Down 75%, does the Polymetal share price make it a buy now?

At Polymetal International (LSE: POLY) share price has risen in the first week of 2023. But it declined sharply again in response to a year’s production results. The update indicates that “2022 presents unprecedented challenges for our company.”

When Russian tanks started rolling in February, stocks in the precious metals miner fell. Polymetal has several gold and silver mines in Kazakhstan, but the majority of its operations are in Russia.

Heading into the anniversary of the invasion, Polymetal shares showed a 12-month fall of 75%.

Production

However, production remains strong. Despite the sanctions, there is no shortage of customers in Russia itself and in parts of Asia. Gold production for the 12 months to December 2022 rose 2%, with silver up 3%.

Revenue fell slightly, down 3%, and net debt rose 45% to $2.4bn (£2bn). But debt fell 14% in the last quarter. But there is still a lot of debt for a company with a market cap of £1.2bn. But Polymetal is targeting free cash flow in 2023, so it should be reduced.

Evaluation

It is difficult to value shares in Polymetal based on fundamentals. In the first half, statutory earnings per share (EPS) were negative, but we saw quite positive underlying EPS figures. If the second half goes better, as the company believes, I could see a full-year price-to-earnings (P/E) ratio in the single digits.

In general, I would say that the financial situation at the end of the year looks quite promising under the circumstances. And it must be tempting to think that Polymetal could survive until the end of the war. After that, if the sanctions are lifted, maybe it will return to a higher price?

Price dip

Shares of Polymetal were getting in the round-up to the update. Why is it suddenly wrong again? It looks like nothing financial. The announcement talks about “Potential re-domiciliation of the parent company, Polymetal International plc, to a jurisdiction deemed ‘friendly’ by the Russian Federation..”

Currently, Russia will not allow Polymetal to sell gold and silver to countries it does not consider friendly. Any move doesn’t seem likely to happen before 2024, so the danger doesn’t seem imminent. But the board is looking to Astana, Kazakhstan as the company’s new home.

Current shareholders?

If so, the main stock listing seems likely to move from London Stock Exchange to Kazakhstan. What will it do for current shareholders? Will they get a fair deal? Will they get the price in Kazakhstani Tenge and hope there is a way out? Can I lose my investment?

There’s no way to tell right now.

Polymetal stocks may look good for investors who can tolerate high risk. And I wouldn’t be surprised if some were tempted by the small investment. But for me it will be a complete gamble, I will keep it clear.