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PETROPAVLOVSK PLCQ3 2019 Results PresentationOctober 2019
2
Cautionary and forward-looking statements
— Some statements contained in this presentation or in documents referred to in it are or may be forward-looking statements, including
references to guidance. Such statements reflect the Company’s current views with respect to future events and are subject to risks,
assumptions, uncertainties and other factors beyond the Company’s control that could cause actual results to differ from those
expressed in such statements. Although the Company believes that such forward-looking statements, which speak only as of the date
of this presentation, are reasonable, no assurance can be given that they will prove to be correct. Therefore, you should not place
undue reliance on these statements
— There can be no assurance that the results and events contemplated by the forward-looking statements contained in this presentation
will, in fact, occur. The Company will not undertake any obligation to release publicly any revisions to these forward-looking
statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation, except as required by
law or by any appropriate regulatory authority. Nothing in this presentation or in documents referred to in it should be considered as a
profit forecast.
— The past performance of the Company and its securities is not, and should not be relied on as, a guide to the future performance of
the Company and its securities
— This presentation does not constitute, or form part of or contain any invitation, recommendation or offer to any person to underwrite,
subscribe for, buy, sell, otherwise acquire, exchange or dispose of any shares or securities in the Company or advise persons to do
so in any jurisdiction, including, but not limited to, the Russian Federation, nor shall it, or any part of it, form the basis of or be relied on
in any connection with or act as an inducement to enter into any contract or commitment therefore or engage in any other investment
activity. In particular, this presentation and the information contained herein are not an offer of securities for sale in the United States.
This presentation does not constitute an advertisement of any securities in the Russian Federation
— No reliance may be placed for any purpose whatsoever on the information or opinions contained in this presentation or on its
completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this presentation or its contents
or otherwise in connection therewith.
— The development and production plans and estimates set out herein represent the current views of the Company's management. The
Company’s Board reviews the production estimates on an ongoing basis. All planning is subject, inter alia, to available funding and
capital allocation decisions
— English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this presentation
3
Petropavlovsk: An Overview
St Petersburg
- RDC Hydrometallurgy
Mining & Processing
Pioneer
Albyn
Malomir
Pokrovskiy
Moscow
- Petropavlovsk Moscow
- PHM Engineering
Blagoveshchensk
- Regis Exploration
- Kapstroi Construction
Irkutsk
- Irgiredmet Institute
IRC Ltd. (non-core)(1)
London
- Petropavlovsk Plc
- Corporate headquarters
Open-pit mine
Underground mine
POX Hub
Analytical labs
R&D
Offices
(1) 31.1% equity interest
7.5Moz Gold mined to date
18 year Average mine life
1 of only two POX plants
in Russia
450-500koz Production in 2019e
A premium-listed, Russian-focused gold mining and R&D business with in-house services
4
qwas
Vertically integrated gold mining business producing gold in doré
One Of The Leading Gold Mining Companies In Russia
(1) As at 30 Sept 2019, incl. gold produced by our alluvial operations and JVs (2) As at 31 Dec 2018, in accordance with the JORC Code. Resources (M,I&I) are incl. of Reserves
(3) Market capitalisation of IRC Ltd as at 21 Oct 2019 = US$107m, Petropavlovsk’s 31.1% holding on a mark to market basis = US$33m
over 7.5Moz AuProduced to date(1)
20.5Moz of JORC Resources(2)
incl. 8.2Moz of Reserves
c.450 - 500KozFY 2019 gold
production guidance
c.14MtpaRIP processing capacity
3x gold minesMix of open pit + underground
over 2,600km2
Total licence area
Pressure Oxidation (POX) HubSuccessfully commissioned Q4 2018
US$305mRevenue H1 2019
US$83mEBITDA H1 2019
27%EBITDA margin
US$750 - 850/oz FY 2019 Total Cash
Costs guidance
31% equity interest in IRC Ltd.A low cost Hong Kong listed premium iron ore
producer(3)
c.US$413mMarket cap
5
Investment highlights
Highly efficient mining + processing operations
2
Strategic location and access to developed infrastructure
3
Potential to grow production via refractory ore processing at the newly launched
Pressure Oxidation (POX) Hub
4
Exploitable + long life mineral resource base with high expansion potential
6
Strong track record of mine development, expansion + asset optimisation
5
One of the major gold mining companies in Russia
1
Experienced management team + skilled workforce, in-house technical expertise and
R&D facilities
7
6
Price Vols
Premium listing on the London Stock Exchange
Share price and key market drivers(1)
Share price and trading volumes(1)
0m
10m
20m
30m
40m
50m
5p
6p
7p
8p
9p
10p
11p
Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019
Price (GBP, pence) 9.65p
52 Week Range 5.70p – 10.46p
Avg. Daily Vol (12m) 4,097,424
Shares outstanding 3,310,210,281
Market Cap. £319.4m (US$413.0m)
EV £772.0m (US$987.9m)
Gold PM Fix $1,488/oz
52 Week Range US$1,257/oz - US$1,548/oz
USD:RUB FX 64.00
52 Week Range 62.60 – 67.50
(1) As at 21 Oct 2019
(2) As at 30 Sept 2019
Shareholder structure(2)
Roman Trotsenko(via Fincraft Holdings Ltd
& VTB Bank)22.4%
Prosperity Capital9.4%
Sothic Capital9.2%
DE Shaw & Co7.2%RCB Bank
4.8%Slevin Ltd
4.5%Everest Alliance Ltd
4.5%
Canaccord Genuity Wealth Mgt2.6%
Hargreaves Lansdown2.5%
Dimensional Fund Advisors2.2%
L&G1.8%
VTB Capital1.7%
Interactive Investor1.6%
Other25.6%
7
History of the Group
0Mtpa
2Mtpa
4Mtpa
6Mtpa
8Mtpa
10Mtpa
12Mtpa
14Mtpa
16Mtpa
18Mtpa
20Mtpa
1999a 2002a 2003a 2004a 2005a 2006a 2007a 2008a 2009a 2010a 2011a 2012a 2013a 2014a 2015a 2016a 2017a 2018a
RIP + HL + Flotation Processing
First gold
from Pioneer
Pokrovskiy RIP
expanded
First gold
from Pokrovskiy
First gold
from Malomir
First gold
from Albyn
Pioneer RIP
commissioned
Moved to LSE
Main Board
Pioneer RIP
plant expanded
Pokrovskiy
RIP plant
commissioned
Listed on AIM
Malomir
RIP expanded
Albyn licence
and Malomir
main site
licence
acquired
Malomir
first
exploration
licence
acquired
Plant
expansions:
Pioneer, Malomir,
Albyn
Albyn
is commissioned
Pioneer RIP
expanded
Malomir RIP
plant
commissioned
Record gold
production of
741Koz
POX
construction
begins
POX
commissioning
First gold
recovered from
POX
Malomir
flotation line
commissioned
8
Well positioned within the industry in terms of gold reserves and average mine life
Exploitable and long life mineral resource base with high expansion potential
24
18 17 15
8 7 7 6 5
Polyus Polymetal IAMGOLD Eldorado Gold Nordgold Petropavlovsk Centamin EndeavourMining
Highland Gold Acacia
64
c.20.5Moz of JORC Resources,
of which c.8.2Moz are JORC Reserves
(refractory + non-refractory)
Exploration work suggests potential for
the discovery of additional resources
P&P Reserves (2018)
Average mine life(1)
49
2621 20 19 17 15 15
10 9
Eldorado Gold Polyus Highland Gold IAMGOLD Petropavlovsk Nordgold Polymetal Centamin Acacia EndeavourMining
Source: Company data, Bloomberg, companies’ annual reports
(1) Calculated as 2018 P&P Reserves divided by annual production in 2018
In Moz
Years
9
Petropavlovsk:
Today & Tomorrow
10
Operational and Corporate Achievements
Over the last 12 months, a significant business turnaround has been achieved
Recent Achievements
Flotation
✓ Malomir flotation plant fully ramped-up and operating above design parameters
✓ Ongoing Pioneer flotation construction to double refractory ore processing capacity
POX Hub
✓ POX plant commissioned ahead of schedule and successfully ramped-up
Financial Performance
✓ H1 2019 TCC better than lower end of guided range
Debt
✓ Convertible bonds refinanced at a lower coupon
✓ IRC loan refinanced with a more favorable payment schedule
Corporate
✓ Third party advisor retained to review and assist with ESG ratings / communication
✓ Independent Board constituted
11
H1 2019 Financial Results Highlights
Strong set of financials overall: costs and capex down, revenue, EBITDA and profits up
Group Revenue (US$m) Capex (US$m)EBITDA (US$m)
270
305
H1 2018 H1 2019
61
83
H1 2018 H1 2019
67
45
H1 2018 H1 2019
1 2 4Total Cash Costs (US$/oz)3
899841
H1 2018 H1 2019
+13% +37% -6% -33%
12
US$899/oz US$841/oz
8052 30
131 5632 0.5
H1
20
18
PO
X r
am
p-u
pre
late
d c
osts
Infla
tio
n
Min
ing
ta
x
Chan
ge in
gra
de
s /
reco
veri
es
FX
De
ferr
ed
str
ipp
ing
Oth
er
taxe
s
H1 2
01
9
Fall in TCC despite underutilised capacity POX , further improvement expected in H2 2019
H1 2019 Group Total Cash Costs (TCC)
(1) The Russian statutory mining tax rate is 6%. Under Russian Federal Law 144-FZ dated 23 May 2016 that introduced certain amendments to the
Russian Tax Code, taxpayers who are participants in Regional Investment Projects have the right to apply reduced mining tax rate provided certain
conditions are met. Malomir and Albyn met eligibility criteria and applied 1.2% mining tax rate in H1 2019. Pokrovskiy applied full mining tax rate in H1
2019
-6%
End of tax relief on
capital investment(1)
Higher grades +
recoveries at Albyn
and Malomir
Lower stripping in H1
2019 vs. H1 2018
Avg. RUB:US$ FX
depreciated by 10%
from 59.3 (H1 2018) to
65.2 (H1 2019)
Electricity (+5%)
Diesel (+18%)
Materials (+10%)
13
Liquidity and Debt Overview
Recent bond restructuring has strengthened near-term liquidity position
Refractory
Refractory978
638 611 596 594
930
610 599 585 568
3.7x
3.5x
3.0x 3.0x
4.0x
2014 2015 2016 2017 2018 2019 - 2022
Total debt Net debt Net debt / Underlying EBITDA
Target
c.2.0x
FY 2018 EBITDA affected by
refractory concentrate
stockpile build-up during POX
commissioning phase
Targeting mid-term Net Debt / EBITDA of c.2.0x
100
500
125
2019 2020 2021 2022 2023 2024 2025 2026
US$125m
convertible bond
matures
Jul 2024 with
8.25% coupon
US$500m notes
maturing Nov 2022
with 8.125%
coupon
Group debt maturity schedule (US$m)
14
B- (Outlook Positive)
(upgraded from CCC)
Last review: August 2019
Improving Credit RatingH
igh
lig
hts
– POX commissioning to have a positive impact on 2019
financials
– IRC debt refinancing to improve liquidity position
– Development of underground operations
– Expanding the Board reinforced corporate governance
Up
sid
e
Tri
gg
ers
Successful convertible bond refinancing
2019 EBITDA growth in line with S&P base case
Improved credit metrics backed by potential sale of IRC stake
Building up successful POX track record
Delivery on revised business strategy
Do
wn
sid
e
Tri
gg
ers 2019 EBITDA may not materially improve vs. 2018
Difficulty in refinancing the US$100m convertible bond due
2020
B- (Outlook Negative)
(outlook re-affirmed)
Last review: April 2019
– Significant strengthening in liquidity position
– Convertible bond successfully refinanced
– Repayment of US$57m bridging loan by IRC
– Increased visibility for production following POX commissioning
– Significant deleveraging by end-2020
– Improved corporate governance
FFO adjusted gross leverage remaining sustained below 4x
Sustained FCF margin with funds used for reduction of gross debt
Improvement of production volumes and cash costs
Improvement in corporate governance
Deterioration of liquidity and / or aggressive dividend distributions
Failure to improve production volumes
Source: S&P and Fitch rating reports
An improved credit rating reduces the Company’s cost of capital
Key highlights from latest report Key highlights from latest report
15
FY2019 Outlook
On track to meet FY 2019 guidance of 450Koz – 500Koz gold with lowered cost guidance
— US$45m - US$55m, consisting of sustaining, exploration + remaining POX capex
— Additional Pioneer flotation spend of c.US$30m (a portion of which falls into 2019)Capex
— c.160Kt – 165Kt of refractory concentrate at 28g/t – 29g/t to be processed this year, of which:
— c.35Kt of concentrate at 28g/t produced / stockpiled in 2018
— c.125Kt – 130Kt of refractory concentrate at 28g/t – 29g/t produced in FY2019e(1)
Malomir
Concentrates
(at POX)
— Elginskoye (Albyn) – currently open in all directions with drilling expected to increase resource of ore
body extensions
— NE Bakhmut pit (Pioneer) high grade material identified below pit with extensions of mineralisation to
increase open pit and underground reserves
— Khabarovsk assets (greenfield) showing highly promising results
Exploration
— TCC revised downwards to US$750 – US$850/oz due to strong operational achievements including a
smoother-than expected ramp-up of the POX Hub (RUB : US$ FX of 66)Costs
— 38Kt at 40g/t – 75g/t Au secured H1 2019(2)
— Additional c.20Kt at 49g/t - 75g/t Au currently under negotiation
— Concentrate is from Russia and Kazakhstan
3rd party
Concentrates
(at POX)
(1) c.125Kt – 130Kt processed from 125Kt – 145Kt of concentrate produced at Malomir during FY2019e
(2) Material secured under contract with deliveries to site ongoing
16
Q3 2019 Update
17
Q3 2019: Increased Production / Sales vs. Q3 2018
Total Q3 2019 production of 130koz - on track to meet FY guidance
47.0
30.8
13.1
RIP
POX
0
10
20
30
40
50
Albyn Malomir Pioneer POX Plant(3rd party
concentrates)
39.5
Koz Albyn (c.47koz Q3 / 126.2koz YTD 2019)
– Q3 production on target in terms of mining, processing and
production
– YTD output above target due to higher grades
Malomir (c.39.5koz Q3 / 132.6koz YTD 2019)
– Refractory ore mining continued at the Centralny open pit, in
line with expectations for Q3 and FY2019
– Mining of non-refractory ore mining continued at
Quartzitovoye open pit and underground operations, with
slightly lower grades compensated by higher mining rates
Pioneer (c.30.8koz Q3 / 83.5 YTD 2019)
– RIP throughput recently affected by an increasing portion of
refractory gold in ores
– FY 2019 production affected by Q1 water ingress issues
POX 3rd party concentrates (13.1koz Q3 / 13.2koz YTD 2019)
– First batch of 3rd party material (c.13kt @ 40 to 50g/t)
processed in July, 95% recovery rate
Q3 production: 28% increase to c.130koz from Q3 2018:
c.102koz
– c.30% of gold produced (c.43koz) from the POX Hub
Q3 sales: c.126koz vs. Q3 2018 (c.83koz(1))
– Avg. gold sales price: US$1,388/oz (Q3
2018:US$1,228/oz)
– Hedging: 80koz at US$1,300/oz outstanding as at 30 Sept
2019
RIP
RIP
POX
Q3 2019 production by mine-site and processing type
(1) Total gold sales in Q3 2018 were affected by the build-up of 19.7koz of gold contained in concentrate stockpiles ahead of POX plant
commissioning
Q3 2019 headline production / sales
Q3 and YTD summary by mine
18
Option agreement to acquire outstanding 25% stake in TEMI LLC
The prospective Unglichikan, Afanasevskoye and Elginskoye deposits sit within TEMI
Option and purchase agreement
– On 23 Sept 2019, the Company entered an option
agreement to purchase outstanding 25% stake in TEMI
– Option price of US$13m payable by 18 Nov 2019
– US$7m cash payment made in May 2019
– US$6m outstanding may be paid in cash or shares at a
fixed price of £0.0826 / share
– Exercise priced depends on when payment is made:
– US$60.0m payable in May 2021, or
– US$53.5m on or before 20 May 2020
– Payable in whole or in part using shares or cash, at the
Company’s election
Future production
– Elginskoye ores are partly non-refractory and amenable to
processing at the Albyn RIP plant
– Production at Elginskoye to begin 2020, coinciding with
depletion of ore currently mined at Albyn main pit
– 156koz of possible production in 2020
JORC Reserves & Resources(1)
– Reserves (P&P) of 1.95Moz, of which 1.53Moz are non-
refractory
– Resources (M&I+I) of c.4.00Moz
Albyn
Afanasevskoye
Elginskoye
Unglichikan
Scale
= 5km
(1) As at 31 Dec 2018
19
POX: Technology Driven
Growth
20
— “Refractory” ore contains gold encapsulated in
sulphides which resists recovery via standard methods
— Sulphides need to be broken down chemically or
mechanically
— “Double refractory” ore also contains carbon, which
impacts recoveries → special measures are required to
neutralise carbon’s effect
Main Options to Treat Gold Bearing Refractory Ores
POX: Introduction To Refractory And Double Refractory Gold OresPOX – one of the most efficient and environmentally-friendly ways to extract gold from
refractory ore
High Grade Concentrate
Pressure Oxidation
(POX)
Bio Oxidation
(BIOX)
Ultra-Fine
Grinding
Roasting
1. POX: oxidation in an
autoclave: high pressure
+ temperature
2. Roasting: oxidation
via high temperature
roasting
3. BIOX: oxidation using
bacteria
4. UFG: fine grinding
releases gold
encapsulated in sulphides
or other minerals
‒ 65% (5.2Moz) of the Group’s total Reserves (8.2Moz) are refractory
‒ 60% (12.3Moz) of the Group’s total Resources (20.5Moz) are
refractory
(1) As at 31 Dec 2018, in accordance with the JORC Code 2012. Reserves are shown as Proven + Probable. Resources are inclusive of Reserves
By design, our POX Hub is able to treat some of the most
technologically complex refractory ore concentrates
2.0Moz
0.2Moz2.7Moz
0.4Moz
5.3Moz
Total
38%
51%
3%
8%
Pioneer
open-pit
2.0Moz
Albyn
open-pit
0.4Moz
Malomir
open-pit
2.7Moz
Pioneer
U/G
0.2Moz
4.2…
0.3Moz6.7Moz
1.1Moz
12.3Moz
Total
34%
54% 2%
9%
Albyn
open-pit
1.1Moz
Malomir
open-pit
6.7Moz
Pioneer
U/G
0.3Moz
Refractory Reserves(1) Refractory Resources (1)Refractory + Double Refractory Ore
Pioneer
open-pit
4.2Moz
21
The POX Hub is well positioned in terms of easy access and well developed infrastructure
The POX Hub Concept
Blagoveshchensk
Albyn
Pilot POX Plant
Malomir
Pioneer
Pokrovskiy POX Hub
Fevralsk(1)
(1) Fevralsk and Tygda are rail loading facilities
Tygda(1)
Concentrate Transportation: Malomir to POX
Km
Truck: Malomir to Fevralsk 166
Rail: Fevralsk to Tygda 1,134
Truck: Tygda to POX Hub 18
Total 1,318
CHINA
Operating mines
Underground mine
POX
Analytical labs
Hydro power plant
Railway
Transportation route
22
POX: A World Class TeamA world class research and development expertise lead by a world class team
Gidrometallurgia: Petropavlovsk’s Scientific Research Centre, established to support the POX project
— Unique laboratory, created the concept of the POX project for the Group, including key technological parameters
— Equipped with state of the art autoclave laboratory facilities (laboratory + pilot testing, feasibility work + audits)
— Unique team of 40 specialists incl. PhD holders, who have undertaken a range of work for c.30 third party companies in addition to POG
Irgiredmet: The Irkutsk Research Institute of Precious and Rare Metals and Diamonds
— Founded in 1871, over 140 years of expertise in R&D, design + engineering
— Helped to develop flotation process / testing, laboratories performed autoclave leaching tests
— 10 specialised technological laboratories with c.300 highly qualified staff, more than 25 patents in the fields of mining / metallurgy
— Annually carries out more than c.200 researches assignments for third party companies, incl. R&D activities to help develop new deposits
Pilot Test Plant: Petropavlovsk’s experimental industrial model pilot processing plant
— Launched in 2009, the plant is the first and only of its kind in Russia
— Small scale autoclave to test all parameters of the process
— Unique asset giving Petropavlovsk the flexibility to test any type of gold recovery process on a smaller scale
— Also carries out test work / scenario analysis for external third party companies
Our partners and industry specialists: over 20 leading industry companies contracted to help us successfully develop / launch the
POX Hub
— Shanghai Morimatsu (autoclaves), LOTERIOS SpA(pressure pipe lines), DSB Säurebau GmbH (titanium inner gear + autoclave linings),
Outotec (flotation, control / automation equipment), Feluwa Pumpen GmbH (acid resistant high-pressure slurry pumps), MOGAS
Industries (valves), Red Mountain Energy Corporation (oxygen plant)
PHM Engineering: engineering and construction supervision of the Group’s processing assets, including the POX Hub
— Responsible for new project feasibility work, technical design, permitting, equipment selection, oversight of manufacturing process,
installation, commissioning
— Over 50 employees including PhD holders
23
POX to reach its full potential by 2021(1): contribution from refractory ore to increase up to c.65%
(1) Assumes 3rd flotation line at Malomir from 2021
(2) Capacity ranges depend on concentrate parameters, particularly sulphur content
Capacity Range(2)
POX: The Heart Of Our Future
0
10
20
30
40
50
60
70
-
2
4
6
8
10
12
14
16
18
2019e 2020e 2021e 2022e
Pioneer non-refract Pioneer flotation Malomir non-refract
Malomir flotation Albyn non-refract % Refractory (RHS)
%
% of total which is
refractory
Refractory RefractoryRefractory
Refractory
Refractory
Refractory
Refractory
Pio
neer
Malo
mir
Alb
yn
Pioneer Malomir 3rd Party Ore
Contribution of Refractory Ores at Malomir +
Pioneer (Mtpa)(1)POX ramp-up (ktpa)(1)(2)
2 a
uto
clave
s4 a
uto
clave
s
0
50
100
150
200
250
300
350
400
450
500
2018 2019e 2020e 2021e 2022e
Pioneer Malomir Albyn 3rd Party
Conce
ntrate
(kt
)
24
POX Processing Costs: Fixed vs. Variable
Overall POX processing costs decline rapidly to c.US$100/t as throughput is increased
Throughput (ktpa) Variable CostFixed Cost
– Through the ramp-up period in H1 the proportion
of fixed costs was c.2/3 of total POX processing
costs; the share of fixed costs is expected to
decrease with the increase of the plant’s utilisation
– H1 2019 processing cost equated to around
US$230/t concentrate
– 144Kt – 149Kt of refractory concentrate is
expected to be processed in H2 2019, comprising:
– 84Kt - 89Kt of our own concentrate
– 60Kt from 3rd party sources
– As a result FY 2019 processing costs are
expected to be c.US$175/t concentrate
– Going further the unit processing cost
declines rapidly to c.US$100/t as throughput is
increased as designed0
50
100
150
200
250
H1 2019 H2 2019 FY 2019 FY 2020 FY 2021 FY 2022
76kt
450kt450kt340kt
220kt
144kt
Fixed costs decrease rapidly
on a per tonne basis as
throughput is increased
US
$/t
FY 2019 to FY 2020H1 to H2 2019
Unit cost of processing and throughput rates Comment
25
A Comparison of Russian POX ProjectsThere are only two gold POX processing plants in Russia, with a third under
construction
Polymetal Amursk POX 1 Polymetal POX 2 Pokrovskiy POX Hub
Commissioned 2012 Q3 2023 Q4 2018
Number of autoclaves 1 1 4
Concentrate processing
capacity225Ktpa 250 - 300Ktpa 400 - 500Ktpa
Capex US$272m US$431m US$310m
Capital intensity US$1,210/t US$1,437/t - US$1,724/t US$620/t - US$775/t
Operational temperature 200 ˚С 240 ˚С 225 ˚С
Pressure 22 bar 43 bar 35 bar
POX recovery rate 97% 96% 93% - 98%
— A comparable amount of development capex was spent to develop the Pokrovskiy POX Hub vs. the Amursk POX 1 project despite
significant difference in processing capacity
— As such, the new Pokrovskiy POX facility has a low capital intensity
(1) The Pokrovskiy POX Hub achieved pressure of 30 bar and temperature of 220˚С. Ramp-up to design parameters continues
26
Autoclave Peer Analysis
POX technology around the world
Project Start POX Feed POX Capacity Autoclaves Temp Pressure ~S Feed Reserves
Pueblo Viejo 2012 Whole Ore 24,000tpd 4 230C 3,450kPa 6.8% 2.8g/t
Goldstrike 1990 Whole Ore 16,000tpd 6 220C 2,900kPa 2.5% 3.9g/t
Copler 2018 Whole Ore 6,000tpd 2 220C 3,150kPa 4.8% 2.8g/t
Lihir 1997Whole Ore &
Concentrate25,000tpd 4 205C 2,650kPa 6.0% 2.3g/t
Twin Creeks 1997Whole Ore &
Concentrate10,400tpd 2 225C 3,170kPa 4.5% 1.8g/t
Kittila 2008 Concentrate 870tpd 1 207C 2,500kPa 18.0% 4.7g/t
Amursk 2012 Concentrate 616tpd 1 200C 2,170kPa 6.5% 5.2g/t
Porgera 1990 Concentrate 16,400tpd 4 197C 1,750kPa 14.0% 4.8g/t
Macraes 1999 Concentrate 650tpd 1 225C 3,140kPa 9.0% 1.1g/t
Corrego do Sitio 2011 Concentrate 240tpd 1 230C 3,600kPa 7.8% 4.1g/t
Pokrovskiy 2018 Concentrate 1,370tpd 4 225C(1) 3,500kPa(1) 23.0% 1.0g/t
Stibnite (Project) 2023E Concentrate 20,000tpd 1 220C 2,400kPa 5.5% 1.6g/t
Donlin (Project) 2025E Concentrate 8,500tpd 2 220C 3,250kPa 7.0% 2.1g/t
Lagunas Norte
(Project)2026E Concentrate 6,000tpd 1 - - 8.0% 2.9g/t
Certej (Project) - Concentrate 2,600tpd 2 230C 3,547kPa 13.0% 1.7g/t
(1) Pokrovskiy POX Hub achieved autoclave pressure of 3,000kPa and a temperature of 220˚С, as ramp-up to design parameters continues
27
Corporate Strategy
28
Strategic Priorities
Asset rationalisation, organic and inorganic growth options
(1) Petropavlovsk is a 31.1% holder of IRC. Gazprombank has been mandated to assess Petropavlovsk’s options
Opportunities Goal Implementation
Str
eam
lin
ing
the b
usin
ess
IRC sale
‒ Eliminate IRC loan guarantee
‒ Improve credit rating
‒ Improve balance sheet metrics
‒ Focus on gold
‒ Achieve higher market multiples
‒ Disposal of a 31.1% controlling stake to a
strategic investor alongside a transfer of the
loan guarantee(1)
‒ Alongside subsequent sale of the IRC stake, an
agreement with Gazprombank to eliminate IRC
guarantee
Org
an
ic G
row
th
Elginskoye
‒ Extend mine life at Albyn
‒ Utilise existing infrastructure
‒ Maximise IRR
‒ Construction of mine at Elginskoye
‒ Construction of road to Albyn plant
‒ Transportation of ore to Albyn RIP
Increase feed of POX
plant by processing
own concentrates
‒ Optimise POX utilisation
‒ Secure concentrates with the best
margins
‒ Maximise IRR
‒ Construction of Pioneer flotation plant (initially 2
lines) with further expansion (3rd flotation line)
‒ Expansion of flotation plant at Malomir (3rd
flotation line)
Ino
rgan
ic G
row
th
New Business
‒ Improve grade of POX feed material
‒ Increase POX utilisation
‒ Expand margins + increase production
‒ Identification of higher grade refractory assets
which can’t be developed at this moment
‒ Identification of the most effective way to bring
together synergies of these assets and the
processing capacity of the POX Hub
Autoclaves
5 + 6 (JV option)
‒ Fully benefit from POX facilities and
POG’s comprehensive in-house R&D
capabilities
‒ Financed by JV partner
‒ Adjustment of the technological process to
process complex material (eg. triple refractory)
29
Organic Growth: Elginskoye to Replace Albyn Pit
Ore body shape is favourable for a low strip-ratio / low dilution operation
– Elginskoye is predominantly a non-refractory ore body, located c.30km west of Albyn plant
– 2.8Moz of JORC Resources including 1.5Moz of JORC Reserves (at avg. 1.1g/t)
– Shallow dipping mineralised zones suitable for low cost open pit mining
– Preparation started to commence production in 2020
– Access road completed
– First mining equipment has been transferred from Albyn to site
– Estimated gold production of c.156koz in 2020
30
Organic Growth: Pioneer is a High Return Strategic Project
At spot gold prices, Pioneer has an IRR of greater than 130%
– After more than 10 years of production Pioneer is
transitioning to become a mainly refractory deposit
– Project looks attractive in terms of profitability + cash
flow generation under various macroeconomic scenarios
Project Sensitivities
IRR
Gold Price (US$/oz)
NPV
Gold Price (US$/oz)
1,250 1,300 1,400 1,450 1,250 1,300 1,400 1,450
RU
B:U
S$
FX 61 86% 99% 126% 140%
RU
B:U
S$
FX 61 137 167 226 256
67 119% 134% 165% 182% 67 191 221 281 310
70 136% 152% 186% 204% 70 215 245 304 334
Key Project Metrics
Total capex spend over 2 yrs US$30m
Construction timeframe 12 - 14 months
First production H2 2020
Processing capacity 3.6Mtpa
Mine life >10 years
31
Inorganic Opportunities: Refractory Deposits in Russia
A large number of known refractory deposits exist in the region and across Russia
POX Hub
Olimpiada
(Polyus)
41.4Moz @ 2.9g/t
Mayskoye
(Polymetal)
2.8Moz @ 11.4g/t
Veduga
(Polymetal)
0.9Moz @ 4.8g/t
Kyuchus
(Govt. owned)
6.9Moz @ 9.3g/t
Nezhdaninskoye
(Polymetal)
7.9Moz @ 5.0g/t
Albazino
(Polymetal)
1.6Moz @ 4.6g/t
Taseevskoye
(Highland Gold)
5.1Moz @ 5.1g/t
Itakinskoye
1.3Moz @ 6g/t
Kluchevskoye
(Sun Gold /
China Gold)
2.5Moz
Malomir
6.9Moz @ 0.8g/t
Bogolubovskoye
(NOK)
2.3Moz
Pioneer
5.9Moz @ 0.7g/t
Nasedkino
(Mangazeya
Mining)
0.9Moz @ 2.1g/t
Poputninskoye
(Polyus)
4.3Moz @ 3.2g/t
Zmeinoye
(Polyus)
0.4Moz @ 4.6g/t
32
Inorganic Growth: 3rd Party Refractory Concentrates Market
Concentrate markets in Russia and Kazakhstan
Mine OwnerOwn
FacilitiesExports
Tonnes
Available (Kt)
Potential Tonnes
Available (Kt)
Olimpiada (Au)(2) Polyus ✘ ✔ 50
Olimpiada (Au,Sb)(2) Polyus ✘ ✔ 150
Bogolyubovskoye NGOK ✘ ✔ 30
Udereyskoye NGOK ✘ ✔ 35
Drazhnoe GV Gold ✘ ✔ 20
Badran Zapadnaya ✘ ✔ 10
Mayskoye(3) Polymetal ✘ ✔ 57
Total available volumes 145 207
Refractory Mines in Russia and Concentrate Availability (Ktpa)
(1) Petropavlovsk’s process can stabilise arsenic as scorodite which offers a more environmentally-friendly approach to roasting
(2) Olimpiada produces two types of flotation concentrates: 150Ktpa of concentrate is sold with an antimony content of up to 30% and 50Ktpa of gold
concentrates containing some antimony
(3) 57Ktpa of Mayskoye concentrate, which is not processed at the Amursk POX plant, may be available
1. Russia: 40% of gold resources are refractory
— Only limited refractory treatment capacity exists including two POX plants
— The majority of concentrates are exported to China
— Russia has declared gold as strategic asset and intends to prohibit exports of concentrates
— For environmental reasons, China is shutting down roasters - particularly those treating high arsenic / antimony(1)
2. Kazakhstan: another source of refractory concentrates
— Four refractory mines currently produce flotation concentrate, with potential to expand further.
— Petropavlovsk has secured 20Kt grading 40g/t to 50g/t which it is currently processing at recoveries of 95%
33
Autoclaves 5 + 6 (JV Option)
Potential for a JV with another refractory producer or developer
– Existing onsite infrastructure enables two additional autoclaves lines (5 + 6) to be added, although some expansion of
oxygen capacity will be required
– Given the large number of refractory ore bodies in the region, the Company believes the development could be
funded via a JV with another refractory developer or producer
– Adjustment in technology can be made to process very complex refractory materials, including:
– Pyrrhotite-containing concentrates
– Bio-cakes
– Cuprous gold-bearing concentrates
– Carbonaceous concentrates from other deposits
– Concentrates obtained from the tails of existing mills
34
Responsible Business
35
Sustainable Development
Maintaining leading ESG Practices
— Full compliance with applicable health and safety legislation
— H&S management systems
— Regular external + internal audits / inspections
— Development of safety culture
— Risk management to mitigate impact
— High quality task specific training
Health and Safety
— Full compliance with UK Corporate Governance Code
— Safety, Sustainability and Workforce Committee formed in Nov
2018
— Annual review + publication of a revised Modern Slavery
Statement
— Remuneration disclosure
— Established Code of Conduct and Business Ethics
Corporate Governance
— Environmental Management system compliant with GOST R
ISO 14001- 2016 (ISO 14001:2015)
— Optimisation of energy consumption, water recycling, GHG
monitoring + reporting in line with international standards
— Strict control cyanide management
— Fully compliant + insured tailing management facilities
— Ongoing land rehabilitation + conservation of biodiversity
— Effective waste management (31% of all waste is reused)
Environmental Management
— Major tax payer in Amur region
— Active engagement with Indigenous communities
— Establishment of POX Hub part of government’s policy to develop
Russian Far East
— Accessible and effective grievance procedure
— Trade Union: 1,616 members, 18% of employees
— Equal career opportunities regardless of gender
— Pokrovskiy Mining College
Social Responsibility
Petropavlovsk is not only fully compliant with regional, national + international legislation, but is striving to
perform in line with best industry practices
36
15%
14%
57%
14%
Non-Executive Chairman (1)
Non-Executive Directors (1)
Independent Non-Executive Directors (4)
Executive directors (1)
Strong corporate governance supported by an experienced Board…
BoD structure Board of Directors
Mr Mirzaaziz Musakhanov
Mr Harry Kenyon-Slaney
Mr Robert Jenkins
Mr Damien Hackett
Mr James W Cameron Jr
Dr Pavel Maslovskiy
Independent N
on-e
xecu
tive
Dire
ctors
Sir Roderic Lyne
Non-e
x.
Chairm
an
CE
O
Dr Pavel Maslovskiy (N) (S) (E*)
Chief Executive Officer
▪ Re-appointed in June 2018▪ Сo-founded the Company in 1994▪ CEO of Petropavlovsk 1994-2011 (when
acted as Senator-Member to Federation Council) and again 2014-2017
Sir Roderic Lyne (N*)
Non-Executive Chairman
▪ Re-appointed as Chairman following June 2018 AGM
▪ Previously was a Non-Ex. Director of AricomPLC
▪ Served as British Ambassador to Russia from Jan 2000 until Aug 2004
Mr James W Cameron Jr (A) (R)
▪ Appointed October 2018▪ Formerly Founder, CEO + Chairman of
Occupational Urgent Care Systems▪ Extensive experience, providing expertise
and consulting services for companies in Russia and the former USSR
Mr Damien Hackett (N) (A) (R) (S)
▪ Appointed October 2018▪ Mr Hackett is Chairman of UrAmerica▪ Has 26 years critical research experience
covering globally diverse mining companies▪ Former Vice Chairman Mining Advisory at
Canaccord Genuity
Mr Mirzaaziz Musakhanov
▪ Nominated by Aeon Mining Ltd, our largest shareholder and appointed as Non-Executive Director on 14 Oct 2019▪ Chairman of the Board at Novaport Group
and a Director at GeoProMining Group▪ Over 20 years of experience in financing and
industry
Mr Robert Jenkins(A*) (R*) (N)
▪ Re-appointed June 2018▪ 25 years of Russia-related investment /
natural resources experience▪ Previously CFO of two Russia-focused
natural resources companies▪ Formerly held Board appointments with
Ruspetro PLC and Toledo Mining PLC
Mr Harry Kenyon-Slaney (S*) (A) (N)
▪ Appointed November 2018 and became Senior Independent Director April 2019▪ Currently holds positions of Non-Ex.
Chairman of Gem Diamonds, Non-Ex. Director of Sibanye Gold▪ 33 years experience, principally with Rio
Tinto
Non-e
xecu
tive
Dire
ctor
7Directors
– Effective corporate governance with focus on sustainable value creation for all stakeholders – 4 committees in place with Remuneration and Audit Committees consisting of Independent Non-executive
Directors only
(S) Member of the Safety, Sustainability and Workforce Committee
(N) Member of the Nominations Committee
(A) Member of the Audit Committee
Board fully compliant with the UK Corporate Governance Code
(R) Member of the Remuneration Committee
* Denotes role of Chairman of the Committee(E) Member of the Executive Committee
BoD breakdown
37
Sustainability Management and Governance
The Board of Directors has appointed committees at Board level to oversee different aspects of
business, risks and performance
Board of Directors
Structure for the Monitoring + Reporting of
Sustainability Performance Data
1HSE Performance data is collected
by key operational management
2Data + summary
reports are submitted to the CEO + Deputy
CEO3
Data + summary reports submitted by
Deputy CEO to Executive + HSE
Committees
4A summary is made to the
Board of Directors
5Recommendations
are given to key operational
management, which then provides BoD
with feedback
The newly formed Safety, Sustainability & Workforce Committee
(SS&W) is responsible for:
— Reviewing + monitoring health, safety, environmental, sustainability
processes + procedures
— Assisting with the community relations + workforce engagement
The Executive Committee
— Consists of both Executive Directors + key
operational management
— Responsible for overseeing implementation of
strategy, business targets + decisions made at Board
level, including decisions made by SS&W Committee
— Reviewing internal control and risk management
Dr Pavel MaslovskiyChief Executive Officer
Mr Damien HackettNED
Mr Harry Kenyon -SlaneyChairman
Dr Alya SamokhvalovaDeputy CEO
38
0.86
0.79
Q3 2018 Q3 2019
1.02
1.18
Q3 2018 Q3 2019
Reporting in line with international standards
Key Performance Indicators Q3 2019
1.58
1.54
Q3 2018 Q3 2019
Lost Time Injury Frequency Rate (LTIFR)Accidents per million manhours
Greenhouse Gas Emissions (GHG) intensity Normalised per ounce of gold produced, t CO2e/oz
Energy ConsumptionMillion GJ
Water UsedMillion m3
(1) Oxygen plant electricity needs contribute the increased energy consumption
— Decline demonstrates an improvement due to educational
Health and Safety procedures and stricter site monitoring
— GHG intensity declined due to improved efficiency and
increased production
— Increase in water usage attributable to the POX hub and
increase in production
— Increase in energy consumption attributable to the POX hub (1)
and increase in production
-3%
+16%
-8%
4.746.28
Q3 2018 Q3 2019
+32%
39
10,343
7,080
6,652
6,053
5,813
5,316
5,105
4,387
4,362
4,338
2,073
Polyus
New Gold Incorporated
Anglogold Ashanti
Sibanye
Kinross
Petropavlovsk
Barrick Gold
Gold Fields
Polymetal
Eldorado Gold Company
Centamin
Energy consumption
(GJ / US$m of revenue)
Greenhouse gas emissions (СО2)
(tonnes / US$m of revenue)
LTIFR(2)
(cases per million working hours)
Women employees
(share of the total number of employees)
24.6%
20.0%
16.0%
15.4%
15.2%
13.0%
12.1%
12.0%
11.0%
10.0%
2.0%
Petropavlovsk
Polymetal
Gold Fields
Polyus
New Gold Incorporated
Sibanye
Barrick Gold
Anglogold Ashanti
Kinross
Eldorado Gold Company
Centamin
1,776
1,101
795
759
612
566
480
464
460
450
397
Sibanye
Polyus
Anglogold Ashanti
Petropavlovsk
Centamin
Gold Fields
Polymetal
New Gold Incorporated
Kinross
Eldorado GoldCompany
Barrick Gold
1.18
1.14
0.50
0.45
0.33
0.26
0.24
0.15
0.09
0.09
0.07
Sibanye
Anglogold Ashanti
Petropavlovsk
Gold Fields
Eldorado Gold Company
Centamin
New Gold Incorporated
Barrick Gold
Polyus
Polymetal
Kinross
Sources: Thomson Reuters, company data
(1) Data for full year 2018
(2) Reporting standards vary, it is not always apparent whether all accidents are reported by a company. Petropavlovsk reports accidents at all facilities while
Russian legislation dictates to report the accidents at hazardous facilities only
ESG Performance Benchmarking(1)
Petropavlovsk vs. major gold companies
Well positioned among peers in terms of implementing ESG standards, with some social aspects better vs. peers (eg.
share of female employees). Room for further improvement to obtain an improved ESG rating in the mid-term
40(1) World Wide Fund for Nature Russia 2018
(2) CSR Hub 2018
Sustainable RatingsWell positioned among peers in the framework of Environmental responsibility and
sustainability disclosure
ESG/CSR Rating(2)
(out of 100)
80 79 74 73 73 72 69 68 67 64 1.59
1.43 1.331.04
0.53 0.48 0.38
Kin
ros
s
Po
lyu
s
Po
lym
et
al
No
rdg
ol
d
Pe
tro
pa
vlo
vs
k
Hig
hla
nd
Go
ld
Go
ld o
fK
am
ch
atk
a
Score of 69 (out of 100)
based on Petropavlovsk’s
disclosure of information
Community
Employees
Environment
Governance
The Transparency Rating of Environmental
Responsibility Project for M+M Companies of Russia(1)
Overall Rating
22 place2018 (0.27)
24 place2017 (0.53)
Ecological Management
17 place2018 (0.71)
25-26 place2017 (0.13)
Environmental Impact
22-34 place2017 (0.13)
22-34 place2018 (0.36)
Information Disclosure
23-31 place2018 (0.50)
18 place2017 (0.56)
— Well positioned among the peers
— Second best group (60-79)
Improved rating in every category, with the exception of
Information Disclosure, an area where the Company has the
opportunity to improve in 2019
41
Conclusions
42
Summary: A Conservative Strategy Focused on Shareholder Returns
A holistic strategy directed at improving long-term shareholder returns
— Addition of 2 more autoclaves to the existing 4
— 50% total processing capacity uplift from 400 – 500Ktpa to 500 – 750Ktpa
— Autoclaves 1 to 4 to process own refractory ore, while 5 + 6 to process 3rd party material (JV
opportunities)
POX capacity
expansion
IRC:
realising value from
non-core assets
— Options include: improvements to existing guarantee structure, outright disposal , payment of a
dividend to Petropavlovsk
Committed to
exploration
— Continue to generate maximum value from core assets via ongoing exploration both surface +
underground
— Potential licence acquisitions adjacent to the existing infrastructure
Balance sheet
strengthening
— Improved cash generation via POX ramp-up
— Targeting Net Debt / EBTIDA of 2.0x
— Construction of new Pioneer flotation to double existing flotation capacity (Q4 2020 launch)
— Malomir 3rd flotation line planned for 2023, but may be accelerated
Increase production
of our own refractory
concentrate
— Focus on operational efficiencies and cost optimisation at existing operations
— Gold price hedging / forward sales agreements are complementary measures
Cost optimisation +
margins1
2
3
4
5
6
43
Appendix
44
Mine By Mine JORC Resource Breakdown
New Resources at Pioneer, Albyn, Malomir + Pokrovskiy
Malomir Pioneer Albyn Pokrovskiy
Refractory Resources
Non-refractory Resources
6.7Moz
97%
0.2Moz
3%
1.4Moz
24%
1.1Moz
21%
4.5Moz
76%4.2Moz
79%
0.9Moz
100%
6.9Moz 5.9Moz 5.3Moz 0.9Moz
Total JORC Resources (as at 31/12/2018)
20.5Moz(1)8.2Moz
40%
12.3Moz
60%
Decrease due to
disposals + sterilisation
due at POX facility
Albyn main ore body +
Unglichikanskoye
Katrin
Nikolaevskya
Ulunginskaya
RIP tailings for
reprocessing via
flotation + POX and
Quartzitovoye
New Resources -
Explanation
(1)Total JORC Resources include Tokur asset, not shown in the split below. Tokur contains non-refractory Resources of 1.4Moz. For full details
please refer to the 2018 Petropavlovsk AR
45
Overall H1 2019 Group Total Cash Costs (TCC) reduced by -6% yoy, with all mines profitable at
H1 2019 avg. realised gold price levels
H1 2018 H1 2019 % change yoy
Mine By Mine TCC And H1 2019 Production Highlights
884
971
843
622
860
1,138
Albyn Malomir Pioneer
-30% -12% +35%
H1 production 11koz above plan H1 production 3.6koz above plan H1 production 7.4koz below plan
46
Decrease in Group AISC and Capex due to strong operating performance and financial
discipline
H1 2019 AISC and Capex
H1 2018 vs. H1 2019 AISC (US$/oz) H1 2018 vs. H1 2019 Total Capex Spend (US$m)
6.1
34.0
2.8
13.010.2
1.1
10.4 9.1 8.5 8.25.6
3.1P
ione
er
PO
X
Alb
yn
Exp
lora
tio
n
Ma
lom
ir
Oth
er
H1 2018 H1 2019
(1) The majority of Pioneer’s capex (US$10.4m of development + US$2.1m of exploration), is categorised as sustaining, resulting in increased AISC
in H1 2019
1,1101,186
1,116
731
1,013
1,506
Alb
yn
Ma
lom
ir
Pio
ne
er
-34% -15% +35%
H1 2018 H1 2019 % change yoy
47
Malomir And Pioneer Flotation Concentrate Parameters
Design vs. actual performance
Malomir Pioneer
Design
(Stage 1)Parameter Design H1 2019a H2 2019e FY 2019e Comments
Ore
processing
1.8Mt (6m)
3.6Mtpa (FY)1.81Mt 1.8-2.0Mt 3.6-3.8Mt
H1 throughput on target, up to 10% increase in
H2 due to better equipment utilisation and
optimisation of processing operations
3.6Mtpa
Scheduled
ROM grades
1.25g/t -
1.35g/t 0.97g/t(1) 1.25-1.30g/t 1.10g/t
Flotation performance exceeded initial design
parameters, affording the opportunity to test
process low grade ore at c.0.7g/t in Q1 2019
The tests confirmed its feasibility, hence lower
than design processed grades in H1 2019
1.1g/t
Concentrate
yields5.5% 3.3% 3.5% 3.4% Up to 40% improvement in concentrate yield
vs. design: lower transportation and POX
processing costs and higher grade concentrate
2.90%
Concentrate
grades24g/t 26g/t 31g/t 28g/t 24.0g/t
Concentrate
volumes
100kt (6m)
200ktpa (FY)
59kt (6m)
120ktpa (FY)
61-70kt (6m)
120-140ktpa
(FY)
120-130kt
Up to c.40% decrease in processed tonnage
due to a positive decrease in yield: more gold
extracted into a smaller volume of concentrate
110ktpa
Recoveries 86% 87% 86% 86% Stable recoveries in line with the design 82%
— Stage 2 flotation expansion will increase capacity of Malomir and Pioneer flotation from 3.6 to 5.4 – 6.0Mtpa
— Similarly to Malomir, it is entirely possible that Pioneer flotation may outperform initial design parameters
(1) H1 2019a Malomir ROM grades included trial processing of lower grade refractory stripping material to understand the ability of the plant to
treat lower grade ore and the potential for lower cut-off grades