Slide 1: Corporate Presentation September 2017
CORPORATE PRESENTATION September 2017
Slide 2: 1. Overview
1. OVERVIEW Ss POLYUS
Slide 3: Unique Exposure to Russian & Gold Public Markets
OVERVIEW Unique Exposure to Russian & Gold Public Markets 71 moz gold P&P Reserves (#2 largest globally excl. Sukhoi Log) Leading reserves and resources base 193 moz gold MI&I Resources (Top-3 globally incl. Sukhoi Log) 37 years average life of mine (excl. Sukhoi Log) 100% open pit operation
Slide 4: Leading Gold Producer Globally
OVERVIEW Leading Gold Producer Globally 8th largest gold producer (FY 2016), moz Top-2 largest gold reserves base (EY 2016), moz 5.5 4.9 3.6 77 71 2.9 2.7 68 65 2.4 53 2.1 2.0 50 48 45 1.7 1.5 29 26 * Newmont Barrick Newcrest Gold Fields Agnico Sibanye Polyus Goldcorp AngloGold Kinross Eagle Barrick
Slide 5: Large-scale Assets Spread Across Siberia and the Far East
OVERVIEW Large-scale Assets Spread Across Siberia and the Far East 13 DEVELOPMENT 7. Natalka MAGADAN CLUSTER KRASNOYARSK 7 PRODUCTION CLUSTER EXPLORATION 1. Olimpiada YAKUTIA 8. SUKHOI LOG 3 2 2. Blagodatnoye 1 CLUSTER 9. Panimba 3. Titimukhta 9 8 6 10 11 10. Poputninskoye 4. Alluvials 4 5 11. Chert
Slide 6: Developing largest gold mines in the world
OVERVIEW Developing largest gold mines in the world Largest gold assets by output in 2016, koz Largest gold assets by resources in 2016, moz Muruntau (Uzbekistan) 1,961 Pebble (USA) 108 Newmont Nevada Operations (USA) 1,631 Olympic Dam (Australia) 107 1 Polyus Krasnoyarsk cluster (Russia) 1,447 Gras
Slide 7: Leading Position on the Cost Curve and Strong Financial Performance
OVERVIEW Leading Position on the Cost Curve and Strong Financial Performance First decile on the global TCC and AISC curves, 1H 2017 ($/oz) 1H 2017 average gold price = 1,238/oz 1,250 1,000 750 Polyus AISC @ $610/oz 500 250 Polyus TCC @ $379/oz 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumulativ
Slide 8: Leading Position on the Cost Curve and Strong Financial Performance
OVERVIEW Leading Position on the Cost Curve and Strong Financial Performance Reserves split moz 80 60 40 20 0 Barrick Polyus Newmont Newcrest Goldcorp AngloGold Gold Fields Sibanye Kinross Agnico Eagle Polymetal Open pit Underground Average grade in reserves 3.42 2.8 2.5 2.01 2.3 Название оси Averag
Slide 9: Establishment of New Board of Directors
OVERVIEW Establishment of New Board of Directors BoD Structure 3 independent Directors 4 BoD Committees INDEPENDENT DIRECTORS Chairman of BoD Audit Edward Dowling (Chairman of BoD) Served at BoD of PGIL Kent Potter (Chairman) (INED) Ex-CEO & current Chairman at BoD Edward Dowling (INED) Ke
Slide 10: Dividend Policy
OVERVIEW Dividend Policy Existing dividend policy 1H17 dividend time-table 30% of EBITDA payout if Net Debt/ EBITDA < 2.5x 14-Aug-17 BoD recommends dividend If Net Debt/ EBITDA > 2.5x, BoD will exercise discretion on dividends 15-Sep-17 EGM date Ex-dividend date for both local shares 2H16 $1.2
Slide 11: Recent Corporate Developments & Financial Snapshot
OVERVIEW Recent Corporate Developments & Financial Snapshot In March 2017, Polyus sold its stake in Nezhdankinskoye gold deposit, with $100 mln of proceeds being paid out in form of special dividend In May 2017, PGIL has entered into an agreement to sell 9.4% of share capital to Fosun. The completio
Slide 12: 3. Operational Performance
3. OPERATIONAL PERFORMANCE Ss POLYUS
Slide 13: Polyus Key Operational Advantages
OPERATIONAL PERFORMANCE Polyus Key Operational Advantages Polyus key assets (Krasnoyarsk cluster and Natalka) Large scale open pit operations with a high grade are among top-15 globally by reserves and production Compact layout of assets provide transportation Compact assets operated on a fly-in
Slide 14: Health & Safety
OPERATIONAL PERFORMANCE Health & Safety Member of the ICMM1 since 2015. The first company from Eastern Europe out of 23 mining and metals companies and 34 regional and commodities associations Safety remains a top priority for Polyus, which is committed to be a zero-fatality company LTIFR2 dynam
Slide 15: Operational Improvements since 2013
OPERATIONAL PERFORMANCE Operational Improvements since 2013 Total gold output increased 19% in 2016 vs. 2013 to 1,968 koz Sustained production increases achieved at key assets: Olimpiada, Blagodatnoye, Verninskoye, Kuranakh Within 3 years the Company increased its average recoveries by 4.6 ppt
Slide 16: Improving Recovery Rates & Productivity at Polyus' Key Assets
OPERATIONAL PERFORMANCE Improving Recovery Rates & Productivity at Polyus’ Key Assets Olimpiada Blagodatnoye 800 695 739 743 754 645 667 110 .0 1,019 700 1,1 00 964 1,006 600 518 100 .0 939 110 .0 479 480 853 855 1,0 00 455 462 421 100 .0 900 500 90. 0 800 90. 0 400 88.2 88.4 80. 0 87.9 87.9 88.0 70
Slide 17: Operational Optimization Initiatives
OPERATIONAL PERFORMANCE Operational Optimization Initiatives Equipment modernization and retrofitting Improvement of equipment availability (increasing throughput capacities and recoveries) (minimizing downtime/increasing production run time) Verninskoye: new Blagodatnoye: Verninskoye: Olimp
Slide 18: Total Optimisation Program Overview
OPERATIONAL PERFORMANCE Total Optimisation Program Overview Initiatives implemented Achieved EBITDA effect, $ mln 374 134 252 94 2015 2016 2015 2016 TOP objectives: Investments < RUB 35 mln per initiative Payback period of < 2 years Focused on: equipment productivity, recovery rate improvement
Slide 19: Recent Operational Results
OPERATIONAL PERFORMANCE Recent Operational Results Key highlights Group operations 1H 2017 1H 2016 Y-o-Y 2016 Ore mined: 1H16 vs 1H17, kt Total rock moved, kt 99,269 71,095 40% 144,780 Mining volumes growth Stripping ratio, t/t 4.6 4.2 10% 3.9 29% at Olimpiada, Kuranakh Ore mined, kt 17,890 13,780 2
Slide 20: Strong Growth Profile
OPERATIONAL PERFORMANCE Strong Growth Profile Gold production dynamics and guidance, 2013-2019, koz1 300 0 280 0 Initial guidance revised 260 0 6% upward in October 2,800 2016; Initial guidance 2,400 240 0 Guidance Guidance surpassed surpassed surpassed by 11% 220 0 2,125 2,350 by 5% by 6% 1,968 200
Slide 21: Projects Driving Production Expansion
OPERATIONAL PERFORMANCE Projects Driving Production Expansion Annual production target of 2.8 million ounces of gold expected to be achieved in 2019 The projects contributing to Company’s production target achievement include 7 brownfield projects and 1 greenfield project (Natalka) supported by ex
Slide 22: Projects to Facilitate Production Expansion
OPERATIONAL PERFORMANCE Projects to Facilitate Production Expansion Annual production target of 2.8 million ounces of gold expected to be achieved in 2019 Most of the projects are to be launched in 2017-2018. 6 projects, including Natalka, are planned to be commissioned during this period 2016 201
Slide 23: Olimpiada: Reconfiguration of Mill No. 1 completed in 3Q 2016
OPERATIONAL PERFORMANCE Olimpiada: Reconfiguration of Mill No. 1 completed in 3Q 2016 Ore processing at Mill No. 1 (mln t) 1 0.86 0.9 0.8 0.710.66 0.7 0.540.570.52 0.510.55 Processing 0.390.450.41 0.42 0.6 0.35 capacity of Mill High-grade Olimpiada ore processing 0.5 0.4 0.27 No. 1 was 0.3 0.2 e
Slide 24: Power Projects
OPERATIONAL PERFORMANCE Power Projects Access to reliable and low-cost source of electricity via grid lines Razdolinskaya – Taiga (RT) grid Ust-Omchug – Omchak (UO) grid Capex: $103 mln Capex: RUB 9.9 bln ($152 mln)1 Financing: FGC UES to buy out in 2017 Financing: state subsidy Construction timelin
Slide 25: Polyus Potential Brownfield Projects – Source of Additional Expansion
OPERATIONAL PERFORMANCE Polyus Potential Brownfield Projects – Source of Additional Expansion The brownfield projects in feasibility study stage (not included into the guidance) represent a potential upside Antimony ingot produced at Polyus Processing the high-grade Olimpiada ore with high antimon
Slide 26: Natalka: Project Overview
OPERATIONAL PERFORMANCE Natalka: Project Overview Asset overview Location One of the largest gold deposits in Russia and globally in terms of gold reserves Life of mine: c.31 years Active construction works on site commenced in 2012, open-pit mining commenced in 1Q 2013 c. $2.2 bln invested
Slide 27: Natalka: History of Development – Project Review 2013-2016
OPERATIONAL PERFORMANCE Natalka: History of Development – Project Review 2013-2016 Helicopter view Background Actions Result Gold grade wasn’t Block model review Reserve estimate (Dec 2015) confirmed At the end of 2013 the Measured, indicated and Mining in 2013 didn’t Group initiated review of i
Slide 28: Natalka: Current Status
OPERATIONAL PERFORMANCE Natalka: Current Status Updated plant flowsheet (3 stage gravity concentration) Gravity Separation I Intensive Cyanidation 18 units Electrowinning Conc. PLS Ore stockpile Crushing and Cake Grinding Gravity Separation II 15 units Hydrocyclone Filtration + Smelting Dore Conc. G
Slide 29: Sukhoi Log: Overview
OPERATIONAL PERFORMANCE Sukhoi Log: Overview Key Highlights Location Chertovo Koryto One of the largest undeveloped gold deposits globally with 58 moz of gold JORC Greenfield project owned by Polyus resources @ 2.0 g/t Distance to Sukhoi Log: 100 km Reserves: 3.1 moz Total consideration pai
Slide 30: Sukhoi Log: Positioning vs Peers
OPERATIONAL PERFORMANCE Sukhoi Log: Positioning vs Peers World’s largest greenfield assets World’s largest operating by JORC gold MI&I Resources, moz1 mines by JORC gold MI&I Resources, moz1 Pebble Olympic Dam 107.7 107.1 (NDM) (BHP Billiton) KSM Grasberg 83.6 (Freeport McMoRan) 99.8 (Seabridge Gold
Slide 31: Sukhoi Log: Tier 1 Asset
OPERATIONAL PERFORMANCE Sukhoi Log: Tier 1 Asset Tier 1 asset1 with world class resource base Broad knowledge of the asset Extensive exploration performed with 324 km drilled over One of the largest gold deposits in the world with 1961-1999 JORC resources of 58 moz @ 2.0 g/t 9 studies performe
Slide 32: Sukhoi Log: Overview of Joint Venture
GREENFIELD PORTFOLIO DEVELOPMENTS Sukhoi Log: Overview of Joint Venture The Sukhoi Log joint venture (“SL Gold”) partner of Polyus is LLC RT Business Development (“RTRB”), which is a subsidiary of Russian state-owned Rostec Corporation (“Rostec”) Both in December 2016 and July 2017 Polyus entere
Slide 33: Sukhoi Log: Current Status
GREENFIELD PORTFOLIO DEVELOPMENTS Sukhoi Log: Current Status 1. Geology 2. Engineering Detailed plan for exploration to be completed by end September Hatch, as contractor for Scoping Study AMC Consultants was engaged for supervising the drilling development engaged program and results review i
Slide 34: Chertovo Koryto: Overview
GREENFIELD PORTFOLIO DEVELOPMENTS Chertovo Koryto: Overview Asset overview Location Chertovo Koryto deposit (“ChK”) is located in a remote area of N Irkutsk Region approximately 200 km northeast of Bodaybo Deposit lies in an area of high relief where several gold rich placer Russian Chertovo Fed
Slide 35: 4. Financial Performance
4. FINANCIAL PERFORMANCE Ss POLYUS
Slide 36: Key Financial Figures
FINANCIAL PERFORMANCE Key Financial Figures Key Financial Highlights TCC dynamics: 1H16 vs 1H17, $/oz 2013 2014 2015 2016 1H16 1H17 Y-o-Y 1% TCC increased only 1% y-o-y despite Gold sales, koz 1,631 1,691 1,768 1,915 837 983 17% 377 379 local currency appreciation by Gold price, w/o SPPP, $/oz 1,385
Slide 37: Total Cash Costs and All In Sustaining Costs
FINANCIAL PERFORMANCE Total Cash Costs and All In Sustaining Costs The lowest TCC & AISC among top-10 global majors 954 975 980 986 915 824 856 730 761 572 799 696 744 571 573 573 677 669 546 389 Polyus Barrick Newcrest Agnico Eagle Goldcorp Newmont Sibanye Kinross Goldfields Aglogold 2016 TCC, $/oz
Slide 38: Working Capital Overview
FINANCIAL PERFORMANCE Working Capital Overview Working capital1, RUB mln + Days inventory outstanding3 + Days receivables outstanding3 2013 2014 2015 2016 -22% Kept the same level, except receivables for flotation concentrate sales 304 303 + Inventories 32,632 37,510 34,933 38,411 238 237 133 127 8
Slide 39: Investment Program
FINANCIAL PERFORMANCE Investment Program Historical and forecasted capital expenditures ($ mln) Capex breakdown ($ mln) Capex structure by currency 1H 2017 1H 2016 Y-o-Y RUB- Natalka 179 82 118% linked Olimpiada 52 33 58% 40% Blagodatnoye 13 9 44% Verninskoye 12 6 100% 1,432 USD- Alluvials 12 11 9%
Slide 40: Debt and Cash Overview
FINANCIAL PERFORMANCE Debt and Cash Overview Key Highlights Debt breakdown as of 30-Jun-17 As of the end of 1H 2017, the total debt amounted to $4,561 mln and was represented by $1.25 By source bln Sberbank loan (2023), Eurobonds (2020, 2022 & 2023) in the overall amount of $2.03 bln, local rouble
Slide 41: Net Debt & Cash Evolution
FINANCIAL PERFORMANCE Net Debt & Cash Evolution Net Debt & Cash evolution 2.5x 2.3x 2.1x 2.0x 1.9x 3,469 +$1mln 3,240 3,241 3,128 -$44mln 3,084 (reflecting RUB 8.5 bln prepayment 1,710 for Sukhoi 1,740 1,382 1,487 1,477 Log license) 30-Jun-16 30-Sep-16 31-Dec-16 31-Mar-17 30-Jun-17 Net Debt, $ mln C
Slide 42: 5. Appendix
5. APPENDIX Ss POLYUS
Slide 43: Strategic Price Protection Programme and Average Gold Price
APPENDIX Strategic Price Protection Programme (SPPP) overview The SPPP comprises of a series of zero cost Asian barrier collar agreements to purchase put options and to sell call options with “knock- out” and “knock-in” barriers Primary part Secondary part Callable amount, 285 420 775 440 380 25 0
Slide 44: TOP Examples
APPENDIX TOP Examples Increase in payload capacity of САТ785С Purchase of mobile canteens at the Wet Sag Mill #10 reconfiguration mining trucks at the Vostochny pit Vostochny pit Replacement of an intermediate shaft with Prior to the initiative, there was a 10-16 Prior to the initiative, the t
Slide 45: Kuranakh: Turnaround Example
APPENDIX Kuranakh: Turnaround Example Kuranakh in FY13 MINING IMPROVEMENTS Kuranakh in FY16 Optimisation of ore transportation The highest-cost, underperforming An average cost producer with a Logistic improvements asset within the portfolio without prospect to increase gold output a clear strat
Slide 46: Increase in Bio Oxidation (BIO) Efficiency
APPENDIX Increase in Bio Oxidation (BIO) Efficiency BIO throughput capacity, ore tonnes per day 1,251 BIO-3 BIO-2 BIO-1 1,089 1,127 1,133 1,017 1,053 1,058 939 979 185 863 860 892 895 904 908 193 205 797 827 179 167 166 749 180 156 672 621 95 107 107 128 137 134 183 120 106 607 505 529 548 423 477 5
Slide 47: Blagodatnoye: Intensive Approach
APPENDIX Blagodatnoye: Intensive Approach During the last 6 years, the Mill has been operating above its design capacity of 6.0 mtpa Prior to 2014, capex-intensive expansion of the Blagodatnoye processing capacities to 9 mtpa via constructing an additional production line (Mill No. 5) was considered
Slide 48: Brownfield Development Projects (1 of 2)
APPENDIX Brownfield Development Projects (1 of 2) 1 Reconfiguration of Mill No. 1 2 Blagodatnoye Mill expansion to 8.0 mtpa Increase ore processing capacity at the Blagodatnoye mill to Reconfiguration of the Mill-1 to process high-grade Olimpiada Initiative Initiative 8 mtpa via existing operations
Slide 49: Brownfield Development Projects (2 of 2)
APPENDIX Brownfield Development Projects (2 of 2) 5 BIO expansion at Mills No. 1,2,3 Initiative An additional BIO circuit at Mills No. 2,3 complex will provide an option to process excessive flotation concentrate The existing BIO capacities are not sufficient to process the whole amount of flotation
Slide 50: Cost Cutting Initiatives
APPENDIX Cost Cutting Initiatives Outsourcing of non-core Optimization of consumables Insourcing of core functions procurement functions PREVIOUSLY Consumables (e.g. diesel oil and ammonia Non-core support services (cleaning, Transportation of material nitrate) procured on spot basis, which is
Slide 51: Government Relations
APPENDIX Government Relations Sukhoi Log In February 2017, a company held by Polyus and Rostec JV (then 51% and 49% shares) 1, SL Gold, acquired the license for Sukhoi Log, the largest gold deposit in Russia and one of the largest deposits globally with 58 moz JORC resources The license was acqu
Slide 52: JORC Ore Reserves and Mineral Resources Estimates as at 31 December 2016
APPENDIX JORC Ore Reserves and Mineral Resources Estimates as at 31 December 2016 Ore Reserves MI&I Mineral Resources Deposit Proved & Probable Total Tonnes Grade Gold Tonnes Grade Gold (mt) (g/t) (moz) (mt) (g/t) (moz) Operating Olimpiada 316 3.0 30 474 3.0 46 Blagodatnoye 223 1.4 10 420 1. 4 19 Ti
Slide 53: Sukhoi Log: Satellite Map & Resource Block Model 2017
APPENDIX Sukhoi Log: Satellite Map & Resource Block Model 2017 Carbonaceous shales with inclusions and individual crystals of Pyrite Thin layers of gold along fractures in the quartz vein Source: Company data This image is illustrative only, and is subject to changes in market conditions and enginee
Slide 54: Gold Mining Tax Regime Benchmarking
APPENDIX Gold Mining Tax Regime Benchmarking Corporate income tax 34.0% 35.0% 30.0% 30.0% 31.0% 25.0% 28.0% 20.0% 24.0% 20.0% 15.0%1 Russia Kazakhstan Chile Indonesia South Africa Australia Mexico Canada Brazil Ghana Mineral extraction tax 16.0% 14.0% 8.0% 6.0% 5.0% 3.8% 5.0% 5.0% 2.5% 4 1.0% 5.0% 2
Slide 55: Gold Market Update: Supply and Demand Highlights
APPENDIX Gold Market Update: Supply and Demand Highlights Global gold supply and demand, t 1,639 1,296 1,130 1,335 1,574 1,690 1,235 4,735 4,687 4,454 4,215 4,269 4,216 4,309 2,917 3,076 3,155 3,233 3,236 2,745 2,846 2010 2011 2012 2013 2014 2015 2016 Mine production Recycled gold & Net producer hed
Slide 56: Gold Market Update: Consumer Demand
APPENDIX Gold Market Update: Consumer Demand Jewellery demand, t Jewellery demand in selected countries, t 250 2,683 216 214 2,481 2,389 2,129 200 181 176 188 179 182 176 2,042 169 165 1,126 151 146 153 141 1,046 973 138 150 121 127 935 899 94 99 100 85 939 807 753 599 629 50 595 617 627 662 514 0 2
Slide 57: Investment Demand
APPENDIX Investment Demand Gold official reserve holdings, August 2017 Changes in CB reserve holdings y-o-y, t Gold reserves, Gold’s share of change 681 33,465 Holder 714 tonnes total reserves 2005-16 US 8,134 24% 0% 177 Germany 3,374 10% -1% 475 173 IMF 2,814 8% -13% 31,436 366 Italy 2,452 7% 0% 33
Slide 58: Disclaimer
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