DGAP-News: Polyus Finance Plc: Trading update for 4Q 2021 and full year 2021

PressRelease 8 February 2022

PJSC Polyus

Trading update for the fourth quarter of 2021 and full year 2021

FY 2021 Highlights

• Total gold output of 2,717 thousand ounces comes in line with FY 2021 production guidance of approximately 2.7 million ounces. However, doré volumes totalled 2,736 thousand ounces, down 2% year-on-year. The difference in total gold and doré gold output reflects the accumulation of unrefined gold to be further processed in 2022.
• The decline was primarily attributable to operations at Olimpiada and driven by lower average grades in ore processed of 3.00 g/t, from 3.40 g/t in the previous year. This was partially offset by higher production volumes at Natalka and Verninskoye.
• Volumes of rock moved increased to 351,690 thousand tonnes (136,430 km³), driven by intensified stripping activities across almost all hard-rock deposits.
• Volumes of ore mined amounted to 67,321 thousand tonnes, down 5% on the previous year, reflecting lower volumes of ore mined at Olimpiada, Natalka and Verninskoye.
• Volumes of ore processed increased 6% to 47,895 thousand tonnes, driven by throughput capacity expansion at Olimpiada, Verninskoye and Natalka.
• Flotation concentrate output decreased 82% to approximately 15 thousand tonnes with volumes of gold contained in flotation concentrate amounting to 29.8 thousand ounces. This reflects lower mining and processing volumes of antimony-rich ore at Olimpiada over 2021 and improved efficiency of the BIO complex.
• FY 2022 production guidance is reiterated at 2.8 million ounces of gold.

4Q 2021 Highlights

• Total gold output amounted to 684 thousand ounces, compared to 770 thousand ounces in the third quarter of 2021. This decline was primarily driven by a seasonal slowdown in production at Alluvials and Kuranakh and lower production volumes at Verninskoye due to scheduled maintenance.
• Volumes of ore mined amounted to 16,828 thousand tonnes, remaining flat quarter-on-quarter.
• Volumes of ore processed decreased by 7% quarter-on-quarter to 11,878 thousand tonnes, due to the seasonal slowdown of heap leaching operations at Kuranakh and scheduled maintenance works at Olimpiada and Verninskoye.
• Recovery rate increased to 83.4%, compared to 83.0% in the previous quarter, driven by higher recoveries at Olimpiada.

Consolidated operating results

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Olimpiada	289.0	281.6	3%	269.9	242.4	268.0	8%	1,082.9	1,001.8	8%
Blagodatnoye	112.0	108.5	3%	117.4	92.4	117.4	-5%	430.3	455.4	-6%
Natalka	129.3	133.6	-3%	125.3	115.1	132.7	-3%	503.3	455.5	10%
Verninskoye	66.8	83.0	-20%	77.6	64.8	67.4	-1%	292.2	273.4	7%
Kuranakh	62.2	65.3	-5%	56.0	54.3	64.2	-3%	237.8	238.7	0%
Alluvials	24.9	91.0	-73%	25.2	n/a	38.0	-34%	141.1	143.3	-2%
Refined gold, koz	684.2	763.0	-10%	671.4	569.0	687.7	-1%	2,687.6	2,568.1	5%
Flotation concentrate production, t	0	3,547	-100%	159	11,671	7,323	-100%	15,377	86,750	-82%
Antimony in flotation concentrate, t	0	581	-100%	0	1,919	1,837	-100%	2,499	10,958	-77%
Gold in flotation concentrate, koz	0	7.0	-100%	0.1	22.7	22.0	-100%	29.8	198.0	-85%
Gold payable in concentrate, koz	0	5.4	-100%	0.0	17.4	17.2	-100%	22.8	153.6	-85%
Total gold output, koz	684.2	770.0	-11%	671.5	591.7	709.7	-4%	2,717.4	2,766.1	-2%
Rock moved, km³	35,994	35,729	1%	33,120	31,587	30,741	17%	136,430	124,233	10%
Stripping ratio, m³/t	1.7	1.7	0%	1.5	1.5	1.4	21%	1.6	1.4	14%
Rock moved, kt	92,903	92,306	1%	85,191	81,290	78,706	18%	351,690	318,429	10%
Stripping ratio, t/t	4.5	4.5	0%	4.0	3.9	3.5	29%	4.2	3.5	20%
Ore mined, kt	16,828	16,827	0%	17,027	16,639	17,301	-3%	67,321	71,155	-5%
Ore processed, kt	11,878	12,722	-7%	12,169	11,126	10,438	14%	47,895	45,113	6%
Recovery rate, %	83.4%	83.0%	0.4ppts	82.6%	81.6%	83.9%	-0.5ppts	82.7%	83.8%	-1.1ppts
Total doré & slime gold output, koz	664.1	764.2	-13%	693.4	614.7	660.7	1%	2,736.4	2,803.5	-2%

 

Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:

"In 2021, Polyus once again delivered on its production guidance, producing just over 2.7 million ounces of gold.

While temporarily lower head grades at our largest asset, Olimpiada, had a negative impact on gold output at the group level, this was partially offset by a stronger year-on-year performance at Natalka and Verninskoye.

We made impressive progress on our growth projects in 2021. We completed the capacity expansion project at Verninskoye ahead of the initial schedule. Debottlenecking initiatives also drove annual ore processed volumes at Olimpiada and Natalka higher on a year-on-year basis, to 15.1 and 12.4 million tonnes, respectively.

In terms of ESG, Polyus stepped up its decarbonization efforts by switching energy consumption of operating assets to renewable electricity. As the next step, we intend to present the market with our climate strategy in the coming months.

Looking ahead, one of Polyus' key milestones for 2022 will be the release of the key highlights of the Bankable Feasibility Study for Sukhoi Log and Final Investment Decision on the project. We will also proceed with the execution of our large-scale brownfield projects - the construction of Mill-5 at Blagodatnoye and the throughput capacity expansion at Kuranakh - along with further activities to enhance the performance of our existing operations.

We expect the Company's total gold production to increase in 2022, primarily driven by a head grade improvement at Olimpiada. We reiterate our full-year production guidance at approximately 2.8 million ounces of gold."

ESG UPDATE

Highlights

• Lost-time injury frequency rate (LTIFR)^[1] - 0.18; Fatality rate - 0.01
• Automotive accident rate (AARk) - 0.17
• COVID-19: operation of production assets proceeded without interruption. Thorough protocols remain in place
• No environmental incidents during 2021.

COVID response update

• Vaccination and revaccination program for employees and contractors continues at all Polyus production sites. Employee immunity levels reached 88.4% at year-end.
• Preventive measures remain at all operations and offices, including enhanced medical screening, social distancing, provision of personal protective equipment and regular disinfection of all communal areas.
• All shift employees and contractors are subjected to obligatory testing for COVID-19 and quarantine in observation facilities prior to transfer to Polyus' sites.
• Polyus spent $94 million on COVID-19 prevention measures in 2021, which includes test kits, personal protection equipment, medicine, increased salaries to staff on extended shifts, as well as donations to local hospitals of medical equipment and medicine, renovation of the buildings.

Environment and climate change

• As a part of the process of developing the Climate Strategy, we have finalised the climate risk assessment and are implementing the results into our climate change approach.
• The Russian environmental regulator Rosprirodnadzor conducted two unscheduled audits at Polyus assets in Yakutia and the Krasnoyarsk Territory. Polyus Stroi (Kransoyarsk) has also undergone a desktop audit and obtained an expanded license for I-IV class waste hazard handling.
• A self-assessment of systems and practices related to implementation of expected ICMM performance has been finalized.

Health & safety

• Polyus' HSE risk management standard and HSE internal audits standard were updated.

Local communities

• Polyus supported the publication of the ICMM's Russian guidance on handling and resolving local-level community concerns and grievances.

Employees

• Launch of a corporate training program for students: master classes with Company experts and internships.
• Driver training pilot project completed at Kuranakh.
• Volunteer projects: grant competition for the best volunteer project, Donor Day, creative competition for the children of employees.

ESG ratings and indices

• Polyus' current ESG ratings:

o S&P Global CSA - 57

o CDP - Climate Change: D; Water Security: C

o Sustainalytics ESG Risk Rating - 25.1

o MSCI ESG - A

o FTSE Russell - 3.6

o Vigeo Eiris - 54

Olimpiada

4Q 2021 Highlights

• Volumes of ore processed amounted to 3,736 thousand tonnes.
• Recovery rate stood at 85.1%.
• Total gold output was 289 thousand ounces.

FY 2021 Highlights

• Volumes of ore processed reached 15,061 thousand tonnes.
• Recovery rate amounted to 84.0%.
• Total gold output was 1,113 thousand ounces.

Gold output

Doré gold output stood at 268 thousand ounces in the fourth quarter of 2021, down 8% quarter-on-quarter, driven by both lower grades in ore processed and lower processing volumes. The latter was attributable to scheduled maintenance works at Mill 1 and Mill 2. On a year-on-year basis, both doré gold output and total gold output decreased by 9% and 7% respectively, driven by lower grades in ore processed.

Mining works

Volumes of rock moved amounted to 38,729 thousand tonnes (14,315 km³), up 4% on the third quarter of 2021.

In line with mining plan, Polyus increased the volumes of ore mined at Vostochny and Zapadny pit to 3,610 thousand tonnes, up two-fold from the previous quarter. The average grades in ore mined decreased to 2.36 g/t, down from 2.43 g/t in the previous quarter.

Over the course of 2021, Polyus intensified stripping activities catching up the respective shortage in volumes accumulated in the previous year. Rock moved volumes increased to 135,927 thousand tonnes (50,245 km³), up 14%, while stripping volumes rose by 21% to 124,136 (45,973 km³). At the same time, volumes of ore mined declined to 11,791 kt, down 28% year-on-year. The average grade in ore mined decreased to 2.80 g/t, down from 3.18 g/t in the previous year, as Polyus proceeded with scheduled mining activities in a lower-grade pit area.

Ore processing

Volumes of ore processed totalled 3,736 thousand tonnes, down 7% compared to the previous quarter. This decline reflects scheduled maintenance works at Mill 1 and Mill 2.

In 2021, volumes of ore processed reached 15.0 million tonnes, up 7% year-on-year. This was driven by the improved performance of SAG-mill at Mill No. 3, following its replacement in the end of 2020. Polyus proceeded with a number of initiatives aimed at stabilising of current processing parameters at 15.0 million tonnes per annum. Alongside increasing throughput, over the course of 2021 Polyus has improved the efficiency of the BIO complex, as a result of the modernization of the BIO-2 and BIO-3 units and the ongoing calibration of the flowsheet at BIO complex.

In 2021, Polyus primarily processed stockpiled material due to the decline in volumes of ore mined. This resulted in average grades in ore processed decreasing to 3.00 g/t, which also negatively impacted the recovery rate, which reduced to 84.0%.

Mining works and ore processing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Rock moved, km³	14,315	13,713	4%	11,368	10,849	11,073	29%	50,245	43,890	14%
incl. stripping, km³	13,007	13,060	0%	10,249	9,657	9,711	34%	45,973	37,994	21%
Stripping ratio, m³/t	3.6	7.3	-51%	3.3	2.9	2.6	38%	3.9	2.3	70%
Rock moved, kt	38,729	37,062	4%	30,764	29,372	29,979	29%	135,927	118,857	14%
incl. stripping, kt	35,119	35,263	0%	27,672	26,082	26,220	34%	124,136	102,584	21%
Stripping ratio, t/t	9.7	19.6	-51%	8.9	7.9	7.0	39%	10.5	6.3	67%
Ore mined, kt	3,610	1,799	101%	3,092	3,290	3,759	-4%	11,791	16,273	-28%
Average grade in ore mined, g/t	2.36	2.43	-3%	3.24	3.08	2.94	-20%	2.80	3.18	-12%
Ore processed, kt	3,736	4,009	-7%	3,648	3,668	3,249	15%	15,061	14,048	7%
Average grade in ore processed, g/t	2.93	3.03	-3%	3.03	3.02	3.34	-12%	3.00	3.40	-12%
Recovery, %	85.1%	84.6%	0.5ppts	83.8%	82.5%	84.9%	0.2ppts	84.0%	85.4%	-1.4ppts
Doré gold, koz	268.5	293.0	-8%	279.5	271.8	281.4	-5%	1,112.8	1,229.3	-9%
Refined gold output, koz	289.0	281.6	3%	269.9	242.4	268.0	8%	1,082.8	1,001.8	8%
Flotation concentrate production, t	0	3,547	-100%	159	11,671	7,323	-100%	15,377	86,750	-82%
Antimony in flotation concentrate, t	0	581	-100%	0	1,919	1,837	-100%	2,499	10,958	-77%
Gold contained in concentrate, koz	0.0	7.0	-100%	0.1	22.7	22.0	-100%	29.8	198.0	-85%
Total gold output, koz	289.0	288.6	0%	270.0	265.1	290.0	0%	1,112.7	1,199.8	-7%

 

Blagodatnoye

4Q 2021 Highlights

• Volumes of ore processed increased 7% compared to the previous quarter.
• Recovery rate stood at 86.9%.
• Doré gold output rose to 113 thousand ounces.

FY 2021 Highlights

• Volumes of ore processed increased to 9,017 thousand tonnes.
• Average grade in ore processed amounted to 1.75 g/t.
• Doré gold output totalled 439 thousand ounces.

Gold output

Doré gold output in the fourth quarter of 2021 amounted to 113 thousand ounces, up 3% compared to the previous quarter. Refined gold output amounted to 112 thousand ounces, compared to 108 thousand ounces in the previous reporting period. On a year-on-year basis, doré gold output and refined gold output decreased by 4% and 6%, respectively. This decline was driven by lower average grade in ore processed (1.75 g/t in 2021, compared to 1.82 g/t in 2020) and lower recovery rate, which was negatively affected by volatility in ore hardness over the course of 2021.

Mining works

Volumes of rock moved declined by 3% to 20,337 thousand tonnes (7,304 km³) compared to the previous quarter. Volumes of ore mined decreased 12% to 4,773 thousand tonnes, compared to 5,452 thousand tonnes in the third quarter of 2021, while average grade in ore mined decreased to 1.32 g/t. Polyus reduced ore mining activities at the second stage of the pit and shifted to lower-grade areas of the third stage, which partially offset the decline in ore mined from the second stage.

In 2021, volumes of ore mined rose to 19,061 thousand tonnes, up 14% from the prior year, while the average grades in ore mined rose to 1.35 g/t.

Ore processing

The average grades in ore processed decreased to 1.75 g/t, from 1.81 g/t in the third quarter of 2021, following decline in average grades in ore mined. Volumes of ore processed increased by 7% to 2,348 thousand tonnes as scheduled maintenance works had been carried out at Mill No. 4 during previous reporting period. Recovery rate slightly decreased to 86.9%, compared to 87.2% in the third quarter of 2021. In 2021, volumes of ore processed amounted to 9,017 thousand tonnes, up 3% year-on-year.

Mill 5

In the fourth quarter of 2021, the Company signed a procurement agreement with FLSmidth for technological equipment for the construction of the Mill and in-pit crushing and conveying (IPCC) system. Esta Construction, the major contractor for the Mill 5 construction project, proceeded with the foundation works of the hydromet and comminution circuits during the period, as well as the construction of infrastructure facilities on site. In addition, the contracting procedures for key processing equipment have almost been finalised with most of the key suppliers selected and long-lead equipment contracted.

Mining works and ore processing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Rock moved, km³	7,304	7,550	-3%	7,180	6,085	5,914	24%	28,119	23,519	20%
incl. stripping, km³	5,599	5,602	0%	5,608	4,502	4,344	29%	21,311	17,554	21%
Stripping ratio, m³/t	1.2	1.0	20%	1.3	1.0	1.0	20%	1.1	1.1	0%
Total rock moved, kt	20,337	21,028	-3%	19,992	16,949	16,473	23%	78,306	65,503	20%
including stripping, kt	15,565	15,576	0%	15,590	12,515	12,079	29%	59,245	48,802	21%
Stripping ratio, t/t	3.3	2.9	14%	3.5	2.8	2.7	22%	3.1	2.9	7%
Ore mined, kt	4,773	5,452	-12%	4,402	4,434	4,394	9%	19,061	16,701	14%
Average grade in ore mined, g/t	1.32	1.42	-7%	1.48	1.19	1.30	2%	1.35	1.29	5%
Ore processed, kt	2,348	2,194	7%	2,283	2,192	2,010	17%	9,017	8,788	3%
Average grade in ore processed, g/t	1.75	1.81	-3%	1.80	1.65	1.91	-8%	1.75	1.82	-4%
Recovery, %	86.9%	87.2%	-0.3ppts	87.0%	86.2%	88.7%	-1.8ppts	86.8%	88.4%	-1.6ppts
Doré gold, koz	113.2	109.5	3%	115.8	100.4	109.6	3%	438.9	457.3	-4%
Refined gold output, koz	112.0	108.5	3%	117.4	92.4	117.4	-5%	430.3	455.4	-6%

 

Natalka

4Q 2021 Highlights

• Volumes of ore mined decreased by 9% compared to the previous quarter.
• Volumes of ore processed amounted to 3,190 thousand tonnes.
• Doré gold output totalled 131 thousand ounces.

FY 2021 Highlights

• Volumes of ore processed increased to 12,387 thousand tonnes.
• Grades in ore processed rose to 1.77 g/t.
• Doré gold output totalled 513 thousand ounces, up 13% on a year-on-year basis.

Gold output

Doré gold output in the fourth quarter of 2021 amounted to 131 thousand ounces, remaining almost flat on the previous quarter. Refined gold output amounted to 129 thousand ounces, compared to 134 thousand ounces in the previous reporting period. On a year-on-year basis, doré gold output and refined gold output rose by 13% and 10%, respectively. This increase was driven by higher average grade in ore processed (1.77 g/t in 2021, compared to 1.72 g/t in 2020) and higher volumes of ore processed.

Mining works

In the fourth quarter of 2021, Polyus intensified stripping activities, increasing volumes to 12,214 thousand tonnes (4,735 km³), while volumes of ore mined decreased to 5,537 thousand tonnes, a 9% decline from the third quarter. In 2021, volumes of ore mined decreased to 23,232 thousand tonnes, down 5% compared to the previous year in line with the mining plan. Polyus intensified mining activities in higher-grade area of the pit in 2021, with the average grades in ore mined increasing to 1.35 g/t (1.27 g/t in 2020).

Ore processing

Volumes of ore processed amounted to 3,190 thousand tonnes, remaining broadly flat on the previous quarter. In 2021, volumes of ore processed increased to 12,387 thousand tonnes, up 8% year-on-year. The mill has reached its target hourly throughput rate of 1,550 t/h and is currently running at an annualized capacity of 12.5 million tonnes per annum. This reflects operational debottlenecking initiatives, including replacement of the four SAG and ball mill motors with upgraded sleeve bearings in December 2020, installation of turbo-elevators and adjustment of screens and the discharge grates at the SAG mill over the course of 2021.

In 2021, the average grades in ore processed increased to 1.77 g/t, compared to 1.72 g/t in 2020, reflecting the increase in the average grades in ore mined during the reporting year.

Recovery rate amounted to 72.7% and 72.0% in the fourth quarter and for the full year of 2021, respectively, remaining broadly flat on the preceding reporting periods.

Mining works and ore processing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Rock moved, km³	6,885	6,801	1%	6,825	7,222	6,938	-1%	27,733	28,638	-3%
incl. stripping, km³	4,735	4,445	7%	4,556	4,986	4,391	8%	18,722	19,093	-2%
Stripping ratio, m³/t	0.9	0.7	29%	0.8	0.9	0.7	29%	0.8	0.8	0%
Total rock moved, kt	17,751	17,547	1%	17,583	18,674	17,841	-1%	71,555	73,537	-3%
including stripping, kt	12,214	11,468	7%	11,735	12,906	11,229	9%	48,323	49,006	-1%
Stripping ratio, t/t	2.2	1.9	16%	2.0	2.2	1.7	29%	2.1	2.0	5%
Ore mined, kt	5,537	6,079	-9%	5,848	5,768	6,612	-16%	23,232	24,531	-5%
Average grade in ore mined, g/t	1.33	1.36	-2%	1.37	1.35	1.27	5%	1.35	1.27	6%
Ore processed, kt	3,190	3,197	0%	3,003	2,997	2,812	13%	12,387	11,437	8%
Average grade in ore processed, g/t	1.73	1.75	-1%	1.76	1.83	1.77	-2%	1.77	1.72	3%
Recovery, %	72.7%	72.6%	0.1ppts	71.8%	71.1%	73.0%	-0.3ppts	72.0%	71.9%	0.1ppts
Doré gold, koz	130.7	130.1	0%	125.3	126.8	111.7	17%	512.9	455.8	13%
Refined gold output, koz	129.3	133.6	-3%	125.3	115.1	132.7	-3%	503.3	455.5	10%

 

Verninskoye

4Q 2021 Highlights

• Volumes of ore processed amounted to 925 thousand tonnes.
• Doré output totalled 76 thousand ounces.

FY 2021 Highlights

• Volumes of ore mined decreased to 4,782 thousand tonnes.
• Volumes of ore processed rose to 3,608 thousand tonnes.
• Doré gold output totalled 295 thousand ounces.

Gold output

Doré gold output stood at 76 thousand ounces, down 4% quarter-on-quarter. Refined gold output amounted to 67 thousand ounces, compared to 83 thousand ounces in the third quarter of 2021. Year-on-year, both doré gold output and refined gold output grew by 7% due to an increase in processing volumes.

Mining works

Volumes of rock moved declined by 14% compared to the previous quarter, to 7,410 thousand tonnes (2,744 km³). In line with the mining plan, volumes of ore mined decreased by 32% compared to the previous quarter, to 724 thousand tonnes. The average grades in ore mined increased to 2.40 g/t during the reporting period, from 1.91 g/t in the third quarter of 2021.

In 2021, Polyus intensified stripping activities, while volumes of ore mined decreased by 15%, to 4,782 thousand tonnes. The average grades in ore mined increased to 2.22 g/t, up from 2.19 g/t as Polyus proceeded with mining activities in a higher-grade pit area.

Ore processing

Volumes of ore processed amounted to 925 thousand tonnes, down 4% on the previous quarter, reflecting the completion of scheduled maintenance works at the Verninskoye mill in October 2021.

In 2021, volumes of ore processed reached 3.6 million tonnes, up 10% compared to the previous year, exceeding the target capacity of 3.5 million tonnes per annum of the Verninskoye mill expansion project, which was completed in the first half of 2021.

Mining works and ore processing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Rock moved, km³	2,744	3,193	-14%	3,222	3,090	2,539	8%	12,249	11,076	11%
incl. stripping, km³	2,476	2,797	-11%	2,624	2,581	2,146	15%	10,478	8,986	17%
Stripping ratio, m³/t	3.4	2.6	31%	1.6	1.9	2.0	70%	2.2	1.6	38%
Total rock moved, kt	7,410	8,621	-14%	8,699	8,343	6,854	8%	33,073	29,903	11%
including stripping, kt	6,686	7,551	-11%	7,085	6,969	5,795	15%	28,291	24,261	17%
Stripping ratio, t/t	9.2	7.1	30%	4.4	5.1	5.5	68%	5.9	4.3	37%
Ore mined, kt	724	1,070	-32%	1,614	1,374	1,059	-32%	4,782	5,642	-15%
Average grade in ore mined, g/t	2.40	1.91	26%	2.24	2.33	2.42	-1%	2.22	2.19	1%
Ore processed, kt	925	963	-4%	954	766	876	6%	3,608	3,277	10%
Average grade in ore processed, g/t	2.81	2.81	0%	2.82	2.82	2.90	-3%	2.82	2.91	-3%
Recovery, %	90.0%	90.0%	0.0ppts	90.0%	90.0%	89.6%	0.4ppts	90.0%	89.6%	0.4ppts
Doré gold , koz	75.6	78.8	-4%	77.7	62.5	73.2	3%	294.6	274.8	7%
Refined gold output, koz	66.8	83.0	-20%	77.6	64.8	67.4	-1%	292.2	273.4	7%

 

Kuranakh

4Q 2021 Highlights

• Seasonal suspension of heap leaching operations.
• Doré gold output was 58 thousand ounces.

FY 2021 Highlights

• Volumes of ore processed at the Kuranakh mill rose to 6,034 thousand tonnes.
• Doré gold output totalled 236 thousand ounces.

Gold output

Doré gold output in the fourth quarter of 2021 amounted to 58 thousand ounces, an 11% decline on the third quarter of 2021, driven by the seasonal suspension of activities at heap leaching facilities. Refined gold output amounted to 62 thousand ounces, down 5% on the previous quarter. In 2021, doré gold output decreased by 3%, while refined gold output remained flat.

Mining works

Volumes of ore mined declined 10% compared to the previous quarter, to 2,184 thousand tonnes, as Polyus downscaled mining activities in low-grade areas due to the seasonal slowdown of heap leaching operations. This resulted in higher grades in ore mined (1.08 g/t in the fourth quarter of 2021, compared to 0.96 g/t in the third quarter of 2021). During the reporting period, Polyus upgraded its mining fleet, delivering six 90-tonne trucks, two 55-tonne trucks and one excavator to the site.

Ore processing

Volumes of ore processed at the Kuranakh mill amounted to 1,541 thousand tonnes, up 5% compared to the previous quarter. Throughput capacity at the Kuranakh mill amounted to 6.0 million tonnes in 2021. The Company is progressing with the project to expand throughput capacity at the Kuranakh mill to 7.5 million tonnes per annum. Polyus commenced early construction works (earthworks, dismantling works, enhancement of existing foundations for sorption columns) and signed contracts for most of long-lead key technological equipment and progressed with detailed design documentation.

Heap leaching

In 2021, Polyus processed 1,788 thousand tonnes of ore at Kuranakh heap leaching facilities, with average grades of 0.68 g/t. Doré gold output amounted to 29 thousand ounces. Due to the seasonality of heap leaching operations, leaching activities have been temporarily suspended until Spring 2022. During the reporting period, Polyus commissioned the conveyor equipment and the second heap leaching pad.

Mining works and ore processing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Rock moved, km³	4,746	4,472	6%	4,525	4,341	4,277	11%	18,084	17,110	6%
incl. stripping, km³	3,522	3,052	15%	3,314	3,340	3,449	2%	13,228	12,500	6%
Stripping ratio, m³/t	1.6	1.3	23%	1.6	1.9	2.3	-30%	1.6	1.6	0%
Total rock moved, kt	8,676	8,048	8%	8,153	7,952	7,559	15%	32,829	30,629	7%
including stripping, kt	6,492	5,621	15%	6,082	6,179	6,082	7%	24,374	22,621	8%
Stripping ratio, t/t	3.0	2.3	30%	2.9	3.5	4.1	-27%	2.9	2.8	4%
Ore mined, kt	2,184	2,427	-10%	2,071	1,773	1,477	48%	8,455	8,008	6%
Average grade in ore mined, g/t	1.08	0.96	13%	1.06	1.21	1.23	-12%	1.07	1.10	-3%
Total ore processed, kt	1,679	2,359	-29%	2,280	1,504	1,491	13%	7,822	7,563	3%
Mill
Ore processed, kt	1,541	1,466	5%	1,523	1,504	1,491	3%	6,034	5,983	1%
Average grade in ore processed, g/t	1.20	1.17	3%	1.22	1.25	1.25	-4%	1.21	1.25	-3%
Recovery, %	88.4%	88.4%	0.0ppts	88.8%	88.9%	89.0%	-0.6ppts	88.7%	89.0%	-0.3ppts
Doré gold, koz	52.1	49.4	5%	52.6	53.2	53.8	-3%	207.3	214.9	-4%
Heap-leach
Ore processed, kt	138	893	-85%	757	-	-	n.a	1,788	1,580	13%
Average grade in ore processed, g/t	0.75	0.67	12%	0.67	-	-	n.a	0.68	0.71	-4%
Recovery, %	72.3%	72.3%	0.0ppts	72.3%	-	-	n.a	72.3%	72.3%	0.0ppts
Doré gold, koz	6.3	16.3	-61%	6.2	-	7.4	-15%	28.8	28.1	2%
Total doré gold, koz	58.4	65.7	-11%	58.8	53.2	61.2	-5%	236.1	243.0	-3%
Refined gold output, koz	62.2	65.3	-5%	56.0	54.3	64.2	-3%	237.8	238.7	0%

 

Alluvials

4Q 2021 Highlights

• Gold in slime production amounted to 18 thousand ounces.
• Refined gold output totalled 25 thousand ounces.

FY 2021 Highlights

• Refined gold output amounted to 141 thousand ounces.

In the fourth quarter of 2021, due to the seasonality of placer operations, production of gold in slime declined to 18 thousand ounces.

Sands washing

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Sands washed, 000 m³	1,220	5,971	-80%	2,425	-	1,599	-24%	9,616	9,629	0%
Average grade, g/m³	0.45	0.45	0%	0.47	-	0.46	-2%	0.46	0.46	0%
Gold in slime, koz	17.7	87.1	-80%	36.3	-	23.6	-25%	141.1	143.3	-2%
Refined gold output, koz	24.9	91.0	-73%	25.2	-	38.0	-34%	141.1	143.3	-2%

 

Sukhoi Log

4Q 2021 and FY 2021 Highlights

Polyus is proceeding with the Bankable Feasibility Study (BFS).

Bankable Feasibility Study developments

The Company finalised open pit geotechnical parameters, defined the parameters of the main technological equipment of the processing plant, and is currently in the final stages of mine planning as well as the general layout, infrastructure, processing plant and tailings storage facility design as part of the BFS.

In the reporting period, the Company also progressed with comprehensive engineering studies required for the BFS and the project design documentation.

Additional drilling activity at Sukhoi Log

Polyus has completed its deep-level and flank exploration drilling campaign and is currently proceeding with studies.

Other activities

In the reporting period, the Company completed engineering studies and started the construction project for the Vitim substation and 220 kV gridline, which are within Polyus' project scope under the agreement with the Federal Grid Company for the technical connection of Sukhoi Log to the existing power grid.

Polyus has also completed detailed instrumental survey of bridges and roads on the Taksimo - Sukhoi Log route, the results are currently under review. This exercise is required for the construction and operations of Sukhoi Log external infrastructure.

In 2021, Polyus completed the feasibility study on airport infrastructure improvement and the project design documentation of the runway reconstruction.

In addition, Polyus has launched the project design documentation stage for warehousing storage capacity expansion at Taksimo Yard, which is expected to be completed in 2022.

FINANCIAL UPDATE

Gold sales

In the fourth quarter of 2021, the Company sold a total of 712 thousand ounces of gold, an 8% decrease on the previous quarter. Total gold sales include 29 thousand ounces of gold contained in concentrate from Olimpiada.

Estimated gold sales totalled approximately $1,274 million, compared to $1,383 million in the previous quarter and $1,503 million in the fourth quarter of 2020.

In 2021, the Company sold a total of 2,736 thousand ounces of gold, down 3% from the prior year. Total gold sales include 49 thousand ounces of gold contained in concentrate from Olimpiada.

Estimated gold sales in 2021 totalled approximately $4,904 million, compared to $4,956 million in 2020. The average realised gold price amounted to $1,802/oz in the fourth quarter of 2021 and $1,798/oz for the FY 2021.
Debt management

The Company's gross debt decreased to $3,540 million, compared to $3,625 million as at the end of the third quarter of 2021. During the reporting period, the Company repaid $150 million of bank loans, while the average interest rate decreased to 4.3% compared to 4.7% in the third quarter due to proactive debt management initiatives.

As at 31 December 2021, the Company's estimated cash position decreased to $1,343 million (30 September 2021: $1,675 million), while its estimated net debt position increased, compared to the previous quarter and amounted to $2,197 million (30 September 2021: $1,950 million). Among other factors, the change in cash position reflects a dividend payout for the first half of 2021 in amount of $507 million.
Eurobonds

In October 2021, the Company completed a Eurobond offering ($700 million Eurobonds due to 2028 with a 3.25% coupon rate) and announced the results of the tender offer of its outstanding notes. As a result of the tender offer, Polyus bought back all of the tendered 2023 notes and most of 2024 notes and increased the final tender volume from initial target of c. $550 million to $650 million (including c. $605 million in principal amount).
Buyback programme

On the 31st of January 2022, Polyus launched an open-market buyback with maximum amount of $200 million, but not more than 1.4% of share capital, to be executed over the course of the next 6 months. As of 8^th of February, the Company has not bought back any shares from an open-market.

	2022	2023	2024	2025	2026	2027	2028
Debt maturities [2], $ mln	500	341	1,909	44	-	-	700

 

 

Eurobonds	Bank loans	Finance lease	Local rouble bonds
52%	37%	2%	9%

 

 

	4Q'21	3Q'21	Q-o-Q	2Q'21	1Q'21	4Q'20	Y-o-Y	2021	2020	Y-o-Y
Refined gold sold, koz	683	765	-11%	670	569	688	-1%	2,687	2,569	5%
Gold contained in concentrate, koz	29	11	n.a	9	-	141	-79%	49	248	-80%
Gold payable in concentrate, koz	23	9	n.a	8	-	116	-80%	40	200	-80%
Total gold sales, koz	712	776	-8%	679	569	829	-14%	2,736	2,817	-3%
Gold sales, $ mln	1,274	1,383	-8%	1,230	1,017	1,503	-15%	4,904	4,956	-1%
Weighted-average refined gold selling price, $/oz	1,802	1,787	1%	1,815	1,788	1,872	-4%	1,798	1,786	1%
Average LBMA price, $/oz	1,795	1,790	0%	1,816	1,794	1,874	-4%	1,798	1,769	2%
Gross debt (incl. derivatives), $ mln	3,540	3,625	-2%	3,899	3,874	3,909	-9%	3,540	3,909	-9%
Net debt (incl. derivatives), $ mln	2,197	1,950	13%	2,366	2,074	2,464	-11%	2,197	2,464	-11%

 

CONFERENCE CALL INFORMATION

Polyus will host an analyst conference call on 8 February 2022 at 1 pm London time (4 pm Moscow time) to present and discuss the fourth quarter operating results.

TO JOIN THE CONFERENCE CALL, PLEASE DIAL:

Conference ID: 9127887


UK

+44 (0)330 336 9601 (Local access)

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USA

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Russia

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TO ACCESS THE REPLAY, PLEASE DIAL:

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US

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Russia

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Enquiries:

Investor and Media contact

Victor Drozdov, Director Communications & Investor Relations (CIR) Department
[email protected]

Forward looking statements

This announcement may contain "forward-looking statements" concerning Polyus and/or Polyus Group. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of Polyus' and/or Polyus Group's operations. Many of these risks and uncertainties relate to factors that are beyond Polyus' and/or Polyus Group's ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as of the date of this announcement. Polyus and/or any Polyus Company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.

 

 

 

 

^[1] Based on a 200,000 work hours' factor.
^[2] Net of non-cash IFRS adjustments