PETROPAVLOVSK PLC
FY 2017 Results Presentation
28 March 2018
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
28 March 2018
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
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.
Company and its securities
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 liability whatsoever is accepted for any loss howsoever arising from any use of this presentation or its contents or otherwise in connection therewith.
Company’s Board reviews the production estimates on an ongoing basis. All planning is subject, inter alia, to available funding and capital allocation decisions
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FY 2017 Achievements
Increased production, positive cash flows and optimised debt profile, development
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Gold sales +10% yoy at a higher price, helped to drive revenues Costs impacted by grades, recoveries, input cost inflation + stronger RUB FX Growth projects: full scale POX development, targeting Q4 2018 launch Improved debt capital terms, maturity + cost, lower YE Net Debt
additional discoveries
(1) Primarily due to a decrease in working capital (2) Before depletion
+6% increase(2) in Total JORC Mineral Resources to 20.9Moz
aligned with development plans
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Profit for the period +31%, Net cash from operating activities +235%
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$29.2m effect of deferred taxation
Units 2017 2016 Change Gold production 000oz 439.6 400.2 +10% Gold sold 000oz 439.8 399.9 +10% Group revenue US$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%)
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US$660/oz US$741/oz US$46/oz US$37/oz US$2/oz US$81/oz US$69/oz US$15/oz US$1/oz TCC FY2016 Lower costs Mining tax concession Other taxes Change in grades / recoveries FX Deferred stripping Co-product effect TCC FY2017
TCC/oz +12% in 2017, primarily due to changes in grades / recoveries + effect of a stronger RUB, partially mitigated by lower unit costs of production
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988 789 1,004 719 807 1,367 1,029 1,278 718 963 Pokrovskiy Pioneer Malomir Albyn FY AISC
Group AISC +19% yoy, due to underlying increase in TCC, sustaining capex, exploration spend, prospective stripping and central admin
+38% +30% +27%
+19% 2016a 2017a Change yoy
Total Cash Costs (TCC, US$/oz) All In Sustaining Cash Costs (AISC, US$/oz)
878 631 824 581 660 1,236 791 929 541 741 Pokrovskiy Pioneer Malomir Albyn FY TCC +41% +25% +13%
+12%
US$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
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Cash expenses increased 18% to US$313m in 2017, due to a stronger RUB + inflation
(2) Before movement in ore stockpiles, GIC and bullion in process of US$19.2m
Consumables + Other Materials 37%
(1) Before movement in ore stockpiles, GIC and bullion in process of US$40.5m
Consumables + Other Materials 37% Labour 21% Fuel 15% Electricity 9% Other 10% External Services 8%
FY2016 Precious Metals Operating Cash Expenses FY2017 Precious Metals Operating Cash Expenses = US$266.0m(1) = US$313.4m(2)
Note: avg. RUB:US$ FX rate FY2017 = 58.3, FY 2016 = 67.2 13% yoy change
Consumables + Other Materials 37%
Consumables + Other Materials 34% Labour 23% Fuel 14% Electricity 10% Other 7% External Services 12%
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Total FY2017 exploration + development capex = US$88.1m
11.6 6.4 3.8 Pioneer Albyn Malomir
FY2017 Exploration Spend (US$m)
US$21.9m
Comment FY2017 Development Spend (US$m)
33.2 14.6 12.7 3.6 2.2 POX Pioneer Malomir Albyn PPE Upgrade
US$66.2m
c.US$233m
(1) Includes US$8.1m of flotation and tailing dam related expenditure (1)
Debt Profile
Net debt at a 5 year low, majority of existing debt long term in nature (fixed income)
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(2)
Convertible Bond + Guaranteed Notes
Bank Debt Debt Composition
83% 17% 1% Convertible Bond Bank Debt Notes Issue
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Net Debt down c.50% from a peak of c.US$1.2bn at end of Q1 2013, to under US$600m as at YE 2017
156.8 47.5 2.6 2.7 598.6 31.1 88.1 60.2 16.7 585.1 As at 1 Jan 2017 Net cash generated by
working capital changes Decrease in w/c Income tax paid Capital expenditure Issue of Notes (net of transaction cost) Interest accrued Bank debt refinancing Other As at 31 Dec 2017 Net cash from operating activities before w/c changes
Note: figures exclude IRC
US$m
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Strong performance across all assets, well positioned for 2018
182Koz (41%) US$541/oz 31Koz (7%) US$1,236/oz 162Koz (37%) US$791/oz 66Koz (15%) US$929/oz
Production by Mine (incl. FY 2017 TCC/oz) Operational Highlights
Malomir), due to more refractory nature of ores mined
production
2018
the POX Hub
launch
grade
during final stages of development
(1) GIC = gold in circuit
Pioneer Malomir Pokrovskiy Albyn
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Strategically positioned
CHINA
Khabarovsk Zabaykalsk EAO Yakutia Pokrovskiy POX Hub Pioneer (40km from POX hub) Malomir (670km from POX hub) Pilot POX Plant Albyn
Operating Mine Underground POX Analytical Labs Hydro Plant
Lime Deposit
Blagoveschchensk
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POX commissioning progressing on time / budget for Q4 2018 launch, with ramp up to commercial production throughout 2019
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NE Bakhmut (Pioneer) + Quartzitovoye (Malomir)
Pioneer Malomir Current JORC R&R 0.63Moz of Resources inc. 0.26Moz @ 5.46 g/t of Reserves 0.30Moz of Resources inc. 0.17Moz @ 5.13 g/t of Reserves Mine life 5 yrs + Underground development completed 2017 3,646m 3,084m Production Started 2017, 35kt @ 2.78g/t Started 2017, 74kt @ 8.03g/t Ramp up In the process of ramping up to c.200ktpa, full capacity expected in H2 2018 Mine now operating at full capacity c.200ktpa 2018 expected grade c.3.7g/t Grade to improve to 5 – 6g/t from 2019 c.6.3g/t Upside Production upside from NE Bakhmut down dip + strike extensions, Andreevskaya + Nikolaevskaya zones 2018 exploration: to add to underground R&R Exploration upside at down deep extensions of Quartzitovoye zone
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Depletion + Disposals Refractory Resources
6.8 5.2 13.0 12.8 12.1 12.0 9.3 9.3 9.3 9.6 2.1 6.0 10.1 12.3 11.7 13.8 14.0 14.4 10.4 11.2 1.4 1.9 2.4 3.8 5.1 5.9 6.6 7.2 11.2 11.7 Moz 5Moz 10Moz 15Moz 20Moz 25Moz 30Moz 35Moz 2008a 2009a 2010a 2011a 2012a 2013a 2014a 2015a 2016a 2017a
Non-Refractory Resources
Ongoing exploration added +6% to the Group’s JORC Resources in 2017(1)
(1) 0.67Moz Au (c.8%) increase (before depletion) in Reserves and 1.17Moz Au (c.6%) increase (before depletion) in Resources
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2017 Objectives 2017 Results
Pioneer
new non-refractory reserves for
Albyn
satellite deposits ahead of main pit depletion in 2019 Malomir
underground operations at Quartzitovoye
Exploration work yielded encouraging near + short term results
Pioneer
refractory reserves for both open pit + underground mining Albyn
suitable for mining in the short or mid term Pioneer
Reserves for underground mining Albyn
satellite target
Near term: boost non-refractory
Near term non-refractory discoveries Mid term: add high quality refractory + non-refractory R&R Mid-term discoveries
Pioneer
established, open pit production started
discovered, open pit production to start 2018
possible from 2019 Albyn
Malomir
Pioneer (2018 exploration budget US$8m)
continue to explore non-refractory resources for open pit mining
continue deep drilling
“blue-sky” exploration Albyn (2018 exploration budget US$7m)
Albyn pit
pit mining at satellite targets Malomir (2018 exploration budget US$1m)
underground mining operations New licences - exploration portfolio expansion
near Pioneer, Malomir + Tokur projects at government auctions Pioneer
underground Reserves
results Albyn
Malomir
Building on 2017 exploration success
2017 Results 2018 Objectives
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We enter 2018 in a strong position to complete the transition to a miner capable of realising the significant value of our assets
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Production Costs
Capex
development + US$12m Pioneer / Albyn tailings + US$15m exploration activity
Priorities For 2018
Balance Sheet Strength + Flexibility
2018 Guidance
production, complemented by a gradual ramp up of higher grade underground operations at Pioneer + Malomir
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Group Production Summary
Mining Units FY 2017a FY 2016a Total material moved m3 000 57,539 61,947 Ore mined t 000 17,990 10,798 Average grade g/t 0.9 1.1 Processing Units FY 2017a FY 2016a RIP Total milled t 000 16,620 16,166 Average grade g/t 0.8 0.9 Gold content Koz 448 472 Recovery rate % 80% 86% Gold recovered Koz 360 407 Heap Leach Ore stacked t 000 1,250 1,141 Average grade g/t 0.4 0.5 Gold content Koz 18 18 Recovery rate % 50% 51% Gold recovered Koz 9 9 TOTAL gold production Koz 440 400 Gold sales Koz 440 400 Costs Units FY 2017a FY 2016a TCC US$/oz 741 660 AISC US$/oz 963 807
Our largest producing mine with a 100% non-refractory defined resource base, with a largely under explored licence area
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2016 2017
Production Processed Grades
2016 2017
Ore Mined Total Milled
2016 2017 2016 2017
2017 Performance 2018 Outlook
extending Albyn mine life
due to slightly higher grades
model + assess underground potential
Afanasevskoye to further expand non- refractory R&R base + subsequent mine life
5.0Mt 5.3Mt 4.7Mt 4.6Mt 1.3g/t 1.2g/t 174Koz 182Koz
Pioneer is one of the Group’s most prospective assets, providing near term growth from its underground non-refractory exploration + development potential
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2016 2017
Production(1) Processed Grades
2016 2017
Ore Mined Total Milled
2016 2017
2017 Performance 2018 Outlook
with 35kt @ 2.78g/t mined in 2017
grades + recoveries, driven by successful measures to release gold in circuit
0.63Moz
from 0.98 to 1.10Moz despite depletion
level as in 2017
capacity, with Pioneer expected to produce
with significant potential to increase in the course of further exploration works planned for 2018
3.3Mt 8.5Mt 6.7Mt 6.8Mt 0.8g/t 0.7g/t 133Koz 162Koz
(1) Includes production from heap leach of 6.1Koz (2016: 5.3Koz)
2016 2017
Preparation under way for large scale refractory mining to unlock c.6Moz of refractory R&R
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2016 2017
Production Processed Grades Ore Mined Total Milled
2016 2017 2016 2017
2017 Performance 2018 Outlook
to addition of gold from refractory ores. Non- refractory production will be as in 2017
state output of c.200ktpa of ore
1.5Mt 2.8Mt 3.0Mt 3.4Mt 55Koz 66Koz 2016 2017 0.9g/t 0.9g/t
increase in ore mined, +13% increase processed ore volumes
Quartzitovoye completed, with the mine at full production by YE
commissioning in Q2 2018
Having produced more than c.2.0Moz since 1999, work is well under way to convert Pokrovskiy into the POX Hub, to support the Group’s next phase of growth
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2016 2017
Production(1) Processed Grades
2016 2017
Ore Mined Total Milled
2016 2017 2016 2017
2017 Performance 2018 Outlook
integration into POX
2017 levels as existing RIP plant + site infrastructure is in the process of being integrated / converted into the POX Hub
1.0Mt 1.5Mt 1.8Mt 1.8Mt 0.7g/t 0.5g/t 38Koz 31Koz
(1) Includes production from heap leach of 2.9Koz (2016: 4.1Koz)