Berenberg lowers target price on Polymetal

Analysts at Berenberg lowered their target price on precious metals miner Polymetal from 2,580.0p to 2,310.0p on Monday, citing cost headwinds in 2021.

Berenberg noted that Polymetal, which operates a portfolio of mines in Russia and Kazakhstan, recorded produced 1.55m ounces of gold equivalent in 2020 versus guidance of 1.5m, driven by good performances at its Kyzyl, Varvara and Albazino mines, and also highlighted that cash costs for 2020 were now guided to be below previous estimates, with tailwinds from weaker local currencies in Kazakhstan and Russia offsetting the impact of Covid-19 costs and higher royalties.

While Polymetal kept production guidance of 1.5m ounces in 2021 and 1.6m ounces in 2022 unchanged, costs were guided to be $700 to $750 per ounce, with a negative impact versus previous expectations due to the strengthening of the Russian rouble and Kazakh tenge, higher domestic inflation, fuel prices and Covid-19 costs.

"We have updated our forecasts to take account of the results and updated guidance including higher costs," said the German bank, which also reiterated its 'buy' rating on the stock.

Moving forward, Berenberg highlighted that the main upcoming catalysts for the stock should be the commissioning of its Nezda mine in November 2021 and a pressure oxidation plant in August 2023.