Polus · RUS:PLZL
Polus — Polyus — BMO Nesbitt Burns 2005 Global Resources Conference
29 slides from Polus's conference presentation, Mar 9, 2005
Slide 1: Gold Mining Company Polyus
GOLD MINING COMPANY POLYUS Mr. Eugene Ivanov President and Chief Executive Officer BMO NESBITT BURNS 2005 Global Resources Conference
Slide 2: Company at a Glance
COMPANY AT A GLANCE 9 Unparalleled exposure to Russian gold 9 World class reserve base Ö 18.9 mln oz reserves plus an additional 38.3 mln oz resources 9 3 operating mines and 9 development / exploration projects: Ö presence in 4 regions, employing 9 800 people Ö 2004 production – 1 087 k oz Ö 2004 e
Slide 3: Why Russia? Growing Russian gold production
WHY RUSSIA? 9 Growing Russian gold production outpaces rest of the world +7% vs. (1)% CAGR G R 7% C A 5.4 5.5 5.4 4.9 4.6 4.1 3.7 1998 1999 2000 2001 2002 2003 2004 mln oz Source: Russian Union of Gold Miners, GFMS
Slide 4: Why Russia? Hard rock gold production is a driving force
WHY RUSSIA? 9 Hard rock gold production is a driving force G R 8% C A 52% 53% 50% 43% 39% 2000 2001 2002 2003 2004 Share of hard rock gold in total production Source: Troika Dialog
Slide 5: Why Russia? Sixth place in world gold output
WHY RUSSIA? 9 Sixth place in world gold output sets the stage for upside South Africa 11.9 Australia 8.8 USA 8.7 China 6.8 e Peru 5.5 Upsid Russia 5.4 Canada 4.2 Indonesia 3.6 Gold production, mln oz Source: Russian Union of Gold Miners, GFMS, Troika Dialog
Slide 6: Why Russia? World's second largest reserve base
WHY RUSSIA? 9 World’s second largest reserve base South Africa 1 157 Russia 482 Australia 193 China 132 Peru 132 USA 119 Canada 113 Indonesia 90 Reserve base, mln oz Source: GFMS, U.S. Geological Survey
Slide 7: Why Russia? Reserve base remains underdeveloped
WHY RUSSIA? 9 Reserve base remains significantly underdeveloped South Africa 97 Russia 89 Canada 27 Indonesia 25 Peru 24 Australia 22 China 19 USA 14 Mine life, years Source: GFMS, U.S. Geological Survey
Slide 8: Here Comes Polyus! Leader of Russian gold mining
HERE COMES POLYUS! 9 Undisputable leader of Russian gold mining since 2001 Polyus 1.1 Peter Hambro 0.2 Highland Gold 0.2 Kinross Gold 0.1 Bema Gold 0.1 High River Gold 0.1 2004 production in Russia, mln oz 2004 production in the rest of the world, mln oz Source: Company reports, BMO Nesbitt Burns, T
Slide 9: Here Comes Polyus! World class reserve base
HERE COMES POLYUS! 9 World class reserve base Polyus 18.9 Highland Gold 7.7 Peter Hambro 2.2 High River Gold 1.2 Bema Gold 0.4 Kinross Gold 0.3 2003 - 2004 reserves in Russia, mln oz 2003 - 2004 reserves in the rest of the world, mln oz Source: Company reports
Slide 10: Here Comes Polyus! Low total cash costs
HERE COMES POLYUS! 9 Attractive low total cash costs among Russian producers 286 219 238 175 192 132 Peter Polyus Bema Highland High River Kinross Hambro Gold Gold Gold Gold 2004 total cash costs, US$ per oz Source: Company reports, BMO Nesbitt Burns
Slide 11: Location of the Assets
LOCATION OF THE ASSETS Natalka, Magadan Bamskoe, Amur Alluvials and Zapadnoe, Olimpiada, Irkutsk Krasnoyarsk HQ, Moscow
Slide 12: Corporate History
CORPORATE HISTORY 2002 2003 2004 Lenzoloto Polyus Polyus Group Matrosov Mine 9 October 2002 – MMC Norilsk Nickel (NN) acquired 100% of Polyus for US$226 mln 9 August 2003 – NN acquired 45% of Matrosov Mine for US$36 mln 9 September 2003 – NN acquired 50.5% of Lenzoloto for US$174 mln 9 April 2004 –
Slide 13: Asset Portfolio
ASSET PORTFOLIO Exploration Pre- Feasibility Development Production feasibility Amur region Bamskoe Krasnoyarsk region Olimpiada Tyrada Olenii Blagodatnoe Titimukhta Panimba Irkutsk region Zapadnoe Pervenetz & Verninskoe Chertovo Korito Mukodek Magadan region Natalka
Slide 14: Krasnoyarsk – Olimpiada
KRASNOYARSK – OLIMPIADA 9 Olimpiada reserves at 10.8 mln oz at 4.3 g/t are augmented by satellites – Tyrada and Olenii deposits 9 Olimpiada open pit capacity is 1.7 mtpa of oxide ore and 2.3 mtpa of sulphide ore 9 2 processing facilities are in place: Ö plant #1 with 1.5 mtpa capacity to treat oxide
Slide 15: Krasnoyarsk – Production
KRASNOYARSK – PRODUCTION 9 Gradual increase in total cash costs due to depletion of oxide ore and a shift to sulphide ore 215 209 211 192 160 165 130 95 1 167 1 051 838 884 814 796 818 809 2003 2004 2005F 2006F 2007F 2008F 2009F 2010F Production, k oz Total cash costs, US$ per oz
Slide 16: Irkutsk – Hard Rock Gold
IRKUTSK – HARD ROCK GOLD 9 Consolidates hard rock gold mining companies and owns key infrastructure 9 Zapadnoe mine with 0.4 mln oz in reserves at 3.3 g/t will proceed from pilot run mode to industrial production by 2006 Ö Capacity of 0.8 mtpa of Sukhoi Log-type ore 9 Acquired Pervenetz and Verninsk
Slide 17: Irkutsk – Hard Rock Gold Production
IRKUTSK – HARD ROCK GOLD PRODUCTION 9 Strong growth with new projects coming into production in 2007 332 325 259 255 191 191 194 179 452 216 216 248 4 12 48 32 2003 2004 2005F 2006F 2007F 2008F 2009F 2010F Production, k oz Total cash costs, US$ per oz
Slide 18: Irkutsk – Alluvials
IRKUTSK – ALLUVIALS 9 Lenzoloto – 2nd largest Russian gold company on a stand-alone basis 9 9 Lenzoloto subsidiaries operate 48 placer deposits and develop / explore another 74 deposits 9 Alluvial reserves stand at 2.2 mln oz Ö Estimated mine life > 15 years 9 Three alluvial gold mining methods: Ö o
Slide 19: Irkutsk – Alluvials Production
IRKUTSK – ALLUVIALS PRODUCTION 9 Stable production and total cash cost profile 326 316 316 316 316 316 306 287 289 289 289 289 289 247 265 280 2003 2004 2005F 2006F 2007F 2008F 2009F 2010F Production, k oz Total cash costs, US$ per oz
Slide 20: Magadan – Natalka
MAGADAN – NATALKA 9 Natalka deposit with 4.0 mln oz in reserves at 4.2 g/t will transform into 18.1 in reserves at 2.0 g/t by 2007 9 2005 – 2007 exploration budget of US$65 mln Ö 108 km of diamond drilling, 20 km already completed 9 Pre-feasibility study will chose between 23 or 30 mtpa processing p
Slide 21: Magadan – Natalka – Orebody
MAGADAN – NATALKA – OREBODY Plan under 0.4 g/t cut-off grade Plan under 0.6 g/t cut-off grade Plan under 0.8 g/t cut-off grade Plan under 1.0 g/t cut-off grade
Slide 22: 2004 Corporate Results
2004 CORPORATE RESULTS 9 Corporate center set up as a strategic architect 9 Raised US$500 mln of equity capital 9 Financial statements for 2003 prepared in accordance with IAS 9 Stakes in Lenzoloto and Matrosov Mine consolidated 9 Hard rock gold company set up in Irkutsk region 9 Chertovo Korito dep
Slide 23: 2004 Financial Results (Estimated)
2004 FINANCIAL RESULTS (ESTIMATED) 9 Gold sold – 1.1 mln oz 9 Realized gold price – US$407 per oz 9 Sales – US$446 mln 9 EBITDA – US$199 mln 9 Cash Flow from Operations – US$113 mln 9 Net Income – US$154 mln 9 Ending cash balance – US$370 mln
Slide 24: 2005 Outlook
2005 OUTLOOK 9 Planned production of 1 093 k oz 9 Total cash costs – US$199 per oz 9 Further ownership consolidation in subsidiaries 9 International independent audit of Olimpiada, Blagodatnoe, Titimukhta, Zapadnoe and Natalka deposits in accordance with JORC by SRK Consulting 9 Advanced exploration
Slide 25: 2005 – 2010 Action Plan
2005 – 2010 ACTION PLAN 2005 2006 2007 2008 2009 2010 Development of Olenii open pit Olimpiada Plant #3 start-up Development of Titimikhta open pit Reconstruction of Zapadnoe plant Construction of Verninskoe and Pervenetz plant Advanced exploration of Natalka deposit Construction of Natalka plant Ex
Slide 26: Strong Organic Growth Profile
STRONG ORGANIC GROWTH PROFILE… 9 Explosive growth with stable low total cash costs 219 221 207 213 207 198 175 144 3.3 2.5 1.9 1.1 1.3 1.1 1.1 1.2 2003 2004 2005F 2006F 2007F 2008F 2009F 2010F Production, k oz Total cash costs, US$ per oz
Slide 27: Coupled by Advanced Exploration
… COUPLED BY ADVANCED EXPLORATION… 9 2005 – 2010 est. additions to reserves, mln oz Bamskoe Chertovo 10.6 Titimukhta Korito Verninskoe Natalka 4.4 Mukodek Panimba New projects 33.6 15.7 Blagodatnoe 2.9 2005 - 2006 2006 - 2007 2007 - 2008 2009 - 2010 Growth in 2005 – 2010 Source: Polyus estimates, wi
Slide 28: And Magnified by Active M&A
… AND MAGNIFIED BY ACTIVE M&A 9 September 2004 – acquired Panimba exploration area for US$76,700 with 1.6 mln oz of resources 9 December 2004 – acquired Chertovo Korito deposit for US$35.1 mln with 3.7 mln oz of resources 9 January 2005 – acquired Mukodek exploration area for US$205,000 with 579 k o
Slide 29: Solid Case for Polyus
SOLID CASE FOR POLYUS 9 Unparalleled exposure to Russian gold industry 9 Key position of a leading Russian gold miner to capitalize on growth potential of Russian gold 9 Existing assets with superior growth profile 9 Solid cash flows 9 Strong cash balance and debt-free balance sheet 9 No hedging pol
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