Polymetal International PLC (LSE:POLY) said it has seen a boost in demand for gold from retail customers in Russia who are moving their cash into a traditional safe-haven asset.
In a business update, the company sought to reassure investors that its business has not been materially affected by Western sanctions on Russia for its invasion of Ukraine, reiterating its current production guidance of 1.7mln oz of gold equivalent for the 2022 financial year.
“Sanctions announced in the period between 9 March and 30 March did not have a material impact on the business of the group. Polymetal believes that targeted sanctions on the company remain unlikely, but are not impossible. Contingency planning has been initiated proactively to maintain business continuity,” the precious metals miner said in a business update.
Sales of gold bullion in Russia “have been restored to new counterparties on terms consistent with those received earlier," it said, with domestic demand for gold “boosted by local retail investment".
Sales of gold and silver concentrates to East Asia and Kazakhstan from Russia have continued, it said, likewise sales of bullion and concentrate from its Kazakhstan operations.
However, the forme FTSE 100 company warned of higher costs from shipments that have been temporarily impacted by the change of freight and logistics service providers.
It said the Russian central bank’s recent statement that it will purchase gold from commercial banks at a fixed price of RUB5,000 (£50) per gramme is not expected to affect the group's sales price materially as gold continues to be sold at global market price, both for exports and to satisfy physical retail demand.
Yesterday, the group said it is in the early stages of evaluating various options to maximise shareholder value, with media reports suggesting the board may be considering splitting the Russian business from the rest of the company.
The move follows the appointment of new independent directors and a new chair following the departure of key board members in response to the conflict in Ukraine, which has entered its second month. The new board appointments will be put for shareholders’ approval at the forthcoming annual general meeting on 25 April.