POLYMETAL INTERNATIONAL PLC Polymetal: Report on payments to governments for the year 2018

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14/06/2019 08:00

Polymetal International plc (POLY)
Polymetal: Report on payments to governments for the year 2018

14-Jun-2019 / 09:00 MSK
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Release time

IMMEDIATE                     LSE, MOEX, AIX: POLY / ADR: AUCOY

Date

14 June 2019

 

 

Polymetal International plc

Report on payments to governments for the year 2018  

Polymetal issues the report on payments to government for the year ended 31 December 2018.

INTRODUCTION

This Report provides an overview of the payments to governments made by Polymetal International plc and its subsidiary undertakings (hereinafter referred to as "Polymetal") for the year 2018 as required under the UK's Report on Payments to Governments Regulations 2014 (as amended in December 2015). These UK Regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013)) and apply to large extractive companies, whose securities are publicly listed on a UK-regulated stock market,  that are involved in the exploration, prospection, discovery, development and extraction of minerals, oil, natural gas deposits or other materials. This Report is also intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the United Kingdom.

BASIS OF PREPARATION

Legislation

This report is prepared in accordance with The Reports on Payments to Governments Regulations 2014 as enacted in the UK in December 2014 and as amended in December 2015.

Reporting entities

This Report includes payments to governments made by Polymetal plc and its subsidiary undertakings (Polymetal). Payments made by entities over which Polymetal has joint control or significant influence are excluded from this Report.

Activities

Payments made by Polymetal to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals are disclosed in this Report. It excludes payments related to refining activities made to the refineries owned by the government agencies and any payments which are not directly attributable to the production and exploration activities.

Government

Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a subsidiary of a government.

Project

Payments are reported at project level except that payments that are not attributable to a specific project are reported at legal entity level. Project is defined as operational activities which are governed by a single contract, or licence agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project.

"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, or licence agreements that are signed with a government giving rise to payment liabilities. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management.

License agreements are aggregated for the purposes of reporting as a single project only when those legal agreements have substantially similar terms and are both geographically and operationally integrated.

Payments

The information is reported under the following payment types:

 

Income taxes

These are taxes paid by Polymetal on its income and profits in accordance with legislation enacted in the applicable jurisdiction. Payments are reported net of refunds. Value added tax, personal income taxes, social taxes, property taxes are excluded.

The maximum income tax rate in Russia is set at 20% and is allocated between federal budget and the budgets of the relevant constituent regions. In 2018 and 2017 the following proportion was applied: 3% was remitted to the federal budget, whereas 17% were allocated to the regional budgets. From 1 January 2017 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, as well as decreased mining tax rate (paying at 60% of the standard mining tax rates). In return for obtaining this tax relief the members of the regional special economic zone are obliged to invest 50% of their tax savings each year in the Special Economic Zone Development Program.  From 1 January 2017, Svetloye LLC has received tax relief as Regional Investment Project and is entitled to the statutory income tax rate of 0% up to 2021, as well as to decreased mining tax rates.

In Kazakhstan and Armenia income taxes are set at 20% and there are no regional or local income taxes in these countries.

Mining tax

Mining tax is a royalty payable in Russian Federation, Kazakhstan and Armenia, which 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 period. Royalty payable in Armenia is calculated as a percentage of actual sales during the reporting period.

Mining tax in Russia is levied at federal level, and is then reallocated between federal and respective regional budgets based on the following proportion: 40% of total tax collected to the federal budget, 60% to regional budgets. Mining tax and royalties in Kazakhstan and Armenia are levied at central government level.

Licence fees

These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. No significant licence fees individually more than 86,000 GBP were paid during the year ended 31 December 2018.

Rental fees

The land in the Russian Federation and Kazakhstan on which the Group's production facilities are located is owned by the state. The Group leases this land through operating lease agreements.

Other payments

Other payments include payments made and social commitments in accordance with subsoil contracts attributable to the Kyzyl project and investment in the Special Economic Zone Development Program of Omolon Gold Mining Company LLC and Magadan Silver JSC.

Cash and in-kind payments

Payments are reported on cash basis. No in-kind payments were made during years ended 31 December 2018 and 31 December 2017.

Materiality Level

Any payment, whether made as a single payment or as a series of related payments, below GBP 86,000 within a financial year is excluded from this Report.

Payments made to governments by a joint ventures or associates of the Group in proportion to the company's interest in the respective venture or associate are insignificant to this Report based on materiality level set.

Exchange Rate

Relevant payments are made by Polymetal in Russian Rubles, Kazakh Tenge and Armenian Dram and for the purpose of this Report are translated to the US Dollar based on the foreign exchange rate at the relevant monthly average rate.

PAYMENTS PER GOVERNMENT

 

 

 

 

 

 

 

 

FOR THE YEAR 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government         

000'$

 

 

 

Income tax

Mining

tax

Rental

fees

Licence fees

Other1

Total

 

 

 

 

 

 

 

 

 

 

Russia

 

 

 

                             94,652  

                          68,408  

                                    2,161  

                          130  

                                 9,643  

                 174,994  

Kazakhstan

 

 

 

                               9,611  

                          15,898  

                                         60  

                                -  

                                 5,425  

                    30,994  

Armenia

 

 

 

                                  388  

                          13,241  

                                       228  

                                -  

                                      12  

                    13,869  

Total

 

 

 

                          104,651  

                          97,547  

                                    2,449  

                          130  

                              15,080  

                 219,857  

 

 

 

 

 

 

 

 

 

 

PAYMENTS PER

PROJECT1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entity                  

000'$

Project

Country/ Government

Region

Income tax

Mining

tax

Rental

fees

Licence fees

Other1

Total

 

 

 

 

 

 

 

 

 

 

Gold of Northern Urals CJSC

Voro

Russia

Svedlovskaya oblast'

                             25,962  

                            8,180  

                                         83  

                                -  

                                      79  

                    34,304  

Okhotskaya Mining and Exploration Company LLC

Okhotsk

Russia

Khabarovskiy Kray

                               8,328  

                            5,751  

                                       301  

                             34  

                                      42  

                    14,456  

Svetloye LLC

Svetloye

Russia

Khabarovskiy Kray

                                        -  

 

                                       290  

                               3  

                                      33  

                         326  

Magadan Silver JSC

Dukat

Russia

Magadanskaya oblast'

                             34,420  

                          14,527  

                                       604  

                             45  

                                 5,111  

                    54,707  

Mayskoye Gold Mining Company LLC

Mayskoye

Russia

Chukotka Autonomous Okrug

 

                          12,322  

                                            6  

 

                                      25  

                    12,353  

Omolon Gold Mining Company LLC

Omolon

Russia

Magadanskaya oblast'

                               6,929  

                            8,603  

                                       403  

                             31  

                                 4,230  

                    20,196  

Albazino Resources Ltd

Albazino

Russia

Khabarovskiy Kray

                             19,013  

                          19,025  

                                       474  

                             17  

                                    123  

                    38,652  

Varvarinskoye JSC

Varvara

Kazakhstan

n/a

                               4,701  

                            2,370  

                                         11  

                                -  

                                    444  

                      7,526  

Komarovskoye Mining Company LLC

Komar

Kazakhstan

n/a

                               3,004  

                            5,333  

                                         11  

                                -  

                                    467  

                      8,815  

Bakyrchik Mining Venture LLC

Kyzyl

Kazakhstan

n/a

                               1,906  

                            8,195  

                                         34  

                                -  

                                 4,489  

                    14,624  

Inter Gold Capital LLC

Kazakhstan

n/a

                                        -  

                                     -  

                                            4  

                                -  

                                      25  

                            29  

Kapan MPC CJSC

Kapan

Armenia

n/a

                                  388  

                          13,241  

                                       228  

                                -  

                                      12  

                    13,869  

Total

 

 

 

                          104,651  

                          97,547  

                                    2,449  

                          130  

                              15,080  

                 219,857  

______________________

1 Includes payments under Special Economic Zone Development Program of kUS$ 4,172 for Omolon Gold Mining Company LLC and kUS$ 4,979 for Magadan Silver JSC.

 

PAYMENTS PER GOVERNMENT

 

 

 

 

 

 

 

 

FOR THE YEAR 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government         

000'$

 

 

 

Income tax

Mining

tax

Rental

fees

Licence fees

Other1

Total

 

 

 

 

 

 

 

 

 

 

Russia

 

 

 

79,692  

61,728  

2,096  

         31  

18,267  

 161,814  

Kazakhstan

 

 

 

12,960  

8,911  

61  

-  

4,370  

26,302  

Armenia

 

 

 

-  

3,961  

222  

-  

1,302  

5,485  

Total

 

 

 

92,652  

74,600  

    2,379  

31  

                              23,939  

                 193,601 

 

 

 

 

 

 

 

 

 

 

PAYMENTS PER

PROJECT1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entity                  

000'$

Project

Country/ Government

Region

Income tax

Mining

tax

Rental

fees

Licence fees

Other1

Total

 

 

 

 

 

 

 

 

 

 

Gold of Northern Urals CJSC

Voro

Russia

Svedlovskaya oblast'

                            23,305  

                            8,102  

                                         98  

                               5  

                                      65  

                   31,575  

Okhotskaya Mining and Exploration Company LLC

Okhotsk

Russia

Khabarovskiy Kray

                               9,211  

                            7,382  

                                       287  

                               2  

                                      34  

                   16,916  

Svetloye LLC

Svetloye

Russia

Khabarovskiy Kray

-  

-  

217  

-  

    14  

      231  

Magadan Silver JSC

Dukat

Russia

Magadanskaya oblast'

                            21,548  

                            8,814  

                                       655  

                             13  

                              14,172  

                   45,202  

Mayskoye Gold Mining Company LLC

Mayskoye

Russia

Chukotka Autonomous Okrug

-  

                            9,644  

                                            -  

-  

                                      28  

                      9,672  

Omolon Gold Mining Company LLC

Omolon

Russia

Magadanskaya oblast'

                            14,587  

                            9,715  

                                       403  

                               9  

                                3,890  

                   28,604  

Albazino Resources Ltd

Albazino

Russia

Khabarovskiy Kray

11,041  

18,071  

436  

2  

64  

29,614  

Varvarinskoye JSC

Varvara

Kazakhstan

n/a

9,803  

3,370  

11  

-  

511  

13,695  

Komarovskoye Mining Company LLC

Komar

Kazakhstan

n/a

2,637  

5,527  

11  

-  

307  

8,482  

Bakyrchik Mining Venture LLC

Kyzyl

Kazakhstan

n/a

484  

14  

36  

-  

3,522  

4,056  

Inter Gold Capital LLC

Kazakhstan

n/a

36  

-  

        3  

-  

30  

 69  

Kapan MPC CJSC

Kapan

Armenia

n/a

-  

3,961  

222  

-  

1,302  

5,485  

Total

 

 

 

                            92,652  

                         74,600  

                                   2,379  

                             31  

                              23,939  

                 193,601  

______________________

1 Includes payments under Special Economic Zone Development Program of kUS$ 3,822 for Omolon Gold Mining Company LLC and kUS$ 13,952 for Magadan Silver JSC.

About Polymetal  

Polymetal International plc (LSE, MOEX, AIX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is a top-20 global gold producer and top-5 global silver producer with assets in Russia and Kazakhstan. The Company combines strong growth with a robust dividend yield.

Enquiries

Media

 

Investor Relations

FTI Consulting

Leonid Fink

Viktor Pomichal

+44 20 3727 1000

Polymetal

Eugenia Onuschenko

Timofey Kulakov

Michael Vasiliev                  

ir@polymetalinternational.com

+44 20 7887 1476 (UK)

 

+7 812 334 3666 (Russia)

Joint Corporate Brokers

 

Morgan Stanley

Andrew Foster

Richard Brown


Panmure Gordon

Charles Lesser

James Stearns

+44 20 7425 8000

 

 

 

+44 20 7886 2500

RBC Europe Limited

Marcus Jackson

Jamil Miah

+44 20 7653 4000

 

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED



ISIN: JE00B6T5S470
Category Code: PGR
TIDM: POLY
Sequence No.: 10107
EQS News ID: 824449

 
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