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September 2014
Investor presentation
Bakyrchik mine site (Kyzyl Gold Project)
1
Disclaimer
THIS PRESENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR USE AT AN INVESTOR PRESENTATION AND IS PROVIDED ASINFORMATION ONLY. THIS PRESENTATION DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS MATERIAL TO AN INVESTOR. BY ATTENDING THE PRESENTATION OR BY READING THEPRESENTATION SLIDES YOU ACKNOWLEDGE AND AGREE TO THE FOLLOWING:
This document and its contents are confidential and proprietary to Polymetal International plc (the “Company”) and may not be reproduced, redistributed, published or passed on (or the contents otherwise divulged)to any other person, directly or indirectly, in whole or in part, for any purpose. If this presentation has been received in error then it must be returned immediately to the Company.
This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution oruse would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
This presentation does not constitute or form part of, and should not be construed as, an offer, invitation, recommendation to purchase, sell or subscribe for any securities of the Company in any jurisdiction orsolicitation of any offer to purchase, sell or subscribe for any securities of the Company in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be reliedupon in connection with any contract or commitment whatsoever, or act as any inducement to enter into, any investment activity. The information in this presentation has not been independently verified. Norepresentation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the presentation and the information contained herein and no reliance should be placed on such information.None of Morgan Stanley & Co International plc, the Company, their advisers, connected persons or any other person accepts any liability for any loss howsoever arising, directly or indirectly, from this presentationor its contents.
This presentation includes forward-looking statements that involve known and unknown risks and uncertainties, many of which are beyond the Company’s control and all of which are based on the directors’ beliefsand expectations about future events. These forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions, predictionsand other statements, which are other than statements of historical facts. The words “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should”, “shall”, “could”, “risk”, “aims”,“plans”, “predicts”, “continues”, “assumes”, “positioned” and similar expressions or the negative thereof identify certain of the forward-looking statements. Forward-looking statements include statements regarding:strategies, outlook and growth prospects; future plans and potential for future growth; liquidity, capital resources and capital expenditures; growth in demand for products; economic outlook and industry trends;developments of markets; the impact of regulatory initiatives; and the strength of competitors. These forward-looking statements include all matters that are not historical facts. The forward-looking statements in thispresentation are based upon various assumptions and predictions, many of which are based, in turn, upon further assumptions and predictions, including, without limitation, management’s examination of historicaloperating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions areinherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control because they relate to future events and circumstances, and the Company maynot achieve or accomplish these expectations, beliefs or projections. Forward-looking statements are not guarantees of future performance and the actual results, performance, achievements or industry results ofthe Company’s economy may differ materially from those described in, or suggested by, the forward-looking statements contained in this presentation. Many factors could cause the actual results to differ materiallyfrom those contained in predictions or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia andKazakhstan, rapid technological and market change in the industries in which the Company operates, as well as other risks specifically related to the Company and its operations. Past performance should not betaken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. Neither the Company, nor any of its agents, employees or advisorsintend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation to reflect any change in their expectations or any change in events,conditions or circumstances on which such statements are based
To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. Third party industry publications, studies and surveys generallystate that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each ofthese publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In addition, certain of the industry, market and competitiveposition data contained in this presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the market in which theCompany operates. While the Company believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independentsource for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry, market or competitive position data contained in thispresentation. The information contained in this presentation has not been independently verified. Neither the Company, any of its affiliates, subsidiaries or subsidiary undertakings nor any of their respective advisorsor representatives makes any representation or warranty, express or implied, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained in thispresentation. Percentages and certain amounts included in this presentation have been rounded for ease of presentation. Accordingly figures shown as totals in certain tables may not be the precise sum of thefigures that precede them. Neither the Company, or any of its affiliates, advisors or representatives accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any informationcontained in the presentation.
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2
Polymetal at a glance
Mayskoye
Dukat
Omolon
KhakanjaSvetloye
Amursk POXAlbazino
Kyzyl project
Voro
Varvara
Saint-Petersburg
Astana
Khabarovsk
Nearby Town
Principle Town
Operating Mines
Development projects
Kostanay
Oskemen
Russia
Kazakhstan
Okhotsk
Magadan
Anadyr
> 1,375 Koz of GE production for the LTM1
> 21 Moz GE reserves at 4.3 g/t> Market Cap US$3.5 bn2
Source: Company information, Bloomberg(1) GE (gold equivalent) at 60:1 Ag oz/Au oz and 1:5 Cu mt/Au oz conversion ratios. Last 12 months ending 30 June 2014(2) As of 3 September 2014.
Pevek
Ekaterinburg
3
1H 2014 1H 2013 % Change (1) FY 2013
Production, GE koz 652 559 +17% 1,282
Revenue, US$m 727 721 +1% 1,707
Adjusted EBITDA, US$m 310 239 +30% 598
Total cash cost, US$/GE oz 627 787 -20% 745
All-in cash cost, US$/GE oz 938 1,210 -22% 1,086
Underlying net earnings, US$m 101 17 NM 117
Dividend for the period, US$/share 0.08 0.01 NM 0.09
Net operating cash flow, US$m 140 59 +137% 462
Capital expenditure, US$m 105 171 -38% 319
Free cash flow, US$m 29 (125) NM 138
Financial highlights
Source: Company data, IFRS accounts
(1) % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all the tables in this presentation.
956 883 853 834 821 804
752 750 747 734 708 693 673 662 650 630 627 610 563
Det
our
Iam
gold
Pet
ropa
vlov
sk
AuR
ico
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in*
Ang
logo
ld
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Bar
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Hoc
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New
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Pol
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Pol
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4
1H 2014 TCC in comparison with peers
Co-product total cash costs (US$/oz)
Source: Companies’ data. The following companies report on a by-product basis and therefore are not included in the comparison: Fresnillo, NewGold, Pan American Silver, Newcrest. The following companies do not report total cash costs: Centerra, Gold Fields* Centamin total cash costs for the Q2 2014 adjusted for royalties (source: BMO report)** Based on 60:1 Au/Ag ratio*** Newmont reported CAS (costs attributable to sales)
1,302 1,287
1,1181,058 1,049 1,032 1,027 1,008 988
942 938 905 899 871 840 809
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terr
a
AuR
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Afri
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Bar
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Gol
d Fi
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New
mon
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gold
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Hoc
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Kin
ross
Yam
ana
Pol
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Pol
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Nor
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Gol
d
Gol
dcor
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5
1H 2014 AISC in comparison with peers
Co-product all-in sustaining cash costs (US$/oz)
$ 1,290/oz average LBMA gold price (1H2014)
Source: Companies’ data. The following companies report on a by-product basis and therefore are not included in the comparison: Fresnillo, NewGold, Pan American Silver, Newcrest. The following companies do not report AISC: Detour, Petropavlovsk.* Based on 60:1 Au/Ag ratio
6
Average reserve grade
6.1
5.2
4.3
3.6 3.0 3.0
2.1 2.1 2.0 1.4 1.4 1.4 1.3 1.3 1.2 1.2 1.2 1.1 1.1 1.1 1.0 0.8 0.8
Hoc
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Afri
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Bar
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Pol
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Gol
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Pan
Am
eric
an S
ilver
Pol
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Fres
nillo
Gol
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New
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gold
Yam
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Gol
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old
Pet
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Coe
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Proven and probable reserves, g/t GE
Source: Company data. Gold, silver, copper proved and probable reserves as of 01.01.2014Peers GE at 60:1 Ag oz/Au oz and 1:5 Cu mt/Au oz conversion ratios. Polymetal GE at 59.4:1 Ag/oz/ Au oz in accordance with the JORC code (2012)* Pro forma impact of the Kyzyl gold project acquisition** Proved and probable reserves as of 30.06.2013
Kyzyl gold project: strategic rationale for the deal
7
Large high-grade reserves
> Mineral Reserves: 6.7 Moz of gold at 7.5 g/t (JORC)* > Expected production start in 2018> Average annual gold production of 310 Koz based on current FS*> LOM of 20 years
Conventional mining> Initial development via open-pit mining (up to 10 years of production)> Cut-and-fill with consolidated backfill underground mining
Favourable location within familiar jurisdiction
> Well-understood and straightforward operating environment – a country in which Polymetal has successfully operated since 2009
> Excellent Infrastructure
Significant exploration upside
> Substantial exploration potential through resource-to-reserve conversion> Resources (inclusive of the reserves) of 10.5 Moz of gold at 8.1 g/t (JORC)*
Refractory competency and flowsheet optionality
> Leverages Polymetal’s core competencies in pressure oxidation (“POX”) processing and refractory gold concentrate trading
> Concentrate can be sold to off-takers
Significant long-term production growth from capital-light high-grade project
* Source: Roscoe Postle Associates feasibility study (October 2013)
8
Source: Reserve and resource statement (JORC 2012) as at 01.01.2014 with further update for Svetloye. Average Au/Ag conversion ratio 59.6:1 Ag oz/Au oz.
Kyzyl gold project: impact on Polymetal
Reserves, Moz Average Reserve Grade, g/t
2019 Annual Production, Moz Life-of-Mine, Years
I
III
II
IV
13.3 19.7
16.720.6
30.0
40.4
Jan-14 Pro formaReserves Resources
+ 35%
+ 23%
+ 49%
3.64.3
1.8
Jan-14 Pro forma Peer GroupReserve grade (g/t)
+ 19%
1.1-1.3
1.5-1.6
Current portfolio Pro forma
(1)
10
15
Jan-14 Pro formaLOM (years)
+ 50%
Notes: 1) Average for ABG, Randgold, Centerra, Gold Fields, Polyus, Goldcorp, Anglogold, Eldorado, Newmont, Harmony, Iamgold, Yamana, Newcrest, NewGold, Centamin, Barrick Gold, Nord Gold, Petropavlovsk,
Kinross2) Life of mine is calculated as a ratio of reserves (13.3 Moz for Polymetal and 20.0 Moz pro forma) to Polymetal’s production of 1.28 Moz in 2013
(2)
+ 29%
1,063 1,282 1,350 1,350 1,400 1,400 1,350 1,225
100-150 325-375
1,063
1,282 1,350 1,350 1,400 1,400 1,450-1,500 1,550-1,600
2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E
Kyzyl
Existingoperations
55% 63% 65% 68% 70% 70% 75% 80%
2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E
9
Production guidance – estimated impact of the Kyzyl project* Gold production, Koz of GE1
Source: Company information(1) GE at 60:1 Ag oz/Au oz and 1:5 Cu mt/Au oz conversion ratios* Indicative, preliminary unaudited estimate for the Kyzyl project which is subject to the results of the new feasibility study (Q4 2015).
Gold share in GE production1
10
114 153
208 190 180 170 170 170 170
66 68
59 60 60 60 60 60 60
282 176 52 30 40 20
40
200-250150-250
50-100
462
397
319
250
310
470-530400-500
280-330
230
2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E
Kyzyl
Svetloye
Project Capex
Exploration
Stay-in-businessCapEx (includingcapitalised stripping)
Capital expenditure – estimated impact of the Kyzyl project*US$ million**
** Total capital expenditure on a cash basis, adjusted for D&A
Notes:* FY 2015 guidance is updated for the Kyzyl (include investments in the feasibility study and detailed engineering) and Svetloye projects. This is a preliminary estimate which is subject to review in Q4 2014.Capital expenditure for the Kyzyl project is indicative unaudited estimate and is subject to the results of the new feasibility study (Q4 2015).
11
Kyzyl gold project: established local infrastructure
> The mine is adjacent to the village of Auezov(population: ~3,000)
> Access by paved highway and gravel roads> A railway station at Chalobai, 6 km from the
mine site, this line provides rail connections to Russia, China, and Europe
> The Kazakhstan-China railway crossing at Alashankou is 510 km away
> Water will be supplied from:
> the Kyzyl Su Dam, which is a State-owned facility located ~ 9 km south of the mine site
> The Kyzyltu Borefield located approximately 3.5 km north of the mine site
> Underground mine drainage water.
> The mine site has access to two 110 Kv grid power lines with 110/35/6 kV transformer belonging to the project
* Source: Roscoe Postle Associates feasibility study (October 2013), Company data
12
Kyzyl gold project: preliminary open pit analysis
N
Source: Company data
1
1 2
2
150
430405
Section 1-1
40-60 m
430450
220
Section2-2
Green Indicative pit limits
Red Open pit development plan
Grey Surface
Pink Ore bodies frames (MSO)
Final optimization of the open pit subject to geotechnical studies and updated assessment of underground mining costs
13
3-D View of the Bakyrchik depositLenses 1 and 12 carry +75% of currently estimated reserves
Source: Roscoe Postle Associates feasibility study (October 2013)
14
Lens 1: Deep levels
Grams per tonneMeters
Drilling depth of ~900 m
Source: Company data
Kyzyl gold project: different development approaches
15
Mining method
Concentrate processing
Final product
Previous owners’ approach
Polymetal potential approach Pros & cons
> Underground
> Dore
> On site processing (roasting or BIOX)
> Open pit followed by underground mining
> Concentrate
> Concentrate offtake (potentially can be later replaced with concprocessing at POX)
> High strip ratio> Lower CapEx
> Lower engineering risks> Faster construction and
ramp-up
> Significantly lower execution risk
> Staged CapEx> Faster cash flows
> Processing optionality
Polymetal’s key objective is to limit capital exposure and ensure higher ROIC
Kyzyl gold project: expected development timeline
16
Q4 2015
• Revised feasibility study with updated reserve estimate• Completion of the permitting
Q1 2016
• Start of construction
1H 2017• Signing of concentrate offtake contract
2H 2018• First production
2019• First year of production at full capacity
17
Net debt, US$ million
Source: Company data* Includes dividend payable
As of June 30, 2014:> Bilateral only 3-5 year credit facilities with the
major Russian and European banks> The average cost of debt remained low at 3.04%
(2013: 3.06%) > Net Debt/ EBITDA = 1.55> Average debt maturity of 2.7 years> Mostly dollar-denominated debt
Debt portfolio
620 632
1,030 905
417
66315
132
1,037
1,295*
1,045 1,038
31/12/2012 30/06/2013 31/12/2013 30/06/2014
Short-term debt (net of cash)Long-term debt
EU banks56%
Russian banks38%
UK banks
6%
Debt structure by source
> No threats to covenants onexisting debt
> Firm commitment to continuepaying regular dividends
> All options to be considered forthe financing of project CapExwith the decision to be made inlate 2015 – early 2016
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Maturity profile and financing considerations
52
236
299
56
404
5 3
2014 2015 2016 2017 2018 2019 2020
Cash Debt
Debt maturity profile, US$ million(as at June 30, 2014)
Appendix
19
20
Kyzyl gold project: general deposit geology
Alluvium Bukon Formation Lower Kokpeckty Formation Upper Kokpeckty Formation
> Mineralised shear zone with fine-grained gold associated with arsenopyrite and pyrite
> Shear zone is 11.5 km long, dips 30°to 40° north with widths of 10 m to 240 m and traced to depths of 1.0 km to 1.5 km in the west and 3.0 km to 3.5 km in the east
> Average ore body width is 8 m
> No signs of grade or ore body width decline with depth
21
Typical section of Lens 1Drilling depth of ~750 m
Source: Roscoe Postle Associates feasibility study (October 2013)
Svetloye development project
> Open-pittable reserves of 7.3 Mt at 2.8 g/t for 0.7 Moz of contained gold1
> 1.0 Mtpa heap leach operation followed by Merrill-Crowe processing of the solutions
> Initial mine life: 8 years
> Annual production: 70 Koz of gold based on the average recoveries of approximately 82%
> Gold-bearing silicification occurs as flat lenses or pods, which outcrop at the surfaceand have true widths of between 20 and 120 m. The average strip ratio over the life of the mine is 1.4 t/t.
> Further substantial exploration potential exists within the existing license area of 40 km2.
22
Source: Company informationEstimate prepared by Snowden as of 01.01.2014 in accordance with the JORC Code 2012. Au price = US$ 1,300/oz
Capital-light, low-risk and low-cost
Project development timeline
23
Q1 2015• Complete project design and permitting
Q3 2015• Start construction
Q3 2017• First production
2018• Full year of production at nameplate capacity
Svetloye development project (cont.)
Robust project economics
> AISC: US$ 750-800/oz of gold
> Pre-production capital expenditure: US$ 90 million1
> Project IRR of 44% at gold price of US$ 1,250/oz, Brent oil price of US$110/bbl, and RUB/USD exchange rate of 33.
> Project IRR of 23% at gold price of US$ 1,000/oz.
Source: Company information(1) Do not take into account potential synergies with Khakanja (mining equipment) and Omolon (equipment from postponed Sopka heap leach project).
Capital-light, low-risk and low-cost
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Dukat
Key facts> Location: Northeast of Magadan, Russia
> Mining: mostly underground
> Processing: 1600 Ktpa concentrator and 400 KtpaMerrill Crowe plant
> Production start date: 2002
> Life of mine: 2023 (Lunnoye), 2021 (Dukat)
2014 highlights
> Dukat mine completely shifted to underground mining. As a result of debottlenecking at the concentrator its capacity increased to 1.6 Mtpa
> Diversified concentrate off-taker base in Japan, South Korea and Kazakhstan
> Lunnoye: the new SAG mill successfully commissioned increasing total processing capacity to 400 kt of ore per annum
> Near mine exploration ongoing
Our flagship operation and the largest primary silver mine in Russia
Source: Company data, IFRS accounts.GE based on actual realized prices
Dukat/Lunnoye/Arylakh/Goltsovoye 1H 2014 2013 2012Waste mined (Kt) 233 1,034 3,558
Ore mined (Kt) 994 1,815 1,782Open pit 36 86 316Underground 958 1,729 1,465Ore processed (Kt) 1,019 1,912 1,772Gold head grade (g/t) 0.92 0.80 0.77Silver head grade (g/t) 449 419 403Gold recovery 86% 84% 83%Silver recovery 88% 87% 85%Gold produced (Koz) 26 41 36Silver produced (Moz) 13.1 22.1 19.2
Total cash costs/ silver ounces sold ($/oz) 9.1 11.6 12.1Adjusted EBITDA, US$m 129 229 378CapEx, US$m (excluding exploration) 13 37 49
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Albazino/Amursk POXNew high-grade open-pit mine and state-of-the-art POX plantKey facts
> Location: Khabarovsk region, Russia
> Mining: open-pit
> Processing: 1600 ktpa flotation concentrator with further autoclaving/CIL at the Amursk POX plant
> Production start date: 2011
> Life of mine: 2021
2014 highlights
> The Amursk plant successfully achieved its design throughput and recoveries in August and October 2013 respectively
> No further off-take required from 2014. All concentrate will be processed through the POX plant
> Significant increase in resources to c. 6 Moz of gold to be followed by a revised reserve estimate and construction decision on Albazino potential by year end
Albazino 1H 2014 2013 2012Waste mined (Kt) 7,974 16,135 15,160Ore mined - open pit (Kt) 787 1,338 1,216Ore processed (Kt) 795 1,513 1,226Gold head grades (g/t) 4.8 5.6 5.3Gold recovery 88% 88% 87%Concentrate produced (Kt) 66 140 115Gold grade in concentrate (g/t) 53 53 49Gold in concentrate (Koz) 107 239 181Concentrate sold (Kt) - 49 40Payable gold in concentrate sold (Koz) - 79 64Amursk POXConcentrate processed (Kt) 75 127 16Gold head grade (g/t) 53 50 38Recovery 93% 86% 79%Gold produced (Koz) 115 159 14Total Production (Albazino/Amursk)Gold (Koz) 115 238 78
Total cash costs/ GE ounces sold ($/oz) 668 790 739Adjusted EBITDA, US$m 67 103 24CapEx, US$m (excluding exploration) 9 36 79Source: Company data, IFRS accounts.
GE based on actual realized prices
26
Mayskoye
Key facts
> Location: Chukotka, Russia
> Mining: underground mechanised mine
> Processing: 850 ktpa flotation concentrator + offtake/POX
> Production start date: Q2 2013
> Life of mine: 2022
> Current resources: 6.1 Moz of gold at 9.5 g/t including 2.0 Moz reserves at 8.8 g/t (JORC)
2014 highlights
26
Started-up in April 2013
1H 2014 2013 2012
Underground development (m) 5,158 9,989 11,068
Ore mined, underground (Kt) 318 667 40
Ore processed (Kt) 392 488 -Gold head grade (g/t) 8.7 7.1 -Gold recovery 81% 78% -Concentrate produced (Kt) 46 49 -Gold grade in concentrate (g/t) 59 55 -Gold in concentrate (Koz) 88 87 -Concentrate sold (Kt) - 30 -Payable gold in concentrate sold (Koz) - 48 -Amursk POXConcentrate processed (Kt) 2 - -Gold head grade (g/t) 46 - -Recovery 80% - -Gold produced (Koz) 2 - -Total Production (Offtake+Amursk)Gold produced (Koz) 2 48 -
CapEx, US$m (excluding exploration) 9 54 66Source: Company data, IFRS accounts.GE based on actual realized prices
> The split between own-processing and third-party off-take will be determined based on the relative cost/recovery attractiveness of each route.
> It is expected that the volume shipped out in the current year will be approximately evenly split between AmurskPOX and off-take sales.
> Contracts with three off-takers in China were signed during the Q2 on terms which were meaningfully improved compared to 2013 off-take agreements.
27
Voro
Key facts
> Location: Sverdlovsk Region, Central Russia
> Mining: open pit
> Processing: Carbon-in-pulp, heap leach
> Production start date: 2000
> Life of mine: 2027 (CIP)
2014 highlights
> In 2014, mining will focus on primary ore.
> Efforts are under way to identify additional sources of primary and oxidised ore, including third-party supplies.
> Carbon-in-Column (CIC) process was introduced in 2013 for the extraction of gold from heap leach solutions as changing ore chemistry slowed down recoveries at the historical Merrill Crowe circuit.
Lowest cost and highest margin mine
1H 2014 2013 2012Waste mined (Kt) 5,221 11,099 11,265Ore mined, open pit (Kt) 887 1,787 1,684
- oxidised 409 981 926- primary 477 807 758
Ore stacked (Kt), heap leach 310 850 901Gold head grade (g/t), heap leach 1.5 1.4 1.6Gold recovery, heap leach - 74% 74%Ore processed (Kt), CIP 459 924 917Gold head grade (g/t), CIP 5.9 5.7 5.3Gold recovery, CIP 83% 80% 79%Gold produced (Koz) 74 153 154Silver produced (Moz) 0.043 0.079 0.154
Total cash costs/ GE ounces sold ($/oz) 421 503 506Adjusted EBITDA, US$m 59 130 182CapEx, US$m (excluding exploration) 3 8 11
Source: Company data, IFRS accounts.GE based on actual realized prices
28
OmolonProcessing hub with multiple feed sourcesKey facts
> Location: Magadan region, Russia
> Mining: open-pit/ underground
> Processing: 850 ktpa CIP/ Merrill Crowe and 1,000 ktpa Birkachan Heap Leach
> Production start date: 2010
> Life of mine: 2020 (CIP)
Mining Processing Reserves(GE koz)
Grade(GE g/t)
Sopka OPcompleted
MC 379 3.9
Birkachan UG CIP/HL 497 4.1
Dalneye OP MC 218 5.4
Oroch OP MC 241 6.7
Tsokol Kubaka OP CIP 207 7.4
1,541 4.8
Ore reserves (JORC)
Source: Ore reserves as of 01.01.2014. GE based on 60:1 gold/silver ratio
29
Omolon (cont.)
2014 highlights> The Birkachan open pit is on care and maintenance
since Q3 2014 after a brief summer mining campaign.
> Underground development at Birkachan started in Q3 2014.
> Heap leach at Birkachan will operate during 2014-2016 to process low-grade ore stockpiles
> The increased amount of ore from Tsokol, Dalneye and Oroch are expected to compensate for the suspension of mining at Birkachan
1H 2014 2013 2012Waste mined (Kt) 6,244 16,537 21,471
Ore mined, open pit (Kt) 1,497 2,065 2,662Ore stacked (Kt), heap leach - - 116
Gold head grade (g/t), heap leach - - 1.1
Ore processed (Kt), Kubaka mill 400 767 724Gold head grade (g/t) 7.3 5.1 5.9Silver head grade (g/t) 146 118 135GE grade processed (g/t), Kubaka mill 9.7 7.1 8.2Gold recovery 95% 95% 94%Silver recovery 84% 88% 88%Gold produced (Koz) 92 115 129Silver produced (Moz) 1.4 2.6 2.7
Total cash costs/ GE ounces sold ($/oz) 622 879 892Adjusted EBITDA, US$m 56 64 129CapEx, US$m (excluding exploration) 5 22 40
Processing hub with multiple feed sources
Source: Company data, IFRS accounts.GE based on actual realized prices
30
Varvara
Key facts> Location: North-western Kazakhstan
> Mining: open pit
> Processing: 1000 Ktpa flotation and 2800 Ktpa CIL
> Production start date: 2007 (acquired by Polymetal in 2009)
> Life of mine: 2024 (Leach), 2030 (Float)
2014 highlights
> Some decline in grades in the leaching circuit in 2014 is expected, as in October 2013 Varvara discontinued purchases of third-party ore due to its declining quality.
> By the third quarter of 2014, we expect to complete the pushback in the North-West and North-East pits and return to a normalised stripping ratio.
> The current weakness in the copper concentrate market led to the accumulation of excess concentrate stockpiles. To prevent further increases in working capital, the flotation circuit was temporarily switched off in July with freed grinding capacity diverted to leaching circuit. Copper concentrate production will be resumed shortly after the current stockpile is sold in full
Standalone gold and copper mine
1H 2014 2013 2012Waste mined (Kt) 15,964 31,053 26,072Ore mined - open pit (Kt) 1,512 2,008 3,609Ore processed (Kt), Float 493 1,005 992Gold head grade (g/t) 1.1 1.3 1.2Copper head grade (%) 0.40% 0.58% 0.76%Gold recovery, Float 46% 56% 61%Copper recovery, Float 81% 89% 92%Ore processed (Kt), Leach 1,297 2,671 2,654Gold head grade (g/t), Leach 1.2 1.3 1.2Gold recovery, Leach 77% 82% 85%Gold produced (Koz) 45 107 101Copper produced (t) 1,527 4,841 6,567
Total cash costs/ GE ounces sold ($/oz) 648 791 795Adjusted EBITDA, US$m 17 74 102CapEx, US$m (excluding exploration) 5 21 16
Source: Company data, IFRS accounts.GE based on actual realized prices
31
Khakanja
Key facts
> Location: Khabarovsk region, Russia
> Mining: Khakanja, Ozerny open-pit mines and Avlayakan underground
> Processing: 600 Ktpa Merrill Crowe
> Production start date: 2003
> Life of mine: 2018
2014 highlights
> Sustaining the grade profile and extending the life-of-mine remain our top priorities for Khakanja
> Commencement of underground mining at Khakanja has been postponed due to geotechnical concerns with the corresponding reserve being re-classified as resource
> High-grade feed in 2014 will come from Ozerny and Avlayakan mines
> Avlayakan: active ore mining from stopes will commence in Q3. High-grade ore shipment from Avlayakan resumed in July; this should result in stronger half-on-half gold production in H2 2014.
31
Approaching the end of LOM
1H 2014 2013 2012
Waste mined (Kt) 4,710 9,097 6,521
Ore mined, open pit (Kt) 427 690 1,346Ore mined, underground (Kt) 8 8 148
Ore processed (Kt) 307 619 622Gold head grade (g/t) 3.6 5.7 4.8Silver head grade (g/t) 122 147 277GE grade processed (g/t) 5.6 8.2 9.4Gold recovery 90% 92% 96%Silver recovery 77% 84% 80%Gold produced (Koz) 32 103 91Silver produced (Moz) 0.9 2.4 4.4
Total cash costs/ GE ounces sold ($/oz) 792 756 615Adjusted EBITDA, US$m 23 85 178CapEx, US$m (excluding exploration) 3 14 20
Source: Company data, IFRS accounts.GE based on actual realized prices
32
12.6672
583
723
1,120
963
787
11.0
824
430
819756
707 721
9.1
792
421
648 622 668
627
0
200
400
600
800
1000
1200
1400
1600
1800
Dukat Khakanja Voro Varvara Omolon Albazino Mayskoye Total cash cost -Polymetal
1H 2013 2H 2013 1H 2014
957
32
Cash cost dynamics 2013-2014Improvements across portfolioTotal cash cost, US$/oz of GE1
Source: Company data(1) Co-product total cash cost: cost of sales + on-mine part of SG&A – deprecation and amortization . GE (gold equivalent) based on actual realized gold, silver and copper prices(2) Silver equivalent based on average realised prices
2
NA NA
3.7
1.51.5
2.0
1.21.2
1.9
6.70.9
20.6
2.60.5
3.6
4.10.3
0.1
2.6
3.8
2.319.7
Dukat Omolon Albazino Mayskoye Khakanja Voro Varvara Bakyrchik Other Total
Reserves Resources
33
Source: Reserve and resource statement (JORC 2012) as at 01.01.2014 including Svetloye reserve and resource estimate announced on 12.05.2014 (as a part of the Khakanja hub)Average Au/Ag conversion ratio 59.4:1 Ag oz/Au oz.(1) Includes Maminskoye, Kutyn, Tamunier
GE
Moz
8.1
5.2
4.8
8.5
5.1
4.8
8.8
9.9
3.7
5.2
2.8
2.1
1.4
1.7 6.9
4.3
4.0
Resource grade
GE
g/t
Reserve grade
1
6.32.0
5.1
6.11.5
1.3
4.53.2
40.4
Gold equivalent reserves and resources
2023 2020 2021 2022 2018 2027 2030
LOM
Reserve mine life
7.5
2038
2.2
1.9
10.5
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