Polymetal International PLC (LSE:POLY) lifted its capital expenditure guidance for the year by more than 20% as it reported an 8% rise in first-half adjusted earnings on higher precious metal prices.
The company revised its 2021 capex guidance to US$675-725mln, from US$560mln previously, due to continuing macroeconomic pressures, materials and wage inflation, as well as the cost of the feasibility study for POX-3 and the acceleration of the Veduga and Prognoz projects in Russia.
Its capex jumped 55% to US$375mln in the first half, partly on inflationary pressures and COVID-related costs.
Adjusted EBITDA climbed to US$660mln from US$610mln the first half of 2020. The FTSE-100 miner has previously announced its interim revenue and production figures.
READ: Polymetal’s revenue rises in second quarter on higher metal prices
It plans to pay an interim dividend of 45 US cents, up from 40 US cents in 2020.
It a separate statement, Polymetal said its board had approved the accelerated development of the open-pit mine at Prognoz, the largest undeveloped primary silver deposit in Russia.
The ore will now be processed at the Nezhda concentrator, rather than building a processing facility on site, to reduce capex and project execution risks given the remote location in eastern Siberia and harsh climate conditions.
"The decision to process ore from Prognoz at Nezhda ensures optimal allocation of human and financial capital within Polymetal,” said chief executive Vitaly Nesis.“Fast-track development significantly reduces CAPEX requirements and project execution risks, while bringing cash flows forward and lowering [the] environmental footprint."
First payable concentrate production is expected in the third quarter of 2023, at least three years earlier than previously planned to enable Polymetal to benefit from the favourable silver market.