Polus · RUS:PLZL

Polus — Polyus Gold International — H1 2015 Earnings Presentation

35 slides from Polus's earnings presentation, 2015

1. Slide 1: Polyus Gold International 1H 2015 Financial results

   Polyus Gold International 1H 2015 Financial results

2. Slide 2: 1H 2015 key highlights

   1H 2015 key highlights Delivering sustained growth Continuing production growth:  Total gold output reached 783 koz, up 5% y-o-y  Strong performance at all of the Group’s mines and significant improvement in recoveries at Olimpiada, Verninskoye and Titimukhta  FY15 production guidance confirmed a

3. Slide 3: Financial Results

   Financial Results 3

4. Slide 4: 1H15 financial highlights

   Financial Results 1H15 financial highlights 1H15 1H14 change y-o-y FY14 Gold sales, koz 799 751 6% 1,691 Average realised gold price excl. SPPP1, $/oz 1,202 1,296 (7%) 1,275 Average realised gold price incl. SPPP, $/oz 1,257 1,306 (4%) 1,300 Total cash cost (TCC), $/oz 436 662 (34%) 585 All-in-susta

5. Slide 5: Revenue analysis

   Financial Results Revenue analysis Sales by mine dynamics, koz Revenue breakdown by mine, 1H15, % Alluvials 366 358 8% Kuranakh 4% Verninskoye Olimpiada 192 187 10% 46% 79 69 66 67 63 34 33 36 Titimukhta 8% Olimpiada Blagodatnoye Titimukhta Verninskoye Alluvials Kuranakh 1H 2015 1H 2014 Blagodatnoye

6. Slide 6: Adjusted EBITDA performance

   Financial Results Adjusted EBITDA performance Adj. EBITDA and adj. EBITDA margin, 1H15 Adj. EBITDA bridge, $ mln 35 0 84% 90 % 78% 73% 589 177 80 % 68% 30 0 70 % 25 0 (6) 60 % 393 62 50% 38 20 0 50 % 40 % (75) 287 30% 15 0 30 % 10 0 162 20 % 33 50 10 % 43 58 Adj. Gold SPPP Volume Change Other Adj. 1

7. Slide 7: TCC & AISC performance

   Financial Results TCC & AISC performance TCC dynamics by mines, $/oz  The Group’s 1H15 TCC dropped by 34% y-o-y and reached $436/oz 1,275  All mines demonstrated a substantial cost 970 decrease, thanks to the strong operational 832 716 performance, optimisation measures and the 611 640 499 499 589

8. Slide 8: Polyus TCC curve

   Financial results Polyus TCC curve Polyus Gold TCC curve in 1H15 800 TCC, $/oz 700 85% of the Polyus output had TCC below $500/oz 600 Group’s average TCC in 1H15 amounted to $436/oz 500 400 Titimukhta Verninskoye Kuranakh Alluvials 300 200 Olimpiada Blagodatnoye 100 0 0 100 200 300 400 500 600 700 8

9. Slide 9: Polyus AISC curve

   Financial results Polyus AISC curve Polyus Gold AISC curve 1H15 1200 AISC, $/oz 1000 85% of the Polyus output had AISC below $700/oz Group’s average AISC in 1H15 amounted to $617/oz 800 600 Alluvials Kuranakh Verninskoye Titimukhta 400 Olimpiada Blagodatnoye 200 0 0 100 200 300 400 500 600 700 800 P

10. Slide 10: Cost of sales breakdown

    Financial Results Cost of sales breakdown The Group’s cash operating costs breakdown by item, 1H14/1H15, $ mln $540 mln 38 4 26 77 $353 mln 75 27 17 3 32 152 70 94 168 110 1H14 1H15 Labour Consumables and spares Tax on mining Fuel Power Outsourced mining services Other  1H15 cash operating costs dr

11. Slide 11: Cost of sales breakdown by business unit

    Financial Results Cost of sales breakdown Cost of sales breakdown by business unit, 1H15 Krasnoyarsk Verninskoye Kuranakh Alluvials Outsourced Outsourced Power mining mining Power Other 5% Other services services 4% Other Other 8% 2% 3% 11% 14% 13% Labour Labour Labour 23% Labour 29% 32% Fuel 13% Po

12. Slide 12: Free cash flow dynamics

    Financial Results Free cash flow dynamics 1H15 cash flow bridge, $ mln 515 (118) 4 1,328 1,217 (290) Dec 2014 Cash & CE Operating CF Investing CF Financing CF Forex Jun 2015 Cash & CE  As of 30 June 2015, the Group’s cash and cash equivalents reached $1,328 mln, up 9% y-o-y.  The Group generated r

13. Slide 13: Net working capital dynamics

    Financial Results Net working capital dynamics NWC as % of LTM revenue in FY13-1H151 200 45% 50% 43% 180 45% 160 40% 140 35% 27% 28% 120 30% 100 25% 80 166 156 20% 60 15% 98 102 40 10% 20 5% 0 0% FY13 1H14 FY14 1H15 NWC turnover, days NWC/Revenue  Net working capital/Revenue ratio remained stable a

14. Slide 14: Capex analysis

    Financial Results Capex analysis Capex breakdown, $ mln change 1H15 1H14 FY14 y-o-y Natalka 38 172 (78%) 310 Olimpiada 10 38 (74%) 56 Blagodatnoye 4 13 (69%) 17 Verninskoye 8 12 (33%) 38 Alluvials 3 15 (80%) 17 Titimukhta - 6 (100%) 6 Kuranakh 2 2 - 6 Exploration 1 5 (80%) 6 Other 30 24 25% 69 Total

15. Slide 15: Debt maturity profile

    Financial Results Debt maturity profile Debt repayment schedule, $ mln Total $2,097 mln 720 49 718 764 1328 136 10 11 38 86 Total liquidity 3Q15 4Q15 FY16 FY17 FY18 FY19 FY20+ position Cash & cash equivalents Bank deposits Unused committed credit lines Debt repayments  The Group’s liquidity positio

16. Slide 16: Debt and cash structure

    Financial Results Debt and cash structure Cash/debt breakdown by currency, as of 1H15, %  Net debt stood at $375 mln at the end of 1H15, up Debt by currency* Cash by currency 15% from $327 mln at the end of FY14 1% 12%  The net debt/adj. EBITDA ratio in 1H15 remained flat to the FY14 level of 0.3x

17. Slide 17: Credit ratings

    Financial Results Credit ratings Polyus credit rating vs. Russia sovereign rating Fitch Russia BBB Polyus Fitch BBB- Polyus S&P BB+ FY13 FY 14 FY15  April 2013. Polyus’ issues its Eurobond. Fitch rates it one notch below the sovereign and S&P – two notches below  April 2014. The first wave of Russ

18. Slide 18: Strategic price protection programme overview

    Financial Results Strategic price protection programme overview Gold forward contract structure  To mitigate the risk of lower gold prices, the Group 1,321 $/oz initiated the Strategic Price Protection Programme (SPPP), which is comprised of a series of zero-cost 77.5 77.5 77.5 77.5 Asian gold coll

19. Slide 19: Total Operational Efficiency Program

    Operational Performance Total Operational Efficiency Program TOE (Total Operational Efficiency) objectives TOE initiatives Aimed to introduce quick-win measures that do not require significant investments:  Equipment productivity improvement  Measures with proven economic effect  Application of n

20. Slide 20: TOE effect on EBITDA in 1H15

    Total Operational Efficiency Program 1H15 results 39 initiatives implemented and 56 initiatives in progress Mining Processing Repairs Power  Decrease in explosive  Decrease in gold  Optimisation of  Optimisation of electric materials costs at all production losses: duration of repairs: all power

21. Slide 21: Operating Results

    Operating Results

22. Slide 22: Operational Performance Key highlights

    Operational Performance Key highlights  Sustained growth in refined gold production: 783 koz produced in 1H15 (+5% y-o-y)  Significant y-o-y gold output increase at Titimukhta (+78%) and Verninskoye (+14%) Total gold output by mine, koz 1H15 1H14 y-o-y change FY14 Olimpiada1 362 354 2% 736 Blagoda

23. Slide 23: Health & Safety update

    Operational Performance Health & Safety update Lost Time Injury Frequency LTIFR FY09-1H15 Business Unit Rate1 FY13 FY14 1H15 0.27 Krasnoyarsk 0.08 0.00 0.25 0.10 Verninskoye 0.05 0.10 0.00 Alluvials 0.02 0.02 0.06 0.17 0.18 Kuranakh 0.28 0.14 0.13 Natalka 0.65 0.10 0.00 0.11 0.10 Polyus Construction

24. Slide 24: Olimpiada

    Operational Performance Olimpiada Operations 1H13 1H14 1H15 TCC 1H13-15, $/oz Rock moved, km³ 12,448 10,911 11,207 720 Strip ratio, m³/t 2.0 1.7 8.1 611 Ore mined, kt 5,370 5,278 1,327 Grade in ore mined, g/t 3.6 3.8 2.6 429 Ore processed, kt 3,796 4,199 4,762 Grade in ore processed, g/t 3.5 3.7 3.4

25. Slide 25: Blagodatnoye

    Operational Performance Blagodatnoye Operations 1H13 1H14 1H15 TCC 1H13-15, $/oz Rock moved, km³ 6,559 7,214 7,905 Strip ratio, m³/t 1.5 1.6 1.7 499 471 Ore mined, kt 3,503 3,702 3,823 2.0 1.9 352 Grade in ore mined, g/t 2.1 Ore processed, kt 3,374 3,623 3,527 Grade in ore processed, g/t 2.1 1.9 1.9

26. Slide 26: Titimukhta

    Operational Performance Titimukhta Operations 1H13 1H14 1H15 TCC 1H13-15, $/oz Rock moved, km³ 5,019 5,057 3,140 1,275 Strip ratio, m³/t 3.7 4.4 1.6 Ore mined, kt 1,243 1,060 1,614 894 Grade in ore mined, g/t 2.0 1.7 1.6 Ore processed, kt 1,208 892 840 499 Grade in ore processed, g/t 1.9 1.3 2.3 Rec

27. Slide 27: Verninskoye

    Operational Performance Verninskoye Operations 1H13 1H14 1H15 TCC 1H13-15, $/oz Rock moved, km³ 2,030 2,479 2,942 1,042 Strip ratio, m³/t 0.6 0.7 1.1 Ore mined, kt 2,151 2,396 2,067 716 Grade in ore mined, g/t 1.9 2.0 2.0 Ore processed, kt 653 1,067 1,059 462 Grade in ore processed, g/t 2.4 2.7 2.7

28. Slide 28: Alluvials

    Operational Performance Alluvials TCC 1H13-15, $/oz Operations 1H13 1H14 1H15 874 832 Sands washed, km³ 2,872 2,306 2,626 589 Average grade, g/t 0.71 0.68 0.54 Gold production, koz 51 36 33 1H13 1H14 1H15 Highlights  The major reason for the 8% y-o-y decrease in gold production at Alluvials in 1H15

29. Slide 29: Kuranakh

    Operational Performance Kuranakh Operations 1H13 1H14 1H15 TCC 1H13-15, $/oz Rock moved, km³ 2,030 6,220 6,758 1,138 Strip ratio, m³/t 0.6 2.6 2.9 970 Ore mined, kt 2,151 1,979 1,959 Grade in ore mined, g/t 1.9 1.3 1.3 640 Ore processed, kt 653 1,868 1,898 Grade in ore processed, g/t 2.4 1.3 1.3 Rec

30. Slide 30: Appendix

    Appendix

31. Slide 31: Balance sheet highlights

    Financial Statements Balance sheet highlights Assets, $ mln 1H15 FY14 change, % 1H14 Non-current assets 2,899 2,800 4% 4,035 Property, plant and equipment1 2,334 2,241 4% 3,442 Exploration and evaluation assets 115 110 5% 178 Derivative financial instruments and investments 148 172 (14%) 90 Inventor

32. Slide 32: Balance sheet highlights (cont.)

    Financial Statements Balance sheet highlights (cont.) Equity and Liabilities, $ mln 1H15 FY14 change, % 1H14 Share capital 1 1 - 1 Additional paid-in capital 2,153 2,152 - 2,152 Cash flow hedge revaluation reserve 114 108 6% (2) Translation reserve (2,009) (2,045) (2%) (493) Retained earnings 1,626

33. Slide 33: Profit and loss statement highlights

    Financial Statements Profit and loss statement highlights change $ mln 1H15 1H14 FY14 y-o-y Revenue from gold sales 1,005 981 2% 2,197 Other revenue 14 26 (46%) 42 Total revenue 1,019 1,007 1% 2,239 Cost of gold sales (406) (599) (32%) (1,174) Other cost of sales (12) (23) (48%) (33) Total cost of s

34. Slide 34: Cash flow highlights

    Financial Statements Cash flow highlights change $ mln 1H15 1H14 FY14 y-o-y Profit before income tax 659 321 105% 40 Amortisation and depreciation 62 107 (42%) 182 Gain/loss on derivative financial instruments and investments (145) (81) 79% 934 Other non-cash items 11 48 (77%) (115) Changes in worki

35. Slide 35: Disclaimer

    Disclaimer The information contained herein has been prepared using information available to Polyus Gold International Limited (“PGIL”) at the time of preparation of the presentation. External or other factors may have impacted on the business of PGIL and the content of this presentation, since its

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