PETROPAVLOVSK PLC POX Capital Markets Day and H1 2019 Results 10th September 2019
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PETROPAVLOVSK PLC POX Capital Markets Day and H1 2019 Results 10th September 2019 1
Cautionary and forward-looking statements
— Some statements contained in this presentation or in documents referred to in it are or may be forward-looking statements, including
references to guidance. Such statements reflect the Company’s current views with respect to future events and are subject to risks,
assumptions, uncertainties and other factors beyond the Company’s control that could cause actual results to differ from those
expressed in such statements. Although the Company believes that such forward-looking statements, which speak only as of the date
of this presentation, are reasonable, no assurance can be given that they will prove to be correct. Therefore, you should not place
undue reliance on these statements
— There can be no assurance that the results and events contemplated by the forward-looking statements contained in this presentation
will, in fact, occur. The Company will not undertake any obligation to release publicly any revisions to these forward-looking
statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation, except as required by
law or by any appropriate regulatory authority. Nothing in this presentation or in documents referred to in it should be considered as a
profit forecast.
— The past performance of the Company and its securities is not, and should not be relied on as, a guide to the future performance of
the Company and its securities
— This presentation does not constitute, or form part of or contain any invitation, recommendation or offer to any person to underwrite,
subscribe for, buy, sell, otherwise acquire, exchange or dispose of any shares or securities in the Company or advise persons to do
so in any jurisdiction, including, but not limited to, the Russian Federation, nor shall it, or any part of it, form the basis of or be relied on
in any connection with or act as an inducement to enter into any contract or commitment therefore or engage in any other investment
activity. In particular, this presentation and the information contained herein are not an offer of securities for sale in the United States.
This presentation does not constitute an advertisement of any securities in the Russian Federation
— No reliance may be placed for any purpose whatsoever on the information or opinions contained in this presentation or on its
completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this presentation or its contents
or otherwise in connection therewith.
— The development and production plans and estimates set out herein represent the current views of the Company's management. The
Company’s Board reviews the production estimates on an ongoing basis. All planning is subject, inter alia, to available funding and
capital allocation decisions
— English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this presentation
2
Welcome and Opening
Remarks
Sir Roderic Lyne
3
A Welcome From The Team
Senior Executive Members and the Board of Directors
Senior Executive Members Board of Directors
Independent
NED
Harry Kenyon-
Dr Pavel Sir Roderic Lyne
Slaney
Dr Pavel Maslovskiy Non-Executive
Sr. Independent
Maslovskiy CEO Chairman
Director
CEO
Independent Independent Independent
NED NED NED
James Cameron Robert Jenkins Damien Hackett
Independent Non- Independent Non- Independent Non-
Exec Director Exec Director Exec Director
Dr Alya
Samokhvalova
Alexey Dubynin — Board strengthened with 4 x new Independent NEDs
Deputy CEO CFO
— New Board fully compliant with UK Corporate Governance Code
— An additional Board Member to be confirmed
4
Key Themes From Today’s Presentation
Petropavlovsk is well-positioned for growth with a strong and sustainable platform
OUR CORPORATE OBJECTIVE
Delivering sustainable returns above our cost of capital by leveraging our long-life asset-base and
technical competence
OUR KEY MESSAGES
✓ POX is up and running
✓ Petropavlovsk has one of only two gold concentrate POX processing plants in Russia → growth
and value opportunities
✓ Pioneer flotation plant to increase concentrate feed to POX from Q4 2020
✓ A 10 year, c.US$400m, investment bearing fruit: a technologically advanced platform for future
growth, processing abundant refractory ores
✓ Turnaround over past 12 months: H1 profits up, costs down. On track for 2019 production and costs
guidance
5
Petropavlovsk:
Today & Tomorrow
Dr Pavel Maslovskiy
6
Petropavlovsk: An Overview
A leading vertically integrated Russian gold miner
3x gold mines c.15Mtpa 20.5Moz of JORC Resources(1) c.7.3Moz Au
Open pit + underground milling capacity incl. 8.2Moz of Reserves Produced to date(2)
Mining & Processing
Pioneer
St Petersburg Albyn
- RDC Hydrometallurgy
Malomir
Pokrovskiy
Moscow Blagoveshchensk
- Petropavlovsk Moscow - Regis Exploration
- PHM Engineering - Kapstroi Construction
London
- Petropavlovsk Plc
- Corporate headquarters
Irkutsk
Open-pit mine Analytical labs - Irgiredmet Institute
Underground mine R&D
POX Hub Offices IRC Ltd. (non-core)(3)
(1) As at 31 Dec 2018, in accordance with the JORC Code. Resources (M,I&I) are incl. of Reserves (2) As at 30 June 2019 (3) 31.1% equity interest 7
Operational and Corporate Achievements
Over the last 12 months, a significant business turnaround has been achieved
Recent Achievements
Flotation
✓ Malomir flotation plant fully ramped-up and operating above design parameters
✓ Ongoing Pioneer flotation construction to double refractory ore processing capacity
POX Hub
✓ POX plant commissioned ahead of schedule and successfully ramped-up
Financial Performance
✓ H1 2019 TCC better than lower end of guided range
Debt
✓ Convertible bonds refinanced at a lower coupon
✓ IRC loan refinanced with a more favorable payment schedule
Corporate
✓ Third party advisor retained to review and assist with ESG ratings and communication
✓ Independent Board constituted
8
H1 2019 Financial Results Highlights
Strong set of financials overall: costs and capex down, revenue, EBITDA and profits up
1 Group Revenue (US$m) 2 EBITDA (US$m) 3 Total Cash Costs (US$/oz) 4 Capex (US$m)
+13% +37% -6% -33%
83 899 67
305 841
270
61
45
H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019
9
H1 2019 Group Total Cash Costs (TCC)
Fall in TCC despite underutilised capacity POX , further improvement expected in H2 2019
Avg. RUB:US$ FX
Electricity (+5%) Higher grades +
End of tax relief on depreciated by 10% Lower stripping in H1
Diesel (+18%) recoveries at Albyn
capital investment(1) from 59.3 (H1 2018) to 2019 vs. H1 2018
Materials (+10%) and Malomir
65.2 (H1 2019)
52 30
80
131 56
32 0.5
US$899/oz US$841/oz
-6%
H1 2019
H1 2018
Inflation
FX
Mining tax
Other taxes
POX ramp-up
recoveries
Deferred
Change in
stripping
related costs
grades /
(1) The Russian statutory mining tax rate is 6%. Under Russian Federal Law 144-FZ dated 23 May 2016 that introduced certain amendments to the
Russian Tax Code, taxpayers who are participants in Regional Investment Projects have the right to apply reduced mining tax rate provided certain 10
conditions are met. Malomir and Albyn met eligibility criteria and applied 1.2% mining tax rate in H1 2019. Pokrovskiy applied full mining tax rate in H1
2019Liquidity and Debt Overview
Recent bond restructuring has strengthened near-term liquidity position
Group debt maturity schedule (US$m) Targeting mid-term Net Debt / EBITDA of c.2.0x
FY 2018 EBITDA affected by
US$500m notes refractory concentrate
stockpile build-up during POX 4.0x
maturing Nov 2022
commissioning phase
3.7x
3.5x
500
3.0x 3.0x
US$125m
convertible bond
978 Refractory
issue maturing 930
Jul 2024
Target
638 610 611 599 596 585 594 568 Refractory
c.2.0x
125
100
2019 2020 2021 2022 2023 2024 2025 2026 2014 2015 2016 2017 2018 2019 - 2022
Total debt Net debt Net debt / Underlying EBITDA
11Improving Credit Rating
An improved credit rating reduces the Company’s cost of capital
Key highlights from latest report Key highlights from latest report
B- (Outlook Negative) B- (Outlook Positive)
(outlook re-affirmed) (upgraded from CCC)
Last review: April 2019 Last review: August 2019
– Significant strengthening in liquidity position
– POX commissioning to have a positive impact on 2019
financials – Convertible bond successfully refinanced
Highlights
– Repayment of US$57m bridging loan by IRC
– IRC debt refinancing to improve liquidity position
– Increased visibility for production following POX commissioning
– Development of underground operations
– Significant deleveraging by end-2020
– Expanding the Board reinforced corporate governance
– Improved corporate governance
Successful convertible bond refinancing
FFO adjusted gross leverage remaining sustained below 4x
2019 EBITDA growth in line with S&P base case
Triggers
Upside
Sustained FCF margin with funds used for reduction of gross debt
Improved credit metrics backed by potential sale of IRC stake
Improvement of production volumes and cash costs
Building up successful POX track record
Improvement in corporate governance
Delivery on revised business strategy
Downside
Triggers
2019 EBITDA may not materially improve vs. 2018
Deterioration of liquidity and / or aggressive dividend distributions
Difficulty in refinancing the US$100m convertible bond due
Failure to improve production volumes
2020
Source: S&P and Fitch rating reports 12Mine By Mine TCC And H1 2019 Production Highlights
Overall H1 2019 Group Total Cash Costs (TCC) reduced by -6% yoy, with all mines profitable at
H1 2019 avg. realised gold price levels
H1 production 11koz above plan H1 production 3.6koz above plan H1 production 7.4koz below plan
1,138
971
884 860 843
622
-30% -12% +35%
Albyn Malomir Pioneer
H1 2018 H1 2019 % change yoy
13H1 2019 AISC and Capex
Decrease in Group AISC and Capex due to strong operating performance and financial
discipline
H1 2018 vs. H1 2019 AISC (US$/oz) H1 2018 vs. H1 2019 Total Capex Spend (US$m)
1,506
1,186 34.0
1,110 1,116
1,013
731
13.0
10.4 9.1 10.2
-34% -15% +35% 8.5 8.2
6.1 5.6
2.8 3.1
1.1
Pioneer
Malomir
Albyn
Pioneer
Exploration
Malomir
Other
POX
Albyn
H1 2018 H1 2019 % change yoy H1 2018 H1 2019
(1) The majority of Pioneer’s capex (US$10.4m of development + US$2.1m of exploration), is categorised as sustaining, resulting in increased AISC
14
in H1 2019FY2019 Outlook
On track to meet FY 2019 guidance of 450Koz – 500Koz gold with lowered cost guidance
Malomir — c.160Kt – 165Kt of refractory concentrate at 28g/t – 29g/t to be processed this year, of which:
Concentrates — c.35Kt of concentrate at 28g/t produced / stockpiled in 2018
(at POX) — c.125Kt – 130Kt of refractory concentrate at 28g/t – 29g/t produced in FY2019e(1)
3rd party — 38Kt at 40g/t – 75g/t Au secured H1 2019(2)
Concentrates — Additional c.20Kt at 49g/t - 75g/t Au currently under negotiation
(at POX) — Concentrate is from Russia and Kazakhstan
— TCC revised downwards to US$750 – US$850/oz due to strong operational achievements including a
Costs smoother-than expected ramp-up of the POX Hub (RUB : US$ FX of 66)
— US$45m - US$55m, consisting of sustaining, exploration + remaining POX capex
Capex
— Additional Pioneer flotation spend of c.US$30m (a portion of which falls into 2019)
— Elginskoye (Albyn) – currently open in all directions with drilling expected to increase resource of ore
body extensions
Exploration — NE Bakhmut pit (Pioneer) high grade material identified below pit with extensions of mineralisation to
increase open pit and underground reserves
— Khabarovsk assets (greenfield) showing highly promising results
(1) c.125Kt – 130Kt processed from 125Kt – 145Kt of concentrate produced at Malomir during FY2019e
(2) Material secured under contract, but not necessarily shipped to site 15POX: Technology Driven
Growth
Dr Pavel Maslovskiy
16POX: Introduction To Refractory And Double Refractory Gold Ores
POX – one of the most efficient and environmentally-friendly ways to extract gold from
refractory ore
Refractory + Double Refractory Ore Refractory Reserves(1) Refractory Resources (1)
— “Refractory” ore contains gold encapsulated in
sulphides which resists recovery via standard methods
— Sulphides need to be broken down chemically or Albyn Pioneer Albyn Pioneer
open-pit 1.1Moz
open-pit open-pit
mechanically 0.4Moz
open-pit 2.0Moz
4.2…
0.4Moz 2.0Moz 1.1Moz 4.2Moz
— “Double refractory” ore also contains carbon, which
impacts recoveries → special measures are required to 9%
8%
neutralise carbon’s effect
38% 34%
Main Options to Treat Gold Bearing Refractory Ores 5.3Moz 12.3Moz
Total Total
51%
54% 2%
3%
Pressure 1. POX: oxidation in an
Oxidation autoclave: high pressure
(POX)
+ temperature
Malomir
2.7Moz Pioneer Malomir Pioneer
2. Roasting: oxidation 0.2Moz 6.7Moz 0.3Moz
Roasting open-pit U/G open-pit U/G
via high temperature 2.7Moz 0.2Moz 6.7Moz 0.3Moz
High Grade roasting
Concentrate
3. BIOX: oxidation using
Bio bacteria ‒ 65% (5.2Moz) of the Group’s total Reserves (8.2Moz) are refractory
Oxidation
(BIOX) 4. UFG: fine grinding ‒ 60% (12.3Moz) of the Group’s total Resources (20.5Moz) are
releases gold refractory
Ultra-
Fine encapsulated in sulphides
Grinding or other minerals By design, our POX Hub is able to treat the most technologically
complex refractory ore concentrates
(1) As at 31 Dec 2018, in accordance with the JORC Code 2012. Reserves are shown as Proven + Probable. Resources are inclusive of Reserves 17The POX Hub Concept
The POX Hub is well positioned in terms of easy access and well developed infrastructure
Concentrate Transportation:
Km
Malomir to POX
Truck: Malomir to Fevralsk 166
Rail: Fevralsk to Tygda 1,134
Truck: Tygda to POX Hub 18
Total 1,318
Albyn
Malomir
Tygda(1)
Pioneer
Pokrovskiy POX Hub
CHINA
Transportation route Fevralsk(1)
Railway
Operating mines
Underground mine Pilot POX Plant
POX
Analytical labs
Blagoveshchensk
Hydro power plant
(1) Fevralsk and Tygda are rail loading facilities 18POX: A World Class Team
A world class research and development expertise lead by a world class team
Gidrometallurgia: Petropavlovsk’s Scientific Research Centre, established to support the POX project
— Unique laboratory, created the concept of the POX project for the Group, including key technological parameters
— Equipped with state of the art autoclave laboratory facilities (laboratory + pilot testing, feasibility work + audits)
— Unique team of 40 specialists incl. PhD holders, who have undertaken a range of work for c.30 third party companies in addition to POG
Irgiredmet: The Irkutsk Research Institute of Precious and Rare Metals and Diamonds
— Founded in 1871, over 140 years of expertise in R&D, design + engineering
— Helped to develop flotation process / testing, laboratories performed autoclave leaching tests
— 10 specialised technological laboratories with c.300 highly qualified staff, more than 25 patents in the fields of mining / metallurgy
— Annually carries out more than c.200 researches assignments for third party companies, incl. R&D activities to help develop new deposits
Pilot Test Plant: Petropavlovsk’s experimental industrial model pilot processing plant
— Launched in 2009, the plant is the first and only of its kind in Russia
— Small scale autoclave to test all parameters of the process
— Unique asset giving Petropavlovsk the flexibility to test any type of gold recovery process on a smaller scale
— Also carries out test work / scenario analysis for external third party companies
PHM Engineering: engineering and construction supervision of the Group’s processing assets, including the POX Hub
— Responsible for new project feasibility work, technical design, permitting, equipment selection, oversight of manufacturing process,
installation, commissioning
— Over 50 employees including PhD holders
Our partners and industry specialists: over 20 leading industry companies contracted to help us successfully develop / launch the
POX Hub
— Shanghai Morimatsu (autoclaves), LOTERIOS SpA (pressure pipe lines), DSB Säurebau GmbH (titanium inner gear + autoclave linings),
Outotec (flotation, control / automation equipment), Feluwa Pumpen GmbH (acid resistant high-pressure slurry pumps), MOGAS
Industries (valves), Red Mountain Energy Corporation (oxygen plant)
19The POX Plant Flowsheet
POX processing is a series of standard and well understood technologies
Regrinding
1 Re-grinding via two separate lines ensures a fine,
1 homogenous feed
– Two parallel lines allow for separate feedstocks:
treatment
Acid pre-
2 – Line 1 has two ball mills
– Line 2 has a single ball mill for finer grinding
Chlorine
washing
3 – Both lines have optionality to feed material through acid
pre-treatment section (if ore requires this) or to by-pass
Pressure Oxidation
2 Acid pre-treatment section removes carbonates and
other minerals which can affect pressure oxidation
4
3 Chlorine washing removes chlorine ions to minimise
gold losses at the POX stage
4 Pressure oxidation via 4 autoclaves to break down
Conditioning
& thickening
sulphides and liberate refractory gold
5
5 Conditioning (cooling) and thickening of the oxidised
pulp
Neutralisation
6 Liquid (comprising of sulphuric acid) is separated at a
6 dewatering stage and neutralised before discharge to
POX tailings pond(1)
7 Solid pulp is neutralised/ filtered using lime, before
To RIP
7 being sent for conventional RIP processing
to RIP
(1) A large water storage allows the use of fresh water in quantities sufficient to prevent chlorine ion concentration build-up, thus optimising gold
recovery 20Malomir And Pioneer Flotation Concentrate Parameters
Design vs. actual performance
Malomir Pioneer
Design
Parameter Design H1 2019a H2 2019e FY 2019e Comments (Stage 1)
H1 throughput on target, up to 10% increase in
Ore 1.8Mt (6m)
1.81Mt 1.8-2.0Mt 3.6-3.8Mt H2 due to better equipment utilisation and 3.6Mtpa
processing 3.6Mtpa (FY)
optimisation of processing operations
Flotation performance exceeded initial design
parameters, affording the opportunity to test
1.25g/t -
Scheduled process low grade ore at c.0.7g/t in Q1 2019
1.35g/t 0.97g/t(1) 1.25-1.30g/t 1.10g/t 1.1g/t
ROM grades
The tests confirmed its feasibility, hence lower
than design processed grades in H1 2019
Concentrate
5.5% 3.3% 3.5% 3.4% Up to 40% improvement in concentrate yield 2.90%
yields
vs. design: lower transportation and POX
Concentrate processing costs and higher grade concentrate
24g/t 26g/t 31g/t 28g/t 24.0g/t
grades
61-70kt (6m) Up to c.40% decrease in processed tonnage
Concentrate 100kt (6m) 59kt (6m)
120-140ktpa 125-130kt due to a positive decrease in yield: more gold 110ktpa
volumes 200ktpa (FY) 120ktpa (FY)
(FY) extracted into a smaller volume of concentrate
Recoveries 86% 87% 86% 86% Stable recoveries in line with the design 82%
— Stage 2 flotation expansion will increase capacity of Malomir and Pioneer flotation from 3.6 to 5.4 – 6.0Mtpa
— Similarly to Malomir, it is entirely possible that Pioneer flotation may outperform initial design parameters
(1) H1 2019a Malomir ROM grades included trial processing of lower grade refractory stripping material to understand the ability of the plant to
treat lower grade ore and the potential for lower cut-off grades 21POX Plant Capacity vs. Sulphur Content
Sulphur affects oxygen consumption and hence affects processing capacity
Autoclave Capacity vs. Sulphur Content of Various Concentrates Autoclave capacity varies according to
1. Sulphur content (and to lesser extent arsenic +
25
antimony)
– Higher sulphur consumes oxygen which
increases costs and reduces capacity
Expected 3rd party range
20 2. Residence time
Single Autoclave Capacity (t/hour)
– A function of concentrate properties,
Malomir = c.28% S temperature and pressure
15 – Graph plateaus on left side when it hits
residence time limit
Current capacity 3. Feeding pump capacity
– Affects physical tonnage of concentrate that can
10 be pumped into autoclave
Kazakh 1 c.20% S Pioneer = c.23% S
– Function of pump + connecting pipework
capacity
5 – Currently c.13t/hour, with measures being taken
to increase to c.24t/hour
– Shown on graph as current capacity and upper
threshold of capacity
0
Potential exists to reduce residence time by increasing
15 20 25 30 35
the fineness of the feed by additional grinding,
Sulphur Grade (%) temperature, pressure
Malomir concentrate Pioneer concentrate Kazakh Concentrate 1 Currently POX is running at 30 bar / 220oC
(1) Assumes 7,500 operation hours per annum and increased capacity constraints on solids from c.13 to c.24 t/hour 22POX: The Heart Of Our Future
POX to reach its full potential by 2021(1): contribution from refractory ore to increase up to c.65%
Contribution of Refractory Ores at Malomir +
POX ramp-up (ktpa)(1)(2)
Pioneer (Mtpa)(1)
500 18 % 70
Capacity Range(2) % of total which is
450 refractory
16
60
4 autoclaves
400
14
Albyn
350 50
12
300
Concentrate (kt)
10 40
250
Refractory
Refractory
Malomir
8 Refractory Refractory 30
200
2 autoclaves
6
150 Refractory
20
100 4
Pioneer
Refractory Refractory 10
50 2
0 - 0
2018 2019e 2020e 2021e 2022e 2019e 2020e 2021e 2022e
Pioneer non-refract Pioneer flotation Malomir non-refract
Pioneer Malomir 3rd Party Malomir flotation Albyn non-refract % Refractory (RHS)
(1) Assumes 3rd flotation line at Malomir from 2021
(2) Capacity ranges depend on concentrate parameters, particularly sulphur content 23POX Processing Costs: Fixed vs. Variable
Overall POX processing costs decline rapidly to c.US$100/t as throughput is increased
Unit cost of processing and throughput rates Comment
250 H1 to H2 2019 FY 2019 to FY 2020 – Through the ramp-up period in H1 the proportion
76kt of fixed costs was c.2/3 of total POX processing
costs; the share of fixed costs is expected to
Fixed costs decrease rapidly
200 on a per tonne basis as decrease with the increase of the plant’s utilisation
220kt throughput is increased
– H1 2019 processing cost equated to around
US$230/t concentrate
144kt
150 – 144Kt – 149Kt of refractory concentrate is
US$/t
expected to be processed in H2 2019, comprising:
340kt
450kt 450kt
– 84Kt - 89Kt of our own concentrate
100
– 60Kt from 3rd party sources
– As a result FY 2019 processing costs are
expected to be c.US$175/t concentrate
50
– Going further the unit processing cost
declines rapidly to c.US$100/t as throughput is
increased as designed
0
H1 2019 H2 2019 FY 2019 FY 2020 FY 2021 FY 2022
Throughput (ktpa) Fixed Cost Variable Cost
24A Comparison Between POX Projects
There are only two gold POX processing plants in Russia, with a third under
construction
Polymetal Amursk POX 1 Polymetal POX 2 Pokrovskiy POX Hub
Commissioned 2012 Q3 2023 Q4 2018
Number of autoclaves 1 1 4
Concentrate processing
225Ktpa 250 - 300Ktpa 400 - 500Ktpa
capacity
Capex US$272m US$431m US$310m
Capital intensity US$1,210/t US$1,437/t - US$1,724/t US$620/t - US$775/t
Operational temperature 200 ˚С 240 ˚С 225 ˚С
Pressure 22 bar 43 bar 35 bar
POX recovery rate 97% 96% 93% - 98%
— A comparable amount of development capex was spent to develop the Pokrovskiy POX Hub vs. the Amursk POX 1 project despite
significant difference in processing capacity
— As such, the new Pokrovskiy POX facility has a low capital intensity
(1) The Pokrovskiy POX Hub achieved pressure of 30 bar and temperature of 220˚С. Ramp-up to design parameters continues 25Autoclave Peer Analysis
POX technology around the world
Project Start POX Feed POX Capacity Autoclaves Temp Pressure ~S Feed Reserves
Pueblo Viejo 2012 Whole Ore 24,000tpd 4 230C 3,450kPa 6.8% 2.8g/t
Goldstrike 1990 Whole Ore 16,000tpd 6 220C 2,900kPa 2.5% 3.9g/t
Copler 2018 Whole Ore 6,000tpd 2 220C 3,150kPa 4.8% 2.8g/t
Whole Ore &
Lihir 1997 25,000tpd 4 205C 2,650kPa 6.0% 2.3g/t
Concentrate
Whole Ore &
Twin Creeks 1997 10,400tpd 2 225C 3,170kPa 4.5% 1.8g/t
Concentrate
Kittila 2008 Concentrate 870tpd 1 207C 2,500kPa 18.0% 4.7g/t
Amursk 2012 Concentrate 616tpd 1 200C 2,170kPa 6.5% 5.2g/t
Porgera 1990 Concentrate 16,400tpd 4 197C 1,750kPa 14.0% 4.8g/t
Macraes 1999 Concentrate 650tpd 1 225C 3,140kPa 9.0% 1.1g/t
Corrego do Sitio 2011 Concentrate 240tpd 1 230C 3,600kPa 7.8% 4.1g/t
Pokrovskiy 2018 Concentrate 1,370tpd 4 225C(1) 3,500kPa(1) 23.0% 1.0g/t
Stibnite (Project) 2023E Concentrate 20,000tpd 1 220C 2,400kPa 5.5% 1.6g/t
Donlin (Project) 2025E Concentrate 8,500tpd 2 220C 3,250kPa 7.0% 2.1g/t
Lagunas Norte
2026E Concentrate 6,000tpd 1 - - 8.0% 2.9g/t
(Project)
Certej (Project) - Concentrate 2,600tpd 2 230C 3,547kPa 13.0% 1.7g/t
(1) Pokrovskiy POX Hub achieved autoclave pressure of 3,000kPa and a temperature of 220˚С, as ramp-up to design parameters continues 26Corporate Strategy
Dr Pavel Maslovskiy
27Strategic Priorities
Asset rationalisation, organic and inorganic growth options
Opportunities Goal Implementation
‒ Disposal of a 31.1% controlling stake to a
the business
Streamlining
‒ Eliminate IRC loan guarantee
strategic investor alongside a transfer of the
‒ Improve credit rating
loan guarantee(1)
IRC sale ‒ Improve balance sheet metrics
‒ Alongside subsequent sale of the IRC stake, an
‒ Focus on gold
agreement with Gazprombank to eliminate IRC
‒ Achieve higher market multiples
guarantee
‒ Extend mine life at Albyn ‒ Construction of mine at Elginskoye
Elginskoye ‒ Utilise existing infrastructure ‒ Construction of road to Albyn plant
Organic Growth
‒ Maximise IRR ‒ Transportation of ore to Albyn RIP
‒ Optimise POX utilisation ‒ Construction of Pioneer flotation plant (initially 2
Increase feed of POX
‒ Secure concentrates with the best lines) with further expansion (3rd flotation line)
plant by processing
margins ‒ Expansion of flotation plant at Malomir (3rd
own concentrates
‒ Maximise IRR flotation line)
‒ Identification of higher grade refractory assets
Inorganic Growth
‒ Improve grade of POX feed material which can’t be developed at this moment
M&A ‒ Increase POX utilisation ‒ Identification of the most effective way to bring
‒ Expand margins + increase production together synergies of these assets and the
processing capacity of the POX Hub
‒ Fully benefit from POX facilities and ‒ Financed by JV partner
Autoclaves
POG’s comprehensive in-house R&D ‒ Adjustment of the technological process to
5 + 6 (JV option)
capabilities process complex material (eg. triple refractory)
(1) Petropavlovsk is a 31.1% holder of IRC. Gazprombank has been mandated to assess Petropavlovsk’s options
28Organic Growth: Elginskoye to Replace Albyn Pit
Ore body shape is favourable for a low strip-ratio / low dilution operation
– Elginskoye is predominantly a non-refractory ore body, located c.30km west of Albyn plant
– 2.8Moz of JORC Resources including 1.5Moz of JORC Reserves (at avg. 1.1g/t)
– Shallow dipping mineralised zones suitable for low cost open pit mining
– Preparation started to commence production in 2020
– Access road completed
– First mining equipment has been transferred from Albyn to site
– Estimated gold production of c.156koz in 2020
29Organic Growth: Pioneer Is A High Return Strategic Project
At spot gold prices, Pioneer has an IRR of greater than 130%
Key Project Metrics
– After more than 10 years of production Pioneer is
Total capex spend over 2 yrs US$30m
transitioning to become a mainly refractory deposit
– Project looks attractive in terms of profitability + cash Construction timeframe 12 - 14 months
flow generation under various macroeconomic scenarios
First production H2 2020
Processing capacity 3.6Mtpa
Mine life >10 years
Project Sensitivities
Gold Price (US$/oz) Gold Price (US$/oz)
IRR NPV
1,250 1,300 1,400 1,450 1,250 1,300 1,400 1,450
61 86% 99% 126% 140% 61 137 167 226 256
RUB:US$ FX
RUB:US$ FX
67 119% 134% 165% 182% 67 191 221 281 310
70 136% 152% 186% 204% 70 215 245 304 334
30Pioneer’s Transition to Become a Principally Refractory Mine
Understanding the transition to processing non-refractory to refractory gold
Current non-refractory processing Future refractory processing: flotation lines 2 + 3
— 6.7Mtpa current(1) RIP plant comprising of crushing + — Construction of flotation facilities totalling 3.6Mtpa
grinding sections capacity is underway
— 3 x 1.8Mtpa(1) (“large”) crushing + grinding lines — The crushing + grinding lines will be gradually switched
plus to the flotation circuit as ore transitions from non-
refractory to refractory
— 1 x 0.6Mtpa (“small”) crushing + grinding line
— Tailings storage will be in a conventional tailings dam
— RIP section will remain available after plant switched to
flotation to provide optionality
Heap Leach Pioneer flotation building (10 Aug 2019)
Grinding Section (SAG RIP Section
0.6Mtpa line & Ball Mills)
1.8Mtpa lines
Flotation Building
(1) 1.8Mtpa is the nominal crushing capacity. Recently, Pioneer has been crushing 2.0Mtpa of softer oxidised (fresh) near-surface material, thus exceeding capacity 31Inorganic Growth: 3rd Party Refractory Concentrates Market
Concentrate markets in Russia and Kazakhstan
1. Russia: 40% of gold resources are refractory
— Only limited refractory treatment capacity exists including two POX plants
— The majority of concentrates are exported to China
— Russia has declared gold as strategic asset and intends to prohibit exports of concentrates
— For environmental reasons, China is shutting down roasters - particularly those treating high arsenic / antimony(1)
2. Kazakhstan: another source of refractory concentrates
— Four refractory mines currently produce flotation concentrate, with potential to expand further.
— Petropavlovsk has secured 20Kt grading 40g/t to 50g/t which it is currently processing at recoveries of 95%
Refractory Mines in Russia and Concentrate Availability (Ktpa)
Own Tonnes Potential Tonnes
Mine Owner Exports
Facilities Available (Kt) Available (Kt)
Olimpiada (Au)(2) Polyus ✘ ✔ 50
Olimpiada (Au,Sb)(2) Polyus ✘ ✔ 150
Bogolyubovskoye NGOK ✘ ✔ 30
Udereyskoye NGOK ✘ ✔ 35
Drazhnoe GV Gold ✘ ✔ 20
Badran Zapadnaya ✘ ✔ 10
Mayskoye(3) Polymetal ✘ ✔ 57
Total available volumes 145 207
(1) Petropavlovsk’s process can stabilise arsenic as scorodite which offers a more environmentally-friendly approach to roasting
(2) Olimpiada produces two types of flotation concentrates: 150Ktpa of concentrate is sold with an antimony content of up to 30% and 50Ktpa of gold 32
concentrates containing some antimony
(3) 57Ktpa of Mayskoye concentrate, which is not processed at the Amursk POX plant, may be availableAutoclaves 5 + 6 (JV Option)
Potential for a JV with another refractory producer or developer
– Existing onsite infrastructure enables two additional autoclaves lines (5 + 6) to be added, although some expansion of
oxygen capacity will be required
– Given the large number of refractory ore bodies in the region, the Company believes the development could be
funded via a JV with another refractory developer or producer
– Adjustment in technology can be made to process very complex refractory materials, including:
– Pyrrhotite-containing concentrates
– Bio-cakes
– Cuprous gold-bearing concentrates
– Carbonaceous concentrates from other deposits
– Concentrates obtained from the tails of existing mills
33R&R / Exploration
Dr Alya Samokhvalova
34Proven Track Record Of Resource Growth
As at 31 Dec 2018, Group Reserves & Resources totalled 20.5Moz, with Reserves of 8.2Moz(1)
Moz
12.3 13.8
10.1 11.7
14.0 14.4 8.2
10.4 11.2
2.1 6.0
13.0 12.8 12.1 12.0 12.3
9.3 9.3 9.3 9.6
6.8
5.2
1.4 1.9 2.4 3.8 5.1 5.9 6.6 7.2
11.2 11.7 12.5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Refractory Resources Non-Refractory Resources Depletion + Disposals
(1) As at 31 Dec 2018, in accordance with the JORC Code 2012. Reserves are shown as Proven + Probable. Resources are inclusive of Reserves 35Mine By Mine JORC Resource Breakdown
New Resources at Pioneer, Albyn, Malomir + Pokrovskiy
Total JORC Resources (as at 31/12/2018) Non-refractory Resources
Refractory Resources
New Resources -
Explanation
8.2Moz 20.5Moz(1) 12.3Moz
40% 60%
Malomir Pioneer Albyn Pokrovskiy
6.7Moz 4.5Moz 4.2Moz
97% 76% 79%
6.9Moz 5.9Moz 5.3Moz 0.9Moz
1.1Moz
1.4Moz 21%
24% 0.9Moz
0.2Moz 100%
3%
RIP tailings for
Katrin Decrease due to
reprocessing via Albyn main ore body +
Nikolaevskya disposals + sterilisation
flotation + POX and Unglichikanskoye
Ulunginskaya due at POX facility
Quartzitovoye
(1)Total JORC Resources include Tokur asset, not shown in the split below. Tokur contains non-refractory Resources of 1.4Moz. For full details
36
please refer to the 2018 Petropavlovsk ARResource Potential
Significant potential to convert resources into reserves plus add future discoveries
Long Term Potential N
8Moz Operating Mines Development
& Satellites Projects
7Moz
6Moz
5Moz
4Moz
3Moz
2Moz
1Moz
Malomir Tokur&Osipkan Albyn
0Moz
20km
Reserves Resources Exploration
– Total exploration potential estimated at c.4Moz in addition to the existing 20.52Moz of JORC Resources(1)
– Significant potential to extend mine life of the Group’s operating mines via conversion of Resources into Reserves
– Most promising exploration and development project outside existing operating mines is Tokur (together with Osipkan)
– Strong regional exploration potential outside existing licence holdings
(1) As at 31 Dec 2018, in accordance with the JORC Code. Resources (M,I&I) are incl. of Reserves 37Responsible Business
Dr Alya Samokhvalova
38Sustainable Development
Maintaining leading ESG Practices
Health and Safety Corporate Governance
— Full compliance with UK Corporate Governance Code
— Full compliance with applicable health and safety legislation
— Safety, Sustainability and Workforce Committee formed in Nov
— H&S management systems 2018
— Regular external + internal audits / inspections — Annual review + publication of a revised Modern Slavery
— Development of safety culture Statement
— Risk management to mitigate impact — Remuneration disclosure
— High quality task specific training — Established Code of Conduct and Business Ethics
Social Responsibility Environmental Management
— Major tax payer in Amur region — Environmental Management system compliant with GOST R
ISO 14001- 2016 (ISO 14001:2015)
— Active engagement with Indigenous communities
— Optimisation of energy consumption, water recycling, GHG
— Establishment of POX Hub part of government’s policy to develop monitoring + reporting in line with international standards
Russian Far East
— Strict control cyanide management
— Accessible and effective grievance procedure
— Fully compliant + insured tailing management facilities
— Trade Union: 1,616 members, 18% of employees
— Ongoing land rehabilitation + conservation of biodiversity
— Equal career opportunities regardless of gender
— Effective waste management (31% of all waste is reused)
— Pokrovskiy Mining College
Petropavlovsk is not only fully compliant with regional, national + international legislation, but is striving to
perform in line with best industry practices
39Sustainability Management and Governance
The Board of Directors has appointed committees at Board level to oversee different aspects of
business, risks and performance
Board of Directors The Executive Committee
— Consists of both Executive Directors + key
operational management
— Responsible for overseeing implementation of
strategy, business targets + decisions made at Board
level, including decisions made by SS&W Committee
— Reviewing internal control and risk management
Mr Harry Kenyon -
Structure for the Monitoring + Reporting of
Dr Pavel Maslovskiy Sustainability Performance Data
Slaney Chief Executive Officer
Chairman
5
Recommendations 1
are given to key HSE Performance
operational data is collected
Dr Alya management, which by key operational
Mr Damien Hackett then provides BoD management
Samokhvalova NED
Deputy CEO with feedback
4 2
A summary is Data + summary
made to the reports are
The newly formed Safety, Sustainability & Workforce Committee Board of submitted to the
(SS&W) is responsible for: Directors CEO + Deputy
3
— Reviewing + monitoring health, safety, environmental, sustainability CEO
Data + summary
processes + procedures reports submitted by
Deputy CEO to
— Assisting with the community relations + workforce engagement Executive + HSE
Committees
40Key Performance Indicators H1 2019
Reporting in line with international standards
Lost Time Injury Frequency Rate (LTIFR) Energy Consumption
Accidents per million manhours Million GJ
+75%
-55%
2.8
2.84
1.6
1.29
H1 2018 H1 2019 H1 2018 H1 2019
— Significant decrease in LTIFR due to more rigorous — Increase in energy consumption attributable to POX hub
implementation of health and safety procedures commissioning(1)
Greenhouse Gas Emissions (GHG) intensity Water Used
Normalised per ounce of gold produced, t CO2e/oz Million m3
+19%
-2%
1.08 11.5
1.06 9.7
H1 2018 H1 2019 H1 2018 H1 2019
— Despite increased energy consumption, GHG intensity — Water usage increase in line with increase in gold output
decreased due to higher gold production
(1) Oxygen plant electricity needs contribute the increased energy consumption 41Health, Safety and Environment (HSE)
Continuous commitment to a safe working environment
HSE And CSR Reporting Structure H1 2019 H&S Progress / Initiatives
— Introduction of “near-hits” record system
Chief Executive Officer
— Road Safety Campaign (Jan - Mar 2019)
Petropavlovsk PLC
— Stricter monitoring of the equipment effect on employees’ health
in the work zones
— More rigorous medical examinations exclusively by medical
Head of Welfare
and General Director contractor
Community Liaison — Medical treatment of diseases pre-requisites via Trade Union
programmes
Road Safety Campaign 2019
Head of
Environmental Chief Engineer
Safety Department
General Directors of General Directors of
Pioneer, Pokrovskiy, Albyn, BRMZ, Regis, Transit, Kapstroy,
Malomir AVT – Amur
(2-3 HSE specialists per (2-3 HSE specialists per
rotation) rotation)
Production Facilities Ancillary Facilities
42ESG Performance Benchmarking(1)
Petropavlovsk vs. major gold companies
Energy consumption Greenhouse gas emissions (СО2) LTIFR(2) Women employees
(GJ / US$m of revenue) (tonnes / US$m of revenue) (cases per million working hours) (share of the total number of employees)
Polyus Sibanye 1,776 Sibanye 1.18 Petropavlovsk 24.6%
10,343
New Gold Incorporated 7,080 Polyus 1,101 Anglogold Ashanti 1.14 Polymetal 20.0%
Anglogold Ashanti 6,652 Anglogold Ashanti 795 Petropavlovsk 0.50 Gold Fields 16.0%
Sibanye 6,053 Petropavlovsk 759 Gold Fields 0.45 Polyus 15.4%
Kinross 5,813 Centamin 612 Eldorado Gold Company 0.33 New Gold Incorporated 15.2%
Petropavlovsk 5,316 Gold Fields 566 Centamin 0.26 Sibanye 13.0%
Barrick Gold 5,105 Polymetal 480 New Gold Incorporated 0.24 Barrick Gold 12.1%
Gold Fields 4,387 New Gold Incorporated 464 Barrick Gold 0.15 Anglogold Ashanti 12.0%
Polymetal 4,362 Kinross 460 Polyus 0.09 Kinross 11.0%
Eldorado Gold
Eldorado Gold Company 4,338 Company 450 Polymetal 0.09 Eldorado Gold Company 10.0%
Centamin 2,073 Barrick Gold 397 Kinross 0.07 Centamin 2.0%
Well positioned among peers in terms of implementing ESG standards, with some social aspects better vs. peers (eg.
share of female employees). Room for further improvement to obtain an improved ESG rating in the mid-term
Sources: Thomson Reuters, company data
(1) Data for full year 2018 43
(2) Reporting standards vary, it is not always apparent whether all accidents are reported by a company. Petropavlovsk reports accidents at all facilities while
Russian legislation dictates to report the accidents at hazardous facilities onlySustainable Ratings
Well positioned among peers in the framework of Environmental responsibility and
sustainability disclosure
The Transparency Rating of Environmental ESG/CSR Rating(2)
Responsibility Project for M+M Companies of Russia(1) (out of 100)
80 79
1.59 74 73 73 72 69
1.43 68 67 64
1.33
1.04
0.53 0.48 0.38
Kinross
Nordgol
Petropa
Polymet
Polyus
Highlan
Kamcha
Gold of
d Gold
vlovsk
tka
al
d
Overall Rating Environmental Impact — Well positioned among the peers
22 place — Second best group (60-79)
2018 (0.27) 22-34 place 22-34 place Community
24 place 2017 (0.13) 2018 (0.36)
2017 (0.53)
Employees
Ecological Management Information Disclosure Score of 69 (out of 100)
based on Petropavlovsk’s
17 place 23-31 place disclosure of information
2018 (0.71) 2018 (0.50) Environment
25-26 place 18 place
2017 (0.13) 2017 (0.56)
Improved rating in every category, with the exception of Governance
Information Disclosure, an area where the Company has the
opportunity to improve in 2019
(1) World Wide Fund for Nature Russia 2018 44
(2) CSR Hub 2018Case Studies
Continuous participation in environmental and social programmes
Reforestation Biodiversity Protection
— c.255,000 of pine seedlings — c.300,000 of carp
planted during 2017 - 2018 hatchlings released into
Zeya river during 2017-
— Pine seedlings are known 2018
for high survival rate
— Aimed to stimulate
— Seedlings are planted on reproduction of aquatic
an artificial surface for long biological resources +
term prevention from preservation of wildlife in
wildfires Amur region
Avoiding Forest Fires Sustaining Future Workforce
— 24/7 dedicated fire brigade — More than 10,500 students
with specially trained fire graduated from Pokrovskiy
fighters at each mine Mining College over 10
years
— Regular safety briefings +
drills — Majority have found
employment at
— Group’s fire teams help Petropavlovsk
local villages to fight the
house fires coming from — College training tailored to
nearby forests the Group’s HR needs
including H&S + POX
45Closing Remarks / Q&A
Sir Roderic Lyne
46Investment Highlights
Our long term goal is to increase shareholder returns
1
Leveraging our technical expertise to become a leading refractory gold producer in
Russia
2
Three large-scale mines in Russia producing 450koz+ per annum
3
Monetising our 12.3Moz of refractory resources + profitable processing 3rd party
refractory material
4
Proven track record of exploration, development, expansion and asset optimisation
5
Strategic location + access to developed infrastructure
47Summary: A Conservative Strategy Focused on Shareholder Returns
A holistic strategy directed at improving long-term shareholder returns
Cost optimisation + — Focus on operational efficiencies and cost optimisation at existing operations
1
margins — Gold price hedging / forward sales agreements are complementary measures
Increase production — Construction of new Pioneer flotation to double existing flotation capacity (Q4 2020 launch)
2 of our own refractory
concentrate — Malomir 3rd flotation line planned for 2023, but may be accelerated
Balance sheet — Improved cash generation via POX ramp-up
3
strengthening — Targeting Net Debt / EBTIDA of 2.0x
IRC:
4 — Options include: improvements to existing guarantee structure, outright disposal , payment of a
realising value from
dividend to Petropavlovsk
non-core assets
— Addition of 2 more autoclaves to the existing 4
5 POX capacity — 50% total processing capacity uplift from 400 – 500Ktpa to 500 – 750Ktpa
expansion — Autoclaves 1 to 4 to process own refractory ore, while 5 + 6 to process 3rd party material (JV
opportunities)
— Continue to generate maximum value from core assets via ongoing exploration both surface +
Committed to underground
6
exploration
— Potential licence acquisitions adjacent to the existing infrastructure
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