Polus · RUS:PLZL

Polus — Polyus — Q3 2019 Earnings Presentation

28 slides from Polus's earnings presentation, November 2019

  1. Slide 1: 3Q 2019 Financial Results

    3Q 2019 FINANCIAL RESULTS NOVEMBER 2019

  2. Slide 2: Key drivers of 3Q 2019 results

     Growth was mainly driven by a seasonal increase of gold output from the alluvial operations and higher gold production at Kuranakh, Natalka and Verninskoye.  Increase reflects higher realized gold price and higher gold sold volumes.  TCC increase was mainly driven by higher seasonal output at th

  3. Slide 3: 2019 TCC and capex guidance

     Polyus expects the group’s TCC to remain in a range of $375-$425/oz Below $425/oz $425/oz Range $375/oz $376/oz Initial guidance for 2019 Revised guidance 9M 2019 TCC for 2019  New capex guidance mainly reflects capex roll-over from 2019 to 2020, related to several infrastructure development proj

  4. Slide 4: Key financial and operating results

    Gold production (doré) (koz) 770 706 9% 699 10% 2,132 1,865 14% Gold production (refined) (koz) 753 684 10% 691 9% 2,037 1,800 13% Average realised refined gold price excl. SPPP ($/oz) 1,482 1,314 13% 1,209 23% 1,372 1,275 8% Average realised refined gold price incl. SPPP) ($/oz) 1,482 1,314 13% 1,2

  5. Slide 5: 1. Overview

    1. OVERVIEW

  6. Slide 6: Gold sales and production by asset

    Alluvials 2Q 2019 11% 400 348 3Q 2019 319 Kuranakh 350 Olimpiada 300 250 9% 200 43% 109 96 87 101 150 61 64 81 68 100 50 50 30 Verninskoye 9% 0 Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Natalka 14% Blagodatnoye 13%  In the third quarter, the group’s revenue from gold sales was $

  7. Slide 7: TCC and AISC by asset and trend

    2Q 2019 2Q 2019 900 120 0.0 1,084 3Q 2019 783 768 3Q 2019 800 100 0.0 914 700 736 693 524 505 662 658 644 800 .0 600 438 420 582 607 592 395 485 519 500 362 377 372 600 .0 297 317 400 400 .0 300 200 200 .0 100 - 0 Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Olimpiada Blagodatnoye V

  8. Slide 8: TCC increased 17% q-o-q to $412/oz

    800 600 $412/oz 400 ($505/oz) Kuranakh Olimpiada Natalka Blagodatnoye Alluvials 200 Verninskoye ($768/oz) ($317/oz) ($377/oz) ($420/oz) ($438/oz) 0 0 100 200 300 400 500 600 700 TCC, $/oz  Group’s TCC increased 17% q-o-q to $412/oz due to higher 1,800 seasonal output at the structurally higher cost

  9. Slide 9: AISC increased to $628/oz

    800 $628/oz 600 400 Olimpiada Verninskoye Blagodatnoye Natalka Kuranakh Alluvials 200 ($592/oz) ($644/oz) ($693/oz) ($914/oz) ($519/oz) ($607/oz) 0 0 100 200 300 400 500 600 700 AISC, $/oz  Group’s AISC increased to $628/oz, up 7% compared to the 2,000 second quarter, trending in line with TCC. 1,8

  10. Slide 10: Cost structure: consumables, labour, MET, fuel, power

    Power Other Other 5% 8% Labour Power 10% Labour 32% 5% 30% Fuel 11% Fuel 11% Tax on mining ax on mining 16% Consumables and spares 16% 28% Consumables and spares 28%  Consumables and spares expenses increased 18% q-o-q due to seasonally higher production volumes at Alluvials and maintenance works a

  11. Slide 11: Adjusted EBITDA of $705 mln

    500 71% 71% 69% 70% 450 52 61% 60% 60% 400 123 (16) (26) (32) 50% 350 323 300 43% 40% 250 30% 200 20% 705 150 604 98 92 10% 100 65 61 53 0 50 - (10%) Olimpiada Verninskoye Blagodatnoye Natalka Kuranakh Alluvials EBITDA Gold price Sales COGS Production Other 2 EBITDA 2Q2019 volume volume 1 structure

  12. Slide 12: Operating cash flow of $603 mln

    2,0 00 603 1,8 00 1,6 00 1,4 00 (201) (6) 1,538 1,2 00 1,0 00 (107) 800 600 400 1,249 200 - Cash & CE Operating CF Investing CF Financing CF FX effect Cash & CE 30-Jun-19 30-Sep-19  In 3Q 2019, the group generated operational cash flow of $603 mln. RUB 8%  Cash outflow on investing activities incr

  13. Slide 13: Working capital outflow of $33 mln

    17 13 2 7 44 (20) (8) (15) 950 908 Net WC 2Q2019 Inventories Deferred Receivables Payables Interest payables Income tax, net Payables for PPE Translation + non- Net WC 3Q2019 expenditures OCF items  Polyus registered a working capital outflow of $33 mln in the reporting period.  This figure primar

  14. Slide 14: Capex of $157 mln

    Olimpiada 39 35 11% 99 146 -32% Blagodatnoe 9 12 -25% 27 57 -53% Verninskoye 11 15 -27% 37 30 23% Alluvials 5 6 -17% 16 18 -11% Kuranakh 10 10 0% 24 33 -27% Natalka 37 48 -23% 108 186 -42% Sukhoi Log 7 8 -13% 21 15 40% IT capex 13 9 44% 31 26 19% Other 26 11 N.A. 48 36 33% CAPEX 157 154 2% 410 547 -

  15. Slide 15: Net debt and maturity profile

     By the end of 3Q 2019, net debt 1,580 1,203 1  decreased 9% q-o-q to $3,317 mln, 58 697  from $3,639 mln as of the end of 2Q 1 451 615 472 18 1 2019, reflecting strong FCF generation  6 during the period. 2019 2020 2021 2022 2023 2024  ND/EBITDA ratio went down to 1.5x, from 1.7x as of the end

  16. Slide 16: Debt structure

    As of 30 June 2019 As of 30 September 2019 Eurobonds Eurobonds 49% 49% Bank loans Bank loans 42% 42% $4,888 mln $4,855 mln Convertibles RUB bonds Convertibles RUB bonds 4% 4% 5% 5% 58% 42% 58% 42% Public debt Private debt Public debt Private debt Floating rate Floating rate 3% 3% $4,888 mln $4,855 m

  17. Slide 17: Net debt/adjusted EBITDA decreased to 1.5x

    1.9x 1.8x 1.8x 1.8x 1.7x 1.7x 1.6x 1.5x 1.5x 3,639 3,151 3,208 3,317 3,077 3,079 3,029 3,011 3,086 1,561 1,538 1,121 1,204 1,095 1,249 908 1,000 896 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19 30-Sep-19 Net Debt, $ mln Cash position, $ mln Net Debt/adj. EBITDA, x

  18. Slide 18: 2. Natalka Update

    2. NATALKA UPDATE

  19. Slide 19: Natalka recovery initiatives and throughput

    71.7% 71.4% 71.6% 4,191 4,534 62.9% 65.5% 65.1% 3,960 55.1% 37.9% 2,564 1,998 1,436 942 663 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19  Currently, the Company is implementing a set of 4,5 00 1,533 180 0 initiatives, aimed at gradual recovery 1,43

  20. Slide 20: Natalka mill improvement initiatives

    • Introduction of the fourth stage of gravity concentration • Expansion of the first stage of gravity concentration • Commissioning of an additional CIC column • Transition to new milling balls at SAG and ball mills • Installation of enhanced heat exchangers at ball and sag mills’ engines • Installa

  21. Slide 21: Slide 21

  22. Slide 22: Rock moved, ore mined and processed by asset

     Increase reflects higher rock moved volumes across all assets  Increase in ore mined volumes was driven by higher ore volumes mined at Blagodatnoye, Verninskoye and Natalka.  Higher ore processed volumes mainly reflect the seasonal ramp up of heap leaching operations at Kuranakh.  Decrease in r

  23. Slide 23: Olimpiada operating results

    3Q’19 2Q’19 Q-o-Q 1Q’19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Rock moved, kt 35,508 33,361 6% 32,232 35,176 33,234 7% 101,101 91,432 11% incl. stripping, kt 30,465 27,692 10% 27,065 30,019 27,349 11% 85,222 78,430 9% Stripping ratio, t/t 6.0 4.9 22% 5.2 5.8 4.6 30% 5.4 6.0 -10% Ore mined, kt 5,043 5,6

  24. Slide 24: Blagodatnoye operating results

    3Q’19 2Q’19 Q-o-Q 1Q’19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Total rock moved, kt 17,691 16,334 8% 17,050 18,151 20,231 -13% 51,075 59,256 -14% 11% including stripping, kt 13,299 13,754 -3% 14,835 16,178 18,719 -29% 41,888 54,058 -23% Stripping ratio, t/t 3.0 5.3 -43% 6.7 8.2 12.4 -76% 4.6 10.4 -56%

  25. Slide 25: Verninskoye operating results

    3Q’19 2Q’19 Q-o-Q 1Q’19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Total rock moved, kt 6,682 6,263 7% 5,649 4,174 4,726 41% 18,594 15,167 23% 4% including stripping, kt 5,426 5,323 2% 4,671 3,525 3,971 37% 15,420 12,827 20% Stripping ratio, t/t 4.3 5.7 -25% 4.8 5.4 5.3 -19% 4.9 5.5 -11% Ore mined, kt 1,25

  26. Slide 26: Kuranakh operating results

    3Q’19 2Q’19 Q-o-Q 1Q’19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Total rock moved, kt 8,083 7,965 1% 7,392 7,739 8,477 -5% 23,440 24,209 -3% including stripping, kt 5,831 5,685 3% 5,766 6,051 5,955 -2% 17,282 18,065 -4% Stripping ratio, t/t 2.6 2.5 4% 3.5 3.6 2.4 8% 2.8 2.9 -3% -4% Ore mined, kt 2,252 2,

  27. Slide 27: Alluvials operating results

    3Q’19 2Q'19 Q-o-Q 1Q'19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Sands washed, 000 m³ 5,115 2,259 126% - 1,258 4,457 15% 7,374 6,431 15% -2% Average grade, g/m³ 0.52 0.55 -5% - 0.69 0.60 -13% 0.53 0.58 -9% Gold in slime, koz 84.9 39.6 114% - 28.0 86.3 -2% 124.5 119.7 4% Refined gold output, koz 81.4 29.6

  28. Slide 28: Natalka operating results

    3Q’19 2Q’19 Q-o-Q 1Q’19 4Q’18 3Q’18 Y-o-Y 9M’19 9M’18 Y-o-Y Total rock moved, kt 18,904 16,809 12% 15,343 15,707 13,088 44% 51,056 29,590 73% 13% including stripping, kt 14,370 12,618 14% 11,383 13,144 11,090 30% 38,371 25,493 51% Stripping ratio, t/t 3.2 3.0 7% 2.9 5.1 5.5 -42% 3.0 6.2 -52% 420 Ore

Polyus — Q3 2019 Earnings Presentation on 6ix