Petropavlovsk : FY 2019 Financial Results & Q1 2020 Production Update Presentation

PETROPAVLOVSK PLC

FY 2019 Results & Q1 2020 Production Update

27 May 2020

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

FY 2019 Financial Results Presentation & Q1 2020 Production Update

Table of contents

1 Opening Remarks and 2019 Highlights

2 Corporate Governance

3 COVID-19 Response

4 Operational Review and Guidance

5 FY 2019 Financial Results and Liquidity

6 Sustainable Development

3

Opening Remarks

FY 2019 Highlights

2019 has been one of the most successful periods in the quarter-century history of the Group

Corporate Financial Operational

Gold sales +39% to

514Koz

Group Revenue +49%

to US$742m

Improved debt

maturity profile - new

$125m convertible

bond placed

POX Hub treated a		Pioneer flotation
record 188kt of		construction on track,
refractory concentrate,		successful transition at
producing 1/3 of the		Malomir to a refractory
Group's gold		asset

EBITDA +45% to		Total Cash Costs (TCC)
	at lowest end of
US$265m		guidance at
		US$749/oz(1)

An independent, highly
qualified and diverse		0 fatalities and a 36%
Board, fully compliant		improvement in LTIFR
with UK Corporate		to 1.61
Governance Code

(1) The Company's initial FY 2019 TCC guidance was US$850/oz - US$950/oz.

5

A Significant Re-rating is Underway

The Company's strong performance has been recognised by the markets and reflected in the share price performance

2019 Share Price Performance(1)

Total Shareholder Return (5 year TSR)(1)

450

2020

400

350Petropavlovsk shares

appreciated by 95% in 2019

300 and by a further 106% YTD, outperforming both gold and

its peers

250

200

150

100

50
Jan 2019	May 2019	Sep 2019	Jan 2020	May 2020
POG.LN			Gold PM Fix
Bloomberg Commodity Index	FTSE All Share Mining Index
GDXJ ETF

Highland Gold

Petropavlovsk

Polymetal

Centamin

Newmont

Barrick

VanEck Vectors Jr. Gold Miners

Centerra

Gold (US$/oz)

FTSE ASM

FTSE 250

Silver

Bloomberg Commodity

Index-39%

Eldorado Gold

-58%

669%

335%

286%

238%

151%

125%

91%

89%

44%

14%

3%

1%

(1) 1 Jan 2019 to 22 May 2020	6
(2) Data set covers the period 22 May 2015 - 22 May 2020. TSR includes share price performance and payment of any dividends over the period

Corporate Governance

Strong Corporate Governance Supported by an Experienced Board

Board fully compliant with the UK Corporate Governance Code

Sir Roderic Lyne (N*)

Non-ExecutiveChairman

• Appointed as Chairman following Jun 2018 AGM
• Previously was a Non-Ex. Director of Aricom PLC and Petropavlovsk PLC
• Served as British Ambassador to Russia from Jan 2000 until Aug 2004

Mr Danila Kotlyarov

Chief Financial Officer

• Appointed CFO Feb 2020 and as Executive Director Apr 2020
• Previously CFO of IRC, remains as IRC Non-Ex. Director
• Member of ACCA, CFA holder, HK and Russia Associations of Financial Analysts

Mr Robert Jenkins(A*)(R*) (N)

• Re-appointedJun 2018
• 25 years of Russia-related investment / natural resources experience
• Previously CFO of two Russia- focused natural resources companies
• Formerly held Board appointments with Ruspetro and Toledo Mining plc

Mrs Katia Ray (R) (S) (RC)

• Appointed Nov 2019
• Over 25 years' of mining sector experience in senior leadership roles with Rio Tinto and Anglo American plc
• Founded a management consulting firm advising corporate mining companies and private equity groups and start-ups

Director .Exec-Non .IndepDirector .Exec-Non .IndepDirector Executive Chairman Executive-Non

Ms FionaPaulus

• Over 37 years' global investment banking experience, at a senior level
• Last 15 years Fiona has specialised in advising companies in energy / resources sectors
• Board member of RHI-Magnesita (global FTSE 250 industrial company), where she also serves on the Audit and Sustainability Committees

Mr Harry Kenyon-Slaney(S*)(A)

(N)

• Appointed Nov 2018, became Senior Independent Director April 2019
• Currently holds positions of Non-Ex. Chairman at Gem Diamonds, Non-Ex. Director at Sibanye Gold
• 33 years experience, principally with Rio Tinto

Mr James W Cameron Jr (A) (R)

(RC)

• Appointed Oct 2018
• Formerly Founder, CEO + Chairman of Occupational Urgent Care Systems
• Extensive experience, providing expertise and consulting services for companies in Russia and the former
  USSR

Mr TimMcCutcheon

• Over 20 years experience in mining and finance, leading / advising a wide range of natural resources companies
• Previous roles at Bear Stearns, Aton and Pioneer Investments
• Former Founder / Partner of DBM Capital Partners
• Currently CEO and of Kenadyr Mining (Holdings) Corp. (TSX Venture Exchange) and a Non-Ex. Director of Ovoca Bio PLC (AIM)

Director .Exec-Non .IndepDirector .Exec-Non .IndepDirector .Exec-Non .Indep .SrDesignate Chair

Dr Pavel Maslovskiy(N) (S) (E*)

Chief Executive Officer	Executive
- Re-appointed in Jun 2018
- Сo-founded the Company in 1994
- CEO of Petropavlovsk 1994-2011	Director
(when acted as Senator-Member to
Federation Council) and again 2014-
2017

Mr Damien Hackett (N) (A) (R) (S)

(RC)

- Appointed Oct 2018	.Indep
-Non
- Mr Hackett is Chairman of UrAmerica
- Has 26 years critical research	.Exec
experience covering globally diverse
mining companies	Director
- Former Vice Chairman Mining Advisory
at Canaccord Genuity

Ms CharlottePhilipps(A) (R)	.Indep
- Appointed Nov 2019
- Extensive natural resources sector	-Non
corporate finance and transactional
experience across CIS / CMEA
.Exec
- Member of the Strategy / Investment
Committee at Inter RAO
- Member of the Advisory Board of	Director
CAPTIS Intelligence Inc.
- Previously held senior positions at
EBRD and AIG Russia Century Fund
Mr Maxim Kharin
- Appointed Apr 2020	-Non
- CFO of UGC, Petropavlovsk's largest
shareholder, since 2012	.Exec
- Previously held several roles in
International Audit Department at Moore	Director
Stephens and responsible for
independent audit across a range of

sectors, including mining

(A) Member of the Audit Committee (R) Member of the Remuneration Committee (S) Member of the Safety, Sustainability and Workforce Committee (E) Chairman of the Executive

Committee (N) Member of the Nominations Committee (RC) Member of the Risk Committee. *Denotes role of Committee Chairman

8

Corporate Governance Developments

A strong, independent, highly qualified and diverse Board, actively engaged in the strategic decision-making and oversight of the Group throughout 2019

New 2019 appointments strengthen Board

• Independent Non-Executive Director Appointments of Katia Ray and Charlotte Philipps in November 2019
• Danila Kotlyarov (Executive Director) and Maxim Kharin (Non-Executive Director) appointed April 2020

Additional appointments in Q1 2020

• Appointments of Fiona Paulus (Chair Designate) and Tim McCutcheon (Independent Non-Executive Director) on 27 May 2020
• Following these new appointments, in addition to the Chairman, the Board will have:
• • 2 x Executive Directors (CEO, CFO)
  • 8 x Independent Directors
  • 1 x Non-Independent Director
• Independent Non-Executive Directors have a notably wide range of relevant experience with a balance of ages, nationalities

Sir Roderic Lyne to retire at the conclusion of the June 2020 AGM

• Fiona Paulus joins Petropavlovsk as Chair Designate, following a distinguished career in investment banking spanning almost four decades, backed by extensive Board experience
• Following his retirement, 3 of 8 Independent Directors will be highly qualified women, reflecting our commitment to diversify Board gender representation

9

Executive Committee

Committee reconstituted in Jan 2019 and comprises a focused and experienced senior executive team who manage the Group on a day-to-day basis

Executive Committee comprises Board members, Dr Pavel Maslovskiy and Mr Danila Kotlyarov, along with:

Dr Alya Samokhvalova

Deputy CEO

• Joined the Company in 2002
• Head of the Company's Corporate Office
• Member of Safety, Sustainability & Workforce Committee
• Non-ExecutiveDirector of RBCC and member of Global Advisory Board of CASS Business School
• Holds a Masters in Investment Management, PhD in Economics, BSc in Accounting and Audit and a BSc in Pharmacy
• Holds a Professional Accountant Certificate from the Institute of Professional Accountants of Russia

Mr Sergey Yermolenko

General Director MC

Petropavlovsk

• Appointed as General Director MC Petropavlovsk in 2004
• One of the original members of the Group's founding management team
• Held top managerial positions with the Group since its inception in 1994
• Played an instrumental role in expansion of the Group into a multi-mine operation, overseeing commissioning of Pokrovskiy, Pioneer, Malomir and Albyn

Mr Nikolai Vlasov

Group Chief Geologist

• One of the original members of the Group's founding management team
• Prior, was the chief geologist of the only comprehensive geological exploration expedition in the Amur region
• Headed government department for the evaluation of gold resources in the Russian Far East
• Received various state awards, including for excellence in exploration of mineral resources, Honored Prospector of mineral resources and Honored Geologist of the Russian Federation

Mr Dmitrii Chekashkin(1)

Group Executive, Business

Transformation and

Operational Efficiency

• Joined the Group in 2003
• Appointed as Group Executive, Business Transformation and Operational Efficiency in 2019
• More than 25 years of experience in gold mining industry
• Prior, was employed as Deputy General Director of Finance for two leading gold mining enterprises in the Russian Far East
• Qualified engineer

Mr Mikhail Safray

Senior Legal Adviser

• Appointed as Senior Legal Advisor in 2018
• Prior, held a number of senior legal positions with large Russian and international companies
• Acted as legal counsel for EBRD in London, where was responsible for investments in industrial companies in CIS and Balkans
• Graduated from the National Research University Higher School of Economics and received a PhD from Kutafin Moscow State Law University and LL.M from Boston University

(1) Mr Chekashkin is a member of the Risk Committee

10

COVID-19 Response

COVID-19 Pandemic: Comprehensive Action Plan Implemented

Following the pandemic outbreak, the Company has proactively responded to COVID-19 developments in order to protect the health and wellbeing of all its employees

Emergency response team established to detect and limit possibility of the virus affecting the Group's operations

• Response team includes representatives from each of the Group's businesses in Russia
• If necessary the response team works with local authorities

Continuous monitoring of potential impact virus may have on the welfare of employees, communities and operations

Zero detected cases of COVID-19 at any of Petropavlovsk's mining, research or administrative operations in Russia or London(1)

No operational disruptions in relation to gold production or sales

Supply chain / logistics unaffected, with ongoing monitoring and all necessary precautions in place to secure business continuity

• Supply channels remain fully functional with production inputs / materials predominantly sourced within Russia

Risk mitigation strategies focused on protecting all employees

• Provision of regular medical advice to prevent infection / spread thereof
• Thorough reporting culture of any infection or illness
• Appropriate resourcing to medical facilities across the Group

Infection Prevention Measures

Employee and community actions taken

• Strict precautionary procedures in place at all production sites
• Mine shift pattern adjustments to lower frequency of new teams arriving onsite
• All employees and contractors undertake 14 days quarantine prior to start of each shift
• At least two rounds of COVID-19 testing for all employees upon (1) arrival to site for quarantine (2) prior to start of each shift, with additional testing carries out if required
• Restricted business travel with closure of Moscow and London offices until further notice, written authorisation required to enter buildings
• Daily check of staff temperature at start of each shift
• Check of temperature of any persons arriving on site
• Designated quarantine zones house individuals showing any flu symptoms
• Restricted contact between employees not connected by common production process at the mines and during shift changes
• All transport, public places (eg. dinning areas, kitchens), utensils and food undergoes thorough disinfection and cleaning
• Purchase and distribution of PPE and disinfectants
• Raising awareness on symptoms, prevention and personal precaution measures
• Local community support with distribution of masks and hand sanitiser among local businesses

(1) As at 27 May 2020

12

Operational Review

FY 2019 Production Performance

Total 2019 gold production increase of 22% to 517.3koz

FY 2019 vs. 2018 production by mine-site

Malomir

Koz							-	Successful transition to a predominantly refractory asset
	+132%		+13%		-11%		- c.¾ of annual production volumes from mining /
200					processing refractory ore from Malomir's Central pit
						-	Flotation plant exceeded design rate / recovery, allowing
	180.3
180							for processing of lower grade material
		170.9
						- POX recovery rates of 88.6% throughout ramp-up period
160		151.0						significantly improved to 92.2% in Q4 for Malomir
140				135.1			concentrates
				Albyn
	POX				120.4
120					- Overall, strong performance due to increased volumes of
						POX		higher-grade ore from lower sections of main ore body +
100							southern flank
80	77.6						- Consistently high processing plant recoveries, at avg.
							93.9% over the year
60						45.7	Pioneer
	RIP	RIP	RIP	RIP	RIP	-	Processing of harder ores from bottom of the pits resulted
40			in a c.12% decrease in milled ore volumes
20	RIP					POX	-	As a result, despite achieving higher recoveries + grades,
							overall production was slightly lower yoy
0	2018 2019	2018 2019	2018 2019	2018 2019	POX 3rd party concentrates
	- 32.5kt processed @ 61.6g/t, 94.9% recovery = 45.7koz
	Malomir	Albyn			POX Plant
	Pioneer
						(3rd party concentrates)

14

Q1 2020 Production Performance

Total Q1 2020 gold production up 73% to 186.2koz (Q1 2019: 107.7koz), of which 115.4koz came from processing refractory concentrates at the POX Hub

Q1 2020 vs. 2019 production by mine-site

Koz
90			-2%	-21%	+21%
84.2
80
70
60
50				44.5		POX
		41.3	40.4
40
				35.2
30				POX			26.4
20					POX	21.9
10	POX	RIP	RIP	RIP		RIP	RIP
n/a					RIP
0
Q1	Q1	Q1	Q1	Q1	Q1	Q1	Q1
2019 2020	2019 2020	2019 2020	2019 2020
POX Plant	Albyn	Malomir	Pioneer
(3rd party concentrates)

POX 3rd party concentrates (Q1 2020: 84.2koz)

• 35kt of high-grade material processed at 72.3g/t, with recoveries averaging 94.2%

Albyn (Q1 2020: 40.4koz)

• Performance in line with expectations in terms of mined volumes and grades from Albyn main pit
• RIP plant recoveries in line with budget at 94.0%

Malomir (Q1 2020: 35.2koz)

• 33.9koz of gold was recovered from processing 38kt of Malomir refractory concentrates (91.5% recovery)
• 4.1koz of gold recovered by processing non-refractory gold via RIP

Pioneer (Q1 2020: 26.4koz)

• Open-pitlower grade material (below 1g/t) was blended with higher grade ores from the Katrin pit and high-grade underground ore (4.9 - 6.6 g/t) prior to RIP plant processing

15

Pioneer Flotation: Construction on Schedule for Q4 2020 Launch

Once operating at full capacity, the new flotation plant will double the Group's flotation capacity from 3.6Mtpa (2 x existing lines at Malomir) to 7.2Mtpa

16

POX: The Heart of Our Future Strategy

Commissioning of the POX plant has opened new horizons for Petropavlovsk and has put the Group in a very strong competitive position

Concentrate (kt)

POX Hub: Utilisation Increase (ktpa)(1)

450

400

350

300

250

200

150

100

50

0

2018a 2019a 2020e 2021e 2022e

Pioneer Malomir 3rd Party

Pioneer

Malomir

3rd Party Concentrate

Contribution of Ores from Malomir, Pioneer and

Albyn (Mtpa)(1)

	16
	14
(Mtpa)Volumes	12										Production	Refractory
8
	10
Processing	2										Production	refractory-Non
	6
	4
	0

	2019a	2020e		2021e	2022e
	Pioneer non-refractory		Malomir non-refractory
	Albyn non-refractory		Pioneer refractory
	Malomir refractory

(1) Assumes 3rd flotation line at Malomir from 2022

17

Track Record of Resource Growth

As at YE 2019, Group Reserves & Resources totalled 21.0Moz Au, with Reserves of 8.5Moz Au

• Increase in Mineral Resources driven by exploration success at Pioneer, Malomir and higher gold price assumptions
• 0.5Moz depleted through mining activities in 2019 were more than replaced via conversion of resources to reserves predominantly at Elginskoye and Quartzitovoye sites as a result of successful exploration completed during 2019
• Tokur, not shown below, contains non-refractory Resources of 1.4Moz

10.1	12.3		11.7	13.8			14.0		14.4	10.4	11.2	8.2	8.0
13.0	12.8		12.1	12.0			9.3		9.3	9.3	9.6	12.3	13.0
-2.4	-3.8		-5.1	-5.9			-6.6		-7.2	-11.2	-11.7	-12.5	-13.0
2010	2011		2012	2013			2014		2015	2016	2017	2018	2019
			Refractory Resources				Non-Refractory Resources			Cumulative Depletion + Disposals
					Total JORC Resources (as at 31 Dec 2019)
							8.0Moz	21.0	13.0Moz
							Moz
								38%		62%
	Malomir			Pioneer				Albyn		Pokrovskiy
6.7Moz	6.8		0.2Moz	2.1Moz	6.6	4.5Moz		3.2Moz	5.0	1.8Moz	1.2	1.2Moz
98%	Moz	2%	31%	Moz	69%		64%	Moz	36%		Moz	100%

18

A Significant De-risking of the Balance Sheet is Underway

ND / EBITDA ratio has decreased to 2.1x as at YE 2019 (YE 2018: 3.1x), targeting < 2.0x in the near term

Group fixed income debt maturity schedule

US$m

US$500m notes

Nov 2022 maturity

			500
					US$125m
				convertible bond
				Jul 2024 maturity
	100				125
2019	2020	2021	2022	2023	2024	2025	2026

• Improved maturity schedule strengthens near-term liquidity position + optimises repayment profile
• New US$125m convertible offering in June 2019 has strengthened near-term liquidity position

Targeting near-term Net Debt / EBITDA of < 2.0x

	45% increase in FY 2019	US$m
3.7x
EBITDA driven mainly by
	higher gold sales volumes at a
	higher avg. realised gold price
	3.5x	3.1x
	3.0x	3.0x	YE 2019
			2.1x

978 930

638

610

611

599

596

585

594

568

609

561

2014	2015	2016	2017	2018	2019
		Total debt		Net debt		Net debt / EBITDA

• The Board is actively considering liability management options with the aim of reducing leverage / cost of debt

19

Guidance and Outlook

A conservative strategy focused on long-term shareholder returns

Costs

Development CapexProduction

Total Cash

2020 Guidance

• 620 - 720Koz, which includes processing of 3rd party refractory concentrates
• 430 - 460Koz will be production from the Group's own ore
• US$700 - US$800/oz TCC for our own gold production (based on current USD / RUB FX rates)
• Production costs of third parties concentrate depend on the prevailing gold price
• US$70m - US$80m, split between US$60m - US$65m of development capex + US$10m - US$15m of exploration spend
• Pioneer flotation plant on track for Q4 2020 launch
• Once at full capacity, the flotation plant will double the Group's flotation capacity from 3.6 to 7.2Mtpa

Production

Total Cash Costs

Capex

2021 - 2024 Outlook

• On average, the Group will target c.600koz- 700koz of gold production annually over 2021 - 2024 period by processing its own refractory + non- refractory ores, as well as high-grade 3rd party refractory concentrates
• 450koz-500kozof gold will be produced from the Group's own ore
• US$800 - US$900/oz TCC for our own gold production

• Average capex spend of US$45m a year, comprising of development and exploration spend

20

A Conservative Strategy Focused on Shareholder Returns

Group's strategy is to create superior value for shareholders

1	Cost optimisation +	-	Focus on operational efficiencies and cost optimisation at existing operations
operational efficiencies	-	Track record of applying unique R&D capabilities to enhance gold processing / recovery techniques

Increase refractory

1. concentrate production, unlocking POX Hub value creation
2. Balance sheet strengthening

• Construction of new Pioneer flotation to double existing flotation capacity (Q4 2020 launch)
• Malomir 3rd flotation line planned for 2022, but may be accelerated
• Pioneer 3rd flotation line 2023
• Improved cash generation via POX ramp-up
• Proactive liability management in relation to the Company's fixed income instruments
• Net Debt / EBTIDA of below 2.0x

IRC:

4 realising value from

non-core assets

Maintain / expand

5 JORC reserves and

resources

• Preliminary agreement for the proposed termination of IRC guarantees and disposal of 29.9% of Petropavlovsk's interest in IRC for US$10m entered into
• Acquisition of outstanding 25% of TEMI
• Continue to generate maximum value from core assets via ongoing surface + u/g exploration
• Potential exploration at existing infrastructure

21

FY 2019 Financial Results

2019 Financial Results Highlights

Overall, a strong set of results, with higher gold sales, increased EBITDA and profits, while costs controlled

1

Gold Sold (koz)

2

Avg. Realised Gold Price (US$/oz)

3

Group Revenue (US$m)

	+39%
370	514
2018	2019

	+7%
1,263	1,346
2018	2019

	+48%
	742
500
2018	2019

4

Underlying EBITDA (US$m)

5

Profit for the year (US$m)

6

Capital Expenditure (US$m)

	+45%		-1%		-23%
183	265	26	26	134	104
2018	2019	2018	2019	2018	2019
					23

2019 Financial Results Highlights

Strong operational performance resulted in higher volumes of gold produced and sold, at a higher average gold sales price than in 2018

		Units		2019		2018		Change
Gold production		Koz		517.3		422.3(1)		+22%
Gold sold		Koz		514.0		369.6		+39%
Avg. realised gold price		US$/oz		1,346		1,263		+7%
Group revenue		US$m		741.6		499.8		+48%
Total cash costs (TCC)		US$/oz		749		678		+10%
All-in sustaining costs (AISC)		US$/oz		1,020		1,079		(5%)
Operating profit		US$m		138.7		126.6		+10%
Underlying EBITDA		US$m		264.8		182.7		+45%
Profit for the year		US$m		25.7		25.9		(-1%)
Profit attributable to Petropavlovsk equity shareholders		US$m		26.9		24.5		+10%
Cash generated from operations before w/c changes		US$m		250.5		162.3		+54%
Net debt (as at 31 Dec)		US$m		(561.3)		(568.0)		(1%)
Development capex		US$m		89.6		112.7		(21%)
Exploration capex		US$m		14.2		21.6		(34%)

(1) Incl. c.52Koz of gold contained in high-grade refractory concentrate produced by the Malomir flotation plant

24

FY 2019 EBITDA

45% yoy EBITDA increase driven by higher gold sales at a higher average gold sales price negatively affected by an increase in TCC

US$m

			1.8
		3.1	47.3
42.7	8.8

14.5

87.5

+45%

182.7

264.8

EBITDA 2018

Gold Sold

Gold Price

FX

Share of IRC EBITDA

Other

TCC

Central admin incl. provision of other taxes

EBITDA 2019

25

TCC reported at below level of initial guided range of US$850/oz - US$950/oz(1)

TCC affected by inflation of some RUB denominated costs and costs of refractory concentrate processing, mitigated by higher processed grades / recoveries, and effect of RUB depreciation

US$/oz	31	0.1
				126
	63	41
	84
			15	7

678 +10% 749

TCC 2018 Refractory	Operating	Mining tax 3rd party	Co-product	Change in	FX	Other	TCC 2019
processing	cost	conсentrate	effect	grades		taxes
	inflation	purchase		+ recoveries
		cost

The additional costs		Mainly ongoing inflation		1.2% mining tax applied		Effect of purchasing		Higher non-refractory
	of certain RUB				grade ore processed at
involved in processing			to Malomir, Albyn, full		more expensive 3rd party
	denominated costs				Pioneer, Albyn, Malomir +
refractory ore vs. non-			mining tax rate applied		concentrate vs.
	(diesel +12%, electricity				higher recoveries achieved
refractory			to Pioneer at 6%		producing our own
	+3%)				at Pioneer, Malomir

(1) The Company's initial FY 2019 TCC guidance was US$850/oz - US$950/oz.

26

2019 Mine by Mine TCC and AISC

2019 TCC up by 10%, following successful ramp-up of POX, with AISC down by 5% reflecting partially lower sustaining exploration expenditure

2019 vs. 2018 TCC (US$/oz)		2019 vs. 2018 AISC (US$/oz)

+10%	-16%	+15%	+31%	-5%	-29%	-3%	+15%
			1,040				1,363
749		752	792	1,079 1,020		1,058 1,022	1,190
	974
648	559	654

468	690

Group TCC

Albyn

Malomir

Pioneer

Group AISC

Albyn

Malomir

Pioneer

General cost inflation

Refractory ore

Includes 3rd party

Lower overall TCC

concentrate acquisition

Increase in TCC

Increase in TCC

offset by higher grades

processing costs:

+ significant

cost (which rises in line

offset by decrease

partly offset by

mined + processed,

flotation,

decrease in

with gold price),

in capitalised

lower sustaining

with recoveries at

transportation and

capitalised

general cost inflation,

stripping

capex

93.9% for the year

POX treatment

stripping

u/g mine capex

% change YoY

2018

2019

27

Production operating cash expenses 2019 vs. 2018

Increase mainly due to inflation of certain RUB costs and purchase of 3rd party concentrate

2018 Precious Metals Operating Cash Expenses

2019 Precious Metals Operating Cash Expenses

Consumables

+

Other

Materials

34%

$87.4m

Electricity

10%

$25.9m

Labour 25% $62.8m

Fuel 16% $39.9m

Other

9%

$21.8m

External Services

7%

$17.9m

Consumables

+

Other Materials

22%

$86.6m

x

Other

8%

$32.0m

Electricity

9%

$34.0m

Labour 21% $83.2m

Purchase of

Flotation

Concentrate

19%

$74.0m

Fuel 11% $43.3m

External Services

11%

$42.3m

Total of US$255.7m before movement in ore stockpiles, GIC and bullion in process of US$8.6m

Total of US$395.5m before movement in ore stockpiles, GIC, flotation concentrate and bullion in process of US$60.8m

		2019	2018	Change
	Avg. RUB/US$ FX	64.7	62.7	+3%
	Avg. Gold PM Fix US$/oz	1,392	1,268	+10%

28

2019 Total Capex Spend

23% yoy decrease in capex as POX is now in operation and most of the related development spend is complete

US$m

2018 Total Capex US$134.4m		2019 Total Capex US$103.8m

Flotation plant,

tailings expansion, u/g development, machinery / equipment

29.9

19.1

POX completion		Ongoing exploration
Total POX spend =		adjacent to ore
	bodies of Group's
US$312m, 2011 -
	main mining
2019	61.5
operations:
Tailings expansion,		Pioneer US$4.7m
access road,		Malomir US$0.1m
machinery /		Albyn US$8.4m
equipment		Other US$1.1m

21.6

21.6

17.1

14.2

10.5

Flotation plant, u/g

development,

tailings, machinery

repairs

19.3

14.1

Capex in relation to the Group's service companies

6.9

2.4

Pioneer

Albyn

POX

Exploration

Malomir

Other

29

Liquidity

Risk mitigation measures in place to actively manage gold price / FX volatility and gold sales

Hedging and price protection		Gazprombank gold sales agreement

• Previous gold hedging programme expired 31 Dec 2019
• • Entered into at the request of the banks at a lower level of gold prices vs. now
  • Gold forward contracts were primarily used, limiting price upside participation
• Commencing Apr 2020, the Company entered into the following arrangements (maturing Dec 2021)
• • Zero cost collar with a RUB:USD price floor of RUB75.0 and a cap of RUB96.2 for US$7m a month to secure a preferred RUB/USD FX rate to fund the Group's RUB denominated operating expenses
  • Zero cost collar with a gold price floor of $1,600/oz and a cap of $1,832/oz for 3.5koz a month to secure a preferred gold price level while leaving upside price increase potential
  • Hedging policy is under consideration, taking into account gold's current upward price trend and the Group's viability analysis

• Gazprombank has approved gold sales prepay limit valid through to the end of May 2024, allowing Petropavlovsk to receive prepays for 70% worth of gold to be shipped within 24 months of prepay receipt
• The Company's total prepay limit with respect to future gold shipments at any one point in time is limited by either volume (c.392koz Au) or amount (33.9bn RUB, c.US$470m)
• Prepays to be settled using proceeds at the prevailing gold price at the date of shipment

30

Sustainable Development

Sustainability Progress in 2019

Extensive work undertaken last year lays strong foundation for the future

Objective	2019 Goals		Status		Performance
	Health and Safety
Safety Performance	Reduce LTIFR at each mine		●		Significant decrease in LTIFR across all mining operations: improved by
Improvement			36% to 1.61
H&S Framework	Review and update H&S Policies to ensure		●		Updated POX H&S policies to reflect the introduction of new technologies
Development	safety at POX and underground
Safety Culture	Conduct safety campaign to raise awareness		●		Conducted Road Safety Campaign and slips/trips/falls Campaign
Development
	Corporate	Social Responsibility
	Increase bilateral communications		●		- Board members visited Group's operations as part of workforce
			engagement programme
	with the workforce
					- Created Instagram account for Pokrovka newspaper
					- 3 community consultations organised to introduce and explain our
Stakeholder Relationship	Increase bilateral communications		●		projects
Building	with the community			- 6 site visits arranged for local residents, school children and
					representatives of local NGOs
	Further strengthen the relationship		●		Signed an agreement for harmonious development of the Ivanovskoye
			evenk community between Albyn mine and the Association of Indigenous
	with indigenous communities
					Minorities of the North of the Selemdzhinskiy District
CSR Framework	Adopt Speak-up and Anti-bribery policies		●		Speak-up and Anti-bribery policies adopted
Align grievance procedure				Completed implementation of the grievance procedure, aligning the
Development		●
	with international industry standards			mechanism with ICMM Principles
	Environmental Management
Carbon Footprint	Improve energy efficiency		●		Implemented Waste Heat Recovery (WHR) system at the POX Hub
Reduction	Reduce emissions		●		15% reduction in GHG emission intensity
Water Management	Maintain zero water discharge		●		Zero discharge to surface and underground water bodies, verified by
		sample analysis
	● Achieved	●	In progress

32

UN Global Compact and SDGs

Petropavlovsk is committed to UNGC corporate responsibility initiative and its principles in the areas of human rights, labour, the environment and anti-corruption

SDGs

Petropavlovsk Contribution

	Contributing to	Investigating and
	education and	bringing into
	learning in the region	operation new,	Developing
Maintaining healthy	in which we operate,	underground drinking	infrastructure for the
workplaces at all	both by providing	water sources which	stable operation of	Protecting forests
times and promote	professional training	can be used both by	our mines and the	and restoring
wellbeing among all	opportunities for our	our operations and	sustainable	biodiversity
our stakeholders	employees and	local community, and	development of local
	assisting local	strive to minimise our	settlements
	schools and	impact on water
	educational facilities	resources

33

Health and Safety and Our People

We regard our people as our most valuable asset and are committed to responsible practices

Key Facts 2019

0

Fatalities

36%

Improvement in LTIFR

30 hrs

On average of safety training per employee

62 hrs

on average training and education in

Pokrovskiy mining college(1)

20%

increase in the number of employees involved

in mentoring programmes

91%

of workforce is from the Russian Far East

LTIFR			Fatalities
2019	1.61		2019	0
2018		2.52	2018	1
2017		3.11	2017	3

In 2019, Petropavlovsk recorded 36% less accidents per million-man hours vs. 2018, with US$2.6m spent on initiatives aimed at improving industrial safety and occupational health

Total Headcount and Gender Split

2019	6,820	2,261	9,081	= 24.9% female staff
2018	6,713	2,187	8,900	= 24.6% female staff
2017	6,674	1,950	8,624	= 22.6% female staff
				Male		Female

(1) Scope includes employees of Amur region-based companies

34

Environmental Stewardship

In 2019, we recorded no serious or moderate environmental accidents, while the number of minor incidents was c.3x less than in 2018

Key Facts 2019

13%

Reduction GHG emissions intensity

0

Water discharge

54%

Of waste rock re-used

0

Environmental fines

Water Consumption

3/mln)	25									60
20
consumption(m										/oz(mIntensity3
15									50
		10									40
Water	5										Au)
0									30
		2017	2018	2019
		Recycled and		Fresh			Intensity
		re-used

Energy Consumption

(TJ)	6,000
5,000
consumption	4,000
	3,000
Energy	2,000
1,000
	0

2017 2018 2019

Total Intensity

0.02

0.01

0.00

Au) (TJ/oz Intensity

GHG Emissions

Waste Generated

Waste Rock Generated

500,000

e)	400,000
2
(t CO	300,000
emissions
200,000
GHG
100,000
	0
	2017	2018	2019

1.1 10,000

1

Intensity

total (t)

7,500

0.9 CO2e generated, 5,000(t

0.8 /oz) Waste 2,500

0.70

				20.0		(t)	140,000
						120,000
						generated
				19.0	Intensity	100,000
				18.0	80,000
				20,000
					Au)(t/Koz	Wasterock
							60,000
				17.0			40,000
				16.0			0
2017	2018	2019					2017	2018	2019

Scope 1: Direct

Scope 2: Indirect

Intensity

Total

Re- used

Intensity

Total

Re- used

35

ESG Performance Benchmarking

Well positioned among peers in terms of implementing ESG standards

	LTIFR(1)			Diversity				GHG Emissions		Energy Consumption		Water Consumption
	(cases per million working hours)			(% female of total work)				(t/1kt of ore)		(GJ/1kt of ore)	(m3/1 kt of ore)
				7.6							75							5,473
							25
		2.3					21		73							3,817
							20			44							2,476
			1.6
		1.0					19		34
															1,587
		0.8					16			32							1,576
		0.5					14				31								951
		0.4					10				21							780
		0.4					10			19		241			590
				(1) 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 only						36

Going Forward

Sustainability Goals and Plans 2020

Health and	Safety
Corporate Social	Responsibility
Environmental	Management

Objective

Safety Performance Improvement

H&S Framework Development

Safety Culture Development

Stakeholder Relationship Building

CSR Framework Development

Carbon Footprint Reduction

Water Management

2020 Goals and Plans

• Sustain / improve on LTIFR of 1.61
• Further review and strengthen policies and standards across all operations
• Continue with Group-wide training programm
• Develop direct engagement channels between management and personnel as a part of employee satisfaction monitoring
• Enhance opportunities for open dialogue by holding community consultations
• Conduct further social impact assessments at our operations
• Review and update our local communities' strategy
• Conduct information campaigns to implement policies across all sites
• Review and update Code of Business Conduct and Ethics
• Upgrade WHR system to reduce energy consumption by suppling heat to shift camp
• Reduce GHG emissions intensity by at least 1% and formalise medium and long-term targets
• Maintain zero water discharge

37

Appendix

FY 2019 IRC Results

Strong FY performance due to successful continuation of K&S ramp-up and refinancing of ICBC project finance facility

Financials

Operations

• Revenue (after hedging) +17% to US$177.2m (2018: US$151.5m)
• EBITDA (excl. FX) +39% to US$33.3m (2018: US$23.9m)
• Net loss of US$38.7m (2018: Profit of US$68.2m after impairment reversal effect)
• During 2019, a total of US$30.9m was paid to Gazprombank as principal / interest in relation to US$240m loan facility, of which c.US$225m was outstanding as at YE 2019
• K&S operated at 81% capacity in 2019, producing a record 2,576Kt of iron ore concentrate (2018: 2,235Kt)
• Sales +11% to 2,464Kt (2018: 2,224Kt)
• K&S achieved 100% production capacity in October, average capacity in Q4 2019 of 87%

Corporate

- Refinancing of ICBC loan completed

- New Gazprombank facility better repayment terms that align with K&S ramp up

Amur bridge

- Russian + Chinese sections of Amur river bridge successfully connected

- The construction of the railway bridge anticipated to be finished by end of 2020

39