Polus · RUS:PLZL

Polus — Polyus — Q1 2019 Earnings Presentation

26 slides from Polus's earnings presentation, May 2019

1. Slide 1: 1Q 2019 Financial Results

   1Q 2019 FINANCIAL RESULTS MAY 2019

2. Slide 2:  Decrease was primarily due to lower flotation concentrate sales from Olimpiada, which amounted

    Decrease was primarily due to lower flotation concentrate sales from Olimpiada, which amounted to 22 koz in 1Q 2019 (4Q 2018: 75 koz).  Decline reflects lower flotation concentrate sales, a seasonal stoppage of the alluvial operations and a decrease in refined gold volumes at Olimpiada, Blagodatn

3. Slide 3: Key financial and operating metrics

   Gold production (doré) (koz) 656 585 12% 539 22% Gold production (refined) (koz) 601 640 (6%) 507 19% Average realised refined gold price excl. SPPP ($/oz) 1,308 1,229 6% 1,336 (2%) Average realised refined gold price incl. SPPP) ($/oz) 1,308 1,232 6% 1,336 (2%) Total cash cost (TCC) ($/oz) 358 331

4. Slide 4: 1. Overview

   1. OVERVIEW

5. Slide 5: Revenue and gold sales by business unit

   400 4Q 2018 Kuranakh 357 8% 350 1Q 2019 Verninskoye 300 275 12% 250 Olimpiada 48% 200 150 Natalka 103 99 85 15% 100 67 65 52 44 50 40 27 Polyus Krasnoyarsk - 0 65% Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Blagodatnoye 17%  In the first quarter, the group’s revenue from gold sal

6. Slide 6: TCC and AISC by business unit

   4Q 2018 4Q 2018 1Q 2019 1,6 00 1Q 2019 1,361 1,4 00 900 821 810 1,011 1,2 00 800 819 1,0 00 700 600 491 533 800 677 722 422 595 599 597 566 371 393 521 500 353 343 304 600 400 389 300 221 400 200 200 100 - - 0 0 Olimpiada Blagodatnoye Verninskoye Alluvials Natalka Kuranakh Olimpiada Blagodatnoye Ver

7. Slide 7: Total cash cost (TCC) analysis

   600 500 400 $358/oz 300 ($533/oz) Kuranakh 200 Olimpiada Verninskoye Blagodatnoye Natalka 100 ($304/oz) ($343/oz) ($393/oz) ($422/oz) 0 0 100 200 300 400 500  TCC increased 8% q-o-q to $358/oz mainly due to lower antimony- TCC, $/oz rich flotation concentrate sales, which resulted in lower by- 1,20

8. Slide 8: All-in sustaining cash cost (AISC) analysis

   800 700 $589/oz 600 500 400 ($722/oz) Kuranakh 300 200 Olimpiada Natalka Verninskoye Blagodatnoye 100 ($521/oz) ($566/oz) ($597/oz) ($599/oz) 0 0 100 200 300 400 500  AISC decreased 7% q-o-q to $589/oz, reflecting lower sustaining AISC, $/oz 1,600 capital expenditures and SG&A. 1,400  AISC at Olim

9. Slide 9: Cost structure breakdown

   Other Other Power (4%) Power 6% Labour 7% 8% Labour 33% 30% Fuel Fuel 13% 12% Tax on mining Tax on mining 18% 16% Consumables and spares Consumables and spares 33% 27%  Consumables and spares expenses decreased due to downscale of production at Alluvials, lower maintenance expenses at Natalka and K

10. Slide 10: Adjusted EBITDA and margin

    1,300 70% 68% 70% 65% 46 1,100 60% 24 3 57% 900 (69) 48% 50% 40% 700 30% 500 484 488 20% 300 251 10% 59 84 65 100 28 0 (100) Olimpiada Verninskoye Blagodatnoye Natalka Kuranakh (10%) EBITDA Gold price Sales volume COGS Other EBITDA 4Q2018 volume 1Q2019 Adj. EBITDA 1Q19, $ mln Adj. EBITDA margin, % 

11. Slide 11: Cash flow

    2,5 00 2,0 00 391 6 1,5 00 438 1,561 (170) 1,0 00 500 896 - Cash & CE Operating CF Investing CF Financing CF Effect of foreign Cash & CE 31-Dec-18 exchange rate 31-Mar-19 changes  In 1Q 2019, the group generated operational cash flow of $438 mln. RUB 9%  Cash outflow on investing activities decrea

12. Slide 12: Working capital

    54 15 16 54 (21) (23) 8 (66) 833 795 Net WC 4Q2018 Inventories Deferred Receivables Payables Interest Income tax, net Payables for PPE Translation + Net WC 1Q2019 expenditures payables non-OCF items  Polyus registered a working capital outflow of $25 mln  This figure primarily reflects an inventor

13. Slide 13: Capital expenditure

    Natalka, including Purchase of equipment 23 42 (45%) 23 45 (49%) Capitalisation of borrowing costs - - N.A. - 23 (100%) Operating costs - - N.A. - 17 (100%) Net proceeds from selling gold produced during the ramp-up period - - N.A. - (3) (100%) Natalka, total 23 42 (45%) 23 82 (72%) Olimpiada 25 36

14. Slide 14: Debt maturity profile

    1,312  The Company repaid the principal 956  amount and liabilities under cross- 2 64 currency swaps in a total amount of 696  613 500 2 434 $965 million, utilizing a credit facility 2 32  with Sberbank in a total amount of RUB 65 billion due in 2024. 2019 2020 2021 2022 2023 2024  The group’s

15. Slide 15: Debt breakdown

    As of 31 Dec 20181 As of 31 Mar 20192 Eurobonds Eurobonds 53% Bank loans 60% 30% Bank loans 38% $3,982 mln $4,572 mln Convertibles 5% Convertibles RUB bonds 4% RUB bonds 5% 5% 70% 30% 62% 38% Public debt Private debt Public debt Private debt Floating rate Floating rate 2% 7% $3,982 mln $4,572 mln Fi

16. Slide 16: Net debt and leverage

    2.0x 1.9x 1.9x 1.8x 1.8x 1.8x 1.7x 1.6x 1.5x 3,128 3,084 3,151 3,077 3,079 3,208 3,086 3,011 3,029 1,487 1,477 1,561 1,121 1,204 1,095 908 1,000 896 31-Mar-17 30-Jun-17 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18 31-Dec-18 31-Mar-19 Net Debt, $ mln Cash position, $ mln Net Debt/adj. EBITDA, x

17. Slide 17: 2. Natalka Update

    2. NATALKA UPDATE

18. Slide 18: Natalka mill operations and recovery

    71.7% 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 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 1,306 1,127 1,149 135 0  During 1Q 2019, Natalka operated at a design 933 115 0 828 950 flowsheet following the completion of repair 2,444 works at the ball mi

19. Slide 19: Natalka recovery improvement measures

     The Company targets further gradual  Polyus, together with Outotec, is recovery improvement via identified currently evaluating the option of list of operational measures, including flash flotation introduction at the introduction of the fourth stage of Natalka Mill , allowing to reduce gold grav

20. Slide 20: 3. Operational Performance

21. Slide 21: Group operational results

     Decrease reflects lower rock moved volumes at Olimpiada and Blagodatnoye.  Increase in ore mined volumes was primarily driven by higher ore volumes mined at Natalka, Blagodatnoye and Verninskoye.  Increase in volumes of ore processed is mainly attributable to the completion of the ramp-up at the

22. Slide 22: Olimpiada operating results

    1Q’19 4Q’18 Q-o-Q 3Q’18 2Q’18 1Q'18 Y-o-Y Rock moved, kt 32,232 35,176 -8% 33,234 29,691 28,507 13% incl. stripping, kt 27,065 30,019 -10% 27,349 25,993 25,088 8% Stripping ratio, t/t 5.2 5.8 -10% 4.6 7.0 7.3 -29% 38% Ore mined, kt 5,167 5,158 0% 5,884 3,698 3,420 51% Average grade in ore mined, g/t

23. Slide 23: Blagodatnoye operating results

    1Q’19 4Q’18 Q-o-Q 3Q’18 2Q’18 1Q'18 Y-o-Y Total rock moved, kt 17,050 18,151 -6% 20,231 19,760 19,265 -11% 6% including stripping, kt 14,835 16,178 -8% 18,719 18,315 17,024 -13% Stripping ratio, t/t 6.7 8.2 -18% 12.4 12.7 7.6 -12% Ore mined, kt 2,215 1,972 12% 1,512 1,445 2,241 -1% 393 371 Average g

24. Slide 24: Verninskoye operating results

    1Q’19 4Q’18 Q-o-Q 3Q’18 2Q’18 1Q’18 Y-o-Y Total rock moved, kt 5,649 4,174 35% 4,726 5,415 5,026 12% -3% including stripping, kt 4,671 3,525 33% 3,971 4,674 4,182 12% Stripping ratio, t/t 4.8 5.4 -11% 5.3 6.3 5.0 -4% Ore mined, kt 978 649 51% 755 741 845 16% 353 343 Average grade in ore mined, g/t 2

25. Slide 25: Kuranakh operating results

    1Q’19 4Q’18 Q-o-Q 3Q’18 2Q’18 1Q’18 Y-o-Y Total rock moved, kt 7,392 7,739 -4% 8,477 8,103 7,629 -3% including stripping, kt 5,766 6,051 -5% 5,955 6,115 5,995 -4% Stripping ratio, t/t 3.5 3.6 -3% 2.4 3.1 3.7 -5% 9% Ore mined, kt 1,626 1,688 -4% 2,522 1,988 1,635 -1% Average grade in ore mined, g/t 1

26. Slide 26: Natalka operating results

    1Q’19 4Q’18 Q-o-Q 3Q’18 2Q’18 1Q’18 Y-o-Y Total rock moved, kt 15,343 15,707 -2% 13,088 9,828 6,674 130% -48% including stripping, kt 11,383 13,144 -13% 11,090 8,392 6,011 89% Stripping ratio, t/t 2.9 5.1 -43% 5.5 5.8 9.1 -68% 810 Ore mined, kt 3,960 2,564 54% 1,998 1,436 663 n.m. Average grade in o

Polyus — Q1 2019 Earnings Presentation on 6ix