At 268p, is the Polymetal International (LON:POLY) share price about to take off?

The war in Ukraine led to a Polmetal share price collapse. With improving revenue figures, however, is it close to taking off?

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Since the outbreak of war in Ukraine, the Polymetal International (LSE:POLY) share price has collapsed. After falling from around 1,000p to 200p, the company has attempted to quell investor worries regarding its operational capabilities. A gold miner operating in Russia and Kazakhstan, the firm recently released its first quarter results. I want to know what these mean for the business as the war progresses. I already own shares in this company, but should I be purchasing more? Let’s take a closer look.  

Dangers for the POLY share price

The Russian invasion of Ukraine had a catastrophic impact on the Polymetal share price. Being a shareholder, it was a tough pill for me to swallow. 

The collapse was caused by investor fears about the possibility of sanctions on the company. To date, it has not been included in any sanctions, although there are still fears that major shareholder, Alexander Nesis, may be subject to sanctions. This could have a negative impact on the Polymetal share price if it happens.

There are also worries about the firm’s ability to sell gold produced in Russia itself. Russia-linked production accounts for around 50% of total production and this could cause trouble.

What’s more, tensions further increased this week as Russia stopped supplying gas to Poland and Bulgaria. Any protracted war will likely dent the Polymetal share price even further. However, I have previously written about how a long, drawn-out war is in neither side’s interests. 

The business also made a firm decision to scrap its dividend. I saw this as a smart move because it will provide further liquidity for the company during uncertain times.

Brighter times ahead?

On a brighter note, the company stated in March that its operations were continuing uninterrupted. 

It also advised investors that it was maintaining its production guidance of 1.7m ounces of gold for 2022. This is a sign that the leadership thinks it will be able to keep up its current production levels. 

There is also the possibility of a demerger, potentially splitting the Russian and Kazakhstan operations and shielding shareholders from any future difficulties in Russia.

Indeed, the company was keen to point out that about 50% of production takes place in Kazakhstan, with this gold usually sold further into Asia.

Historically, the business is profitable, increasing pre-tax profits from $384m in 2017 to $1.1bn in 2021. 

In addition, its recent trading update showed that revenue for the three months to 31 March 2022 stood at $616m, an increase of 4% year on year. Since this period included much of the war, I’m pleased that revenue is still growing.

Overall, the situation remains uncertain. I’m satisfied with my current exposure to the company. Despite this, recent revenue figures are very encouraging and I think the Polymetal share price could be on the verge of turning upwards. I won’t rule out an additional future purchase. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andrew Woods owns shares in Polymetal International. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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