MMC Norilsk Nickel (MNOD) NORNICKEL REPORTS 1H2021 INTERIM CONSOLIDATED IFRS FINANCIAL RESULTS 05-Aug-2021 / 14:30 MSK Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. -----------------------------------------------------------------------------------------------------------------------

PRESS RELEASE

Public Joint Stock Company «Mining and Metallurgical Company «NORILSK NICKEL» (PJSC «MMC «NORILSK NICKEL», « Nornickel», the «Company», the «Group»)

NORNICKEL REPORTS 1H2021 INTERIM CONSOLIDATED IFRS FINANCIAL RESULTS

Moscow, August 5, 2021 - PJSC MMC Norilsk Nickel the world's largest palladium and high-grade nickel and a major producer of platinum and copper, reports interim consolidated IFRS financial results for six months ended June 30, 2021.

1H2021 HIGHLIGHTS -- Consolidated revenue increased 33% y-o-y to USD 8.9 billion owing to higher metal prices and increase of palladium

sales volumes, which have more than offset production losses caused by the temporary suspension of Oktyabrsky and

Taimyrsky mines due to their flooding and Norilsk concentrator, following an incident in February this year; -- After the water inflow to the underground mines was effectively stopped in late March, the Oktyabrsky mine resumed

full production by the middle of May, while the Taimyrsky mine has been restored to 80% capacity and is expected to

return to full capacity by the end of this November. Norilsk concentrator has reached 85% of its design capacity

and is expected to return to full operations in early October this year; -- EBITDA increased three-fold y-o-y to USD 5.7 billion due to higher revenue and lower base effect of 1H2020, when

USD 2.1 billion environmental provision related to the diesel fuel spill in Norilsk industrial area in May 2020 was

recognized; -- CAPEX increased 80% y-o-y to almost USD 1 billion driven by stepped up investments in Sulfur project, South Cluster

development as well as increased capital repairs and equipment upgrades investments aiming at the improvement of

industrial safety and modernization of core assets; -- Net working capital increased more than two-fold to USD 1.8 billion mostly driven by one-off and seasonal factors

such as changes in income tax payable and amortization of advance payments by customers. The Company confirms its

working capital target of approximately USD 1 billion by the end of 2021; -- Free cash flow decreased 48% y-o-y to USD 1.4 billion driven by the reimbursement for the environmental damages in

the amount of USD 2.0 billion and increased capital expenditures; -- Net debt increased 64% y-o-y to USD 7.7 billion owing to lower free cash flow, payment of final dividend for 2020

and the share buyback, with net debt/EBITDA ratio increased marginally to 0.7x as of June 30, 2021; -- On June 1, 2021, the Company's Board of Directors approved holistic environmental strategy covering six major areas

(air, water, soil, tailings and waste management, biodiversity and climate change) and setting 21 concrete targets

for 2030; -- In June 2021, the Company paid final dividend for 2020 in the amount of RUR 1,021.22 (approximately USD 13.89) per

ordinary share; -- In June 2021, the Company completed share buyback, having repurchased from 5,382,079 ordinary shares at RUB 27,780

(around USD 384) per share for a total amount of approximately USD 2.1 billion.

RECENT DEVELOPMENTS -- In July 2021, Nornickel got a lawsuit from the Federal Agency for Fishery for 58.7 billion rubles. Based on the

preliminary analysis the Group believes that the amount of damages in monetary terms to aquatic bioresources

resulting from the 2020 diesel fuel spill as stated in the lawsuit by Rosrybolovstvo is overstated. It exceeds by

many times the results of investigations carried out by specialized scientific institutions and experts, which have

assessed the impact of this incident on aquatic bioresources. After completion of the analysis of the lawsuit,

management plans to defend position of the Company in court and provide it's calculation of damages.

KEY CORPORATE HIGHLIGHTS

USD million (unless stated otherwise) 1H2021 1H2020 Change,%

Revenue 8,943 6,711 33%

EBITDA¹ 5,700 1,838 3x

EBITDA margin 64% 27% 37 p.p.

Profit for the period 4,304 45 96x

Capital expenditures 990 551 80%

Free cash flow² 1,397 2,679 (48%)

Net working capital2,4 1,758 7125 2x

Net debt² 7,734 4,7055 64%

Net debt/12M EBITDA 0.7x 0.6x5 0.1x

Dividends paid per share (USD)³ 13.9 17.9 (22%)

1) A non-IFRS measure, for the calculation see the notes below.

2) A non-IFRS measure, for the calculation see an analytical review document ("Data book") available in conjunction with Consolidated IFRS Financial Results on the Company's web site.

3) Paid during the current period

4) Normalized on receivables from the registrar on transfer of dividends

5) Reported as of December 31, 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The President of Nornickel, Vladimir Potanin, commented on the results,

"First half of 2021 was full of events, which had quite an opposite impact on our financial performance. On one hand, the suspension of two mines in Norilsk division and an accident at Norilsk concentrator resulted in a loss of production and thereof lower revenue and profits. Currently, Oktyabrsky mine is operating at full nameplate capacity, Taimyrsky mine has recovered to 80% capacity, while Norilsk concentrator has gone through a number of repairs and is running at 85% of capacity. Full recovery of both mines and the concentrator is expected in the fourth quarter 2021. On the other hand, our metal basket enjoyed strong support from the positive trends in the global commodity markets. However, the sustainability of such a benign price environment will depend on how quickly the short-term recovery of the global economy after an unprecedented recession of last year will fade away, how much longer the world's largest central banks could continue their extremely soft monetary and fiscal policies and how much further investors' optimism regarding the pace of decarbonization of the global economy can grow.

At the same time, we are experiencing a material increase in tax burden following the recent changes in tax regime in Russia. On top of the three and a half times increase in mineral extraction tax that has already affected our 1H2021 financial results, the Russian government has just announced a temporary re-introduction of export duties on nickel and copper in 2H2021 and according to public comments by government officials, it appears that adjustment of taxation system might not be done yet.

The execution of our sustainability agenda has step changed. We have developed and approved new holistic environmental and climate change strategy, focusing on the mitigation of adverse impact on air, water, soil, biodiversity as well as on waste and tailings management. The strategy includes specific targets for each of these areas, which have already been incorporated into short- and long-term management KPIs. As part of the 'clean air' programme we continued the execution of the Sulfur project at Nadezhda metallurgical plant in Norilsk. Our capital expenditures in the reported period almost doubled to USD 1 billion including investment in environmental programmes and modernization of fixed assets. At the same time, our broad-scale modernization of energy infrastructure aimed at improvement of industrial safety and energy efficiency resulted in lower carbon emissions in 2019-2020 allowing us to produce the first batch of certified carbon-neutral nickel.

Our financial performance in 1H2021 was quite strong. Revenue increased 33% year-on-year to USD 8.9 billion on the back of higher metal prices and sales of palladium and rhodium driven by the ramp up of a new line for production of precious metals from chlorine leaching residues at Kola MMC. EBITDA grew three-fold to USD 5.7 billion owing mostly to a low base effect of 1H2020, when expenses of around USD 2 billion related to the reimbursement of environmental damages caused by the diesel spill were recognized. Working capital increased to USD 1.8 billion driven by a number of seasonal and one-off factors that we expect to be reversed in the second half of the year. In spite of higher EBITDA, free cash flow decreased almost 50% to USD 1 billion mainly due to the payment of environmental damages to Russian Federal Service for Supervision of Natural Resource following an arbitration court ruling.

Net debt increased to USD 7.7 billion, while net debt/EBITDA ratio was almost flat at 0.7x staying at a conservative level, well below our average leverage through the cycle. Financial stability of the Company is confirmed by investment grade credit ratings assigned by all three major international agencies".

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August 05, 2021 07:30 ET (11:30 GMT)