Slide 1: Corporate Presentation July 2019
POLYUS ._ * ¥ CORPORATE PRESENTATION JULY 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 production overview
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 48% 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 and recognition
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 and priorities
• 3.9 • BBB • 22* 71 C 2 F Yes • Constituent • Constituent • Not in index • 4.4 • BBB • 61 85 N/A 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 ind
Slide 10: Corporate governance and ownership
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
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11
Slide 12: 1Q 2019 operating 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
Slide 13: 1Q 2019 financial results
Decline reflects lower flotation concentrate sales, a seasonal stoppage of the alluvial operations and a decrease in refined gold volumes at Olimpiada, Blagodatnoye and Kuranakh. TCC increase was mainly driven by lower antimony-rich flotation concentrate sales in the period, with by-product cred
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Slide 15: Reserves versus gold 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 and grades in the industry
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: Production growth 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 track record and guidance
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 and Natalka ramp-up
1,4 50 1,328 1,017 1,075 1,091 1,302 110 .0 1,1 00 939 964 1,241 110 .0 1,3 50 1,2 50 1,213 1,218 100 .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 80.8 700 88.0 87.9 88.0 87.8 87.5 87.5 80. 0 1,0 50 80.1 80.7 79.3 600 75.9 70. 0 73.6 70. 0 500 950 60. 0 60. 0 400 8
Slide 20: Completed projects / Ongoing projects
Completed projects Ongoing projects
Slide 21: Brownfield projects IRR
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: Blagodatnoye expansion
Following the completion of the expansion project to 2.95 mtpa, Polyus’ technical team identified a potential for a further capacity expansion up to 3.5 mtpa, which might be achieved by debottlenecking of certain circuits. Feasibility study is completed Recently commissioned BIO-4 unit demonst
Slide 23: Olimpiada debottlenecking
Capex-light debottlenecking of crushing, grinding, flotation and hydrometallurgy circuits. Feasibility study has been completed. Equipment procurement is underway. Installation of a screen preceding С-150 Installation of additional Installation of an additional reactivation jaw crusher c
Slide 24: Chertovo Koryto project
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
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 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 programme
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
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Slide 30: Natalka mill performance
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
Slide 31: Natalka recovery improvement
The Company targets further Polyus, together with Outotec, gradual recovery improvement is currently evaluating the via identified list of operational option of flash flotation measures, including introduction introduction at the Natalka of the fourth stage of gravity Mill , allowing to reduce g
Slide 32: Natalka infrastructure
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
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Slide 34: Sukhoi Log location and infrastructure
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 (5.5 km) Hydrogeology 10.5 km 1st stage completed (5 km) Exploration 150 km 202 km Verification In-fill drilling, Drilled drilling flanks samples In order to further update and upgrade the estimation of Indicated Mineral Resources at Suk
Slide 36: Sukhoi Log scoping study
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 other large 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: Reserves and life of mine
110 60% 90 40% 70 20% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Industry output, moz Top-20 producers' share in total output 7.2 5.1 5.1 4.5 4.1 3.4 2.6 2.5 2.7 2.3 1.7 2.4 2.4 2.4 2.0 2.0 1.1 1.6 1.3 1.6 Maiden P&P Reserve estimate Newmont Barrick Anglogold Kinross Polyus Newcrest Goldcor
Slide 39: 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 40: Sukhoi Log pre-feasibility study timeline
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
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Slide 42: Financial highlights and cost position
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 43: Cost position AISC and TCC
110% 100% 90% 80% 80% 78% 70% 67% 60% 50% 45% 40% 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 Polyus Polymetal Highland Gold Petropavlovsk $/oz 1Q 2019 average gold price = $1,304/oz 1,250 1,000 750 Polyus AISC @ $589/oz 500 250 Polyus TCC @ $358/oz 0 0% 10% 20% 30% 40% 50% 60% 70% 8
Slide 44: Cost structure and currency exposure
Power Other 7% 8% Labour Below 450 30% Below 425 Fuel 12% 358 Tax on mining Consumables and spares 16% Initial guidance for Revised guidance 1Q 2019 27% 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 45: Cost inflation
Initial guidance: 500 30% below 450 450 400 358 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 1Q 2019 2019F PPI CPI Labor Sulfuric Tyres Sodium Milling Amonium Diesel Russia Russia acid cyanide balls nitrate fuel 2018A 20
Slide 46: 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 47: Mineral extraction tax
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 48: 8. Focus on Shareholder Returns
8. FOCUS ON SHAREHOLDER RETURNS
Slide 49: Dividend policy and yield
Payout: 30% of EBITDA 400 10. 00% Threshold for the dividend policy: Net Debt/EBITDA < $340 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% 150 Semi
Slide 50: 9. Debt Management
9. DEBT MANAGEMENT Palacttth sm Vy
Slide 51: Debt repurchases and maturities
In April 2018, Polyus conducted repurchase of In September 2018, Polyus conducted convertibles for $50 mln nominal or 20% of the repurchase of 2020, 2022, 2023 and 2024 total issue, taking into account significant notes in aggregate principal amount of $132 market dislocation. mln, thus improvin
Slide 52: Debt maturity profile
1,312 The Company repaid the principal 956 2 amount and liabilities under 64 696 613 cross-currency swaps in a total 500 2 434 amount of $965 mln, utilizing a 2 32 credit facility with Sberbank in a total amount of RUB 65 bln due in 2019 2020 2021 2022 2023 2024 2024. The group’s net debt
Slide 53: Debt structure
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% 2% $3,982 mln $4,572 mln Fi
Slide 54: 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 55: 10. Guidance
10,,GUIDANCE
Slide 56: 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 57: 11. Appendix
11. APPENDIX POLYUS
Slide 58: Operating statistics
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 59: 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