Growth and Dividends - Polymetal International › files › ru... · Production results Kyzyl Operations ˃ Record quarterly production of 470 Koz of GE, up 26% y-o-y. ˃ 9M production

Investor presentationOctober 2017

Kyzyl processing plant construction

Growth and Dividends

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Disclaimer

This presentation includes forward-looking statements that involve know n and unknown risks and uncertainties, many of which are beyond the Company’s control and all of which are

based on the directors’ beliefs and expectations about future events. These forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or

performance, and underlying assumptions, predictions and 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 futuregrowth; 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. The forward-looking statements in this presentation 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 historical operating trends, data contained in the Company’s records and other data

available from third parties. Although the Company believes that these assumptions w ere reasonable w hen made, these assumptions are inherently subject to signif icant uncertainties and

contingencies which are diff icult or impossible to predict and are beyond its control, and the Company may not achieve or accomplish these expectations, beliefs or projections. Manyfactors could cause the actual results to differ materially from 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 and Kazakhstan, rapid technological and market change in the industries in which the Company operates,

as well as other risks specif ically related to the Company and its operations. Past performance should not be taken 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 advisors intend 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 orcircumstances on w hich such statements are based

Nothing in this presentation constitutes an offer, invitation, recommendation to purchase, sell or subscribe for any securities in any jurisdiction or solicitation of any offer to purchase, sell or

subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act asany inducement to enter into, any investment activity.

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 generally state 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 of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verif ied the datacontained therein. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Company's own internal research and estimates

based on the know ledge and experience of the Company's management in the market in w hich the Company operates. While the Company believes that such research and estimates are

reasonable and reliable, they, and their underlying methodology and assumptions, have not been verif ied by any independent source 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 this presentation. The information

contained in this presentation has not been independently verif ied. Neither the Company, any of its aff iliates, subsidiaries or subsidiary undertakings nor any of their respective advisors orrepresentatives 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 this presentation. 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 the figures that precede them. Neither the Company, or any of its aff iliates, advisors or representatives accepts any liability w hatsoever (in

negligence or otherw ise) forany loss howsoeverarising fromany information contained in the presentation.

Polymetal today

High-quality operating assets and growth projects

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˃ 6 operations in Russia, 1 in Kazakhstan and 1 in Armenia

˃ 1 POX facility and 4 major development projects

˃ Market cap of US$ 5.1 billion*, FTSE 250 constituent

Notes:

*As at market close 18.10.2017

Production results Kyzyl Operations

˃ Record quarterly production of 470

Koz of GE, up 26% y-o-y.

˃ 9M production of 1,028 Koz of GE,

up 15% y-o-y and in line with the

FY2017 production guidance of 1.4

Moz of GE.

˃ Polymetal generated FCF during the

quarter which was used to pay

US$60M in interim dividends and a

US$20M consideration for a stake

increase in the Nezhda gold property.

˃ Polymetal re-confirms its production

guidance for FY2018 at 1.55 Moz of

GE and for FY2019 at 1.7 Moz of

GE.

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˃ At Kyzyl, all major processing

equipment has been installed

and the external electrical

infrastructure now fully

operational.

˃ Construction activities are now

focused on finalising the TSF.

˃ First fresh ore from the open

pit is expected in March of

2018.

˃ The project remains on

track to produce its first

concentrate in Q3 2018.

˃ Svetloye heap leach operation

fully ramped up with significant

contributions in Q3.

˃ Updated reserve estimate at

Komar adds 535 Koz of gold with

stable grades of 1.8 g/t to

reserves, extending the Varvara

hub mine life by 3 years, until

2032.

˃ Record quarterly production

achieved at Albazino and

Varvara.

Q3 operational performance

Highlights

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> Deliver a significant and sustainable dividend

> Ensure significant and profitable growth

> Control costs and replace reserves at operating mines

> Deliver medium-term growth at Kyzyl

> Build and advance a long-term growth pipeline

> Maintain highest standards of corporate governance and sustainable development

Simple strategic objectives and clear execution priorities

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1,269 1,400 1,470 1,420 1,470

80 280330

1,269

1,400

1,550

1,700 1,800

2016A 2017E 2018E 2019E 2020E

Kyzyl

Existingoperations

69% 77% 82% 87% 87%

2016A 2017E 2018E 2019E 2020E

Gold production, Koz of GE1

Notes:

GE at 80:1 Ag oz/Au oz, 1:5 Cu mt/Au oz and 1:2 Zn mt/Au oz conv ersion ratios.

Share of gold in production1

We have robust growth profile

5-year results: we deliver on production

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900

1,090

1,190 1,2201,260

952

1,168

1,312 1,267 1,269

2012 2013 2014 2015 2016

Guidance

Actual

+6%

+7%

+10%

Annual production based on 80:1 Ag/Au ratio (Koz of GE)*

+4%

* Company historical gold equiv alent guidance recalculated using 80:1 Ag oz/Au oz conv ersion ratio.

+1%

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4.5%

3.2%

2.7%2.4% 2.3% 2.2% 2.2% 2.1%

1.9% 1.8%1.6% 1.6% 1.5% 1.4% 1.4%

0.8% 0.7%

0.0%

Poly

meta

l

Centa

min

Pan A

merican

Cente

rra

Acacia

Yam

ana

Tahoe

Kin

ross

New

mont

Barr

ick

Gold

field

s

FTS

E G

M

Agnic

o E

agle

Anglo

gold

New

cre

st

Eld

ora

do

Randgold

New

Gold

5Y Sector-leading dividend yield

18%11%

3%

-9% -24%

-26%

-39% -51% -51%-57% -58% -65%

-66% -70% -71% -72% -72% -79% -80%-88%

Centa

min

Agnic

o E

agle

Poly

meta

l

Randgold

Fre

snill

o

Gold

New

mont

New

cre

st

Silv

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M

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Barr

ick

Kin

ross

Gold

field

s

New

Gold

Tahoe

Anglo

gold

Yam

ana

Eld

ora

do

5Y* TSR

5-year results: dividend yield and TSR

Notes:

Bloomberg data as at market close 19.10.2017

*since POLY IPO

We have high-grade reserves

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Average reserve grade (2P reserves), g/t GE

Source: Company data. Gold, silv er, copper prov ed and probable reserv es as of 01.01.2017

GE at 80:1 Ag oz/Au oz and 1:5 Cu mt/Au oz conv ersion ratios.

4.23.8

6.3

2.8

3.6

2.9

2.31.9 1.7 1.6 1.4 1.4 1.4 1.3 1.3 1.3

1.1 1.1 1.1 1.0 0.9 0.90.7

Acacia

Avera

ge

Unde

rgro

und

Op

en

-pit

Rand

go

ld

Go

ld F

ield

s

Agn

ico

Ea

gle

Pan

Am

erican

Go

ldcorp

Eld

ora

do

Iam

gold

Ang

log

old

Fre

snill

o

Barr

ick

New

mon

t

Yam

ana

New

crest

Centa

min

New

Gold

Bue

na

ventu

ra

Ta

hoe

Kin

ross

Cente

rra

Polymetal

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1,182

1,063

1,002 974 964

937 931 906

879 869 863 854 844 836 789 787

779 750 728 725

664

597

Harm

ony

Anglo

gold

IAM

GO

LD

Go

ld F

ield

s

Kin

ross

AC

AC

IA

Yam

ana

New

mont

Hoch

sch

ild

Agnic

o-

Eagle

Eld

ora

do

New

Gold

Tahoe

Poly

meta

l

Go

ldco

rp

New

cre

st

Centa

min

Randgold

Fre

snill

o

Barr

ick

Cente

rra

Poly

us

All-in sustaining cash costs for 12 months ending 30 June 2017, US$/oz of GE

Source: Companies’ data on co-product basis f or the 12 months ending 30 June 2017. Centamin, Centerra Gold, Tahoe: AISC reported on by -product basis

Hochschild: AISC based on Ag/Au ratio of 74

US$ 1,259 oz – average LBMA gold price for the period

We control our costs

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145 157 145 150 170

47 45

50 50

50 32

86

145

80

30

30

30 224

288

370

310

250

2015A 2016A 2017E 2018E 2019E

Long-term growth projects

Kyzyl and POX expansion

Exploration

Stay-in-business CapEx

Capital expenditures, US$M

Our business model is capital-light

Notes: Long-term growth projects include Prognoz, Viksha and Nezhda.

Total capital expenditure in 2015-2016 includes amounts pay able at the end of the period. On a cash basis, capital expenditure was US$ 271 million in 2016 (2015: US$ 205 million).

We generate significant free cash flow

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2.2

1.1

(1.1)

OCF Capex FCF (Pre-M&A)

Randgold

2.5

1.1

(1.4)


Polymetal

2.8

0.3

(2.4)


Fresnillo

Pre-M&A free cash flow in 2012-2016, US$ bn

Notes:

Company data. Free cash f low (pre-M&A)

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… and we deliver meaningful cash returns to shareholders

Total Dividends and FCF for 2012-2016, US$ bn

1.11.1

0.3

0.9

0.2

1.1

Polymetal Randgold Fresnillo

Pre M&A FCF Dividends

Notes:

Company data. Free cash f low (pre-M&A)

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Notes:

1) As at market close 19 October 2017 based on div idends paid

Dividends, US$ per share

> US$ 1,048 million paid out

since IPO

> Interim dividend for 1H 2017

increased by 55% y-o-y to

US$ 0.14 per share

> LTM yield of 4.0%

> Average 5-year yield of

4.5% (1)

(1)

Track record of substantial dividend payments

0.20

0.32

0.16 0.21 0.22

0.32

0.50

0.20

0.30

0.15

0.70

0.32 0.36

0.51

0.37 0.32

2012 2013 2014 2015 2016 1H 2017

Special at the discretion of the Board

Regular (50% of underlying net income starting FY2017, before that - 30%)

Liquidity profile

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Robust liquidity profile: US$ 1.1 bn of undrawn credit facilities

Current leverage at 2.19x Net Debt/ Adjusted EBITDA but is expected to decrease below 2.0x by year’s end

Low cost of debt below 4% with an average maturity of >4 years

Net debt of US$1.6bn*, 100% bilateral and denominated in US dollars

Notes:

*As at 30.09.2017

New maturity profile, US$M(long term loans only)

26

102

238

454

372

100 50

2018 2019 2020 2021 2022 2023 2024

46% 54%

Fixed Floating

Interest rate breakdown(long term loans only)

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FY2016 FY2017

Production, GE Koz 1,269 1,400

TCC, US$/GE oz 570 600-650

AISC, US$/GE oz 776 775-825

Capital expenditure, US$M 271 370

Free cash flow, US$M 257 Positive

Regular dividend Paid Definitely

Special dividend Paid Decision in January*

Gold, US$/oz. 1,250 1,200

Silver, US$/oz. 17.3 16.0

RUR/USD rate 67 60

Brent oil, US$ 49 60

FY2017 Outlook

On track to deliver on production and cost guidance

*Based on FCF post regular dividends and gold price

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We continue to provide both valuation upside and meaningful current income

67x 62x54x 52x 47x

38x 38x31x 31x 30x 30x 28x 27x 24x 21x 16x 16x 14x 13x 12x 11x 10x 9x 8x

Ya

man

a

New

Gold

Ag

nic

o E

agle

Eld

ora

do

An

glo

go

ld

Hoch

sch

ild

Kin

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Pa

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n

New

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st

Ran

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illo

New

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k

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Bu

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aven

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Ta

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eta

l

Oce

ana

Gold

Aca

cia

Harm

on

y

Po

lyu

s G

old

Cen

terr

a

2017E P/E

Source: Bloomberg & Capital IQ data as at market close 19.10.2017

5.7%

4.1% 4.0% 3.9%3.2% 2.9%

1.9% 1.9%1.4% 1.1% 0.9% 0.9% 0.9% 0.9% 0.8% 0.8% 0.7% 0.6% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4%

0.0% 0.0%

Ce

nta

min

Po

lyu

s G

old

Po

lym

eta

l

FT

SE

35

0

Ta

ho

e

Ha

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Aca

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Go

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Ra

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go

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SE

GM

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old

Ag

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ag

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Ya

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old

LTM Dividend yield

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Kyzyl and Amursk projects update

| 19

Kyzyl is one of the best development-stage gold projects in the world

> Large: 7.3 Moz of gold reserves, of which 3.1 Moz is open pit

> High-grade: 7.7 g/t with 6.9 g/t in the open pit

> Excellent exploration upside: 3.1 Moz of additional resources at 6.8 g/t

> Technology: Flotation followed by concentrate offtake or POX processing

> LOM: 22 years (first 10 years open pit)

> Low capital intensity: US$375M (open pit + flotation + POX expansion)

> Robust economics:*

• US$ 488/oz TCC

• US$ 518/oz AISC

• 33% IRR

• US$ 750M NPV

Notes:

*Based on 10% discount rate. the gold price of US$ 1,200/oz, RUB/USD exchange rate of 64 and Tenge/USD exchange rate of 300.

.

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Permitting Engineering Contracting Construction

Open pit

Processing

plant

External

Infrastructure

100 % 100% 100 % 95 %

100% 100 % 50 %

100 % 100 % 100 % 95 %

100 %

Internal

Infrastructure

Tailings storage

100 % 100 % 100 % 80 %

100 % 100 % 95 % 50 %

KyzylCompletion scorecard

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External power supply facilities (ETL и MSDS) 100%

On-site & Auezov village boiler houses 100%

Maintenance shop 75%

Processing plant building 100%

Kyzyl infrastructure Progress

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KyzylOpen pit

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> Expand the capacity of the existing POX plant by ~50% in terms of concentrate

processed (now limited by the oxygen plant capacity) by debottlenecking the existing

POX facility at low capital cost (US$ 55M)

> Materially improve economics of the Kyzyl project by retaining ~50% of concentrate

for in-house treatment at the POX by:

> Increasing gold recovery from the Kyzyl concentrate to 95%

> Bringing down processing and transportation costs

> Strengthen Polymetal’s commercial position on the concentrate market vis-à-vis off-

takers

> Add development optionality for other refractory gold projects in the Company’s

portfolio

Amursk POX expansion project

Operating synergies with Kyzyl

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Permitting Engineering Contracting Construction

Hydrometallurgical

plant

Oxygen

station 2

Other processing

objects

100 % 90% 65% 50%

100% 50% 30 %

100 % 80% 65% 40%

90 %

Infrastructure 100 % 55 % 85% 0 %

Amursk POX expansion projectCompletion scorecard

Ramp up to full expanded capacity by 2H 2018

| 25

Amursk POX expansion project

Construction progress

Oxygen Plant No 2 30 % Cooling and neutralization area 55 %

Leach tailings filtration area 30 %Dry coolers 50%

> Key additions to the equipment will comprise a 2nd oxygen plant, an autoclave discharge thickener, separate filters for

thickener underflow, and upgrades for heat recovery and water treatment systems

| 26

Further growth opportunities

Nezhda – a very large high-grade gold project

| 27

> Substantial resource (JORC-compliant): 11 Moz of GE at 4.8 g/t of which 2.1 Moz at 3.8 g/t is open-pit

> Low capital intensity and excellent fit with Polymetal’s core capabilities: processing via flotation followed by concentrate

offtake

> Polymetal entered into binding agreement to increase its current 17.7% stake to 24.7% for $8M with a call option to buyout the remaining 75.3% based on the results of an initial JORC-compliant reserve estimate at $100/oz of attributable gold reserves. The

call option premium is $12M in cash.

> The call option is exercisable in 2018 with the total consideration capped at $180M of which $10M will be paid in cash and the rest in shares.

> First JORC-compliant reserve statement in 2H 2017 and development decision in Q3 2018

5 000 m

10

00

m

0-5

5-25

25-50

50-70

70-100

100, ceiling

Legend, AU m*g/t

Nezhda: progress

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2017

2018

Exploration

Geomechanical and mining

method studies

Preparation of JORC-compliant MR estimate

Further exploration of ore zone1 and adjacent areas to grow

open-pittable resources

• Upgrade of inferred resources into indicated

Construction expected to start in 2019 with

potential start of production in 2021

Technology

Pilot plant test-work

Hydrometallurgical studies

(concentrate) Study of concentrate

thickening and filtration Reagent mode optimization

Issue of operating

procedure

Design

Optimization of open-pit

mining

• Project documentation for processing facility

• Processing equipment marketing

• JORC-compliant CPR

Notes:

Start of construction and production is subject to positiv e dev elopment decision

Design

• Preparation and audit of PFS

• Development of project

documentation

Exploration

• Continue exploration activities at

adjacent areas to grow open-

pittable resources• Additional exploration of

potential ore zones for underground mining

• Further upgrade of inferred

resources into indicated

Development

• Development decision

Viksha – our first PGM asset

| 29

Gra

m-m

ete

r

(gm

-m)

One of the

largest open

pittable PGM

resources in the

world

Consistent gram-meter (gm-m) down dip (Pd eq.* ore body width)

˃ 20-year mining licence granted on July 18, 2016 for a project

area of 47km2

˃ Mineral Resources: 213 Mt at 0.98 g/t of combined precious

metals, total content at 6.6 Moz

˃ Processing: conventional flotation processing to produce bulk copper-PGM sulphide concentrate + off-take

˃ Average thickness: 7 m

˃ Depth of open pit: 150 m

Viksha: project timeline

| 30

2016

2017

2018

2019

Q1

License documents submitted for

governmental

approval

Q2

Received governmental approval

New mining license

granted

Q4

Exploration program approved and being

launched

Q1

Geological engineering survey

Q3

• Pilot plant testwork

Q4

• Confirmatory testwork

Q2

• Exploration completed• Start of feasibility study development and reserves estimate

Q3

• Submission of Russian FS to Subsoil agency (Rosnedra) and get reserves on balance• Bankable FS and development decision

Potential start of production in 2022 Notes:

Start of production subject to positiv e dev elopment decision

Prognoz – the largest undeveloped primary silver deposit in Russia

| 31

* Estimated by Micon in 2009

Key facts

Ownership:

> 5% with an option to increase stake to 50% (investment decision

to be made no later than Q1 2020)

> the other 50% owned by financial investor and potentially

available

Mineral resources: 292 Moz at 586 g/t* silver, 3% lead

Additional mineral potential: 7.9 - 18.1 Mt of ore at 469 g/t silver for

119 – 273 Moz of silver contained*

Mining method: Open-pit (5-8 years), followed by underground

Throughput: ~1 Mtpa

Production: 20 Moz of silver per annum (100%)

Capex: ~$250M (100%)

Top silver development projects globally

| 32

Source: Company reports, BMO Capital Markets

Silve

r g

rad

e, g

/t

0

200

400

600

800

1000

0

200

400

600

800

Mangazeiskiy Juanicipio Prognoz Silvertip Los Gatos Webbs Terronera Fuwan Navidad La Preciosa Corani

Development projects – Ranked by Silver Grade

P+P M+I Inf. Ag grade, g/t

Silve

r co

nte

nt, M

oz

(BCM)(CDE)(CDE)(FRES;MAG) (POLY)(SBR) (DOWA) (Silv er Mines) (EXK) (MSV) (PAAS)

Prognoz: project timeline

| 33

2017

• Focus on exploration (at least 25km of diamond drilling)• Start of technical study development and reserve estimate

2018

• Preparation of preliminary feasibility study• No later than 31 March 2019 - completion of pre-feasibility study and externally audited JORC-compliant reserves

estimate followed by investment decision

2019

• Preparation of the FS (combined mining method, reserves estimate)• Design of processing plant and infrastructure

2020

• Completion of permitting stage• Development decision and start of construction

Potential start of production in 2023

Notes:

Start of production subject to positiv e dev elopment decision

| 34

Operating assets review

| 35

Key facts:

> Location: Magadan Region, Russia

> Life of mine: 2023

> Mining: Underground

> Processing: 1.8 Mtpa concentrator and 425 Ktpa Merrill

Crowe plant

> Reserves (JORC): 2.1 Moz GE at 4.7 g/t including 142

Moz of silver at 327 g/t

> Resources (JORC): 0.6 Moz GE at 13.3 g/t including 43

Moz of silver at 886 g/t

> Employees: 1,897

Dukat

Operation

Development

Plant

City

| 36

Gra

de

, (g

/t)

Notes:

GE produced at 80:1 Ag oz/Au oz; SE (silv er eq.) per oz sold based on actual realised prices (f or AISC)

1,574 1,711 1,817 1,938 1,463

338400

416435

346

1,912 2,111

2,233 2,373

1,808

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, KtDukat concentrator Lunnoye plant

317 344

393 369

241

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

6.0 5.8 6.4 5.6 4.7

13.9

10.9

7.8 8.0

10.2

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/SE oz)

Dukat

1,253 1,468

1,656

1,661

1,211

168

191201 183

143

394

384

401 435

419

48111,815

2,0432,258 2,279

1,833

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined, KtDukat Goltsovoye Lunnoye Nachalny-2 Terem

˃ Start of production from high-grade satellite deposits

˃ Terem (mineral resources1 of 690 Kt, at 21.9 g/t GE) and Nachalny – 2 introduced to the feed in Q3 2017

˃ Perevalnoye (ore reserves of 350 Kt, at 5.9 g/t GE) in Q4 2017

˃ Primorskoye (mineral resources of 500 Kt, at 19.6 g/t GE) in Q3 2019

˃ Step-out exploration at deeper flanks of Dukat and Lunnoye

˃ Removal of left-behind pillars and lower-grade stopes where no minimal development is needed through application of differentiated cut-off grade

| 37

˃ Extend LOM to 2027 while maintaining stable costs

˃ Slow down grade erosion and production decline

˃ Improve processing capacity utilization

Notes:

1) Unaudited mineral resource estimate

Dukat: operational priorities

| 38

Albazino

Key facts:

> Location: Khabarovsk Territory, Russia

> Commissioning: 2009


> Mining: Open pit/Underground

> Processing: 1.6 Mtpa flotation circuit followed by

POX and CIL processing at Amursk Hub

> Reserves (JORC): 2.0 Moz GE , 4.2 g/t

> Resources (JORC): 1.7 Moz GE , 5.3 g/t

> Employees: 988

| 39

Albazino

Gra

de

, (g

/t)

1,513 1,609 1,607 1,654

1,291

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

238 227 220 244

197

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

5.6

4.85.2 5.0

4.8

1,139

901

667 684

893

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/GE oz)

Notes:

GE produced at 80:1 Ag oz/Au oz; GE (gold eq.) per oz sold based on actual realised prices (f or AISC)

1,338 1,566 1,5831,866

1,217

49

267

2501,338

1,566 1,632

2,133

1,467

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined, Kt

Open-pit Underground Total

86.0%

93.8% 94.0% 94.0% 96.1%Recovery

(POX), %

˃ Acceleration of satellite open-pit development:

˃ Ekaterina 1 (ore reserves of 380 Kt at 3.5 g/t GE)

˃ Ekaterina 2 (ore reserves of 1,170 Kt at 2.6 g/t GE)

˃ Ekaterina 3 (ore reserves of 200 Kt at 3.5 g/t GE)

˃ Farida (mineral resources of 610 Kt at 4.0 g/t GE)

˃ Continued resource-to-reserve conversion in the underground mine

˃ Continued near-mine exploration

Albazino: operational priorities

| 40

Stable production and costs for the next

10-12 years

| 41

Mayskoye

Key facts:

> Location: Chukotka, Russia



> Mining: Underground and open pit

> Processing: 850 Ktpa flotation concentrator/CIL

> Reserves (JORC): 1.4 Moz GE, 6.9 g/t


> Employees: 977

Operation

Development

Plant

Sea port / City

| 42

Mayskoye

48

143 138

116

90

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

NR

1,134

935

1,242

FY 2013 FY 2014 FY 2015 FY 2016

AISC (US$/GE oz)

667 653 628 730 766

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined, Kt

Gra

de

, (g

/t)

488

807

683 761

649

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

Notes:


7.1

8.7

6.7 5.3 5.9

10.0 10.5

13.8

19.5

14.4

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Underground development, Km

˃ Debottlenecking of the CIP section to achieve design recovery levels for oxidised ore from the open pit

˃ Maintain safety, productivity and grade control underground

˃ Accelerate resource-to-reserve conversion both in the open pit and underground

Mayskoye: operational priorities

| 43

Stable production for the next 8-10 years with

2017-2019 costs lower by 25-30% vs 2016

| 44

Omolon

Key facts:

> Location: Magadan Region, Russia




> Processing: 850 Ktpa CIP and Merrill

Crowe,1000 Ktpa HL


- CIP: 1.2 Moz GE at 6.8 g/t

- HL: 0.3 Moz GE at 1.3 g/t

> Mineral resources (JORC): 0.6 Moz GE, 10.3 g/t

- CIP: 566 Koz GE at 11.9 g/t

- HL: 16 Koz GE at 1.9 g/t

> Employees: 725

Operation

Development

Depleted

Plant

City

| 45

767 825 835 840

1,008

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

1,322

722 732 675

901

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/GE oz)

Gra

de

, (g

/t)

147

213

188 170

140

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

6.68.4 7.5 7.0

5.0

Omolon: operational statistics

Notes:


2,0652,488 1,990

2,061

378

4172

190

2,065

2,488

1,9942,233

567

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined, KtOpen-pit Underground Total

˃ Smooth roll-over from older depleted ore sources (Tsokol, Dalneye) to Birkachan, Oroch

˃ Continued resource and reserve accretion at Olcha, Sopka, Nevenrekan, Yolochka

˃ Restart of Heap Leach operation at Birkachan

Omolon: operational priorities

| 46

˃ Stable production and costs for the next 7-8 years

˃ Advancing LOM extension options

Omolon: production by ore source

| 47

825 835 840 850 850 850 850

8.4

7.5

7.0

7.6

7.0

7.9

7.0

0

2

4

6

8

0

300

600

900

1200

1500

2014 2015 2016 2017E 2018E 2019E 2020E

Ore processed breakdown, Kt

Birkachan Sopka Tsokol Olcha Dalneye Oroch Grade GE, g/t

Grade GE, g/t

| 48

> Location: North-western Kazakhstan

> Commissioning: 2007 (operated by Poymetal since 2010)


> Mining: Open pit

> Processing: CIL (2.5 Mtpa)/ flotation (1 Mtpa)

> Total Reserves (JORC)*: 3.4 Moz GE, 1.6 g/t

- Komar: 1.4 Moz GE at 1.8 g/t

- Varvara & others: 2.0 Moz GE at 1.5 g/t

> Total Resources (JORC): 2.9 Moz GE, 1.8 g/t

- Komar: 0.5 Moz GE at 2.2 g/t

- Varvara & others: 2.4 Moz GE at 1.8 g/t

> Employees: 1,129

Key facts:

Varvara

Operation

Development

Plant

City

*Updated JORC-compliant reserv e estimate as of 01.06.2017

| 49

Notes:


2,782

1,076

338

1,346

3,676 3,664 3,457

3,119

2,422

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

Varvara and other Komar

1,088 1,049

1,092

975

1,026

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/GE oz)

Gra

de

, (g

/t)

131

106

72 85 88

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

1.51.2

0.91.1 1.3

Varvara: operational statistics

2,820

1,070

383

1,363

2,008

3,985 4,068

3,203

2,433

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined by source, Kt

Varvara Komar Total

Varvara: operational priorities

| 50

>Evaluation of in-pit waste storage at both Komar and Varvara with the goal to reduce operational footprint and cut costs by reducing average waste haulage distance twofold

>Optimisation of the long-term mine plan for the hub as a whole with evaluation of strategic options for

assets on the Russian side of the border (Tarutin, Maminskoye)

>Continued active presence on the market for 3rd party ore

˃ Komar will drive a strong jump in production at

Varvara in 2017

˃ Stable production for the next 10-12 years

˃ Costs trending lower 15-20% vs 2016

| 51

Key facts:

> Location: Khabarovsk Region, Russia


> Life of mine:

- Okhotsk – 2019

- Svetloye – 2024


> Processing: 600 Ktpa Merrill Crowe, 1000

Ktpa HL circuit at Svetloye


average grade

- Svetloye: 675 Koz GE at 2.8 g/t

- Okhotsk: 201 Koz GE at 5.3 g/t

> Resources (JORC): 0.5 Moz GE, 5.2 g/t

average grade

> Employees: 1,182

Okhotsk

Operation

Development

Plant

Sea port

23 84

134 119 114 108

63

134119 114

131

147

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

Svetloye Okhotsk Total

| 52

Notes:


619 622 631 627 467

428921

619 622 631

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

Okhotsk Svetloye Total

1,055

1,389

1,065

909

621

752

1,040

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/GE oz)

Okhotsk: operational statistics

697

1,077

399 14198

1,336

935

697

1,077

399

1,477

1,032

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore mined, Kt

Okhotsk Svetloye

Gra

de

, (g

/t)

7.5 6.7 6.2 4.94.7

| 53

>De-bottlenecking heap leach stacking capacity at Svetloye given significant expansion in ore reserves

following positive grade reconciliation after in-fill drilling and positive exploration results on the flanks

>Continued exploration at smaller high-grade satellite deposits potentially providing feedstock at Khakanja(Khotorchan, Kundumi, Kirankan)

>Advancing Levoberezhny, particularly the heap leachable oxide cap

>Evaluation of strategic options for the Khakanja plant and associated smaller deposits

˃ Stable production at very low costs at Svetloye

for the next 7-8 years

˃ Flexible ore source planning for Khakanja

Okhotsk: operational priorities

| 54

Key facts:

> Location: Sverdlovsk Region, Russia

> Commissioning: 2000 (HL), 2005 (CIP)


> Mining: Open pit

> Processing: 950 Ktpa CIP circuit

> Reserves (JORC): 0.9 Moz GE , 2.5 g/t


> Employees: 874

Voro

Operation

Development

Plant

City

| 55

Notes:


924 915 924 1,001 752

850 747450 319

302

1,774 1,662

1,375 1,321

1,054

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Ore Processed, Kt

CIP HL

692

515

391 419

473

FY 2013 FY 2014 FY 2015 FY 2016 1H 2017

AISC (US$/GE oz)

Gra

de

, (g

/t)

154 159 141

129

88

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Production (GE Koz)

3.63.7

3.43.6

3.4

Voro: operational statistics

11 11 10 10

8

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Waste mined, Mt

| 56

>Reserve estimate for Saum and Tamunier in 1H 2018

>Feasibility study for the joint development of Saum, North Kaluga and Tamunier with an upgrade of the existing CIP plant to include flotation circuit in Q3 2018

>Continue regional exploration and evaluation of bolt-on M&A opportunities

˃ Declining medium-term production and the

cessation of mining at Voro in 2019

˃ Stockpile processing in 2019-2027

Voro: operational priorities

| 57

Key facts:

˃ Location: Kapan province, Armenia

˃ Acquired by Polymetal: April 2016

˃ Mining: underground

˃ Processing: flotation concentration followed by offtake

˃ Life of mine: TBC in Q3 2017

˃ Ore reserves: TBC in Q3 2017

˃ Mineral resources (JORC):

- Kapan 1.9 Moz GE , 4.0 g/t average grade

- Lichkvaz 0.6 Moz GE , 4.2 g/t average grade

˃ Employees: 1,085

KapanOur first Armenian operation

Yerevan

St. Petersburg

2400 km

320 km

Kapan project

Lichkvaz

70 km

Azerbaijan

Turkey

Iran

Armenia

| 58

Notes:


64

224 247

1H 2016 2H 2016 1H 2017

Ore Processed, Kt

1,930

1,184 1,197

1H 2016 2H 2016 1H 2017

AISC (US$/GE oz)

Gra

de

, (g

/t)

6

19

25

1H 2016 2H 2016 1H 2017

Production (GE Koz)

4.23.9

4.5

Kapan: operational statistics

2

7 8

1H 2016 2H 2016 1H 2017

Underground development, Km

| 59

> Carry on with improvement measures aimed at debottlenecking the underground mine

> Undertake additional drilling to produce a JORC-compliant reserve estimate and a combined LOM for Kapan and Lichkvaz in Q3 2017

> Continue active exploration activities in the region

Kapan: operational priorities

A capital-light regional processing hub with

sizeable production of more than 100 Koz of

GE per annum

| 60

Appendix

| 61

Sustainability is the only way forward

0strikes and lockouts

0major environmental incidents

5.5% staff turnover in 2016

0.2LTIFR

(4 fatalities in 2016)

US$13.6Mcommunity investments

2014-16

42% female qualified personnel

Member 2016/2017

25cooperation agreements with

communities

60hours of training per person

11,261 people

We are committed to delivering sustainable value

| 62

2016-2017 Sustainability highlights

> Signatory to the International Cyanide Management Code

> Leader for Environmental management in WWF/UN rating

> Completion of ESIA at Kyzyl (EBRD Environmental and Social Policy implemented)

> CarbonManagement and Human Rights Policies signed

> 50% reduction of extreme risks and 14% LTIFR reduction

> Biodiversity conservation incorporated into corporate environmental management

> Over 50 social service institutions renovated or upgraded in host communities

• \

| 63

Notes:

Shareholder structure data as of October 3. 2017

59% Free Float

27% ICT Group (Alexander Nesis)

13% PPF (Petr Kellner)

Christine Coignard

Senior INED

ex-MD HCF International

Advisors

Chair of the Remuneration Committee

Jonathan Best

INED

ex-CFO of AngloGold Ashanti

Chair of the Audit and Risk

Committee

Russell Skirrow

INED

ex-Chairman ML Metals/

Mining IB team

Leonard Homeniuk

INED

ex-President of Centerra

Gold

Chair of the Safety and Sustainability Committee

Jean-Pascal

Duvieusart

PPF Group

ex-Managing Partner at

McKinsey

Konstantin Yanakov

ICT Group Ltd

ex-CFO of Polymetal

Marina Gronberg

Vitalbond Ltd

Vitaly Nesis

Group CEO

Shares outstanding

430,115,480

1% Management

& Directors

Bobby Godsell

Chair

Chairman of Business Leadership South Africa,

ex-CEO of AngloGold Ashanti

Chair of the Nomination Committee

We are committed to highest standards of corporate governance

INED Non-independent

• 14% High net worth individuals

• 45% Institutional

investors

Shareholder structure Board of DirectorsThe majority of our Board is independent

We operate in stable low-risk jurisdictions

| 64

Type of risk Recent issues in mining jurisdictions

outside FSU

Russia/Kazakhstan/Armenia

Resource

nationalism

> Tanzania – export ban on concentrate since March + possible introduction of 1% clearing fee on mineral export value. Government blocks export of Petra diamond parcel

with risk of nationalisation

> Indonesia - Freeport McMoran divests ownership to local aluminum producer under gov’t pressure

Low risk

No instances of government overreach or licensing issues in hard rock mining in more than 10 years

Tax regime

> Burkina Faso – adoption of new mining code abolishes a previous 10% tax break on mining company profits (now 27.5%)

> South Africa – introduction of new 1% royalty on mine

turnover

> Zambia – increased electricity tariffs for copper mines

Stable tax regime

Relatively low

corporate and sectortaxation levels

No recent changes to royalty rates and mineral extraction tax;

Corporate tax rates stable at 20% since 2009 in Russia and Kazakhstan, and

since 2006 in Armenia

Environmental

/regulatory/

community

limitations

> Greece and some other EU countries – ban on project development for environmental reasons in many locations

> Philippines – ban on open-pit mining and closure of several operating mines involved in production of nickel for

environmental reasons

> Colombia – project suspension by government after

community anti-mining vote

Low risk No material issues

Labour issues > South Africa – miners’ strikes and instances of illegal

miners occupying mine sites

Low risk

None, unemployment rates at a low 5.3% in Russia, 4.9% in Kazakhstan and 17.4% in Armenia

Labour strikes extremely rare; labour

unions only traditionally influential in coal mining

Source: Publicly av ailable data

1H 2017 1H 2016 Change, % (1) FY 2016

Revenue, US$M 683 593 +15% 1583

Adjusted EBITDA, US$M 257 293 -12% 759

Adjusted EBITDA margin 38% 49% -11% 48%

Total cash cost (TCC), US$/GE oz 656 514 +28% 570

All-in sustaining cash cost (AISC), US$/GE oz 906 754 +20% 776

Net earnings/ (loss) for the period, US$M 120 165 -27% 395

Underlying net earnings, US$M 117 125 -6% 382

Underlying EPS, US$/share 0.27 0.29 -7% 0.90

Dividend declared during the period, US$/share (2) 0.18 0.13 +38% 0.37

Dividend proposed for the period, US$/share 0.14 0.09 +56% 0.37

Net operating cash flow, US$M 35 65 -46% 530

Capital expenditure, US$M 193 117 +65% 271

Free cash flow (pre M&A), US$M (3) (163) (53) +208% 257

30-June-17 31-Dec-16

Net debt, US$M 1,582 1,330 (4) +19%

Net debt/Adjusted EBITDA (5) 2.19 1.75 +25%

Financial highlights

Notes:

(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.(2) 1H 2017: f inal dividend for FY 2016 paid in May 2017. 1H 2016: final dividend for FY 2015 paid in May 2016.

(3) Net cash generated by operating activities less capital expenditures.(4) As at 31 Dec 2016. (5) On a last 12 months basis

| 65

Impact of Rouble appreciation on AISC

| 66

754

906

AISC 1H 2016 Domestic

inflation

Mining tax

change - Au&Ag

price

USD rate

change

Au/Ag ratio

change

Average grade

processed

Changes in

sales structure

Other AISC 1H 2017

AISC reconciliation, US$/oz

Source: Company data

GE based on actual realised prices

- 41

˃ AISC driven mostly by the increase in TCC as a result of continued Russian Rouble strengthening which was partially offset

by the robust operating performance at Varvara, Kapan and Svetloye (Okhotsk hub).

˃ We remain on track to meet the FY2017 AISC guidance of US$ 775-825/GE oz.

+ 37

- 5- 6

+ 139

+ 1+ 28

Financial performance is heavily dependent on the RUB/USD exchange rate and oil price dynamics

| 67

Labor, 24%

Fuel, 20%

Services, 23%

Grid power,

4%

Non-fuel consumables,

21%

Royalty, 8%

$ / RUB / Tenge

RUB/ Tenge

Oil

$ / Au

Oil / RUB /

Tenge

RUB / Tenge

RUB, 41%

Tenge, 9%

$, 20%

Oil, 30%

OpEx Structure, $/oz

> A 1 RUB movement in domestic

currency will have an US$8/oz effect

on TCC

| 68

RUB, 20%

$, 40%

Tenge, 40%

Project Capex (Kyzyl + Amursk + LT projects)

Sustaining Capex

RUB, 50%

$, 20%

Tenge, 30%

> A 10% devaluation of domestic currencies will have approx.

8% effect on the sustaining capex or ~US$8/oz

> A 10% devaluation of domestic currencies will have approx.

6% effect on the project capex (US$175M in 2017) or ~US$11

million

Capital expenditures also sensitive to FX dynamics

Reserves and resources

| 69

2.1

1.5

2.0

1.4

0.90.9

4.1

7.3

0.9

21.2

0.6

0.6

1.7

3.2

0.50.8

2.9

3.1

2.5

1.90.7

18.6

Dukat Omolon Albazino Mayskoye Okhotsk Voro Varvara Kyzyl Kapan Nezhda Other Total

Reserves Resources

Notes:

Reserv e and resource statement (JORC 2012) as at 01.01.2017 including updates f rom Dolinnoy e and Nezhda. Gold and silv er price assumptions of $1,200/oz and $16/oz respectiv ely .

*Assuming a reasonable resource-to-reserv e conv ersion

1) Includes Kapan and Lichkv az mines 2) Kuty n, Veduga

GE

Moz

4.7 3.7 4.2 6.9 3.2 2.5 1.8 4.3

Re

se

rve

g

rad

e, g

/t

2.7

2.0

3.7

4.7

1.41.7

7.0

1.6 38.6

2023 2024 2031 2034 2024 2027 2032

LO

M

7.7

2039

4.1

10.4

2.5

N/A

N/A

**

1 2

N/A

1.9

Documents

Growth and Dividends - Polymetal International › files › ru... · Production results Kyzyl Operations ˃ Record quarterly production of 470 Koz of GE, up 26% y-o-y. ˃ 9M production