petropavlovsk plc · 22-06-2017 · 2016 exploration highlights alexandra n 10km pioneer license...

$: PETROPAVLOVSK PLC · 22-06-2017 · 2016 Exploration Highlights Alexandra N 10km Pioneer license 1.55Moz uplift in JORC non-refractory reserves, incl.:-340% increase in non-refractory$
PETROPAVLOVSK PLCAnnual Meeting of the Shareholders 22 June 2017

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

Cautionary and Forward-looking Statements

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

IntroductionsIntroductions

3

Our Corporate StrategyOur Corporate Strategy

4

Near Term

Solid + stable producing asset base

Corporate StrategyFocus on deleveraging and unlocking existing reserves potential

2016-2018 2019-2020 2021+

Production growth via exploration for underground and adjacent areas

Production growth via core

Medium Term

Optimisation of POX production through partnerships / JV

Long Term

Sustainable cash flow generation through focus on margin

Sustainable mineral reserves base via exploration

55

Production growth via core development projects

‒ POX Hub

‒ Underground mining

Continued focus on margins

Cash generation from steady state enlarged operations deleveraging + development projects

‒ Targeting ND/EBITDA of 2.5x or lower

partnerships / JV opportunities

Highly prospective underground + open pit exploration at the existing assets

Focus on existing underexplored license areas

Regional partnerships + early stage exploration

Near TermNear Term

Solid + stable producing asset base

Sustainable cash flow generation to support POX development

Margin focus

6

Operations OverviewFY 2016 production by mine (incl. FY 2016 TCC/oz)

Pioneer Albyn

180Koz

142Koz (34%)

77

MalomirPokrovskiy

180Koz (43%)

US$581/oz

38Koz (9%)

US$878/oz

(34%)US$631/oz

57Koz (14%)

US$824/oz

(1) TCC data shown based on Koz sold by the Group

Competitive Cost Profile TCC and AISC down by over 20% since 2014

972 874 807860749 660 626

1.321.09

0.88

2014 2015 2016 2017EAISC (US$/oz)

TCC and AISC (US$/oz)Overview

Total cash costs for the Group’s mines decreased by 23% in 2014-2016 despite average grade decrease

The primary drivers of the reduction were optimal extraction of gold, improvements in business process and procurement, comprehensive cost control and ruble depreciation

In 2017 TCC are expected to decrease further by 5%

8

US$860/ozAv. grade –

1.32 g/t

US$660/ozAv. grade –

0.88 g/t

-US$118/oz

-US$234/oz -US$41/oz -US$5/oz

+US$190/oz +US$8/oz

TCC FY2014 Lower unit costs FX Decrease inmining tax

Other Change ingrades + recoveries

Deferredstripping

TCC FY2016

AISC (US$/oz)TCC (US$/oz)Average processed grade (reverse order, g/t)

Evolution of Cash Costs – 2016 vs. 2014

5%

2016 Exploration Highlights

Alexandra

N

10km

Pioneer license

1.55Moz uplift in JORC non-refractory reserves, incl.:

- 340% increase in non-refractory JORC Reserves at Elginskoye(Albyn) to 1.24Moz, with feasibility study completed

Highly promising discoveries within Pioneer project area

- New promising non-refractory deposit - Katrin 2.5 km southwest from the Zheltunak Zapadnaya zone

- 9km long gold-arsenic geochemical anomaly immediately southwest of Pioneer

- Two new zones of mineralisation potentially suitable for open pit mining discovered near Pioneer NE Bakhmut pit 2

Katrin

99

Pioneer

ZheltunakPokrovskiy

Pokrovskiy licenseKatrin

Katrin

- 4 zones of mineralisation with strike length of 240 - 320m confirmed and explored by 100 drill holes, 4 trenches and a pre-strip

- Gold grade of the intersections vary between 0.65 + 15.74g/t with thickness between1.6 and 21.7m

- Katrin is hosted within a known 1km silification zone, with suggesting potential for further discoveries

- Mineralisation is non-refractory + expected to be suitable for processing at Pioneer / Pokrovskiy plants

Key:

Open pit Licence outline

Processing plant2016 geochemical anomalies

Areas of proposed greenfield exploration

Alluvial deposits

8671 68 65

50 48 45 4131 29

19 17 15 8 8 8 3

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Sustainable Long-life ReservesAverage mine life c.17 years

Largest Gold Producers by Reserves(1)

Moz, 2016

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10

Largest Gold Producers by Life of Mine(1)

Source: Companies’ data (1) According to Petropavlovsk’s production plan (as at 31 December 2015)

Years, 2016

40 38 3727 23 20 19 17 16 14 14 14 13 12 12 10 7

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Medium TermMedium Term Production growth via core development

projects

‒ POX Hub

‒ Underground mining

Continued focus on margins

Cash generation from steady state enlarged operations deleveraging

‒ Targeting ND/EBITDA 2.5 or lower

11

JORC Refractory Mineral Resources(1)JORC Refractory Ore Reserves(1)

POX Hub OverviewPOX unlocks c.50% of our existing reserve base

3.7Moz @0.9g/t

[email protected]/t

[email protected]/t

[email protected]/t

1212 (1) As at 31 Dec 2016, in accordance with JORC 2012

@0.9g/t

ProbableProven

Total Proven + Probable Refractory Reserves = 4.1Moz @ 0.9g/t

InferredIndicatedMeasured

Total Measured, Indicated + Inferred Refractory Resources = 9.3Moz @ 0.8g/t

>15yrs of sustainable refractory production

[email protected]/t

Filtration unitOxygen stationAutoclave unit

Container

POX Hub Overview Construction is c.65% complete

13

Container unit, equipment

storage

POX Hub staged commissioning scheduled from 4Q18, with ramp up throughout 2019 Most design, earth works and civil works complete. All critical items on site, including 80% of project

equipment. All key contracts signed, including installation and commissioning work with Outotec The autoclaves (x 4) are installed / lined

POX Hub OverviewMalomir flotation plant – STAGE 1 (3.6Mtpa) 90% complete

• Malomir was acquired in 2003 as a greenfield license, now the Group’s largest asset by R&R.

• License area of 964km2

• Produced c.0.6Moz Au to date

• 6.8Moz JORC resource, 2.7Moz JORC reserve (>90% refractory)

• Completing POX will unlock an implied LOM of

• 3.0Mtpa RIP plant throughput

Stage 1: 3.6Mtpa – commissioning by end of 2017 Stage 2: 1.8Mtpa expansion - commissioning in 2019 Total capacity 5.4Mtpa across three lines Stage 1 + 2 CAPEX est. US$32m

14

MainProduction

Area

MainProduction

Area

NE Bakhmut #3 NE Bakhmut #2 NE Bakhmut #1

JORC estimates to be completed

[email protected]/tAreas of

scheduled

Unlocking underground potential: PioneerAccessing high grade

[email protected]/[email protected]/t

[email protected]/t

[email protected]/t

scheduled production

Direction of expected ore

body extension

[email protected]/t

1515

NE

NE Bakhmut 3 + 2 JORC resource of 100koz @ 6.1g/t indicated and 30koz @ 5.8g/t inferred(1)

Resource drilling to date only up to 200m below pit shell

Deepest hole drilled to date was 480m (from surface), intersecting mineralised zone

Mineralised zones remain open in multiple directions

(1) Group internal estimate as of Q3 2016, in accordance with JORC Code (2012)

JORC

Unlocking underground potential: MalomirQuartzitovoye

N JORC resource 210Koz @ 8.2g/t

Indicated + 100koz @ 5.3 g/t Inferred(1)

Resource drilling to date only up to 200m below pit shell

Mineralised zones remain open in multiple directions

New drill intercepts marked not included in JORC

1616

[email protected]/t

[email protected]/t

[email protected]/t

included in JORC

Appointed NAO Bashkirskoye SPY underground contractors

Development commenced Q1 17 -decline and ventilation portals complete

2017 est. underground exploration capex estimate US$4m

(1) Group internal estimate as of Q3 2016, in accordance with JORC Code (2012)

First underground JORC Reserves of 370Koz (all non-refractory) support an initial mine life of at least 6 years at Pioneer + Malomir

- Pioneer: c.165Koz @ 4.5g/t

- Malomir: c. 207Koz @ 5.9g/t

New high grade discovery at Quartzitovoye (Malomir) with grades up to 69.9g/t

- High grade pay-shoots open to depth

Underground Exploration Highlights

Prime targets include NE BakhmutPromezhutochnaya, Andreevskaya underground reserves + resources

Malomir: down-dip extensions of known zones + new high grade zones

Albyn: high grade ore body continues below open pit, with high grade targets NW of Albyn pit + at Unglichikan

Recent Exploration Results Future Priority Exploration Targets

Quarzitovoye Long Section In Combination With Malomir Cross Section

17

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Exploration potential on down

dip extension

Quartzitovoye Malomir

Quarzitovoye Long Section In Combination With Malomir Cross Section

Deleveraging StrategyBank debt + convertible bond

(2)

US$530m bank debt refinancing approved

US$430m bank debt effective, Dec 2016 + US$100m in May 2017

- Lenders: Sberbank + VTB

- Maturing 2022, back-ended repayment schedule

- Maturity extension to 2022, subject to certain conditions being satisfied

- Hedging 500koz @ c.US$1,252/oz, over 3

Bank Debt Us$530m Bank Debt Repayment Schedule

Total = US$530m

25

50

75

100

125

150

1818

- Hedging 500koz @ c.US$1,252/oz, over 3 yrs, requirements satisfied

948 930

610 599

0

200

400

600

800

1,000

2013a 2014a 2015a 2016a

US$100m issue in 2015

- 9% quarterly coupon

- 5 year maturity (March 2020)

- Exchange price of GBP£0.0826

Convertible Bond Net Debt (US$m)

0

25

2017e 2018e 2019e 2020e 2021e 2022e

Long TermLong Term

Optimisation of POX production through partnerships / JV opportunities

Highly prospective underground + open pit exploration at the existing assets

Focus on existing, underexplored license areas

Regional partnerships + early stage exploration

19

POX Hub OverviewSignificant refractory gold territory

Mayskoye

KyuchusNezhdaninskoye

Russia Extensive + well understood refractory gold R&R base

c.80% of R&R are refractory or partly refractory

Experience in treating refractory ore across multiple metals

Highly skilled labour + technology

The POX Hub give Petropavlovsk a competitive advantage + offers new growth opportunities

Key: Principal refractory / partly refractory deposits

Petropavlovsk

Other assets

2020

Pokrovskiy POX Hub

Olimpiada

Veduga

Albazino

Taseevskoye

Itakinskoye Kluchevskoye

Malomir

Bogolubovskoye

PioneerNasedkino

Expansion. The POX Hub is engineered to allow for an additional 2 x autoclaves to be installed, increasing capacity by 30% to 650ktpa

Potential to toll treat third party concentrates

Different concentrates can be processed in parallel without compromising recovery

Consolidated 5 Year Plan And Potential For Its Improvement

Potential for further resource growth, production

growth + cost reduction

Pioneer under-explored underground potential

Malomir under-explored underground potential

POX expansion upside

416

Group Production (Koz) Upside

2121

POX high-grade upside

Highly prospective greenfield and brownfield

surface exploration potential within c.3,500km2

license footprint

2016a 2017e 2018e 2019e 2020e 2021e

c.800

2016e 2017e 2018e 2019e 2020e 2021e

Note: bar charts not to scale

Group AISC (US$/oz)

Qualityassets

Well developed energy and transport

infrastructure

Established

Experienced management

team

Our Key Strengths

22

In-house expertise,

technology, innovation

Competitive cost profile

Skilled workforce with local

knowledge and expertise

Established track record of

launching ambitious

projects on time

Growth delivered via

geological exploration

Annual General MeetingAnnual General Meeting

23

Ordinary ResolutionsOrdinary Resolutions

24

2017 Annual General Meeting

Resolution 1

25

To receive and adopt the accounts and the reports of the Directors and auditor thereon

Questions not covered by subsequent resolutions?


Resolution 1: Summary of Proxy Voting

ResolutionTotal Votes

Cast

For(incl. Chairman’s

discretion)

% For(incl. Chairman’s

discretion) Against % Against Withheld

26

1 2,472,913,742 2,467,969,539 99.8 53,227 0.002 11,049,101

Discretionary votes shown for all resolutions include Chairman’s discretion only

Third party discretionary proxies have been appointed for all resolutions in respect of 4,890,976 shares, these

have not been included in ‘For’ or ‘Against’ as the voting intention was unknown

Total votes cast exclude withheld votes

Total votes cast represent c. % of the Company’s issued share capital


Resolution 2

27

To receive and approve the Directors’ Remuneration Report

Questions?




Cast


discretion)



28

2 2,481,120,020 2,462,546,838 99.25 13,682,206 0.55 2,842,823


Resolution 3

29

To approve the Directors’ remuneration policy

Questions?




Cast


discretion)



30

3 2,482,532,327 2,388,311,038 96.2 89,330,313 3.6 1,430,516


Resolution 4

31

To re-appoint Deloitte LLP as auditor of the Company

Questions?




Cast


discretion)



32

4 2,482,055,039 2,475,468,692 99.73 1,695,371 0.07 1,907,804


Resolution 5

To authorise the Directors to determine the

33

To authorise the Directors to determine the remuneration of the auditor




Cast


discretion)



34

5 2,483,212,607 2,477,991,037 99.79 330,594 0.013 750,236


Resolution 6

To appoint Mr Vladislav Egorov as a Director of the

35

To appoint Mr Vladislav Egorov as a Director of the Company




CastFor % For

Against(incl. Chairman’s

discretion)% Against Withheld

36

6 2,474,875,691 1,659,855,425 66.8 817,409,455 32.93 1,410,292

No of individual

proxies received

53 220


Resolution 7

37

To appoint Mr Bruce M. Buck as a Director of the Company




CastFor % For



38

7 2,474,875,691 1,659,955,767 66.88 817,309113 32.93 1,410,292

No of individual

proxies received

54 220


Resolution 8

To appoint Mr Ian Ashby as a Director of the

39

To appoint Mr Ian Ashby as a Director of the Company




CastFor % For



40

8 2,474,873,432 1,795,999,232 72.35 681,263,389 27.45 1,412,551

No of individual

proxies received

86 190


Resolution 9

41

To appoint Mr Garrett Soden as a Director of the Company




CastFor % For



42

9 2,474,891,000 1,795,981,664 72.35 681,280,221 27.45 1,412,551

No of individual

proxies received

85 190


Resolution 10

To re-elect Dr Pavel Maslovskiy as a Director of the

43

To re-elect Dr Pavel Maslovskiy as a Director of the Company

Questions?




Cast


discretion)



44

10 2,481,357,399 2,432,130,653 98.01 44,335,770 1.79 89,353

No of individual

proxies received

277 12


Resolution 11

To re-elect

45

To re-elect Mr Andrey Maruta as a Director of the Company

Questions?




Cast


discretion)



46

11 2,481,357,399 2,433,548,705 98.07 42,917,718 1.73 89,353

No of individual

proxies received

276 12


Resolution 12

47

To re-elect Mr Robert Jenkins as a Director of the Company

Questions?




Cast


discretion)



48

12 2,481,355,140 827,815,512 33.36 1,648,648,652 66.44 91,612

No of individual

proxies received

262 27


Resolution 13

To re-elect Mr Alexander Green as a Director of the

49

To re-elect Mr Alexander Green as a Director of the Company

Questions?




Cast


discretion)

% For(incl.

Chairman’s discretion)

Against % Against Withheld

50

discretion)

13 2,481,355,140 828,119,987 33.37 1,648,344,177 66.42 91,612

No of individual

proxies received

262 27


Resolution 14

51

To re-elect Mr Andrew Vickerman as a Director of the Company

Questions?




Cast


discretion)



52

14 2,476,870,006 823,681,616 33.25 1,648,297,414 66.54 4,576,746

No of individual

proxies received

258 29


Resolution 15

To re-elect Mr Peter Hambro as a Director of the

53

To re-elect Mr Peter Hambro as a Director of the Company

Questions?




Cast


discretion)



54

15 2,481,357,399 744,071,713 29.99 1,732,394,710 69.81 89,353

No of individual

proxies received

243 55


Resolution 16

55

To authorise the Directors to allot shares

Questions?




Cast


discretion)



56

16 2,480,954,005 2,174,315,241 87.64 301,747,788 12.16 1,036,330


Resolution 17

57

To disapply statutory pre-emption rights

Resolution Withdrawn


Resolution 18

To disapply statutory pre-emption rights – additional

58

To disapply statutory pre-emption rights – additional 5% authority

Resolution Withdrawn

Declare AGM ClosedDeclare AGM Closed

59

petropavlovsk plc · 22-06-2017 · 2016 exploration highlights alexandra n 10km pioneer license...

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