Russia's Polymetal may consider special dividend payout -CFO

Russian gold and silver producer Polymetal may consider a special dividend payout as rising gold prices bring the company closer to achieving its target debt burden, chief financial officer Maxim Nazimok said on Tuesday.

By Anastasia Lyrchikova

MOSCOW, Aug 27 (Reuters) - Russian gold and silver producer Polymetal POLYP.L may consider a special dividend payout as rising gold prices bring the company closer to achieving its target debt burden, chief financial officer Maxim Nazimok said on Tuesday.

Polymetal, one of Russia's largest producers of precious metals, is also considering acquiring minority stakes in domestic rare earth metals projects, tapping into growing demand for commodities used in the production of electric cars.

"We are at the stage of searching for suitable assets. We are not talking about changing the company's profile but rather about minority investments in assets that are in development," Nazimok said in an interview with Reuters.

Rising gold prices mean Polymetal, which is listed in London, Moscow and Nur-Sultan, may reach its target 1.5x ratio of net debt to earnings before interest, tax, depreciation and amortization (EBITDA) by the beginning or middle of next year, Nazimok said.

"The current price environment increases the likelihood of a special dividend," Nazimok said.

Prices of spot gold XAU=, seen as a safe haven asset at times of economic uncertainty, have grown by more than 20% since the beginning of the year and are now at around $1.540 per ounce.

Polymetal pays a regular dividend twice a year based on 50% of underlying net earnings, subject to a hard ceiling of a net debt to adjusted EBITDA ratio below 2.5x.

At the end of each year it also considers a special dividend payout, depending on free cash flow, market outlook and investment plans. It did not pay a special dividend in 2018.

On Tuesday its board recommended an interim dividend of $0.20 per share, after the company reported underlying net earnings rising 21% year on year to $188 million in the first half of the year.

Polymetal's shares were trading up 3.4% on the day in London at 1500 GMT.

The company, part-owned by Russian businessman Alexander Nesis, has partially refinanced a $400 million loan from Russian state-controlled lender Sberbank SBER.MM, using loans from other lenders. It has set loan term extension as its priority, Nazimok said.

"We want to distribute the maturity schedule more comfortably, take the pressure off for the next three years, while we are implementing two large construction projects," Nazimok said.

In the first half of the year, Polymetal, which has assets in Russia and Kazakhstan, increased production by 22% year on year to 756,000 ounces of gold equivalent, largely due to a rise in volumes at its Kyzyl project in northeastern Kazakhstan, which reached designed capacity in November 2018.

The company may exceed its 2019 production forecast of 1.55 million ounces of gold equivalent by 3%-4%, but does not plan to revise its forecasts yet, the executive said.

Polymetal's management does not expect any new share sales this year, Nazimok said. PPF Group, owned by the Czech Republic's richest businessman Petr Kellner, sold a 4.5% stake in the company last month.

(Reporting by Anastasia Lyrchikova; Writing by Polina Ivanova; Editing by Katya Golubkova and David Evans)

((p.ivanova@thomsonreuters.com;))

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