Slide 1: Corporate Presentation October 2016
CORPORATE PRESENTATION October 2016
Slide 2: 1. Overview
1. OVERVIEW Ss POLYUS
Slide 3: Leading gold producer globally
Overview Leading gold producer globally #9 globally by production (2015, moz) #4 globally by P&P reserves (2015, moz) 6.1 92 5.0 74 69 4.0 64 3.5 52 2.6 46 41 2.5 2.2 2.1 33 1.8 1.5 28 21 Barrick Kinross Polyus Sibanye Navoi MMC Goldcorp AngloGold Newcrest Newmont Goldfields Barrick Polyus Sibanye K
Slide 4: Recent highlights
Overview Recent highlights Level 1 listing on MOEX obtained in April 2016 implying the Company intends to raise its free float to at least 10% from 4.5%. The Company is #9 globally by gold output and #4 globally by gold reserves One of the lowest cost producers globally with TCC of $377/oz in 1H16 a
Slide 5: Operating in a gold-rich region
Overview Operating in a gold-rich region Russia is #3 globally by production (2015, moz) 14.8 #1 in Russia Polyus 1.76 moz in 2015 almost 20% of the Russian production 8.8 8.6 6.9 5.5 5.4 5.1 4.3 3.6 3.1 3.0 2.7 2.0 2.0 1.9 China Australia Russia United Peru South Canada Mexico Indonesia Brazi
Slide 6: Strong portfolio of producing assets
Overview Strong portfolio of producing assets Burgakhchany Russian Federation Natalka Blagodatnoye Nezhdaninskoye1 Titimukhta Olimpiada Kuranakh Panimba Chortovo Koryto Alluvials Razdolinskoye Verninskoye Bamskoye FY15 gold production by mine Kuranakh 8% Alluvials 10% Russian Federation Operating mi
Slide 7: Developing largest gold mines in the world
Overview Developing largest gold mines in the world Largest gold assets by output in 2015, koz Largest gold assets by resources in 2015, moz Muruntau (Uzbekistan) 1,961 Pebble (US) 107.7 Grasberg (Indonesia) 1,360 Grasberg (Indonesia) 104.8 Polyus Krasnoyarsk cluster (Russia) 1,289 Olympic Dam (Aust
Slide 8: Highest EBITDA margin among peers
Overview Highest EBITDA margin among peers EBITDA margin of Russian m&m companies, % EBITDA margin of global peers, % Polyus 58 +13 ppts Polyus 58 +13 ppts 45 45 Alrosa 53 +8 ppts 40 45 Agnico Eagle 38 +2 ppts Norilsk 50 48 +2 ppts Gold Fields 39 0 ppts 39 NordGold 46 40 +6 ppts 38 Newcrest 38 0 ppt
Slide 9: Extensive open-pit high-grade resource base
Overview Extensive open-pit high-grade resource base Reserves split and average grade in reserves as of 2015, g/t 4.2 2.9 Average grade excl. Polyus = 1.8 g/t 2.4 2.2 1.4 1.4 1.3 1.1 1.1 1.1 0.7 Polymetal Gold Fields Agnico Eagle Polyus Newcrest AngloGold Barrick Goldcorp Newmont Sibanye Kinross Ope
Slide 10: Low-risk strategy targets
Overview Low-risk strategy targets Strong operational profile Extensive reserve and resources base Development of the resource base via delivery Focus on the CIS as a home region which is of profitable ounces rich in undeveloped resources Focus on operational excellence at Tier 1 assets Focus
Slide 11: FY15 & 1H16 achievements
Overview FY15 & 1H6 achievements The first CIS company to join the ICMM Portfolio of attractive low-cost brownfield growth options identified under Strategic Asset Review Total gold output of 1,763 koz in FY15, up 4% y-o-y Positive effect from the Strategic Price Protection Programme of $116 mln in
Slide 12: 2. Corporate Governance
2. CORPORATE GOVERNANCE Ss POLYUS
Slide 13: Corporate development
Corporate governance Corporate development Polyus corporate structure changes Since 2012 Polyus Gold International (PGIL) was a premium LSE listed company with a 22% free-float In November 2015, Wandle Holdings (the vehicle of the largest shareholder of PGIL) consolidated 100% of PGIL through th
Slide 14: New corporate structure
Corporate governance New corporate structure Polyus Gold previous corporate structure Polyus current corporate structure (prior to 17 November 2015) Principal holding company Polyus Gold International Limited Issuer of the eurobonds BoD with Polyus Gold International Limited Independent Director
Slide 15: Establishment of the new Board
Corporate governance Establishment of the new Board The new Board A new composition of PJSC Polyus’ Board of Directors was formed and approved at the Company’s AGM on 5 April 2016 The new Board comprises of 9 members - 3 independent Directors, 3 representatives of the controlling shareholder and
Slide 16: Reporting standards: unchanged or improved
Corporate governance Reporting standards: unchanged or improved Annual Report Annual Report Published semiannually To be published quarterly starting with 3Q 2016 Financial Statements under IFRS standards, Financial Statements under IFRS standards, including MD&A including MD&A Published quarterly P
Slide 17: Buyback and the changes in the shareholder structure
Corporate governance Buyback and the changes in the shareholder structure Shareholder structure of PJSC Polyus before Current shareholder structure of PJSC Polyus the buyback (prior to 11 March 2016) (post 30 September 2016) Free float (4.69%) Free float (4.53%) Polyus-Invest (quasi-treasury) 8,633,
Slide 18: New dividend policy
Corporate governance New dividend policy New Dividend Policy Short Description Dividends on a semi-annual basis in an amount of 30% of the EBITDA if the net debt/adjusted EBITDA (last 12 months) ratio is lower than 2.5х Should the net debt/adjusted EBITDA (for the last 12 months) ratio increase
Slide 19: 3. Operational Performance
3. OPERATIONAL PERFORMANCE Ss POLYUS
Slide 20: Operational improvements since 2013
Operational performance Operational improvements since 2013 Total gold output increased 17% in 1H 2016 vs. 1H 2013 to 839 koz Sustained production increases achieved at key assets: Olimpiada, Blagodatnoye, Verninskoye, Kuranakh 1H 2016 results marked an 18% increase in ore processing volumes a
Slide 21: FY15 & 1H16 operational achievements
Operational performance FY15 & 1H16 operational achievements Continued operational improvements drove FY15 gold output 4% up y-o-y FY15 total gold output of 1,763 koz, up 4% y-o-y; the guidance range for FY16 at 1,870-1,900 koz The average recovery for the Group totaled 84.5% in FY15, 2.3 ppts up y-
Slide 22: Improving operational performance at Polyus' key assets
Operational performance Improving operational performance at Polyus’ key assets Recovery rate (%) and productivity per hour (t/h) Recovery rate (%) and productivity per hour (t/h) at Olimpiada at Blagodatnoye Worn out SAG mill to be replaced at Mill-2 Mill-4 operates above its design capacity 724 72
Slide 23: Total Operational Efficiency Program overview
Operational performance Total Operational Efficiency Program overview TOE objectives TOE initiatives Aimed to introduce quick-win measures that do not Equipment productivity improvement require significant investments: Application of new reagents Measures with proven economic effect Recovery
Slide 24: Kuranakh: turnaround example
Operational performance Kuranakh: turnaround example Kuranakh in FY13 MINING IMPROVEMENTS Kuranakh in 1H16 Optimisation of ore transportation The highest-cost, underperforming An average cost producer with a Logistic improvements asset within the portfolio without prospect to increase gold outpu
Slide 25: Strong growth profile
Operational performance Strong growth profile Gold production dynamics and guidance, FY 2008-2020, koz1 2,700 Guidance Guidance revised Guidance surpassed upward surpassed by 6% by 5% 2,000+ 1,900 1,800 1,710 1,763 1,652 1,650 1,696 1,870 1,569 1,760 1,381 1,630 1,222 1,231 1,277 1,580 2008 2009 201
Slide 26: Projects to facilitate production expansion
Operational performance Projects to facilitate production expansion Mid-term annual production target of 2.7 million ounces of gold expected to be achieved by 2020 The projects contributing to Company’s production target achievement include 7 brownfield projects (see description below) and 1 gre
Slide 27: Krasnoyarsk Business Unit (KBU) development
Operational performance Krasnoyarsk Business Unit (KBU) development 1 Reconfiguration of Mill-1 2 Extra BIOX capacity at Mill-2/3 Reconfiguration of the Mill-1 to process high-grade Olimpiada An additional BIOX circuit at Mill-2/3 complex will provide an Initiative Initiative ore, coupled with an in
Slide 28: Key initiatives at Verninskoye and Kuranakh
Operational performance Key initiatives at Verninskoye and Kuranakh 5 Verninskoye expansion Initiative Verninskoye Mill throughput capacity expansion to 3.0 mtpa via existing operations debottlenecking Background Possibility of expanding the mill’s capacity above the current 2.2 mtpa is driven by th
Slide 29: Construction of power supply infrastructure
Operational performance Construction of power supply infrastructure Razdolinskaya-Tayga 220 kV grid Peleduy-Mamakan 220 kV grid Project potential and goals Project potential and goals Construction of the grid is a prerequisite for: Solving the regional power shortage issues at the Bodaybo District
Slide 30: Natalka development
Operational performance Natalka development Review of the block model At the beginning of 2014, the Group initiated a thorough revision of the Natalka project, including a review of the resource block model to ensure the incorporation of all newly available information. The review of the block mod
Slide 31: 4. Financial Performance
4. FINANCIAL PERFORMANCE Ss POLYUS
Slide 32: Financial highlights
Financial performance Financial highlights Item 1H16 1H15 change y-o-y FY15 FY14 change y-o-y Gold production, koz 839 784 7% 1,763 1,696 4% Average realised gold price excl. SPPP, $/oz 1,223 1,202 2% 1,155 1,275 -9% Average realised gold price incl. SPPP, $/oz 1,277 1,257 2% 1,221 1,300 -6% Total c
Slide 33: TCC benchmarking
Financial performance TCC benchmarking Polyus’ evolution on the global TCC curves in FY13 - FY15 1,200 1,200 1,200 US$/oz FY15 FY14 FY13 1,000 1,000 1,000 800 800 800 600 600 600 Polyus in 2013 – 707 US$/oz 400 Polyus in 2014 – 585 US$/oz 400 400 Polyus in 2015 – 424 US$/oz Cumulative production, %
Slide 34: AISC benchmarking
Financial performance AISC benchmarking Global AISC curve in FY14-FY15 1,400 US$/oz FY15 FY14 1,200 1,000 Polyus in 2014 – 825 US$/oz 800 600 400 Polyus in 2015 – 610 US$/oz Cumulative production, % 200 0% 10% 20% 30% 40% 40% 50% 50% 60% 60% 70% 70% 80% 80% 90% 90% 100% 100% Highlights The lowest AI
Slide 35: EBITDA margin and cost performance
Financial performance EBITDA margin and cost performance EBITDA margin, TCC and AISC breakdown by mine, 1H16 TCC ($/oz) AISC ($/oz) EBITDA margin (%) 74% 1,151 63% 64% 61% 56% 705 604 550 491 30% 487 459 416 396 407 375 279 Olimpiada Blagodatnoye Titimukhta Verninskoye Alluvials* Kuranakh Krasnoyark
Slide 36: Debt maturity profile and liquidity position
Financial performance Debt maturity profile and liquidity position1 Polyus has very comfortable debt maturity profile and proactively manages upcoming redemptions The Company utilizes conservative approach to its liquidity position and maintains significant liquidity cushion (over $2 bn as of 30
Slide 37: Debt structure
Financial performance Debt structure1 Almost all of the Company’s debt is unsecured and denominated in US$ (rouble-denominated borrowings, that represented 15% of the Group’s total debt as of 30 June 2016, were converted to $US via cross-currency swaps) The debt portfolio is represented by $2.5
Slide 38: Net debt position
Financial performance Net debt position Historically, Polyus had low leverage (Net Debt / EBITDA below 0.5x). In 1H 2016 it increased to 2.3x1 (for PGIL) due to the share buyback partly financed with debt The Company is on a deleveraging path. Strong underlying performance accompanied by favorab
Slide 39: 5. Appendix
5. APPENDIX Ss POLYUS
Slide 40: Strategic Price Protection Programme overview
Appendix Strategic Price Protection Programme overview In March 2014, the Group initiated the SPPP, comprised of a series of zero cost Asian gold collars (“revenue stabiliser”) and gold forward contracts. The revenue stabiliser component represents a series of zero-cost Asian barrier collar agreem
Slide 41: Capex profile driven by development projects
Appendix Сapex profile driven by development projects Capex breakdown1, $ mln 1H16 1H15 change y-o-y FY15 Natalka 82 38 116% 111 Olimpiada 33 10 230% 39 Blagodatnoye 9 4 125% 13 Verninskoye 6 8 (25%) 21 Alluvials 11 3 267% 5 Titimukhta - - - 1 Kuranakh 12 2 500% 10 Exploration 3 1 200% 7 Other (incl
Slide 42: Production System: long-term performance growth trajectory
Appendix Production System: long-term performance growth trajectory Year-by-year performance xx Maturity and continuous improvement effect improvement, percent on the basis of Production System 8 6 4 We are here 3 Organization based on 2 Share best practices continuous 25-30 Management by “Go among
Slide 43: Gold price performance
Appendix Gold price performance Gold demonstrated strong performance in 2016YTD, while ETF holdings expanded by 39%1 Gold price may be further supported by rising uncertainty regarding interest rate increases, the consequences of Brexit, and global economic growth Gold Price Dynamics2 2,100 1,80
Slide 44: Gold market update: supply and demand highlights
Appendix Gold market update: supply and demand highlights Global gold supply and demand, t 4,731 4,685 4,482 4,482 4,482 4,448 4,459 4,358 4,213 4,282 4,271 4,218 2,336 2,307 2010 2011 2012 2013 2014 2015 1H 2016 Supply Demand Global gold demand by source, % 2015 1H 2016 Central banks Central banks
Slide 45: Gold market update: consumer demand
Appendix Gold market update: consumer demand Jewellery demand, t Jewellery demand in selected countries, t 350 In 1H 2016 India and China jewellery demand decreased by 29% y-o-y 2,679 300 2,486 2,397 396 2,130 250 367 368 291 267 1,397 1,074 200 975 241 1,060 150 753 925 216 215 807 181 180 188 179
Slide 46: Gold market update: investment demand
Appendix Gold market update: investment demand Gold official reserve holdings, September 2016 Changes in CB reserve holdings y-o-y, t 32,924 Gold reserves, Gold’s share of change Holder tonnes total reserves 2005-16 704 190 US 8,133 76% 0% 177 Germany 3,378 70% -1% 31,436 475 173 IMF 2,814 - -13% 36
Slide 47: Gold market update: supportive policy backdrop
Appendix Gold market update: supportive policy backdrop Limited upside for bond yields as a result of a global growth momentum weakness 5.0 4.0 3.0 2.0 31,436 1.0 - (1.0) Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Swiss Germany Japan Netherlands Gold vs. inflation-indexed US rates (inve
Slide 48: Disclaimer
Disclaimer The information contained herein has been prepared using information available to PJSC Polyus at the time of preparation of the presentation. External or other factors may have impacted on the business of Polyus and the content of this presentation, since its preparation. In addition all