Polymetal International : Integrated Report 2023

Integrated Annual Report

2023

About this report

Integrated Annual Report 2023

On 7 March 2024, Polymetal International plc ("Polymetal", the "Company" or the Group) completed the disposal of its Russian business. The Company continues to operate with two production facilities (Kyzyl, Varvara) and a major development project (Ertis POX) in Kazakhstan. For that reason, the primary focus of this Integrated Annual Report is on these operations located in Kazakhstan, with the results for the Russian business presented in aggregate.

Polymetal International plc is a leading precious metals mining group and the second largest gold producer in Kazakhstan. The Company is one of the most sustainable and responsibility-driven in its sector.

This approach provides for the needs of Polymetal International stakeholders, who (along with management) have a greater vested interest in the operations and prospective assets in Kazakhstan. This manner of presentation in the Integrated Annual Report is for the 2023 results as the Company looks to the future and a new era in its development.

Reporting scope and boundaries

This report covers Polymetal International plc's policies, business approach and strategic decisions. The scope excludes JSC Polymetal and its subsidiaries since its entire decision-making process came under the remit of the management of JSC Polymetal. Polymetal International plc had no involvement in such decision-making process, including implementation of policies and procedures.

The governance and management of the Group was restructured in 2023. In order to ring-fence the Group's Russian subsidiaries and ensure sanctions compliance, the top management at Polymetal International

(the Company) resigned from all positions at JSC Polymetal in June 2023.

The management of all Russian operations was therefore delegated to the executives of JSC Polymetal, while the Board and management of Polymetal International are focused on the operations of those assets located in Kazakhstan.

Based on circumstances existing as of 31 December 2023, the Company has determined that JSC Polymetal and its subsidiaries did not meet the definitin of a disposal group in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. For 2023, the results for JSC Polymetal continue to be recognised in the financial statements of the Group.

To avoid confusion, the presentation of performance across the Group's operations, including all our subsidiaries, associates and joint ventures, provides detailed analysis of the Kazakhstan segment. Aligning with the financial statements, aggregated results of the Russian segment are shown separately. This covers the reporting period from 1 January to 31 December 2023 and provides comparative data for previous years. To read more about our significant subsidiaries refer to page 143.

Sustainability-related information in this Integrated Annual Report is presented for the entire Group as it stood prior to disposal of Russian assets in 2024, i.e. without clear demarcation between assets in Russia and Kazakhstan unless clearly stated. The separation of all sustainability figures between assets in Kazakhstan and Russia is presented in the Sustainability data annex.

Reporting boundaries for environmental and social metrics of assets in Kazakhstan are different and based on the materiality of impacts made by respective entities. Detailed information regarding boundaries is presented in Sustainability data annex.

Reporting standards and external assurance

This report is prepared in accordance with the Astana International Financial Centre (AIFC) regulations, in particular with Corporate Governance Principles set out in the AIFC Market Rules, as well as the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD). We inform our reporting process by using the International Integrated Reporting Council's (IIRC) International Integrated Reporting Framework and are committed to continuously improving the adoption of integrated thinking and reporting.

We remain committed to the disclosure of transparent and verifiable information. The financial statements were prepared in compliance with the applicable laws and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and were audited by AO Business Solutions and Technologies. Ernst & Young Advisory LLP provided limited assurance over sustainability-related information of Polymetal International's operations located in Kazakhstan, prepared in accordance with the Global Reporting Initiative (GRI) Sustainability Reporting Standards, the Metals & Mining Sustainability Accounting Standard published by the Sustainability Accounting Standards Board (SASB).

Strategic report

• 02 About this report

• 04 At a glance

• 06 Where we operate

• 08 SID's statement

• 10 Group CEO's statement

• 12 Business model

• 14 Our strategy

• 16 Key performance indicators

• 18 Market review

• 20 Operating review

• 28 Financial review

Sustainability

• 39 How we manage sustainability

• 40 Material issues

• 42 Health and safety

• 46 Employees

• 50 Environment

• 56 Climate and energy

• 62 Communities

• 64 Ethical business

Risk management

68 Risk management

Governance

• 86 Board of Directors

• 88 Corporate governance

• 94 Audit and Risk Committee report

• 98 Safety and Sustainability Committee report

• 100 Nomination Committee report

• 102 Remuneration Committee report

• 113 Stakeholder engagement

• 114 Going concern

• 115 Directors' responsibility statement

• 116 Directors' report

Financial statements

• 120 Independent auditor's report

• 124 Consolidated financial statements

• 128 Notes to the consolidated financial statements

Appendices

• 168 Alternative performance measures

• 170 Reserves and Resources

• 173 Group production statistics

• 173 Financial highlights

• 174 Non-financial information statement

• 175 Independent practitioner's assurance report

• 178 Sustainability data

• 190 Tailings Storage Facilities Disclosure

• 191 GRI and SASB content indices

• 201 Glossary

• 204 Share information

• 205 Contacts

For more information, visit our website: polymetalinternational.com

At a glance

Focused on restoring shareholder value

Polymetal International plc is the second largest gold producer in Kazakhstan. Listed on Astana International Exchange (AIX) and Moscow Exchange, Polymetal operates two producing assets while developing the Ertis POX project and exploring further growth opportunities.

Polymetal today

Sustainability (Kazakhstan)

Sustainalytics ESG Risk Rating: 22.6

Sustainalytics Low Carbon Transition Rating

(Medium Risk, TOP-12 in Precious Metals industry)

Climate strategy alignment: 1.9°C (Medium Risk, TOP-5 in Gold industry)ISS ESG Corporate Rating: B-

CDP

(TOP-15 in Mining & Integrated Production Industry)

Relevant Climate & Water disclosure available on the platform

Key financial figures (Kazakhstan)

of total Group Adjusted EBITDA

of total Group revenue

What distinguishes Pol	ymetal
1	Focus on high-grade assets ` Read more on pages 6, 21-27, 170-172	Return on investment in the precious metals industry is driven by grades and mining conditions. We achieve better returns and lower risks from our project portfolio by setting appropriate thresholds on head grades and, where possible, opting for open-pit mines.
2	Leading competence in treatment of refractory ores ` Read more on pages 9, 11, 13, 15, 26-27, 89	Ertis POX facility will be Kazakhstan's first large-scale and high-tech, full-cycle POX plant for refractory ore processing. It will have a solid foundation as a result of our expertise in building and operating Amursk POX in Russia. As more and more gold resources globally tend to be refractory, our technological expertise in environmentally friendly refractory ore processing will be a key strategic advantage, including being in the market buying third-party feedstock.
3	Strong capital discipline ` Read more on pages 15	We engender a strong focus on capital discipline throughout the business; maximising risk-adjusted return on capital is our priority in all investment decisions. By prioritising high-return investments, we have created a resilient business that generates significant capital returns across cycles and acts as a platform for sustainable growth.
4	Commitment to sustainability ` Read more on pages 38-67	We ensure this through impact assessment and responsible capital allocation, which means investing in green and more efficient technologies, delivering tangible socioeconomic value to communities and creating safe and inclusive workplaces.
5	Investing in exploration ` Read more on pages 15, 21-25, 35	Investment in both greenfield and near-mine exploration provides us with a cost-effective increase in our reserve base and, along with successful acquisitions, is the key source of our long-term growth.
6	Operational excellence ` Read more on pages 11, 14, 20-25	We pride ourselves on our operational excellence and delivering on our promises. Despite challenging trading conditions, we beat our production guidance for the 12th consecutive year.

Where we operate

Focus on Kazakhstan and Central Asian countriesStrategic changes

Continued investment in projects, infrastructure and exploration in Kazakhstan, including the construction of Kazakhstan's first large-scale, full-cycle, high-tech refractory ore processing hub, will be the key to drive operating performance.

Polymetal post restructuring

Facilitating future actions to unlock shareholder value

On 7 March, Polymetal disposed of its Russian assets. Post the disposal, the Company is well-positioned to change the strategy and continue creating shareholder value due to:

De-leveraging

• • $2,383m Net debt~$130m Net cash

De-risking

• • Fully de-risking ongoing operations and restoring the Company's access to international financial markets

  • • No metals and mining operations in Russia

  • • Head office in AIFC, Kazakhstan

• • Significant de-leveraging and increase in liquidity to fund strategic transactions for growth and, when appropriate, the resumption of dividends

  • • No UBOs in Russia, 75% free float - mostly Western shareholders

• • Freeing the funds to pursue further growth opportunities and unlocking the Western counterparty engagements necessary to procure for, engineer and finance the construction of the Ertis POX project in Kazakhstan

Increase in liquidity

• • Revenues generated from sales to Kazakhstan and China

• • Positive free cash flow

Following the disposal of its Russian assets, Polymetal no longer owns or controls these assets. These now constitute a completely separate and independent business with its own shareholder, board and management teams.

Tolling agreement with Amursk POX

Varvara hub

Reserves 2.1 GE Moz 2042 Life of mine

216 GHG emissions

(Scope 1+2), kt CO2e

` Full asset review on page 25

Key:

Operating mineDevelopment projectsHeadquartersCity/town

Kyzyl

Reserves 9.6 GE Moz 2054 Life of mine

244 GHG emissions

(Scope 1+2), kt CO2e

` Full asset review on page 24

Projected grid conneсtion Grid access Projected renewable energy sources Renewable energy source

Ertis POX

250-300 Ktpa

Concentrate capacity

2028 Launch ` Full asset review on pages 26-27

Find out more:

• ` GHG emissions reduction, read more on pages 56-61 and 185

• ` Green energy implementation, read more on pages 56-61

• ` Biodiversity and nature-related projects, read more

  on pages 50-55 and 60-61

• ` Communities and social engagement, read more

  on pages 49 and 62-63

Transition period until the launch of Ertis POX

• • Kyzyl concentrate will be toll-treated at Amursk POX with the treatment charge paid in local currencies

• • Tolling agreement continues until 2031 to allow time for the Ertis POX facility to become operational and fully replace need for Amursk POX

Start-up of Ertis POX in H1 2028

• • Total benefits of $300-350/oz

• • +15-20 Koz of gold per annum

• • Single technological hub with Kyzyl

Temporary transitional agreement with Amursk POX, a subsidiary of JSC Polymetal, pursuant to the tolling agreement. This ongoing operational relationship will be consistent with and in compliance with all applicable local and international regulations and sanctions laws.

Ertis POX would help to unlock the potential for new assets with refractory reserves and the provide security of in-house downstream processing and independence of Kyzyl refractory gold production from the Amursk POX plant in Russia.

It has been gratifying to see the Company's financial and operating performance stabilise during 2023 against the continuing and tightening backdrop of continued Russia-Ukraine conflict, new sanctions (including the designation of the Russian business of the Company by the US in May 2023) and counter-sanctions. The Board believed that under these circumstances fully divesting the Russian assets and pursuing growth in Kazakhstan and other Central Asian countries would greatly increase the Company's ability to generate value for shareholders. And, already in 2024, the long-anticipated restructuring of the business has been completed and we are looking positively to the future.

Re-domiciliation to Kazakhstan

Given the rapid deterioration of the business environment caused by the Russian invasion of Ukraine, the Board set up a Special Committee, comprised of Independent Non-Executive Directors, to review the options open to the Company, which would enable it to preserve business continuity and restore shareholder value. Its first recommendation was that Polymetal International should switch its domicile from Jersey to Kazakhstan. It had been the first foreign company listed on the Astana Stock Exchange (AIX) in 2019 and, following re-domiciliation in August 2023, Polymetal has been able to switch its primary listing from the London Stock Exchange (LSE) to AIX.

This decision was not taken lightly since, as a consequence, its premium listing on the LSE was cancelled. However, this was felt to be necessary in order to mitigate the impact of Russian counter-sanctions being imposed against entities incorporated in unfriendly jurisdictions (including Jersey), as well the prospect of further reprisals. Both would place significant restrictions on the Company and expose it to unmanageable risk.

Choosing the Astana International Finance Centre (AIFC) as the jurisdiction for our re-domiciliation was also prudent given AIFC's own adoption of English common law and adherence to best practice. We too will continue to uphold the standards that we have set ourselves over the last 25 years in corporate governance and health and safety, and our approach to environmental matters.

The divestment of Russian assets

However, a further strategic pivot was required following the US Department of State designation of JSC Polymetal and its subsidiaries in Russia. The Special Committee was once again deployed to develop an appropriate response in the light of these new sanctions. In the first instance, the Group's Russian subsidiaries were ring-fenced, with management of all Russian operations delegated to the executives of JSC Polymetal, and management of Polymetal International resigning from their positions in the Russian entities. At the same time, all service agreements between the Company and its non-Russian subsidiaries, and JSC Polymetal and its subsidiaries, were terminated and all payments from the Company and its non-designated subsidiaries under other inter-Group agreements with JSC Polymetal and its subsidiaries were discontinued.

The Special Committee, after a thorough review, also recommended the divestment of the Group's Russian assets as the most viable option for mitigating the legal, financial and operational risks that emerged as a result of designation, as welll as the optimal path towards re-establishing shareholder value. This would be the Company's way to restore access to international financial markets, enable the resumption of dividend payments and eliminate the discounts being applied by international capital markets to businesses associated with Russia. With divestment completed in March 2024, Polymetal's Board and management team is now able to concentrate on expanding its asset base within Kazakhstan and also look to other countries in Central Asia, which present a number of interesting options for further growth.

Dividend decision

Both the re-domiciliation and divestment of the Russian business, along with related de-leveraging, have improved the balance sheet of the Company considerably. However, it will need to invest in excess of $1 billion over the medium term in projects in Kazakhstan, most notably the new Ertis POX, and M&A activities in order to achieve its ambitious long-term growth plans.

As yet, the Company has not restored its access to major sources of debt funding and, in the light of this, the Board considers that it would not be prudent to pay dividends for the full year 2023. This will allow the Group to maintain both strategic and operating flexibility. The Board will further consider the dividend in first half of 2024.

Change of a major shareholder

I want to express my gratitude to all our shareholders and investors for the continued support that they have shown us over the years. We also welcome our new significant shareholder Maaden International Investment, representing the government of the Sultanate of Oman.

We are pleased that the shareholders have confirmed their full support of Polymetal's strategy and the actions undertaken to secure the future of this business, as well our intention to further develop the asset base in Kazakhstan and the wider region.

Brighter future

Now that the Company has significantly de-risked its operations and finances, and established stable operations in Kazakhstan, the favourable macroeconomic conditions will allow it to generate sufficient cash flows to fund growth and repay debt. With divestment now complete, we also expect better stock trading conditions for Western shareholders as infrastructure providers gradually remove the limitations previously placed on Polymetal's shares. The Board is also set on maintaining high standards of corporate governance and ESG in the new environment, which will ensure the creation of further sustainable value.

Evgueni Konovalenko Senior Independent Director

We started 2023 facing many of the frustrations of the previous year: namely, the ongoing Russia/Ukraine war with the resulting upheavals of sanctions and counter-sanctions, and disruptions in supply chains and financing options. With this in mind, from the outset, we planned to pursue re-domiciliation to a 'friendly' jurisdiction with a view to also engineering a subsequent split of the business in order to restore shareholder value. However, due to geopolitical interventions beyond our control, this reorganisation did not proceed as we originally planned.

Key corporate events in 2023

For a number of reasons, we quickly identified Astana International Financial Centre (AIFC) as the optimal re-domiciliation jurisdiction: because of its basis on English common law, our long-standing presence and listing in Kazakhstan, and its neutral position on western and Russian counter-sanctions. For AIX to become our primary exchange, however, we also had to accept the hard reality that this would necessitate discontinuing our 12-year premium listing on the London Stock Exchange. And, this in turn, would entail management resolving a separate, complicated set of infrastructural issues in order to enable trading for all categories of shareholder post re-domiciliation.

As we progressed our plans for re-domiciliation to AIFC, the Group was hit by the designation of its Russian business, JSC Polymetal, by the US Department of State, which made any plans to spin off the Russian operation totally impracticable. As a consequence and in response to the US designation, the Board formed a Special Committee to develop appropriate measures with regard to sanctions compliance and to oversee the divestment of the Russian business - JSC Polymetal and its subsidiaries.

Since then, we have made substantial progress in redefining Polymetal's status for the long term. In August 2023, the Company successfully completed re-domiciliation to AIFC and resumed trading on AIX as a Kazakhstani issuer. This also kicked off the process of searching for potential buyers for the Russian business and culminated in the announcement of its disposal at a total effective valuation of $3.7 billion on 19 February 2024. The deal successfully closed on 7 March 2024.

Seen from a purely financial perspective, due to the inevitable Russian discount, the transaction has not generated a great deal of value for Polymetal. Nevertheless, in removing numerous operational, financial, legal and sanctions risks, I truly believe that it is in the best interest of all our shareholders since it enables the Company to open a new chapter in its corporate history. Polymetal is now well-positioned to implement a new strategy and restore its track record of creating sustained shareholder value.

Production and performance

In 2023, the Company avoided major operational business disruption and successfully met its original production guidance. The Company's gold equivalent production demonstrated solid results, despite the difficult environment experienced by the Russian part of the business and some repercussions from the designation of JSC Polymetal for the Company on the Kazakhstan side.

In spite of persistent geopolitical headwinds, Polymetal retained its profitability and reduced its leverage. An improvement in financial results was driven by robust production and stable cost performance coupled with favourable commodity price dynamics, with revenue increasing by 8% year-on-year to $3 billion. We also reported an impressive 43% increase in EBITDA at $1.5 billion, thanks to both growth in ounces sold through release of working capital and in the devaluation of the local currency in Russia.

Total cash costs (TCC) were 8% lower and all-in sustaining costs (AISC) were 5% lower than in 2022. Both were below the announced guidance range of $950-1,000/GE oz and $1,300-1,400/GE oz, respectively, attributing to the substantial positive impact of Rouble devaluation on local-currency costs. Net debt was largely stable year-on-year at $2.38 billion ($0.17 billion in Kazakhstan and $2.21 billion in Russia); however, it decreased in relative terms in 2023 to 1.64x net debt/Adjusted EBITDA ratio from 2.35x in 2022.

Safety remains our top priority

We remain committed to ensuring a safe working environment for all our employees and contractors. Significantly, for the fourth consecutive year, there were no fatal accidents during 2023 among Polymetal's workforce and nor, for the second year running, among our contractors. I am also pleased to report that none of the ten lost-time accidents (in Russia) resulted in permanent disability or serious damage to health. Employees' lost-time injury frequency rate (LTIFR) decreased by 30% year-on-year and is a testament to our investment in promoting a zero-harm safety culture.

Our new POX development project in Kazakhstan Our major development focus now is on Kazakhstan's first large-scale, full-cycle pressure oxidation (POX) plant for refractory ore processing: the Ertis POX project. This will be a new, state-of-the-art facility in the Pavlodar region and will ensure that Kyzyl (and potentially other Kazakh assets) will no longer have to rely on the temporary POX-processing arrangement made with Amursk POX in Russia.

We have already identified the site and signed contracts for this and the critical processing equipment. We plan to start construction early next year with completion due by 2028. We are partnering once again with international engineering consultancy, Hatch, who are tasked with both basic and detailed engineering for the project. We are also proceeding with the permitting process. Capitalising on our experience in developing POX sites in Russia, we believe that this project will involve fewer construction risks. Compared with the Russian Far East, the logistics in Kazakhstan are much better as is the cost of materials and labour.

Our next steps

With the sale of Russian assets completed in Q1 2024, the Company is now able to pursue its future growth plans while, at the same time, ensuring the long-term free cash flow potential of the existing assets in Kazakhstan. We expect stable operational results in Kazakhstan in 2024 and, following a positive investment decision from the Board, expected in H2 2024, will accelerate the construction schedule for the Ertis POX.

Our priorities during the year will be centred on safety, cost control and operational improvement. Alongside this, we also plan to make tangible progress in terms of securing new growth opportunities for the business. Together, these will ensure that we deliver substantial financial returns for our shareholders over the coming years.

We could not have achieved the continued operation of the business over the last year without the loyal support of our employees and I would like to formally thank them on behalf of the whole senior management team. Their skills, expertise and commitment are vital to Polymetal's future.

Vitaly Nesis

Group Chief Executive Officer

Business model

Defining our capabilities for the future

Our business model, based on key competencies and driving sustainable value, has proved its resilience in difficult times and as a basis for the future.

Our purpose

Deliver long-term value to all stakeholders through responsible and efficient mining

Factors influencing long-term performance

Our capitals

Financial

We aim to improve both the Company's liquidity and balance sheet.

` Read more on pages 15, 28

Natural

Portfolio of high-grade reserves; water, energy and fuel to run our operations.

` Read more on pages 170, 181, 186

Intellectual

Investment in skills and expertise; use of leading technologies in refractory gold processing; selective mining; development of know-how.

` Read more on pages 46-49, 86-87

Our values

Human

Attracting and retaining high-potential employees across Kazakhstan.

` Read more on pages 46-49

Manufactured

Robust performance of our operating mines by driving continued operating improvement; a strong growth pipeline; continuous extension of life-of-mine by investing in near-mine exploration.

` Read more on pages 20-27

Social and relationship

Constructive relationships with local government and communities; transparent and productive dialogue with stakeholders.

` Read more on pages 62-67

Our outputs (in Kazakhstan)

486 Кoz

GE production 28% of Group GE production ` Read more on pages 20-21

3,202

average number of employees 22% of Group headcount ` Read more on pages 46-49

11.6 Moz of GE Ertis POX

Ore Reserves 41% of Group Reserves ` Read more on pages 22-23

0.39x

Net debt/Adjusted EBITDA

1.64x Group leverage ratio ` Read more on pages 29, 37

Kazakhstan's first large-scale and high-tech, full-cycle POX plant for refractory ore processing ` Read more on pages 26-27

$7.3m

Community investment 41% of Group community investments ` Read more on pages 62-63

Our strategy

Reshaping our strategy

Polymetal aims to achieve superior shareholder returns while maintaining high standards of corporate governance and citizenship. To achieve this aim, we will pursue the following strategy:

Focus on Kazakhstan and selected Central Asian countries

• • maintaining stable production and cash flow at existing operations in Kazakhstan

• • safeguarding employment

• • contributing to tax revenue

• • social development and contribution to local communities

Risks

KPIs
•	Production risk	• Revenue
•	Supply chain risk	• Gold equivalent production
•	Political risk
•	Taxation risk

Focus in 2024

• • De-risking the legal, financial and operational aspects of the business post divestment of Russian operations

Best practice in corporate governance and sustainable development

• • full compliance with applicable sanctions laws, including the mitigation of secondary sanctions risks

Risks

• • Health and safety risk

• • Environmental risk

• • Human capital risk

• • Legal and compliance risk

Focus in 2024

KPIs

• • GHG intensity

• • Fresh water withdrawal intensity

• • Lost time injury frequency rate (LTIFR)

• • Share of female employees

• • Development of renewable energy projects at Varvara and Kyzyl to accelerate our decarbonisation and contribute to energy stability in the region

Strong cash flow generation and a strong balance sheet

• • pursue growth opportunities

• • resume the payment of dividends

Risks

• • Market risk

• • Currency risk

• • Liquidity risk

Focus in 2024

KPIs

• • Free cash flow

• • Total cash costs

• • All-in sustaining cash costs

• • Increase in liquidity to fund strategic initiatives for growth and ultimately, when appropriate, the resumption of dividends

• • Positive free cash flow generation

Growth in chosen jurisdictions

• • invest in excess of $1 billion in projects, infrastructure, and exploration in Kazakhstan over the next five years, including, most notably, the Ertis POX facility

• • invest in near-mine exploration to expand the reserve base: in particular, Kyzyl, Varvara, North Balkhash, Komar flanks, Baksy

• • invest in stand-alone exploration in Kazakhstan and Central Asia to establish the feasibility of the construction of new stand-alone mines

• • pursue selected acquisition opportunities

Risks

• • Construction and development risk

• • Supply chain risk

• • Exploration risk

Focus in 2024

• • Investment decision for Ertis POX

  KPIs

  • • Ore Reserves

  • • Adjusted EBITDA

  • • Capital expenditure

• • Continue exploration efforts to unlock resource potential of Kazakhstan and selected Central Asian countries

Key performance indicators

In this Integrated Annual Report, the primary focus is on Polymetal's operations located in Kazakhstan, which represent the future direction of the business. For this reason, the KPI results in the charts below highlight the results of our Kazakhstan assets only. The Group performance in 2023 is presented separately below the charts.

Financial

Sustainability

GHG intensity (Scope 1+2)

(kgCO₂e/GE oz)

Freshwater use for processing intensity³

(m³/Kt of processed ore)

Operating

0.04

947

Total Group

634

2021 677

2022 629

2023

In line with the goals of the Paris Agreement, we seek to decarbonise our operations by switching to low-carbon electricity supplies and mining fleet, generating more solar energy and improving energy efficiency. We aim to reduce our GHG intensity by 30% by 2030 and develop long-term goals further.

Relevance to strategy

Best practice in corporate governanceand sustainable development

KPI linked to executive remuneration

Lost time injury frequency rate (LTIFR)

Total Group

0.07

2021 0.12

2022 0.10

2023

An improvement in the health and safety record at our operations, with a goal of zero fatalities, is a key priority. There were no fatal accidents in 2023.

Relevance to strategy

Best practice in corporate governanceand sustainable development

Total Group

125

2021 155

2022 138

2023

Our approach is to minimise fresh water withdrawal by recycling water at our plants and capturing mine water and storm run-off for further reuse. Alongside monitoring water use volumes, we take full responsibility for the efficient treatment of water that we discharge to local water bodies.

Relevance to strategy

Best practice in corporate governanceand sustainable development

KPI linked to executive remuneration

Share of female employees

(%)

Total Group

21

2021 21

2022 21

2023

We value a diversity of views and backgrounds among our employees, aiming to attract more women to careers in the male-dominated mining industry. Our diversity action plan sets gender diversity targets for our existing development programmes and introduces new initiatives to inspire women into leadership roles.

Relevance to strategy

Best practice in corporate governanceand sustainable development

1	Defined in the Alternative performance measures section on pages 168-169. Reconciliation to IFRS measures on pages 33-34.	3	Excluding water for non-technological purposes.
2	Allocation factors for corporate costs were revised in 2023 and previous periods were restated accordingly.	4	Based on 80:1 Au/Ag conversion ratio and excluding base metals. Comparative data for previous years restated accordingly (120:1 Au/Ag conversion ratio was used previously).

Market review

Successfully responding to global tensions

In 2023, the international market's take on the confluence of continuing global geopolitical tensions, slowing growth pace of the Chinese economy and recessionary fears were reflected in the gold price reaching a new, all-time high.

Commodity price momentum and demand

Despite another year of high interest rates and bond yields, markets were again perturbed by looming recessionary fears and ongoing global geopolitical conflicts, which made investors lean towards safe-haven assets such as gold. In first half of 2023, along with peaking interest rates, the gold price reached its lowest point at $1,811/oz before beating the 2022 all-time high and reaching $2,078/oz during the second half of the year on the back of elevated geopolitical and security risks, along with indications of rate cuts in 2024. The average LBMA gold price in 2023 was $1,943/oz, an increase of 8% compared with the previous year.

In 2023, gold demand remained strong at 4,448 tonnes, only 5% below the very exceptional 2022, when the world saw post pandemic re-opening and escalating military conflict between Russia and Ukraine. The momentum for gold accumulation, as seen in recent years, continued into 2023 - over 1,037 tonnes were added to central banking reserves, with China purchasing the most, while Kazakhstan was one the biggest sellers in efforts to support the local Tenge.

Despite an elevated gold price, jewellery demand proved strong and remained on a par with 2022 at 2,093 tonnes. The removal of COVID restrictions in China - the world's largest jewellery consumer - paved the way for a substantial hike in the demand for jewellery in 2023. China's annual jewellery consumption increased by 10% year-on-year to 630 tonnes, which was partially offset by India's price sensitivity and as a result lower-carat gold jewellery purchases.

The third consecutive annual gold ETF outflow, along with the weakening demand for bars and coins, pulled overall investment demand down to 945 tonnes - a 15% year-on-year drop (2022: 1,113 tonnes). In 2023, soaring global inflation, record-high bond yields and waves of liquidity issues within the banking sector attracted investors to a strong US dollar and risk-free government bonds away from the gold investments.

COVID-relief payments from governments to re-energise business did not spare the technology market. Notwithstanding advances in artificial intelligence, major chip manufacturers experienced a downturn, which was in turn reflected in gold demand. Tech demand for gold dropped by 4% year-on-year to 298 tonnes, sinking below the 300 tonnes mark for the first time.

Having started the year by largely tracking gold dynamics, the silver price reached an annual low of $20.1/oz in March. It did not then, however, see the same dramatic upturn as gold with investors more inclined to stick to the more reliable safehaven offered by gold. And, although silver briefly rallied to $26/oz in April on the back of geopolitical and economic uncertainties, it failed to maintain the momentum and averaged $23.3/oz for the year, up 7% (2022: $21.8/oz).

Supply chain disruptions

During 2023, the US, the EU and Japan continued to apply sanctions against Russia and prohibited industrial goods and technologies exports.

Sanction risks

Gold Gold

In 2023, Russia and Russian companies, banks and individuals continued to be exposed to international sanctions, which affected ongoing business, investment projects, international trade and financing. Russia in turn introduced counter-sanctions, which among others included restricted capital movements and corporate actions for residents of 'unfriendly' jurisdictions.

Implications for Polymetal and responses

The Group strictly adheres to all relevant laws and has implemented comprehensive measures to ensure compliance with all international sanctions and counter-sanctions. In 2023, the Company completed re-domiciliation from Jersey to Astana International Financial Centre (AIFC) in Kazakhstan to avoid further unfavourable treatment in Russia and ensure that the Company is able to execute corporate actions aimed at restoration of shareholder value.

Unfortunately, on 19 May 2023, the US Department of State designated Polymetal's Russian subsidiary. The Board of Directors of the Company set up a Special Committee of Independent Non-Executive Directors to develop an appropriate response and ensure that this external challenge was addressed in the best interests of the Company, its shareholders and other stakeholders. In February 2024, the Group entered into contracts for the divestment of its Russian business through a sale of 100% JSC Polymetal's shares to a third party, JSC Mangazeya Plus. On 16 February 2024, US Department of the Treasury's Office of Foreign Asset Control (OFAC) confirmed to the Company that it would not impose sanctions on non-US persons, including Polymetal International plc, for participating in or facilitating such a transaction. On

7 March 2024 the transaction was approved by the Shareholders General Meeting and, following receipt of required regulatory approvals, was completed on the same day.

Gold and silver price

($/oz)

Silver

2,100 29

1,900 25 The Russian Rouble demonstrated significant devaluation relativeto 2022. Continuous geopolitical escalation, capital outflows and a $169.4 billion decrease in exports, as a result of deteriorating oil

prices, pulled the Rouble rate to a staggering 101 RUB/$ in August

2023. Towards the year end, the Rouble improved on the back of

1,700 21 an emergency 8.5 cumulative percentage points rate hike (to 16%)

1,650 20 by the Central Bank of Russia and the introduction of capital

1,600 19 control measures. The average annual Rouble rate was 85.3

Jan 23

Mar 23

May 23

Source: World Gold Council, LBMA

Currency and oil price

RUB/$

$/barrel

RUB/$, Brent crude oil, $

105

100

95

90

85

80

75

70

65

60

55

Jan 23

Mar 23

Source: Yahoo Finance, Central Bank of Russia, National Bank of the Republic of Kazakhstan

Gold demand

(tonnes)

Silver

Jul 23

Sep 23

Nov 23

Dec 23

KZT/$

KZT/$

100

95

90

85

80

75

70

65

60

55

May 23

Jul 23

Sep 23

Nov 23

Dec 23

4,699

Gold demand 2022

Technology Jewellery

Worldwide inflation

Throughout 2023, the global economy continued to face the consequences of soaring inflation. Moreover, demand-pull factors, supply chain disruptions, ongoing geopolitical tensions and sanctions against Russian commodities all contributed in elevating

consumer prices. Estimated 2023 global inflation reached 6.8%

(Russia - 7.4%, Kazakhstan - 9.8%, US - 3.4%).

Economy and local currencies

RUB/$ (2022: 68.6 RUB/$).

Although consistent geopolitical tension within the CIS region, strengthening of the US Dollar and the weakening average oil price of $82 per barrel (2022: $101 per barrel) posed significant pressure, the Kazakhstan Tenge remained steady at 456 KZT/$ (2022: 461 KZT/$), on the back of increased oil exports along with the significant realisation of foreign currency and gold reserves by the National Bank of Kazakhstan.

Implications for Polymetal and responses

The Group's revenue and over 72% of borrowings are denoted in US Dollars and China's Renminbi, while the majority of the Group's operational costs are denoted in Russian Rouble and Kazakh Tenge. As a result, changes in exchange rates affected the Company's financial results and performance.

Revenue for 2023 grew by 8% to $3.0 billion ($0.9 billion in Kazakhstan and $2.1 billion in Russia) due to higher gold and silver prices. Although domestic inflation imposed significant pressure on costs, the devaluation of the Rouble in the second half of 2023 allowed the Company to meet its cost guidance.

Total bar and coinother inst. productsCentral banks &ETFs and similarGold demand 2023