petropavlovsk plc...denver gold forum americas 2019 17 september 2019 2 cautionary and forward-...

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PETROPAVLOVSK PLCDenver Gold Forum Americas 201917 September 2019

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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

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Petropavlovsk: Celebrating its 25th Year Anniversary

St Petersburg - RDC Hydrometallurgy

Mining & ProcessingPioneer

Albyn

Malomir

Pokrovskiy

Moscow- Petropavlovsk Moscow - PHM Engineering

Blagoveshchensk- Regis Exploration- Kapstroi Construction

Irkutsk- Irgiredmet Institute

IRC Ltd. (non-core)(1)

London- Petropavlovsk Plc- Corporate headquarters

Open-pit mine

Underground mine

POX Hub

Analytical labs

R&D

Offices

(1) 31.1% equity interest

7.3Moz Gold mined to date

18years Average mine life

1 of only two POX plants in Russia

450-500koz Production in 2019e

A premium-listed, Russian-focused gold mining and R&D business with in-house services

4

qwasVertically integrated gold mining business producing gold in doré

One Of The Leading Gold Mining Companies In Russia

(1) As at 30 Jun 2019, incl. gold produced by our alluvial operations and JVs (2) As at 31 Dec 2018, in accordance with the JORC Code. Resources (M,I&I) are incl. of Reserves(3) Market capitalisation of IRC Ltd as at 17 September 2019 = US$126m, Petropavlovsk’s 31.1% holding on a mark to market basis = US$39m

over 7.3Moz AuProduced to date(1)

20.5Moz of JORC Resources(2)

incl. 8.2Moz of Reserves

c.450 - 500KozFY 2019 gold

production guidance

c.14MtpaRIP processing capacity

3x gold minesMix of open pit + underground

over 2,600km2

Total licence area

Pressure Oxidation (POX) HubSuccessfully commissioned Q4 2018

US$305mRevenue H1 2019

US$83mEBITDA H1 2019

27%EBITDA margin

US$750 - 850/oz FY 2019 Total Cash

Costs guidance

31% equity interest in IRC Ltd.A low cost Hong Kong listed premium iron ore

producer(3)

c.US$405mMarket cap

5

Proven Track Record Of Resource GrowthAs at 31 Dec 2018, Group Reserves & Resources totalled 20.5Moz, with Reserves of 8.2Moz(1)

Depletion + DisposalsRefractory Resources

6.8 5.2

13.0 12.8 12.1 12.09.3 9.3 9.3 9.6

12.32.1 6.0

10.1 12.3 11.7 13.814.0 14.4

10.4 11.28.2

1.4 1.9 2.4 3.8 5.1 5.9 6.6 7.211.2 11.7 12.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Non-Refractory Resources

Moz

(1) As at 31 Dec 2018, in accordance with the JORC Code 2012. Reserves are shown as Proven + Probable. Resources are inclusive of Reserves

6

Sustainable DevelopmentMaintaining leading ESG Practices

— Full compliance with applicable health and safety legislation

— H&S management systems

— Regular external + internal audits / inspections

— Development of safety culture

— Risk management to mitigate impact

— High quality task specific training

Health and Safety— Full compliance with UK Corporate Governance Code

— Safety, Sustainability and Workforce Committee formed in Nov 2018

— Annual review + publication of a revised Modern Slavery Statement

— Remuneration disclosure

— Established Code of Conduct and Business Ethics

Corporate Governance

— Environmental Management system compliant with GOST R ISO 14001- 2016 (ISO 14001:2015)

— Optimisation of energy consumption, water recycling, GHG monitoring + reporting in line with international standards

— Strict control cyanide management— Fully compliant + insured tailing management facilities— Ongoing land rehabilitation + conservation of biodiversity

— Effective waste management (31% of all waste is reused)

Environmental Management

— Major tax payer in Amur region— Active engagement with Indigenous communities— Establishment of POX Hub part of government’s policy to develop

Russian Far East

— Accessible and effective grievance procedure

— Trade Union: 1,616 members, 18% of employees

— Equal career opportunities regardless of gender

— Pokrovskiy Mining College

Social Responsibility

Petropavlovsk is not only fully compliant with regional, national + international legislation, but is striving to perform in line with best industry practices

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Peer Group Valuation AnalysisLong term valuation upside potential

EV / EBITDA (NTM)

P / CF (NTM)

EV / Reserves (Gold Equivalent)

Market performance (YTD)

8.2 8.17.4 7.4

6.5 6.25.3

4.8 4.74.0

Poly

met

al

New

mon

t

Barri

ck G

old

Poly

us

Hig

hlan

d

Ende

avou

r

Eldo

rado

Cen

tam

in

Petro

pavl

ovsk

Cen

terra

Times (x)

Times (x)

US$/oz

Percentage (%)

Source: Thomson Reuters

15.0

8.8 8.5 8.2 7.76.5

5.4 5.2 4.43.1

Cen

tam

in

Barri

ck G

old

Poly

met

al

New

mon

t

Poly

us

Hig

hlan

d

Ende

avou

r

Eldo

rado

Cen

terra

Petro

pavl

ovsk

381 348308 298

235 217 213

121 118 83

Ende

avou

r

Poly

met

al

Barri

ck G

old

Poly

us

New

mon

t

Cen

tam

in

Hig

hlan

d

Petro

pavl

ovsk

Cen

terra

Eldo

rado

186

8059 57

43 3927 19 12 12

Eldo

rado

Cen

terra

Hig

hlan

d

Petro

pavl

ovsk

Poly

met

al

Poly

us

Barri

ck G

old

Cen

tam

in

Ende

avou

r

New

mon

t

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History Of The Group

0Mtpa

2Mtpa

4Mtpa

6Mtpa

8Mtpa

10Mtpa

12Mtpa

14Mtpa

16Mtpa

18Mtpa

20Mtpa

1999a 2002a 2003a 2004a 2005a 2006a 2007a 2008a 2009a 2010a 2011a 2012a 2013a 2014a 2015a 2016a 2017a 2018a

RIP + HL + Flotation Processing

First goldfrom Pioneer

Pokrovskiy RIP expanded

First goldfrom Pokrovskiy

First goldfrom Malomir

First goldfrom Albyn

Pioneer RIP commissioned

Moved to LSE Main Board

Pioneer RIP plant expanded

PokrovskiyRIP plant

commissioned

Listed on AIM

MalomirRIP expanded

Albyn licence and Malomir

main site licence

acquired

Malomirfirst

exploration licence

acquired

Plant expansions:

Pioneer, Malomir, Albyn

Albynis commissioned

Pioneer RIP expanded

Malomir RIP plant

commissioned

Record gold production of

741Koz

POX construction

begins

POX commissioning

First goldrecovered from

POX

Malomirflotation line

commissioned

A successful organic strategy, active throughout the mining life-cycle from exploration to development

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Petropavlovsk: Today & Tomorrow

10

Petropavlovsk: Asset Base

Blagoveshchensk

Albyn

Pilot POX Plant

Malomir

PioneerPokrovskiy POX Hub

Fevralsk(1)

(1) Fevralsk and Tygda are rail loading facilities

Tygda(1)

Concentrate Transportation: Malomir to POX Km

Truck: Malomir to Fevralsk 166Rail: Fevralsk to Tygda 1,134Truck: Tygda to POX Hub 18

Total 1,318

CHINA

Operating mines

Underground mine

POX

Analytical labs

Hydro power plant

Railway

Transportation route

The Amur region has a long tradition of gold mining with expertise and excellent infrastructure

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Malomir

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Gold mine and modern flotation plant

Malomir Site Overview

Geography

Overview– Acquired as greenfield in 2003, RIP plant commissioned 2010– One of the largest gold mines in Russia in terms of resource base– Mining carried out both via open pit + underground– Underground grades between 6 – 7g/t expected in 2019 - 2020– Plant capacity includes:

– 3.6Mtpa flotation; and– 0.4Mtpa RIP

– Production increasingly coming from refractory ores– Flotation achieving up to 40% improvement in concentrate yield vs.

design leading to lower transportation and processing costs in the POX Hub

Key characteristics

74.5km2

total gold licencearea

6.9Moztotal mineral Resources incl.

2.9Moz ore Reserves

18 yearsmine life

0.8Mozgold produced to date

191Koz(1)

expected in FY2019e

Lime depositAnalytical lab

Open-pit mineUnderground mine

Hydro plantCore assetsPokrovskiy POX hub Blagoveshchensk

(1) Production volume includes gold contained in c.43Kt of gold concentrate produced in 2018(2) Production at Malomir includes 34.6koz produced via the POX Hub in Q2 2019 and 61.3koz produced in H1 2019

MALOMIR Units 2016 2017 2018 H1 2019

Segment revenue US$m 67 83 102 120

Total cash costs US$/oz 824 929 791 860

All-in sustaining costs US$/oz 1,004 1,278 1,058 1,013

CAPEX US$m 4 17 25 7

Gold production Koz 55 66 78(1) 93(2)

JORC P&P Reserves Highlights

Open-pit non-refractory

Open-pit refractory

Underground non-refractory

2.9Moz@ 1.0g/t

2.7Moz

0.1Moz

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RIP and flotation

Malomir Processing

3.6Mtpa flotation plant comprising of

— 2 x 1.8Mtpa crushing and grinding lines

— 2 x 1.8Mtpa flotation lines

0.4 - 0.6Mtpa RIP plant(1)

— 1 x 0.4 - 0.6Mtpa crushing + grinding line

— 1 x 0.4 - 0.6Mtpa RIP circuit

Redundant 3.6Mtpa RIP section is available for

— Cyanidation of flotation tailings, should this be necessary to improve gold recovery

— RIP ore processing, should new non-refractory reserves discovered

Expansion of the flotation plant

— Flotation plant expansion to 5.4Mtpa expected via an additional 1 x 1.8Mtpa crushing + grinding section and 1 x 1.8Mtpa flotation line

Near-term processing costs

— Crushing, grinding + cyanidation (for non-refractory ore) c.US$7.4/t ore

— Crushing + grinding + flotation (for refractory ore) c.US$4.9/t ore

3.6Mtpa Grinding Section (SAG &Ball Mills)2 x 1.8Mtpa Flotation

lines

Redundant RIP Section

2 x 1.8Mtpa Jaw Crushers

Active RIP Section

0.4M

tpa

Jaw

Crus

her

0.4M

tpa

Grin

ding S

ectio

n (S

AG &

Ball M

ills)

Current setup

(1) Capacity shown as a range depending on whether the material is harder or softer

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Malomir And Pioneer Flotation Concentrate ParametersDesign vs. actual performance

Malomir Pioneer Design

(Stage 1)Parameter Design H1 2019a H2 2019e FY 2019e Comments

Ore processing

1.8Mt (6m)3.6Mtpa (FY) 1.81Mt 1.8-2.0Mt 3.6-3.8Mt

H1 throughput on target, up to 10% increase in H2 due to better equipment utilisation and optimisation of processing operations

3.6Mtpa

Scheduled ROM grades

1.25g/t -1.35g/t 0.97g/t(1) 1.25-1.30g/t 1.10g/t

Flotation performance exceeded initial design parameters, affording the opportunity to test process low grade ore at c.0.7g/t in Q1 2019

The tests confirmed its feasibility, hence lower than design processed grades in H1 2019

1.1g/t

Concentrate yields 5.5% 3.3% 3.5% 3.4% Up to 40% improvement in concentrate yield

vs. design: lower transportation and POX processing costs and higher grade concentrate

2.90%

Concentrate grades 24g/t 26g/t 31g/t 28g/t 24.0g/t

Concentrate volumes

100kt (6m)200ktpa (FY)

59kt (6m)120ktpa (FY)

61-70kt (6m)120-140ktpa

(FY)120-130kt

Up to c.40% decrease in processed tonnage due to a positive decrease in yield: more gold extracted into a smaller volume of concentrate

110ktpa

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

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Maximise value of low-grade material through Malomir flotation plant

Potential to grow production via 3rd party refractory ore processing at thePOX Hub

4

6 Steps to Delivering Shareholder Value

POX technology to unlock value from significant refractory asset base1

Reduce debt and deleverage balance sheet5

Pioneer

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One of the Company’s flagship assets with significant exploration potential

Pioneer Site Overview

Overview

1,337 km2


19 yearsmine life


117Kozexpected in FY2019e


2.8Moz ore Reserves

GeographyKey characteristics

– Acquired as a greenfield in 2001– A significant open pit + high-grade underground asset– Pioneer is principally refractory deposit– Non-refractory ore is processed via 6.7Mtpa RIP plant– Underground mining commenced H1 2019, est. 200kt @ 6g/t

to be mined FY2019 (H1 2019 actual: 99kt @ 4.6g/t)– Construction of a new floating facility in progress,

commissioning scheduled H2 2020– New Pokrovskiy POX Hub c.40km away




(1) The Pioneer flotation plant is currently scheduled to become operational from 2023, but the Board is considering accelerating this to H2 2020

PIONEER Units 2016 2017 2018 H1 2019


Total cash costs US$/oz 631 791 799 1,138

All-in sustaining costs US$/oz 789 1,029 1,294 1,506

CAPEX US$m 12 26 29 13

Gold production Koz 142 162 135 53

0.5Moz

2.0Moz

0.2Moz0.2Moz

Underground refractory


Open-pit refractory

Underground non-refractory


2.8Moz@ 0.85g/t

17

The route to processing non-refractory to refractory gold Pioneer Processing

— 6.7Mtpa current(1) RIP plant comprising of crushing + grinding sections

— 3 x 1.8Mtpa(1) (“large”) crushing + grinding lines plus

— 1 x 0.6Mtpa (“small”) crushing + grinding line

— RIP section will remain available after plant switched to flotation; providing optionality to use for the cyanidation of flotation tailings to improve gold recoveries

— 0.7Mtpa heap leach facility to stop in Q4 2019(2)

— Near-term processing costs (crushing, grinding + cyanidation) for non-refractory of c.US$7.4/t ore

— Under current plans, two 1.8Mtpa lines (totalling 3.6Mtpa capacity) are expected to be operational from Q4 2020

— Most recent capex estimate: c.US$30m

— Conceptually a third flotation line can be added to increase capacity up to 5.4Mtpa

— The crushing + grinding lines will be gradually switched to the flotation circuit in line with the transition of ore from non-refractory to refractory

— Remaining 1 x 0.6Mtpa crushing and grinding will remain to remain dedicated to RIP processing

— Tailings storage will be in a conventional tailings dam

Current non-refractory processing Future refractory processing: flotation lines 2 + 3

(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 (2) A gold in circuit recovery is planned after the heap leach stops

0.6Mtpa line

1.8Mtpa lines

Grinding Section (SAG & Ball Mills)

RIP Section

Heap Leach

Flotation Building

18

Organic Growth: Pioneer Is A High Return Strategic ProjectAt spot gold prices, Pioneer has an IRR of greater than 130%

– After more than 10 years of production Pioneer is

transitioning to become a mainly refractory deposit

– Project looks attractive in terms of profitability + cash

flow generation under various macroeconomic scenarios

Project Sensitivities

IRRGold Price (US$/oz)

NPVGold Price (US$/oz)

1,250 1,300 1,400 1,450 1,250 1,300 1,400 1,450

RU

B:U

S$ F

X 61 86% 99% 126% 140%

RU

B:U

S$ F

X 61 137 167 226 256

67 119% 134% 165% 182% 67 191 221 281 310

70 136% 152% 186% 204% 70 215 245 304 334

Key Project Metrics

Total capex spend over 2 yrs US$30m

Construction timeframe 12 - 14 months

First production H2 2020

Processing capacity 3.6Mtpa

Mine life >10 years

19

Albyn

20

Company’s largest mine in terms of non-refractory resources and gold produced in 2018

Albyn Site Overview

Overview

1,053km2


18 yearsmine life


167Kozexpected in FY2019e


2.3Moz ore Reserves

– Acquired as a greenfield in 2005– Petropavlovsk’s largest producing mine (151Koz Au in 2018)– Has potential exploration targets, among which Ulgen, Yasnoye +

Leninskoye are the most significant– Major part of Reserves is non-refractory and can be treated at the

4.7Mtpa RIP plant, which operates throughout the year– The RIP plant comprises of 2 x 1.8Mtpa grinding lines,

commissioned 2011– FY2019 Albyn production is expected to be marginally higher due

to slight increase in plant throughput

GeographyKey characteristics




ALBYN Units 2016 2017 2018 H1 2019


Total cash costs US$/oz 581 541 747 622

All-in sustaining costs US$/oz 719 718 974 731

CAPEX US$m 11 10 16 13

Gold production Koz 174 182 151 79


1.9Moz

0.4Moz


Open-pit refractory

2.3Moz@ 1.1g/t

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Mine plan: Elginskoye to Replace Albyn PitOre 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

Development plan through to 2020e

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

- 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000

2018a 2019e 2020e

g/t A

u

000m

3, k

t

Waste Total Ore (kt) Average grade (g/t)

22

POX: Technology Driven Growth

23

Refractory Deposits in RussiaMajority of gold resources in Russia are refractory

POX Hub

Olimpiada(Polyus)

41.4Moz @ 2.9g/t

Mayskoye(Polymetal)

2.8Moz @ 11.4g/t

Veduga(Polymetal)

0.9Moz @ 4.8g/t

Kyuchus(Govt. owned)

6.9Moz @ 9.3g/t

Nezhdaninskoye(Polymetal)

7.9Moz @ 5.0g/t

Albazino(Polymetal)

1.6Moz @ 4.6g/t

Taseevskoye(Highland Gold)5.1Moz @ 5.1g/t

Itakinskoye1.3Moz @ 6g/t

Kluchevskoye(Sun Gold / China Gold)

2.5Moz

Malomir6.9Moz @ 0.8g/t

Bogolubovskoye(NOK)2.3Moz

Pioneer5.9Moz @ 0.7g/t

Nasedkino(Mangazeya

Mining)0.9Moz @ 2.1g/t

Poputninskoye(Polyus)

4.3Moz @ 3.2g/t

Zmeinoye(Polyus)

0.4Moz @ 4.6g/t

— Limited refractory treatment capacity exists in Russia— Majority of concentrates are exported to China; however, China

is actively closing heavily polluting plants — Russia has declared gold as strategic asset and intends to

prohibit exports of concentrates

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— “Refractory” ore contains gold encapsulated in sulphides which resists recovery via standard methods

— Sulphides need to be broken down chemically or mechanically

— “Double refractory” ore also contains carbon, which impacts recoveries special measures are required to neutralise carbon’s effect

Main Options to Treat Gold Bearing Refractory Ores

POX: Introduction To Refractory And Double Refractory Gold OresOne of the most efficient and environmentally-friendly methods to treat refractory gold ores

High Grade Concentrate

Pressure Oxidation

(POX)

Bio Oxidation

(BIOX)

Ultra-Fine

Grinding

Roasting

1. POX: oxidation in an autoclave: high pressure + temperature

2. Roasting: oxidation via high temperature roasting

3. BIOX: oxidation using bacteria

4. UFG: fine grinding releases gold encapsulated in sulphides or other minerals

‒ 65% (5.2Moz) of the Group’s total Reserves (8.2Moz) are refractory‒ 60% (12.3Moz) of the Group’s total Resources (20.5Moz) are

refractory

(1) As at 31 Dec 2018, in accordance with the JORC Code 2012. Reserves are shown as Proven + Probable. Resources are inclusive of Reserves

By design, our POX Hub is able to treat the most technologically complex refractory ore concentrates

2.0Moz

0.2Moz2.7Moz

0.4Moz

5.3MozTotal

38%

51%3%

8%

Pioneer open-pit2.0Moz

Albyn open-pit0.4Moz

Malomir open-pit2.7Moz

Pioneer U/G

0.2Moz

4.2…

0.3Moz6.7Moz

1.1Moz

12.3MozTotal

34%

54% 2%

9%

Albyn open-pit1.1Moz

Malomir open-pit6.7Moz

Pioneer U/G

0.3Moz

Refractory Reserves(1) Refractory Resources (1)Refractory + Double Refractory Ore

Pioneer open-pit4.2Moz

25

POX: A World Class TeamA world class research and development expertise team exists within Petropavlovsk

Gidrometallurgia: A Scientific Research Centre established to support the POX project – Unique laboratory created the concept of the POX

project, including technological parameters– Equipped with state of the art autoclave laboratory

facilities (laboratory + pilot testing, feasibility work + audits)

– World class team of 40 specialists incl. PhD holders– Have consulted to c.30 third party companies

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 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

– Undertakes >200 researches assignments for 3rd party companies annually

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

PHM Engineering: The 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

26

POX to reach its full potential by 2021(1): contribution from refractory ore to increase up to c.65%

(1) Assumes 3rd flotation line at Malomir from 2021(2) Capacity ranges depend on concentrate parameters, particularly sulphur content

Capacity Range(2)

POX: The Heart Of Our Future

0

10

20

30

40

50

60

70

-

2

4

6

8

10

12

14

16

18

2019e 2020e 2021e 2022e

Pioneer non-refract Pioneer flotation Malomir non-refract

Malomir flotation Albyn non-refract % Refractory (RHS)

%

% of total which is refractory

Refractory RefractoryRefractoryRefractory

Refractory

Refractory

Refractory

PioneerM

alomir

Albyn

Pioneer Malomir 3rd Party Ore

Contribution of Refractory Ores at Malomir + Pioneer (Mtpa)(1)POX ramp-up (ktpa)(1)(2)

2 autoclaves4 autoclaves

0

50

100

150

200

250

300

350

400

450

500

2018 2019e 2020e 2021e 2022ePioneer Malomir Albyn 3rd Party

Conc

entra

te (k

t)

27

POX Processing Costs: Fixed vs. VariableOverall POX processing costs decline rapidly to c.US$100/t as throughput is increased

Throughput (ktpa) Variable CostFixed Cost

– Through the ramp-up period in H1 the proportion

of fixed costs was c.2/3 of total POX processing

costs; the share of fixed costs is expected to

decrease with the increase of the plant’s utilisation

– H1 2019 processing cost equated to around

US$230/t concentrate

– 144Kt – 149Kt of refractory concentrate is

expected to be processed in H2 2019, comprising:

– 84Kt - 89Kt of our own concentrate

– 60Kt from 3rd party sources

– As a result FY 2019 processing costs are

expected to be c.US$175/t concentrate

– Going further the unit processing cost

declines rapidly to c.US$100/t as throughput is

increased as designed0

50

100

150

200

250

H1 2019 H2 2019 FY 2019 FY 2020 FY 2021 FY 2022

76kt

450kt450kt340kt

220kt

144kt

Fixed costs decrease rapidly on a per tonne basis as throughput is increased

US$

/t

FY 2019 to FY 2020H1 to H2 2019

Unit cost of processing and throughput rates Comment

28

Corporate Strategy

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Strategic PrioritiesAsset rationalisation, organic and inorganic growth options

(1) Petropavlovsk is a 31.1% holder of IRC. Gazprombank has been mandated to assess Petropavlovsk’s options

Opportunities Goal Implementation

Stre

amlin

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the

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Strategic exit from IRC

‒ Eliminate IRC loan guarantee‒ Improve credit rating‒ Improve balance sheet metrics‒ Focus on gold‒ Achieve higher market multiples

‒ Disposal of a 31.1% controlling stake to a strategic investor alongside a transfer of the loan guarantee(1)

‒ Alongside subsequent sale of the IRC stake, an agreement with Gazprombank to eliminate IRC guarantee

Org

anic

Gro

wth

Elginskoye‒ Extend mine life at Albyn‒ Utilise existing infrastructure‒ Maximise IRR

‒ Construction of mine at Elginskoye‒ Construction of road to Albyn plant‒ Transportation of ore to Albyn RIP

Increase feed of POX plant by processing own concentrates

‒ Optimise POX utilisation‒ Secure concentrates with the best

margins‒ Maximise IRR

‒ Construction of Pioneer flotation plant (initially 2 lines) with further expansion (3rd flotation line)

‒ Expansion of flotation plant at Malomir (3rd flotation line)

Inor

gani

c G

row

th

M&A‒ Improve grade of POX feed material‒ Increase POX utilisation‒ Expand margins + increase production

‒ Identification of higher grade refractory assets which can’t be developed at this moment

‒ Identification of the most effective way to bring together synergies of these assets and the processing capacity of the POX Hub

Autoclaves5 + 6 (JV option)

‒ Fully benefit from POX facilities and POG’s comprehensive in-house R&D capabilities

‒ Financed by JV partner‒ Adjustment of the technological process to

process complex material (eg. triple refractory)

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Final Remarks

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Summary: A Conservative Strategy Focused on Shareholder ReturnsA holistic strategy directed at improving long-term shareholder returns

— 50% total processing capacity uplift from 400 – 500Ktpa to 500 – 750Ktpa— Autoclaves 1 to 4 to process own refractory ores, while 5 + 6 could process complex 3rd party

material (JV opportunities)

POX capacityexpansion

IRC: realising value from

non-core assets

— Options include: improvements to existing guarantee structure, outright disposal , payment of a dividend to Petropavlovsk

Committed toexploration

— Continue to generate maximum value from core assets via ongoing exploration both surface + underground

— Potential licence acquisitions adjacent to the existing infrastructure

Balance sheet strengthening

— Improved cash generation via POX ramp-up leading to balance sheet deleveraging— Targeting Net Debt / EBTIDA of 2.0x

— Construction of new Pioneer flotation to double existing flotation capacity (Q4 2020 launch)— Malomir 3rd flotation line planned for 2023, but may be accelerated

Increase production of our own refractory

concentrate

— Focus on operational efficiencies and cost optimisation at existing operationsCost optimisation + margins1

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petropavlovsk plc...denver gold forum americas 2019 17 september 2019 2 cautionary and forward-...

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