Polus · RUS:PLZL
Polus — Polyus — Q2 2019 Earnings Presentation
27 slides from Polus's earnings presentation, August 2019
Slide 1: 2Q 2019 Financial Results
2Q 2019 FINANCIAL RESULTS AUGUST 2019
Slide 2: Key drivers of quarterly results
Increase was driven by higher volumes of refined gold output from Olimpiada and Blagodatnoye, an increase in flotation concentrate sales and the start of the washing season at Alluvials . Increase reflects higher gold sold volumes. TCC decrease was mainly attributable to improved performance a
Slide 3: Key financial and operating results
Gold production (doré) (koz) 706 656 8% 628 12% 1,362 1,166 17% Gold production (refined) (koz) 684 601 14% 602 14% 1,285 1,109 16% Average realised refined gold price excl. SPPP ($/oz) 1,314 1,308 0% 1,300 1% 1,311 1,317 0% Average realised refined gold price incl. SPPP) ($/oz) 1,314 1,308 0% 1,300
Slide 4: 1. Overview
Slide 5: Revenue and gold sales by business unit
1Q 2019 Alluvials 348 Kuranakh 4% 2Q 2019 7% 275 Verninskoye Olimpiada 9% 49% Natalka 99 109 87 85 13% 67 61 44 50 30 Polyus Krasnoyarsk - 65% Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Blagodatnoye 16% In the second quarter, the group’s revenue from gold sales was $886 mln, a 2
Slide 6: TCC and AISC by business unit
1Q 2019 2Q 2019 1Q 2019 2Q 2019 1,084 783 533 524 722 736 662 658 599 582 597 566 393 395 422 521 485 343 362 372 304 297 - - Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh TCC demonstrated a fifth Similarly to TCC, the gro
Slide 7: TCC position on the global cost curve
800 600 $352/oz ($783/oz) 400 ($524/oz) Alluvials Kuranakh Olimpiada Natalka Blagodatnoye 200 Verninskoye ($297/oz) ($372/oz) ($395/oz) ($362/oz) 0 0 100 200 300 400 500 600 TCC, $/oz Group’s TCC decreased 2% q-o-q to $352/oz due to improved 2,000 performance at Olimpiada with higher average grade
Slide 8: AISC position on the global cost curve
1,200 1,000 800 ($1,084/oz) $584/oz Alluvials 600 ($736/oz) Kuranakh 400 Natalka Olimpiada Blagodatnoye Verninskoye 200 ($485/oz) ($582/oz) ($662/oz) ($658/oz) 0 0 100 200 300 400 500 600 Group’s AISC decreased to $584/oz per ounce, trending in line with AISC, $/oz TCC per ounce. 2,000 AISC at O
Slide 9: Cash cost structure
Power Other Other Power 7% 8% Labour 8% Labour 5% 30% 32% Fuel Fuel 12% 11% Tax on mining Tax on mining 16% 16% Consumables and spares Consumables and spares 27% 28% Consumables and spares expenses increased 22% q-o-q due to the the start of production at the alluvial operations and maintenance wo
Slide 10: Adjusted EBITDA and margin
73% 67% 64% 61% 143 12 51% 325 2 (41) 35% 604 95 488 71 52 34 14 Olimpiada Blagodatnoye Verninskoye Natalka Kuranakh Alluvials EBITDA Gold price Sales volume COGS Other EBITDA 1Q2019 volume 2Q2019 Adj. EBITDA 2Q'19, $ mln Adj. EBITDA margin, % Group’s adjusted EBITDA rose 24% q-o-q to $604 mln, dr
Slide 11: Cash flow
451 (183) 4 1,561 (584) 1,249 Cash & CE Operating CF Investing CF Financing CF Effect of foreign Cash & CE 31-Mar-19 exchange rate 30-Jun-19 changes In 1Q 2019, the group generated operational cash flow of $451 mln. RUB 10% Cash outflow on investing activities increased to $183 mln compared to $
Slide 12: Working capital
26 9 8 26 62 (16) (27) (11) 908 831 Net WC 1Q2019 Inventories Deferred Receivables Payables Interest Income tax, net Payables for Translation + Net WC 2Q2019 expenditures payables PPE non-OCF items Polyus registered a working capital outflow of $105 mln in the reporting period. This figure prima
Slide 13: Capital expenditure
Natalka, including Purchase of equipment - - N.A. - 91 (100%) Capitalisation of borrowing costs - - N.A. - 47 (100%) Operating costs - - N.A. - 25 (100%) Net proceeds from selling gold produced during the ramp-up period - - N.A. - (17) (100%) Natalka, total 48 23 N.A. 71 146 (51%) Olimpiada 35 25 40
Slide 14: Debt maturity profile
In April 2019, the Company 1,312 repaid the principal amount on 956 64 2 credit facilities nominated in RUB 696 613 and liabilities under cross- 5002 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 20
Slide 15: Debt breakdown
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% 28% $4,572 mln $4,888 mln F
Slide 16: Net debt and net debt/adjusted EBITDA
1.9x 1.9x 1.8x 1.8x 1.8x 1.7x 1.7x 1.6x 1.5x 3,639 3,084 3,151 3,077 3,079 3,208 3,029 3,086 3,011 1,477 1,561 1,121 1,204 1,249 1,095 1,000 908 896 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 30-Jun-19 Net Debt, $ mln Cash position, $ mln Net Debt/adj. EBITDA, x
Slide 17: 2. Natalka Update
Slide 18: Natalka ore processed and recovery
71.7% 71.4% 4,191 62.9% 65.5% 65.1% 3,960 55.1% 2,564 1,998 1,436 663 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 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 1,623 800 2,0 00 1,368 1,468 600 1,5 00 400 1,0 0
Slide 19: Natalka mill gravity and flotation upgrades
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 20: Operating Performance
ERFORMANCE ——
Slide 21: Group operating results
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 22: Olimpiada operating results
2Q’19 1Q’19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Rock moved, kt 33,361 32,232 4% 35,176 33,234 29,691 12% 65,593 58,198 13% incl. stripping, kt 27,692 27,065 2% 30,019 27,349 25,993 7% 54,757 51,081 7% Stripping ratio, t/t 4.9 5.2 -6% 5.8 4.6 7.0 -30% 5.1 7.2 -29% Ore mined, kt 5,669 5,16
Slide 23: Blagodatnoye operating results
2Q’19 1Q’19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Total rock moved, kt 16,334 17,050 -4% 18,151 20,231 19,760 -17% 33,384 39,025 -14% 1% including stripping, kt 13,754 14,835 -7% 16,178 18,719 18,315 -25% 28,589 35,339 -19% Stripping ratio, t/t 5.3 6.7 -21% 8.2 12.4 12.7 -58% 6.0 9.6 -38%
Slide 24: Verninskoye operating results
2Q’19 1Q’19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Total rock moved, kt 6,263 5,649 11% 4,174 4,726 5,415 16% 11,912 10,441 14% 6% including stripping, kt 5,323 4,671 14% 3,525 3,971 4,674 14% 9,994 8,856 13% Stripping ratio, t/t 5.7 4.8 19% 5.4 5.3 6.3 -10% 5.2 5.6 -7% Ore mined, kt 940 97
Slide 25: Kuranakh operating results
2Q’19 1Q’19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Total rock moved, kt 7,965 7,392 8% 7,739 8,477 8,103 -2% 15,357 15,732 -2% including stripping, kt 5,685 5,766 -1% 6,051 5,955 6,115 -7% 11,451 12,110 -5% Stripping ratio, t/t 2.5 3.5 -29% 3.6 2.4 3.1 -19% 2.9 3.3 -12% -2% Ore mined, kt 2,
Slide 26: Alluvials operating results
2Q'19 1Q'19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Sands washed, 000 m³ 2,259 - n.a. 1,258 4,457 1,974 14% 2,259 1,974 14% Average grade, g/m³ 0.55 - n.a. 0.69 0.60 0.53 4% 0.55 0.53 4% Gold in slime, koz 39.6 - n.a. 28.0 86.3 33.4 19% 39.6 33.4 19% Refined gold output, koz 29.6 - n.a. 40.3
Slide 27: Natalka operating results
2Q’19 1Q’19 Q-o-Q 4Q’18 3Q’18 2Q’18 Y-o-Y 1H’19 1H’18 Y-o-Y Total rock moved, kt 16,809 15,343 10% 15,707 13,088 9,828 71% 32,152 16,502 95% -12% including stripping, kt 12,618 11,383 11% 13,144 11,090 8,392 50% 24,001 14,403 67% Stripping ratio, t/t 3.0 2.9 3% 5.1 5.5 5.8 -48% 2.9 6.7 -57% 422 Ore