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GOLD MINING COMPANY POLYUS. Mr. Eugene Ivanov President and Chief Executive Officer RUSSIAN ECONOMIC FORUM 2005. WHY RUSSIA?. Growing Russian gold production outpaces rest of the world +7% vs. (1)% CAGR. CAGR 7%. 5.5. 5.4. 5.4. 4.9. 4.6. 4.1. 3.7. 1998. 1999. 2000. 2001. 2002. - PowerPoint PPT Presentation
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GOLD MINING COMPANY POLYUS
Mr. Eugene IvanovPresident and Chief Executive Officer
RUSSIAN ECONOMIC FORUM2005
WHY RUSSIA?WHY RUSSIA?
Growing Russian gold production outpaces rest of the world
+7% vs. (1)% CAGR
3.74.1
4.64.9
5.4 5.5 5.4
1998 1999 2000 2001 2002 2003 2004
mln oz
CAGR 7%
Source: Russian Union of Gold Miners, GFMS
WHY RUSSIA?WHY RUSSIA?
World’s second largest reserve base and only sixth place in gold output
Source: GFMS, U.S. Geological Survey
Reserve base, mln oz
90
113
119
132
132
193
1 157
482
Indonesia
Canada
USA
Peru
China
Australia
Russia
South Africa
WHY RUSSIA?WHY RUSSIA?
Source: BMO Nesbitt Burns
0% NAV Premium
40% 40%
17%
-18%
Major producers Intermediates Junior producers
Russian producers
Russian producers are undervalued so far
Average
WHY RUSSIA?WHY RUSSIA?
Source: BMO Nesbitt Burns
EV / Reserves, US$ / oz
125150
182
51
Major producers Intermediates Junior producers Russian producers
Discount for Russian producers implies high growth potential
Average
HERE COMES POLYUS!HERE COMES POLYUS!
Undisputable leader of Russian gold mining since 2001
Source: Company reports, BMO Nesbitt Burns, Troika Dialog
0.1
0.1
0.1
0.2
0.2
1.1
High River Gold
Bema Gold
Kinross Gold
Highland Gold
Peter Hambro
Polyus
2004 production in Russia, mln oz2004 production in the rest of the world, mln oz
HERE COMES POLYUS!HERE COMES POLYUS!
World class reserve base
Source: Company reports
2003 - 2004 reserves in Russia, mln oz2003 - 2004 reserves in the rest of the world, mln oz
2.2
18.9
7.7
0.4
0.3Kinross Gold
Bema Gold
High River Gold
Peter Hambro
Highland Gold
Polyus
1.2
COMPANY AT A GLANCECOMPANY AT A GLANCE
Goal of becoming a TOP-5 Global Producer by 2010
Unparalleled exposure to Russian gold
3 operating mines and 9 development / exploration projects:presence in 4 regions, employing 9 800 people2004 production – 1 087 k oz2004 est. total cash costs – US$175 per oz2004 est. EBITDA – US$199 mln
Financial strength
Focus on explosive growth with low total cash cost profile
World class reserve base18.9 mln oz reserves plus an additional 40.9 mln oz resources
LOCATION OF THE ASSETSLOCATION OF THE ASSETS
HQ, Moscow
Olimpiada, Krasnoyarsk
Alluvials and Zapadnoe,
Irkutsk
Natalka,
Degdekan, Magadan Bamskoe,
Amur
ASSETS – KRASNOYARSK, IRKUTSKASSETS – KRASNOYARSK, IRKUTSK
Krasnoyarsk assets include Olimpiada, Olenii, Tyrada operating mines and Blagodatnoe, Panimba, Titimukhta deposits. Olimpiada open pit is the largest mine in Russia with 4.0 mtpa of ore mining capacity and 4.5 mtpa of ore treating capacity
Irkutsk Hard Rock Gold consolidates hard rock gold mining assets, incl. Zapadnoe, Verninskoe, Pervenetz, Mukodek, Chertovo Korito, and owns key infrastructure
Lenzoloto – 2nd largest Russian gold company on a stand-alone basis. 9 Lenzoloto subsidiaries operate 48 placer deposits and develop / explore another 74 deposits in Irkutsk region
ASSETS – MAGADAN, AMURASSETS – MAGADAN, AMUR
Assets in Magadan include Natalka deposit and Degdekan exploration area
Natalka deposit with 4.0 mln oz in reserves at 4.2 g/t will transform into 18.1 in reserves at 2.0 g/t by 2007. 2005 – 2007 exploration budget of US$65 mln
Pre-feasibility study will chose between 23 or 30 mtpa processing plant, est. development capex of US$600 – 800 mln, annual production of up to 1.4 mln oz at total cash costs of approx. US$200 per oz
In February 2005 Polyus acquired Bamskoe deposit in Amur region containing .4 mln oz reserves and 2.4 mln oz resources
NATALKA EXPLORATION UPDATENATALKA EXPLORATION UPDATE
2003 – creation of geological model based on historical 125 000 m drilled, resulted in 78.3 mln oz of modeled MI&I resources
2004 – two stage exploration program to confirm modeled resources and explore at depth and on flanks, 13 drill rigs in place: Surface diamond drilling of 120 000 m, 34 000 m
completed Underground drilling of 6 000 m, will end this May
2005 – exploration stage #1 completed: Confirmed 18.2 mln oz of measured and 11.3 mln oz of
indicated resources under .6 g/t cut-off grade, in line with completed SRK audit results
Added 6.5 mln oz of indicated resources under +600 m elevation bench
Encountered two new ore intervals 200 m thick and grading more than 2.0 g/t
Possible upward reevaluation of grade
NATALKA EXPLORATION UPDATENATALKA EXPLORATION UPDATE
Two new ore intervals 200 m
thick and grading > 2.0 g/t
Upside from exploration stage #1,
6.5 mln oz of indicated resources
STRONG ORGANIC GROWTH PROFILESTRONG ORGANIC GROWTH PROFILE
Explosive growth with stable low total cash costs
Production, k oz Total cash costs, US$ per oz
2003 2004 2005F 2006F 2007F 2008F 2009F 2010F
1.1 1.1 1.2 1.31.9
2.5
3.3
1.1
175
198207
219 221213 207
144
SOLID CASE FOR POLYUSSOLID CASE FOR POLYUS
Unparalleled exposure to Russian gold industry
Key position of a leading Russian gold miner to capitalize on growth potential of Russian gold
Existing assets with superior growth profile
Solid cash flows
Strong cash balance and debt-free balance sheet
No hedging policy
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