CEO receiving a bonus of 98% of maximum opportunity for the year (which constitutes 120% of his
base salary or $592,693).
Total number of share options
outstanding under the PSP
1 Lost time injury frequency rate.
144
2 Due to inability to issue shares to the Group CEO, these shares were deferred until this becomes possible.
3 No PSP share awards were granted to the Group CEO due to the current issues with the Policy as outlined above.
145
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Remuneration Committee report continued
Other scheme interests awarded during the financial year
No other share awards were made to the Group CEO in 2022.
Total pension entitlements (audited)
Save for the Group’s defined contributions to the mandatory pension fund of the Russian Federation during the financial year ended
31 December 2022, no amounts were set aside or accrued by the Group to provide pension, retirement or other benefits to the Directors
and senior management. This is in line with the rest of the Russian-based workforce.
Loss of office payments or payments to past Directors (audited)
No loss-of-office payments or payments to past Directors were made in the year under review.
Directors’ shareholdings (audited)
The Group CEO is required to retain a shareholding equal to five times his base salary, i.e. 933,901 shares. As of 15 March 2023,
the Group CEO achieved his minimum shareholding requirement.
For the purposes of determining whether the requirements have been met, the share price is measured at the end of each financial year.
Shares are valued for these purposes at the average price for the 90-day period ending 31 December 2022 of $2.69 per share translated
at the closing exchange rate of the Dollar to the Russian Rouble as at 31 December 2022.
Shares that count towards shareholding requirements include unrestricted shares. The table below sets out the number of shares held,
or potentially held, by Directors. For details of outstanding conditional share awards held by the Group CEO at 31 December 2022,
refer to page 145.
Shares held
Options held
Shareholding
requirement
(% of salary)
Unvested
(subject to
performance
conditions)
Unvested
(not subject to
performance
conditions)
Owned
outright
Vested but
unexercised
Exercised in
year
Current
shareholding
(% of salary) Guideline met
500%
3,387,400
33,466
24,300
2,421
1,500
1,460
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,814%
–
–
–
–
–
yes
N/A
N/A
N/A
N/A
N/A
Director
Vitaly Nesis
Ian Cockerill¹
Ollie Oliveira²
Konstantin Yanakov
Andrea Abt
Italia Boninelli³
Ten-year Group CEO remuneration
Group CEO total
remuneration ($)
Annual bonus –
% of maximum
LTIP award – %
of maximum
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
1,151,437
1,802,498
1,765,488
920,868 1,024,523 726,928
496,411
511,665
907,790
1,081,572
1,037,413
98%
58%
92%
41%
49%
44%
40%
33%
90%
88%
90%
0%
87%
76%
27%
33%
–
–
–
–
–
–
Percentage change in Group CEO’s remuneration
The table below shows the percentage change in the Group CEO total remuneration from 2021 to 2022, compared to the average
change for all Group employees. To ensure the comparability of this figure, and to minimise distortions, the all-employee average
remuneration figure is based on full-time permanent employees.
Group CEO
Average employee
Base salary
Annual bonus
$
20%
22%
Local
currency
11%
14%
$
104%
40%
Local
currency
Taxable
benefits
89%
30%
n/a
n/a
Group CEO to employee pay ratio
The UK regulations on CEO pay ratio disclosure do not apply to Polymetal as the Group has fewer than 250 UK employees, but we
support the move to transparency of remuneration levels across the wider workforce and we have therefore chosen to voluntarily publish
our median CEO pay ratio. The use of a pay ratio, and how it moves over time, is intended to help the stakeholders to make a balanced
evaluation of how pay arrangements are delivered across the whole employee population.
A significant proportion of the Group CEO’s remuneration package is performance-related and dependent on the achievement of
financial and non-financial KPIs, as well as being dependent on LTIP outcomes based on Polymetal TSR performance. Therefore, the
ratio could range significantly from year to year. The Committee will continue to take into account factors such as internal relativities and
ratios when considering executive pay.
The table provides the pay ratio of the Group CEO’s total remuneration to the equivalent pay for the lower quartile, median and upper
quartile of Group employees (calculated on a full-time basis). The Group CEO remuneration is the total single figure remuneration for 2022
contained on page 143.
Year
2022
2021
Remuneration data, $
Group CEO single total figure of remuneration
Average Group employee remuneration
Group CEO pay to Group average employee ratio
Median Group employee remuneration
Group CEO pay to Group median employee ratio
Method
25th percentile
Median
75th percentile
Option A
Option A
67
123
43
75
29
49
2022
2021
1,151,437
1,802,498
36,377
32,495
32:1
55:1
26,853
24,095
43:1
75:1
Advisors
PricewaterhouseCoopers LLP (PwC) provided Polymetal with information and support in relation to general remuneration matters and
implementation of the Company’s remuneration policy. PwC is a member of the Remuneration Consultants’ Group (RCG) and a signatory
of the RCG Voluntary Code of Practice, and incorporates the principles of the Voluntary Code of Practice into its engagement. No other
services were provided by PwC during 2022 other than external assurance services for the Company’s Annual Report and tax advisory.
Fees paid to PwC in relation to remuneration services provided to the Committee in 2022 totalled $13,031 (2021: $16,752), with fees
quoted in advance and based on the level of complexity of the work undertaken.
PwC was selected in 2013, after submitting a proposal to management, to carry out benchmarking as part of a competitive process,
the results of which were presented to the Remuneration Committee for approval.
During its work in 2022, the Committee was aided by the Group CEO, SID and senior finance and human resources executives of the
Company.
Statement of consideration of shareholders’ views
The Committee regularly consults with the Company’s major shareholders, and sought their feedback on the amendments to the revised
Directors’ Remuneration Policy. The shareholder consultation period started in January 2023 on the changes to the implementation of the
Remuneration Policy for 2023 (annual bonus metrics) and proposed amendment to the Remuneration Policy (addition of ESG metrics to
the LTIP). The Company Secretary responded to several e-mails to clarify details for shareholders. Overall, their proposals received
positive feedback and support.
Shareholder support for the Remuneration Policy and 2021 Directors’ Remuneration Committee Report
The Company received shareholder approval of its Remuneration Policy at the AGM on 27 April 2020 to cover a period of three years.
The policy applied from the date of approval. The Directors’ annual Remuneration Committee Report was put to an advisory shareholder
vote at the 2022 AGM of the Company. The table below shows full details of the voting outcomes.
Votes for
Votes against
Votes withheld
Remuneration Policy (at the 2020 AGM)
352,776,157 (99.90%)
350,983 (0.10%)
2021 Remuneration Committee report (at the 2022 AGM)
133,449,786 (89.55%)
15,572,678 (10.45%)
1,519,513
236,706
1 As at resignation date.
2 Shares are held by a person closely associated with Mr Oliveira, as at resignation date.
3 Shares are held by a person closely associated with Ms Boninelli, as at resignation date.
146
147
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Non-Executive Directors
In 2023, we propose reducing the Chairman’s fee to $350,000, from the current level of $500,000. The current fee level was set in 2020,
in line with the median of the FTSE 100 companies at that time. During 2022, in considering our remuneration arrangements for the
upcoming year, it was decided that this fee be reduced to $350,000. Whilst the scope and demands of the role have not changed, the
reduced fee more appropriately reflects the current market capitalisation of the business.
Fees, $
Independent Board Chair fee
Independent Non-Executive Director basic fee
Additional fees:
Senior Independent Director
Audit and Risk Committee Chair
Remuneration Committee Chair
Safety and Sustainability Committee Chair
Nomination Committee Chair
Committee membership fee (not payable to the Committee Chair)
Board and Committee meeting attendance fee
Approval
This report was approved by the Board of Directors and signed on its behalf by
Paul Ostling
Chair, Remuneration Committee
2023
2022
350,000
127,000
500,000
127,000
25,000
38,000
19,000
19,000
19,000
13,000
4,000
25,000
38,000
19,000
19,000
19,000
13,000
4,000
Remuneration Committee report continued
Implementation of the Remuneration
Policy in 2023
In 2023, subject to shareholder approval of the Directors’ Remuneration Policy at the 2023 AGM, the Committee intends to implement the
Remuneration Policy for Executive and Non-Executive Directors as follows:
Group CEO
Base salary
In accordance with the policy, the Group CEO’s salary will be increased (in Roubles) by 6% in line with the rest of the workforce. Base
salary for the Group CEO for 2023 and 2022 is set out below:
Group CEO
2023 salary
2022 salary
RUB 35,632,800 RUB 33,137,400
$506,597
$441,832
Change¹
+7%
+15%
Base salary for 2023 is translated at the exchange rate of 70.34 Roubles to the Dollar as at 31 December 2022.
Pension and benefits
No pension or benefits plans are in place for 2023, except for the defined pension contributions to the mandatory pension fund of the
Russian Federation.
Annual bonus
The prospective targets for annual bonus measures are considered commercially sensitive by the Board, particularly in the gold mining
industry, because of the sensitivity of information that their disclosure may provide to the Company’s competitors, given that these are
largely based outside the UK and hence are not subject to the same reporting requirements as the Company. Targets and outcomes will
be disclosed retrospectively at the end of the performance year.
Long‑Term Incentive Plan (Deferred Share Awards Plan and Performance Share Plan)
Deferred Share Awards Plan
The Committee intends to defer annual bonus awards earned for the 2022 performance period in line with the policy disclosed on page 136.
Performance Share Plan
As disclosed on page 133, it is currently impartible to make an award under the PSP due to the external conditions. It is the Group’s
intention to return to a normal operation of PSP as soon as the technically possible.
Starting from 2022, a GHG emissions intensity metric with a weighting of 20% is added to PSP vesting conditions. The remaining 80% of
the LTIP will be measured based on relative TSR performance against the FTSE Gold Mining Index, in line with the current ranking
approach of peers.
Vesting conditions starting from 2022:
Metric
Weight
Criteria
Pay-out
Absolute and relative TSR
80%
GHG emissions intensity metric
Total vesting achievement
20%
100%
Relative TSR measured over four years against the
constituents of the FTSE Gold Mines Index and also on
the Company’s absolute TSR²
Below median performance
Median performance
Upper quintile performance and above
GHG intensity reduction vs the trajectory set out in the
Company’s Climate Change Report in April 2021³
2% below
In line
2% above
0%
20%
100%
0%
50%
100%
1 The change is due to the salary increase from April 2022, the annual base salary amount has been pro-rated accordingly. Amount in Dollar has been additionally
impacted by Rouble/Dollar exchange rate.
2 Straight-line vesting will occur between median and upper quintile performance. No award will vest for performance below median, or if the Company’s absolute
TSR performance is negative, regardless of relative performance.
3 GHG emissions intensity metric will be subject to an additional underpin of zero incidents at tailing storage facilities and zero conflicts with local communities during
the four-year performance period. The Remuneration Committee has discretion to reduce the vesting of the ESG metric to nil, depending on the magnitude
of the incident.
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While recruitment to the
Board of Directors has been
a key focus this year, promoting
diversity across the Group remains
central to our remit.”
Evgueni Konovalenko
Chair, Nomination Committee
Nomination Committee
Evgueni
Konovalenko
Janat Berdalina
Paul Ostling
Pascale
Jeannin Perez
Meeting attendance
Evgueni Konovalenko1
1/1
Janat Berdalina2
1/1
Paul Ostling2
1/1
Pascale Jeannin Perez3 1/1
Riccardo Orcel4
Giacomo Baizini5
Ian Cockerill6
Ollie Oliveira6
0/0
0/1
1/1
1/1
1 From 22 March 2022.
2 From 9 November 2022.
3 From 1 December 2022.
4 From 22 March until 28 September 2022.
5 Until 28 September 2022.
6 Until 7 March 2022.
The Nomination Committee comprises four Independent
Non-Executive Directors, who have no personal financial
interest in the matters to be decided, other than as
a shareholder (where applicable).
The Board considers that the composition and work of the
Nomination Committee complies with the requirements of the
UK Code.
` For further detail on biographies and Board experience:
pages 112‑113.
Board succession
In 2022, because of the Russia-Ukraine conflict, the majority of the
Independent Non-Executive Directors (INEDs) stepped down from
the Polymetal Board of Directors, resulting in the immediate need
to recruit new Board members. The search was successful with
five new Directors appointed in March; in September, two Directors
stepped down; two new appointments were made in December.
As at 31 December 2022, this resulted in an eight-person Board
comprising six Independent Non-Executive Directors, one
Executive Director and one Non-Executive Director. The search for
a new Chair of the Board is ongoing and will continue into 2023.
While we are still evaluating the options available that will enable us
to modify the Group’s asset-holding structure and maximise
shareholder value, the Board believes that the appointment of a
new Chair should be postponed. Once the preferred option has
been finalised, we can then turn our attention to such an
appointment as we look to the future and the strategic
development of the businesses Kazakhstan and in Russia.
Taking into consideration the major changes to the Board, an
enhanced induction programme was introduced, with further
details provided on page 122. The main focus of the programme
has been to bring Directors up to speed as soon as practicably
possible in order to enable them to provide the Company with
strong leadership during this turbulent year.
Despite the significant changeover in Directors, the Board
members continue to bring to the table a combination of the skills
required to cover all of Polymetal’s strategic objectives, including
business strategy, finance, mining and sustainability, investment
banking and governance.
The Committee continues to review the non-executive needs of the
Board to ensure a balance of skills, diversity and experience as
well as compliance with various regulatory requirements.
Board structure
review and
evaluation
Key responsibilities
Focus during 2022
• Leads a formal, rigorous and transparent
• Reviewed requirements of Independent Non-Executive
process for Board appointments
Director succession
• Regularly reviews the Board structure, size
and composition, and makes
recommendations to the Board about
any changes
• Conducted interviews with Board candidates
• Reviewed the time required from Non-Executive Directors
• Continued to review the skills and experience of the Board,
term limits of Directors, concept of independence
• Makes recommendations to the Board
about the Directors’ re-appointment at the
end of their term of office
• Reviewed the structure, size and composition of all Committees,
including skills, knowledge, experience and diversity and made
recommendations to the Board about changes
• Reviews the results of the Board
• Made recommendations to the Board about the re-election
performance evaluation that relate to the
composition of the Board and individual
Directors
of Directors at the AGM
• Supervised the tailored induction process
• Led review of the internal evaluation of the Board and
all Committees
Leadership and
conflicts of
interest
• Keeps both executive and non-executive
leadership needs of the Group under
review
• Kept the executive leadership needs of the Group under
review in order to ensure the continued ability of the Group
to compete effectively in the marketplace
Diversity and
governance
• Requires Directors and proposed
appointees to the Board to disclose any
conflict of interest or significant
commitments, with an indication of the
time involved
• Requires Directors to apply for approval
before undertaking additional external
appointments
• Leads on diversity and provides a
statement of the Board’s policy on
diversity, including gender and ethnicity,
any measurable objectives that it has set
for implementing the policy and progress
on achieving objectives
• Focuses on the Company’s approach to
succession and planning, and how both
support developing a diverse pipeline
• Reviews the Company’s gender balance
within the Group leadership team
• Continued succession discussions at executive level,
including support in developing a diverse pipeline
• Reviewed the report on the development of participants in
the Young Leaders Programme
• Oversaw Talent Pool development, including the Research and
Development Conference
• Analysed the HR system, including attraction, development
and retention
• Reviewed HR reports, including headcount, costs, diversity,
professional development, employment culture, approach to the
learning process and training benchmarking information
• Discussed diversity highlights, including the policy on diversity
and inclusion, how it had been implemented and progress on
achieving objectives
• Performed internal evaluation of the Committee
• Reviewed the Committee’s terms of reference
• Reviewed the work plan for 2023
Executive succession
The Nomination Committee continues to pay close attention to
the matter of executive succession. As part of the induction
process, the Committee had a session on the current status of the
executive management. While there are no current concerns about
the need for immediate executive succession, contingency
planning is essential. The Committee reviews plans annually to
ensure uninterrupted business operations. This includes
development programmes for the Company’s most
senior managers, which provide both exceptional opportunities for
nominated employees to broaden the scope of their work and
future proofing for the Company.
In 2023, the Committee will continue monitoring the executive
succession programmes with a particular focus on replenishing the
pipeline. Mining is not excluded from the severe staff shortages
experienced across all industries globally. The Nomination
Committee continues to monitor the human capital development
programmes, starting from grassroots initiatives in schools,
continuing through apprenticeship programmes, professional
colleges and close co-operation with universities and paying
attention to attracting and retaining young professionals. The
Board believes that a successful executive succession programme
starts with the ability to develop professionals within the Company.
The Young Leaders Programme
Our Young Leaders Programme is now well established and
ongoing. This programme helps to evaluate the Talent Pool and
tailors training for the future senior management needs of the
Group. Within the programme, regular meetings take place
between Young Leaders and Board members, which enable the
Board to challenge and debate with the Young Leaders, who in
turn have an opportunity to ask questions and interact directly
with the Board. Training is provided on both general governance
topics and general presentation skills. 35% of those taking part in
the Young Leaders are female.
The Board monitors progress of the previous years’ cohorts.
Graduates of the programme participated in training programmes,
received promotions and were rotated to a different area of
operation to expand their experience.
In 2022, the Board facilitated the first mentoring programme with
Young Leaders to encourage their professional development.
Mentoring is provided by the Group’s top management.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Nomination Committee report continued
Going concern and longer‑term viability
Gender pay
The Nomination and Remuneration Committees undertook an
in-depth review of the employee gender pay gap and continue to
review it annually. They concluded that, while there is no gender
pay gap for the same positions, the gender imbalance within the
mining industry, in general, impacts the gender pay ratio in
Polymetal: in 2022, this was 1.23 (2021: 1.22). The Board
determined that in order to narrow the gender pay gap, Polymetal
needs to continue improving its talent pipeline.
Diversity in the wider workforce
Following the Board discussions, the Group HR department
identified the following priority areas for 2023:
•
Immersive programmes for HR and heads of
structural subdivisions
• Targeted/themed courses for female employees and students
of flagship universities
• Developing a pool of female representatives, role models
Inviting female change agents to participate in external
•
stakeholder engagement
• Promoting a female image in the industry: communication,
•
engagement, leadership, recognition
Implementing tailored programmes for women at different levels
within the Company.
The Group is focused on attracting, retaining and promoting
women in professions traditionally dominated by men: production,
processing, metallurgy, geology, construction and procurement.
It is also essential to create a pipeline of candidates deemed
capable of achieving senior management positions in such roles as
mine surveyor/geologist and specialists in production or mine
planning. As part of this, in 2021, we introduced a new Female
Chief Engineer programme and the first appointment of a Female
Chief Engineer is expected in 2024. Mentoring options with the
Board are being considered. Following the success of the
inaugural Female Senior Engineer Programme, the Company
preparations for the second group of females to start the training is
in hand. Further information is available on pages 53-54.
Looking to the future, it is vital that women are also represented at
a more junior level and we have made significant improvements in
the gender balance of our Talent Pool; more than tripling the share
of women over the past five years from 10% in 2017 to 35% in
2022. At least one-third of the participants in our Young Leaders
Programme are now women. The Board also closely monitors
senior management succession programmes to ensure that there
is a balanced Talent Pool within 3-7 years skills range from the top
roles.
We believe that increasing female representation will benefit the
Group and we actively endorse female participation in Polymetal’s
management. We acknowledge that reducing the gender
imbalance, and with it the gender pay gap, is a long-term goal and
we will continue to focus on inclusivity and diversity in order to
enable our employees to fulfil their potential.
Further information on workforce diversity is available on page 54.
Diversity
Board diversity
We continue to focus on diversity. Ensuring we have sufficient
gender, cultural, ethnic and experiential diversity is critical if we are
to avoid ‘Group think’. We have a 25% female representation on our
Board and our ethnic spread is incredibly diverse. Our Board
comprises people with a wide range of experience and skills from
very different backgrounds. In 2022, we appointed Janat Berdalina,
a Kazakh, who identifies herself with and has evident heritage from
Central Asia. The level of female representation is below that
recommended by the FTSE Women Leaders Review; however, the
Nomination Committee is committed to adding at least one
additional female member to the Polymetal Board of Directors.
Board Diversity Policy – objectives and progress
against targets
Polymetal’s Diversity and Inclusion Policy includes a section on
Board diversity. The key objective of this is to ensure a fair and
unbiased process when recruiting new Board members. Board
diversity is addressed as part of the Board succession programme
as detailed below.
Objective
Progress
Consider candidates
with little or no previous
Board experience in public
companies for appointment
as Non-Executive Directors.
During 2022, two female
Directors were appointed: Janat
Berdalina and Pascale Jeannin
Perez; neither had any previous
significant Board appointments.
Ensure that females form at
least one-third of the Board.
Ensure that at least one
Director is from an ethnic
minority background.
Work with recruitment
consultancies that have
signed up to the Voluntary
Code of Conduct for Executive
Search Firms.
Ensure that a diverse
executive pipeline is
developed within the Group.
25% of the Board members are
female. Succession process is
ongoing.
One Director is from an ethnic
minority background.
There is an ongoing review of
the search firm currently
engaged with the expectation
that consultants should be
signatories to the Voluntary
Code of Conduct on gender
diversity and best practice.
At Nomination Committee
meetings, the Directors
consider diversity and inclusion
within the Group and there is an
enhanced focus on diversity
within talent development
programmes.
Polymetal is committed to the principles of non-discrimination,
inclusion and diversity for both the Board and its employees. All have
equal opportunities regardless of gender, age, race, nationality,
language, origin, wealth, residence, religion and other beliefs, social
or other personal circumstances. The Company’s Code of Conduct
and Diversity and Inclusion Policy outline the principles and
approach to diversity and prohibits any discrimination. Regular
compliance monitoring is undertaken by the HR department to
ensure that our internal procedures are implemented throughout all
Group companies. No instances of discrimination were reported in
2022. The Group is in full compliance with all local legislation in the
countries where it operates that prohibit any discrimination in
payment and promotion.
As of the date of this report, the Executive Committee of the
Company comprised 35% females.
Going concern
In assessing its going concern status, the Group has taken account
of its principal risks and uncertainties, financial position (including
significant inflationary and logistical pressures), sources of cash
generation, anticipated future trading performance, its borrowings
and other available credit facilities from non-sanctioned banks, and
its forecast compliance with covenants on those borrowings, and its
capital expenditure commitments and plans. In the going concern
assessment, the Group also considered the restrictions for moving
cash between jurisdictions and assessed the ability to meet liabilities
within each of the individual jurisdictions, whilst maintaining
compliance with sanctions and counter sanctions.
At the reporting date, the Group holds $350 million of undrawn
credit facilities with non-sanctioned banks and $633 million of
cash, which is considered to be adequate to meet the Group’s
financial obligations as they fall due over the next 12 months
($514 million of short-term borrowings is due for repayment in the
next 12 months). All of the 2023 repayments are well covered by
available cash balances. No borrowing covenant requirements are
forecast to be breached.
As referred to in Note 33 on page 213, at the reporting date the cash
balances include $118 million of cash and cash equivalents held in
Russia, that are subject to certain legal restrictions and are therefore
not available for general use of the Company (but fully available for
use by its Russian subsidiaries). The Group determined that these
restrictions would not have any material effect on the Group’s
liquidity position and its ability to finance its obligations.
The Group has taken legal advice on the implications of the
sanctions to date as part of this assessment. None of the Group’s
entities, nor its significant shareholders are currently subject to any
specific sanctions.
Longer-term viability
Based on key drivers and measures of success used within the
business, the Board has assessed the prospects of the Group,
taking account of the potential impact of the principal risks to the
Group’s business model and ability to deliver its strategy, including
solvency and liquidity risks during the lookout period.
Despite the impact of the Russia-Ukraine conflict leading to
increased geopolitical tensions and sanctions imposed by the
global community on certain Russian companies and individuals,
Polymetal’s strategy for value creation remains unchanged.
Assessment of prospects
Management has considered the Group’s long-term prospects
aligned to the sustainability of the business model (detailed on
pages 16-17) and covering a period of the average of Polymetal’s
life-of-mine of 16 years, primarily with reference to the results of the
Board-approved strategy (detailed on pages 22-23). Management
has also considered the Group’s current financial position,
including the level of cash as at 31 December 2022, and the
Group’s historical ability to generate free cash flow, as well as the
contingency planning in place to restructure the debt portfolio and
minimise exposure to liquidity risk.
The overall macroeconomic situation is expected to remain
supportive for gold and silver as commodities, due to their role as
safe haven assets against the backdrop of political and economic
uncertainties. Consideration of Russian focused sanctions and the
associated risks is set out in a separate section below.
The strategic planning process is undertaken annually and
includes analyses of Polymetal’s current position, growth projects
pipeline, cash flow, climate change risks and opportunities, capital
allocation principles and returns to shareholders. Accordingly, and
considering global prospects for gold and gold price, history of
exploration success and ability to buy mineral properties at
attractive terms, the Board believes the prospects for the Group in
the long term remain good.
Viability lookout period
The period over which the Board considers it possible to form a
reasonable expectation as to the Group’s viability, based on the
stress testing and scenario planning process employed by the
Group, is the three-year period to December 2025. This is within
the Group’s routine medium-term forecasting covering the next
three years, performed on the annual basis, and covering strategic
and investment planning. The Board is confident the Group’s
scenario planning is focused primarily on plausible changes in
external factors, providing a reasonable degree of confidence
whilst still providing an appropriate longer-term outlook.
Principal risks
The Board has continued to place appropriate emphasis on risk
management in 2022, taking into account material macroeconomic
conditions and geopolitical challenges, including sanctions as a
result of the Russia-Ukraine conflict, and considering the Group’s
resilience to changes in the external business environment.
The detailed assessment of the principal risks and uncertainties
facing the Group is set out on pages 98-110 of this Integrated
Annual Report.
The corporate planning process is underpinned by detailed
life-of-mine plans and overlaid with scenario stress testing.
The stress tests are designed to evaluate the resilience of the
Group to the potential impact of principal risks and the availability
and effectiveness of the mitigating actions that could be taken to
avoid or reduce the impact of the underlying risks. In considering
the likely effectiveness of such actions, the conclusions of the
Board’s regular monitoring and review of risk and internal control
systems, as discussed on pages 96-97, are taken into account.
Key assumptions
The key assumptions underpinning the Board’s assessment of
longer-term viability include gold and silver prices, production and
sales volumes, foreign exchange rates and the ability to roll forward
borrowing facilities as they fall due in the ordinary course of
business. These assumptions are consistent with those used for
business planning purposes, and also for the assessment of
impairment indicators and the recoverability of ore stockpiles and
heap leach work in progress.
Assessment of viability
In order to assess the resilience of the Group to threats to its
viability posed by principal risks in severe but plausible scenarios,
the model was subjected to stress analysis together with an
assessment of potential mitigating actions. The most significant
risks in terms of their potential financial impact were modelled
together as a single stress scenario to understand their combined
financial impact.
Scenario
Macroeconomic
stress
Principal
risks factored
Assumptions
• Market
• Currency
• Cash and liquidity
• Supply chain
• Political
• Construction and
development
• Conservative gold and
silver price assumptions
5% below than budgeted
• 10% Rouble and Tenge
strengthening against
Dollar
• Capital expenditure
overrun for development
projects: 10% for
Amursk POX-2 and 20%
for Veduga
The resulting impact on key metrics was considered with particular
focus on solvency measures including debt headroom and
covenants. Under the macroeconomic stress scenario, there are
no financial covenant breaches forecast. Under stress scenario
assumptions mentioned above, only limited mitigating actions are
required to maintain liquidity and covenant compliance, including
the refinancing of existing facilities as they mature.
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Directors’ report
Liquidity and solvency
The Group is considered to be viable if its financial covenants are
maintained within prescribed limits, and if there is available free
cash flow and debt facilities to fund operations. The sources of
funding available to the Group are set out in Note 24 to the
consolidated financial statements. Our base case projections
demonstrate that the Group should be able to operate within the
currently available debt facilities and comply with all related
covenants during the lookout period. The undrawn facilities of $0.5
billion as at 31 December 2022 have an average period of maturity
of three years. Under reasonably possible downside assumptions
mentioned above, only limited mitigating actions are required to
maintain liquidity and covenant compliance, including the
refinancing of existing facilities as they mature.
Taking into account the significant level of uncertainty regarding
external factors, the models do not assume any dividend payments
for both base and stress cases.
Expectation
The Board confirms that taking into account the Group’s current
position and based upon the robust assessment of the principal
risks facing the Group, together with available mitigating actions,
the Board has a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over
the period to 31 December 2025.
Sanctions
Consistent with the approach taken by the Group to assess going
concern described on page 153, the Directors also assessed the
resilience of the Group’s longer-term viability in light of the sanctions
imposed on certain Russian institutions and individuals by the global
community in 2022, along with the possibility of further sanctions
and Russian counter-sanctions that could potentially impact the
Group in the future.
This included taking external legal advice on the implications of the
sanctions to date as part of this assessment. It has been assumed
that the cash flows generated will be available for use in the
business.
As such these do not represent the Group’s ‘best estimate’ forecast,
but were considered in the Group’s assessment of going concern,
reflecting the current evolving circumstances and the most
significant and plausible potential risks identified at the date of
approving the Integrated Annual Report and Accounts.
The results of the macroeconomic stress scenario indicated that the
Group would be able to withstand the adverse impact of the
principal sanctions related risks occurring over the longer-term
horizon of the three-year period.
Management also performed ‘break-even’ sensitivity analysis for the
viability period. The Group’s viability is not sensitive to available
borrowings, assuming revenue and operating cash inflows are
realised as forecast per the base case and no dividends are paid.
In assessing the prospects of the Group, the Directors noted that
such an assessment in light of existing and potential new sanctions
in the future introduces further uncertainty that increases over time
and accordingly that future outcomes cannot be guaranteed or
predicted with certainty.
Nevertheless the Group considers that the gold and silver metal that
it continues to mine will remain sought after and valuable global
commodities, for which there will be continued high demand,
particularly during times of macroeconomic and political volatility
and uncertainty. Therefore, while there is heightened uncertainty in
the viability lookout period in particular in respect of possible as yet
unknown sanctions, there is an expectation that the Group will
continue to be able to access markets for its products.
The Directors submit the Integrated Annual Report of Polymetal International plc together
with the audited financial statements of Polymetal International plc for the year ended
31 December 2022.
Corporate governance
Refer to pages 116–123 for a description of the Group’s corporate
governance structure and policies.
Financial and business reporting
The Board believes that the disclosures set out in the Strategic
Report on pages 04–43 of this Integrated Annual Report provide
the information necessary for shareholders to assess the Group’s
performance, business model and strategy.
Environmental reporting
Information on the annual quantity of emissions from activities for
which the Company is responsible as well as a ratio which
expresses Polymetal’s annual emissions in relation to a quantifiable
factor associated with the Company’s activities (GHG emissions
intensity (Scope 1+2), t of CO₂e per Kt of ore processed) is available
in the Sustainability section on pages 44–83 of this Integrated
Annual Report. The Board believes that due to the importance of
these metrics being put into context, this is the most appropriate
section for disclosure.
Auditors
Each of the persons who is a Director at the date of approval of
this Integrated Annual Report confirms that:
• So far as the Director is aware, there is no relevant audit
information of which the Group’s auditor is unaware
• The Director has taken all steps that they ought to have taken
as a Director in order to make himself or herself aware of any
relevant audit information and to establish that the Group’s
auditor is aware of that information.
MHA MacIntyre Hudson (an independent member of Baker Tilly
International Limited) as Group auditor and AO Business Solutions
and Technologies as component auditor have audited financial
statements. The Audit and Risk Committee reviews both the level
of the audit fee and the level and nature of non-audit fees as part of
its review of the adequacy and objectivity of the audit process.
Directors
The Directors, their status and Board Committee memberships are
set out on pages 112-113, 121 of the Report.
Re-election policies
In accordance with the UK Code, all Directors are subject to annual
re-election. Full terms and conditions of the appointment of
non-executive Directors are available for inspection at the
Company’s registered office.
The Directors’ biographical details are set out on pages 112–113.
Following their performance evaluations, the Board and the SINED
consider that each of the Directors standing for election or re-
election will continue to be an effective contributor to the Group’s
success and demonstrates commitment to their role.
Appointment and replacement of Directors
The Board may appoint a person who is willing to act as a Director,
either to fill a vacancy or as an additional Director and, in either
case, whether or not for a fixed term. Irrespective of the terms of
his or her appointment, a Director so appointed shall hold office
only until the next AGM. If not re-appointed at such AGM, they
shall vacate office at its conclusion.
The Company may, by ordinary resolution, remove any Director
from office (notwithstanding any provision of the Company’s
Articles or of any agreement between the Company and such
Director, but without prejudice to any claim that they may have for
damages for breach of any such agreement). No special notice
needs to be given of any resolution to remove a Director and no
Director proposed to be removed has any special right to protest
against his or her removal. The Company may, by ordinary
resolution, appoint another person in place of a Director removed
from office.
Directors’ interests
Directors’ interests are disclosed in annual declarations and the
Company Secretary is notified promptly of any changes to those
interests. Before each Board meeting, independent non-executive
Directors reconfirm their independence and all Directors disclose
whether they hold any interests in any matters to be reviewed at
the Board meeting. Information on Directors’ interests in shares of
the Company is set out in the Remuneration Report on page 146.
Directors’ indemnities
To the extent permitted by the Companies (Jersey) Law 1991, the
Company has indemnified every Director and other officer of the
Company (other than any person (whether an officer or not)
engaged by the Company as auditor) out of the assets of the
Company against any liability incurred by them for negligence,
default, breach of duty, breach of trust or otherwise in relation to
the affairs of the Company. This provision does not affect any
indemnity to which a Director or officer is otherwise entitled.
Board and Committee terms of reference
The schedule of matters reserved to the Board and terms of
reference for all Board Committees can be found in the Corporate
Governance section on the Company’s website. Terms of
reference are reviewed at least annually.
Business ethics and anti-bribery policies
and procedures
Refer to pages 81 for a description of the Group’s business ethics
and anti-bribery policies and procedures.
Political donations
The Company may not make a political donation to a political party
or other political organisation, or to an independent election
candidate, or incur any political expenditure, unless such donation
or expenditure is authorised by an ordinary resolution of
shareholders passed before the donation is made or the
expenditure incurred. No such donations were made in 2022
(2021: none).
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Directors’ report continued
Capital structure
The structure of the Company’s share capital is detailed in Note 30
to the financial statements. There are no specific restrictions on the
size of a holding or on the transfer of shares, which are both
regulated by the Articles of the Company and applicable
legislation. The Directors are not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of shares or on voting rights.
The Articles of the Company can be altered by a special resolution
of the Company. A resolution is a special resolution when it is
passed by three-quarters of the members who (being entitled to
do so) vote in person, or by proxy, at a General Meeting of the
Company. Pursuant to the Company’s Articles, the Directors have
the power to allot Equity Securities (as defined in the Articles).
There are a number of agreements that take effect, alter or
terminate upon a change of control of the Company, such as
commercial contracts, bank loan agreements and employees’
share plans. None of these is considered to be significant in terms
of their likely impact on the business of the Group as a whole.
Furthermore, the Directors are not aware of any agreements
between the Company and its Directors or employees that provide
for compensation for loss of office or employment that occurs
because of a takeover bid. Substantial shareholdings in the
Company are disclosed on page 264.
Details of employee option schemes are set out in the
Remuneration Report on page 141. There were no acquisitions of
the Company’s own shares in 2022.
At the AGM of the Company held in 2022, the power to allot Equity
Securities (as defined in the Articles) was renewed up to an
aggregate number of 157,875,413 ordinary shares, provided that
the Directors’ power in respect of such an amount may only be
used in connection with a pre-emptive issue (as defined in the
Articles).
The Directors are further empowered pursuant to Article 10.4 of
the Company’s Articles to allot Equity Securities for cash as if
Article 11 of the Articles (Pre-emptive rights) did not apply and for
the purposes of paragraph (b) of Article 10.4 of the Articles, the
Non Pre-emptive Shares (as defined in the Articles) are an
aggregate number of up to 23,681,312 ordinary shares.
The Directors are empowered to allot an additional 23,681,312
Equity Securities for cash as if Article 11 of the Articles (Pre-
emptive rights) did not apply and for the purposes of paragraph (b)
of Article 10.4 of the Articles. This additional authority can be used
only for the purposes of financing (or refinancing, if the authority is
to be used within six months after the original transaction) a
transaction that the Directors of the Company determine to be an
acquisition or other capital investment of a kind contemplated by
the Statement of Principles on Disapplying Pre-Emption Rights
most recently published by the Pre-emption Group.
The authorities above will, unless previously revoked or varied,
expire at the conclusion of the Company’s next AGM (or, if earlier,
at the close of business on the date which is 15 months after the
date of the resolution which granted them, being 26 July 2023).
Pursuant to Article 57 of the Companies (Jersey) Law 1991, the
Company is authorised to make market purchases of ordinary
shares of the Company, provided that:
• The maximum number of ordinary shares to be purchased is
47,362,624 ordinary shares
• The minimum price (excluding expenses) which may be paid for
each ordinary share is 1 penny
• The maximum price (excluding expenses) which may be paid
for each ordinary share is the higher of:
– An amount equal to 105% of the average of the middle
market quotations of an ordinary share in the Company as
derived from the London Stock Exchange Daily Official List
for the five business days immediately preceding the day on
which the ordinary share is contracted to be purchased
– An amount equal to the higher of the price of the last
independent trade of an ordinary share and the highest
current independent bid for an ordinary share as derived
from the London Stock Exchange Trading System
• Pursuant to Article 58A of the Companies (Jersey) Law 1991,
the Company may hold as treasury shares any ordinary shares
purchased pursuant to the authority conferred in this resolution.
This authority will expire at the conclusion of the Company’s
next AGM or 18 months from the date of the passing of this
resolution, being 26 October 2022 (whichever is earlier).
Approval of share issues, consideration for which does not
exceed $25 million, is delegated to any Director holding any
executive office.
Exchange Offer
Further to the Exchange Offer¹ announced on 22 September 2022
and as approved by Shareholders at the General Meeting on
12 October 2022, the Company repurchased 39,070,838 ordinary
shares on 9 December 2022 in consideration for the issuance of
certificated shares, on a one-for-one basis. The certificated shares
enjoy the same rights and ISIN as, and be fungible with, the
ordinary shares in all respects. Following the repurchase of the
exchanged shares and the issuance of the corresponding
certificated share, the total number of voting rights in the Company
remained unchanged and is 473,626,239 ordinary shares of no par
value, each carrying one vote. As a result of the Exchange Offer,
the Company holds 39,070,838 ordinary shares in treasury, which
do not enjoy any voting or economic rights.
Total Issued Share Capital
As of 15 March 2023, the total issued share capital of the
Company comprises 512,697,077 ordinary shares of no par value.
During the year, the Company issued 39,070,838 shares; the
Group and its subsidiaries held 39,070,838 treasury shares
(31 December 2021: no shares). The total number of voting rights
in the Company is 473,626,239 Ordinary Shares of no par value,
each carrying one vote (31 December 2021: 473,626,239 shares).
During the year, the Company issued no shares.
Dividends
The Board has carefully evaluated the liquidity and solvency of the
business in light of multiple external uncertainties. Taking into
account the Group’s leverage (2.35x Net Debt/EBITDA, materially
above the level of 1.5x previously deemed comfortable) and
significant level of uncertainty regarding external factors, the Board
has decided not to propose any dividend for 2022 in order to allow
the Group to maintain strategic and operating flexibility in a highly
volatile and stressful environment.
Annual General Meeting
Notice of AGM and Form of Proxy will be sent out in due course.
Having taken all matters considered by the Board and brought to
the attention of the Board during the year into account, we are
satisfied that the Integrated Annual Report, taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy.
On behalf of the Board
Evgueni Konovalenko
Senior Independent Non-Executive Director
15 March 2023
1 The invitation by the Company to Eligible Shareholders to offer to exchange Eligible Shares for Certificated Shares on the terms and subject to the conditions set
out in the Shareholder Circular dated 22 December 2022.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Directors’ responsibility statement
The Directors are responsible for preparing the annual report and financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
elected to prepare the Group financial statements in accordance
with International Financial Reporting Standards as adopted for
use in the UK (IFRS). The financial statements are required by law
to be properly prepared in accordance with the Companies
(Jersey) Law 1991. International Accounting Standard 1 requires
that financial statements present fairly for each financial year the
Group’s financial position, financial performance and cash flows.
This requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting Standards
Board’s ‘Framework for the preparation and presentation of
financial statements’.
In virtually all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRSs. However, the Directors are
also required to:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance and
• make an assessment of the Company’s ability to continue in
operation and meet its liabilities as they fall due over a
reasonably reliable lookout period, which the Directors have
determined to be three years.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK and Jersey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• The financial statements, prepared in accordance with the
Companies (Jersey) Law 1991 and International Financial
Reporting Standards as adopted for use in the UK, give a true
and fair view of the assets, liabilities, financial position and profit
or loss of the Company and the undertakings included in the
consolidation taken as a whole.
• The management report, which is incorporated into the
strategic report, includes a fair review of the development and
performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board,
Evgueni Konovalenko
Senior Independent Non-Executive Director
Vitaly Nesis
Group Chief Executive Officer
15 March 2023
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Financial statements
Independent auditor’s report
Consolidated financial statements
Consolidated income statement
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
1. General
2. Significant accounting policies
3.
Critical accounting judgements and key sources
of estimation uncertainty
4. Acquisitions and disposals
5. Segment information
6. Revenue
7. Cost of sales
8. On-mine costs
9. Smelting costs
10. Depletion and depreciation of operating assets
11. General, administrative and selling expenses
12. Other operating expenses, net
13. Employee costs
14. Auditor’s remuneration
15. Finance expenses
16. Income tax
17. Impairment of non-current assets
18. Property, plant and equipment
19. Leases
20. Goodwill
21. Investments in associates and joint ventures
22. Inventories
23. Accounts receivable and other financial assets
24. Borrowings
25. Environmental obligations
26. Payables and accrued liabilities
27. Commitments and contingencies
28. Financial instruments
29. Risk management activities
30. Stated capital account and retained earnings
31. Share-based payments
32. Related parties
33. Supplementary cash flow information
34. Subsequent events
162
172
173
174
175
176
177
187
190
190
193
194
194
194
194
195
195
195
196
196
196
199
199
200
201
201
202
203
204
205
205
206
206
208
211
212
212
213
215
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Independent auditor’s report to the members
of Polymetal International plc
For the purpose of this report, the terms “we” and “our” denote MHA MacIntyre Hudson
in relation to UK legal, professional and regulatory responsibilities and reporting
obligations to the members of Polymetal International plc. For the purposes of the table
on pages 164 to 166 that sets out the key audit matters and how our audit addressed the
key audit matters, the terms “we” and “our” refer to MHA MacIntyre Hudson. The Group
financial statements, as defined below, consolidate the accounts of Polymetal
International plc and its subsidiaries (the “Group”). The relevant legislation governing the
Group is Companies (Jersey) Law, 1991.
Opinion
We have audited the financial statements of Polymetal International plc for the year ended 31 December 2022.
The financial statements that we have audited comprise:
• the Consolidated Income Statement
• the Consolidated Statement of Comprehensive Income
• the Consolidated Statement of Financial Position
• the Consolidated Statement of Changes in Equity
• the Consolidated Statement of Cash Flows
• Notes 1 to 34 to the consolidated financial statements, including significant accounting policies
The financial reporting framework that has been applied in the preparation of the group’s financial statements is applicable
law and International Financial Reporting Standards (IFRS) as adopted by the United Kingdom (‘UK’) and as issued.
In our opinion the financial statements:
• give a true and fair view of the state of the Group’s affairs as at 31 December 2022 and of the Group’s loss for the year
then ended;
• have been properly prepared in accordance with UK adopted international accounting standards IFRSs as issued by
the International Accounting Standards Board (IASB); and
• have been prepared in accordance Companies (Jersey) Law, 1991.
Our opinion is consistent with our reporting to the Audit & Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our ethical responsibilities in accordance with those requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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162
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the group’s ability to continue to adopt the going concern basis of
accounting included:
• The consideration of inherent risks to the Group’s operations and specifically their business model, including their
consideration of the impact of sanctions and counter sanctions as detailed in the key audit matter titled “The impact of
Sanctions and Counter sanctions” below.
• The evaluation of how those risks might impact on the available financial resources.
• Where additional resources may be required, the reasonableness and practicality of the assumptions made by the
Directors when assessing the probability and likelihood of those resources becoming available.
• Liquidity considerations including examination of cash flow projections at Group level.
• The evaluation of the base case scenarios and stress scenarios, in respect of the Group, and the respective sensitivities
and rationale.
• Viability assessments at Group level, including consideration of reserve levels and business plans.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are authorised for issue.
In relation to the Group’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in the company’s financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Scope
First-year audit transition
Our audit was scoped by obtaining an understanding of the Group, its environment, including the
Group’s system of internal control, and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the directors that may have represented a risk of
material misstatement.
We, and our component auditors acting on specific group instructions, undertook full scope audits on
the complete financial information of 5 components; Albazino, Dukat, Kyzyl, Omolon, and Vavara,
specified audit procedures on particular aspects and balances on another 13 components; Amikan,
Amursk, Corporate and other, Komar, K-PM, Kutyn, Mayskoye, Nezhda, Primorskoye, Prognoz, Saum,
Svetloye, and Voro.
We developed a detailed audit transition plan, designed to deliver an effective transition from the
Group’s predecessor auditor, Deloitte LLP (“Deloitte”). Our audit planning and transition commenced in
July 2022, following our appointment.
Our transition activities included (but were not limited to) meeting relevant partners and senior staff from
Deloitte, reviewing the Audit Committee meeting minutes and reviewing Deloitte’s 2021 audit working
papers.
Our transition focused on obtaining an understanding of the Group’s system of internal control,
evaluating the Group’s accounting policies and areas of accounting judgement, and meeting with
management and the component auditor.
Materiality
Group
2022
US$45.5m
2021
US$47m
5% of the 2-year rolling average of profit
before tax adjusted for impairments and net
foreign exchange losses (2021: 4% profit
before tax adjusted for net foreign exchange
gain and net gains on disposal of subsidiaries)
Key audit matters
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Impairment of the Nezdha - Nezhda-Prognoz cash generating unit (CGU)
•
• The impact of sanctions and counter sanctions
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of Polymetal International plc continued
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) that we identified. These matters included those matters which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Impairment of Nezhda – Prognoz CGU
The impact of sanctions and counter sanctions
Key audit
matter description
At 31 December 2022 the Group reported an impairment of US$694 million (2021: US$nil million) to the
Nezhda-Prognoz CGU in note 17.
Key audit
matter description
The conflict between Russia and Ukraine has led to Western nations imposing a range of sanctions. In
response to these sanctions the Russian government has issued counter sanctions.
How the scope of our audit
responded to the key audit
matter
The value of the Group’s mining operations is particularly sensitive to forecast long-term gold price,
planned mining operations including the timing of capital expenditure, forecast reserves and foreign
exchange rates and may also be impacted by the implications of the situation in Ukraine and sanctions
being imposed on certain Russian institutions by the US, the UK and the EU. There is also a risk that
impairment indicators exist that require management to undertake an impairment review of the Group’s
assets.
The Nezhda-Prognoz CGU impairment assessment is inherently sensitive to plausible changes in certain
economic and operational key input assumptions which incurred in the period ended 31 December
2022, which could increase or reduce the CGU’s recoverable value estimate. Key recoverable value
input assumptions include the long-term gold and silver prices, the discount rate and the projected
operating costs.
We have performed the following procedures in our consideration of impairment indicators for all
identified CGUs, as well as their subsequent impairment:
• Documented our understanding of the controls relevant to the identification of impairment indicators
and valuation of recoverable amount for relevant CGUs;
• Evaluated the design and determined the implementation of key internal controls around the
significant risk of valuation of impairment;
• Reviewed and challenged management’s accounting paper which sets out management’s
consideration of impairment indicators. Where appropriate analysis of indicators is lacking, we
sought additional explanations and clarifications from management;
• Challenged managements’ impairment assessment methodology, production profile, capital and
operating costs (including transport costs);
• We engaged the support of an expert to consider the reasonableness of the discount rate
assumptions;
• Challenged management’s selection of macroeconomic inputs and determination of the discount
rate to be applied to the forecast cash flows and evaluated the sensitivity of discount rate and other
assumptions;
• Reviewed management’s disclosures in the financial statements including sensitivities presented to
determine if reasonable and relevant and the accuracy of their financial impact; and
• Evaluated the governance process, observing that the Audit & Risk Committee were briefed by
management at their meetings where the inputs to the impairment model were discussed and
approved.
How the scope of our audit
responded to the key audit
matter
Both the sanctions and counter sanctions are detailed, complex and can require significant judgement
in assessing whether the businesses operations and financing arrangements comply. Non-compliance
with sanctions would have a pervasive impact on the group operations and going concern assessment.
Compliance with sanctions is therefore considered a significant risk.
The entity may be knowingly or unknowingly in breach of prohibitions in different jurisdictions. A breach
of sanctions could have an impact on the operations of the group and or result in significant financial
penalties.
The western sanctions and countersanctions include a set of wide-ranging and complex prohibitions,
which are difficult to interpret and include general anti-avoidance measures. The Group engaged legal
experts to provide legal advice in accordance with management’s risk assessment of operations and
specific transactions.
None of the Group’s entities, its directors nor its significant shareholders are currently subject to any
specific sanctions.
We have performed the following procedures in respect to management’s consideration of sanction and
counter sanctions:
• Reviewed and challenged management’s consideration of sanctions and counter sanctions including
internal controls introduced for the identification and prevention of breaches;
• We reviewed the legal advice obtained by management in respect of sanctions compliance and
internal controls;
• We engaged the support of legal experts to consider management’s consideration of relevant
sanctions and the appropriateness of management’s legal advice in respect of key judgements
identified;
• Corroborated key facts identified during management’s assessments;
• Reviewed management’s assessment of the impact of compliance with sanctions and counter
sanctions on the intergroup cash flows during the period and the ability of the group to service its
liabilities within individual jurisdictions and the potential related impact on going concern;
• We challenged management’s conclusions in respect of compliance with sanctions and counter
sanctions; and
• We evaluated the governance process including, the implementation of the group’s sanctions
compliance policy and seek confirmation that the board is not aware of a breach of sanctions or
counter sanctions due in the period.
Key observations
The discount rate was an area of particular judgement by management and us given the sensitivity of
the recoverable amount to small changes in the rate.
We are satisfied the impairment of the Nezhda-Prognoz CGU is reasonable and recognised in
accordance with IAS36 and disclosures thereon in note 17.
Key observations
Based on the procedures performed, we have not identified evidence of instances of a breach in
sanctions or counter sanctions during the period or facts or circumstances affecting the group’s ability
to service its liabilities within individual jurisdictions without breaching sanctions or counter sanctions.
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of Polymetal International plc continued
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in
aggregate, would change or influence the economic decision of a reasonably knowledgeable user of those financial
statements. Misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of
the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole. Materiality is used in planning the scope of our work, executing that work and
evaluating the results.
Materiality in respect of the Group was set at US$45.5m (2021: US$47m) which was determined on the basis of 5% of a
2-year rolling average of profit before tax adjusted for impairments and net foreign exchange losses (2021: 4% of profit
before tax adjusted for net foreign exchange gains). Profit before tax adjusted for impairments and net foreign exchange
losses was deemed to be the appropriate benchmark for the calculation of materiality as this is a key area of the financial
statements because this is the metric by which the performance and risk exposure of the Group is principally assessed by
management and investors. In our opinion this is therefore the benchmark with which the users of the financial statements
are principally concerned.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to
reduce, to an appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Performance materiality for the Group was set at US$27.5m (2021: US$32.9m) which represents 60% (2021: 70%) of the
materiality level.
The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of
the systems and controls and the level of misstatements arising in previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding US$2.275m (2021: US$2.35m) to the Audit &
Risk Committee as well as differences below this threshold that in our view warranted reporting on qualitative grounds.
Overview of the scope of the Group audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit
scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial
statements. This assessment takes into account the size, risk profile, organisation / distribution and effectiveness of
group-wide controls, changes in the business environment and other factors such as recent internal audit results when
assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate
quantitative and qualitative coverage of significant accounts in the consolidated financial statements, of the 18 reporting
components of the group, we identified 5 components in Russia and Kazakhstan which represent the principal business
units within the Group.
Full scope audits - Of the 18 components selected, full scope audits of the complete financial information of 5 components;
Albazino, Dukat, Kyzyl, Omolon, Varvara were undertaken, these entities were selected based upon their size or risk
characteristics.
Specified procedures – Specified procedures were undertaken on 13 components; Amikan, Amursk, Corporate and other,
Komar, K-PM, Kutyn, Mayskoye, Nezdha, Primorskye, Prognoz, Saum, Svetloye, and Voro. Our audit work was executed at
levels of materiality applicable to each component which were between US$1.8m and US$18.6m.
Our audit scoping coverage for the key balances is summarised in the charts below.
Revenue %
PBT %
Gross assets %
0%
11%
13%
40%
29%
40%
60%
60%
47%
Full scope audit
Audit of specified ABCOT
Analytical review
ABCOT – Account Balance and Classes of Transactions
The group audit team led and directed the audit work performed by the component auditors in Russia through a
combination of group planning meetings and calls, provision of group instructions (including detailed supplemental
procedures), review and challenge of related component interoffice reporting and of findings from their working papers and
interaction on audit and accounting matters which arose, this included assessing the appropriateness of conclusions and
consistency between reported findings and work performed.
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of Polymetal International plc continued
The control environment
We evaluated the design and implementation of those internal controls of the Group, which are relevant to our audit, such
as those relating to the financial reporting cycle. We also tested operating effectiveness and placed reliance on controls
over metal inventories and revenue.
Our IT audit specialist engaged with the component teams’ internal IT audit specialists to get an understanding of the
general IT environment and test general IT controls and these were found to be operating effectively.
Climate‑related risks
In planning our audit and gaining an understanding of the Group, we considered the potential impact of climate-related
risks on the business and its financial statements. We obtained management’s climate-related risk assessment, along with
relevant documentation and reports relating to management’s assessment and held discussions with management to
understand its process for identifying and assessing the related risks.
We engaged internal specialists to assess and challenge, amongst other factors, the related risks and benchmarks
identified by management, the nature of the Group’s business activities, its processes and the geographic distribution of its
activities.
We critically reviewed management’s assessment and challenged the assumptions and disclosures underlying its
assessment. We made enquiries to understand the extent of the potential impact of climate change risks on the Group’s
financial statements. This has included a review of the Group’s climate change strategy, critical accounting estimates and
judgements, and the effect on the MHA audit approach. We also considered the ongoing viability of the business in respect
both to direct climate risks and changes in legislation as nations grapple with their commitments to reduce emissions.
Reporting on other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the entity’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during
the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 153;
• Directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the
period is appropriate set out on page 153;
• Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and
meets its liabilities set out on page 153;
• Directors’ statement on fair, balanced and understandable set out on page 158;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 110;
• Section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 126; and
• Section describing the work of the Audit & Risk Committee set out on pages 126.
Matters on which we are required to report by exception
Under the Companies (Jersey) Law, 1991 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• proper accounting records have not been kept by the parent company, or proper returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company’s financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Now, for tomorrow
168
Now, for tomorrow
169
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Independent auditor’s report to the members
of Polymetal International plc continued
Auditor responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud
or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from
error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further
removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements,
the less likely we would become aware of it.
Identifying and assessing potential risks arising from irregularities, including
fraud
The extent of the procedures undertaken to identify and assess the risks of material misstatement in respect of
irregularities, including fraud, included the following:
• We considered the nature of the industry and sector, the control environment, business performance including
remuneration policies . From our sector experience and through discussion with directors, we obtained an
understanding of the legal and regulatory frameworks applicable to the Group focusing on laws and regulations that
could reasonably be expected to have a material impact on the financial statements.
• We considered the result of our enquiries of management and the Audit & Risk Committee about their own identification
and assessment of the risk and irregularities;
• We considered any matters identified on review of the Group’s documentation of their policies and procedures relating
to;
– identifying, evaluating and complying with the laws and regulations, including sanctions and counters sanction as
referred to in our key audit matters and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they had any knowledge of actual or suspected fraud;
and
– the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations.
• We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur by
evaluating management’s incentives and opportunities for manipulation of the financial statements. This included
utilising the spectrum of inherent risk and an evaluation of the risk of management override of controls; and
• As a result of these procedure we determined that the principal risks were management bias in accounting estimates,
particularly in determining impairment of mining operations, and the potential for a breach of sanctions and/or counter
sanctions related to the Russia and Ukraine conflict. The group engagement team shared this risk assessment with the
Component Auditors of Significant Subsidiaries so that they could include appropriate audit procedures in response to
such risks in their work.
Now, for tomorrow
170
Audit response to risks identified
As a result of the above, we identified the impairment assessment of Nezhda-Prognoz CGU as a key audit matter. The key
audit matter section of our report explains the matter in more detail and the specific procedures we performed in response.
We also identified the impact of sanctions and counter sanctions as a key audit matter. The key audit matter section of our
report explains the matter in more detail and the specific procedures we performed in response.
In addition to the above, audit procedures performed by the engagement team in connection with the risks identified
included:
• reviewing financial statement disclosures and testing to supporting documentation to assess compliance with
applicable laws and regulations expected to have a direct impact on the financial statements;
• testing journal entries, including those processed late for financial statements preparation, those posted by infrequent or
unexpected users, those posted to unusual account combinations;
• evaluating the business rationale of significant transactions outside the normal course of business, and reviewing
accounting estimates for bias;
• enquiry of management around actual and potential litigation and claims;
• challenging the assumptions and judgements made by management in its significant accounting estimates; and
• obtaining confirmations from third parties to confirm existence of a sample of transactions and balances.
We communicated relevant laws and regulations and potential fraud risks to all engagement team members, including
experts, and the component auditors and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Other requirements
We were appointed by the Audit & Risk Committee on 1 July 2022. This being the first year of engagement.
We did not provide any non-audit services which are prohibited by the FRC’s Ethical Standard to the Group or the Parent
Company, and we remain independent of the Group and the Parent Company in conducting our audit.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Article 113A of the
Companies (Jersey) Law, 1991 Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the
Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these
financial statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on
the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Rakesh Shaunak FCA
for and on behalf of MHA MacIntyre Hudson*, Recognised Auditor
London, United Kingdom
15 March 2023
*MHA MacIntyre Hudson is a trading name of MacIntyre Hudson LLP
Now, for tomorrow
171
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Consolidated financial statements
Consolidated financial statements
Consolidated income statement
Consolidated statement of financial position
Revenue
Cost of sales
Gross profit
General, administrative and selling expenses
Other operating expenses, net
Impairment of non-current assets
Impairment of investment in associate
Operating (loss)/profit
Foreign exchange (loss)/gain, net
(Loss)/gain on disposal of subsidiaries, net
Change in fair value of financial instruments
Finance expenses
Finance income
(Loss)/profit before income tax
Income tax
(Loss)/profit for the year
(Loss)/profit for the financial year attributable to:
Equity shareholders of the Parent
(Loss)/earnings per share ($)
Basic
Diluted
Consolidated statement of comprehensive income
Year ended
31 December
2022
$m
Year ended
31 December
2021
$m
Note
6
7
11
12
17
21
4
28
15
16
30
30
2,801
(1,690)
1,111
(311)
(142)
(801)
(24)
(167)
(32)
(2)
(20)
(119)
8
(332)
44
(288)
(288)
(288)
(0.61)
(0.61)
2,890
(1,307)
1,583
(226)
(149)
–
–
1,208
5
3
4
(66)
7
1,161
(257)
904
904
904
1.91
1.88
Year ended
31 December
2022
$m
Year ended
31 December
2021
$m
Note
(Loss)/profit for the year
Other comprehensive income, net of income tax
Items that may be reclassified to profit or loss
Fair value gain arising on hedging instruments during the year
Exchange differences on translating foreign operations
Currency exchange differences on intercompany loans forming net investment in foreign
operations, net of income tax
28
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Equity shareholders of the Parent
(288)
338
16
365
(43)
50
50
50
904
(42)
–
(36)
(6)
862
862
862
Assets
Property, plant and equipment
Right-of-use assets
Goodwill
Investments in associates and joint ventures
Non-current accounts receivable
Other non-current financial assets
Deferred tax asset
Non-current inventories
Total non-current assets
Current inventories
Prepayments to suppliers
Income tax prepaid
VAT receivable
Trade and other receivables
Other financial assets at FVTPL
Cash and cash equivalents
Total current assets
Total assets
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities
Current borrowings
Advances received
Income tax payable
Other taxes payable
Current portion of contingent consideration liability
Current lease liabilities
Total current liabilities
Non-current borrowings
Contingent and deferred consideration liabilities
Deferred tax liability
Environmental obligations
Non-current lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Stated capital account
Share-based compensation reserve
Cash flow hedging reserve
Translation reserve
Retained earnings
Total equity
Total liabilities and shareholders’ equity
Year ended
31 December
2022
$m
Year ended
31 December
2021
$m
Note
18
19
20
21
23
23
16
22
22
23
23
33
26
24
33
33
24
33
16
25
33
26
30
31
28
3,392
131
14
13
31
24
142
133
3,880
1,057
185
64
148
103
10
633
2,200
6,080
(264)
(514)
(6)
(11)
(68)
(9)
(25)
(897)
(2,512)
(112)
(107)
(76)
(106)
(28)
(2,941)
(3,838)
2,242
2,450
35
16
(1,543)
1,284
2,242
(6,080)
3,314
33
14
28
28
29
67
96
3,609
781
119
11
123
79
12
417
1,542
5,151
(223)
(446)
(134)
(21)
(54)
(31)
(7)
(916)
(1,618)
(111)
(206)
(50)
(29)
(18)
(2,032)
(2,948)
2,203
2,450
31
–
(1,865)
1,587
2,203
(5,151)
172
173
Vitaly Nesis
Group Chief Executive
Evgueni Konovalenko
Senior Independent Non-Executive Director
Notes on pages 176 to 215 form part of these financial statements. These financial statements are approved and authorised for issue by
the Board of Directors on 15 March 2023 and signed on its behalf by:
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Consolidated financial statements
Consolidated financial statements
Consolidated statement of cash flows
Consolidated statement of changes in equity
Net cash generated by operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Net cash inflow/(outflow) on asset acquisitions¹
Proceeds from disposal of subsidiaries
Investments in associates
Acquisition of shares held at FVTPL
Loans advanced
Repayment of loans provided
Contingent consideration received
Net cash used in investing activities
Cash flows from financing activities
Borrowings obtained
Repayments of borrowings
Repayments of principal under lease liabilities
Dividends paid
Acquisition of non-controlling interest
Proceeds from royalty arrangement
Contingent consideration paid
Net cash from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Year ended
31 December
2022
$m
Year ended
31 December
2021
$m
206
(794)
123
5
(7)
–
(12)
3
3
(679)
3,885
(3,029)
(18)
–
(24)
–
(27)
787
314
417
(98)
633
1,195
(759)
(5)
2
(3)
(5)
(36)
18
–
(788)
3,360
(3,080)
(4)
(635)
–
20
(33)
(372)
35
386
(4)
417
Note
33
18
4
4
21
33
33
33
30
4
33
33
33
33
Note
Stated capital
account
$m
Share-based
compensation
reserve
$m
Cash flow
hedging
reserve
$m
Balance at 1 January 2021
Profit for the year
Other comprehensive income,
net of income tax
Total comprehensive income
Share-based compensation
Shares allotted to employees
Dividends
Balance at 31 December 2021
Loss for the year
Other comprehensive income, net
of income tax
Total comprehensive income
Share-based compensation
Own share exchanged in the year
Transfer to retained earnings
Consolidation of non-controlling
interest
2,434
–
–
–
–
16
–
2,450
–
–
–
–
–
–
–
31
31
30
31
30
31
4
Balance at 31 December 2022
2,450
31
–
–
–
16
(16)
–
31
–
–
–
13
–
(9)
–
35
–
–
–
–
–
–
–
–
16
16
–
–
–
–
16
Translation
reserve
$m
(1,823)
–
(42)
(42)
–
–
–
(1,865)
–
322
322
–
–
–
–
(1,543)
Retained
earnings
$m
Total equity
$m
1,318
904
–
904
–
–
(635)
1,587
(288)
–
(288)
–
–
9
(24)
1,284
1,960
904
(42)
862
16
–
(635)
2,203
(288)
338
50
13
–
–
(24)
2,242
1 Cash inflow on acquisitions comprises cash consideration of $27 million paid for Galka deposit and cash acquired as a result of consolidation of 100% interest in
Albazino Power Line (Note 4). As a result of later transaction the Group assumed debt of $161 million and acquired corresponding cash balances of $150 million.
174
175
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements
1. General
Corporate information
Polymetal Group (the Group) is a leading gold and silver mining group with operations in Kazakhstan and Russia.
Polymetal International plc (the Company) is the ultimate parent entity of Polymetal Group. The Company was incorporated in 2010 as a
public limited company under Companies (Jersey) Law 1991 and has its place of business in Cyprus. Its shares are listed on the London
and Moscow stock exchanges and Astana International Exchange.
Significant subsidiaries
As of 31 December 2022 the Company held the following significant mining and production subsidiaries:
Name of subsidiary
Bakyrchik Mining Venture LLC
Varvarinskoye JSC
Komarovskoye Mining Company LLC
Gold of Northern Urals JSC
Svetloye LLC
Magadan Silver JSC
Mayskoye Gold Mining Company LLC
Omolon Gold Mining Company LLC
Albazino Resources Ltd
Amur Hydrometallurgical Plant LLC
South-Verkhoyansk Mining Company JSC
Prognoz Silver LLC
GRK Amikan LLC
Deposits and
production
facilities
Kyzyl
Varvara
Komar
Voro
Pesherny
Svetloye
Dukat
Lunnoe
Perevalnoye
Mayskoye
Birkachan
Tsokol
Burgali
Albazino
Amursk POX
Nezhda
Prognoz
Veduga
Segment
Kazakhstan
Kazakhstan
Kazakhstan
Ural
Khabarovsk
Magadan
Magadan
Magadan
Khabarovsk
Khabarovsk
Yakutia
Yakutia
Khabarovsk
Effective interest held, %
Country of
incorporation
31 December
2022
31 December
2021
Kazakhstan
Kazakhstan
Kazakhstan
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Going concern
In assessing its going concern status, the Group has taken account of its principal risks and uncertainties, financial position (including
significant inflationary and logistical pressures), sources of cash generation, anticipated future trading performance, its borrowings and
other available credit facilities from non-sanctioned banks, and its forecast compliance with covenants on those borrowings, and its
capital expenditure commitments and plans. In the going concern assessment, the Group also considered the restrictions for moving
cash between jurisdictions and assessed the ability to meet jurisdictional liabilities.
At the reporting date, the Group holds $350 million of undrawn credit facilities with non-sanctioned banks and $633 million of cash, which
is considered to be adequate to meet the Group’s financial obligations as they fall due over the next 12 months ($514 million of short-term
borrowings is due for repayment in the next 12 months). All of the 2023 repayments are well covered by available cash balances.
No borrowing covenant requirements are forecast to be breached.
At the reporting date the cash balances include $118 million of cash and cash equivalents held in Russia, that are subject to certain legal
restrictions and are therefore not available for general use of the Company (but fully available for use by its Russian subsidiaries).
The Group determined that these restrictions would not have any material effect on the Group’s liquidity position and its ability to finance
its obligations.
The Group has taken legal advice on the implications of the sanctions to date as part of this assessment. None of the Group’s entities,
nor its significant shareholders are currently subject to any specific sanctions.
The Board is therefore satisfied that the Group’s forecasts and projections, including the stress scenario, show that the Group has
adequate resources to continue in operational existence for at least the next 12 months from the date of this report and that it is
appropriate to adopt the going concern basis in preparing the year-end financial statements.
Basis of presentation
The Group’s annual consolidated financial statements for the year ended 31 December 2022 are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the United Kingdom (‘UK’), provisions of the Companies (Jersey) Law
1991, and the Disclosure and Transparency Rules of the Financial Conduct Authority. The financial statements have been prepared on the
historical cost basis, except for certain financial instruments which are measured at fair value as of end of the reporting period and
share-based payments which are recognised at fair value as of the measurement date.
The following accounting policies have been applied in preparing the consolidated financial statements for the year ended
31 December2022.
New standards adopted by the Group
• Amendments to IFRS 9 Financial Instruments, IFRS 1 First-time Adoption of International Financial Reporting Standards and
IFRS 16 Leases, esulting from Annual Improvements to IFRS Standards 2018-2020, effective for annual periods beginning on or after
1 January 2022.
• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets resulting the costs to include when assessing
whether a contract is onerous, effective for annual periods beginning on or after 1 January 2022.
• Reference to the Conceptual Framework (Amendments to IFRS 3 Business Combinations), effective for annual periods beginning on
or after 1 January 2022. The amendments update an outdated reference to the Conceptual Framework in IFRS 3 without significantly
changing the requirements in the standard.
The Group has early adopted for the annual period beginning 1 January 2021 the amendments to IAS 16 Property, Plant and Equipment.
The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling
items produced while the Company is preparing the asset for its intended use, effective for annual periods beginning on or after 1
January 2022 with early application permitted. These amendments did not have a material impact on these consolidated financial
statements.
New accounting standards issued but not yet effective
The following amendments to the accounting standards were in issue but not yet effective as of date of these consolidated financial
statements:
• Amendments to IAS 1 Presentation of Financial Statements regarding the classification of liabilities as current and non-current,
effective for annual periods beginning on or after 1 January 2023;
•
IFRS 17 Insurance Contracts, effective for annual period beginning on or after 1 January 2023 with earlier application permitted;
• Amendments to IAS 1 and IFRS Practice Statement 2 requiring that an entity discloses its material accounting policies, instead of its
significant accounting policies, effective for annual period beginning on or after 1 January 2023 with earlier application permitted;
• Amendments to IAS 8 replacing the definition of a change in accounting estimates with a definition of accounting estimates, effective
for annual period beginning on or after 1 January 2023 with earlier application permitted;
• Amendments to IAS 12 clarifying that the initial recognition exemption does not apply to transactions in which equal amounts of
deductible and taxable temporary differences arise on initial recognition, effective for annual period beginning on or after 1 January
2023 with earlier application permitted; and
• Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures regarding the
sale or contribution of assets between an investor and its associate or joint venture, the effective date of the amendments has yet to
be set. However, earlier application of the amendments is permitted.
The Group has determined these standards and interpretations are unlikely to have a material impact on its consolidated financial
statements or are not applicable to the Group.
2. Significant accounting policies
Basis of consolidation
Subsidiaries
The consolidated financial statements of the Group include the financial statements of the Company and its subsidiaries, from the date
that control effectively commenced until the date that control effectively ceased. Control is achieved where the Company is exposed, or
has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee.
Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from
the effective date of acquisition and up to the effective date of disposal, as appropriate.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by the Group.
All intra-group balances, transactions and any unrealised profits or losses arising from intra-group transactions are eliminated on
consolidation.
Changes to the Group’s ownership interests that do not result in a loss of control over the subsidiaries are accounted for as equity
transactions. The carrying amount of the Group’s interests and non-controlling interests are adjusted to reflect the change in their relative
interests in the subsidiaries. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the
consideration paid or received is recognised directly in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, the profit or loss from the disposal is calculated as the difference between 1) the
aggregated fair value of the consideration received and the fair value of any retained interest and 2) the previous carrying amount of the
assets (including goodwill), and liabilities of the subsidiary and non-controlling interests.
176
177
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Notes to the consolidated financial statements continued
2. Significant accounting policies continued
Business combinations
IFRS 3 Business Combinations applies to a transaction or other event that meets the definition of a business combination. When
acquiring new entities or assets, the Group applies judgement to assess whether the assets acquired and liabilities assumed constitute
an integrated set of activities, whether the integrated set is capable of being conducted and managed as a business by a market
participant, and thus whether the transaction constitutes a business combination, using the guidance provided in the standard.
Acquisitions of businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the
aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the
Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the consolidated income statement as incurred.
Transaction costs incurred in connection with the business combination are expensed. Provisional fair values are finalised within 12
months of the acquisition date.
Where applicable, the consideration for the acquisition may include an asset or liability resulting from a contingent consideration
arrangement. Contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred
in a business combination. Subsequent changes in such fair values are adjusted against the cost of acquisition retrospectively with the
corresponding adjustment against goodwill where they qualify as measurement period adjustments. Measurement period adjustments
are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that
existed at the acquisition date. The measurement period may not exceed one year from the effective date of the acquisition. The
subsequent accounting for contingent consideration that does not qualify for as a measurement period adjustment is based on how the
contingent consideration is classified. Contingent consideration that is classified as equity is not subsequently remeasured. Contingent
consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with IFRS 9 Financial
Instruments with the corresponding amount being recognised in profit or loss.
The identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in
•
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively;
liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements
of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that Standard.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair
value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in the consolidated
income statement. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in
equity are reclassified to profit or loss, where such treatment would be appropriate if that interest was disposed of.
Goodwill and goodwill impairment
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the
fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the
identifiable assets acquired and the liabilities assumed.
If the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the
amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if
any), the excess is recognised immediately in the consolidated income statement as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to
each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
In 2022 the recoverable amount of the relevant cash-generating units was determined based on value in use calculation. Value in use is
based on the application of the Discounted Cash Flow Method (DCF) using post-tax cash flows to the life of mine models based on
proved and probable ore reserves and certain resources where a relevant resource-to-reserve conversion ratio can be reasonably
applied.
On disposal of a subsidiary, the attributable goodwill is included in the determination of the profit or loss from disposal.
Acquisition of mining licenses
The acquisition of mining licenses is often affected through a non-operating corporate entity. As these entities do not represent a
business, it is considered that the transactions generally do not meet the definition of a business combination and, accordingly, the
transaction is usually accounted for as the acquisition of an asset. The net assets acquired are accounted for at cost. Where asset
acquisition is achieved in stages net assets acquired are accounted for as the sum of cost of the original interest acquired and the cost of
additional interest acquired.
Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
arrangement. Significant influence constitutes the power to participate in the financial and operating policy decisions of the investee but
does not extend to a control or joint control over the enactment of those policies. The results and assets and liabilities of associates are
incorporated in the consolidated financial statements using the equity method of accounting.
A joint arrangement is defined as an arrangement of which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
A joint operation is a joint arrangement in which the parties that share joint control have rights to the assets, and obligations for the
liabilities, relating to the arrangement. This includes situations where the parties benefit from the joint activity through a share of the
output, rather than by receiving a share of the results of trading. In relation to its interest in a joint operation, the Group recognises: its
share of assets and liabilities; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the
output by the joint operation; and its share of expenses.
A joint venture is a joint arrangement in which the parties that share joint control have rights to the net assets of the arrangement and is
accounted for using the equity accounting method.
When entering in a new joint arrangement, the Group applies judgement to assess whether the parties that have joint control over the
arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement (joint operation) or rights to the net
assets of the arrangement (joint venture), using the guidance provided in the standard. When a joint arrangement has been structured
through a separate vehicle, consideration has been given to the legal form of the separate vehicle, the terms of the contractual
arrangement and, when relevant, other facts and circumstances.
Equity method of accounting
Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated balance sheet at cost
and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the investee. When the
Group’s share of the losses of an associate or a joint venture exceeds the Group’s interest in that entity, the Group ceases to recognise its
share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or
made payments on behalf of the investee.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities of an investee at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost
of acquisition, after reassessment, is recognised immediately in profit or loss.
The requirements of IAS 28 Investments in Associates and Joint Ventures (IAS 28) are applied to determine whether any indicators that
the interest in an associate or a joint venture may be impaired. Where an indicator of impairment exists or the carrying value of the asset
contains goodwill with an indefinite useful life, the entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with IAS 36 as a single cash generating unit through the comparison of its recoverable amount (the higher of value in use and
fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognised in accordance with IAS 36.
When a Group entity transacts with its investees, profits and losses resulting from the transactions with the investee are recognised in the
Group’s consolidated financial statements only to the extent of interests in the associate or the joint venture that are not related to the
Group.
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2. Significant accounting policies continued
Functional and presentation currency
The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it
operates. For all Russian entities the functional currency is the Russian Rouble (RUB). The functional currency of the Group’s entities
located and operating in Kazakhstan (Varvarinskoye JSC, Bakyrchik Mining Venture LLC, Inter Gold Capital LLC, Komarovskoye Mining
Company LLC) is the Kazakh Tenge (KZT). The functional currency of the parent company Polymetal International plc and its intermediate
holding companies is US Dollar.
The Group has chosen to present its consolidated financial statements in US Dollar ($), as management believes it is the most useful
presentation currency for international users of the consolidated financial statements of the Group as it is a common presentation
currency in the mining industry. The translation of the financial statements of the Group entities from their functional currencies to the
presentation currency is performed as follows:
• all assets and liabilities are translated at closing exchange rates at each reporting period end date;
• all income and expenses are translated at the average exchange rates for the periods presented, except for significant transactions
•
•
that are translated at rates on the date of such transactions;
resulting exchange differences are recognised in other comprehensive income and presented as movements relating to the effect of
translation to the Group’s presentation currency within the Translation reserve in equity; and
in the consolidated statement of cash flows, cash balances at the beginning and end of each reporting period presented are
translated using exchange rates prevalent at those respective dates. All cash flows in the period are translated at the average
exchange rates for the periods presented, except for significant transactions that are translated at rates on the date of transaction.
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of
control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that
includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of
the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to
profit or loss.
In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the
proportionate share of accumulated exchange differences reattributed to non-controlling interests and are not recognised in the
consolidated income statement. For all other partial disposals (i.e. reductions in the Group’s ownership interest in associates or jointly
controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated
exchange differences is reclassified to the consolidated income statement.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are
treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting
period. Exchange differences arising are recognised in equity.
The Group translates its income and expenses in presentation currency on a monthly basis at monthly average rate. During the years
ended 31 December 2022 and 31 December 2021 exchange rates used in the preparation of the consolidated financial statements were
as follows:
31 December 2022
Year ended
Average
Maximum monthly rate
Minimum monthly rate
31 December 2021
Year ended
Average
Maximum monthly rate
Minimum monthly rate
Russian Rouble/
US Dollar
Kazakh Tenge/
US Dollar
70.34
68.55
104.08
57.27
74.29
73.65
76.10
71.50
462.65
460.85
499.75
431.82
431.67
426.03
434.34
418.71
The Russian Rouble and Kazakh Tenge are not freely convertible currencies outside the Russian Federation, and Kazakhstan,
accordingly, any translation of Russian Rouble and Kazakh Tenge denominated assets and liabilities into US Dollar for the purpose of the
presentation of consolidated financial statements does not imply that the Group could or will in the future realise or settle in US Dollars the
translated values of these assets and liabilities.
The amounts reported are rounded to the nearest million, unless overwise stated.
Foreign currency transactions
Transactions in currencies other than an entity’s functional currencies (foreign currencies) are recorded at the exchange rates prevailing
on the dates of the transactions. All monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates
prevailing at the reporting date. Non monetary items carried at historical cost are translated at the exchange rate prevailing on the date of
transaction. Non-monetary items carried at fair value are translated at the exchange rate prevailing on the date on which the most recent
fair value was determined. Exchange differences arising from changes in exchange rates are recognised in the consolidated income
statement. Exchange differences generated by monetary items that forms part of the intragroup net investment in the foreign operation
are recognised in the consolidated financial statements within foreign currency translation reserve.
Property, plant and equipment
Mining assets
Mining assets include the cost of acquiring and developing mining assets and mineral rights. Mining assets are depreciated to their
residual values using the unit-of-production method based on proven and probable ore reserves according to the JORC Code, which is
the basis on which the Group’s mine plans are prepared. Changes in proven and probable reserves are dealt with prospectively.
Depreciation is charged on new mining ventures from the date that the mining asset is capable of commercial production. In respect of
those mining assets whose useful lives are expected to be less than the life of the mine, depreciation over the period of the asset’s useful
life is applied.
Mineral rights for the assets under development are included within Exploration and development. When a production phase is started,
mineral rights are transferred into Mining assets and are depreciated as described below.
Capital construction‑in‑progress
Capital construction-in-progress assets are measured at cost less any recognised impairment. Depreciation commences when the
assets are ready for their intended use.
Exploration and evaluation assets
Mineral exploration and evaluation costs, including geophysical, topographical, geological and similar types of costs are expensed as
incurred until such time as the Group determines that reasonable prospects exist for the eventual economic extraction of minerals, which
is supported by management’s decision to prepare the mineral resource estimation for the relevant field. Mineral resource estimation
prepared in accordance with JORC is subsequently published on the Group’s website.
Exploration assets representing mineral rights which were acquired as a result of a business combination or an asset acquisition in
accordance with IFRS 3 Business Combinations, are recognised as a result of the purchase price allocation where appropriate; and are
carried at deemed cost, being fair value as at the date of acquisition or at cost where a transaction is classified as an asset acquisition.
No changes were made to this part of the Group’s policy.
In accordance with IFRS 6 Exploration for and evaluation of mineral resources, the potential indicators of impairment include:
management’s plans to discontinue the exploration activities, lack of further substantial exploration expenditure planned, expiry of
exploration licenses in the period or in the nearest future, or existence of other data indicating the expenditure capitalised is not
recoverable. At the end of each reporting period, management assesses whether such indicators exist for the exploration and evaluation
assets capitalised.
Development assets
Exploration and evaluation expenditure are transferred to development assets when commercially-viable reserves are identified, so that
the entity first establishes proved and probable reserves in accordance with the JORC Code and a respective mining plan and model are
prepared and approved. At the time of reclassification to development assets, exploration and evaluation assets are assessed for
impairment based on the economic models prepared.
The costs to remove any overburden and other waste materials to initially expose the ore body, referred to as stripping costs, are
capitalised as a part of development assets when these costs are incurred.
Non‑mining assets
Non-mining assets are depreciated to their residual values on a straight-line basis over their estimated useful lives. When parts of an item
of property, plant and equipment are considered to have different useful lives, they are accounted for and depreciated separately.
Depreciation methods, residual values and estimated useful lives are reviewed at least annually.
Estimated useful lives are as set out below:
Machinery and equipment
Transportation and other assets
5 – 20 years
3 – 10 years
Gains or losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the asset’s
carrying amount at the date. The gain or loss arising is recognised in the consolidated income statement.
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Notes to the consolidated financial statements continued
2. Significant accounting policies continued
Stripping costs
During the production phase of a mine when the benefit from the stripping activity is the improved access to a component of the ore
body in future periods, the stripping costs in excess of the average ore to waste ratio for the life of mine of that component are recognised
as a non-current asset. After initial recognition, the stripping activity asset is depreciated on a systematic basis (unit-of-production
method) over the expected useful life of the identified component of the ore body made accessible as a result of the stripping activity.
Estimated ore reserves
Estimated proven and probable ore reserves reflect the economically recoverable quantities which can be legally recovered in the future
from known mineral deposits. The Group’s reserves are estimated in accordance with JORC Code.
Leases
The group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognised a rights-of-use asset
and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as
leases with a lease term of 12 months or less), leases of low value assets and leases for the purposes of mining and exploration activities,
which fall out of the IFRS 16 scope. For these leases, the Group recognises the leases payments as operating expenses on a straight-line
basis over the term of the lease.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.
The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently
measured by increasing the carrying amount to reflect interest on the lease liability based on the effective interest method and by
reducing the carrying amount to reflect the lease payments made. The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the commencement date and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment losses and are presented as a separate line in the
consolidated financial statements.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset or using the unit-of-
production method based on proven and probable ore reserves according to the JORC Code, where it is applicable.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described below.
Impairment of property, plant and equipment
An impairment review of property, plant and equipment is carried out when there is an indication that those assets have suffered an
impairment loss or there are impairment reversal indicators. If any such indication exists, the carrying amount of the asset is compared to
the estimated recoverable amount of the asset in order to determine the extent of the impairment loss or its reversal (if any). Where it is
not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit (CGU) to which the asset belongs.
A CGU is defined as the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows
from other assets or groups of assets. Assets are combined into a CGU consisting of the assets for which it is impossible to estimate the
recoverable amount individually, which is the case when:
•
•
the asset does not generate cash inflows that are largely independent of those from other assets; and
the asset’s value in use cannot be estimated to be close to its fair value less costs of disposal (which is the case when the future cash
flows from continuing use of the asset cannot be estimated to be negligible).
Recoverable amount is the higher of fair value less costs of disposal and value in use. Value in use is based on the application of the
Discounted Cash Flow Method (DCF) using post-tax cash flows and post-tax discount rate. The DCF method is applied to the
development of proved and probable reserves and certain resources where a relevant resource-to-reserve conversion ratio can be
reasonably applied.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately in the
consolidated income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the original carrying
amount that would have been determined had no impairment loss been recognised in prior periods. Impairment loss may be
subsequently reversed if there has been a significant change in the estimates used to determine the asset’s recoverable amount since the
last impairment loss was recognised.
A reversal of an impairment loss is recognised in the consolidated income statement immediately.
Inventories
Metal inventories
Inventories including refined metals, metals in concentrate and in process, Doré and ore stockpiles are stated at the lower of production
cost and net realisable value. Production cost is determined as the sum of the applicable expenditure incurred directly or indirectly in
bringing inventories to their existing condition and location. Work in-process, metal concentrate, Doré and refined metal are valued at the
average total production costs at each asset’s relevant stage of production (i.e. the costs are allocated proportionally to unified metal
where unified metal is calculated based on prevailing market metal prices). Ore stockpiles are valued at the average cost of mining that
ore. Where ore stockpiles and work in-process are not expected to be processed within 12 months, those inventories are classified as
non-current.
Net realisable value represents the estimated selling price for that product based on forward metal prices for inventories which are
expected to be realised within 12 months, and the flat long-term metal prices for non-current inventories, less estimated costs to
complete production and selling costs.
Consumables and spare parts
Consumables and spare parts are stated at the lower of cost or net realisable value. Cost is determined on the weighted average moving
cost. The portion of consumables and spare parts not reasonably expected to be used within one year is classified as a long-term asset
in the Group’s consolidated balance sheet. Net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
Financial instruments
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised
immediately in the consolidated income statement.
Trade receivables without provisional pricing that do not have a significant financing component (determined in accordance with IFRS 15
Revenue from Contracts with Customers) are not initially measured at fair value, rather they are initially measured at their transaction
price.
Financial assets
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets. Financial assets are classified as either financial assets at amortised cost, at fair value through other
comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL) depending upon the business model for managing the
financial assets and the nature of the contractual cash flow characteristics of the financial asset.
Trade receivables without provisional pricing that do not contain provisional price features, loans and other receivables are held to collect
the contractual cash flows and therefore are carried at amortised cost adjusted for any loss allowance. The loss allowance is calculated in
accordance with the impairment of financial assets policy described below.
Trade receivables arising from the sales of copper, gold and silver concentrate with provisional pricing features are exposed to future
movements in market prices as described below and therefore contain an embedded derivative. IFRS 9 does not require that embedded
derivatives are separated; instead, the contractual cash flows of the financial asset are assessed in their entirety. Trade receivables from
sales of copper, gold and silver concentrates have contractual cash flow characteristics that are not solely payments of principal and
interest, and are therefore measured at fair value through profit or loss in accordance with IFRS 9 and do not fall under the expected
credit losses model (ECL) described below.
Effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating interest income
or expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts or payments
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums
or discounts) through the expected life of the financial instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.
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2. Significant accounting policies continued
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses (ECL) on investments in debt instruments that are measured at
amortised cost, trade and other receivables and contract assets, except for trade accounts receivable with provisional pricing. The
amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument.
The Group always recognises lifetime ECL for trade receivables and other receivables. The expected credit losses on these financial
assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific
to the receivables, general economic conditions and assessment of both the current as well as the forecast direction of conditions at the
reporting date, including time value of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial
recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group
measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial
instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial
instrument that are possible within 12 months after the reporting date.
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in
the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may
still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any
recoveries made are recognised in profit or loss.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Financial liabilities
Financial liabilities are initially classified and subsequently measured at amortised cost or FVTPL.
A financial liability is classified as and measured at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are
recognized in profit or loss.
A derivative is defined as a financial instrument or other contract within the scope of IFRS 9 with all three of the following characteristics:
•
•
•
its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange
rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the
variable is not specific to a party to the contract. Inclusion of the term ‘non-financial variable specific to a party to the contract’ is
limited to excluding insurance contracts from the definition of a derivative;
it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that
would be expected to have a similar response to changes in market factors; and
it is settled at a future date.
Borrowings, representing financial contracts for unconditional repayment of principal and interest under a loan agreement, and other
financial liabilities, including trade payables, are subsequently measured at amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in
profit or loss.
Supplier financing or reverse factoring arrangements, where a financial institution agrees to pay amounts an entity owes to the entity’s
suppliers and the entity agrees to pay the financial institution at a date later than suppliers are paid, are classified as borrowings when it is
determined that the terms and/or nature of the related balance account, such as accounts payable or advances to suppliers, are
substantially changed by the arrangement and therefore represents a financing transaction.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in the
consolidated income statement.
Cash flow hedges
The Group designates certain derivatives as hedging instruments in respect of interest rate risk in cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in cash flows
of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness
requirements:
• There is an economic relationship between the hedged item and the hedging instrument
• The effect of credit risk does not dominate the value changes that result from that economic relationship
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Change in the fair value of derivatives designated as a cash flow hedge is initially recognised in the consolidated statement of
comprehensive income and accumulated in the cash flow hedge reserve in shareholders’ equity. The deferred amount is then released to
the consolidated statement of income in the same periods during which the hedged transaction affects the consolidated statement of
income. Hedge ineffectiveness is recorded in the consolidated income statement when it occurs.
If the hedging instrument expires or is terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked,
any cumulative gain or loss recognised directly in other comprehensive income transferred to the consolidated income statement.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in the consolidated income statement in the period in which they are incurred.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, cash deposits and highly liquid investments with original maturities of three months
or fewer, which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Environmental obligations
An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when disturbance is caused by the
development or ongoing production of mining assets. Such costs arising from the decommissioning of plant and other site preparation
work, discounted to their net present value using a risk-free rate applicable to the future cash flows, are provided for and capitalised at
the start of each project, as soon as the obligation to incur such costs arises. These costs are recognised in the consolidated income
statement over the life of the operation, through the depreciation of the asset in the cost of sales line and the unwinding of the discount
on the provision in the finance costs line. Costs for restoration of subsequent site damage which is created on an ongoing basis during
production are provided for at their net present values and recognised in the consolidated income statement as extraction progresses.
Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work (that result from changes
in the estimated timing or amount of the cash flow or a change in the discount rate), are added to or deducted from the cost of the related
asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in
the consolidated income statement.
The provision for closure cost obligations is remeasured at the end of each reporting period for changes in estimates and circumstances.
Changes in estimates and circumstances include changes in legal or regulatory requirements, increased obligations arising from
additional mining and exploration activities, changes to cost estimates and changes to the risk free interest rate.
Employee benefit obligations
Remuneration paid to employees in respect of services rendered during a reporting period is recognised as an expense in that reporting
period. The Group pays mandatory contributions to the state social funds, including the Pension Fund of the Russian Federation and
Kazakhstan, which are expensed as incurred.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Income taxes are computed in accordance with
the laws of countries where the Group operates.
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2. Significant accounting policies continued
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the consolidated income
statement because of items of income or expense that are taxable or deductible in other periods and items that are never taxable or
deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for
all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future (judged to be one year). Deferred tax assets arising from deductible
temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will
be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future (judged to be one year).
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets
and liabilities on a net basis.
Recognition of current and deferred tax
Current and deferred tax is recognised in the consolidated income statement, except when they relate to items that are recognised in the
consolidated statement of comprehensive income or directly in equity, in which case, the current and deferred tax is also recognised in
consolidated statement of comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the
initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Uncertain tax positions
Provision for uncertain tax positions is recognised within current tax when management determines that it is probable that a payment will
be made to the tax authority. For such tax positions the amount of the probable ultimate settlement with the related tax authority is
recorded. When the uncertain tax position gives rise to a contingent tax liability for which no provision is recognised, the Group discloses
tax-related contingent liabilities and contingent assets in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Total exposures identified as of 31 December 2022 are disclosed in Note 27.
Mining tax
Mining tax includes royalties payable in Russian Federation and Kazakhstan. Mining tax in Russian Federation and Kazakhstan is
calculated based on the value of the precious metals extracted in the period. This value is usually determined based on the realised
selling price of precious metals or, in case if there were no sales during the period, cost of production of metals extracted (Russian
Federation) or the average market price (Kazakhstan) during the reporting period. Mining tax is charged to cost of production and
absorbed into metal inventories (Note 7).
Revenue recognition
The Group has three major streams: the sale of gold and silver bullions; sale of copper, gold and silver concentrate; and sale of Doré.
Revenue is measured at the fair value of consideration to which the entity expects to be entitled in a contract with a customer in exchange
for transferring promised goods, excluding amounts collected on behalf of third parties, such as value added tax (VAT). Group recognises
revenue when it transfers control of a product or service to a customer.
Sale of gold and silver bullion
Metal sales includes sales of refined gold and silver, which are generally physically delivered to customers in the period in which they are
produced, with their sales price based on prevailing spot market metal prices.
Revenue from metal sales is recognized when control over the metal is transferred to the customer, which generally occurs when the
refined gold and silver has been accepted by the customer. Once the customer has accepted the metals, the significant risks and
rewards of ownership have typically been transferred and the customer is able to direct the use of and obtain substantially all of the
remaining benefits from the metals.
186
Sales of copper, gold and silver concentrate
The Group sells copper, gold and silver concentrate under pricing arrangements whereby the final price is determined by the quoted
market prices in a period subsequent to the date of sale. These quotation periods differ from 1 to 4 months, depending on the specific
terms of the relevant agreement.
For shipments under the Incoterms Cost, Insurance and Freight (CIF) and Cost and Freight (CFR), control passes to the customer and the
revenue is recorded at the time of loading, whilst for shipments under the Incoterms Delivery at Place (DAP) and Delivery at Terminal
(DAT), control passes when the goods are delivered at an agreed destination. The proportion of concentrate sold on CIF or CFR
Incoterms is insignificant, and therefore no separate material performance obligations for freight and insurance services are recognised.
Revenue is initially recognised based on Polymetal’s estimate of copper, gold and silver content in the concentrate and using the forward
London Bullion Market Association (LBMA) or London Metal Exchange (LME) price, adjusted for the specific terms of the relevant
agreement, including refining and treatment charges which are subtracted in calculating the provisional amount to be invoiced.
Subsequent adjustments to pricing during the quotation period is not considered to be variable consideration under IFRS 15, as the
Group’s performance obligation has been satisfied at the point of delivery. Trade receivables arising from the sales of copper, gold and
silver concentrate with provisional pricing features are accounted for under IFRS 9 Financial Instruments as described above. The
provisionally priced accounts receivable, outstanding as of each reporting date, are marked to market using the forward price for the
quotation period under the relevant agreement with mark-to-market adjustments recognised within revenue.
Doré
Doré sales arrangements are similar to the copper, gold and silver concentrate pricing arrangements described above, with shorter
quotational periods of up to 14 days.
Share-based compensation
The Group applies IFRS 2 Share-based Payments to account for share-based compensation. IFRS 2 requires companies to recognise
compensation costs for share-based payments to employees based on the grant-date fair value of the award.
The fair value of the awards granted under Performance Share Plan (PSP) (as defined in the Remuneration report) is estimated using a
Monte-Carlo model valuation (see Note 31).
The fair value of the awards granted is recognised as a general, administrative and selling expense over the vesting period with a
corresponding increase in the share-based compensation reserve. Upon the exercise of the awards the amounts recognised within the
share-based compensation reserve are transferred to stated capital account.
Earnings per share
Earnings per share calculations are based on the weighted average number of common shares outstanding during the period. Diluted
earnings per share are calculated using the treasury stock method, whereby the proceeds from the potential exercise of dilutive stock
options with exercise prices that are below the average market price of the underlying shares are assumed to be used in purchasing the
Company’s common shares at their average market price for the period.
3. Critical accounting judgements and key sources of estimation uncertainty
In the course of preparing the financial statements, management necessarily makes judgements and estimates that can have a significant
impact on those financial statements. The determination of estimates requires judgements which are based on historical experience,
current and expected economic conditions, and all other available information.
Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the period in which the estimates
are revised and in the future periods affected. The judgements involving a higher degree of estimation or complexity are set out below.
Critical accounting judgements
The following are the critical accounting judgements (apart from judgements involving estimation which are dealt with separately below),
made during the year that had the most significant effect on the amounts recognised in the financial statements.
Determination of CGUs and Indicators of Impairment
The Group considers both external and internal sources of information in assessing whether there are any indications that CGUs are
impaired. The external sources of information the Group considers include changes in the market, economic and legal environment in
which the Group operates, that are usually not within its control, and are expected to affect the recoverable amount of CGUs. Internal
sources of information include the manner in which mining properties, plant and equipment are being used or are expected to be used;
and indicators of the economic performance of the assets, historical exploration and operating results. The primary external factors
considered are changes in spot and forecast metal prices, market rates of returns that inform discount rates, and changes in laws and
regulations. The primary internal factors considered are the Group’s current mine performance against expectations, changes in mineral
reserves and resources, life of mine plans and exploration results.
Impairment charges are assessed at the CGU level. Significant management judgement is applied in determining the Group’s CGUs,
particularly when assets relate to integrated operations, and where changes in CGU determinations could impact the impairment recorded.
CGUs identified by the Group generally represent production facilities with the related satellite deposits. Nezhda and Prognoz represent
relatively adjacent mining operations in Yakutia, Russia (noting the 675km distance between the mines), which are now planned to share
the existing Nezhda concentrator processing facilities. Management judge the Nezhda and Prognoz mines are interdependent, such that
the lowest level of identifiable cash inflows that are largely independent of other assets is both mines on a combined basis. The two
operations are therefore assessed for impairment as a single CGU.
187
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Notes to the consolidated financial statements continued
3. Critical accounting judgements and key sources of estimation uncertainty
continued
Accounting for acquisitions
To determine the appropriate accounting approach to be followed for an acquisition transaction, the Group applies judgement to assess whether
the acquisition is of a business, and therefore within scope of IFRS 3 Business Combinations, or is of a group of assets that do not constitute a
business and is therefore outside scope of IFRS 3. In making this determination, management evaluates the inputs, processes and outputs of the
asset or entity acquired. Judgement is used to determine whether an integrated set of activities and assets is capable of being conducted and
managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other
owners, members or participants. The acquisitions of subsidiaries during the reporting year have been assessed as asset acquisitions.
Use of estimates
The preparation of financial statements requires the Group to make estimates and assumptions that affect the amounts of the assets and
liabilities recognised, amounts of revenue and expenses reported, and contingent liabilities disclosed, as of the reporting date. The
determination of estimates is based on current and expected economic conditions, as well as historical data and statistical and
mathematical methods as appropriate.
Key sources of estimation uncertainty
Key sources of estimation uncertainty reflect those sources of estimation uncertainty which may have a possible material impact of
resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year. They include: cash flow
projections for impairment testing and impairment reversal, valuation of contingent consideration assets and liabilities and calculation of
net realisable value of stockpiles and work-in progress, mineral reserves and resources assessment and life of mine plans, useful lives of
production and other assets, environmental provision and recoverability of deferred tax assets.
DCF models are developed for the purposes of impairment testing, valuation of contingent consideration assets and liabilities, calculation of net
realisable value of metal inventories and assessment of the recoveraly of deferred tax assets. Expected future cash flows used in DCF models
are inherently uncertain and could change over time. They are affected by a number of factors including ore reserves, together with economic
factors such as commodity prices, exchange rates, discount rates and estimates of production costs and future capital expenditure.
• Ore reserves and mineral resources – Recoverable reserves and resources are based on the proven and probable reserves and
resources in existence. Reserves and resources are incorporated in projected cash flows based on ore reserve statements and
exploration and evaluation work undertaken by appropriately qualified persons (see below). Mineral resources, adjusted by certain
conversion ratios, are included where management has a high degree of confidence in their economic extraction, despite additional
evaluation still being required prior to meeting the required confidence to convert to ore reserves.
• Commodity prices - Commodity prices are based on latest internal forecasts, benchmarked against external sources of information.
Polymetal currently uses flat real long-term gold and silver prices of $1,800 per ounce for 2023, $1,700 per ounce from 2024
(2021: $1,800 for 2022 and $1,500 from 2023) and $20 per ounce for 2023, $21 per ounce from 2024 (2021: $22 for 2022 and $20
from 2023), respectively.
• Foreign exchange rates – Foreign exchange rates are based on observable spot rates, or on latest internal forecasts, benchmarked
with external sources of information for relevant countries of operation, as appropriate. The RUB/$ exchange rates are estimated at
65 RUB/$ for 2023, at 73 RUB/$ for 2024 and 75 RUB/$ from 2025 (2021: flat long-term rate of 72 RUB/$). The KZT/$ exchange rate
are estimated at 450 KZT/$ for 2023, at 502 KZT/$ from 2024 (2021: 420 KZT/$), respectively.
• Discount rates – The Group used a post-tax real discount rate of 14.1% for Russia assets and 9% for Kazakhstan (2021: 8.0% both for
Russian and Kazakhstan). Post-tax cash flow projections used in the value in use impairment models are discounted based on this
rate. In 2022 the separate discount rates were estimated to avoid averaging, as Kazakhstan and Russia are expected to have different
country risks, considering the sharp drop in Russian credit rating and the effect of the sanctions in place.
• Operating costs, capital expenditure and other operating factors - Cost assumptions incorporate management experience and
expectations, as well as the nature and location of the operation and the risks associated therewith. Underlying input cost
assumptions are consistent with related output price assumptions. Other operating factors, such as the timelines of granting licences
and permits are based on management’s best estimate of the outcome of uncertain future events at the balance sheet date.
Sensitivity analysis
Impairment charges of $801 million for property, plant and equipment was recognised during the year ended 31 December 2022
(Note 17). The recoverable amounts were estimated based on a value in use calculation.
The Group has two CGUs to which goodwill was allocated, being Mayskoye ($11 million) and Dukat ($3 million). No impairment charge for
goodwill was recognised during the year ended 31 December 2022 (Note 20).
The impairment assessment is inherently sensitive to plausible changes in certain economic and operational key input assumptions within
the next financial year, which could increase or reduce the CGU’s recoverable value estimate.
The management has performed an analysis as to whether a reasonably possible adverse change to any of the key assumptions would
lead to impairment.
The following scenarios were considered as reasonably possible and were used for this sensitivity analysis:
• 10% simultaneous decrease in gold and silver prices over the life of mine;
• 10% appreciation in RUB/$ exchange rates;
• 10% increase in operating expenses over the life of mine; and
• 1% increase in the discount rate applied.
188
Each of the sensitivities above has been determined by assuming that the relevant key assumption moves in isolation, and without regard
to potential mine plan changes and other management decisions which would be taken to respond to adverse changes in existing
management projections.
The table below summarises the outcomes of the isolated scenarios described above. As a result if each isolated scenario the Group
would recognise an additional impairment for each CGU as specified by the table below. Certain scenarios would result in impairment of
goodwill, allocated to Dukat, and further impairment of non-current assets.
Scenario
Decrease in gold and silver prices
Appreciation of RUB/$ exchange rate
Increase in operating expenses
Increase in discount rate
Nezhda-Prognoz
$m
Veduga
$m
Dukat
$m
258
159
136
41
101
54
46
35
76
50
43
–
No additional charges would be recognised for Kutyn CGU under all scenarios. No scenarios would result in impairment of Mayskoye
CGU, including goodwill.
No sensitivity analysis was performed for investments in associates, as investment in Tomtor was fully provided for, due to suspension
(Note 21) and the remaining investments are not considered material.
The sensitivities of contingent consideration liabilities measured at FVTPL ($36 million at 31 December 2022; $63 million at 31 December
2021) and inventories held at net realisable value ($95 million at 31 December 2022; $49 million at 31 December 2021) to a reasonably
possible change in key assumptions described above are not considered material.
Recoverability of deferred tax assets
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be utilised (Note 16). This review takes into account the factors such
as estimates of future production, commodity lines, operating costs, future capital expenditure, as described above. If actual results differ
from these estimates or if these estimates must be adjusted in future periods, the financial position, results of operations and cash flows
may be negatively affected.
Deferred tax assets arising from tax losses carried forward, as well as applicable tax legislation, are described in Note 16. It is not
practical to show the likely impact on the deferred tax balances of changes in corporate parameters because of number of legal entities
with tax losses available and the different tax attributes applicable to each entity.
Climate change
We have assessed and set out the Group’s climate risks and opportunities as part of our commitment to climate disclosure within the
Strategic Report. Mitigation and adaptation measures that may be required in the future to combat the physical and transition risks of
climate change could also have potential implications for the Group’s financial statements. This would be the case where assets and
liabilities are measured based on an estimate of future cash flows.
In preparing the Group’s financial statements, climate-related strategic decisions have impacted the following:
• Our decarbonisation and clean energy initiatives considered and approved by the Board were included in future cash flow projections,
underpinned by estimates for recoverable amounts of property, plant and equipment, as deemed relevant.
• The provision for mine closure costs impacted by climate risks and opportunities is set out in Note 25 to the financial statements.
We have adopted both mitigation and adaptation measures within our climate management system. We focus on renewable energy, carbon-
intensive fuel replacement and innovative technologies to both mitigate climate change impacts and to reduce our carbon footprint. The
adaptation measures we use are based on climate models, which inform the design, construction, operation and closure of our mining assets.
Significant judgements and key estimates made by the Group may be impacted in the future by changes to our climate change strategy
or in global commitments to decarbonisation. This could, in turn, result in material changes to the financial results and the carrying values
of certain assets and liabilities in future reporting periods. As at the reporting date, the Group believes that there is no material impact on
balance sheet carrying values of assets or liabilities.
Environmental obligations
The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The
Group’s provision for future decommissioning and land restoration cost ($76 million at 31 December 2022; $54 million at 31 December
2021) represents management’s best estimate of the present value of the future cash outflows required to settle the liability which reflects
estimates of future costs, inflation, movements in foreign exchange rates and assumptions of risks associated with the future cash
outflows; and the applicable interest rate for discounting the future cash outflows. Actual costs incurred in future periods could differ
materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates
could affect the carrying amount of this provision.
189
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Notes to the consolidated financial statements continued
4. Acquisitions and disposals
Galkinskoye acquisition
On 10 March 2022, the Group acquired 100% of shares of PSU-Holding JSC, a parent company of PSU LLC, which owns the license of
Galka gold-sulfide ore deposit. Total cash consideration comprised $27 million.
Transaction represents an asset acquisition in accordance with IFRS 3 Business Combinations, as the acquired company did not have
any substantive processes that have the ability to contribute to the creation of outputs. The consideration paid was mainly attributable to
the acquired mineral rights of $29 million and other current liabilities of $2 million.
Albazino power line acquisition
In December 2021, the Group entered into a preliminary lease agreement to lease on pre-agreed terms the grid power line from Gorin to
the Albazino production site. The power line was planned to be built, owned and operated by AEK LLC, an independent grid
management company. The construction is funded by the 8-year senior loan and 8-year subordinated loan facility, while Polymetal
provided guarantees to the lenders in connection to the senior loan and lease payments to AEK.
In 2022 Polymetal made the decision to consolidate 100% of the project entity in order to take full control of the project. The acquisition
was completed by 28 June 2022 for total consideration of 10 thousand RUB (approximating $177), representing the nominal share capital
of the entity. The Group determined that it represents an asset acquisition in accordance with IFRS 3 Business Combinations, as the
acquired company did not have any substantive processes that have the ability to contribute to the creation of outputs. Assets and
liabilities acquired are detailed as follows:
Assets acquired and liabilities recognised at the date of acquisition
Capital construction in progress
Cash and cash equivalents
Other current assets
Borrowings
Fair value of the net assets acquired
Cash and cash equivalents acquired
$m
19
150
(8)
(161)
–
150
Acquisition of non-controlling interest in Novopetrovskoye LLC
On 22 March 2022, following completion of the initial JORC-compliant Mineral Resource estimate, the Group increased its interest in
Novopetrovskoye LLC from 75% to 100%. The Group purchased the additional 25% from an unrelated party for a consideration of
$24 million, payable in cash. The Group has previously determined that Novopetrovskoye LLC meets the definition of a subsidiary and
therefore it was consolidated from the date of the 75% share acquisition. The increase in interest in the entity was recognised as an
acquisition of the non-controlling interest and recognised within equity. As of 31 December 2021 Novopetrovskoye did not give rise to a
significant non-controlling interest to be presented within equity, income statement and statement of comprehensive income.
Disposal of Tarutinskoye
In December 2022, the Group sold its 100% interest in a minor subsidiary Tatutinskoye to the third party for total cash consideration
$7 million. Assets and liabilities disposed of comprised mineral rights of $9 million and the intercompany debt of $10 million, which was
assigned to the buyer as a part of transaction. As a result the Group recognised loss on disposal of subsidiary of $2 million. Cash
consideration of $5 million was received in December 2022, which the remaining amount payable in equal installments on first and
second anniversary of the disposal.
5. Segment information
The Group has identified five reportable segments:
• Kazakhstan (Varvara, Komar, Kyzyl);
• Magadan (Omolon, Dukat, Mayskoye);
• Ural (Voro);
• Khabarovsk (Amursk POX, Albazino, Svetloye, Veduga, Kutyn);
• Yakutia (Nezhda, Prognoz).
Reportable segments are determined based on the Group’s internal management reports, which are separated based on the Group’s
geographical structure. Minor companies and activities (management, purchasing and other companies) which do not meet the
reportable segment criteria are disclosed within «Сorporate and other» segment. Each segment is engaged in gold, silver or copper
mining and related activities, including exploration, extraction, processing and reclamation. The Group’s reportable segments are based
in the Russian Federation and Kazakhstan.
The measure which management and the Chief Operating Decision Maker (the CODM) use to evaluate the performance of the Group is
segment Adjusted EBITDA, which is an Alternative Performance Measure (APM). For more information on the APMs used by the Group,
including definitions, please refer to page 218.
Revenue shown as “Corporate and other” comprises, principally, intersegment revenue relating to the supply of inventories, spare parts
and fixed assets, and rendering management services to the Group’s production entities. The Group recognises Revenue and related
Cost of sales in the segment where the source ore was mined, regardless of whether it was processed on behalf of that segment at
190
production facilities related to another hub, Revenue and Cost of sales of the production entities are reported net of any intersegmental
Revenue and Cost of sales related to the intercompany sales of ore and concentrates, as well as intercompany smelting services, as this
presentation is more meaningful from a management and forecasting perspective.
Business segment current assets and liabilities, other than current inventory, are not reviewed by the CODM and therefore are not
disclosed in these consolidated financial statements. The segment adjusted EBITDA reconciles to the profit before income tax as follows:
Year ended 31 December 2022 ($m)
Kazakhstan Magadan Khabarovsk
933
996
565
Russia
Ural
177
Yakutia
130
Revenue from external customers
Cost of sales, excluding depreciation,
depletion and write-down of inventory to net
realisable value
Cost of sales
Depreciation included in Cost of sales
Write-down of metal inventory to net
realisable value
Reversal of previous write-down of
non-metal inventory to net realisable value
Rehabilitation expenses
General, administrative and selling expenses,
excluding depreciation, amortisation and
share-based compensation
General, administrative and selling expenses
Depreciation included in SGA
Share-based compensation
Other operating expenses excluding additional
tax charges
Other operating expenses, net
Bad debt and expected credit loss
allowance
Additional tax charges/fines/penalties
Share of loss of associates and joint ventures
Adjusted EBITDA
Depreciation expense
Rehabilitation expenses
Write-down of non-metal inventory to net
realisable value
Write-down of metal inventory to net
realisable value
Impairment of non-current assets
Impairment of investment in associate
Share-based compensation
Bad debt and expected credit loss
allowance
Additional tax charges/fines/penalties
340
415
(75)
–
–
–
27
29
(2)
–
26
28
–
(2)
–
540
77
–
–
–
–
–
–
–
2
549
690
(103)
(38)
1
(1)
44
45
(1)
–
48
48
–
–
–
355
104
1
(1)
38
–
–
–
–
–
306
380
(62)
(13)
–
1
38
39
(1)
–
23
22
–
1
–
198
63
(1)
–
13
106
–
–
–
(1)
18
85
93
(9)
–
–
1
11
12
(1)
–
6
6
1
(1)
–
75
10
(1)
–
–
–
–
–
(1)
1
66
75
112
(23)
(14)
–
–
16
16
–
–
8
8
–
–
–
31
23
–
–
14
695
–
–
–
–
1
1
109
112
(3)
–
85
84
1
–
–
659
200
(1)
(1)
65
801
–
–
(1)
–
Operating loss
461
213
(701)
(404)
Foreign exchange gain/(loss), net
Loss on disposal of subsidiaries, net
Change in fair value of financial instruments
Finance expenses
Finance income
Loss before tax
Income tax
Loss for the year
Current metal inventories
Current non-metal inventories
Non-current segment assets:
Property, plant and equipment, net
Goodwill
Non-current inventory
Investments in associates
Total segment assets
Additions to non-current assets:
Property, plant and equipment
Acquisition of subsidiaries
111
46
696
–
34
–
887
108
–
264
132
413
14
33
–
856
135
–
182
90
1,358
–
52
–
1,682
436
19
25
14
306
–
3
–
348
86
29
123
28
540
–
11
–
702
107
–
594
264
2,617
14
99
–
3,588
764
48
Total
reportable
segments
2,801
1,355
1,690
(272)
Total
1,868
1,015
1,275
(197)
(65)
(65)
Corporate
and other
–
–
–
–
–
–
–
152
170
(5)
(13)
30
30
–
–
–
Total
2,801
1,355
1,690
(272)
(65)
1
1
288
311
(10)
(13)
141
142
1
(2)
–
1
1
136
141
(5)
–
111
112
1
(2)
–
1,199
(182)
1,017
277
(1)
(1)
65
801
–
–
(1)
2
57
705
310
3,313
14
133
–
4,475
872
48
5
–
–
–
–
24
13
–
–
282
(1)
(1)
65
801
24
13
(1)
2
(224)
(167)
(32)
(2)
(20)
(119)
8
(332)
44
(288)
705
352
3,392
14
133
13
–
42
79
–
–
13
134
4,609
11
1
883
49
191
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
5. Segment information continued
Year ended 31 December 2021 ($m)
Kazakhstan Magadan Khabarovsk
983
1,103
641
Revenue from external customers
Cost of sales, excluding depreciation,
depletion and write-down of inventory to net
realisable value
Cost of sales
Depreciation included in Cost of sales
Write-down of metal inventory to net
realisable value
Reversal of previous write-down of
non-metal inventory to net realisable value
Rehabilitation expenses
General, administrative and selling expenses,
excluding depreciation, amortisation and
share-based compensation
General, administrative and selling expenses
Depreciation included in SGA
Share-based compensation
Other operating expenses excluding additional
tax charges
Other operating expenses, net
Bad debt and expected credit loss
allowance
Additional tax charges/fines/penalties
Share of loss of associates and joint ventures
Adjusted EBITDA
Depreciation expense
Rehabilitation expenses
Write-down of non-metal inventory to net
realisable value
Write-down of metal inventory to net
realisable value
Share-based compensation
Bad debt and expected credit loss
allowance
Additional tax charges/fines/penalties
318
396
(78)
–
–
–
23
25
(2)
–
12
13
–
(1)
–
630
80
–
–
–
–
–
1
Russia
Ural
163
63
69
(6)
–
–
–
7
7
–
–
7
7
–
–
–
Yakutia
–
–
–
–
–
–
–
11
11
–
–
7
7
–
–
–
456
550
(74)
(20)
–
–
33
34
(1)
–
56
57
(1)
–
–
238
292
(48)
(5)
1
(2)
29
30
(1)
–
35
33
–
2
–
558
339
86
(18)
75
–
–
20
–
1
–
49
2
(1)
5
–
–
(2)
6
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
reportable
segments
2,890
1,075
1,307
(206)
(25)
1
(2)
103
107
(4)
–
117
117
(1)
1
–
1,595
210
2
(1)
25
–
1
(1)
Total
1,907
757
911
(128)
(25)
1
(2)
80
82
(2)
–
105
104
(1)
2
–
965
130
2
(1)
25
–
1
(2)
Corporate
and other
–
–
–
–
–
–
–
99
119
(4)
(16)
32
32
–
–
–
Total
2,890
1,075
1,307
(206)
(25)
1
(2)
202
226
(8)
(16)
149
149
(1)
1
–
(131)
1,464
4
–
–
–
16
–
–
214
2
(1)
25
16
1
(1)
6. Revenue
Gold (thousand ounces)
Silver (thousand ounces)
Copper (tonnes)
Total
Gold (thousand ounces)
Silver (thousand ounces)
Copper (tonnes)
Total
Geographical analysis of revenue by destination is presented below:
Sales to Kazakhstan
Sales to Asia
Sales within the Russian Federation
Sales to Europe
Total
Year ended 31 December 2022
Volume
shipped
(unaudited)
Volume
payable
(unaudited)
Average price
($ per oz/t
payable)
(unaudited)
1,408
18,973
3,810
1,376
18,542
3,399
1,738
20.7
7,650
Year ended 31 December 2021
Volume
shipped
(unaudited)
Volume
payable
(unaudited)
Average price
($ per oz/t
payable)
(unaudited)
1,421
17,860
2,403
1,386
17,482
2,093
1,768
24.0
10,032
$m
2,392
383
26
2,801
$m
2,450
419
21
2,890
Year ended
31 December
2022
$m
31 December
2021
$m
1,205
1,284
296
16
2,801
1,008
490
1,271
121
2,890
Included in revenues for the year ended 31 December 2021 are revenues which arose from the sales to the Group’s largest customers,
whose contribution to the Group’s revenue presented 10% or more of the total revenue. In 2022 revenues from such customers
amounted to $754 million, $446 million, $452 million and $233 million respectively (2021: $833 million, $638 million, $369 million and
$279, respectively).
Presented below is an analysis per revenue streams as described in Note 2 Significant accounting policies:
Operating profit
549
462
286
80
(18)
810
1,359
(151)
1,208
108
35
728
–
30
–
901
93
–
228
92
376
14
25
–
735
117
–
117
50
1,045
–
38
–
1,250
437
–
50
8
126
–
2
–
186
67
–
50
17
938
–
1
–
1,006
152
–
445
167
2,485
14
66
–
3,177
773
–
553
202
3,213
14
96
–
4,078
866
–
5
3
4
(66)
7
1,161
(257)
904
553
228
3,314
14
96
28
–
26
101
–
–
28
155
4,233
5
16
871
16
Bullions
Concentrate
Dore
Ore
Total
Foreign exchange gain/(loss), net
Gain on disposal of subsidiaries, net
Change in fair value of financial instruments
Finance expenses
Finance income
Profit before tax
Income tax
Profit for the year
Current metal inventories
Current non-metal inventories
Non-current segment assets:
Property, plant and equipment, net
Goodwill
Non-current inventory
Investments in associates
Total segment assets
Additions to non-current assets:
Property, plant and equipment
Acquisition of subsidiaries
192
Year ended
31 December
2022
$m
31 December
2021
$m
1,104
915
754
28
2,801
1,341
897
652
–
2,890
193
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
7. Cost of sales
11. General, administrative and selling expenses
Cash operating costs
On-mine costs (Note 8)
Smelting costs (Note 9)
Purchase of ore and concentrates from third parties
Mining tax
Total cash operating costs
Depreciation and depletion of operating assets (Note 10)
Rehabilitation expenses (Note 25)
Total costs of production
Increase in metal inventories
Write-down of inventories to net realisable value (Note 22)
Idle capacities and abnormal production costs
Total
8. On‑mine costs
Services
Labour
Consumables and spare parts
Other expenses
Total (Note 7)
9. Smelting costs
Consumables and spare parts
Services
Labour
Other expenses
Total (Note 7)
10. Depletion and depreciation of operating assets
On-mine
Smelting
Total in cost of production (Note 7)
Less: absorbed into metal inventories
Depreciation included in cost of sales
Year ended
31 December
2022
$m
31 December
2021
$m
243
13
10
15
30
311
141
170
311
171
16
8
10
21
226
107
119
226
Year ended
31 December
2022
$m
31 December
2021
$m
62
44
14
15
2
(2)
7
72
28
20
11
(1)
2
17
142
149
Year ended
31 December
2022
$m
31 December
2021
$m
741
567
69
136
1,513
324
(1)
1,836
(216)
64
6
516
383
130
152
1,181
229
2
1,412
(132)
24
3
Labour
Share-based compensation (Note 31)
Depreciation
Services
Other
Total
including
Mine site expenses
Corporate head office expenses
Total
1,690
1,307
12. Other operating expenses, net
Year ended
31 December
2022
$m
31 December
2021
$m
363
175
196
7
741
254
130
126
6
516
Year ended
31 December
2022
$m
31 December
2021
$m
242
213
110
2
567
164
145
72
2
383
Year ended
31 December
2022
$m
31 December
2021
$m
228
96
324
(52)
272
161
68
229
(23)
206
Exploration expenses
Social payments
Expenses related to the investment in Special Economic Zone
Taxes, other than income tax
Additional tax charges/fines/penalties
Change in estimate of environmental obligations
Other expenses
Total
For the operations held in the Special Economic Zone of the Russian Far East, Omolon Gold Mining Company LLC and Magadan Silver
JSC are entitled to the decreased statutory income tax rate of 17%, as well as decreased mining tax rate (paying 60% of standard mining
tax rates). In return for obtaining this tax relief the members of the regional free Economic Zone are obliged to invest 50% of their tax
savings each year in the Special Economic Zone Development Programme, amounting to $14 million in 2022 (2021: $20 million).
Operating cash flow spent on exploration activities amounts to $61 million (2021: $71 million).
13. Employee costs
Wages and salaries
Social security costs
Share-based compensation (Note 31)
Total employee costs
Reconcilation:
Less: employee costs capitalised
Less: employee costs absorbed into unsold metal inventory balances
Employee costs included in costs of sales
Year ended
31 December
2022
$m
31 December
2021
$m
500
115
13
628
(64)
(24)
540
366
89
16
471
(64)
(13)
394
The weighted average number of employees during the year ended 31 December 2022 was 14,455 (year ended 31 December
2021: 13,589).
Compensation of key management personnel is disclosed within Note 32.
Depreciation of operating assets excludes depreciation relating to non-operating assets (included in general, administrative and selling
expenses) and depreciation related to assets employed in development projects where the charge is capitalised. Depreciation expense,
which is excluded from the Group’s calculation of Adjusted EBITDA (see Note 5), also excludes amounts absorbed into unsold metal
inventory balances.
194
195
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
14. Auditor’s remuneration
Fees payable to the auditor and their associates for the audit of the Company’s Annual Report
United Kingdom
Overseas
Audit of the Company's subsidiaries
Total audit fees
Audit-related assurance services (half-year financial statements review)
Total audit and half-year review fees
Other services
Total non-audit fees
Total fees
Non-audit fees as % of audit and half-year review fees
Year ended
31 December
2022
$m
31 December
2021
$m
0.49
–
0.07
0.55
0.36
0.91
–
–
0.91
0%
0.56
0.76
0.07
1.39
0.50
1.89
0.34
0.34
2.23
18%
Fees payable to the auditor for 2022 exclude any fees payable to the overseas component auditors, as they do not meet the definition of
the auditor’s associates.
15. Finance expenses
Interest expense on borrowings
Unwinding of discount on lease liabilities (Note 7, 33)
Unwinding of discount on environmental obligations (Note 25)
Unwinding of discount on contingent consideration liability (Note 33)
Total
Year ended
31 December
2022
$m
31 December
2021
$m
94
7
8
10
119
51
3
4
8
66
During the year ended 31 December 2022 interest expense on borrowings excludes borrowing costs capitalised in the cost of qualifying
assets of $35 million (2021: $13 million). These amounts were calculated based on the Group’s general borrowing pool and by applying
an effective interest rate of 4.53% (2021: 2.91%) to cumulative expenditure on such assets.
16. Income tax
The amount of income tax expense for the years ended 31 December 2022 and 31 December 2021 recognised in profit and loss was as
follows:
Current income taxes
Deferred income taxes
Total
Year ended
31 December
2022
$m
31 December
2021
$m
164
(208)
(44)
261
(4)
257
Increased deferred income tax credit resulted from deferred tax benefit of $149 million related to impairment of non-current assets
(Note 17).
A reconciliation between the reported amounts of income tax expense attributable to income before income tax is as follows:
Profit before income tax
Theoretical income tax expense at the tax rate of 20%
Effect of Special Economic Zone and Regional Investment project decreased tax rates
Tax effect of WHT on intercompany dividends
Non-taxable net foreign exchange gains
Effect of different tax rates of subsidiaries operating in other jurisdictions
Change in unrecognised deferred taxes
Non-deductible interest expense
Other non-taxable income and non-deductible expenses
Adjustments in respect of prior periods
Total income tax expense
Year ended
31 December
2022
$m
31 December
2021
$m
(332)
(66)
19
(15)
(25)
(9)
14
6
27
5
(44)
1,161
232
(33)
33
–
5
3
10
10
(3)
257
The actual tax expense differs from the amount which would have been determined by applying the statutory rate of 20% for the Russian
Federation and Kazakhstan to profit before income tax as a result of the application of relevant jurisdictional tax regulations, which disallow
certain deductions which are included in the determination of accounting profit. These deductions include social related expenditure and
other non-production costs, certain general and administrative expenses, financing expenses, foreign exchange related and other costs.
Additionally, the Group has a number of tax concessions, the most significant of which are detailed below.
Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of 17% for the
operations held in the Special Economic Zone of the Russian Far East, the rate of 17% was used in calculation of income tax provision
and deferred tax positions for those entities. Amursk Hydrometallurgical Plant LLC is entitled to an income tax rate of 0% in 2022, a tax
rate of 13% during 2023-2027. South-Verkhoyansk Mining Company JSC received tax relief as a Regional Investment Project and is
entitled to the statutory income tax rate of 10% for 5 first years and 13.5% for 2 years from the date of eligibility.
Following an agreement reached by the Finance Ministers from the G7 in July 2021 backing the creation of a global minimum corporate
tax rate of least 15%, over 140 countries and jurisdictions have agreed to the OECD/G20 Inclusive Framework on BEPS, also referred to
as BEPS 2.0, including Russia and Kazakhstan. The new framework aims to ensure that large multinational enterprises pay a fair share of
tax wherever they operate and to set a global minimum tax rate. Earliest possible implementation is on 1 January 2023 and it is expected
that implementation in key countries will commence soon. Neither Russia or Kazakhstan have yet announced any details regarding the
adjustment of their local tax legislation. We are monitoring information in this regard.
Based on the current understanding of the anticipated changes to the global tax landscape as a result of implementation of BEPS 2.0 rules, the
Group is assessing the impact of these rules on its future tax obligations once adjustments are made to relevant local tax legislation. The Group’s
future effective tax rate is expected to continue to exceed the minimum rate of 15% and not significantly increase by virtue of these new rules.
Tax exposures related to the income tax
In 2022 and 2021 no individual material exposures were identified as probable and therefore provided for. Management has identified a
total exposure in respect of contingent liabilities (Note 27) (covering taxes and related interest and penalties) of approximately $122 million
being uncertain tax positions (31 December 2021: $157 million) which relate to income tax. This is connected largely to the more assertive
position of the Russian tax authorities in their interpretation of tax legislation in several recent court cases for other taxpayers.
Fiscal periods remain open to review by the tax authorities in respect of taxes for the three and five calendar years preceding the year of
tax review for Kazakhstan and Russia respectively. In case of Regional Investment Project in Russian Federation fiscal period remains
open to review for five years as well. While the Group believes it has provided adequately for all tax liabilities based on its understanding
of the tax legislation, the above facts may create additional financial risks for the Group.
Management does not anticipate a significant risk of material changes in estimates in these matters in the next financial year.
Income tax amounts included in other comprehensive income
An analysis of tax by individual item presented in the consolidated statement of comprehensive income is presented below:
Net foreign exchange gains/(losses) on net investment in foreign operation
Current tax expense
Deferred tax expense
Total income tax recognised in other comprehensive income
Year ended
31 December
2022
$m
31 December
2021
$m
5
–
5
2
–
2
Current and deferred tax assets recognised within other comprehensive income relate to the tax losses originated by foreign currency exchange
losses, allowable for tax purposes and generated by monetary items that form part of the intragroup net investment in the foreign operation.
These foreign currency exchange losses are recognised in the consolidated financial statements within the foreign currency translation reserve.
196
197
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
Deferred taxation
Deferred taxation is attributable to the temporary differences that exist between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for tax purposes.
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the reporting
period.
At 1 January 2021
Charge to income statement
Exchange differences
At 31 December 2021
Charge to income statement
Exchange differences
At 31 December 2022
Mineral
rights
$m
(189)
2
3
(184)
88
(22)
(118)
Exploration
in progress
$m
Trade and
other
payables
$m
Environmental
obligation
$m
Tax losses
$m
Unremmited
earnings
$m
Other
$m
(42)
(24)
–
(66)
12
(9)
(63)
18
–
–
18
(40)
2
(20)
8
3
–
11
1
–
12
81
19
–
100
103
3
206
(15)
(7)
–
(22)
22
–
–
(7)
11
–
4
22
(8)
18
Total
$m
(146)
4
3
(139)
208
(34)
35
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following analysis shows
deferred tax balances presented for financial reporting purposes:
Deferred tax liabilities
Deferred tax assets
Total
Year ended
31 December
2022
$m
31 December
2021
$m
(107)
142
35
(206)
67
(139)
The Group believes that recoverability of the recognised deferred tax asset (DTA) of $206 million at 31 December 2022
(2021: $100 million), which is related to the tax losses carried forward, is more likely than not based upon expectations of future taxable
income in the Russian Federation and Kazakhstan.
In accordance with Russian Federation tax law regarding loss carryforwards, loss carryforwards are limited to 50% of taxable profit in tax
years through to 2024. From 2025 the limitation will expire and it will be possible to fully utilise loss carryforwards against the corporate
tax base in a given year and losses incurred from 2007 can be carried forward for an indefinite period until fully utilised.
Tax losses carried forward represent amounts available for offset against future taxable income generated predominantly by Polymetal
JSC and JSC South-Verkhoyansk Mining Company. Each legal entity within the Group represents a separate tax-paying component for
income tax purposes. The tax losses of one entity cannot be used to reduce taxable income of other entities of the Group.
Losses incurred in certain taxable entities in recent years have created a history of losses as of 31 December 2022. The Group has
concluded that there is sufficient evidence to overcome the recent history of losses based on forecasts of sufficient taxable income in the
carry-forward period.
The Group’s estimate of future taxable income is based on established proven and probable reserves which can be economically
developed. The related detailed mine plans and forecasts provide sufficient supporting evidence that the Group will generate taxable
earnings to be able to fully realise its net DTA even under various stressed scenarios. The amount of the DTA considered realisable,
however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced due to
delays in production start dates, decreases in ore reserve estimates, increases in environmental obligations, or reductions in precious
metal prices.
No deferred tax asset has been recognised in respect of $95 million (2021: $84 million) of losses as it is not considered probable that
there will be future taxable profits against which the losses can be utilised.
In 2022 the Group paid withholding income tax of $7 million (2021: $25 million) related to intercompany dividends, which were remitted
during the year. As of 31 December 2022 the Group did not recognise any deferred tax liability (31 December 2021: $22 million) for the
undistributed retained earnings of certain of the Group subsidiaries, which are expected to be remitted from these subsidiaries in
foreseeable future (judged to be one year). No deferred tax liabilities for taxes that would be payable on the unremitted earnings of the
Group subsidiaries is recognised where the Group determines that the undistributed profit of its subsidiaries will not be distributed in the
foreseeable future (judged to be one year). The temporary differences associated with investments in subsidiaries, for which deferred tax
liabilities have not been recognised, amount to $4.1 billion (2021: $3.2 billion).
198
17. Impairment of non‑current assets
During the year ended 31 December 2022, due to the appreciation of Russian Rouble against Dollar resulting in the increased carrying
value of non-current assets, as well as a post tax real discount rate increase, the Group carried out an impairment review of its property,
plant and equipment. As a result of this review, total impairment loss of $801 million was recognised, which comprised the following:
Property, plant and equipment
Development assets
Mining assets
Capital construction in-progress
Non-mining assets
Total PPE
Nezhda-Prognoz
$m
Kutyn
$m
Veduga
$m
Total
$m
315
341
36
2
694
2
7
3
–
12
13
64
18
–
95
330
412
57
2
801
Nezhda-Prognoz CGU relates to Yakutia reporting segment, while Kutyn and Veduga CGUs are included in Khabarovsk reporting
segment (Note 5).
After the related tax credit of $149 million, the post-tax impairment charge amounts to $652 million.
The recoverable amount of the relevant cash-generating units is determined based on a value in use calculation, which represent Level 3
fair value measurement in accordance with IFRS 13. The impairment testing procedure, related assumptions and sensitivities are
described in detail in Note 2 and Note 3 “Use of estimates” section above.
18. Property, plant and equipment
Cost
Balance at 1 January 2021
Additions
Transfers
Change in environmental obligations (Note 25)
Acquisitions
Eliminated on disposal of subsidiaries
Disposals and write-offs including fully
depreciated mines
Translation to presentation currency
Balance at 31 December 2021
Additions
Transfers
Change in environmental obligations (Note 25)
Acquisitions (Note 4)
Eliminated on disposal of subsidiaries (Note 4)
Disposals and write-offs including fully
depreciated mines
Translation to presentation currency
Balance at 31 December 2022
Development
assets
$m
Exploration
and evaluation
assets
$m
Mining assets
$m
Non-mining
assets
$m
Capital
construction
in-progress
$m
418
65
(98)
–
–
–
–
(1)
384
65
(13)
–
29
–
–
35
500
62
14
(11)
–
16
(6)
–
(1)
74
19
–
–
1
(8)
–
(1)
85
2,801
305
343
2
–
–
(64)
(44)
3,343
255
245
12
–
(10)
(152)
50
3,743
65
10
1
–
–
–
(1)
(1)
74
11
2
–
–
–
–
6
93
543
477
(235)
1
–
–
–
(3)
783
533
(234)
8
19
–
(1)
39
1,147
Total
$m
3,889
871
–
3
16
(6)
(65)
(50)
4,658
883
–
20
49
(18)
(153)
129
5,568
199
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
18. Property, plant and equipment continued
Amounts recognised in profit and loss for the year ended 31 December 2022 are as follows:
Development
assets
$m
Exploration
and evaluation
assets
$m
Mining
assets
$m
Non-mining
assets
$m
Capital
construction
in-progress
$m
Accumulated depreciation, amortisation
Balance at 1 January 2021
Charge for the period
Disposals and write-offs including fully
depreciated mines
Translation to presentation currency
Balance at 31 December 2021
Charge for the period
Eliminated on disposal of subsidiaries (Note 4)
Impairment recognised during period (Note 17)
Disposals and write-offs including fully
depreciated mines
Translation to presentation currency
Balance at 31 December 2022
Net book value
31 December 2021
31 December 2022
–
–
–
–
–
–
–
(334)
–
82
(252)
384
248
–
–
–
–
–
–
–
(2)
–
–
(2)
74
83
(1,118)
(260)
59
15
(1,304)
(345)
10
(418)
148
75
(1,834)
2,039
1,909
(33)
(7)
–
–
(40)
(9)
–
(4)
–
–
(53)
34
40
Total
$m
(1,151)
(267)
59
15
(1,344)
(354)
10
(801)
148
165
–
–
–
–
–
–
–
(43)
–
8
(35)
(2,176)
783
1,112
3,314
3,392
Mining assets, exploration and development assets at 31 December 2022 included mineral rights with a net book value which amounted
to $713 million (31December 2021: $1,016 million) and capitalised stripping costs with a net book value of $277 million (31 December
2021: $249 million). Mineral rights of the Group comprise assets acquired upon acquisition of subsidiaries. As of 31 December 2022
capital construction in progress includes prepayments made for equipment and construction works amounting to $210 million
(2021: $162 million).
Included within the $153 million of assets disposed of and written off were fully depreciated items of $121 million (year ended
31 December 2021: $65 million and $19 million, respectively).
No property, plant and equipment was pledged as collateral at 31 December 2022 or at 31 December 2021.
19. Leases
Movements of the right-of-use assets for the year ended 31 December 2022 are as follow:
Right-of-use assets
At 1 January
Additions
Depreciation charge for the period
Disposals
Accumulated depreciation of assets disposed
Translation to presentation currency
At 31 December
Year ended
31 December
2022
$m
31 December
2021
$m
33
122
(8)
(1)
1
(16)
131
32
9
(6)
(4)
1
1
33
The leases of the Group are represented by the office leases and the lease of the overhead power line, supplying electricity to the the
Nezhda production site, which commenced in July 2022. The Group has a right to acquire the power line after the end of the lease term.
Movements of the lease liabilities for the year ended 31 December 2022 are detailed in Note 33. Maturity analysis of lease liabilities is
presented in Note 29. The Group’s lease commitments related to the variable lease payments are disclosed in Note 27.
The Group excluded the following lease agreements from the right-of-use assets and lease liabilities and recognises the lease payments
associated with those leases as expenses on a straight-line basis over the lease term:
• Lease agreements with variable payments;
• Lease agreements of land plots to explore for or use minerals and similar non-generative resources;
• Short-term lease agreements that expire within 12 months from the date of initial application;
• Lease agreements of low value assets (of $5,000 or less).
200
Expenses related to lease exemptions
Unwinding of discount on lease liabilities
Depreciation of right-of-use assets
Total lease expenses
20. Goodwill
Mayskoye
Dukat
Total
Year ended
31 December
2022
$m
31 December
2021
$m
(5)
(7)
(8)
(20)
(3)
(3)
(6)
(12)
Year ended
31 December
2022
$m
31 December
2021
$m
11
3
14
11
3
14
There were no significant movements in goodwill during years ended 31 December 2022 and 2021.
The recoverable amount of the relevant cash-generating units is determined based on a value in use calculation. The impairment testing
procedure, related assumptions and sensitivities are described in detail in Note 2 and Note 3 “Use of estimates” section above.
21. Investments in associates and joint ventures
Interests in associates and joint ventures
Tomtor (ThreeArc Mining Ltd)
Individually immaterial investments
Total
Loans forming part of net investment in joint ventures
Individually immaterial investments
Total
Total investments in associates and joint ventures
Movement during the reporting periods was as follows:
At 1 January
Impairment recognised
Acquisitions
Consolidated as subsidiaries
Loans advanced forming part of net investment
Currency translation adjustment
Total at 31 December
31 December 2022
31 December 2021
Voting
power
%
9.1
Carrying
Value
$m
–
6
6
7
7
13
Voting
power
%
9.1
Carrying
Value
$m
20
4
24
4
4
28
Year ended
31 December
2022
$m
31 December
2021
$m
28
(24)
3
–
4
2
13
24
–
1
(1)
4
–
28
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
21. Investments in associates and joint ventures continued
Tomtor (ThreeArc Mining Ltd)
ThreeArc owns 100% Tomtor niobium and rare-earth metals exploration project (Tomtor). The project is comprised of the Tomtor open-pit
deposit and the Krasnokamensk Hydrometallurgical Facility which was planned to be built near the town of Krasnokamensk.
The Group determined that it exercised significant influence over the investee through participation in policy and decision-making
processes, and therefore ThreeArc constituted an associate under IAS 28 Investments in Associates and Joint Ventures. The investment
was accounted for using the equity method.
During the year ended 31 December 2022 the project was suspended at an early development stage, and, therefore the investment in
Tomtor was fully provided for, resulting in impairment loss of $24 million recognised within income statement. During the year ended
31 December 2021, no significant share of profit/(loss) from Tomtor was recognised by the Group.
Summarised financial position of the investments
The Group holds a number of individually immaterial investments in joint arrangements to explore and develop several deposit in
Kazakhstan and Russia. The following table summarises the aggregate financial position of the investments on a 100% basis. The
summarised financial information below represents amounts in the associate’s consolidated financial statements prepared in accordance
with IFRS, adjusted for fair value adjustments at acquisition and differences in accounting policies. As of 31 December 2022, consistent
with as of 31 December 2021, none of the entities held any significant cash balances and did not record any significant amounts of
revenue or expenses, depreciation and amortisation, interest income and expenses, income tax.
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
22. Inventories
Inventories expected to be recovered after twelve months
Ore stock piles
Сopper, gold and silver concentrate
Consumables and spare parts
Total non-current inventories
Inventories expected to be recovered in the next twelve months
Сopper, gold and silver concentrate
Ore stock piles
Work in-process
Doré
Metal for refining
Refined metals
Total current metal inventories
Consumables and spare parts
Total current inventories
31 December 2022
31 December 2021
Non-significant
investments
$m
Tomtor
$m
Non-significant
investments
$m
13
5
(5)
(1)
12
307
3
(91)
(1)
218
10
3
(5)
–
8
Year ended
31 December
2022
$m
31 December
2021
$m
89
10
34
133
287
229
111
55
20
3
705
352
1,057
70
–
26
96
182
221
115
26
9
–
553
228
781
Write-downs of metal inventories to net realisable value
The Group recognised the following write-downs and reversals to net realisable value of its metal inventories:
Ore stock piles
Ore in heap leach piles
Сopper, gold and silver concentrate
Total
Year ended
31 December
2022
$m
31 December
2021
$m
(28)
(31)
(6)
(65)
(28)
3
–
(25)
The key assumptions used as of 31 December 2022 in determining net realisable value of inventories (including the commodity price
assumptions for long-term stockpiles) are described in Note 3 “Use of estimates” section. For short-term metal inventories, applicable
quoted forward prices as of 31 December 2022 were used: gold and silver prices of $1,874 per ounce (2021: $1,836) and $24.6 per
ounce (2021: $23.5), respectively.
During the year ended 31 December 2022 the Group recognised a reversal of previous write-down of consumables and spare parts
inventory of $1 million (year ended 31 December 2021: reversal of $1 million).
The amount of inventories held at net realisable value at 31 December 2022 is $95 million (31 December 2021: $49 million).
23. Accounts receivable and other financial assets
Non-current accounts receivable
Loans provided to third parties
Other long-term assets
Total
Other non-current financial assets
Interest rate swaps (Note 28)
Contingent consideration receivable
Total
Trade and other receivables
Receivables from provisional copper, gold and silver concentrate sales
Other receivables
Short-term loans provided
Less: Impairment allowance for doubtful debts
Total
Other financial assets at FVTPL
Short-term contingent consideration receivable
Shares held at FVTPL
Total
Year ended
31 December
2022
$m
31 December
2021
$m
15
16
31
16
8
24
54
46
8
(5)
103
9
1
10
12
16
28
–
29
29
44
32
7
(4)
79
7
5
12
The average credit period on sales of copper, gold and silver concentrate at 31 December 2022 was 20 days (2021: 18 days). No interest
is charged on trade receivables. The Group’s doubtful debt relates to its non-trade receivables, which are fully impaired.
Contingent consideration receivable are classified as Group’s Level 3 financial assets as detailed in Note 28.
202
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
24. Borrowings
Secured loans from third parties
Dollar denominated
Total secured loans from third
parties
Unsecured loans from third parties
Dollar denominated
Dollar denominated
Euro denominated
Euro denominated
RUB denominated
RUB denominated
CNY denominated
CNY denominated
Total unsecured loans from third
parties
Total loans from third parties
Actual interest rate at
31 December 2022
31 December 2021
Type of
rate
31 Dec
2022
31 Dec
2021
Current
$m
Non-
current
$m
Total
$m
Current
$m
Non-
current
$m
fixed
2.68%
3.04%
floating
fixed
floating
fixed
floating
fixed
fixed
floating
5.69%
3.75%
0.98%
n/a
9.35%
8.03%
5.99%
3.50%
1.35%
3.52%
0.45%
0.60%
n/a
6.67%
n/a
n/a
33
33
149
43
2
–
132
3
83
69
481
514
158
158
339
1,206
19
–
518
202
–
70
2,354
2,512
191
191
488
1,249
21
–
650
205
83
139
2,835
3,026
100
100
298
2
–
2
44
–
–
346
446
191
191
378
948
24
–
77
–
–
Bank loans
The Group has a number of borrowing arrangements with various lenders. These borrowings consist of unsecured and secured loans
and credit facilities as detailed above. Where security is provided it is in form of a pledge of revenue from certain sales agreements.
Movements in borrowings are presented in Note 33. The Group complied with its debt covenants throughout 2022 and 2021.
The table below summarises maturities of borrowings:
Total
$m
291
291
676
950
24
2
–
121
–
–
25. Environmental obligations
Opening balance
Change in estimate of environmental obligations (Note 12)
Decommissioning liabilities recognised as increase in Property plant and equipment (Note 18)
Rehabilitation expenses (Note 7)
Effect of unwinding of discount (Note 15)
Translation effect
Closing balance
Less current portion of environmental obligations (Note 26)
Total non-current environmental obligation
Year ended
31 December
2022
$m
31 December
2021
$m
54
(2)
20
(1)
8
(3)
76
–
76
44
2
3
2
4
(1)
54
(4)
50
The principal assumptions are related to Russian Rouble and Kazakh Tenge projected cash flows. The assumptions used for the
estimation of environmental obligations were as follows:
1,427
1,618
1,773
2,064
Discount rates
Inflation rates
Expected mine closure dates
2022
2021
7.25%-13.61%
4%-14%
1-30 years
8.18%-10.03%
2.4%-8%
1-30 years
The discount rates applied are based on the applicable government bond rates in Kazakhstan and Russia. The expected mine closure
dates are consistent with life of mine models and applicable mining licence requirements.
26. Payables and accrued liabilities
31 December 2022
31 December 2023
31 December 2024
31 December 2025
31 December 2026
31 December 2027
31 December 2028
31 December 2029
31 December 2030
31 December 2031
31 December 2032
Total
Year ended
31 December
2022
$m
31 December
2021
$m
–
514
737
561
411
459
164
168
8
2
2
446
177
372
220
390
170
139
139
8
3
–
Non-current liabilities
Long-term royalties payable (Note 33)
Other non-current liabilities
Total non-current liabilities
Current liabilities
Trade payables
Accrued liabilities
Short-term royalties payable (Note 33)
Current portion of environmental obligations (Note 25)
Labour liabilities
Payables related to investment in Special Economic Zone (Note 12)
Other payables
3,026
2,064
Total current liabilities
Year ended
31 December
2022
$m
31 December
2021
$m
19
9
28
150
69
5
–
19
13
8
264
16
2
18
121
50
5
4
17
19
7
223
In 2022 the average credit period for payables was 34 days (2021: 30 days). There was no interest charged on the outstanding trade and
other payables balance during the credit period. The Group has financial risk management policies in place, which include budgeting and
analysis of cash flows and payment schedules to ensure that all amounts payable are settled within the credit period.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
27. Commitments and contingencies
Commitments
Capital commitments
The Group’s contractual expenditure commitments as of 31 December 2022 amounted to $279 million (2021: $270 million).
Nezhda power line
In June 2020, the Group entered into a preliminary lease agreement to lease on pre-agreed terms the single-circuit 110 kV grid power line
running from Khandyga to the Nezhda production site and the related substation. Construction was completed and state registration was
completed in July 2022, which was determined as a commencement date of the lease (Note 19).
The Group’s lease commitments related to the variable lease payments, representing reimbursement of maintenance costs are estimated
at $36 million (undiscounted), which will be expensed as incurred.
Forward sale commitments
The Group has certain physical gold and silver forward sale commitments which are priced at the prevailing market price, calculated with
reference to the LBMA or LME gold and silver price, which are accounted for as executory contracts as the Group expects to, and has
historically, physically delivered into these contracts.
Contingent liabilities
Taxation
Russian and Kazakhstan tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur
frequently. Management’s interpretation of such legislation as applied to the transaction and activity of the companies of the Group may
be challenged by the relevant regional and federal authorities and as a result, significant additional taxes, penalties and interest may be
assessed. Fiscal periods remain open to review by the tax authorities in respect of taxes for three and five calendar years preceding the
year of review for Kazakhstan and Russia respectively. Under certain circumstances reviews may cover longer periods.
Management has identified a total exposure (covering taxes and related interest and penalties) of $125 million in respect of contingent
liabilities (2021: $157 million), mainly related to income tax as described in Note 16.
28. Financial instruments
Major categories of financial instruments
Financial assets
Derivatives designated in hedge relationships
Interest rate swaps
Financial assets at FVTPL
Receivables from provisional copper, gold and silver concentrate sales (Note 23)
Contingent consideration receivable (Note 23)
Shares held at FVTPL (Note 23)
Financial assets at amortised cost, including cash and cash equivalents
Cash and cash equivalents (Note 33)
Other receivables (Note 23)
Non-current loans and receivables (Note 23)
Total financial assets
Financial liabilities
Financial liabilities at FVTPL
Contingent consideration liability (Note 33)
Royalty payable (Note 33)
Financial liabilities at amortised cost
Borrowings (Note 24)
Deferred consideration (Note 33)
Trade and other payables (Note 26)
Total financial liabilities
Year ended
31 December
2022
$m
31 December
2021
$m
16
54
17
1
633
49
15
785
36
24
3,026
85
171
3,342
–
44
36
5
417
35
12
549
63
21
2,064
79
147
2,374
The Group’s principal financial liabilities comprise borrowings, derivatives, trade and other payables. The Group has various financial
assets such as accounts receivable, loans advanced and cash and cash equivalents.
Trade and other payables exclude employee benefits and social security.
Interest expense, calculated using effective interest method, arising on financial liabilities at amortised costs is disclosed in Note 33.
The main risks arising from the Group’s financial instruments are foreign currency and commodity price risk, interest rate, credit and
liquidity risks.
At the end of the reporting period, there are no significant concentrations of credit risk for receivables at FVTPL. The carrying amount
reflected above represents the Group’s maximum exposure to credit risk for such receivables.
Presented below is a summary of the Group’s accounts receivable with embedded derivative recorded on the consolidated balance
sheet at fair value.
As of 31 December 2022, accounts receivable with embedded derivatives recognised at fair value amounted to $54 million (31 December
2021: $44 million) and represented receivables from provisional metal concentrate sales. In 2021 gain recognised on revaluation of these
instruments approximates to $17 million (2021: nil) and is recorded within revenue.
Fair value of financial instruments
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped
into Levels 1 to 3 based on the degree to which the fair value is observable as follows:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly or indirectly; and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
At 31 December 2022 and 31 December 2021, the Group held the following financial instruments:
Receivables from provisional copper, gold and silver concentrate sales
(Note 23)
Contingent consideration receivable (Note 23)
Shares held at FVTPL (Note 23)
Royalty liabilities payable (Note 33)
Contingent consideration liability (Note 33)
Total
Receivables from provisional copper, gold and silver concentrate sales
(Note 23)
Contingent consideration receivable (Note 23)
Shares held at FVTPL (Note 23)
Royalty liabilities payable (Note 33)
Contingent consideration liability (Note 33)
Total
31 December 2022
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
–
–
1
–
1
54
–
–
–
54
–
17
–
(24)
(36)
(43)
54
17
1
(24)
(36)
12
31 December 2021
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
–
–
5
–
5
44
–
–
–
44
–
29
–
(21)
(63)
(55)
44
29
5
(21)
(63)
(6)
During the reporting year, there were no transfers between Level 1 and Level 2.
The Group recognised the following gains and loss from revaluation of its Level 3 financial instruments:
Gain on contingent consideration receivable revaluation
Gain/(loss) on contingent consideration payable revaluation (Note 33)
Change in fair value of shares held at FVTPL
Gain/(loss) on royalty payable revaluation (Note 33)
Total change in fair value of financial instruments
Year ended
31 December
2022
$m
31 December
2021
$m
17
(3)
4
2
20
1
4
–
(1)
4
The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables and short-term debt recorded at
amortised cost approximate to their fair values because of the short maturities of these instruments. The estimated fair value of the
Group’s debt, calculated using the market interest rate available to the Group as of 31 December 2022, is $2,615 million
(2021: $1,849 million), and the carrying value as of 31 December 2022 is $3,026 million (2021: $2,064 million) (see Note 24).
206
207
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
28. Financial instruments continued
As of 31 December 2022 the Group held several interest rate swap contracts, recognised within non-current accounts receivables and
other financial instruments in the amount of $16 million (31 December 2021: nil). All interest rate swap contracts to pay fixed and receive
floating interest payments are designated as cash flow hedges to reduce the Group’s cash flow exposure resulting from variable interest
rates on borrowings. As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the
Group performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the
value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying
interest rates. As of 31 December 2022 it was determined that there is no hedge ineffectiveness identified and therefore change of fair
value was recognised within other comprehensive income.
Receivables from provisional copper, gold and silver concentrate sales
The fair value of receivables arising from copper, gold and silver concentrate sales contracts that contain provisional pricing mechanisms
is determined using the appropriate quoted forward price from the exchange that is the principal active market for the particular metal.
As such, these receivables are classified within Level 2 of the fair value hierarchy.
Valuation methodologies used in the measurement of fair value for Level 3 financial assets
and financial liabilities
The main level 3 inputs used by the Group in measuring the fair value of contingent consideration assets and liabilities, represented by
various royalties and net smelter returns (NSR), are derived and evaluated as follows:
• The relevant valuation model simulates expected production of metals at respective mines and are based on life of mine models
prepared using applicable ore reserves and mineral resource estimations;
• Commodity prices – Commodity prices are based on latest internal forecasts, benchmarked against external sources of information.
The prices applied are consistent with those described in Note 3.
• Discount rates – The Group used a post-tax real discount rate of 14.1% (2021: 8.0%) as described in Note 3. For the Monte-Carlo
modelling, where inflation is incorporated into volatility estimation, a nominal discount rate of 16% (2021: 10.7%) is applied.
• Where the percentage of net smelter return (NSR) or royalty receivable or payable depends on commodity prices or foreign exchange
rates reaching certain levels, the Group applies the Monte-Carlo modelling to incorporate the volatility measure into the valuation,
which is applied to the prevailing market prices/rates as of the valuation date. The Monte-Carlo modelling is applied to Prognoz (NSR)
contingent considerations payable and all contingent considerations receivable.
The key assumptions used in the Monte-Carlo calculations are set out below:
Gold
Silver
Copper
Zinc
RUB rate
Price as of valuation date per
ounce/tonne, $US
1,812
23.945
8,387
3,025
70.3375
Volatility, %
13.65%-14.58%
27.18%-28.25%
24.97%
29.73%
19%-20.98%
Constant correlation to gold,
%
n/a
80.43%
62.77%
54.09%
50.8%-63.69%
The Directors consider that a reasonably possible change in a valuation assumption would not have a material impact on the
consolidated financial statements for contingent considerations receivables and payable.
29. Risk management activities
Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return
to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy is to provide value to stakeholders
by maintaining an optimal short-term and long-term capital structure, reducing cost of capital, and to safeguard the ability to support the
operating requirements on an ongoing basis, continuing the exploration and development activities.
The capital structure of the Group consists of net debt (borrowings as detailed in Note 24 offset by cash and cash equivalents and bank
balances as detailed in Note 33) and equity of the Group comprising the Stated Capital account, reserves and retained earnings.
The Group’s committed borrowings are subject to certain financial covenants. Compliance with covenants is reviewed on a semi-annual
basis and the Group’s Board is satisfied with forecast compliance with covenants on those borrowings.
The Group’s Board reviews the capital structure of the Group on a semi-annual basis. As part of this review, the Board considers the cost
of capital and the risks associated with each class of capital.
Foreign currency and commodity price risk
In the normal course of business the Group enters into transactions for the sale of its commodities, denominated in Dollars. In addition,
the Group has assets and liabilities in a number of different currencies (primarily Russian Rouble and Kazakh Tenge). As a result, the
Group is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates.
The Group does not currently use derivative instruments to hedge its exposure to foreign currency risk.
The carrying amounts of monetary assets and liabilities denominated in foreign currencies other than functional currencies of the
individual Group entities at 31 December 2022 and 31 December 2021 were as follows:
Dollar
CNY
Euro
Total
Assets
Liabilities
31 December 2022
$m
31 December 2021
$m
31 December 2022
$m
31 December 2021
$m
272
–
–
272
391
–
–
391
1,417
224
10
1,651
498
–
12
510
Dollar denominated assets and liabilities disclosed above exclude balances outstanding held in Polymetal International plc and its
intermediate holding companies, where the functional currency is Dollar ($) as described in Note 2.
Currency risk is monitored on a monthly basis by performing a sensitivity analysis of foreign currency positions in order to verify that
potential losses are at an acceptable level.
The table below details the Group’s sensitivity to changes in exchange rates by 10% which is the sensitivity rate used by the Group for
internal analysis. The analysis includes external loans as well as loans to foreign operations within the Group where the denomination of
the loans is in a currency other than of the lender or the borrower.
Profit or loss
RUB to Dollar
KZT to Dollar
RUB to CNY
Other comprehensive income or loss
RUB to Dollar
KZT to Dollar
Year ended
31 December
2022
$m
31 December
2021
$m
(31)
(84)
(22)
35
(35)
3
(13)
–
37
(37)
Provisionally priced sales
Under a long-established practice prevalent in the industry, copper, gold and silver concentrate sales are provisionally priced at the time
of shipment. The provisional prices are finalised in a contractually specified future period (generally one to three months) primarily based
on quoted LBMA or LME prices. Sales subject to final pricing are have quotation periods from 1 to 4 months.
Interest rate risk
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is
managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate
swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite; ensuring the most
cost-effective hedging strategies are applied.
The Group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section of this note.
For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was
outstanding for the whole period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible change in interest rates.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended
31 December 2022 would have decreased/increased by $7 million (2021: $4 million). This is mainly attributable to the Group’s exposure to
interest rates on its variable rate borrowings.
The Group’s floating interest rate borrowings is USD Libor and SOFR as a benchmark. USD LIBOR is expected to be replaced by
alternative risk-free rates as part of inter-bank offer rate (IBOR) reform. The Group is continuing to monitor the market and assessing the
potential changes in order to effectively transition to alternative risk-free rates.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
29. Risk management activities continued
Credit risk
Credit risk is the risk that a customer may default or not meet its obligations to the Group on a timely basis, leading to financial losses to
the Group. The Group’s financial instruments that are potentially exposed to concentration of credit risk consist primarily of cash and
cash equivalents and loans and receivables.
Trade accounts receivable at 31 December 2022 and 31 December 2021 are represented by provisional copper, gold and silver
concentrate sales transactions. A significant portion of the Group’s trade accounts receivable is due from reputable export trading
companies. With regard to other loans and receivables the procedures of accepting a new customer include checks by a security
department and responsible on-site management for business reputation, licences and certification, creditworthiness and liquidity.
Generally, the Group does not require any collateral to be pledged in connection with its investments in the above financial instruments.
Credit limits for the Group as a whole are not set up.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-
rating agencies. The major financial assets at the balance sheet date other than trade accounts receivable presented in Note 33 are cash
and cash equivalents at 31 December 2022 of $633 million (2021: $417 million).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to settle its liabilities as they fall due.
The Group’s liquidity position is carefully monitored and managed. The Group manages liquidity risk by maintaining detailed budgeting,
cash forecasting processes and matching the maturity profiles of financial assets and liabilities to help ensure that it has adequate cash
available to meet its payment obligations.
During the year ended 31 December 2022 certain restrictions were imposed the by the Russian government on remittance of the
dividends from the entities, registered in Russian Federation and controlled by “unfriendly” jurisdictions, which include Jersey where the
Company is incorporated. The Group determined that these restrictions would not have any material effect on the Group’s liquidity
position and its ability to finance its obligations. Such unremitted accumulated retained earnings based on local accounting standards
approximate to $3.8 billion (2021: $3.4 billion).
The following table details the Group’s remaining contractual maturity for its financial liabilities with agreed repayment periods. The table
has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be
required to pay. The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the
undiscounted amount is derived from interest rate curves at the end of the reporting period. The contractual maturity is based on the
earliest date on which the Group may be required to pay.
Presented below is the maturity profile of the Group’s financial liabilities as of 31 December 2022 and 31 December 2021:
31 December 2022
Less than
3 months
$m
3–12 months
$m
1–5 years
$m
More than
5 years
$m
14
149
6
–
8
177
Less than
3 months
$m
308
137
9
1
2
457
664
22
4
5
23
718
2,487
–
124
16
87
2,714
366
–
15
–
43
424
3–12 months
$m
194
10
23
4
5
236
31 December 2021
1–5 years
$m
More than
5 years
$m
1,301
–
112
18
28
1,459
491
–
17
4
14
526
Total
$m
3,531
171
149
21
161
4,033
Total
$m
2,294
147
161
27
49
2,678
Borrowings (Note 24)
Accounts payable and accrued expenses (Note 26)
Contigent consideration liabilities (Note 28, 33)
Royalty payable (Note 33)
Lease liabilities (Note 19)
Total
Borrowings (Note 24)
Accounts payable and accrued expenses (Note 26)
Contigent consideration liabilities (Note 28, 33)
Royalty payable (Note 33)
Lease liabilities (Note 19)
Total
210
30. Stated capital account and retained earnings
The movements in the Stated Capital account in the year were as follows:
Balance at 31 December 2020
Issue of shares in accordance with DSA and LTIP plans
Balance at 31 December 2021
Own shares exchanged during period
Own certificated shares issued in exchange
Balance at 31 December 2022
Stated capital
account
no. of shares
Stated capital
account
$m
Treasury
shares
no. of shares
471,818,000
1,808,239
473,626,239
(39,070,838)
39,070,838
2,434
16
2,450
–
–
–
–
–
39,070,838
–
473,626,239
2,450
39,070,838
On 3 June 2022, the EU imposed sanctions on the National Settlement Depository (“NSD”), which effectively blocked the operations
between Euroclear and NSD. Euroclear is the operator of CREST, the relevant system for paperless settlement of share transfers and the
holding of shares in uncertificated form. As a result of the sanctions, shareholders who hold their shares through NSD (which the
Company estimates to be, in aggregate, approximately 22% of the Company’s issued share capital), had been unable to receive
dividends and/or take part in any corporate actions of the Company.
On 22 September 2022, the Board announced its intention to conduct an exchange offer. The exchange offer invited shareholders whose
rights have been affected by the sanctions imposed on NSD, subject to fulfilling eligibility criteria, to tender such shares for exchange in
consideration for the issuance of a certificated share, on a one-for-one basis.
Eligible shareholders who successfully participated in the exchange offer regained the enjoyment of their rights in the Company, albeit
where such rights are evidenced in certificated form. The certificated shares have the same rights and ISIN as, and are fungible with, the
Ordinary Shares in all respects.
As of 31 December 2022, 39,070,838 Ordinary Shares (the “First Exchanged Shares”) have been repurchased by the Company in
connection with the Exchange Offer, in consideration for the issuance of 39,070,838 Ordinary Shares (the “First Certificated Shares”)
The transaction represents an exchange of Ordinary Shares in the Company for Certificated Shares in connection with the Company’s
Exchange Offer. The exchange of shares did not give rise to any cash settlement and hence does not give rise to any financial liability. The
shares were exchanged at par, on a one-for-one basis and does not affect the Company’s net asset and resources position or capital
structure.
As of 31 December 2022 the total number of voting rights in the Company is 473,626,239 Ordinary Shares of no par value, each carrying
one vote (31 December 2021: 473,626,239). As of 31 December 2022 the Company holdsthe First Exchanged Shares in treasury and
such shares do not enjoy any voting or economic rights (31 December 2021: none).
The shares exchanged during the year ended 31 December 2022 relate to the significant shareholder of the Group and therefore an
exchange of 39,070,838 ordinary shares represents a transaction with the related party.
Weighted average number of shares: Diluted earnings per share
Both basic and diluted earnings per share were calculated by dividing profit for the year attributable to equity holders of the parent by the
weighted average number of outstanding common shares before/after dilution respectively. The calculation of the weighted average
number of outstanding common shares after dilution is as follows:
Weighted average number of outstanding common shares
Dilutive effect of share appreciation plan
Weighted average number of outstanding common shares after dilution
Year ended
31 December
2022
31 December
2021
473,626,239
–
473,048,821
6,809,043
473,626,239
479,857,864
There were no adjustments required to earnings for the purposes of calculating the diluted earnings per share during the year ended
31 December 2022 (year ended 31 December 2021: nil).
No outstanding Long-Term Incentive Plan (LTIP) awards issued under 2019-2021 tranches represent dilutive potential ordinary shares with
respect to earnings per share from continuing operations as these are out of money as of the reporting date (31 December: 2019 – 2021
tranches were dilutive).
Dividends
During the year ended 31 December 2022 the Group did not recognise or pay any dividends (2021: dividends of $635 million were
deducted from equity and paid). Final dividend for 2021, declared in March 2022, was later rescinded by the Board due to changes in
operating conditions and therefore was not deducted from equity during reporting period. No final dividend was proposed in relation to
the reporting period.
211
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
31. Share‑based payments
For the year ended 31 December 2022, share-based compensation in the amount of $13 million (2021: $16 million) was recognised in
general, administrative and selling expenses in the consolidated income statement (Note 11). As of 31 December 2022 total accumulated
share-based compensation reserve amounts to $35 million (2021: $31 million) with movements presented in statement of changes in
equity.
During the year ended 31 December 2022 no shares were released and issued in accordance with management bonus plan deferral
award and the long-term incentive plan (2021: 1,808,239 shares in accordance with management bonus plan deferral award and the
long-term incentive plan). The LTIP tranche, granted in 2018 lapsed during the year ended 31 December 2022 and accordingly, the
related balance of $9 million in the share-based payment reserve was transferred into retained earnings.
As of the reporting date the unrecognised share-based compensation expense related to non-vested equity-settled stock appreciated
rights is detailed as follows:
Number of
option
granted
shares
2,549,754
2,831,753
2,497,292
1,732,722
31 December 2022
31 December 2021
Expected
amortisation
period
years
Unrecognised
share-based
compensation
expense
$m
Expected
amortisation
period
years
Unrecognised
share-based
compensation
expense
$m
–
0.3
1.3
2.3
–
1
8
7
16
0.3
1.3
2.3
3.3
1
4
14
11
30
Tranche 2018
Tranche 2019
Tranche 2020
Tranche 2021
Total
The assumptions used in the calculation and fair value of one award, calculated based on those assumptions, are set in the table below:
Risk free rate
Expected volatility
Constant correlation
Expected life, years
Share price at the date of grant (USD)
Fair value of one award (USD)
Tranche 2019
Tranche 2020
Tranche 2021
2.32%
33.87%
39.54%
4
11.0
4.3
0.35%
35.59%
44.31%
4
20.6
9.4
0.61%
35.36%
40.78%
4
19.8
7.1
Dividend yield is not incorporated into the calculation of the fair value of the awards, as Dividend equivalents will be received on vested
shares, reflecting the value of dividends, which have been paid during the period from the grant date to the vesting date.
32. Related parties
Related parties are considered to include shareholders, affiliates, associates, joint ventures and entities under common ownership and
control with the Group and members of key management personnel.
During the period ended 31 December 2022 transactions with the related parties represented by equity method investments comprise by
miscellaneous purchases of $0.7 million (period ended 31 December 2021: $1.4 million) and various sales to the related parties of
$0.5 million (period ended 31 December 2021: $0.7 million).
Outstanding balances with related parties as of 31 December 2022 are represented by accounts receivable of $1.2 million (31 December
2021: $0.3 million) to equity method investments.
Loans provided to equity method investments, classified as loans forming part of net investment in joint ventures, are presented
in Note 21.
The exchange of the ordinary shares under the exchange offer during the year ended 31 December 2022 is described in Note 30.
The remuneration of directors and other members of key management personnel during the periods was as follows:
Share-based payments
Short-term benefits of board members
Short-term employee benefits
Total
212
Year ended
31 December
2022
$m
31 December
2021
$m
1
3
6
10
2
2
3
7
33. Supplementary cash flow information
Profit before tax
Adjustments for:
Depreciation and depletion recognised in the statement of comprehensive income
Write-down of inventories to net realisable value
Share-based compensation
Finance expenses
Finance income
Change in fair value of financial instruments
Foreign exchange (loss)/gain, net
Impairment of non-current assets
Impairment of investment in associate
(Loss)/gain on disposal of subsidiaries, net
Other non-cash expenses
Movements in working capital
Change in inventories
Change in VAT receivable
Change in trade and other receivables
Change in prepayments to suppliers
Change in trade and other payables
Change in prepayments received
Change in other taxes payable
Cash generated from operations
Interest paid
Interest received
Income tax paid
Net cash generated by operating activities
Note
5
22
11, 31
15
28
17
21
4
Year ended
31 December
2022
$m
Year ended
31 December
2021
$m
(332)
1,161
282
64
13
119
(8)
20
32
801
24
2
12
214
24
16
66
(7)
(4)
(5)
-
-
(3)
10
1,029
1,472
(269)
(15)
(18)
(31)
(29)
(134)
23
556
(123)
7
(234)
206
(123)
3
(10)
(15)
1
127
20
1,475
(60)
6
(226)
1,195
As a result of consolidation of 100% interest in Albazino power line (Note 4) the Group assumed debt of $161 million and acquired
corresponding cash balances of $150 million. Cash acquired is presented within investing activities as net cash inflow on acquisitions.
There were no significant non-cash transactions during the year ended 31 December 2022, other than in respect of share-based
payments and exchange of the ordinary shares under the exchange offer (Note 30) (2021: drawdowns under factoring arrangements of
$48 million and share-based compensation of $16 million).
Cash outflows related to capitalised exploration amounted to $15 million for the year ended 31 December 2021 (2021: $12 million). During
the year ended 31 December 2022, the capital expenditure related to the new projects, increasing the Group’s operating capacity
amounts to $208 million (2021: $556 million).
Cash and cash equivalents
Bank deposits
Current bank accounts
– USD
– other currencies
– USD
– other currencies
Total
31 December
2022
$m
31 December
2021
$m
468
90
68
7
633
224
58
131
4
417
At the reporting date the cash balances include $118 million of cash and cash equivalents held in Russia, that are subject to certain legal
restrictions and are therefore not available for general use of the Company (but fully available for use by its Russian subsidiaries).
The Group determined that these restrictions would not have any material effect on the Group’s liquidity position and its ability to finance
its obligations.
Bank deposits as of 31 December 2022 are mainly presented by the Dollar deposits, bearing an average interest rate of 3.9% per annum
(2021: Dollar deposits, bearing an average interest rate of 0.2% per annum).
213
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Notes to the consolidated financial statements continued
33. Supplementary cash flow information continued
Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
Liabilities from financing activities are those for which cash flow were, or future cash flows will be, classified in the Group’s consolidated
cash flow statements as cash flows from financing activities.
34. Subsequent events
There were no subsequent events.
1 January
Cash inflow
Cash outlow
Changes from financing cash flows
Additions as a result of acquisitions
Change in fair value, included in profit or loss
Unwind of discount
Arrangement fee amortisation
New leases
Lease termination
Net foreign exchange losses
Exchange differences on translating foreign operations
Other changes
31 December
Less current portion
Total non-current liabilities at 31 December
1 January
Cash inflow
Cash outlow
Changes from financing cash flows
Additions as a result of acquisitions
Factoring arrangement
Change in fair value, included in profit or loss
Unwind of discount
Arrangement fee amortisation
New leases
Lease termination
Net foreign exchange losses
Exchange differences on translating foreign operations
Other changes
31 December
Less current portion
Total non-current liabilities
Year ended 31 December 2022
Contingent
consideration
payable at fair
value
$m
Deferred
consideration
payable at
amortised
cost
$m
Borrowings
$m
Royalty
payable
$m
Lease
liabilities
$m
2,064
3,885
(3,029)
856
161
–
–
1
–
–
(19)
(37)
106
3,026
(33)
2,993
Borrowings
$m
1,737
3,360
(3,080)
280
–
48
–
–
–
–
–
6
(7)
47
2,064
(446)
1,618
63
–
(27)
(27)
–
(3)
3
–
–
–
–
–
–
36
(9)
27
79
–
–
–
–
–
6
–
–
–
–
–
6
85
–
85
31 December 2021
Contingent
consideration
payable at fair
value
$m
87
–
(33)
(33)
10
–
(4)
3
–
–
–
–
–
9
63
(31)
32
Deferred
consideration
payable at
amortised
cost
$m
74
–
–
–
–
–
–
5
–
–
–
–
–
5
79
–
79
21
–
–
–
–
3
–
–
–
–
(2)
2
3
24
(5)
19
36
–
(18)
(18)
–
–
7
–
123
(1)
–
(16)
113
131
(25)
106
Royalty
payable
$m
Lease
liabilities
$m
–
20
–
20
–
–
1
–
–
–
–
–
–
1
21
(5)
16
33
–
(7)
(7)
–
–
–
3
–
9
(3)
–
1
10
36
(7)
29
214
215
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Appendices
Alternative performance measures
Reserves and Resources
Group production statistics
Financial highlights
Non-financial information statement
Independent practitioner’s assurance report
Sustainability data
Health and safety
People
Water
Consumables and waste
Air quality
Lands and biodiversity
Environmental expenditure
GHG emissions
Energy
Climate-related risks
Communities investment and engagement
Compliance and business ethics
Value distribution
Salient human rights risks
TCFD, GRI and SASB content indices
TCFD content index
GRI content index
SASB content index
Glossary
Shareholder information
Contacts
218
220
229
229
230
231
234
234
235
237
238
240
241
242
243
244
246
249
249
250
250
251
251
252
258
260
264
265
216
Polymetal International plc Integrated Annual Report & Accounts 2022
Polymetal International plc Integrated Annual Report & Accounts 2022
217
Alternative performance measures
Introduction
The financial performance reported by the Group contains certain Alternative Performance Measures (APMs), disclosed
to complement measures that are defined or specified under International Financial Reporting Standards (IFRS). APMs
should be considered in addition to, and not as a substitute for, measures of financial performance, financial position or
cash flows reported in accordance with IFRS.
The Company believes that these measures, together with measures determined in accordance with IFRS, provide the
readers with valuable information and an improved understanding of the underlying performance of the business.
APMs are not uniformly defined by all companies, including those within the Group’s industry. Therefore, the APMs used
by the Group may not be comparable to similar measures and disclosures made by other companies.
Purpose
APMs used by the Group represent financial KPIs for clarifying the financial performance of the Company and measuring
it against strategic objectives, given the following background:
• Widely used by the investor and analyst community in the mining sector and, together with IFRS measures, provide a
holistic view of the Company
• Applied by investors to assess earnings quality, facilitate period-to-period trend analysis and forecasting of future
earnings, and understand performance through eyes of management
• Highlight key value drivers within the business that may not be obvious in the financial statements
• Ensure comparability of information between reporting periods and operating segments by adjusting for uncontrollable
or one-off factors which impact upon IFRS measures
• Used internally by management to assess the financial performance of the Group and its operating segments
• Used in the Group’s Dividend Policy
• Certain APMs are used in setting Directors’ and management’s remuneration.
APMs and justification for their use
Group APM
Underlying
net earnings
Underlying
earnings per
share
Underlying
return on
equity
Underlying
return on
assets
Adjusted
EBITDA
Net debt
Net debt/
Adjusted
EBITDA ratio
Free cash
flow
Free cash
flow post
M&A
Closest equivalent
IFRS measure
• Profit/(loss)
for the financial
period
attributable
to equity
shareholders of
the Company
Adjustments made to IFRS measure
Rationale for adjustments
• Write-down of metal inventory to net realisable value (post-tax)
• Write-down of development and exploration assets (post-tax)
• Foreign exchange (gain)/loss (post-tax)
• Change in fair value of contingent consideration liability (post-tax)
• Gains/losses on acquisition, revaluation and disposals of
interests in subsidiaries, associates and joint ventures (post-tax)
• Excludes the impact of key significant
one-off non-recurring items and significant
non-cash items (other than depreciation)
that can mask underlying changes in core
performance
• Earnings per
share
• Underlying net earnings (as defined above)
• Weighted average number of outstanding common shares
• No equivalent
• Underlying net earnings (as defined above)1
• Average equity at the beginning and the end of reporting year,
adjusted for translation reserve
• Excludes the impact of key significant one-off
non-recurring items and significant non-cash
items (other than depreciation) that can mask
underlying changes in core performance
• The most important metric for evaluating
the Company’s profitability
• Measures the efficiency with which a
company generates income using the funds
that shareholders have invested
• No equivalent
• Underlying net earnings (as defined above)¹ before interest
• A financial ratio that shows the percentage
and tax
• Average total assets at the beginning and the end of reporting
of profit a company earns in relation to its
overall resources
year
• Profit/(loss)
before income
tax
• Finance cost (net)
• Depreciation and depletion
• Write-down of metal and non-metal inventory to net
realisable value
• Write-down of development and exploration assets
•
Impairment/reversal of previously recognised impairment of
operating assets
• Share-based compensation
• Bad debt allowance
• Net foreign exchange gain/losses
• Change in fair value of contingent consideration liability
• Rehabilitation costs
• Additional mining taxes, VAT, penalties and accrued interest
• Gains/losses on acquisition, revaluation and disposals of
interests in subsidiaries, associates and joint ventures
• Not applicable
• Net total of
current and
non-current
borrowings2
• Cash and cash
equivalents
• No equivalent
• Not applicable
• Cash flows from
operating activity
less cash flow
from investing
activities
• Excluding acquisition costs in business combinations and
investments in associates and joint ventures
• Excluding loans forming part of net investment in joint ventures
• Excluding proceeds from disposal of subsidiaries
• Cash flows from
• Not applicable
operating
activity less
cash flow from
investing
activities
• Excludes the impact of certain non-cash
elements, either recurring or non-recurring,
that can mask underlying changes in core
operating performance, to be a proxy for
operating cash flow generation
• Measures the Group’s net indebtedness
that provides an indicator of the overall
balance sheet strength
• Used by creditors in bank covenants
• Used by creditors, credit rating agencies
and other stakeholders
• Reflects cash generating from operations
after meeting existing capital expenditure
commitments
• Measures the success of the Company in
turning profit into cash through the strong
management of working capital and capital
expenditure
• Free cash flow including cash used in/
received from acquisition/disposal of assets
and joint ventures
• Reflects cash generation to finance returns
to shareholders after meeting existing
capital expenditure commitments and
financing growth opportunities
Total cash
costs (TCC)
• Total cash
operating costs
• General,
administrative &
selling expenses
• Depreciation expense
• Rehabilitation expenses
• Write-down of inventory to net realisable value
Intersegment unrealised profit elimination
•
•
Idle capacities and abnormal production costs
• Exclude Corporate and Other segment and development assets
• Reclassification of treatment charges deductions to cost of sales
• Calculated according to common mining
industry practice using the provisions of Gold
Institute Production Cost Standard
• Gives a picture of the Company’s current
ability to extract its resources at a reasonable
cost and generate earnings and cash flows
for use in investing and other activities
All-in
sustaining
cash costs
(AISC)
• Total cash
operating costs
• General,
administrative &
selling expenses
• AISC is based on total cash costs, and adds items relevant to
sustaining production such as other operating expenses,
corporate level SG&A, and capital expenditure and exploration
at existing operations (excluding growth capital) After tax, all-in
cash costs include additional adjustments for net finance cost,
capitalised interest and income tax expense All-in costs include
additional adjustments on that for development capital
•
Includes the components identified in World
Gold Council’s Guidance Note on Non-GAAP
Metrics – All-In Sustaining Costs and All-In
Costs (June 2013), which is a non-IFRS
financial measure
• Provides investors with better visibility into the
true cost of production
1 Annualised basis for half-year results.
2 Excluding lease liabilities and royalty payments.
218
219
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Reserves and Resources
Ore Reserves as at 1 January 20231
Tonnage
Grade
Content
Kt Au g/t Ag g/t
Cu % Zn % Pb % GE g/t Au Koz Ag Koz
Cu Kt
Zn Kt
Pb Kt GE Koz
9,270
5,790
2,100
1,380
14,570
14,570
–
8,290
3,630
4,660
3,870
2,590
650
510
120
22,760
15,230
3,980
3,550
1,380
1,030
170
180
–
6,880
5,690
370
150
570
100
–
1,100
1,100
68,120
58,360
50,440
5,640
2,280
34,440
25,990
8,450
9,510
5,910
3,600
2,840
2,080
630
120
10
27,000
3,810
15,870
7,320
1,650
400
–
700
550
6.0
6.8
2.1
3.5
–
2.6
3.0
0.4
1.5
–
5.4
0.8
1.2
1.1
3.2
3.3
7.7
–
1.4
2.3
2.1
5.5
4.1
–
3.0
5.1
7.2
3.2
3.5
–
4.4
3.4
0.3
1.5
–
9.0
1.2
1.6
1.3
5.8
–
9.2
6.9
–
–
–
28
–
–
–
179
195
384
1,327
–
–
–
7
6
25
–
3
–
46
–
118
–
–
–
–
–
16
460
–
–
192
164
76
1,578
–
–
–
–
–
–
–
–
–
–
–
0.43
–
–
–
–
–
–
–
–
1.59
–
2.37
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.61
–
–
9
–
19
507
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.6
6.0
6.8
2.1
3.8
3.8
–
2.9
2.6
3.0
3.8
–
–
1.89
–
–
–
2.05
–
2.7
4.0
5.1
22.0
–
–
–
–
–
–
–
–
–
1.82
–
14.7
–
–
–
–
–
–
–
–
–
–
–
0.58
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.42
–
–
–
–
0.61
–
–
–
–
–
–
–
–
0.9
0.8
1.2
1.1
3.9
3.3
3.4
8.0
–
1.9
1.5
2.3
2.6
5.5
4.9
–
3.0
3.0
2.8
5.2
5.1
7.2
3.2
4.3
3.6
6.1
4.0
4.4
3.4
3.0
2.8
3.6
1.0
30.1
1.5
1.2
1.6
1.3
9.2
5.9
–
9.4
11.4
Proved
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara4
Komar
Elevator5
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Nevenrekan
Voro hub
Voro
Maminskoye5
Saum
Pesherny
Galka⁶
Tamunier⁶
Development and
exploration projects
Veduga7
Total Proved
Probable
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara4
Komar
Elevator5
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Nevenrekan
220
1,660
1,112
456
92
–
–
–
–
1,660
12,914
1,660
–
12,914
–
–
–
–
29,971
14,927
4,099
6,234
4,711
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31.6
31.6
–
–
393
217
33
143
–
1,160
555
–
226
–
380
–
–
–
–
–
–
–
–
4.8
–
–
2.4
–
2.4
–
–
–
760
308
453
79
29
31
–
19
680
400
156
124
170
108
18
44
–
416
264
27
10
102
13
–
106
106
–
–
–
–
–
–
–
–
–
–
9.6
–
–
9.6
–
–
–
–
–
–
–
–
–
–
17.4
–
–
2.8
–
14.7
–
–
–
–
–
–
–
–
–
–
–
–
–
10.4
–
–
10.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,660
1,112
456
92
1,770
1,770
–
760
308
453
469
223
85
83
78
680
400
156
124
174
110
18
46
–
424
268
27
12
102
16
–
106
106
5,532
44,438
36.4
27.0
10.4
6,045
9,749
8,216
1,297
235
–
–
–
–
2,936 138,132
2,936
13,072
– 125,060
1,231
839
392
–
–
–
55
23
30
–
2
16,812
12,878
3,331
294
310
1,287
150
840
297
401
74
–
206
121
–
–
–
–
9,469
114
–
425
8,931
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.0
9.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.7
–
–
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,749
8,216
1,297
235
120.2
4,715
–
120.2
–
–
–
0.7
–
–
0.7
–
–
–
–
–
–
–
–
–
–
3,048
1,667
1,231
839
392
274
190
74
4
6
1,287
150
840
297
486
76
–
210
201
Tonnage
Grade
Content
Kt Au g/t Ag g/t
Cu % Zn % Pb % GE g/t Au Koz Ag Koz
Cu Kt
Zn Kt
Pb Kt GE Koz
Voro hub
Voro
Maminskoye⁵
Saum
Pesherny
Galka⁶
Tamunier⁶
Development and
exploration projects
Veduga7
Total Probable
Proved+Probable
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara4
Komar
Elevator5
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Nevenrekan
Voro hub
Voro
Maminskoye⁵
Saum
Pesherny
Galka⁶
Tamunier⁶
Development and
exploration projects
Veduga7
13,690
180
9,930
500
1,980
570
530
17,850
17,850
165,340
67,630
56,230
7,740
3,660
49,010
40,560
8,450
17,800
9,540
8,260
6,710
4,670
1,280
630
130
49,760
19,040
19,850
10,870
3,030
1,430
170
880
550
20,570
5,870
10,300
650
2,550
670
530
18,950
18,950
Total Proved+Probable
233,460
4.2
2.5
2.0
4.4
2.5
3.9
4.0
5.2
7.0
2.8
3.5
–
3.7
3.2
0.3
1.5
–
5.6
0.9
1.6
1.2
4.0
3.3
8.9
6.8
1.5
2.5
2.0
4.7
2.8
3.9
10
–
46
–
84
8
–
–
–
–
20
460
–
–
185
180
325
1,3
–
–
2.91
–
1.84
–
–
–
4.74
–
9.29
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.64
–
–
–
–
–
–
–
–
–
–
4.06
–
10.0
–
–
–
–
0.46
–
–
7
6
20
505
3
–
46
–
89
8
–
–
–
–
–
–
2.60
–
1.91
–
3.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.42
–
–
–
–
1.78
–
–
–
–
–
–
–
–
–
–
–
–
–
2.9
4.2
2.5
2.4
4.4
3.1
3.9
4.0
4.0
4.0
5.2
5.2
7.0
2.8
4.1
3.7
6.1
3.5
3.7
3.2
3.4
2.8
3.8
4.3
22.5
1.2
0.9
1.6
1.2
6.8
4.0
3.4
9.1
11.3
2.5
1.6
2.5
2.4
4.7
3.4
3.9
3.9
3.9
3.6
1,239
2,495
24
788
31
283
47
65
2,301
2,301
55
–
744
–
1,558
138
–
–
25.1
–
–
14.5
–
10.6
–
–
–
77.2
–
–
23.7
–
53.5
–
–
–
–
–
–
–
–
–
–
–
–
1,258
24
788
38
283
58
67
2,301
2,301
19,198 166,909
34.1
77.9
121.0
21,301
11,409
9,329
1,753
328
–
–
–
–
4,596 151,046
4,596
25,986
– 125,060
1,991
1,147
844
–
–
–
134
46,783
52
61
–
21
27,805
7,429
6,528
5,020
1,967
551
996
421
571
182
18
250
121
–
–
–
–
9,862
331
33
568
8,931
1,655
3,655
288
815
42
385
60
65
2,407
2,407
610
–
969
–
1,938
138
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40.6
40.6
–
–
–
–
–
–
–
29.9
–
–
16.9
–
12.9
–
–
–
–
–
–
–
–
–
–
–
–
–
10.3
–
–
10.3
–
–
–
–
–
–
–
–
–
–
94.7
–
–
26.5
–
68.2
–
–
–
–
–
–
–
11,409
9,329
1,753
328
120.2
6,486
–
120.2
–
–
–
11.1
–
–
11.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,818
1,667
1,991
1,147
844
743
413
159
87
84
1,967
551
996
421
661
186
18
256
201
1,683
292
815
50
385
74
67
2,407
2,407
24,730 211,347
70.5
104.9
131.3
27,346
1 Ore Reserves are reported in accordance with the JORC Code (2012). Gold equivalent (GE) is calculated based on gold and silver only. Discrepancies in calculations
are due to rounding.
2 Revised estimate of Ore Reserves for Bakyrchik (Zone 1) open-pit/underground was performed by Polymetal as at 1 January 2023. Initial estimate for East Bakyrchik
(Zone 2) was performed as at 1 April 2020. Price: Au = $1,200/oz. Revised estimate was not performed.
3 Revised Ore Reserves estimate for open-pit was prepared by Polymetal as at 1 January 2023. Previous estimate for underground Ore Reserves was prepared by
Polymetal as at 1 January 2022. Revised estimate was not performed due to lack of material changes.
4 Copper grade is indicated only for High Grade Copper Ore Reserves. Reserves of high grade ore are 7.4 Mt of the Proved category and 1.5 Mt of the Probable
category.
5 Previous estimate prepared by Polymetal as at 1 January 2022. Revised estimate was not performed due to lack of material changes.
6
7 Previous estimate prepared by CSA as at 1 February 2021. Revised estimate was not performed due to lack of material changes. Ore Reserves are presented in
Initial estimate was prepared by Polymetal as at 1 January 2023.
accordance with the Company’s ownership equal to 59.4%.
221
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Reserves and Resources continued
Mineral Resources as at 1 January 20231
Tonnage
Grade
Content
Tonnage
Grade
Content
Kt Au g/t
Ag g/t Cu % Zn % Pb % GE g/t Au Koz
Ag Koz Cu Kt Zn Kt Pb Kt GE Koz
Kt Au g/t
Ag g/t Cu % Zn % Pb % GE g/t Au Koz
Ag Koz Cu Kt Zn Kt Pb Kt GE Koz
Measured
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Albazino hub
Albazino
Talgiy
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara4
Komar
Elevator⁵
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Voro hub
Voro
Maminskoye⁷
Saum
Pesherny
Development and
exploration projects
Veduga8
Total Measured
Indicated
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Talgiy
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara⁴
Komar
Elevator⁵
222
5,820
100
3,130
2,590
2,810
2.4
10.7
1.0
–
–
–
2,810
2.8
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.21
–
–
–
2.39
–
–
–
–
420
377
439
1,428
–
–
–
6
8
6
2
–
43
–
0.49
–
–
–
–
–
–
–
1.2
–
–
–
–
–
–
–
–
–
2.3
–
0.9
–
–
–
6,030
4,170
700
1,160
3,150
1,990
1,050
80
30
5,770
5,220
470
80
2,450
2,060
130
260
620
500
60
30
30
290
290
26,940
10,050
7,240
2,350
460
9,300
7,120
2,180
12,530
4,230
6,800
1,500
1,460
930
410
50
70
8,510
2,190
5,090
1,230
3.2
4.1
3.6
0.8
1.5
–
5.0
0.8
2.2
1.2
1.8
7.0
1.6
0.7
1.7
1.8
1.5
4.1
6.7
3.2
3.6
–
4.8
3.5
5.3
0.6
2.2
–
6.8
1.4
1.8
1.4
–
1.42
3.7
10.1
–
–
–
–
–
–
–
–
–
–
–
14
757
–
–
–
339
290
310
1,692
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.30
–
–
–
2.42
–
–
–
–
0.57
–
–
–
–
–
–
–
–
6.2
1,158
2.4
10.7
1.0
8
1,071
79
–
–
–
939
939
–
–
–
–
41,803
26,884
12,720
1,155
1,045
–
–
–
–
475
389
37
49
75
31
–
44
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.0
3.0
–
–
–
–
–
–
0.4
–
–
0.4
–
–
–
–
–
–
–
–
–
–
–
–
1.8
–
–
1.8
–
–
–
–
–
–
–
–
–
0.7
–
–
0.7
–
–
–
–
–
–
–
–
–
–
–
–
2.0
–
–
2.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,158
8
1,071
79
256
256
650
423
93
133
651
402
217
15
17
169
133
33
3
169
125
31
13
19
12
4
2
1
8
8
248
248
650
423
93
133
106
53
50
–
4
169
133
33
3
164
120
31
13
18
11
4
2
1
8
8
2,521
43,292
3.3
2.5
2.0
3,080
1,508
950
510
48
824
824
–
1,668
654
756
257
61
19
28
–
15
441
96
291
55
–
–
–
–
56,198
3,157
53,041
–
–
–
–
18,014
10,164
3,717
471
3,662
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.9
3.9
–
–
–
–
–
–
–
–
–
–
–
–
–
1.1
–
–
1.1
–
–
–
–
–
–
–
–
–
1,508
950
510
48
30.9
1,558
–
30.9
–
–
–
–
1.1
–
–
1.1
–
–
–
–
–
851
707
1,668
654
756
257
297
151
77
6
63
441
96
291
55
2.8
2.8
3.4
3.2
4.1
3.6
6.4
6.3
6.4
5.9
23.5
0.9
0.8
2.2
1.2
2.1
1.9
7.1
1.6
1.0
0.7
1.7
2.1
1.5
0.9
0.9
3.6
4.7
4.1
6.7
3.2
5.2
4.1
4.8
3.5
5.3
6.3
5.0
6.0
4.1
29.3
1.6
1.4
1.8
1.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Omolon hub
Birkachan
Burgali
Nevenrekan
Kegali⁶
Tumaninskoe⁶
Voro hub
Maminskoye⁷
Saum
Pesherny
Galka
Tamunier
Pavlov
Development and
exploration projects
Veduga8
Novopetrovsky9
Total Indicated
Measured+Indicated
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Talgiy
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara⁴
Komar
Elevator⁵
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Nevenrekan
Kegali⁶
Tumaninskoe⁶
Voro hub
Voro
Maminskoye⁷
Saum
Pesherny
Shalkinskoe
Tamunier
Pavlov
1,540
1,020
190
50
60
220
6,460
2,400
60
110
40
50
3,800
5,900
880
5,020
55,750
15,870
7,340
5,480
3,050
12,110
9,930
2,180
18,560
8,400
7,500
2,660
4,610
2,920
1,460
130
100
14,280
7,410
5,560
1,310
3,990
3,080
130
450
50
60
220
7,080
500
2,460
90
140
40
50
3,800
3.8
7.3
6.0
9.2
7.1
2.1
1.7
4.4
2.4
3.1
2.9
2.8
5.6
4.1
9.0
1.3
3.4
–
4.0
3.5
4.6
0.8
1.7
–
6.3
1.0
1.8
1.4
2.5
7.0
4.0
6.0
9.2
7.1
0.7
2.0
1.7
3.8
2.4
3.1
2.9
9
17
352
231
70
–
47
–
71
9
1
–
–
–
–
–
–
–
–
–
–
–
1.65
–
1.76
–
–
–
4.60
–
7.86
–
–
–
58
–
2.75
–
5.07
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13
757
–
–
–
394
353
392
1,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.53
–
–
7
8
11
352
231
70
2
–
46
–
71
9
1
–
–
–
–
–
–
–
–
1.48
–
1.76
–
–
–
–
3.77
–
7.86
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.5
3.9
7.5
9.2
12.1
8.0
2.6
2.1
2.0
4.4
2.9
3.2
2.9
5.6
2.8
6.1
4.1
5.2
4.1
9.0
1.3
4.7
–
1.42
3.5
10.1
3.9
4.0
3.5
4.6
6.4
5.9
6.3
5.2
27.8
1.3
1.0
1.8
1.4
3.4
2.5
7.1
4.1
9.2
12.1
8.0
2.5
0.7
2.0
2.0
3.8
2.9
3.2
2.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.24
–
–
–
2.40
–
248
123
44
11
19
52
540
159
3
16
3
5
354
979
79
900
1,993
302
104
613
470
504
337
–
85
–
89
15
148
–
–
–
–
–
–
1.6
–
0.9
–
0.7
–
–
–
–
–
–
–
–
5.7
–
2.6
–
3.1
–
–
9,323
138.2
254.2
–
9,323
–
138.2
–
254.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
270
127
45
16
25
58
544
159
4
16
4
6
356
1,064
79
985
6,269
85,865
143.8
261.0
32.1
7,349
2,666
957
1,581
127
–
–
–
–
1,071
57,137
1,071
–
2,317
1,077
850
391
4,096
53,041
–
–
–
–
167
59,817
72
77
–
18
610
228
324
58
412
244
31
57
11
19
52
559
11
162
5
17
3
5
354
37,048
16,437
1,626
4,706
–
–
–
–
2,468
691
37
153
613
470
504
412
31
–
130
–
89
15
148
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.9
6.9
–
–
–
–
–
–
–
–
–
2.0
–
–
1.3
–
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
2.9
–
–
2.9
–
–
–
–
–
–
–
–
–
–
–
–
6.5
–
–
3.3
–
3.1
–
–
–
–
–
–
2,666
957
1,581
127
30.9
1,814
–
30.9
–
–
–
–
3.1
–
–
3.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,106
707.2
2,317
1,077
850
391
948
553
293
22
81
610
228
324
58
439
252
31
58
16
25
58
562
12
162
6
17
4
6
356
223
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Reserves and Resources continued
Mineral Resources as at 1 January 20231 continued
Tonnage
Grade
Content
Tonnage
Grade
Content
Kt Au g/t
Ag g/t Cu % Zn % Pb % GE g/t Au Koz
Ag Koz Cu Kt Zn Kt Pb Kt GE Koz
Kt Au g/t
Ag g/t Cu % Zn % Pb % GE g/t Au Koz
Ag Koz Cu Kt Zn Kt Pb Kt GE Koz
Development and
exploration projects
Veduga8
Novopetrovsky9
6,190
1,170
5,020
2.3
5.6
–
58
–
2.75
–
5.07
Total Measured+Indicated
82,690
Inferred
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda
Prognoz
Albazino hub
Albazino
Talgiy
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Varvara hub
Varvara⁴
Komar
Elevator⁵
Omolon hub
Birkachan
Burgali
Nevenrekan
Kegali⁶
Tumaninskoe⁶
Voro hub
Maminskoye⁷
Pesherny
Galka
Tamunier
Pavlov
Andrei
Development and
exploration projects
Veduga8
Novopetrovsky9
Total Inferred
15,390
9,500
5,790
100
49,060
47,360
1,700
6,690
4,170
600
1,920
2,220
1,570
570
80
6,550
1,250
1,900
3400
1,270
400
450
60
330
30
5,900
730
120
140
10
3,130
1,770
6,990
6,600
390
94,070
4.1
9.1
3.6
5.1
–
5.8
5.7
4.4
0.8
1.0
–
1.8
2.2
1.7
9.8
16.2
9.4
6.3
17.8
3.7
5.7
2.5
2.6
2.1
2.9
4.9
5.8
–
–
–
–
–
–
1.75
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.07
–
–
0.36
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10
647
–
–
–
433
365
306
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.67
–
–
–
–
–
–
–
13
27
459
73
116
–
–
83
25
1
4
–
–
2.73
–
–
–
–
–
10.8
–
–
–
–
53
–
3.69
–
4.87
5.4
2.3
6.1
3.9
6.0
4.1
9.1
3.6
5.3
5.1
8.6
5.4
5.8
5.7
4.4
6.1
6.4
5.8
4.1
1.8
1.8
2.2
1.7
12.0
9.9
16.4
13.5
7.2
19.2
2.7
3.7
5.7
3.4
2.8
2.1
2.9
4.9
4.9
6.2
988
87
900
9,323
138.2
254.2
–
9,323
–
138.2
–
254.2
–
–
–
1,072
87
985
8,790
129,157
147.1
263.5
34.0
10,429
2,975
1,262
1,701
11
–
–
–
–
7,700
50,764
7,700
–
1,165
783
110
272
57
40
17
–
387
71
134
182
463
124
234
20
67
18
496
86
22
11
1
214
162
1,105
1,033
72
15,634
35,130
–
–
–
–
29,180
21,823
6,594
763
–
–
–
–
2,429
170
386
969
788
117
711
–
–
363
11
84
252
666
–
666
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.8
2.8
–
–
–
–
–
–
–
–
0.5
–
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.4
–
–
2.4
–
–
–
–
–
–
–
–
–
–
2.2
–
–
2.2
–
–
–
14.4
19.0
–
14.4
–
19.0
–
–
–
–
2,975
1,262
1,701
11
29.6
8,302
–
29.6
–
–
–
–
0.3
–
–
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,833
468
1,165
783
110
272
437
323
104
10
387
71
134
182
489
126
238
29
77
19
504
86
22
15
1
215
165
1,111
1,033
78
5.1 14,347
83,751
17.7
23.5
29.8
15,369
Measured+Indicated+Inferred
Standalone mines
Kyzyl2
Mayskoye
Svetloye
Nezhda hub
Nezhda³
Prognoz
Albazino hub
Albazino
Talgiy
Kutyn
Dukat hub
Dukat
Lunnoye
Perevalnoye
Primorskoye
Varvara hub
Varvara⁴
Komar
Elevator⁵
Omolon hub
Birkachan
Tsokol Kubaka
Burgali
Nevenrekan
Kegali⁶
Tumaninskoe⁶
Voro hub
Voro
Maminskoye⁷
Saum
Pesherny
Galka
Tamunier
Pavlov
Andrei
Development and
exploration projects
Veduga8
Novopetrovskiy9
31,260
16,840
11,270
3,150
61,170
57,290
3,880
25,250
12,570
8,100
4,580
6,830
4,490
2,030
210
100
20,830
8,660
7,460
4710
5,260
3,480
130
900
110
390
250
12,980
500
3,190
90
260
180
60
6,930
1,770
13,180
7,770
5,410
4.1
9.1
1.4
4.8
–
4.6
3.7
4.5
0.8
1.5
–
6.3
1.1
1.9
1.6
3.3
7.0
10.2
7.9
6.7
8.4
0.7
2.4
1.7
4.7
2.5
3.0
2.6
2.9
4.5
5.6
–
–
–
11
709
–
–
–
408
356
360
1,625
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.56
–
–
–
–
–
2.55
–
–
–
2.99
–
–
–
–
0.57
–
–
8
8
19
410
98
76
2
–
46
–
81
12
1
4
–
–
–
–
–
–
–
–
1.48
–
2.08
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.77
–
8.86
–
–
–
–
57
–
2.82
–
5.05
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.6
4.1
9.1
1.4
5.1
4.9
9.5
4.3
4.6
3.7
4.5
6.3
6.1
6.1
4.8
27.8
1.5
1.1
1.9
1.6
5.5
3.4
7.1
10.4
11.6
7.9
9.4
2.6
0.7
2.4
2.0
4.7
3.3
3.1
2.6
2.9
5.2
4.5
6.1
5,641
2,220
3,282
139
–
–
–
–
8,771
107,901
8,771
–
3,482
1,859
960
663
224
111
95
–
18
997
299
458
240
875
368
31
290
30
86
69
19,729
88,172
–
–
–
–
88,997
58,870
23,031
2,389
4,706
–
–
–
–
4,898
861
37
540
1,581
1,258
622
1,055
1,123
11
249
5
39
14
7
568
162
31
–
130
–
451
27
232
252
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.7
9.7
–
–
–
–
–
–
–
–
–
2.6
–
–
1.3
–
1.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.3
–
–
5.3
–
–
–
–
–
–
–
–
–
–
–
–
8.6
–
–
3.3
–
5.3
–
–
–
2,092
9,989
152.6
273.2
1,120
973
–
9,989
–
152.6
–
273.2
–
–
–
–
5,641
2,220
3,282
139
60.5
10,116
–
60.5
–
–
–
–
6.2
–
–
6.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,940
1,176
3,482
1,859
960
663
1,386
876
398
32
81
997
299
458
240
928
378
31
296
45
101
77
1,067
12
249
6
39
18
7
571
165
2,183
1,120
1,063
Measured+Indicated+Inferred 176,760
4.5 23,137
212,908
164.8
287.1
66.7
25,798
1 Mineral Resources are reported in accordance with the JORC Code (2012). Gold equivalent (GE) is calculated based on gold and silver only. Mineral Resources are
additional to Ore Reserves. Discrepancies in calculations are due to rounding.
2 Mineral Resources estimate for Bakyrchik (Zone 1) open-pit/underground mine was revised by Polymetal as at 1 January 2023. Mineral Resources estimate for
Gluboky Log (Zone 2) was prepared by Polymetal as at 1 April 2020. Price: Au = $1,200/oz. Revised estimate was not performed due to lack of material changes.
Mineral Resources estimate for Bolshevik was prepared by Polymetal as at 1 January 2019. Price: Au = $1,200/oz. Revised estimate was not performed due to lack
of material changes.
3 Mineral Resources estimate for open-pit mining was revised by Polymetal as at 1 January 2023. Mineral Resources estimate for underground mining was not
revised as compared to the estimate performed as at 1 January 2022 due to the lack of material changes. Initial Mineral Resource estimate for underground mining
(ore zone 32) was performed as at 1 January 2023.
4 Cu grade estimate is presented for rock and powder ore with high Cu grade only (total Mineral Resources of rock and powder ore with high Cu grade are 1.5 and
0.2 Mt of ore respectively).
Initial estimate was prepared by Polymetal as at 1 January 2023.
5 Estimate was performed by Polymetal as at 1 January 2022. Revised estimate was not performed due to lack of material changes.
6
7 Mineral Resources estimate was performed by Polymetal as at 1 January 2022. Revised estimate was not performed due to lack of material changes.
8 Mineral Resources estimate was performed by Polymetal as at 1 January 2022. Revised estimate was not performed due to lack of material changes. Mineral
Resources are presented in accordance with the Company’s ownership equal to 59.45%.
9 Average Cu grade only accounts for tonnage of copper-zinc ore of 4.8 Mt. Average Zn grade only accounts for tonnage of copper-zinc and zinc ore of 4.8 Mt and
0.29 Mt respectively. Average Ag grade only accounts for tonnage of copper-zinc ore and gold sulphide ore of 4.8 Mt and 0.35 Mt respectively.
224
225
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Reserves and Resources continued
PGM Mineral Resources as at 1 January 20231
Measured
Indicated
Total Measured+Indicated
Inferred
Measured+Indicated+Inferred
Tonnage
Grade
Content
Mt
6.8
140.6
147.3
9.2
156.5
Pd g/t
Pt g/t
Au g/t
Cu % Pd, Moz Pt, Moz
Au Moz
Cu Kt
0.2
0.1
0.1
0.1
0.1
0.3
0.3
0.3
0.2
0.3
0.7
0.7
0.7
0.7
0.7
0.11
0.10
0.10
0.09
0.10
0.0
0.6
0.7
0.0
0.7
0.1
1.1
1.2
0.1
1.3
0.2
3.1
3.3
0.2
3.5
7.2
142.2
149.5
8.2
157.7
This estimate was prepared by employees of JSC Polymetal Management Company and JSC Polymetal Engineering, led
by Mr Valery Egorov, who assumes overall responsibility for the Mineral Resources and Ore Reserves Report.
Mr Egorov is employed full-time as the Technical Director of Bakyrchik Mining Venture LLC and has more than 16 years’
experience in gold, silver and polymetallic mining. He is a Member of the Institute of Materials, Minerals & Mining (MIMMM),
London, and a Competent Person under the JORC Code.
Listed below are other Competent Persons employed by the Company that are responsible for relevant research on which
the Mineral Resources and Ore Reserves estimate for the Kazakhstan operations (Kyzyl and deposits of Varvara hub)
is based:
• Ore Reserves – Valery Egorov, Technical Director of Bakyrchik Mining Venture LLC, MIMMM, with more than 16 years’
Tomtor Rare Earth Metals Mineral Resources as at 1 January 20232
relevant experience;
Tonnage
Grade, %
Mt
0.6
0.4
1.0
Nb2O5
3
6.7
5.0
6.0
NdPr
oxides
2.5
3.1
2.8
REO
Other
REO
10.7
13.6
11.7
Content, Kt
REO4
Total
REO
13.2
16.7
14.5
Nb2O5
43
20
63
NdPr
oxides⁵
15.7
12.2
27.8
Other
REO⁶
67.9
55.1
123.1
Stage 1
Stage 2
Total Probable
Additional Tomtor Rare Earth Metals Mineral Resources as at 1 January 20237
Tonnage
Grade, %
Content, Kt
Indicated
Inferred
Indicated+Inferred
Mt
0.01
0.1
0.1
Nb2O5
3
5.9
4.7
4.8
NdPr
oxides
2.4
2.8
2.8
REO
Other
REO
10.9
12.5
12.4
Total
REO
13.3
15.3
15.2
Nb2O5
0.4
6.2
6.5
NdPr
oxides⁵
0.1
3.6
3.7
REO4
Other
REO⁶
0.6
16.4
17.0
Total
REO
84
67
151
Total
REO
0.7
20.0
20.7
Investment in associate Tomtor was also provided for, as the project was suspended. Please refer to Note 17 on page 199.
• Geology and Mineral Resources – Victor Pchelka, Deputy Director for Mining Operations of the Mineral Resources
Department of Polymetal Eurasia LLC, MIMMM, PONEN, with 36 years’ relevant experience.
Listed below are other Competent Persons employed by the Company that are responsible for relevant research on which
the Mineral Resources and Ore Reserves estimate for the other Company’s operations is based:
• Ore Reserves – Victor Batalov, Head of Mineral Resources Estimate Section of Polymetal Management, AusIMM, with
more than 20 years’ relevant experience;
• Geology and Mineral Resources – Roman Govorukha, Head of Mining Geology Department, JSC Polymetal
Management Company, AusIMM, with 22 years’ relevant experience.
All the above mentioned Competent Persons have sufficient experience that is relevant to the style of mineralisation and
types of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’
(JORC Code).
All Competent Persons have given their consent to the inclusion in the report of the matters based on their information in
the form and context in which it appears.
Metals prices used in estimating Mineral Resources and Ore Reserves are listed below (unless otherwise indicated in the
footnotes of the above tables):
Au = $1,500/oz;
Ag = $20.0/oz;
Cu = $7,500/t;
Zn = $2,200/t;
Pb = $2,000/t.
All metals presented in the tables of Mineral Resources and Ore Reserves were used in Mineral Resources and Ore
Reserves estimates. The gold equivalent as of 01.01.2023 includes only gold and silver. Data on conversion ratios into gold
equivalent are given on the next page.
1 Mineral Resources are reported in accordance with the JORC Code (2012). Discrepancies in calculations are due to rounding. Estimate was prepared by Polymetal
as at 1 January 2021. Price for Pd = $1,500/oz, Pt = $800/oz, Au = $1,200/oz, and Cu = $6,000/t.
2 Ore Reserves are presented in accordance with the JORC Code (2012). Estimate prepared by SRK as at 31 December 2019, using the following prices: $34.2/kg of
Nb₂O₅, $48.5/kg of Pr₆O₁₁, $48.5/kg of Nd₂O₃, $20.80/kg of carbonate concentrate of medium and heavy rare earths (Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu, Y)
and at 7.8% Nb₂O₅ Equivalent cut-off grade. Mineral Resources are presented in accordance with the Company’s ownership equal to 9.09%. All discrepancies in
calculations are due to rounding.
3 Nb₂O₅ – Niobium oxide
4 REO – rare earth oxides.
5 NdPr oxides – Pr₆O₁₁ (t)+ Nd₂O₃(t).
6 The metal of the remaining rare earth oxides is calculated by the formula: Others = La₂O₃ (t) + Ce₂O₃(t) +Sm₂O₃(t) + Eu₂O₃(t) + Gd₂O₃(t) + Tb₂O₃(t) + Dy₂O₃(t) +
Ho₂O₃(t) + Er₂O₃(t) + Tm₂O₃(t) + Yb₂O₃(t) + Lu₂O₃(t) + Y₂O₃(t).
7 Mineral Resources are additional to Ore Reserves. Additional Mineral Resources are presented in accordance with the JORC Code (2012).Estimate prepared by
SRK as at 31 December 2019 using the following prices: $23.9/kg of Nb₂O₅, $53.5/kg of Pr₆O₁₁, $48.5/kg of Nd₂O₃, $20.80/kg of carbonate concentrate of medium
and heavy rare earths (Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu, Y) and at 7.8% Nb₂O₅ Eq cut-off grade. Additional Mineral Resources are presented in accordance
with the Company’s ownership equal to 9.09%. All discrepancies in calculations are due to rounding.
226
227
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Reserves and Resources continued
Gold equivalent conversion ratios
Silver to gold equivalent conversion ratio
Metal to gold equivalent conversion ratio: GE=Me/k
Where Me is the evaluated metal content (silver g/t)
Where k is the metal to gold equivalent conversion rate that is calculated considering the difference in metals value issuing
the following formula:
For silver: k= ((Au price/31.1035 – (Au price /31.1035 – Treatment charge Au)*(Royalty Au)/100 –
(Treatment charge Au))*(Recovery Au)) / ((Ag price/31.1035 - (Ag price/31.1035 – Treatment charge Ag)*(Royalty Ag)/100 –
(Treatment charge Ag))*(Recovery Ag)), where Royalty is the mineral extraction tax at applicable rate, recovery – the life-of-
mine expected recovery of the respective metal in the processing technology applied.
Silver to gold equivalent conversion ratios
k
Ag
77
76
162
75
75
125
92
77
85
94
81
83
112
124
95
102
76
91
82
88
60
161
120
115
97
109
75
112
96
139
88
Deposit
Dukat
Lunnoye
Doroninskoye
Perevalnoye
Primorskoye
Birkachan
Tsokol Kubaka
Burgali
Kegali
Tumaninskoye
Nevenrekan
Ore processing technology
Conventional flotation
Cyanidation+Merrill Crowe process
Cyanidation+Merrill Crowe process
Conventional flotation
Rich ore to offtakers
Cyanidation+Merrill Crowe process
Cyanidation carbon-in-pulp
Heap leaching+carbon-in-column
Cyanidation carbon-in-pulp
Cyanidation carbon-in-pulp
Cyanidation+Merrill Crowe process
Cyanidation carbon-in-pulp
Cyanidation+Merrill Crowe process
Voro primary ore (stockpiles)
Cyanidation carbon-in-pulp
Voro primary run-of-mine unpayable ore (stockpiles)
Cyanidation carbon-in-pulp
Conventional flotation
Cyanidation carbon-in-pulp
Heap leaching+carbon-in-column
Cyanidation carbon-in-pulp
Cyanidation carbon-in-pulp
Cyanidation carbon-in-pulp
Heap leaching+carbon-in-column
Cyanidation carbon-in-pulp
Heap leaching+carbon-in-column
Cyanidation carbon-in-pulp
Cu-Zn primary ore: conventional flotation
Conventional flotation
Cu-Zn and Zn ore: conventional flotation
Au-S: gravity concentration
Cu-Zn ore: conventional flotation
Au-S: gravity concentration
Tamunier
Pavlovskoye primary ore
Pavlovskoye oxidised ore
Andrei East (primary ore)
Andrei West (primary ore)
Andrei East (oxidised ore)
Andrei West (oxidised ore)
Saum
Prognoz
Novopet
Galka
228
Group production statistics
Consolidated highlights
Waste mined, Kt
Underground development, m
Ore mined, Kt
Open-pit
Underground
Ore processed, Kt
Gold grade processed (incl. by-product copper and zinc), g/t
Silver grade processed, g/t
GE grade processed, g/t
Total Production
Gold, Koz
Silver, Moz
Copper, t
Zinc, Kt
Plumbum, Kt
Gold equivalent, Koz based on 80:1 Ag/Au ratio, excluding base metals
Gold equivalent, Koz based on 120:1 Ag/Au ratio, excluding base metals
Gold equivalent production by mine, GE Koz
Kyzyl
Dukat
Albazino/Amursk
Mayskoye
Omolon
Voro
Varvara
Svetloye
Nezhda
Okhotsk
Kapan
Total
Financial highlights
Revenue, $m
Adjusted EBITDA, $m2
Adjusted EBITDA margin, %
Average realised gold price, $/oz3
Average LBMA closing gold price, $/oz
Average realised silver price, $/oz3
Average LBMA closing silver price, $/oz
Total cash costs, $/GE oz2
All-in sustaining costs, $/GE oz2
Net earnings/(loss), $m
Underlying net earnings, $m2
Underlying EPS, $/share2
Dividends declared during the period, $/share4
Dividend proposed for the period, $/share5
Operating cash flow, $m
Capital expenditure, $m
Free cash flow (pre M&A), $m2
Free cash flow (post M&A), $m2
FY 2018
FY 2019
FY 2020
FY 2021
FY 2022
126,696
130,000
13,979
9,319
4,660
15,162
3.1
60
3.6
158,560
105,819
17,224
13,022
4,202
15,024
3.4
52
3.8
166,805
90,011
15,386
11,221
4,166
15,447
3.5
44
4.1
205,888
95,549
15,647
11,686
3,962
15,799
3.2
45
3.8
211,127
97,997
19,456
15,388
4,068
18,289
3.1
39
3.6
1,216
25.3
3,875
5.4
1,532
1,427
96
306
308
117
195
107
130
136
104
33
1,316
21.6
2,452
1.0
7.2
1,586
1,496
343
287
241
129
205
107
137
134
–
3
1,402
18.8
1,544
2.3
5.1
1,637
1,559
382
275
261
139
213
89
159
120
–
–
1,422
20.4
1,901
–
–
1,677
1,592
360
291
249
139
217
93
198
109
21
–
–
1,450
21.0
1,664
2.9
5.0
1,712
1,625
330
292
230
120
199
93
211
104
133
–
–
1,532
1,585
1,637
1,677
1,712
FY 2017
FY 2018
FY 2019
FY 20201
FY 2021
FY 2022
1,815
745
41%
1,247
1,258
16.1
17.0
658
893
354
376
0.88
0.32
0.44
533
383
143
56
1,882
780
41%
1,253
1,269
14.8
15.7
649
861
355
447
1.00
0.47
0.48
513
344
176
134
2,241
1,075
48%
1,411
1,393
16.5
16.2
655
866
483
586
1.25
0.51
0.82
696
436
256
299
2,865
1,661
58%
1,797
1,771
20.9
20.5
638
874
1,066
1,052
2.23
1.02
1.29
1,166
558
610
603
2,890
1,464
51%
1,792
1,799
24.8
25.0
730
1,030
904
913
1.93
1.34
0.97
1,195
759
418
407
2,801
1,017
36%
1,764
1,802
21.9
21.8
942
1,344
(288)
440
0.93
–
–
206
794
(445)
(473)
1 Restated due to a voluntary change in accounting policy. Starting from 1 January 2021, exploration and evaluation (E&E) expenses costs are capitalised into assets
only when mineral resources are published; and before that are expensed as incurred. Previously capitalised E&E assets with no mineral resource estimates were
written off via retrospective adjustments to the 2020 income statement and balance sheet amounts brought forward.
2 Refer to “Alternative Performance Measures” section for definition and details.
3
In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are
calculated as revenue divided by gold and silver volumes sold, excluding effect of treatment charges deductions from revenue.
4 Based on declaration date.
5 Dividend proposed for the FY include interim, final and special dividend paid for the financial year.
Source: Consolidated audited IFRS financial statements for the years ended 31 December 2022, 2021, 2020, 2019, 2018.
229
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Non‑financial information statement
Independent practitioner’s assurance report
The following information is provided in compliance with the Non-Financial Reporting
Directive requirements. The table below sets out where relevant information can be found
in this Integrated Annual Report. More detailed information is available on the Company’s
website: www.polymetalinternational.com.
Reporting requirement
Policy and standards
Business model
The International Integrated Reporting Framework
Universal matters
Environmental matters
Employees
Human rights
Social matters
Anti-corruption and
anti-bribery
UN Global Compact
EBRD Environmental and Social Policy
Responsible Gold Mining
Principles
Code of Conduct
Environmental Policy
Code of Conduct
Climate Change Policy
Tailings and Water Storage
Facilities Management Policy
Energy Policy
Mine Closure Policy
Acid Rock Drainage
Management Standard
ISO 14001
ISO 15001
ILO conventions, national labour codes
Code of Conduct
ISO 45001
Employment and Labour Standard
Health and Safety Policy
Diversity and Inclusion Policy
Collective agreements
Universal Declaration on Human Rights
The UN Guiding Principles on Business and Human Rights
Human Rights Policy
Modern Slavery Act Statement
Code of Conduct
Supplier Code of Conduct
Community Engagement Policy
Political and Charitable Donations Policy
Procurement Policy
Code of Conduct
Anti-Bribery and Corruption Policy
Supplier Code of Conduct
Gifts and Entertainment Policy
Policy on Use of Agents, Representatives, Intermediaries
and Contractors’ Due Diligence
Whistleblowing Policy
Policy on Disciplinary Action for Violation of Anti-Bribery
and Corruption Procedures
Relevant information
Business model, pages 16-17;
Strategy, pages 22-23.
Our contribution to the UN SDGs, page 44;
Our material issues, page 45.
Climate change, pages 62-75;
Environment, pages 56-61;
Environmental risk, page 104;
Full Disclosure on Tailings Storage Facilities
2022, available on the website.
Employees, pages 50-56;
Health and safety, pages 46-49;
Human capital risk, page 105;
Health and safety risk, page 103.
Human rights, page 82;
Modern Slavery Act Transparency
Statement 2021, available on the website;
Supply chain stewardship, pages 81-82.
Communities, pages 76-79.
Anti-bribery and corruption, page 81.
Principal risks and impact
from business activity
Non-financial key
performance indicators
Risk Management Policy
Risk management, pages 96-110.
GRI
SASB
TCFD
Key performance indicators, page 26;
Sustainability data, pages 234-250.
To the Shareholders, Management and Stakeholders
of Polymetal International plc.
Scope
We have been engaged by Polymetal International plc (hereinafter “the Company”) to perform a limited assurance
engagement, as defined by International Standards on Assurance Engagements, (hereinafter “the Engagement”) for
information in the field of sustainability (hereinafter “Sustainability Information” or “Subject Matter”) disclosed in the Company’s
Integrated Annual Report (hereinafter “the Report”) for 2022 (hereinafter “the Reporting Period”). The Subject Matter is
disclosed in the following sections of the Report:
• Sustainability section of the Report, pages 44-83,
• Sustainability highlights on “At a glance” spread of the Report, page 6,
• Stakeholder engagement, pages 18-19,
• Sustainability-related figures in all spreads of the Integrated Annual Report, including Key Performance Indicators related
to sustainability, page 27,
• Green highlights in Operating review, pages 32-43,
• Safety & Sustainability Committee report, pages 130-131,
• Safety and sustainability-related remuneration KPIs in the Remuneration Committee report, page 144,
• Sustainability data section in appendix, pages 234-250,
• GRI Index and relevant sections of the Report which the GRI Index refers to, pages 252-257,
• SASB content index and relevant sections of the Report which the SASB Index refers to, pages 258–259,
• TCFD content index and relevant sections of the Report which the TCFD Index refers to, page 251.
Other than as described in the preceding paragraph, which sets out the scope of our Engagement, we did not perform
assurance procedures on the remaining information included in the Report, and accordingly, we do not express a conclusion
on that information. Also, we did not perform any assurance procedures regarding forward-looking statements on
performance, events, or planned activities of the Company.
Applicable criteria
In preparing the Sustainability Information in the Report the Company applied:
• Global Reporting Initiative Sustainability Reporting Standards 2021 (hereinafter “the GRI Standards”),
• Metals & Mining Sustainability Accounting Standards by the Sustainability Accounting Standards Board
(hereinafter “the SASB Standards”),
• The recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures
(hereinafter “the TCFD Recommendations”)
as set forth in section “About the Report” on the page 4 of the Report (hereinafter “the Criteria”).
The Company’s responsibilities
The Company’s management is responsible for selecting the Criteria, and for presenting the Sustainability Information in
accordance with the Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls,
maintaining adequate records, and making estimates that are relevant to the preparation of the Sustainability Information,
such that it is free from material misstatement, whether due to fraud or error.
Practitioner’s responsibilities
Our responsibility is to express a conclusion on the presentation of the Sustainability Information based on the evidence we
have obtained.
We conducted our limited assurance Engagement in accordance with the International Standard for Assurance
Engagements (revised) “International Standard for Assurance Engagements Other Than Audits or Reviews of Historical
Financial Information” (hereinafter “ISAE 3000”) and the terms of reference for this Engagement as agreed with Company
on November 18, 2022. ISAE 3000 requires we plan and perform our engagement to obtain limited assurance about
whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The
nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of
material misstatement, whether due to fraud or error.
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance
conclusions.
230
231
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Ernst & Young Advisory LLP
Al-Farabi ave., 77/7
Esentai Tower
Almaty, 050060
Republic of Kazakhstan
Tel.: +7 727 258 5960
Fax: +7 727 258 5961
www.ey.com
Limitations to the procedures performed
A limited assurance engagement is substantially less in scope than a reasonable assurance engagement. Certain matters
may not be identified during a limited assurance engagement which may be identified during a reasonable assurance
engagement.
A limited assurance engagement in accordance with ISAE3000 in particular does not contemplate testing internal controls,
assessing control risk or other procedures ordinarily performed during a reasonable assurance engagement. Our
procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of
data within IT systems. The TCFD disclosure includes climate-related scenario analysis that is subject to inherent
uncertainties given incomplete and evolving scientific and socio-economic knowledge about the possible impact, timing,
and likelihood of physical and transition climate-related risks.
Notwithstanding this context in which our assurance conclusion is given, the scenario analysis was performed by the
Company to assess the possible impact of the climate-related risks in relation to the Company’s business. EY did not
re-perform an assessment of the physical and transition risks used in the preparation and application of the scenario
analysis, and did not perform an assessment of the underlying IT systems used in their generation.
Conclusion
Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe
that the Sustainability Information has not been prepared and represented fairly, in all material respects, in accordance with
the Criteria.
Almaty
March 15, 2023
Independent practitioner’s assurance report continued
Our Independence and Quality Control
We apply International Standard on Quality Control 1 (ISQC 1), and accordingly, we maintain a robust system of quality
control, including policies and procedures documenting compliance with relevant ethical and professional standards and
requirements in law or regulation.
We comply with the independence and other ethical requirements of the IESBA Code of Ethics for Professional
Accountants, which establishes the fundamental principles of integrity, objectivity, professional competence and due care,
confidentiality, and professional behavior.
Description of procedures performed
The assurance engagement performed represents a limited assurance engagement. The nature, timing and extent of
procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable
assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is lower.
Although we considered the effectiveness of management’s internal controls when determining the nature and extent of
our procedures, our assurance engagement was not designed to provide assurance on internal controls.
A limited assurance engagement consists of making inquiries, primarily of persons responsible for preparing the Subject
Matter and related information, applying analytical and other appropriate procedures. The procedures we performed were
based on our professional judgement and included the steps outlined below:
• Interviewed the representatives of the Company’s corporate-level and site-level management and specialists responsible
for the Company’s sustainability and climate policies, activities, performance and relevant reporting data,
• Performed analysis of the relevant internal methodologies and guidelines, key documents related to the Company’s
sustainability policies, activities, performance and relevant reporting data,
• Obtained understanding of the processes used to prepare the Sustainability Information of the Company, including
management’s processes to identify the Company’s material climate-related risks and opportunities,
• Benchmarked the Report against sustainability reports of selected international mining and gold mining peers of the
Company to determine sector-specific sustainability and climate issues raised by stakeholders,
• Reviewed a selection of corporate and external media publications with respect to the Company’s sustainability policies,
activities, events, and performance within the reporting period,
• Conducted analysis of material sustainability issues identified by the Company,
• Identified sustainability issues material for the Company based on the procedures described above and analysis of their
presentation in the Report,
• Reviewed data samples on key sustainability and climate indicators including production, health and safety,
GHG emissions (Scope 1, 2, and 3), water and energy resources management, environmental protection, compliance,
personnel management, and social activities for the reporting period, to assess whether the Company has properly
collected, prepared, collated and reported these data appropriately,
• On a sample basis collected evidence substantiating other qualitative and quantitative information included in the Subject
Matter,
• Visited the Company’s production facilities of Bakyrchik Mining Venture LLP (Kazakhstan) to interview executives
responsible for production and finance, human resources, environmental protection, health and safety, charitable and
social activities, and gather evidence supporting the Sustainability Information in the Report regarding sustainability
policies, activities and events in reporting period,
• Reviewed the Subject Matter to understand how the Company’s material climate-related risks and opportunities identified
by the Company are reflected in the qualitative disclosures of the Subject Matter, as well as for consistency of the
Sustainability Information with the TCFD Recommendations,
• Performed walkthrough of Company’s processes related to its climate scenario analysis considering the Company’s
inputs, key assumptions, and consistency with the TCFD Recommendations,
• Reviewed physical and transition climate-related risks affecting the Company’s assets and operations based on risk
exposure modeling, using EY climate tools and benchmark analysis of major gold mining companies in terms of their
climate risk disclosures and associated impact on operations,
• On a sample basis, based on professional judgement, agreed statements within the disclosures to source information to
check the accuracy and reasonableness of these. We also assessed that the sample gave appropriate coverage across
governance, strategy, risk management and metrics & targets sections of the disclosure of the TCFD Recommendations.
We also performed such other procedures as we considered necessary in the circumstances.
232
233
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability data
Health and safety
Polymetal employees health and safety
Injuries, including:
Fatalities
Severe injuries
Minor injuries
LTIFR1
Days off work following accidents²
Occupational deseases and health difficulties
Near-misses
Contractor employees safety
Injuries, including:
Fatalities
Severe injuries
Minor injuries
LTIFR1
Units
number
number
number
number
rate
number
number
number
Units
number
number
number
number
rate
2022
13
0
0
13
0.10
877
9
4,770
2022
12
0
0
12
0.21
2021
15
0
2
13
0.12
1,545
5
4,687
2021
6
1
0
5
0.09
2020
13
0
2
11
0.12
1,583
2
3,653
2020
12
0
0
12
0.24
2019
20
2
3
15
0.19
1,760
1
2,684
2019
10
1
0
9
0.20
Polymetal employees safety in 2022: site level
LTIFR
Fatalities Severe injuries Minor injuries
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
0.00
0.00
0.00
0.00
0.22
0.18
0.07
0.35
0.16
0.33
0.00
0.00
0.50
0.32
0.00
0.10
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
2
1
2
2
2
0
0
1
1
0
13
1 Lost-time injury frequency rate per 200,000 hours worked.
2 Data for 2021 was restated due to sick leave extension for one of the injured employees.
234
People
Headcount and turnover
Employees
Average headcount
Headcount as of 31 December
Contractors working on Polymetals's territories (average headcount)
New employee hires during the reporting period
Female
Male
Voluntary turnover³
Female
Male
Involuntary turnover⁴
Other turnover⁵
Workforce diversity
Gender
Percentage of female employees
Percentage of female managers⁶
Percentage of female qualified personnel⁷
Percentage of female workers⁸
Gender pay gap⁹
Taken parental leave, including:
Female employees on parental leave
Male employees on parental leave
Return to work and retention rates after parental leave
Age
Employees under 30 years old, including:
Female
Male
Percentage of employees under 30 years old
Employees 30-50 years old, including:
Female
Male
Percentage of employees 30-50 years old
Over 50 years old, including:
Female
Male
Percentage of employees over 50 years old
Disability
Disabled personnel
Collective agreements
Units
2022
2021
2020
2019
number
number
number
number
number
number
%
%
%
%
%
14,694
15,160
6,078
4,584
988
3,596
8.4
7.1
8.7
0.9
14.3
13,392
14,281
7,082
4,722
962
3,760
8.2
8.2
8.2
0.3
14.2
12,065
12,679
5,277
3,156
662
2,494
6.5
5.8
6.7
N/A
N/A
11,611
11,819
5,336
N/A
N/A
N/A
5.8
6.9
5.5
N/A
N/A
Units
2022
2021
2020
2019
%
%
%
%
%
number
number
number
%
number
number
number
%
number
number
number
%
number
number
number
%
21
22
41
12
23
131
120
11
100
2,365
567
1,798
16
10,297
2,256
8,041
68
2,498
603
1,895
16
number
66
21
22
40
11
22
149
139
10
100
2,366
552
1,814
17
9,617
2,065
7,552
67
2,298
554
1,744
16
30
21
22
40
11
25
118
111
7
100
2,092
500
1,592
16
8,579
1,840
6,739
68
2,006
480
1,526
16
30
21
22
39
12
30
150
146
4
100
2,083
468
1,615
18
7,815
1,677
6,138
66
1,918
448
1,470
16
23
Percentage of employees at operating sites covered by collective
bargaining agreements
Percentage of employees covered by collective bargaining
agreements
%
%
100
80
100
83
100
83
100
86
Units
2022
2021
2020
2019
Includes only employees that left the Company voluntarily due to dissatisfaction with their job.
Includes employees that were dismissed.
Includes employees that left the Company due to other reasons such as relocation, retirement or enrollement to an educational institution.
3
4
5
6 Managers – employees who hold positions as heads of business units: directors, chiefs of divisions, managers, experts or supervisors, etc.; chief specialists, for
example, chief accountant, chief dispatcher, chief engineer, chief mechanic, chief metallurgist, chief geologist; and deputies to these positions.
7 Qualified personnel – employees engaged in engineering and technical works or finance, such as accountants, geologists, dispatchers, engineers, inspectors,
mechanics, quantity surveyors, editors, economists, energy specialists, legal advisors, etc., and assistants to these positions. It also covers office workers in
accounting and control and maintenance positions who are not engaged in manual labour.
8 Workers include personnel who are directly engaged in the process of value creation, as well as those engaged in repair, moving goods, transporting passengers,
providing material services, and so on.
9 Calculated as avarage remuneration for men to avarage remuneration for women divided by average renumeration for women.
235
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability data continued
People continued
Employees by type of employment contract in 2022
Employment contract type
Indefinite term employment contract
Fixed-term employment contract
Employment status
Full-time
Part-time
Employee training
Trained personnel
Average number of training hours per employee (per year)¹
By gender
Female
Male
By employee level
Managers
Qualified personnel
Workers
Average number of mandatory training hours per year²
Average number of non-mandatory training hours per year
Total investments in training³
Annual investments in training per employee
Female
Male
Units
number
number
number
number
number
number
number
number
number
$ thousand
$
$
$
Female
Male
Total
Share in total
workforce
2,897
237
3,057
77
2022
9,237
78
47
86
101
72
73
22
56
1,458
99
126
92
10,832
729
11,438
122
2021
7,396
49
36
53
54
68
38
17
32
1,129
84
97
81
13,729
966
14,495
199
2020
7,593
79
58
83
116
81
66
32
47
1,131
94
98
82
93%
7%
99%
1%
2019
10,453
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1,215
105
N/A
N/A
1 The new methodology has been applied since 2021 to ensure better alignment with the GRI-404. Data for 2020 has been restated accordingly for comparative
purposes. Data for 2019 calculated using the old methodology is considered to be unrepresentative.
2 Manadory training mostly refers to safety training.
3 Travel costs excluded from 2020.
236
Water
Water use
Fresh water withdrawal, including:
Ground water
Surface water
External water supply
Water reused and recycled, including:
Recycled water
Waste water
Total water use
Share of water recycled and reused
Fresh water use intensity
Fresh water use for processing intensity⁴
Water consumption in 2022: site level
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
Water discharge
Watercourses
Collecting ponds
Landscape
Sewage
Total water discharge
Water discharge in 2022: site level
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
4 Does not include water used for non-technological purposes.
Units
thousand m³
thousand m³
thousand m³
thousand m³
thousand m³
thousand m³
thousand m³
thousand m³
%
m³/ Kt of processed ore
m³/ Kt of processed ore
2022
3,344
1,756
845
743
34,442
30,691
3,751
37,786
91
183
138
2021
3,480
1,452
1,028
1,000
31,636
27,743
3,893
35,116
90
220
155
2020
3,484
1,285
1,467
732
29,606
26,965
2,641
33,090
89
226
171
2019
4,919
1,695
2,236
988
32,276
28,222
4,053
37,194
87
327
268
Total water
consumption
thousand m³
Fresh water
withdrawal
thousand m³
Water reused
and recycled
thousand m³
Share of water
recycled and
reused
%
Fresh water
use for
processing
intensity⁴
m³/ Kt of
processed ore
5,796
6,454
128
7,103
2,266
1,580
6,236
417
2,837
953
1,389
2,548
15
48
16
587
689
13
48
98
328
363
99
348
48
268
420
15
4
15
5,209
5,765
115
7,054
2,168
1,252
5,873
318
2,489
905
1,121
2,128
0
44
1
37,786
3,344
34,442
90
89
89
99
96
79
94
76
88
95
81
84
0
92
6
91
227
166
N/A
0
6
139
103
39
87
N/A
N/A
157
N/A
N/A
N/A
138
Units
thousand m³
thousand m³
thousand m³
thousand m³
thousand m³
2022
8,452
1,131
0
184
9,767
2021
7,756
1,443
0
354
9,553
2020
10,128
1,864
0
375
12,367
2019
10,757
857
0
297
11,910
Watercourses
thousand m³
Collecting
ponds
thousand m³
Landscape
thousand m³
Sewage
thousand m³
0
0
990
875
114
2,632
1,884
434
1,439
0
21
46
11
0
5
8,452
58
612
0
0
149
22
241
41
0
0
0
0
0
5
3
1,131
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
83
0
11
6
0
0
66
0
0
0
15
0
0
2
0
184
237
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability data continued
Consumables and waste
Principal consumables
Lime
Cement and concrete
Quicklime
Grinding body
Sodium cyanide
Flotation reagents
Soda
Ammonium nitrate
Granulite
Perhydrol
Waste generation and management
Total waste
By composition
Waste rock
Tailings, including¹
Dry tailings
Wet tailings
Share of dry stacked tailings
Other waste (metal, plastic, paper, etc.)
By waste hazard classification
Non-hazardous
Hazardous²
By treatment
Waste disposed
Non-hazardous
Hazardous
Waste diverted from disposal, including:
Waste reused and recycled
Non-hazardous
Hazardous
Waste neutralised
Non-hazardous
Hazardous
Percentage of waste reused of total waste generated
Percentage of mineral waste reused of total waste generated
Percentage of non-mineral waste reused of total waste
generated
Units
t
t
t
t
t
t
t
t
t
t
2022
73,036
61,987
43,044
19,027
9,522
6,995
6,039
5,070
4,576
4,059
2021
70,968
43,593
37,216
17,272
8,498
6,201
6,827
3,877
5,416
5469
2020
77,081
48,464
32,148
17,016
8,132
5,383
5,844
2,805
5,488
6227
2019
71,899
34,846
28,217
17,360
8,202
4,193
8,723
2,772
5496
Units
2022
2021
2020
2019
t
228,292,508
210,621,211
181,959,017
155,923,761
t
t
t
t
%
t
t
t
t
t
t
t
t
t
t
t
t
%
%
%
212,735,776
15,539,024
4,350,152
11,188,872
28
17,708
196,841,661
13,751,596
1,954,736
11,796,860
14
27,954
169,287,548
12,627,995
1,348,599
11,279,395
11
43,474
143,439,734
12,469,214
1,212,822
11,256,392
10
14,813
222,261,930
6,030,579
210,080,143
8,502
181,951,432
7,585
155,918,075
5,686
180,668,648
174,643,303
6,025,346
54,440,601
54,440,005
54,437,436
2,569
595
190
406
23
23
159,015,806
159,013,768
2,039
48,573,139
48,571,506
48,566,649
4,858
1,633
62
1,571
23
N/A
141,217,837
141,215,474
2,363
31,621,854
31,621,525
31,616,846
4,679
330
43
286
17
N/A
134,518,857
134,514,807
4,050
21,705,608
21,705,334
21,703,421
1,913
274
26
248
14
N/A
65
N/A
N/A
N/A
Waste management in onsite/offsite breakdown in 2022
Waste diverted from disposal, including:
Non-hazardous waste
Waste reused and recycled
Waste neutralised
Hazardous waste
Waste reused and recycled
Waste neutralised
Waste disposed
Non-hazardous waste
Hazardous waste
Share of waste reused and recycled in 2022: site level
Units
Onsite
Offsite
Total
t
t
t
t
t
t
t
t
t
t
54,435,600
54,434,415
54,434,415
0
1,184
1,014
170
180,667,724
174,642,763
6,024,961
5,001
3,210
3,021
190
1,791
1,555
235
924
540
384
54,440,601
54,437,626
54,437,436
190
2,975
2,569
406
180,668,648
174,643,303
6,025,346
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
Total waste
generated
t
Share of waste
reused and
recycled
%
85,851,654
7,407,027
38,524,371
10,807,911
4,093,253
9,476,108
7,660,898
5,836,551
22,196,413
10,671,071
326,107
19,870,680
15
5,504,390
66,061
228,292,508
1
42
24
14
41
85
65
48
30
34
0
23
100
100
100
23
1 Data for 2021 was restated due to the improvements of waste accounting procedures.
Increase in 2022 is explained by the regulatory changes of tailings waste classification.
2
238
239
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability data continued
Air quality
Air pollutant emissions
Sulphur dioxide (SO₂)
Oxides of nitrogen (Nox)
Carbon monoxide
Solid particles
Ozone depleting (CFC-11 equivalents) substances emitted
VOCs
Mercury (Hg)
Lead (Pb)
Air pollutant emissions in 2022: site level
Units
t
t
t
t
t
t
t
t
2022
1,151
4,232
3,951
7,465
0
1,335
0
5
Kyzyl
Varvara
Komar mine
(part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of
Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
Units
Sulphur
dioxide (SO₂)
Oxides of
nitrogen (Nox)
Carbon
monoxide Solid particles
t
t
t
t
t
t
t
t
t
t
t
t
t
t
t
t
70
0
0
22
49
236
149
127
218
49
4
202
5
4
14
277
28
96
241
336
840
370
209
709
261
45
648
26
72
76
134
7
38
211
301
753
542
274
583
248
31
683
21
59
65
661
1,126
337
912
426
487
456
273
600
863
28
603
2
671
19
1,151
4,232
3,951
7,465
2021
1,064
3,472
3,455
5,703
0
1,194
0
5.12
Ozone
depleting
(CFC-11
equivalents)
substances
emitted
2020
847
2,789
2,798
2,946
0
1,004
0
0.17
2019
954
2,532
2,818
4,773
0
1,081
0
0.27
VOCs
Lead (Pb)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
50
0
3
53
82
174
84
45
600
41
7
147
10
16
18
1,330
0
0
0
0
0
0
0
0
0
0
0
5
0
0
0
5
Lands and biodiversity
Land use
Total managed land area
Land disturbed during year
Land rehabilitated during year
Total land disturbed and not yet rehabilitated
Land use: site level, 2022
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Primorskoye
Total
Units
hectares
hectares
hectares
hectares
2022
33,887
1,676
464
13,895
2021
32,634
882
290
12,315
Units
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
hectares
2020
25,952
1,329
1,404
11,838
2019
19,153
601
136
11,376
Land
disturbed
during year
Land
rehabilitated
during year
93
356
84
73
5
258
224
2
148
102
34
60
2
229
8
0
0
0
0
0
88
97
33
53
0
0
79
0
113
0
464
hectares
1,676
Rare and protected species’ habitats in areas affected by Polymetal operations
Least concern
Near threatened
Vulnerable
Endangered
Critically endangered
National Red Lists
Red Data Book of the Russian Federation
Red Data Book of Kazakhstan
Endemic species
Number of
species in the
direct impact
area
(found at the
site)
Number of
species in the
indirect impact
area
(found up to 1
km away from
the site)
270
7
6
0
0
6
11
1
695
15
21
4
5
52
6
3
240
241
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Sustainability data continued
Environmental expenditure
Total environmental expenditure
Overall expenditure, including:
Water
Land¹
Waste
Air quality
Other²
Units
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
2022
46,649
21,325
4,866
11,448
7,419
1,589
Environmental expenditure by type in 2022 (operational/capital)
Overall expenditure, including:
Water
Land¹
Waste management
Air quality
Other²
Units
Operational
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
11,742
2,386
1,002
4,538
2,226
1,589
2021
46,102
2,719
17,132
23,810
1,359
1082
Capital
34,907
18,940
3,864
6,910
5,194
0
2020
27,853
2,847
16,798
5,226
2,103
879
2019
35,021
19,583
8,121
4,576
2,117
624
Share of
operational
expenditure
in total
Share of
capital
expenditure
in total
25%
11%
21%
40%
30%
100%
75%
89%
79%
60%
70%
0%
GHG emissions
GHG emissions: trailing three‑year data
Scope 1 (direct emissions), including:
Combustion of fuels in stationary sources, including:
Organisation-owned stationary sources
Controlled contractor stationary sources
Combustion of fuels in mobile combustion sources,
including:
Organisation-owned mobile sources
Controlled contractor mobile sources
Emissions resulting from the waste processing
Scope 2 (energy indirect emissions):
Location based
Market based3
Total Scope 1 + Scope 2 (market based)
Scope 3 (other indirect emissions), including:
Upstream
Fuel and energy-related activities
(not included in Scopes 1 or 2)
Purchased goods
Capital goods
Upstream transportation and distribution
Business travel
Employee commuting
Downstream
Downstream transportation and distribution
Processing of sold products
GHG intensity (Scope 1 + Scope 2)
Units
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
kg of CO2e per oz of GE
2022
751,486
338,252
337,977
275
411,951
290,343
121,608
1,283
2021
682,645
302,564
301,983
581
378,885
281,235
97,650
1,196
2020
612,669
283,912
283,415
497
327,785
254,679
73,106
972
2019
613,717
287,144
286,799
345
325,719
248,718
77,001
854
551,952
330,897
1,082,383
585,496
494,797
612,590
452,692
1,135,337
546,159
471,097
593,143
565,924
1,178,593
625,265
536,510
584,706
584,706
1,198,423
610,635
511,321
224,272
158,991
167
94,100
968
16,299
90,699
42,287
48,412
632
184,767
171,284
260
97,643
1,445
15,698
75,062
35,573
39,489
677
192,419
222,498
108
110,205
2,668
8,612
88,755
44,437
44,318
730
192,517
204,701
64
99,360
4,135
10,544
99,314
40,887
58,427
742
GHG emissions in 2022 (Scope 1 and Scope 2): site level
Kyzyl
Varvara
Komar mine (part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Primorskoye (part of Dukat hub)
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Units
Scope 1
Scope 24
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
t of CO2e
132,528
13,892
54,807
19,771
35,923
91,127
94,672
5,661
55,963
121,454
29,119
2,330
80,244
4,061
9,934
73,208
125,725
17,114
2,254
11,454
0
11,684
0
177
143
5
63,463
22,823
0
2,847
1
2
Including rehabilitation activities.
Including scientific research, biodiversity protection and noise pollution.
242
3 We continue a transition to a market-based method for calculating indirect emissions and we disclose data based on both market and location based methods
strictly according to GHG Protocol guidance. Since the contractual information and residual mix totals are not available for the base year (2019), location-based
results for this period has been used as a proxy for marketbased method. For 2020–2022 data emissions from non-renewable grid energy are calculated using the
location-based method and grid average emission factors.
4 Kyzyl, Varvara, Komar mine, Voro, Dukat, Mayskoye and Nezhda are calculated taking into account data on current structure of grid energy mix. Since the
contractual information and residual mix totals are not available for the other grid connected sites, location-based results for these sites has been used as a proxy
for market-based method.
243
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Sustainability data continued
Energy
Energy consumption by source
Diesel, including:
Diesel for transport and mobile machinery
Diesel for electricity generation
Diesel for heat
Electricity purchased
Coal for heat
Natural gas for heat
Petrol
Waste oils
Renewable sources (solar/wind self-generation)
Total energy
Energy intensity
Energy intensity dynamics
Units
2022
2021
2020
2019
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
7,061,250
3,799,044
2,929,821
332,385
2,522,532
904,217
163,033
62,040
31,736
12,073
6,568,300
3,704,632
2,570,299
293,368
2,318,344
830,873
150,825
54,541
26,695
3,899
5,972,101
3,353,157
2,331,857
287,087
2,236,462
786,144
145,662
49,701
16,776
3,586
5,832,685
3,236,542
2,299,403
296,740
2,161,367
856,644
167,911
36,836
24,688
3,824
10,756,881
9,953,476
9,210,433
9,083,956
GJ per Koz of GE
% year-on-year
6,283
6%
5,934
4%
5,702
1%
5,627
-1%
Energy consumption by source in 2022: site level
GJ
Kyzyl
Varvara
Komar mine
(part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Primorskoye (part of Dukat hub)
Svetloye
Albazino
Kutyn (part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Diesel for
transport
and mobile
machinery
1,465,247
161,060
Diesel for
electricity
generation
181
698
633,452
19,329
171,001
187,565
190,725
17,474
166,703
403,288
42,076
7,256
271,129
14,423
48,316
809
262
4,787
737,527
404,123
46,210
133,790
1,007,194
92,339
0
469,552
31,088
1,261
Diesel for
heat
Electricity
purchased
Coal for
heat
Natural gas
for heat
Petrol Waste oils
63,053
0
0
0
45,537
35,903
33,456
1,086
12,268
80,222
15,029
0
44,165
0
1,666
393,888
579,713
69,256
231,757
301,579
0
431,155
0
922
746
28
330,728
152,438
0
30,322
78,850
0
0
0
178,794
69,197
276,026
0
223,407
0
18,322
0
59,621
0
0
0
0
6,017
9,716
6,153
140,380
0
0
0
0
0
0
0
16,500
0
0
0
3,607
6,133
4,331
4,994
10,780
539
1,535
4,923
2,496
1,024
3,144
456
2,345
0
0
0
0
3,676
5,601
6,724
0
2,233
10,314
0
0
2,969
219
0
Renewable
sources
(solar/wind
self-
generation)
0
19
0
0
0
8,543
0
1
3,374
136
0
0
0
0
0
Total energy
3,799,044
2,929,821
332,385
2,522,532
904,217
163,033
62,040
31,736
12,073
Electricity and heat consumption by source
Electricity consumption, including:
Self-generated non-renewable electricity (diesel)
Self-generated renewable electricity (solar & wind)
Purchased non-renewable electricity
Purchased renewable electricity
Purchased electricity from nuclear power plants¹
Heat consumption, including:
Self-generated heat (fossil fuels)
Heat utilisation systems:
– from diesel power stations
– from POX
Renewable electricity share in total electricity consumption
Renewable electricity share in self-generation
Heat utilisation systems share in total heat consumption
Units
2022
2021
2020
2019
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
GJ
%
%
%
3,664,374
1,129,769
12,073
1,427,556
824,778
270,198
1,949,157
1,431,370
517,787
424,506
93,281
30%
1,1%
27%
3,325,659
1,003,416
3,899
1,728,421
589,923
0
1,744,709
1,301,761
442,948
334,248
108,700
18%
0,4%
25%
3,154,215
914,166
3,586
2,130,843
105,620
0
1,628,330
1,235,669
392,660
280,951
111,709
3%
0,4%
24%
3,066,154
900,962
3,824
2,161,367
0
0
1,773,696
1,345,984
427,713
264,999
162,713
0%
0,4%
24%
Electricity and heat consumption by source in 2022: site level
GJ
Electricity consumption
Heat consumption
Self-generated
non-renewable
electricity
(diesel)
Self-generated
renewable
electricity
(solar & wind)
Purchased
non-renewable
electricity
Purchased
renewable
electricity
Purchased
electricity from
nuclear power
plants
Self-generated
heat (fossil
fuels)
Heat utilisation
from diesel
power stations
Heat utilisation
from POX
Kyzyl
Varvara
Komar mine
(part of Varvara hub)
Voro
Mayskoye
Omolon
Dukat
Primorskoye
(part of Dukat hub)
Svetloye
Albazino
Kutyn
(part of Albazino hub)
Amursk POX
Nezhda
Prognoz
Veduga
Total energy
0
0
38
25
1,140
284,263
148,916
16,889
49,752
405,204
33,131
0
178,892
11,130
389
0
19
0
0
0
8,543
0
1
3,374
136
0
0
0
0
0
267,834
500,673
62,612
24,003
31,381
0
25,869
0
922
746
28
330,728
152,438
0
30,322
126,054
79,039
6,644
207,755
0
0
405,286
0
0
0
0
270,198
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
141,903
0
6,153
140,380
228,007
110,702
316,205
1,086
237,908
90,536
33,351
16,500
106,755
218
1,666
0
0
0
0
0
116,644
31,728
2,387
34,696
171,836
18,023
0
45,078
4,114
0
1,129,769
12,073
1,427,556
824,778
270,198
1,431,370
424,506
0
0
0
0
0
0
0
0
0
0
0
93,281
0
0
0
93,281
244
245
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Sustainability data continued
Key material climate-related risks
Risk key
Risk impact
R1 Insignificant
R2 Minor
R3 Moderate
R4 Major
R5 Catastrophic
Likelihood
Risk level
(according to risk-matrix for Paris Agreement
Scenario and mid-term horizon)
Less than 1%
Adjusted EBITDA1
1–5%
Adjusted EBITDA
5–10%
Adjusted EBITDA
10–20%
Adjusted EBITDA
More than 20%
Adjusted EBITDA
L1 Rare
Less than 10%
L2 Unlikely
10–30%
L3 Possible
30–60%
L4 Likely
60–90%
L5 Almost certain More than 90%
Low
Medium
High
Extreme
Business-as-Usual scenario
Paris Agreement scenario
Sustainable
Development scenario
Short-
term
Mid-
term
Long-
term
Short-
term
Mid-
term2
Long-
term
Short-
term
Mid-
term
Long-
term
R1
L1
R2
L3
R2
L5
R1
L1
R2
L2
R2
L5
R1
L1
R2
L2
R2
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
Risk factor
Risk description
1. Physical climate-related risks
Acute risks
The thawing of
permafrost is considered
one of the most critical
risks due to its potential
impact on our physical
infrastructure.
Destabilised building
foundations could result
in bearing capacity
failure and damaged
building structures,
unacceptable operating
conditions or the
complete collapse of
buildings and structures,
leading to economic and
environmental damage
and potential injury or
loss of life. The most
exposed assets are
Nezhda, Mayskoye,
Dukat and Omolon.
Extreme and severe cold
waves can lead to an
increase in fuel
consumption for mobile
fleet and power
generators to ensure
optimal working
conditions, and can
cause downtime.
The most exposed
assets are Dukat,
Varvara and Kyzyl.
Hurricanes can cause
damage to power lines,
supply disruptions and
downtime. The most
exposed asset is
Varvara, Svetloye
and Kyzyl.
Extreme precipitations
can isolate our remote
assets, cause damage
to power lines, supply
disruptions and
downtime. The most
exposed assets are
Dukat, Omolon and
Kyzyl.
Permafrost-
related risks
(thermokarst
and permafrost
melting)
Cold waves
Hurricanes
Extreme
snowfalls
246
Risk factor
Risk description
Short-
term
Mid-
term
Long-
term
Short-
term
Mid-
term
Long-
term
Short-
term
Mid-
term
Long-
term
Business-as-Usual scenario
Paris Agreement scenario
Sustainable
Development scenario
1. Physical climate-related risks continued
Acute risks
Change in
hydrological
cycles (floods)
Chronic risks
Average
temperature
rises
Seasonal or extreme
rainfall flooding can
destroy berths and
disrupt supply chains.
As a result, there may be
delays in the supply of
consumables and
products, food and
employees by water. The
most exposed assets are
Albazino and Svetloye.
An increase in average
annual temperatures can
lead to drought and
a lack of water resources
for production
processes. The most
exposed asset is Dukat.
2. Transitional climate-related risks
Policy and legal risks
Cross-border
carbon tax
National carbon
regulation
Implementation
of
environmental
insurance
There are long-term
risks of the spread of
CBAM and similar
international carbon
regulation to the metal
and mining industry and
our export products.
Carbon regulation in
Kazakhstan and Russia is
actively developing. As of
2022, there are no
carbon taxation or quotas
in the countries where we
operate. However, in the
medium term, there are
risks of the introduction of
such systems for
carbon-intensive
industries and for all
industrial enterprises in
the long term.
In the event of the
introduction of
compulsory insurance
for environmental risks,
an increase in insurance
rates and additional
costs is possible.
R1
L4
R1
L4
R1
L5
R1
L4
R1
L4
R1
L4
R1
L4
R1
L4
R1
L4
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R1
L5
R2
L1
R2
L1
R2
L3
R2
L1
R2
L3
R3
L5
R2
L1
R2
L4
R3
L5
R1
L1
R1
L3
R1
L4
R1
L1
R2
L4
R2
L4
R1
L1
R2
L5
R3
L5
R1
L1
R1
L1
R1
L1
R1
L1
R1
L1
R1
L3
R1
L1
R1
L1
R1
L4
247
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Sustainability data continued
Key material climate-related risks continued
Risk factor
Risk description
Short-
term
Mid-
term
Long-
term
Short-
term
Mid-
term2
Long-
term
Short-
term
Mid-
term
Long-
term
Business-as-Usual scenario
Paris Agreement scenario
Sustainable
Development scenario
2. Transitional climate-related risks continued
Market risks
R1
L1
R1
L3
R1
L4
R1
L1
R1
L4
R1
L4
R1
L1
R1
L5
R1
L5
R1
L1
R1
L1
R1
L2
R1
L1
R1
L2
R1
L3
R1
L1
R1
L2
R1
L4
R2
L1
R2
L1
R2
L2
R2
L1
R2
L2
R2
L3
R2
L1
R2
L2
R2
L4
Increase in the
cost of
carbon-
intensive
resources
Technology risks
Requirements
for renewables
usage
Tightening of
construction
standards
The introduction of
carbon regulation and
changes in the structure
of global energy
generation could lead to
an increase in the cost
of carbon-intensive
energy resources, such
as fossil fuels.
Mandatory use of the
best available
technologies and
renewable energy
sources may require
additional capital
investments for technical
re-equipment.
The tightening of
building codes and
standards may lead to
an additional increase in
capital expenditure in
development projects.
Reputation risks
Reputational
risks
No material risks
identified
Human capital
risk
No material risks
identified
Communities investment and engagement
Community investment
Sport
Healthcare
Education
Culture and art
Infrastructure of social importance
IMN support
Charitable donations
Total сommunity investment
Number of partnership agreements
Total value of financial contributions to political parties,
politicians, and political action Committees
Stakeholder engagement
Employees enquiries
Response rate
Communities enquiries
Response rate
Stakeholder meetings, including:
Public hearings and community meetings
Site visits by external stakeholders
Other
Units
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
$ thousand
number
2022
3,869
5,158
4,101
856
7,786
488
967
23,226
40
2021
4,981
5,695
3,074
880
4,439
419
477
19,966
37
2020
2,282
9,177
2,751
847
2,194
315
331
17,897
33
2019
6,234
249
1,889
1,201
3,470
334
1,772
15,148
33
$ thousand
0
0
0
0
Units
number
%
number
%
number
number
number
number
2022
1,629
100
839
100
80
57
18
5
2021
1,773
100
613
100
59
37
7
15
2020
1,092
100
572
100
44
38
5
1
2019
1,149
100
588
100
77
49
22
6
Compliance and business ethics
Compliance and product responsibility
Signficant fines
Non-monetary sanctions
Cases brought
Environmental fines
Total number of substantiated complaints regarding breaches of
customer privacy and losses of customer data
Monetary value of significant fines for non-compliance with laws
and regulations concerning the provision and use of products
and services
Total number of incidents of non-compliance with regulations
and voluntary codes concerning health and safety impacts of
products and services
Business ethics
Code of conduct violations¹
Cases of corruption²
Prevented loss
Units
2022
2021
2020
2019
$ thousand
$ thousand
number
$ thousand
$ thousand
$ thousand
$ thousand
Units
number
number
$ thousand
0
0
0
6.2
0
0
0
2022
1,105
4
0
0
0
0
5.7
0
0
0
0
0
0
0.3
0
0
0
2021
1,013
4
0
2020
792
8
18,712
0
0
0
1.5
0
0
0
2019
451
17
307
248
249
1
In 2022, 94% related to alcohol and drug use. All employees and contract workers identified were dismissed with no right to return. Contractors involved were
required to pay penalties.
2 Acts of corruption did not involve public or government officials.
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022
Units
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
2022
2,801
1,695
625
116
0
-32
15
136
44
202
2021
2,890
2020
2,865
2019
2,246
722
471
54
635
257
11
152
28
560
780
394
67
481
275
15
142
28
683
845
397
75
240
107
11
115
24
432
Sustainability data continued
Value distribution
Value generated and distributed
Revenue
Cash operating costs (excluding depreciation, labour costs and
mining tax)
Wages and salaries; other payments and benefits for employees
Payments to capital providers
Payments to shareholders
Taxes (excluding payroll taxes included in labour costs)
Income tax
Taxes, other than income tax
Mining tax
Social payments
Undistributed economic value retained
Salient human rights risks
Community rights
• Limitations in access
to resources (water,
electricity, etc.),
particularly among
indigenous
communities
• Forced resettlement
• Poor accessibility of
grievance
mechanisms"
Health and
safety
• Injuries and
fatalities
• Occupational
diseases
• Road hazards
• Poor awareness
of employees of
health and safety
measures
Policies and standards
Environment
Labour
relations
Security
Diversity and
equality
• Water availability
• Unfavourable
• Excessive force
• Discrimination
and safety
• Climate change
risk for future
generations
• Hazardous waste
• Shared resources
working
conditions
• Forced or child
labour
• Violation of
collective
bargaining
agreements
by security
guards
• Violation of
privacy rights
based on gender,
race, skin colour,
religion,
nationality, social
origin or political
opinions
Supply chain
• Bribery and
corruption
• Human rights
violation by
contractors and
suppliers
• Community
• Health and Safety
• Environment
Engagement Policy
Policy
• Political and
• ISO 45001
Charitable Donations
Policy
Policy
• Tailings and Water
Storage Facilities
Management
Policy
• Mine Closure
Policy
• Acid Rock
Drainage
Management
Corporate
Standard
• ISO 14011
• Cyanide Code
• Employment and
Labour Standard
• Modern Slavery
Act Transparency
Statement
• The Security
Force
Management
Standard
• Privacy Notice
• Diversity and
Inclusion Policy
• Human
• Supplier Code of
Conduct
• Procurement
Resources Policy
Policy
• Anti-Bribery and
Corruption Policy
• Gifts and
Entertainment
Policy
• Whistleblower
Policy
Read more on how we
mitigate this risk on
pages 76–79
Read more on how
we mitigate this risk
on pages 46–49
Read more on how
we mitigate this risk
on pages 56–61
Read more on how
we mitigate this risk
on pages 50–55
Read more on
how we mitigate
this risk on our
website
Read more on how
we mitigate this risk
on pages 53–54
Read more on how
we mitigate this risk
on pages 81–82
TCFD, GRI and SASB content indices
TCFD Content Index
In accordance with the FCA’s listing rule for premium listed commercial companies LR 9.8.6R(8), the Company made
disclosures consistent with the TCFD’s recommendations and recommended disclosures in this Integrated Annual Report.
We transparently publish our approach to managing climate-related risk and opportunity, not only in this report but also
in our Climate Change Report, CDP Climate Response and on our website. Below is a guidance on where to find
disclosures aligned to the Financial Stability Board’s TCFD recommendations.
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the Board’s oversight of climate-related risks and
Integrated Annual Report 2022:
opportunities.
• Corporate governance section, pages 111–152.
• Climate change section, pages 62–73.
b) Describe management’s role in assessing and managing
Integrated Annual Report 2022, pages 65–70.
climate-related risks and opportunities.
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,
and financial planning, where such information is material.
a) Describe the climate-related risks and opportunities the
organisation has identified over the short, medium,
and long term.
b) Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial
planning.
c) Describe the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios, including
a 2°C or lower scenario.
Integrated Annual Report 2022, pages 65–68
and Sustanability data, pages 246–248.
Integrated Annual Report 2022, pages 63–68
and Sustanability data, pages 246–248.
Integrated Annual Report 2022, pages 62–68
and Sustainability data, pages 246–248.
Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks.
a) Describe the organisation’s processes for identifying and
Integrated Annual Report 2022:
assessing climate-related risks.
• Risks and risk management section, pages 96–99 and 110
• Climate change section, pages 66–75.
b) Describe the organisation’s processes for managing climate-
Integrated Annual Report 2022:
related risks.
c) Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
• Risks and risk management section, pages 96–99 and 110
• Climate change section, pages 66–75.
Integrated Annual Report 2022:
• Risks and risk management section, pages 96–99 and 110
• Climate change section, pages 66–75.
Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such
information is material.
a) Disclose the metrics used by the organisation to assess
Integrated Annual Report 2022, pages 71–73.
climate-related risks and opportunities in line with its strategy
and risk management process.
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.
Integrated Annual Report 2022, pages 71–73
and Sustanability data, pages 243–248.
c) Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
Integrated Annual Report 2022, pages 45, 62–63 and 71–73.
250
251
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 TCFD, GRI and SASB content indices continued
GRI content index
Polymetal International plc has reported in accordance with the GRI Standards for the period from 1 January to
31 December 2022.
GRI Standard
Disclosure
Location
Comments and
ommisions
GRI Standard
Disclosure
Location
Comments and
ommisions
GRI 1: Foundation 2021
GRI 2: General Disclosures
2021
2-1 Organizational details
At a glance, pages 6–7
2-2 Entities included in the organization’s
sustainability reporting
Where we operate, pages 8–9;
Notes to the consolidated financial statements.
Significant subsidiaries, page 176
2-3 Reporting period, frequency and contact
point
1 January 2022 – 31 December 2022
(FY 2022)
2-4 Restatements of information
In the footnotes of the report
2-5 External assurance
About this report. External assurance, page 4
2-6 Activities, value chain and other
business relationships
At a glance pages 6–7;
Where we operate, pages 8–9;
Business model, pages 16–17;
Stakeholder engagement pages 18-19
2-7 Employees
Employees, page 50
2-8 Workers who are not employees
Sustainability data. People, page 241
2-9 Governance structure and composition
Corporate governance, pages 116–123
2-10 Nomination and selection of the highest
governance body
Nomination Committee report, pages 150-152
2-11 Chair of the highest governance body
Our governance framework, page 120
2-12 Role of the highest governance body in
overseeing the management of impacts
Roles of the Chair, Group CEO and Senior
Independent Director, page 121;
2-13 Delegation of responsibility for
managing impacts
Corporate governance. Board leadership and
company purpose, page 118
Our governance framework, page 120
2-14 Role of the highest governance body in
sustainability reporting
Board areas of focus in 2022 and link to
strategy, page 117
2-15 Conflicts of interest
Corporate governance, page 116;
Nomination Committee Report,
pages 150–153
2-16 Communication of critical concerns
Stakeholder engagement, pages 18-19, 249;
2-17 Collective knowledge of the highest
governance body
2-18 Evaluation of the performance of the
highest governance body
2-19 Remuneration policies
2-20 Process to determine remuneration
Employees. Communications and
engagement, page 54;
Communities. Engagement, page 76;
Ethical business. Anti-bribery and corruption,
page 81
Corporate governance. Training, page 141
Corporate governance. Section 3:
Composition, succession and evaluation,
page 199
Remuneration Committee report,
pages 132–149
Remuneration Committee report,
pages 132–149
2-21 Annual total compensation ratio
Remuneration Committee report, Group CEO
to employee pay ratio, page 147
2-22 Statement on sustainable development
strategy
Sustainability, pages 44–45
2-23 Policy commitments
Sustanability. Which guidelines do we follow?
pages 46, 50, 56, 62, 76, 80
2-24 Embedding policy commitments
Corporate governance, pages 116–123;
Audit and Risk Committee report,
pages 124–129
GRI 2: General Disclosures
2021
2-25 Processes to remediate negative
impacts
2-26 Mechanisms for seeking advice and
raising concerns
2-27 Compliance with laws and regulations
Sustainability, pages 44–45;
Safety and Sustainability Committee report,
pages 130–131
Stakeholder engagement, pages 18–19
Risk management. Legal and complance risk,
page 106;
Ethical business, pages 80–83;
Sustainability data. Compliance and business
ethics, page 249
2-28 Membership associations
At a glance, pages 6–7;
Risk management. Legal and compliance risk,
page 106;
Sustainability, Which guidelines do we follow?
pages 46, 50, 56, 62, 76, 80;
Ethical business. Responsible tax policy,
pages 82-83
2-29 Approach to stakeholder engagement
Stakeholder engagement, pages 18–19;
Employees. Communications and
engagement, page 54;
Communities. Engagement, page 76;
Corporate governance. Board’s stakeholder
engagement, page 123
2-30 Collective bargaining agreements
Employees. Freedom of association, page 55
GRI 3: Material Topics
2021
3-1 Process to determine material topics
Sustainability. Material issues, pages 44–45
3-2 List of material topics
Sustainability. Material issues, pages 44–45
GRI 201: Economic
Performance 2016
201-1 Direct economic value generated and
distributed
Value distribution, page 248
201-2 Financial implications and other risks
and opportunities due to climate change
Climate change, pages 62–75;
Key material climate-related risks,
pages 246–248
201-3 Defined benefit plan obligations and
other retirement plans
Employees. Remuneration and social benefits,
page 51
201-4 Financial assistance received from
government
Ethical business. Responsible tax policy
("Tax incentives"), pages 82–83
GRI 202: Market Presence
2016
202-1 Ratios of standard entry level wage by
gender compared to local minimum wage
Employees. Remuneration and social benefits,
page 51
202-2 Proportion of senior management
hired from the local community
Proportion of managers of local nationality –
94% for male and 99% for female
GRI 203: Indirect
Economic Impacts 2016
203-1 Infrastructure investments and
services supported
Communities. Social investments and impact
assessment, page 77
GRI 204: Procurement
Practices 2016
3-3 Management of material topics
204-1 Proportion of spending on local
suppliers
GRI 205: Anti‑corruption
2016
205-1 Operations assessed for risks related
to corruption
Ethical business. Supply chain stewardship,
page 81
Ethical business. Local procurement, page 82;
Ethical business.Supply chain stewardship,
pages 81–82
We have zero tolerance to corruption risks,
operate a Hot line for reporting corruption
concerns and assess all suppliers for
anti-corruption principles (see pages 81–82);
See also our Anti-Bribery and Corruption
Policy approved by the Board of Directors of
Polymetal International plc on 11 December
2019 and available on the website
205-2 Communication and training about
anti-corruption policies and procedures
Ethical business. Anti-bribery and corruption,
page 81
205-3 Confirmed incidents of corruption and
actions taken
Ethical business. Anti-bribery and corruption,
page 81
252
253
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 TCFD, GRI and SASB content indices continued
GRI content index continued
GRI Standard
Disclosure
GRI 206: Anti‑competitive
Behavior 2016
206-1 Legal actions for anti-competitive
behavior, anti-trust, and monopoly practices
GRI 207: Tax 2019
207-1 Approach to tax
Location
Zero
Ethical business. Responsible tax policy,
pages 82-83;
Group Tax Strategy approved
207-2 Tax governance, control, and risk
management
Risks management. Principal risks and
uncertainties, pages 100-109;
GRI 207: Tax 2019
207-3 Stakeholder engagement and
management of concerns related to tax
Ethical business. Responsible tax policy,
pages 82-83;
Group Tax Strategy;
Independent auditor’s report,
pages 231–233
Stakeholders engagement, pages 76–77;
Ethical business. Anti-bribery and corruption,
page 81;
Ethical business. Responsible tax policy,
pages 82–83
207-4 Country-by-country reporting
Operating review, pages 28–43;
Financial statements, pages 172–215
Reporting
requirements b.iv-b.ix
disclosed on Group
consolidated level due
to confidentiality
reasons
GRI 301: Materials 2016
301-1 Materials used by weight or volume
Sustainability data, Consumables and waste,
pages 238
GRI 302: Energy 2016
302-1 Energy consumption within the
organization
Climate change. Energy consumption by
source, page 63;
GRI 303: Water and
Effluents 2018
302-3 Energy intensity
Sustainability data, Energy, page 244
302-4 Reduction of energy consumption
Climate change. Opportunities, pages 67–68;
Sustainability data, Energy, pages 244–245
Climate change. Our climate actions,
page 74–75
3-3 Management of material topics
Environment. Water stewardship, page 57–58
303-1 Interactions with water as a shared
resource
Environment. Water stewardship, page 57–58
303-2 Management of water discharge-
related impacts
Environment. Water quality risks: monitoring
and treatment, page 58
303-3 Water withdrawal
303-4 Water discharge
Environment. Fresh water withdrawal, page 58
Sustainability data. Water, page 237
303-5 Water consumption
Environment. Water use in 2022, page 58;
Sustainability data. Water, page 237
GRI 304: Biodiversity 2016
3-3 Management of material topics
304-1 Operational sites owned, leased,
managed in, or adjacent to, protected areas
and areas of high biodiversity value outside
protected areas
Environment. Biodiversity and land. Protected
territories, page 60
304-2 Significant impacts of activities,
products and services on biodiversity
Environment. Biodiversity and land,
pages 60-61
304-3 Habitats protected or restored
304-4 IUCN Red List species and national
conservation list species with habitats in
areas affected by operations
Environment. Biodiversity and land. Protected
territorie, page 60
Environment. Biodiversity and land. Protected
species, pages 60–61
Comments and
ommisions
GRI Standard
Disclosure
Location
GRI 305: Emissions 2016
3-3 Management of material topics
Climate change. Our approach, page 62;
Comments and
ommisions
Climate change. Climate governance,
pages 68–70
305-1 Direct (Scope 1) GHG emissions
Climate change, pages 62–75;
305-2 Energy indirect (Scope 2) GHG
emissions
305-3 Other indirect (Scope 3) GHG
emissions
Sustainability data. GHG emissions, page 243
Climate change, pages 62–75;
Sustainability data. GHG emissions, page 243
Climate change, pages 62–75;
Sustainability data. GHG emissions, page 243
305-4 GHG emissions intensity
Climate change, pages 62–75;
305-5 Reduction of GHG emissions
Sustainability data. GHG emissions, page 243
Climate Change. Our climate actions,
page 74–75
305-6 Emissions of ozone-depleting
substances (ODS)
Zero
305-7 Nitrogen oxides (NOx), sulfur oxides
(SOx), and other significant air emissions
Sustainability data. Air quality, page 240
GRI 306: Waste 2020
3-3 Management of material topics
Environment. Waste managment, page 59
306-1 Waste generation and significant
waste-related impacts
306-2 Management of significant waste-
related impacts
Environment. Waste managment, page 59
Environment. Waste managment, page 59
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
GRI 308: Supplier
Environmental
Assessment 2016
308-1 New suppliers that were screened
using environmental criteria
Sustainability data. Consumables and waste,
page 238
Sustainability data. Consumables and waste,
page 238
Sustainability data. Consumables and waste,
page 238
In 2022, we carried out 264 environmental
checks of more than 100 contractor
organisations, with no violations resulting in a
significant financial impact on the business.
308-2 Negative environmental impacts in the
supply chain and actions taken
Environment. Our approach, pages 56–57;
Environemnt. Cyanide management, page 60
GRI 401: Employment 2016
3-3 Management of material topics
Employees. Our appproach, page 50
401-1 New employee hires and employee
turnover
Employees. Headcount and turnover, page 55;
Sustainability data. People, page 235
401-2 Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
No such benefits
401-3 Parental leave
Sustainability data. People, page 235
GRI 402: Labor/
Management Relations
2016
402-1 Minimum notice periods regarding
operational changes
The Company fully complies with the
legislation regarding timely notification of
employees about possible operational
changes. See also Employment and Labour
Corporate Standard available on the website.
301-2 Recycled input materials used
Environment. Waste management, page 59
GRI 306: Waste 2020
306-3 Waste generated
254
255
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 TCFD, GRI and SASB content indices continued
GRI content index continued
GRI Standard
Disclosure
Location
GRI 403: Occupational
Health and Safety 2018
3-3 Management of material topics
403-1 Occupational health and safety
management system
Health and safety. Our approach,
pages 46–49
Health and safety, page 46–49
Comments and
ommisions
403-2 Hazard identification, risk
assessment, and incident investigation
Health and safety. Risk assessment
and mitigation, pages 46–47
403-3 Occupational health services
403-4 Worker participation, consultation,
and communication on occupational health
and safety
Health and safety. Health and wellbeing,
page 49
Health and safety. Health and wellbeing,
page 49
403-5 Worker training on occupational
health and safety
Health and safety. Health and wellbeing,
page 49
403-6 Promotion of worker health
403-7 Prevention and mitigation of
occupational health and safety impacts
directly linked by business relationships
Health and safety. Health and wellbeing,
page 49
Health and safety, pages 46–49;
isk management. Health and safety risk,
page 103
403-8 Workers covered by an occupational
health and safety management system
Health and safety. Health and wellbeing,
page 49
403-9 Work-related injuries
Health and safety. Safety performance 2022,
page 48;
403-10 Work-related ill health
GRI 404: Training and
Education 2016
404-1 Average hours of training per year per
employee
Sustainability data. Health and safety,
page 234
Health and safety. Occupational health,
page 49;
Sustainability data. Health and safety,
page 234
Sustainability data. People, page 235
GRI 405: Diversity and
Equal Opportunity 2016
404-2 Programs for upgrading employee
skills and transition assistance programs
Employees. Training and talent development,
page 51
404-3 Percentage of employees receiving
regular performance and career
development reviews
4% (read more on Integrated Annual Report
2021 – Employees. Mentoring and succession
planning, page 52)
3-3 Management of material topics
Employees. Diversity and inclusion, page 53
405-1 Diversity of governance bodies and
employees
Nomination Committee report. Diversity,
page 152;
Employees. Diversity and inclusion, page 53
405-2 Ratio of basic salary and
remuneration of women to men
Employees. Polymetal salaries compared to
regional wages, page 51
GRI 406: Non‑
discrimination 2016
406-1 Incidents of discrimination and
corrective actions taken
Zero incidents
GRI 407: Freedom of
Association and Collective
Bargaining 2016
407-1 Operations and suppliers in which the
right to freedom of association and collective
bargaining may be at risk
Employees. Freedom of association, page 55
GRI 408: Child Labor 2016
408-1 Operations and suppliers at significant
risk for incidents of child labor
Zero operations and suppliers
GRI 409: Forced or
Compulsory Labor 2016
409-1 Operations and suppliers at significant
risk for incidents of forced or compulsory
labor
Zero operations and suppliers
GRI Standard
Disclosure
Location
GRI 410: Security
Practices 2016
410-1 Security personnel trained in human
rights policies or procedures
All security personnel is outsoursed and
receives training on the human rights
principles under relevant national regulation
GRI 411: Rights of
Indigenous Peoples 2016
411-1 Incidents of violations involving rights
of indigenous peoples
Zero
GRI 413: Local
Communities 2016
3-3 Management of material topics
Communities. Our appproach, page 76
413-1 Operations with local community
engagement, impact assessments, and
development programs
Where we operate, pages 8–9;
Communities, pages 76–79
413-2 Operations with significant actual and
potential negative impacts on local
communities
Zero operations
GRI 414: Supplier Social
Assessment 2016
414-1 New suppliers that were screened
using social criteria
Ethical business. Supplier due diligence,
page 82
414-2 Negative social impacts in the supply
chain and actions taken
Ethical business. Supplier due diligence,
page 82
GRI 415: Public Policy 2016
415-1 Political contributions
GRI 418: Customer Privacy
2016
418-1 Substantiated complaints concerning
breaches of customer privacy and losses of
customer data
Zero
Zero
Comments and
ommisions
The number of
suppliers’ checks is
disclosed without
breakdown into new
and existing suppliers
due to the
inapplicability of such
breakdown for the
Company as the due
diligence process is
applied to all suppliers
irrespective of whether
they are old or new
(see page 82).
256
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Energy
Management
Water
Management
TCFD, GRI and SASB content indices continued
SASB Content Index
Topic
SASB code
Accounting metric
Greenhouse
Gas Emissions
EM-MM-110a.1
Gross global Scope 1 emissions
Data and references
751,486 tonnes CO₂e
EM-MM-110a.2
Air Quality
Air Quality
EM-MM-120a.1
Percentage covered under emissions-limiting
regulations
No GHG emission-limiting regulations are imposed in
Russia or Kazakhstan
Discussion of long-term and short-term strategy or
plan to manage Scope 1 emissions, emissions
reduction targets, and an analysis of performance
against those targets
Air emissions of the following pollutants:
Climate Change, pages 62–75
(1) CO
(2) NOx (excluding N₂O)
(3) Sox
(4) particulate matter (PM₁₀)
(5) mercury (Hg)
(6) lead (Pb)
(7) volatile organic compounds (VOCs)
EM-MM-130a.1
(1) Total energy consumed
(2) percentage grid electricity
(3) percentage renewable
3,951 tonnes
4,232 tonnes
1,151 tonnes
7,465 tonnes
Zero
5.16 tonnes
1,335 tonnes
10,756,881 GJ
23%
7.8% in total energy consumption, including
purchsed energy;
1.1% in self-generated electricity
EM-MM-140a.1
Total fresh water withdrawn
3,344 thousand m³
Total fresh water consumed
Percentage of each in regions with High or Extremely
High Baseline Water Stress
EM-MM-140a.2
Number of incidents of non-compliance associated
with water quality permits, standards, and regulations
3,344 thousand m³ (see our total water consumption
structure at page 58)
22% of fresh water withdrawan. Voro and Varvara
(including Komar mine) are located in high water-stress
risk areas, according to the World Resources Institute
(WRI) Aqueduct tool
In 2022, government agencies revealed four minor
incidents of non-compliance related to discharge water
quality monitoring and water infrustructure at Komar
mine, Saum and Amursk POX. All these non-
compliances are either resolved or in process of being
resolved.
Waste &
Hazardous
Materials
Management
EM-MM-150a.4
Total weight of non-mineral waste generated
17,708 tonnes
EM-MM-150a.5
Total weight of tailings produced
EM-MM-150a.6
Total weight of waste rock generated
15,539,024 tonnes
212,735,776 tonnes
EM-MM-150a.7
Total weight of hazardous waste generated
6,030,579 tonnes (includes 6,027,094 tonnes of tailings
waste generated by Varvara and Kyzyl sites and
classified as hazardous according to the current
regulation in Kazakhstan)
EM-MM-150a.8
Total weight of hazardous waste recycled
2,569 tonnes
EM-MM-150a.9
Number of significant incidents associated with
hazardous materials and waste management
Zero
EM-MM150a.10
Description of waste and hazardous materials
management policies and procedures for active and
inactive operations
Environment. Waste management, page 59
Biodiversity
Impacts
EM-MM-160a.1
Description of environmental management policies
and practices for active sites
Environemnt. Biodiversity and lands, pages 60–61
EM-MM-160a.2
Percentage of mine sites where acid rock drainage is:
(1) predicted to occur
(2) actively mitigated
14% of total ore processed (Dukat mine)
14% of total ore processed (Dukat mine)
(3) under treatment or remediation
14% of total ore processed (Dukat mine)
EM-MM-160a.3
Percentage of:
(1) proved reserves in or near sites with protected
conservation status or endangered species habitat
(2) probable reserves in or near sites with protected
conservation status or endangered species habitat
43% of proved reserves (includes reserves in or one
kilometre away from protected conservation status or
endangered species habitat)
61% of probable reserves (includes reserves in or one
kilometre away from protected conservation status or
endangered species habitat)
Topic
SASB code
Accounting metric
Data and references
Security,
Human Rights &
Rights of
Indigenous
Peoples
EM-MM-210a.1
Percentage of:
(1) proved reserves in or near areas of conflict
(2) probable reserves in or near areas of conflict
Zero
Zero
EM-MM-210a.2
Percentage of:
(1) proved reserves in or near indigenous land
(2) probable reserves in or near indigenous land
EM-MM-210a.3
Discussion of engagement processes and due
diligence practices with respect to human rights,
indigenous rights, and operation in areas of conflict
2% (our Omolon operation is situated near a territory of
traditional nature use, where we pay increased
environmental fees to compensate indigenous
communities)
1% (our Omolon operation is situated near a territory of
traditional nature use, where we pay increased
environmental fees to compensate indigenous
communities)
Ethical business. Human rights, page 82;
Sustainability data. Salient human rights risks, page 256
Community
Relations
EM-MM-210b.1
Discussion of process to manage risks and
opportunities associated with community rights and
interests
Ethical business. Human rights, page 82;
Communities. Engagement, pages 76–77
EM-MM-210b.2
Number and duration of non-technical delays
Zero
Labor Relations
EM-MM-310a.1
Percentage of active workforce covered under
collective bargaining agreements, broken down by
U.S. and foreign employees
80% of all employees and 100% of operating site staff
are covered by collective bargaining agreements
EM-MM-310a.2
Number and duration of strikes and lockouts
Zero
Workforce
Health & Safety
EM-MM-320a.1
(1) MSHA all-incidence rate
(2) fatality rate
LTIFR (employees): 0.10;
LTIFR (contractors): 0.21
Fitalities (employees): 0;
Fitalities (contractors): 0
(3) near miss frequency rate (NMFR)
Near-misses (employees): 4,770
average hours of health, safety, and emergency
response training for (a) full-time employees and (b)
contract employees
Business Ethics
& Transparency
EM-MM-510a.1
Description of the management system for prevention
of corruption and bribery throughout the value chain
4,513 employees attended mandatory training sessions
and 7,821 attended non-mandatory training on safety.
Each contractor working at any of Polymetal’s sites is
required to undergo safety training before starting work.
Ethical business. Anti-bribery and corruption, page 81
EM-MM-510a.2
Production in countries that have the 20 lowest
rankings in the Corruption Perception Index
Zero
Tailings Storage
Facilities
Management
EM-MM-540a.1
Tailings storage facility inventory table: (1) facility
name, (2) location, (3) ownership status,
(4) operational status, (5) construction method,
(6) maximum permitted storage capacity, (7) current
amount of tailings stored, (8) consequence
classification, (9) date of most recent independent
technical review, (10) material findings, (11) mitigation
measures, (12) site-specific EPRP
Disclosed in our Management of Tailings Storage
Facilities Report published in June 2022 on our
website
EM-MM-540a.2
Summary of tailings management systems and
governance structure used to monitor and maintain
the stability of tailings storage facilities
Environment, Tailings and overburden waste, page 59
EM-MM-540a.3
Approach to development of Emergency
Preparedness and Response Plans (EPRPs) for
tailings storage facilities
Disclosed in our Management of Tailings Storage
Facilities Report published in June 2022 on our
website
Activity Metric
EM-MM-000.A
Production of:
(1) metal ores
(2) finished metal products
Ore processed: 18.3 Mt
Gold: 1,450 Koz;
Silver: 21.0 Moz;
Total production (gold equivalent¹): 1,712 Koz
Activity Metric
EM-MM-000.B
Total number of employees, percentage contractors
Average headcount of employees: 14,694;
Average headcount of contractors: 6,078
1 Based on 80:1 Au/Ag conversion ratio and excluding base metals.
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Glossary
Abbreviations and units
of measurement
AGM
Annual General Meeting
CIS
E&E
EITI
GE
ILO
ISO
IMN
JORC
JSC
LBMA
LGIM
LTIP
N/A
Commonwealth of Independent States
Exploration and evaluation assets
Extractive Industries Transparency Initiative
gold equivalent
International Labour Organisation
International Organisation for Standardisation
Indigenous Minorities of the North
Australasian Joint Ore Reserves Committee
joint stock company
London Bullion Market Association
Legal and General Investment Management Ltd
Long-Term Incentive Programme
not applicable
OHSAS
Occupational Health And Safety Assessment Series
PdE
PGM
PIRC
POX
PPE
SE
TUC
palladium equivalent
platinum group metal
Pensions & Investment Research Consultants Ltd
pressure oxidation
personal protective equipment
silver equivalent
Trades Union Congress
UDHR
Universal Declaration of Human Rights
CO2e
g/t
GJ
km
Koz
Kt
Ktpa
m
Moz
Mt
Mtpa
MWh
CO2 equivalent
gram per tonne
gigajoules
kilometres
thousand ounces
thousand tonnes
thousand tonnes per annum
metres
million ounces
million tonnes
million tonnes per annum
megawatt hour
Oz or oz
troy ounce (31.1035 g)
p.p.
t
TJ
tpd
percentage points
tonne (1,000 kg)
terajoule
tonnes per day
Technical terms
Assay
A chemical test performed on a sample of any material
to determine the amount of valuable metals contained in
the sample
Ag
Silver
Au
Gold
Base Erosion and Profit Shifting (BEPS)
OECD/G20 project to set up an international framework to
combat tax avoidance by multinational enterprises using
base erosion and profit shifting tools
Carbon-in-leach or CIL
A technological operation in which slurry containing gold
and silver is leached by cyanide in the presence of activated
carbon. Gold is adsorbed onto activated carbon in parallel
with leaching
Carbon-in-pulp or CIP
A technological operation in which slurry containing gold and
silver is leached by cyanide initially without and subsequently
in the presence of activated carbon. Gold adsorption onto
carbon starts only after preliminary leaching
Compound annual growth rate (CAGR)
The rate of return required for an investment to grow
from its opening balance to its ending balance, assuming
the reinvestment of profits at the end of each year during
this period
Concentrate
A semi-finished product of mineral processing (flotation
or gravity separation) containing significantly more value
per unit of weight than ore and subject to further processing
for the production of metals or other substances in final
useful form
Cu
Copper
Cut-off grade
The minimum grade at which mineralised material can be
economically mined and processed (used in the calculation
of ore reserves) leaching with cyanide as the leaching agent
Debottlenecking
The process of identifying specific areas and/or equipment
at our mining facilities that limit production flow and
optimising them to increase the overall capacity
Diamond drilling
Recovers mineral samples from depth or from within areas
that are harder to drill by cutting a long cylindrical core 2cm
or more in diameter
Dilution
The share (percentage) of material below the cut-off grade
that is extracted together and irretrievably mixed with ore
during mining. All other things being equal, higher dilution
leads to lower grade in ore mined
Doré
One of the traditional end-products of a gold/silver mine; an
alloy containing 90% in sum of gold and silver as well as
10% of impurities
Dry tailings
A method of tailings storage in the form of a filtered wet
(saturated) and dry (unsaturated) cake that can no longer be
transported by pipeline due to its low-moisture content.
Significantly reduces the possibility of dam failure, lowers
the potential damage from such an accident and eliminates
tailings run-off
Exchange traded fund (ETF)
A type of pooled investment security that operates much
like a mutual fund. ETFs track a particular index, sector,
commodity, or other asset
Exploration
Activity ultimately aimed at discovery of ore reserves for
exploitation. Consists of sample collection and analysis,
including reconnaissance, geophysical and geochemical
surveys, trenching, drilling, etc.
Five-whys method
Iterative interrogative technique used to explore the
cause-and-effect relationships underlying a particular
problem
Flotation
A technological operation in which ore-bearing minerals are
separated from gangue minerals in the slurry based on
variance in the interaction of different minerals with water.
Particles of valuable concentrate are carried upwards with
froth and collected for further processing
Grade
The relative amount of metal in ore, expressed as grams
per tonne for precious metals and as a percentage for
most other metals
GRI
Global Reporting Initiative (GRI) is the independent,
international organisation that works with businesses,
investors, policymakers, civil society, labour organisations
and other experts to develop sustainability reporting
standards and promote their use by organisations around
the world
Head grade
The grade of ore coming into a processing plant
Heap leach
A technological operation in which crushed material is
laid on a sloping, impervious pad where it is leached by a
cyanide solution to dissolve gold and/or silver. Metals are
subsequently recovered from pregnant leach solution by
CIC or the Merrill-Crowe process
Indicated resource
That part of a resource for which tonnage, grade and
content can be estimated with a reasonable level of
confidence. It is based on exploration, sampling and testing
information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and
drill holes. The locations are too widely or inappropriately
spaced to confirm geological and/or grade continuity but
are spaced closely enough for continuity to be assumed
Inferred resource
That part of a resource for which tonnage, grade and
content can be estimated with a low level of confidence.
It is inferred from geological evidence and assumed but not
verified geological and/or grade continuity. It is based on
information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and
drill holes, which may be limited or of uncertain quality
and reliability
In-fill drilling
A conventional method of detailed exploration on an already
defined resource or reserve, consisting of drilling on a
denser grid to allow more precise estimation of ore body
parameters and location
Internal rate of return (IRR)
The interest rate at which the net present value of all the
cash flows (both positive and negative) from a project or
investment equal zero and is used to evaluate the
attractiveness of a project or investment
JORC-compliant
Exploration results, mineral resources and ore reserves are
all reported according to the mining industry’s JORC Code,
managed by the Australasian Joint Ore Reserves
Committee
Leaching
The process of dissolving mineral values from solid into the
liquid phase of slurry
Life-of-mine
The length of time during which it is anticipated ore reserves
will be extracted
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Glossary continued
Measured resource
That part of a resource for which tonnage, densities, shape,
physical characteristics, grade and mineral content can be
estimated with a high level of confidence. It is based on
detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and
drill holes. The locations are spaced closely enough to
confirm geological and grade continuity
Merrill-Crowe process
A technological operation for extraction of gold and/or silver
after cyanide leaching. In the first step, slurry containing
gold and/or silver is separated into liquid and solid phases
by washing the solids off in counter current decantation
thickeners. In the second step, pregnant leach solution
(liquid phase of slurry) is filtered to remove impurities and
de-aerated. Finally, gold and silver are deposited onto the
solid bed of claylike material where they replace the zinc
particles that pass into a solution. Merrill-Crowe is
preferentially used for silver-rich ores
Mill
A mineral processing plant
Mineralisation
A rock containing valuable components, not necessarily in
the quantities sufficient for economically justifiable
extraction. Consists of ore minerals and gangue
Minerals extraction tax (MET)
Tax base established as the value of extracted minerals or
as a multiple of the quantity of extracted minerals and a
certain solid tax rate subject to a coefficient
Net realisable value (NRV)
Valuation method, common in inventory accounting, that
considers the total amount of money an asset might
generate upon its sale, less a reasonable estimate of the
costs, fees, and taxes associated with that sale or disposal
Offtake agreement
A contract between Polymetal and a purchaser to buy a
specified amount of future production
Open-pittable
Amenable for economically feasible mining by
open-pit methods
Open-pit mine
A mine that is entirely on the surface. Also referred to as
open-cut or open-cast mine
Ore
The part of mineralisation that can be mined and
processed profitably
Ore body
A spatially compact and geometrically connected
location of ore
Ore mined
Ore extracted from the ground for further processing
Ore processed
Ore subjected to treatment in a mineral processing plant
Ore stacked
The ore stacked for heap leach operations
Overburden
This is the material that sits above an ore body, such as the
rock and soil, during exploration
Oxidised ore
Ore in which both ore minerals and gangue are fully
or partially oxidised thus impacting its physical and
chemical properties and influencing the choice of a
processing technology
Pd
Palladium
POX or pressure oxidation
A technological operation in which slurry is subjected to
high pressure and high temperature in an autoclave with the
goal of destroying the sulphide particles enveloping gold
particles and making slurry amenable to cyanide leaching
Precipitate
The semi-finished product of mineral processing by the
Merrill-Crowe process, normally containing very high
concentrations of silver and/or gold
Preg-robbing
A characteristic of gold-bearing ore denoting the presence
of organic carbon matter, which may lead to lower recovery
in conventional cyanide leaching. Lower recovery is due to
losses of gold absorbed into the above-mentioned organic
carbon instead of absorbing into man-made carbon
introduced to the slurry in CIP or CIL
Primary ore
Unoxidised ore
Probable reserves
The economically mineable part of an indicated (and in
some cases measured) resource, which has a lower level of
confidence than proved reserves but is of sufficient quality
to serve as the basis for a decision on the development of
the deposit
Resources
A concentration or occurrence of material of intrinsic
economic interest in or on the earth’s crust in such form,
quality and quantity that there are reasonable prospects for
eventual economic extraction. The location, quantity, grade,
geological characteristics and continuity of resources are
known, estimated or interpreted from specific geological
evidence and knowledge. Resources are sub-divided in
order of increasing geological confidence, into inferred,
indicated and measured categories
Production
The amount of pure precious metals produced following
processing, measured in thousands of ounces for gold,
millions of ounces for silver and tonnes for copper
SAG mill
A semi-autogenous grinding mill, generally used as a
primary or first stage grinding solution
Proved reserves
The economically mineable part of a measured resource,
which represents the highest confidence category of
reserve estimate. The style of mineralisation or other factors
could mean that proved reserves are not achievable in
some deposits
Pt
Platinum
SASB
The Sustainability Accounting Standards Board (SASB) was
founded as a nonprofit organization in 2011 to help
businesses and investors develop a common language
about the financial impacts of sustainability. It merged with
the International Integrated Reporting Council (IIRC) into the
Value Reporting Foundation in 2021. SASB Standards guide
the disclosure of financially material sustainability
information by companies to their investors
Reclamation
The restoration of a site after mining or exploration activity
has been completed
Step-out exploration drilling
Holes drilled to intersect a mineralisation horizon or
structure along strike or down dip
Recovery or recovery rate
The percentage of valuable metal in the ore that is
recovered by metallurgical treatment in the final or semi-
finished product
Refractory
A characteristic of gold-bearing ore denoting the
impossibility of recovering gold from it by conventional
cyanide leaching
Reserves
The economically mineable part of a measured and/or
indicated mineral resource. It takes into account mining
dilution and losses. Appropriate assessments and studies
have been carried out, and include consideration of and
modification by realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate, at
the time of reporting, that extraction could reasonably be
justified. Reserves are subdivided in order of increasing
confidence into probable reserves and proved reserves
Stope
A large underground excavation entirely within an ore body,
a unit of ore extraction
Stripping
The mining of waste in an open-pit mine
Tailings
Part of the original feed of a mineral processing plant that is
considered devoid of value after processing
TCFD
Task Force on Climate-Related Financial Disclosures.
Organisation with the goal of developing a set of voluntary
climate-related financial risk disclosures. These disclosures
would ideally be adopted by companies which would help
inform investors and other members of the public about the
risks they face related to climate change
Underground development
Excavation which is carried out to access ore and prepare it
for extraction (mining)
Waste
Barren rock that must be mined and removed to access ore
in a mine
262
263
Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Shareholder information
As of 15 March 2023, the total issued share capital of the Company comprised 512,697,077 ordinary shares of no par
value. Тhe Company holds 39,070,838 shares in treasury. The total number of voting rights in the Company is 473,626,239
Ordinary Shares of no par value, each carrying one vote.
Substantial shareholdings as at 15 March 2023
In accordance with the FCA’s Disclosure and Transparency Rules (DTR 5), as at 15 March 2023 the Company received
notification of the following material interests in voting rights over the Company’s issued ordinary share capital (including
qualifying financial instruments):
Full name of shareholder
Details of person
subject to the
notification
obligation
Total number
of voting
rights
% of voting
rights
ICT Holding Ltd, Powerboom Investments Limited and Boompower Holding Limited
Alexander Nesis
113,174,748
23.99%
BlackRock, Inc.
Fodina B.V.
BlackRock, Inc.
46,950,805
Renáta Kellnerová
15,846,598
9.91%
3.35%
Free float
Based on free float restrictions adopted by FTSE Russell1, the Company does not include ICT Holding Ltd, Powerboom
Investments Limited and Boompower Holding Limited’s shares as well as shares owned by management and directors into
free float. Hence, the free float as at 15 March 2023 equals 75.2% and includes the following shareholdings:
Free float
(%)
Free float
Other institutional investors and individuals below notifiable threshold
BlackRock, Inc.
Non-free float
24.8
75.2
Fodina B.V.
9.91
3.35
75.2%
61.96
Company secretary
Tania Tchedaeva
Investor relations
Evgeny Monakhov
+44 20 7887 1475 (UK)
Kirill Kuznetsov
+7 812 334 3666 (Russia)
+7 717 261 0222 (Kazakhstan)
ir@polymetalinternational.com
Contacts
Registrar
Computershare Investor Services
(Jersey) Limited
13 Castle Street
St Helier
Jersey JE1 1ES
Channel Islands
Auditors
MHA MacIntyre Hudson
2 London Wall
Barbican
London
EC2Y 5AU
United Kingdom
Brokers
Panmure Gordon
40 Gracechurch Street
London EC3V 0BT
United Kingdom
Legal counsels
Jersey legal advisors
Carey Olsen
47 Esplanade
St Helier
Jersey JE1 0BD
Channel Islands
UK advisors
Dentons UK and Middle East LLP
One Fleet Place
London EC4M 7RA
United Kingdom
Cypriot legal advisors
Andreas M. Sofocleous & Co LLC
Proteas House
155 Makariou III Ave
Limassol 3026
Cyprus
Contacts
Registered address (Jersey)
Charter Place
23-27 Seaton Place
St. Helier, Jersey, JE4 0WH
Channel Islands
+44 1534 765000
Registered No. 106196
Head office, Limassol (Cyprus)
Parthenonos, 6
3rd floor
3031, Limassol,
Cyprus
+357 25 558090
London office (UK)
Berkeley Square House
Berkeley Square
London W1J 6BD
United Kingdom
+44 20 7887 1475
St. Petersburg office (Russia)
JSC Polymetal
Office 1063
2 Prospect Narodnogo Opolcheniya
St. Petersburg 198216
Russian Federation
+7 812 334 3666
+7 812 677 4325
Astana office (Kazakhstan)
Polymetal Eurasia LLP
10 D Kunaeva Street
Astana 010000
Republic of Kazakhstan
+7 717 261 0222
1 https://research.ftserussell.com/products/downloads/Free_Float_Restrictions.pdf?_ga=2.22689659.1315808839.1614166515-716764096.1614166515
264
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Polymetal International plc Integrated Annual Report & Accounts 2022Polymetal International plc Integrated Annual Report & Accounts 2022 Polymetal International plc
Charter Place
23-27 Seaton Place
St. Helier, Jersey, JE4 0WH
Channel Islands
+44 1534 765000
Registered No. 106196
www.polymetalinternational.com
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