Berenberg raises target price on Polymetal

With earnings per share of $0.81 and a dividend of $0.40, Berenberg said higher production at the group's Kyzyl mine had offset guided declines at Svetloye and Voro and also highlighted that group cash costs were a beat at $638.0 an ounce as costs were positively affected by the weaker rouble and tenge.

Berenberg anticipates that Polymetal's interim dividend will remain at 50% of underlying net income, replacing its previous policy of paying a special dividend.

"We view this as a positive and it could result in a total payout of $1.37/share in 2021 when the policy is enacted, a yield of 5.5%," said the analysts, which added that this would increase to $1.96. per share at prices of $2,000 per ounce for gold and $26 an ounce for silver, assuming 75% of free-cash-flow is paid out.

However, the German bank did note that the currency effect was partially offset by domestic inflation, Covid-19 costs and higher mining taxes.

Berenberg, which transferred coverage to Jonathan Guy, stated Polymetal was its preferred larger-cap London-listed gold stock, pointing to the firm's "solid track record for operational delivery" and its peer-group-leading level of distribution.

"Covid-19 has had no material impact on the company’s operations," stated Berenberg, which reiterated its 'buy' rating on the stock.