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April 13, 2022updated 22 Apr 2022 8:45am

Russian gold miner Polymetal suspends dividend vote due to sanctions

The vote on dividends has been pushed back to August as a result of "liquidity crunch" driven by sanctions.

By Zachary Skidmore

Russian gold miner Polymetal has postponed a vote on a planned $246m dividend payment, due to a liquidity crunch caused by the impact of Western sanctions levied on Moscow.

The London Stock Exchange listed-miner expected to put the payout to a vote at its annual meeting this month, proposing on 2 March a final dividend of $0.52 per share, or $246m in total. The decision has now been postponed until August.

Sanctions bite

Western sanctions have not explicitly targeted Polymetal. However, the sanctions levied on the bulk of Russian banks and financial institutions have created uncertainty over the availability of funds and caused higher funding costs, while the liquidity crunch and supply chain limitations caused higher working capital needs.

“We have thoroughly re-evaluated the board’s March recommendation on dividends, taking into account recent changes in the macro and regulatory environment, and unanimously have come to a conclusion that the payment decision should be postponed in order to sustain the stability and liquidity of the business,” Riccardo Orcel, Polymetal’s board chairman, said in a statement on Wednesday.

Shares in the company have slumped significantly since the outset of the Ukraine conflict, down 75% to prewar levels, leading to a valuation of just £1.26bn. Additionally, Polymetal has been saddled with increased debt. Its net debt stood at almost $2bn at the end of March, with 94% of its borrowings denominated in US dollars.

In response, Orcel stated: “We will continue to monitor the operating, funding, and regulatory conditions in which the business operates, hoping that stability is restored, improving visibility, which would allow us to return to our cash distribution policy.”

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