Slide 1: Polyus: No 1 gold producer in Russia. Successful Strategy Implementation
Polyus: No 1 gold producer in Russia. Successful Strategy Implementation. Evgueni Ivanov, President MINEX 2005 / 6 October 2005
Slide 2: Disclaimer
Disclaimer 9The information contained herein has been prepared using information available to Polyus Group at the time of preparation of the presentation. External or other factors may have impacted on the business of Polyus Group and the content of this presentation, since its preparation. In addit
Slide 3: Polyus Today
POLYUS TODAY ¾ # 1 gold producer in Russia. ¾ 13.3 mln. oz of JORC reserves plus 51.1 oz of JORC resources. ¾ 2004 results: 9 Gold production - 1 085 k oz 9 Total cash costs - $ 175 per oz 9 EBITDA - $ 208 mln.
Slide 4: Polyus' operations
Polyus’ operations , Natalka, Vostochnaya Kyutchus Degdekan Nezhdaninskoye Magadan Yakutsk Verninskoe, Chertovo Koryto, Kuranakh Blagodatnoe, Zapadnoe, a n d Z a pa dnoe, Bamskoye Olimpiada Mukodek Alluvials HQ, Olimpia d a, Tyrada, I r ku tsk Blagovechshensk Moscow HQ Moscow Titimuhta oyarsk Krasn
Slide 5: Assets Portfolio
Assets Portfolio Amur region Exploration Pre- Feasibility Development Production Bamskoe feasibility Krasnoyarsk region Olympiada / Tyrada Olenye Blagodatnoye / Titimuhta Panimba Irkutsk region Zapadnoe Pervenets/ Verninskoe Chertovo Koryto Mukodek Magadan Natalka Degdekan/ Vostochnaya Yakutia Kuran
Slide 6: Mission & Strategy
Mission & Strategy Mission: to reveal nature’s and human Strategic goal: to grow to a top-5 global values for the benefit of shareholders, gold producer by 2010 employees and communities Polyus strategic objectives by 2010: ¾ Capitalization – up to $8 bln. ¾ Annual production in Russia – up to 3.2 m
Slide 7: Strategy
STRATEGY TO BECOME A TOP-5 GLOBAL MAJOR BY 2010 WE WILL: Continue high profile exploration works on existing fields Upgrade our production capacities Create an independent company Go on with proactive M&A
Slide 8: Exploration projects in 2005: Reserves replacement
Exploration projects in 2005 Reserves replacement
Slide 9: 2005 JORC Audit Results
2005 JORC AUDIT RESULTS 9 JORC reserves amount to 13.3 mln oz Proved Probable Proved & Probable Grade, g/t Gold, k oz Grade, g/t Gold, k oz reserves, k oz Olimpiada 4.6 3 100 3.8 8 700 11 800 Verninskoe - - 3.3 1 100 1 100 Zapadnoe - - 2.8 400 400 Total 3 100 10 200 13 300 9 JORC resources exceed 51
Slide 10: Blagodatnoe: Important discovery in Krasnoyarsk
BLAGODATNOE: Important discovery in Krasnoyarsk Balance reserves in pit Olympiada deposit area outline (Russian B+C1+C2) 7.15 mln oz at Blagodaynoye average grade 2.4 g/t Plus resources P1 3.76 mln oz ¾ Cost of resources 26 km explored - $0.8 per oz (well bellow the world average $13.8 per oz) Olymp
Slide 11: Blagodatnoe Deposit: Reserves Replacement
BLAGODATNOE DEPOSIT: RESERVES REPLACEMENT Balance reserves in pit 7.15 mln oz outline, В+С1+С2 Average grade 2.4 g/t Off-balance reserves in pit 1.35 mln oz outline, С2 Off-balance reserves 2.89 mln oz outside the pit outline Inferred resources, Р1 3.76 mln oz
Slide 12: Blagodatnoe: Production Prospects
BLAGODATNOE: PRODUCTION PROSPECTS Mill project capacity 5 mln. tons of ore per year Gold recovery 89% Annual gold production (est.) 328 k oz Total cash costs (est.) $ 270 per oz Mine life 20 years
Slide 13: Natalka: Successful Underground Drilling
NATALKA: SUCCESSFUL UNDERGROUND DRILLING ¾ Discovered additional 18.51 mln. oz of resources below 600 m. at grade of 1.59 g/m. ¾ Estimated resources (Russian B+C1+C2) – 51.83 mln oz. ¾ Exploration cost for B+C1 reserves amounted to $2.5 per oz (well below world average) ¾ A new ore body Vostotchnaya
Slide 14: Production development in 2005
Production development in 2005
Slide 15: Olympiada: Capacity Upgrade
OLYMPIADA: CAPACITY UPGRADE Olympiada mine: Produces 800 k oz per year Mill-1: capacity 1.5 mln tons of ore per year (oxide ore) Mill-2: capacity 3 mln. tons of ore (sulfide ore) Goals: 9 Increase gold production. 9 Increase sulfide ore processing. . . 9 Which will offset repletion of oxide ores
Slide 16: Olympiada: Capacity Upgrade
OLYMPIADA : CAPACITY UPGRADE ¾Expansion of Vostochny and Zapadny pits to engage new stocks of sulfide ore. ¾Construction of Mill-3 with a capacity 5 mln. tons of sulfide ore per year. ¾Engaging new deposits to keep Mill-1 operating at full capacity.
Slide 17: Successful M&A in 2005
Successful M&A in 2005
Slide 18: Yakutia: The largest ever acquisition in Russian gold mining sector
YAKUTIA: The largest ever acquisition in Russian gold mining sector ¾Completed on 16 September 2005. ¾The total price of the acquisition amount to $285 mln. ¾Natural resources base of the acquired assets – 28 135 k oz (comparable with reserves of Suknoi Log or Natalka) ¾International reserves audit
Slide 19: Yakutia: Projects, development programs and investments
Yakutia: Project / Status Development Preliminary estimate program of investments Preparation of the feasibility Kuranakh / operating study for the mine fleet $165 mln. mine modernization and production facilities upgrade Preparation of a new feasibility study Nezhdaninskoe / pre- (biooxidation tech
Slide 20: Licenses acquired in 2005
Licenses acquired in 2005 In 2005 Polyus acquired through actions 6 mining and exploration licenses Krasnoyarsk Razdolinskaya area region Zyryanovskaya area Irkutsk region Mukodek area Amur region Bamskoe deposit, including Nevachansk prospective area Magadan region Degdekan area Vostochnaya (Tochin
Slide 21: Verninskoe: New project in Irkutsk region
Verninskoe: New project in Irkutsk region ¾ Acquired in February 2005 for $25.8 mln. ¾ JORC Audited in April 2005: 9 Reserves 1.1 mln. oz 9 Resources 1.1 mln oz ¾ Price of 1 acquired oz of reserves = $26, which is well bellow the world market average ($50-75) for similar deposits. ¾ Further explorat
Slide 22: Spin-off from Norilsk Nickel: Unlocking shareholders' value
Spin-off from Norilsk Nickel Unlocking shareholders’ value
Slide 23: Independent company: Advantages
independent company: Advantages ¾ Create a new gold major – undisputed Russian leader and one of the largest players in the international gold mining sector. ¾Unlocking additional “gold” value to shareholders. ¾ Potential to increase capitalization of the new company through: 9 High market premium o
Slide 24: Ownership structure
Ownership structure CONTROLLING Part of Nornikel FREE FLOAT (ca 40%) SHAREHOLDERS (ca 60%) Norilsk Nickel Polyus Russian Jenington (20% subsidiaries of Gold Fields) CONTROLLING New Company FREE FLOAT (ca 40%) SHAREHOLDERS (ca 60%) NewCo Polyus Russian Jenington (20% subsidiaries of Gold Fields)
Slide 25: Key transaction dates
Key transaction dates ; Norilsk EGM unanimously voted for the spin- off of Polyus. 30 September 2005 Record date to receive Polyus Gold shares 1 January 2006 Organizational meeting of the new company - 3 March Polyus Gold 2006 State registration of Polyus Gold March 2006 Trading date for Polyus Gold