PETROPAVLOVSK PLC FY 2017 Results Presentation 28 March 2018 - PowerPoint PPT Presentation

PETROPAVLOVSK PLC FY 2017 Results Presentation 28 March 2018

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 2

FY 2017 Highlights

FY 2017 Achievements Increased production, positive cash flows and optimised debt profile, development on schedule  Revenues of US$587m, +9% yoy Gold sales +10% yoy at  EBITDA of US$197m, -2% yoy a higher price, helped  Profit for the Period of US$41m, +31% yoy to drive revenues  Net cash from Operating Activities (1) of US$124m, +235% yoy Costs impacted by  TCC: US$741/oz, +12% yoy grades, recoveries,  AISC: US$963/oz, +19% yoy (underground sustaining capex, stripping, central admin) input cost inflation + stronger RUB FX Growth projects:  POX: construction progress currently at 80% full scale POX  Malomir flotation: Q2 2018 commissioning development, targeting  Underground: Pioneer + Malomir now fully operational Q4 2018 launch  US$500m of guaranteed notes issued in Q4, bank loans repaid, production schedule Improved debt capital aligned with development plans terms, maturity + cost,  De-risking of working capital via gold sales agreement with Gazprombank (96Koz) lower YE Net Debt  YE 2017 Net Debt down to US$585m +6% increase (2) in Total  70% of new R&R additions are non-refractory, 16% is underground JORC Mineral  Ongoing exploration: significant prospectivity remains at Albyn, Malomir, Pioneer for Resources to 20.9Moz additional discoveries 4 4 (1) Primarily due to a decrease in working capital (2) Before depletion

FY 2017 Financials

FY 2017 Financial Highlights Profit for the period +31%, Net cash from operating activities +235% Units 2017 2016 Change Gold production 000oz 439.6 400.2 +10% Gold sold 000oz 439.8 399.9 +10% Group revenue US$m 587.4 540.7 +9% Average realised gold price US$/oz 1,262 1,222 +3% Total average cash costs (TCC) US$/oz 741 660 +12% All-in sustaining costs (AISC) US$/oz 963 807 +19% Operating profit US$m 111.9 77.0 +45% Underlying EBITDA US$m 196.8 200.1 (2%) Profit before tax US$m 60.5 27.0 +124% Profit for the period US$m 41.5 31.7 +31% Net cash from operating activities US$m 124.0 37.0 +235% Net Debt (as at 31 Dec) US$m (585.1) (598.6) (2%) Note: Operating profit includes the Group’s share of an estimated partial reversal of previous impairment losses on IRC PPE in relation to the K&S mine, amounting to 31.1% of c.US$130m Profit for the period reflects an increase in operating profit partially offset by the US$29.2m effect of deferred taxation 6 6

Evolution of Hard Rock Cash Costs 2017 vs. 2016 TCC/oz +12% in 2017, primarily due to changes in grades / recoveries + effect of a stronger RUB, partially mitigated by lower unit costs of production US$15/oz US$1/oz US$69/oz US$46/oz US$81/oz US$37/oz US$2/oz US$741/oz US$660/oz TCC FY2016 Lower Mining tax Other Change in FX Deferred Co-product TCC FY2017 costs concession taxes grades / stripping effect recoveries 7

TCC and AISC Mine by Mine Group AISC +19% yoy, due to underlying increase in TCC, sustaining capex, exploration spend, prospective stripping and central admin Total Cash Costs (TCC, US$/oz) All In Sustaining Cash Costs (AISC, US$/oz) US$m Comment Sustaining exploration capex 16.1 Pioneer, Malomir, Albyn Sustaining u/ground mine capex 8.4 Pioneer, Malomir Planned tailings expansion 7.4 Pioneer, Malomir, Albyn Other sustaining capex 9.1 Across all mines 1,236 1,367 1,278 929 1,029 1,004 988 878 963 824 791 741 807 789 660 719 718 631 581 541 +27% +41% +25% +13% -7% +12% +38% +30% -0% +19% Pokrovskiy Pioneer Malomir Albyn FY AISC Pokrovskiy Pioneer Malomir Albyn FY TCC 2016a 2017a Change yoy 8 8

Precious metals operating cash expenses 2017 vs. 2016 Cash expenses increased 18% to US$313m in 2017, due to a stronger RUB + inflation of some RUB denominated costs, particularly energy FY2016 Precious Metals Operating Cash Expenses FY2017 Precious Metals Operating Cash Expenses (1) Before movement in ore stockpiles, GIC and bullion in process of US$40.5m (2) Before movement in ore stockpiles, GIC and bullion in process of US$19.2m Labour Labour 21% 23% Consumables Consumables Fuel + + Fuel 14% Other Consumables + Consumables + Other 15% Materials Other Other Materials Materials 37% Materials 34% Other 37% 37% Other 7% 10% External Services Electricity External Services Electricity 8% 9% 12% 10% = US$266.0m (1) = US$313.4m (2) 9 9 Note: avg. RUB:US$ FX rate FY2017 = 58.3, FY 2016 = 67.2  13% yoy change

FY2017 Development and Exploration Spend Total FY2017 exploration + development capex = US$88.1m FY2017 Development Spend (US$m) Comment  Overall POX development spend as at 31 Dec 2017 = US$66.2m 33.2 c.US$233m  US$33.2m was spent on POX in 2017  c.US$62m allocated to POX in 2018 (1) 14.6 12.7  c.US$6m allocated to Malomir flotation in 2018 3.6 2.2 POX Pioneer Malomir Albyn PPE Upgrade (1) Includes US$8.1m of flotation and tailing dam related expenditure FY2017 Exploration Spend (US$m) US$21.9m 11.6 6.4 3.8 Pioneer Albyn Malomir 10 10

Debt Profile Net debt at a 5 year low, majority of existing debt long term in nature (fixed income) Convertible Bond + Guaranteed Notes Bank Debt  US$4m in short term bank debt  US$100m convertible bond issue - 9% coupon, paid quarterly - 5 year maturity (Mar 2020) - Exchange price: GBP£0.0826 (2)  US$500m guaranteed notes issue - 8.125%, paid semi-annually - 5 year maturity (Nov 2022) Debt Composition Notes Issue Convertible Bond 83% 17% Bank Debt 1% 11 11

12 12 Note: figures exclude IRC US$600m as at YE 2017 Net Debt down c.50% from a peak of c.US$1.2bn at end of Q1 2013, to under 2016 to 2017 Change in Net Debt US$m 598.6 As at 1 Jan 2017 Net cash from operating Net cash generated by 156.8 activities before w/c operating activities before changes working capital changes 47.5 Decrease in w/c 31.1 Income tax paid 88.1 Capital expenditure Issue of Notes 2.6 (net of transaction cost) 60.2 Interest accrued 16.7 Bank debt refinancing 2.7 Other 585.1 As at 31 Dec 2017

FY 2017 Operational Review