Polymetal International Share Price Forecast April 2022 – Time to Buy POLY?
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Shares of Anglo-Russian precious metals mining company Polymetal International (LSE: POLY) are in the red today, after closing at £289. 0 as of April 6th (18:44 GMT+1). Polymetal International shares have had a bad 2022. Investors’ sentiment around the company hasn’t remained intact following Russia’s invasion of Ukraine. Since Polymetal International shares are down 75% over the last 12 months, which has made many investors wonder whether it’s a buying opportunity.
Polymetal International – Technical Analysis
Polymetal International’s financial statement indicates a market cap of £1.601 billion with total assets worth £3.803 billion. Revenue for 2021 was at £2.10 billion with a profit margin of 31.28% compared to $2.23 billion in 2020.
Oscillators such as Relative Strength Index (14)(44.4), Stochastic %K (14, 3, 3)(70.8), Commodity Channel Index (20)(76.9 ), Average Directional Index (14)( 36.2) and Awesome Oscillator(−38.7) are neutral. Moving averages such as Simple Moving Average (50)(588.2), Exponential Moving Average (100)(798.1), Simple Moving Average (100)(941.6), Exponential Moving Average (200)(1064.4) and Simple Moving Average (200)(1192.1) are indicating a sell action.
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Recent Developments
Polymetal International was founded by Alexander Nesis of ICT Group in 1998. It successfully placed £491m of shares on the London Stock Exchange in 2011, which valued the company at £3.55 billion. This made it the first Russian-founded company to obtain a premium listing at the LSE. In November 2021, it invested US$447 million in the Veduga goldfield in Krasnoyarsk Krai. In March 2022, it purchased 25% of the Novopetrovskoye Polymetal field and consolidated its 100% investment.
Polymetal International shares suffered a crash recently due to the Russian invasion of Ukraine, and the sanctions swiftly applied to companies operating there. However, the company itself or its key people have not been sanctioned. It has managed to maintain its mining operations as well as sell gold. However, material shipments out of Russia to East Asia and Kazakhstan have been impacted temporarily. However, this has been attributed to a switch in logistic service providers rather than the war.
On the other hand, as Russian investors seek to protect their wealth from the Ruble drop, the local demand for gold is on the rise. This has led to management reiterating its 2022 production guidance for 1.7 mega ounces of gold equivalents. However, mining is a capital-intensive process, and the fact that the Russian banking sector is cut off from SWIFT will make it difficult to secure additional funds.
Should You Buy POLY Shares?
Investors can rest assured that Polymetal has almost $500m of undrawn credit available from non-sanctioned financial institutions. However, this may not be enough depending on the current Russia-Ukraine crisis. While Russian banks are offering loans to businesses, they are only available in Rubles. Polymetal can currently get loans with a massive 23-25% interest rate due to the central bank boosting rates.
In an effort to reduce expenses, management has already started to delay their early-stage mining projects. The company’s margins as well as shares will both suffer if it starts taking out these expensive loans to keep operations going. Thus the fate of this business seems to depend on the current situation in Ukraine. The company’s management has already discussed splitting its Russian and Kazakh operations into separate companies. This adds even more uncertainty to the mix. Based on this, now is not the time to buy Polymetal International shares.
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