Polymetal International : Preliminary results for the year ended 31 December 2023

NEWS RELEASE

Release time	IMMEDIATE	AIX, MOEX: POLY
Date	15 March 2024

Polymetal International plc

Preliminary results for the year ended 31 December 2023

Polymetal International plc ("Polymetal", the "Company" or the Group) announces the Group's preliminary results for the year ended 31 December 2023.

"In 2023, Polymetal managed to stay profitable and reduce leverage despite persistent geopolitical headwinds. Robust production and stable cost performance coupled with favorable commodity price dynamics drove improvement in financial results. In 2024, after the sale of the Russian assets is completed, the Company will pursue long-term growth while ensuring long-term free cash flow potential of the existing assets in Kazakhstan", said Vitaly Nesis, Group CEO of Polymetal International plc, commenting on the results.

FINANCIAL HIGHLIGHTS

• In 2023, revenue increased by 8% year-on-year(y-o-y), totalling US$ 3,025 million (2022: US$ 2,801 million), of which US$ 893 million (30%) was generated from operations in Kazakhstan and US$ 2,132 million (70%) from operations in the Russian Federation. Average realised gold price increased by 9% while silver price increased by 4%, both closely tracking market dynamics. Gold equivalent (GE) production was stable at 1,714 Koz y-o-y. Gold sales increased by 2% y-o-y to 1,400 Koz, while silver sales decreased by 10% to 16.6 Moz. Significant tightening of concentrate exports regulations in Russia led to material accumulation of concentrates in sea ports.
• Group Total Cash Costs (TCC)1 for 2023 were US$ 861/GE oz, down 9% y-o-y, and 9% below the lower end of the Group's guidance of US$ 950-1,000/GE oz. This was predominantly on the back of a weaker Rouble which outweighed inflationary pressures. In Kazakhstan, TCC were US$ 903/GE oz, up by 24% y-o-y, on the back of a planned grade decline combined with a 14% decrease in sales volumes and inflationary headwinds. Across the Group's Russian mines, TCC were at US$ 845/GE oz, down by 19% y-o-y, mainly on the back of Rouble depreciation.
• All-inSustaining Cash Costs (AISC)1 amounted to US$ 1,276/GE oz, down 5% y-o-y, 2% below the lower end of the Group's guidance of US$ 1,300-1,400/GE and driven by the same factors. In Kazakhstan, AISC increased by 18% to US$ 1,263/GE oz, mostly driven by a decrease in sales volume. In Russia, AISC decreased by 13% to US$ 1,281/oz, on the back of a sales increase coupled with lower stripping volumes after completion of large stripping campaigns in 2023.
• Adjusted EBITDA1 was US$ 1,458 million, 43% higher than in 2022, on the back of higher commodity prices and lower cash costs. Of this, US$ 439 million (30%) was earned from operations in Kazakhstan and US$ 1,019 million (70%) earned from operations in the Russian Federation. The Adjusted EBITDA margin increased by 12 percentage points to 48% (2022: 36%).
• Underlying net earnings2 increased by 40%, totalling US$ 615 million (2022: US$ 440 million), with a basic EPS of US$ 1.11 per share. Reflecting the increase in operating profit, the Group recorded a net profit3 of US$ 528 million in 2023, compared to a net loss of US$ 288 million due to one-off impairment charges in 2022.
• Capital expenditure was US$ 679 million4, down 14% compared with US$ 794 million in 2022 and 3% below the lower end of the guidance range of US$ 700-750 million, as a result of the substantial positive impact of Russian Rouble devaluation on local-currency costs.
• Net operating cash inflow was US$ 575 million (2022: US$ 206 million). The Group reported negative free cash flow1 of US$ 128 million in 2023, which is still a significant improvement over the 2022 negative free cash flow of US$ 445 million.
• Net debt2 was largely stable at US$ 2,383 million (US$ 174 million in Kazakhstan and US$ 2,209 million in Russia), compared with US$ 2,393 million as at 31 December 2022 (US$ 277 million in Kazakhstan and US$

1. The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to complement measures that are defined or specified under International Financial Reporting Standards (IFRS). For more information on the APMs used by the Group, including justification for their use, please refer to the "Alternative performance measures" section below.
2. Adjusted for the after-tax amount of impairment charges, write-downs of metal inventory, foreign exchange gains/losses and other change in fair value of contingent consideration.
3. Profit for the year
4. On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.

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NEWS RELEASE

2,117 million in Russia). This represents 1.64x of Adjusted EBITDA and is significantly below the 2022 leverage ratio of 2.35x.

DIVIDENDS AND DISPOSAL

• On 19 February 2024, the Group announced its intention to sell 100% of JSC Polymetal and its subsidiaries to JSC Mangazeya Plus for an effective total consideration of approximately US$ 3.69 billion, valuing JSC Polymetal and its subsidiaries at 5.3x EV/EBITDA based on Adjusted EBITDA of JSC Polymetal and its subsidiaries for the 12 months ended 30 June 2023 (US$ 694 million) and at 3.6x based on an full year 2023 Adjusted EBITDA of JSC Polymetal and its subsidiaries (approximately US$ 1.0 billion). 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.
• Following the disposal, the Group's net cash position of approx. US$ 130 million.
• No dividend will be proposed for the full year 2023. Following the recent completion of the divestment of the Russian business, the Board will actively reconsider the dividend policy and intend to share an update in May this year.

FINANCIAL HIGHLIGHTS 1	2023	2022	Change
Revenue, US$m
Kazakhstan	893	933	-4%
Russia	2,132	1,868	+14%
Total	3,025	2,801	+8%
Total cash cost2, US$ /GE oz
Kazakhstan	903	728	+24%
Russia	845	1,046	-19%
Total	861	942	-9%
All-in sustaining cash cost2, US$ /GE oz
Kazakhstan	1,263	1,0673	+18%
Russia	1,281	1,4803	-13%
Total	1,276	1,344	-5%
Adjusted EBITDA2, US$m
Kazakhstan	439	5163	-15%
Russia	1,019	5013	+103%
Total	1,458	1,017	+43%
Average realised gold price4, US$ /oz	1,929	1,764	+9%
Average realised silver price4, US$ /oz	22.8	21.9	+4%
Net earnings/(loss), US$m	528	(288)	n/a
Underlying net earnings2, US$m	615	440	+40%
Return on assets (underlying)2, %	17%	9%	+8%
Return on equity (underlying)2, %	15%	11%	+4%
Basic earnings/(loss) per share, US$	1.11	(0.61)	n/a

1. Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.
2. Defined in the "Alternative performance measures" section below.
3. Allocation factors for corporate costs were revised in 2023, previous periods were restated accordingly.
4. In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are calculated as revenue divided by gold and silver volumes sold, without effect of treatment charges deductions from revenue.

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FINANCIAL HIGHLIGHTS 1	2023	2022	Change
Underlying EPS2, US$	1.30	0.93	+44%
Net debt2, US$m
Kazakhstan	174	277	-37%
Russia	2,209	2,117	+4%
Total	2,383	2,393	-0%
Net debt/Adjusted EBITDA
Kazakhstan	0.39	0.54	-27%
Russia	2.17	4.23	-49%
Total	1.63	2.35	-31%
Capital expenditure, US$m
Kazakhstan	145	101	+43%
Russia	534	693	-23%
Total	679	794	-14%
Net operating cash flow, US$m	575	206	+179%
Free cash flow2, US$m	(128)	(445)	+71%
Free cash flow post-M&A2, US$m	(131)	(473)	+72%

Notes:

1. Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.
2. Defined in the "Alternative performance measures" section below.

OPERATING HIGHLIGHTS

• No fatal accidents among the Group's employees and contractors occurred in 2023 as well as no lost time injuries were recorded in Kazakhstan. Lost time injury frequency rate (LTIFR) among the Company's workforce for the full year decreased by 30% y-o-y to 0.07. Two serious and eight minor lost-time accidents were recorded in 2023, all in Russia. Days lost due to work-related injuries (DIS) increased by 32% y-o-y to 1,156, also relates to Russia.
• The Company's 2023 GE production was stable at 1,714 Koz, including 486 Koz in Kazakhstan and 1,228 Koz in Russia, and in line with the original production guidance of 1.7 Moz.
• The Company has successfully secured a land plot for the Ertis POX project in the Pavlodar Special Economic Zone in Kazakhstan.

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	2023	2022	Change
PRODUCTION (Koz of GE) 1	1,714	1,720	-0%
Kazakhstan	486	541	-10%
Kyzyl	316	330	-4%
Varvara	169	211	-20%
Russia	1,228	1,178	+4%
SAFETY
LTIFR2 (Employees)	0.07	0.10	-30%
Kazakhstan	0	0	n/a
Russia	0.09	0.12	-25%
DIS2	1,156	877	+32%
Kazakhstan	0	0	n/a
Russia	1,156	877	+32%
Fatalities
Employees	0	0	n/a
Contractors	0	0	n/a
Average headcount	14,647	14,694	-0.3%
Kazakhstan	3,202	3,219	-0.5%
Russia	11,4453	11,475	-0.3%

Notes:

1. Based on 80:1 Au/Ag conversion ratio and excluding base metals. Discrepancies in calculations are due to rounding. Mayskoye production reporting approach was amended to record production as soon as the ownership title for gold is transferred to a buyer at the mine site's concentrate storage facility. Previous periods were restated accordingly.
2. Company employees only are taken into account.
3. The average number of personnel was revised versus the number reported in January 2024 to include average headcount of all assets in Russia that were deconsolidated during the reporting year and were not part of Group as at 31 December 2023, for the period they were part of the Group.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") HIGHLIGHTS

• Our 2023 group-wide direct and indirect energy-related emissions (Scope 1 and Scope 2) increased by 5% compared to 2022. In Kazakhstan our Scope 1 and Scope 2 emissions increased by 10% compared to 2022 mainly due to the legislative changes in the energy market and the resulting inability to purchase green electricity from the grid. We are currently focusing our efforts on the Kazakhstan segment and on designing our own solar power plants with a total capacity of up to 40 MW at Varvara and Kyzyl to minimize our dependence on grid electricity.
• We continue to reforest territories equal to those that had been disturbed by our activities. In 2023, we planted 430 thousand saplings on almost 200 hectares of land in Russia and were implementing a voluntary pilot project to plant a new forest not far from Varvara site in Kazakhstan.
• In 2023, we decreased our fresh water intensity for ore processing by 53%, compared with 2019, to 125 m³/1,000 t (2022: 49%). In Kazakhstan, we have also continued to decrease our fresh water intensity as the majority of the water we use in ore processing at our cites in Kazakhstan is circulated in closed water cycles. Overall, 90% of our on-site water consumption in Kazakhstan is via a closed cycle of treated waste.
• Polymetal's social investments amounted to US$ 17.6 million in 2023, including US$ 7.3 million in Kazakhstan, and were targeted to projects in education, local infrastructure, sports and culture.

2024 OUTLOOK FOR KAZAKHSTAN BUSINESS

• The Company expects its Kazakhstan assets to deliver stable production at 475 Koz of GE.
• Costs are estimated in the ranges of US$ 900-1,000/GE oz for TCC and US$ 1,250-1,350/GE oz for AISC1. A y- o-y increase is expected mostly due to sharp increases in power and railway tariffs in Kazakhstan.
• Capital expenditures are expected to be approximately US$ 225 million including US$ 60 million for Ertis POX.

1 Based on 500 KZT/USD and 13% inflation in Kazakhstan.

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CONFERENCE CALL AND WEBCAST

The Company will hold a webcast on Friday, 15 March 2024, at 16:00 Astana time (11:00 London time). To participate in the webcast, please register using the following link: https://streamstudio.world-television.com/1451-2739-39231/en

Webcast details will be sent to you via email after registration.

Enquiries

Investor Relations	Media
Evgeny Monakhov	Yerkin Uderbay
[phone] (UK)	[phone] (Kazakhstan)
	[e-mail]
Kirill Kuznetsov
Alikhan Bissengali
[phone] (Kazakhstan)
[e-mail]

FORWARD-LOOKING STATEMENTS

This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements speak only as at the date of this release. These forward-looking statements can be identified by the use of forward- looking terminology, including the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or "should" or similar expressions or, in each case their negative or other variations or by discussion of strategies, plans, objectives, goals, future events or intentions. These forward-looking statements all include matters that are not historical facts. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the company's control that could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the company's present and future business strategies and the environment in which the company will operate in the future. Forward-looking statements are not guarantees of future performance. There are many factors that could cause the company's actual results, performance or achievements to differ materially from those expressed in such forward-looking statements. The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

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TABLE OF CONTENTS
SINED's statement	7
Group CEO statement	9
Operating review	11
Financial review	18
Principal risks and uncertainties	30
Going concern	31
Directors' responsibility statement	32
Financial statements	33
Alternative Performance Measures	64

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SINED'S STATEMENT

It has been gratifying to see the Company's financial and operating performance stabilise during 2023 against the continuing and tightening backdrop of a continued Russia-Ukraine conflict and 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 was completed, and we are positively looking into the future.

Re-domiciliation to Kazakhstan

Back in 2022, 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 from LSE to AIX as its primary listing.

This decision was not taken lightly since, as a consequence, its premium listing on the London Stock Exchange 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, health and safety, and 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, and also the optimal path towards re-establishing shareholder value. It became the Company's way to restore the 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 this divestment completed in March 2024, Polymetal's Board and management team will now be able to concentrate on expanding its asset base within Kazakhstan and also looking 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, as described in Dividends and disposal section above.

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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 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 to date as well the 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.

Senior Independent Non-Executive Director

Evgueni Konovalenko

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GROUP CEO STATEMENT

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 engineer a subsequent split of the business in order to restore shareholder value. However, due to geopolitical interventions beyond our control, this reorganisation did not go as we had 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 from the point of western and Russian counter-sanctions. For Astana International Exchange (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 regards to sanctions compliance and to oversee the full 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 Kazakh 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 US$ 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 US$ 3 billion. We also reported an impressive 43% increase in EBITDA at US$ 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 US$ 950-1,000/GE oz and US$ 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 US$ 2.38 billion (US$ 0.17 billion in Kazakhstan and US$ 2.21 billion in Russia) however it decreased in relative terms from 2.35 ND/EBITDA in 2022 to 1.64 in 2023.

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.

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Our new POX development project in Kazakhstan

Our major development focus now is on Kazakhstan's first large-scalefull-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 centered 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.

Group Chief Executive Officer

Vitaly Nesis

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