Q2 2019 production results

Polymetal reports strong production for the second quarter and the six months ended June 30, 2019.

“Excellent results from Kyzyl drove our production growth while other operations delivered strong performances”, said Vitaly Nesis, Group CEO of Polymetal.“

HIGHLIGHTS

• The Company’s Q2 gold equivalent (“GE”) production grew 19% year-on-year to 384 Koz as Kyzyl delivered at full capacity with 81 Koz of gold produced in the quarter. GE production from continuing operations was up 29% year-on-year.

• Q2 gold production was up 30% over the previous year at 302 Koz. Silver production was down 11% at 6.0 Moz on the back of asset disposals.

• GE production for H1 2019 was 756 Koz, up 22% year-on-year. We expect stronger production in 2H driven by seasonal concentrate de-stockpiling at Mayskoye.

• Revenue for Q2 increased 13% year-on-year to US$ 492 million, with gold sales rising 31% on strong production. Silver sales fell 22% due to a temporary logistical lag between production and sales to be eliminated in H2.

• The Company is well positioned to meet its full-year 2019 production guidance of 1.55 Moz of GE and reiterates its cost guidance: TCC of US$ 600-650/ GE oz and AISC of US$ 800-850/ GE oz¹.

• Polymetal generated significant free cash flow in Q2. Net debt remained unchanged during the quarter at US$ 1,700 million as of 30 June 2019, while the Company paid US$ 146 million of final dividends for FY 2018 (US$ 0.31 per share). As in previous years, we expect significantly stronger free cash flow generation in the second half of the year on the back of higher production volumes and seasonal working capital drawdown.

• We are saddened to report a fatal accident that occurred on 10 May 2019. A pump station operator died at Omolon. The Company’s risk management activities increasingly focus on behavioral and cultural issues underpinning unsafe labor practices. We remain committed to our strategic objective of zero fatalities.

• At Nezhda, mining activities focused on constructing pit access roads. Construction proceeded according to schedule with the concentrator building comfortably on track for full winterization by the time the cold season starts in November. The project is expected to start up in Q4 2021.

• At POX-2, detailed engineering of the facility is in full swing. All long-lead equipment has been contracted. Site preparation activities including deforestation and topsoil removal are in progress. The project is on track for launch in H2 2023.

Note: (1) The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group’s operating costs.

Notes:
(1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.
(2) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios.
(3) Calculated based on the unaudited consolidated management accounts.
(4) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 31 March 2019 (for the three months period) and 31 December 2018 (for the six months period).
(5) LTIFR = lost time injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

Notes:     (1) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios.

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CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday,
24 July 2019 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:
8 800 500 98 63 access code 34668237# (free from Russia), or
44 203 009 24 80 (free from the UK), or
1 646 722 49 14 (free from the US), or
follow the link: https://webcasts.eqs.com/polymetal20190724. Please be prepared to introduce yourself to the moderator or register.

Webcast replay will be available on Polymetal’s website (www.polymetalinternational.com) and at https://webcasts.eqs.com/polymetal20190724. A recording of the call will be available immediately after the call at 442033645147 (from within the UK), +16467224969 (USA Toll Free) and 74952491671 (from within Russia), access code 418860357#, from 14:30 Moscow time Wednesday, 24 July, till 14:30 Moscow time Wednesday, 31 July, 2019.