Polymetal International (LSE:POLY) is a gold and silver miner that owns 10 producing assets and two major development projects across Russia and Kazakhstan. It’s certainly been a bruising 16 months for investors in Polymetal shares.
Sanctions imposed on Russia since it invaded Ukraine have disrupted the company’s operations in the country, putting the share price under considerable pressure. To compound difficulties, the firm was also excluded from the FTSE equity indexes, but it did retain its London Stock Exchange (LSE) listing.
I don’t own shares in the business. But if I’d invested £1,000 in mid-2018 how much would I have today? Let’s explore.
Five-year performance
Five years ago, the Polymetal share price stood at £6.66. After enjoying an upward trajectory for over two years, the shares peaked in September 2020. Subsequently, they entered a prolonged downtrend and fell off a cliff when the war started.
Today, the stock trades for £1.86. That’s a disastrous 71% decline over the past half-decade.
So, if I’d invested £1,000 in the company in 2018, I could have bought 150 shares with £1 left as spare change. Today, my shareholding would have shrunk in value to a meagre £279.
However, the company paid dividends over the period. Polymetal was once a leading FTSE 100 dividend stock before the payouts were cancelled due to the conflict. Since 2018, I’d have earned £344.79 in passive income, bringing my total return to £623.79. That equates to a loss of £376.21.
Delisting and divestment
Polymetal began trading on the LSE in 2011, but this era could soon be drawing to a close. Last month shareholders approved a proposal to re-domicile the company in the Astana International Finance Centre in Kazakhstan. The company’s abandoning its current Jersey registration and LSE listing as a result. This process is expected to complete on 17 July.
The move is part of a wider plan to divest the firm’s Russian business, which accounted for around two-thirds of its revenue in 2022. Polymetal intends to ring-fence its Russian subsidiaries to ensure compliance with Western sanctions.
This leaves investors in a pickle. They could move their holdings to a broker that operates on the AIX exchange. However, Freedom24 — one of the platforms recommended by Polymetal — isn’t opening accounts for UK residents at present.
These developments will be hugely disappointing for British shareholders keen to maintain their positions, especially in light of the company’s recent guidance. Polymetal claims it has started 2023 “from a position of relative strength“. The firm expects free cash flows will resume and net debt will fall as the year unfolds.
Should investors buy?
If investors are tempted to add a gold and silver miner to their portfolios, Polymetal shares arguably look pretty cheap right now. Provided revenues recover, this could be a comeback story in the making.
However, UK investors run the risk of being left with warrants or bonds. Alternatively, they might feel forced to sell. A final option might be to go through the complicated process of transferring their shareholdings to a suitable European or Asian broker.
The uncertainty that comes with the company’s LSE delisting, coupled with the ongoing repercussions of severe sanctions, is enough to put me off. I won’t be buying.
