PJSC Polyus : Report for 12m 2021.pdf

REPORT OF THE SECURITIES ISSUERPublic Joint-Stock Company Polyus

Issuer's code: 55192-E

For 12 months of 2021

The information contained in this Issuer's Report is subject to disclosure in accordance with the laws of the Russian Federation on securities

Issuer's address	3 Krasina St., bld. 1, office 801, Moscow, 123056, Russian Federation
Issuer's contact	Openkina Anastasiya Leonidovna, Corporate Secretary, PJSC Polyus
person
Tel.: [phone]
E-mail:[e-mail]
Internet web page:	www.polyus.com.
www.e-disclosure.ru/portal/company.aspx?id=7832
CEO
____________ Pavel Grachev
Date: 31 March 2022
signature

Table of contents

Table of contents ................................................................................................................................................................. 2

Introduction ......................................................................................................................................................................... 3

Section 1. Issuer's Management Report .............................................................................................................................. 3

1.3. Key operational results of the Issuer ........................................................................................................................ 5

1.4. Key financial results of the Issuer ............................................................................................................................ 6

1.5. Information on main suppliers material for the Issuer ............................................................................................. 8

1.6. Information on main debtors material for the Issuer ................................................................................................ 8

1.7. Information on the Issuer's liabilities ...................................................................................................................... 9

1.7.1. Information on main creditors material for the Issuer ........................................................................................... 9

1.7.2. Information on the Issuer's liabilities under the provided security ....................................................................... 9

1.7.3. Information on other material liabilities of the Issuer ......................................................................................... 11

1.8. Information on the Issuer's development prospects ............................................................................................... 11

1.9.8. Information security risk ..................................................................................................................................... 17

1.9.9. Environmental risk .............................................................................................................................................. 17

1.9.10. Natural and climatic risk ................................................................................................................................... 17

1.9.11. Risks of credit institutions ................................................................................................................................. 17

1.9.12. Other risks that are material to the Issuer (group of the Issuer) ........................................................................ 18

Section II. Information about the Issuer's management bodies; the Issuer's risk management, business and financial

control, internal control, and internal audit systems; the Issuer's employees ................................................................... 18

2.1. Information about the Issuer's management bodies ............................................................................................... 18

2.1.1. Composition of the Issuer's Board of Directors (Supervisory Board) ................................................................ 18

2.1.2. Information on the Issuer's sole executive body ................................................................................................. 27

2.1.3. Composition of the Issuer's collective executive body ....................................................................................... 28

2.2. Information on the policy on remuneration and/or reimbursement of expenses and the size of the same for each

of the Issuer's management bodies ............................................................................................................................... 28

3.2. Information on shareholders (members) of the Issuer or entities entitled to control votes attached to voting shares

(interest) comprising the nominal (share) capital of the Issuer ..................................................................................... 34

3.3. Information on the participation interest of the Russian Federation, a constituent entity of the Russian Federation,

or municipal entity in the Issuer's Charter Capital and on existence of special right ("golden share") ........................ 35

Section IV. Data on the Issuer's Financial and Economic Performance ........................................................................... 36

4.2. Additional information disclosed by issuers of use of proceeds bonds .................................................................. 39

4.3. Information on the person(s) that have provided security for the Issuer's secured bonds, and on security provided

for the Issuer's secured bonds ....................................................................................................................................... 39

4.3.1. Additional information on mortgage collateral for the Issuer's mortgage-backed bonds ................................... 39

4.3.2. Additional information on collateral by monetary claims under Issuer's bonds backed by collateral by

monetary claims ............................................................................................................................................................ 39

4.4. Information on declared and paid out dividends on the Issuer's shares ................................................................. 39

4.5. Details of Entities in Charge of Registration of Rights to Issue-grade Securities of the Issuer ............................. 44

4.1.5. Details of the Registrar in Charge of Maintaining the Register of Securities Holders of the Issuer ................... 44

4.5.2. Details of the Depository in Charge of Collective Safe Custody of Securities of the Issuer .............................. 44

4.6. Details of the Auditor of the Issuer ........................................................................................................................ 45

Introduction

The information contained in this Issuer's Report is subject to disclosure in accordance with Article 30.4 of the Federal Law of the Russian Federation On Securities Market.

Reasons for the Issuer's obligation to disclose information in the form of an issuer's report

With regard to the Issuer's securities, the prospectus was registered

The Issuer's exchange-traded bonds are admitted to organized trading at the stock exchange, with the prospectus provided for such trading

The Issuer is a public joint-stock company

The information on financial statements contained (referred to) in the Issuer's Report and used as a basis to disclose the Issuer's financial and business performance:

•  The report contains reference to consolidated financial statements used as a basis to disclose the Issuer's financial and business performance

•  The report contains reference to accounting (financial) statements used as a basis to disclose the Issuer's financial and business performance

The information on the Issuer's financial and business performance shows its activities as a company which together with other companies is defined as a group of companies according to the IFRS.

The consolidated financial statements together with accounting (financial) statements used as a basis to disclose the Issuer's financial and business performance in this Issuer's Report fairly and accurately present the Issuer's assets, liabilities, financial position, profit and loss. The information on the Issuer's financial position and business performance provide a fair representation of the Issuer's activities and associated key risks.

This Issuer's Report contains the assessments and projections of forthcoming events and/or actions, the development prospects of the economy sector where the Issuer is engaged in its main activities, and the Issuer's results, including the Issuer's plans and the probability of certain events and actions.

Investors should not rely completely on the assessments and projections contained herein as the Issuer's actual performance in future periods may differ from the projected results for many reasons. Acquisition of the Issuer's securities involves risks, including those addressed in this Issuer's Report.

Section 1. Issuer's Management Report

1.1. General data on the Issuer and its activities

The Issuer's full company name: Public Joint Stock Company Polyus The Issuer's abbreviated company name: PJSC Polyus

The Issuer's location: Russian Federation, Moscow

The Issuer's address: 3 Krasina St., bld. 1, office 801, Moscow, 123056, Russian Federation

The Issuer's Charter contains a company name in the foreign language

The Issuer's company name in the foreign language: Public Joint Stock Company Polyus

Data on the incorporation of the Issuer:

The Issuer was incorporated in accordance with the laws of the Russian Federation through reorganization of the Public Joint Stock Company "Mining and Metallurgical Company Norilsk Nickel" by way of spin-off. The Issuer was officially registered on 17 March 2006.

The Issuer's incorporation date: 17 March 2006

All previous company names of the Issuer for the last three years preceding the closing date of the reporting period covered by this Issuer's Report

The Issuer did not change its company name during the last three years preceding the closing date of the reporting period covered by this Issuer's Report.

The Issuer was not reorganized during the last three years preceding the closing date of the reporting period covered by this Issuer's Report.

Principle State Registration Number (OGRN): 1068400002990

Taxpayer's ID No. (INN): 7703389295

Brief overview of financial and business activities, operational segments and geographic footprint of the Issuer's Group:

Polyus is the world's largest gold-mining company in terms of gold reserves and the fourth largest by production volume, showing the lowest production costs among global gold producers. Principal operations of the Company are located in Siberia and the Russian Far East, specifically in Krasnoyarsk, Irkutsk and Magadan Regions, and the Sakha Republic (Yakutia).

Brief description of the Issuer's Group:

Principal activities of PJSC Polyus and its controlled entities (jointly the "Group" or "Polyus") are gold mining (including initial processing) and sales. The Group comprises five operational mines, gold-bearing alluvials and a number of mines under construction and development, and is engaged in exploration and prospecting activities. Polyus' largest business unit is Krasnoyarsk BU, which develops Olimpiada and Blagodatnoye gold mines. The Irkutsk Business Unit:comprises Verninskoye deposit and alluvials in the Bodaibo District.

Total number of entities in the Issuer's Group: 44

Information on personal laws applicable to the entities in the Issuer's Group: The Issuer's Group includes companies incorporated in the United Kingdom and Kazakhstan.

Federal Law No. 57-FZ on Foreign Investments in Commercial Entities Having Strategic Importance for the Defense of the Country and the Security of State dated 29 April 2008 prohibits foreign investors and groups that include foreign investors and/or their controlled entities from engaging themselves in certain type(s) of activities, including type(s) of activities that have strategic importance for the defense of the country and security of state, provided such foreign investors and their groups have equity interests in the Issuer (purchase and sell equity shares in the Issuer).

There are no other restrictions related to equity interests in the Issuer and provided for in the Charter.

1.2. Data on the Issuer's position in the industry

Polyus holds an unparalleled portfolio of assets and boasts the lowest production costs among leading global gold producers thanks to control over operating costs and efficient use of resources. The Company is committed to the sustainable development principles, best management practices, and health, safety and environment standards. Its assets are situated in the Krasnoyarsk Territory, Irkutsk and Magadan Regions, and the Republic of Sakha (Yakutia) and comprise five operational mines, including one of the world's largest mines Olimpiada. The Company is also engaged in alluvial gold mining and a number of new projects, building a new process plant (Blagodatnoye Mill-5) in the Krasnoyarsk Territory and conducting a technical and financial analysis of Sukhoi Log, a gold deposit richest in reserves and resources, which is located in the Irkutsk Region. Polyus employs about 20,000 people.

The Company is involved in the transition of Russian economy to a sustainable development model (ESG transformation) and participates extensively in the development of its legal framework as a founder of the National ESG Alliance.

As a major taxpayer and employer in the vast territories of Siberia and the Russian Far East, Polyus contributes to economic growth and welfare of the people living in those regions by creating and upgrading the power, transport and social infrastructure.

In 2021, gold production in Russia amounted to 346.42 tonnes. Polyus ranked fourth in 2021 in terms of gold output:

Newmont - 5,971 koz

Barrick - 4,437 koz

Agnico Eagle (after the merger with Kirkland Lake) - 3,463 koz Polyus - 2,717 koz

Polyus is a global leader among public gold-mining companies in terms of gold reserves

As at the end of last year, Polyus' proven and probable reserves* amounted to 104 moz of gold.

* According to JORC.

Demand

According to the Gold Demand Trends Full Year 2021 report prepared by the World Gold Council (WGC), globaldemand for gold in Q4 2021 reached 1,147 tonnes. This is the highest level since Q2 2019 and a 1.5-fold increase as compared to Q4 2020. In 2021, demand for gold amounted to 4,021 tonnes, up 10% year-on-year. Therefore, demand for gold in Q4 2021 showed an almost complete recovery after the effect of COVID-19 pandemic.

Demand for jewelry recovered to the pre-pandemic level of 2019 and amounted to 2,124 tonnes. This was driven, among other things, by a strong performance in the fourth quarter when demand hit the highest level since Q2 2013.

Demand for jewelry reached nearly a decade's high, mostly on the back of economic recovery in the key markets, China and India.

Despite the strong performance of gold markets, the outflow from gold-backed exchange traded funds (ETFs) reached 173 tonnes vs. inflow of 874 tonnes in 2020. This was mostly driven by investors who cut their hedging positions early in the year amidst the spread of vaccines against COVID-19. Nevertheless, that outflow is insignificant if compared to 2,200 tonnes of gold added to the ETFs over the last five years.

Demand for gold bars and coins grew 31% year-on-year to reach 1,180 tonnes. In the fourth quarter, demand climbed to a five-year high of 318 tonnes. Retail investors viewed gold as a safe haven amidst growing inflation and continuing economic uncertainties.

Central banks added 463 tonnes of gold to their reserves in 2021, up 82% year-on-year. Gold reserves were increased by central bank from both developing and developed countries, so that the total global reserves reached an almost 30-year high. Central banks eased the drive in the second half of the year to bring their demand down by 22% as compared to the first six months.

Demand from technology sectors in 2021 rose 9% to hit a three-year high of 330 tonnes.

Supply

According to the Gold Demand Trends Full Year 2021 report published by the World Gold Council on 28 January 2022, total supply in 2021 decreased 1% year-on-year to 4,666 tonnes.

Although global production rose 2% to 3,561 tonnes, recycled output fell 11% to 1,150 tonnes due to partial lifting of lockdown restrictions. Producers opted to remove all the previously made stocks from the market. This move was stimulated by the fact that the gold price in the pre-pandemic 2019 was $1,393/oz and increased to $1,799/oz in 2021.

Unlike in 2020, when gold production decreased due to shutdowns at the mines as a result of lockdown restrictions, the pandemic factor ceased to affect gold output in 2021.

Last year, the decline of output was observed in Asia and Oceania while other regions demonstrated growth.

According to the WGC, gold output in China went down by 10% year-on-year as a result of the production shutdown in the Shandong Province for safety reasons. Production problems made the output decline by 8% in Burkina Faso and 7% in Australia. In Mauritania, the fire at the Tasiast mine owned by Kinross Gold brought the gold output in the country down by 58%.

As for positive trends, gold production in Egypt surged 56% in 2021 after recovery of operations at the Sukkari mine owned by Centamin. The WGC also mentions output growth in Indonesia and Russia.

In Russia, gold output in 2021 grew 2% to 346.42 tonnes, according to the Ministry of Finance data as at 16 March 2022.

Price

In 2021, the average gold price on the London Metal Exchange was $1,799 a troy ounce, or 2% above the average price in 2020 ($1,769 a troy ounce).

The information in this paragraph is based on the opinions of the Issuer's management.

1.3. Key operational results of the Issuer

Operational highlights (operational performance of the Group)

Item	Unit	12M 2020	12M 2021
Refined gold	koz	2,568.1	2,687.6
Flotation concentrate	t	86,750	15,377
Antimony in flotation concentrate	t	10,958	2,499
Gold in flotation concentrate	koz	198	29.8
Marketable gold concentrate	koz	153.6	22.8
Total gold produced	koz	2,766.1	2,717.4