Slide 1: Corporate Presentation September 2019
POLYUS ._ * ¥ CORPORATE PRESENTATION SEPTEMBER 2019
Slide 2: 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 relevant in
Slide 3: 1. Overview
1. OVERVIEW ye POLYUS
Slide 4: Asset base and operating performance
Natalka Alluvials 5% 6% 6 Kuranakh 5 8% 4 6 Verninskoye Olimpiada 3 9% 1 54% 2 1 7 4 Blagodatnoye 2 8 17% 3 5 1. Olimpiada 4. Kuranakh 7. SUKHOI LOG 2. Blagodatnoye 5. Alluvials 8. Chertovo Koryto 3. Verninskoye 6. Natalka 0 50, 000 100 ,000 150 ,000 200 ,000 250 ,000 300 ,000 350 ,000 60. 0% 65. 0%
Slide 5: Investment highlights
Adherence to ESG principles Sustainalytics score: 71/”Outperformer” Focus on shareholder returns 86% TSR since SPO in 2017 Absolute cost leadership TCC @ 348/oz in 2018 Value accretive growth 48% growth in gold output since 2013
Slide 6: 2. Sustainability, Health & Safety
2. SUSTAINABILITY, HEALTH & SAFETY
Slide 7: Health and safety performance
Automated HSE data and processes management system launched across Polyus’ operations Polyus’ integrated HSE management system certified in accordance with ISO 14001 and 45001. Polyus became the first Russian company certified in accordance with ISO 45001. Waste management: plastic waste crush
Slide 8: ESG ratings
Score: “C”(medium) obtained in July 2018 Score: 71, upgraded from “Average performer” to “Outperformer” in November 2018. #2 within Russian Metals & Mining universe #2 in the 2018 WWF and UN Russian Metals & Mining Companies Environmental Transparency Rating Polyus is a constituent of MSCI EM ESG Le
Slide 9: ESG ratings versus peers and priorities
• 3.9 • BBB • 45 71 C 2 F Yes • Constituent • Constituent • Not in index • 4.4 • A • 67 85 C+ 4 C Yes • Constituent • Constituent • Constituent • 3.1 • B • 36 69 C- 9 F Yes • Constituent • Not in index • Not in index • 3.2 • BB • No score 70 N/A 10 F Yes • Constituent • Not in index • Not in index •
Slide 10: Governance and shareholder structure
4 Independent Directors (incl. Chairman) out of 9 All 4 committees headed by Independent Directors Independent Directors professional experience covers: Natural Resources (Metals & Mining; Oil & Gas) Investments and Business Development Capital Markets Top management Treasury shares (via
Slide 11: 11
11
Slide 12: Operating results by mine
Increase mainly reflects higher rock moved volumes at Olimpiada and Natalka. Increase in ore mined volumes was primarily driven by higher ore volumes mined at Olimpiada, Blagodatnoye, Kuranakh and Natalka. Higher ore processed volumes were mainly driven by the start of heap leaching operations
Slide 13: Financial results and EBITDA bridge
Increase reflects higher volumes of refined gold output and an increase in flotation concentrate sales. TCC decrease was mainly driven by an improved performance at Olimpiada with a higher average grade in ore processed and higher sales of antimony-rich flotation concentrate. Capital expenditu
Slide 14: aati es
aati es » POLYUS
Slide 15: Reserves and grade versus peers
3.8 4.0 140 118 3.0 2.7 2.5 120 2.0 2.0 1.7 1.4 100 1.2 1.2 1.0 0.7 80 75 0.0 64 60 54 48 -1.0 44 -2.0 40 26 24 21 -3.0 20 -4.0 0 -5.0 2 Newmont Barrick Polyus Newcrest Gold Fields Anglogold Kinross Polymetal Agnico Goldcorp Eagle Open pit Underground Average grade, g/t reserves, moz reserves, moz 2
Slide 16: Declining reserves of major gold companies
Grasberg 1,964 Grasberg 2,416 Newmont Nevada 1,735 Barrick Nevada 2,100 Yanacocha 1,462 Polyus Krasnoyarsk KBU (Olimpiada, Blagodatnoye) 1,738 * Barrick Nevada 1,239 Newmont Nevada 1,697 Veladero 1,121 Olimpiada 1,322 Polyus Krasnoyarsk Polyus Krasnoyarsk… (Olimpiada, Blagodatnoye, Titimukhta) 933 L
Slide 17: Gold production versus peers
Guidance range Barrick 7.2 Newmont 5.1 Newmont GoldCorp 7.4 7.6 Newmont 5.1 Barrick 4.5 Barrick3 5.1 5.6 Anglogold 4.1 Anglogold 3.4 Anglogold 3.25 3.45 Goldcorp 2.7 Kinross 2.5 Polyus 2.8 Kinross 2.6 Polyus 2.4 Kinross 2.5 2 Newcrest 2.4 Newcrest 2.4 Newcrest 2.4 2.6 Gold Fields 2.0 Goldcorp 2.29 G
Slide 18: Production growth and guidance track record
Platform for the next ca.2,800 ca. 2,800 development stage of the Company 2,440 First gold at Sukhoi Log expected around 2026 1,652 2013 … 2018 2019 2020 … LT Guidance Initial guidance revised 6% Guidance Guidance surpassed by 6% upward in October 2016; Initial surpassed by 3% surpassed by 2% gu
Slide 19: Operating KPIs by mine
1,302 1,328 1,316 1,017 1,075 1,091 1,095 1,4 50 964 110 .0 1,1 00 939 1,213 1,218 1,241 110 .0 1,3 50 1,2 50 100 .0 1,0 00 853 855 100 .0 1,122 900 90. 0 90. 0 1,066 800 1,1 50 88.2 80. 0 81.0 80.8 82.1 700 88.0 87.9 88.0 87.8 87.5 87.5 87.5 80. 0 1,0 50 80.1 80.7 79.3 600 75.9 70. 0 73.6 70. 0 500
Slide 20: Completed projects, ongoing projects
Completed projects Ongoing projects
Slide 21: Brownfield projects IRR versus capex
Focus on low-risk high-return projects with expected IRR of over 20% under the following assumptions: Gold price: $1,050/oz; 100 FX: 60 RUB/USD Expansion projects must meet both capital 80 and cost efficiency criteria Completed projects More than 150 projects implemented since Ongoing proj
Slide 22: Olimpiada debottlenecking project
Capex-light debottlenecking of crushing, grinding, flotation and hydrometallurgy circuits. Feasibility study has been completed. Equipment procurement is underway. Installation of an additional crushing circuit Installation of an additional Installation of an additional comprising a ball
Slide 23: Blagodatnoye BIO-4 and expansion
Recently commissioned BIO-4 unit demonstrated a step up in operational efficiency compared to BIO 1,2,3 units, including higher recovery, throughput and decreased reagent consumption. Polyus is currently evaluating possible options for further BIO modernization at existing units and construction
Slide 24: Chertovo Koryto pre-feasibility study
N Chertovo Koryto Perevoz Marakan Zapadnoye Verninskoye Kropotkin Artemovskiy Alluvial Deposit Mineral Deposit Regional Center BODAYBO Town Settlement Mamakan Paved Road 25 0 25 50 to Taksimo Km In late 2018 Polyus entered the Pre-feasibility Study stage, which will include: Open pit modelling a
Slide 25: 2019 capex guidance revision
Capex roll over from 2018, related to a recalibration of brownfield projects Other $140mln KBU $235mln Delayed construction of some infrastructure projects at Natalka Sukhoi Log Additional spending on new mid-sized projects (in PFS $35mln and FS stages) and efficiency improvement initiatives A
Slide 26: Capex/EBITDA and EBITDA margin versus peers
Barrick 1,407 Polyus 64% Goldcorp 1,227 Polymetal 42% Newmont 1,112 Barrick 41% Agnico Eagle 1,060 Newcrest 40% Kinross 985 Goldcorp 40% Goldfields 820 Goldfields 38% Polyus 736 Agnico Eagle 35% Anglogold 734 Kinross 32% Newcrest 642 Anglogold 32% Polymetal 370 Newmont 31% 100% EBITDA margin, % Poly
Slide 27: IT and automation projects
42 Other projects 26 6 5 5 Other IT projects Maintenance and repair management 5 platform 4 Data transmission networks Manufacturing execution system (MES) / 5 Laboratory information management Equipment and software for 26 system (LIMS) workstations ERP 12 IT infrastructure development 2019F 2019F
Slide 28: Exploration drilling programs
83 km (exploration, hydrogeology and Northwest geotechnical Central Southeast Resource and Reserve upgrade: 2020. 50 km (in fill drilling - Vostochniy, Promezhutochniy, deep levels, flanks). Resource and Reserve upgrade: 2020 Geology exploration drills Grid densification (50x100 / 50x200 gri
Slide 29: es) POLYUS |
« “as es) POLYUS |
Slide 30: Natalka ramp-up: recovery and throughput
71.7% 71.4% 4,191 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 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 4,5 00 1,430 160 0 1,306 1,149 4,0 00 1,127 140 0 3,5 00 933 2,711 120 0 3,0 00 828 2,444 100 0 1,893 2,5 00 563 1,623 1,468 800 1,368 2
Slide 31: Natalka recovery improvements
In 2Q 2019, Polyus introduced Polyus approved the roll out of two additional concentrators at flash flotation technology at the first stage of gravity the Natalka Mill and anticipates separation and commissioned the commissioning of flash the fourth stage of gravity flotation units in 2020. conc
Slide 32: Natalka infrastructure updates
Polyus The Grid is supposed to link commissioned the Ust-Srednekanskaya HPP with assay laboratory Natalka, increasing available in 1Q 2019 power capacity Grid length: 120 km Capex: RUB 7.9 bln (state subsidy) Completion by the end of 2019 Polyus proceeds Tanks installation with dam is
Slide 33: 6. Sukhoi Log
Slide 34: Sukhoi Log location and proximity to assets
Chertovo Koryto, Vysochayshy, 100 km 30 km Zapadnoye Close proximity to other Polyus assets Sukhoi Log creates opportunities for: Optimisation of processing facilities and potential economies of scale Verninskoye, 6 km Utilisation of existing River Port, 850 km infrastructure (including the Pe
Slide 35: Sukhoi Log drilling campaign
Drilled to date Geotechnical 10.5 km 1st stage completed (5.1 km) Hydrogeology 7.5 km 1st stage completed (4.7 km) Exploration 204 km In-fill drilling, Drilled flanks samples 450 400 In order to further update and upgrade the 350 estimation of Indicated Mineral Resources 300 at Sukhoi Log, t
Slide 36: Sukhoi Log scoping study processing schemes
Run-of-mine Crushing Milling (2 lines x 15 mtpa) Gold Extraction SAG mill Ball mill Gravity Flotation Cyanidation Carbon-in-leach Smelting Electrowinning pebble crusher (SABC) Scoping study resulted in 3 potential processing schemes, which will be The estimates are at the scoping study level of
Slide 37: Sukhoi Log versus global gold projects
106 98 South Deep 66 Sukhoi 63 Log 63 45 41 35 33 28 Lihir 52 25 20 Pebble KSM Sukhoi Donlin Reko Snowfield Cerro La Caspiche Frieda Mponeng 50 Log Diq Casale Colosa River Muruntau 48 Olimpiada 42 Klerksdorp 40 2.1 2.2 ERPM 39 Snowfield 35 0.8 0.3 0.4 0.2 0.5 0.5 0.5 0.2 Cadia East 35 Pebble KSM Suk
Slide 38: Global gold production outlook
3,478 3,456 3,425 3,411 3,326 3,351 3,354 3,287 3,207 3,138 3,075 2,942 2,848 2,761 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Operating & Historic Commissioning stage Construction stage Assessment stage (Scoping Study, Feasibility & Pre-Feasibility) In 2020’s, analysts fo
Slide 39: Sukhoi Log pre-feasibility study progress
Polyus continues to work on the Pre-Feasibility Study jointly with international engineering consultants. Development of geological, geophysical, hydrometeorological surveys were completed. Trade-off studies on throughput capacity and comminution circuits design are being finalized. Mineral re
Slide 40: 7. Absolute Cost Leadership
Slide 41: Financial and cost performance versus peers
Total cash costs, $/oz 585 424 389 364 348 (4%) EBITDA adjusted, $ mln 1,018 1,278 1,536 1,702 1,865 10% EBITDA adjusted, margin % 45% 58% 62% 63% 64% 1 ppts Capex2,$ mln 525 268 466 804 736 (8%) FCF1, $ mln 282 351 902 610 672 10% Net debt / EBITDA adjusted, “x” 0.3 0.3 2.1 1.8 1.7 (6%) -5% 5% 15%
Slide 42: Cost position and margins versus peers
110% 100% 90% 85% 80% 75% 70% 60% 59% 50% 47% 40% 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 Polyus Polymetal Highland Gold Petropavlovsk $/oz 1,250 1,000 750 Polyus 2Q’19 AISC @ $584/oz 500 250 Polyus 2Q’19 TCC @ $352/oz 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sources: C
Slide 43: TCC structure and currency exposure
Other Power Labour Below 450 8% Below 425 5% 32% 352 Fuel 11% Tax on mining 16% Consumables and spares Initial guidance for Revised guidance 2Q 2019 28% 2019 for 2019 Consumables and spare parts split roughly equally on USD-linked components and RUB items USD USD Although fuel is linked to USD d
Slide 44: Cost inflation and TCC guidance
Initial guidance: 500 30% below 450 450 400 352 Revised guidance: 23% 350 300 below 425 18% 18% 18% 250 13% 11.7% 12% 200 10% 150 7% 8% 6% 6% 100 4.0% 4.3%4.9% 5% 50 0.4% 0 2Q 2019 2019F PPI CPI Labor Sulfuric Tyres Sodium Milling Amonium Diesel Russia Russia acid cyanide balls nitrate fuel 2018A 20
Slide 45: Regional Investment Project tax regime
% % 8 30 6.0 20 6 20 4 4.8 4.8 10 10 10 10 10 2.4 2.4 3.6 3.6 10 2 1.2 1.2 0.0 0.0 0 0 0 0 0 0 0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 RIP regime Base rate Regional Investment Project is a special tax regime, which allows Lower MET rate is applied at Lower MET r
Slide 46: Mineral extraction tax comparison
MET payments for gold and diamond companies are 8% linked to underlying commodity prices (6% for gold). 6% MET payments for other sectors are either calculated of the cost of mining (iron ore, base metals, potash etc.) or 1% 1% represent an absolute amount on a per tonne basis (coal). Diamond Go
Slide 47: 8. Focus on Shareholder Returns
8. FOCUS ON SHAREHOLDER RETURNS
Slide 48: Dividend policy and yield
Payout: 30% of EBITDA 400 10. 00% Threshold for the dividend policy: Net Debt/EBITDA < $340 mln $328 mln $311 mln 9.0 0% 350 $296 mln 2.5x 300 $264 mln 8.0 0% $239 mln 7.0 0% If Net Debt/EBITDA > 2.5x, BoD will exercise discretion 250 6.0 0% 3.7% 3.8% on dividends 200 3.0% 5.0 0% 2.3% 4.0 0% 1
Slide 49: 9. Debt Management
9. DEBT MANAGEMENT Palacttth sm Vy
Slide 50: Debt maturity profile and net debt
In April 2019, the Company 1,312 repaid the principal amount on 956 credit facilities nominated in RUB 2 64 and liabilities under cross- 696 2 613 500 434 2 currency swaps totalling $1 32 billion, utilizing a RUB 65 billion credit facility with Sberbank due 2019 2020 2021 2022 2023 2024 in 2
Slide 51: Debt structure
As of 31 Mar 20191 As of 30 June 2019 Eurobonds 53% Eurobonds 49% Bank loans Bank loans 38% 42% $4,572 mln $4,888 mln Convertibles 4% Convertibles RUB bonds RUB bonds 5% 4% 5% 62% 38% 58% 42% Public debt Private debt Public debt Private debt Floating rate Floating rate 2% 3% $4,572 mln $4,888 mln Fi
Slide 52: Credit rating upgrades
In November 2018, S&P upgraded Polyus rating from In December 2018, Fitch Ratings has upgraded Polyus’ BB- to BB with a stable outlook rating to ‘BB’ with Stable outlook from previously Upgrade reflects a combination of assigned ‘BB-’ with Positive outlook. S&P’s expectation that the company
Slide 53: 10. Guidance
10,,GUIDANCE
Slide 54: Guidance overview of Polyus
wr GUIDANCE OVERVIEW of POLYUS 2018 2019F GOLD PRODUCTION, MOZ 2.440 CA. 2.8 TCC, $/oz 348 S$ BELOW 425 CAPEX, SMLN 736 . 725 2018 ... 2019 ! TCC REMAINING AT ! 1 BELOW $425/0Z TERRITORY 1 BOTH CAPEX & TCC FORECASTS ARE BASED ON THE ' ASSUMPTION OF FOREIGN EXCHANGE RATE OF 60 ' ROUBLES PER DOLLAR 1
Slide 55: 11. Appendix
11. APPENDIX POLYUS
Slide 56: Operating data summary
Total rock moved 000 m3 49,474 50,759 48,477 55,610 53,466 66,703 66,351 71,239 64,505 58,073 88,418 116,987 Stripping 000 m3 44,255 47,543 40,991 46,878 45,317 57,256 54,552 59,448 55,628 46,326 73,420 99,481 Stripping ratio m3/t 4.7 7.2 2.3 2.2 2.2 2.4 1.6 2.0 2.5 1.6 1.9 2.3 Ore mined kT 9,377 6,
Slide 57: Mineral resources and reserves
Olimpiada 281 2.88 26.0 Blagodatnoye 208 1.36 9.1 Titimukhta 12 2.42 0.9 Verninskoye 91 1.65 4.8 Alluvials 71 0.35 0.8 Kuranakh 136 0.97 4.3 Natalka 287 1.67 15 Chertovo Koryto 62 1.53 3.1 Total 1,147 1.75 64.4 Mines in Operation Olimpiada 440 2.93 41.5 Blagodatnoye 405 1.38 17.9 Titimukhta 12 2.46