2017-2019 Production Guidance and Dividend Update

PJSC Polyus

PJSC Polyus (MOEX — PLZL) («Polyus», or the «Company»), the largest gold producer in Russia, announces its production guidance for 2017–2019 together with a dividend update.

2017–2019 Production Guidance

Since 2013, the Companyhas demonstrated a 19% growthin total gold output to 1,968 koz,driven by processing capacity expansion, higher recovery rates andefficiency improvements.

Based on the operational results for 1Q 2017, theCompany reiterates its production guidance for 2017 to be in the range of 2.075–2.125 moz.

With the majority of brownfield development projects expected to be completed in 2017 and production at Natalka expected to be commissioned by the end of 2017, the group expects total gold output to increase further to 2.35–2.40moz in 2018 and 2.8 moz in 2019.

Dividend Update

The Board of Directors of the Company (the «Board») has considered and preliminarily approved the dividends that it intends to recommend for approval bythe Company’s annual general shareholders’ meeting («AGM»). In aggregate these dividendsare the ruble equivalent of USD 354 million, including:

• a regular dividend in respect of the financial year ended 31 December 2016 totaling USD 254 million, representing 30% of the Company’s EBITDA for 2H 2016 in line with the dividend policy wherebydividends are paid on a semi-annual basis; and
• a special dividend totaling USD 100 million in connection with the successful sale by the group of its stake in the Nezhdaninskoye deposit. The asset was in an exploration stage via a JV with Polymetal and non-cash producing.

The dividend is subject to formal approval of dividend recommendation to shareholders by the Board and approval of such dividend by the Company’s shareholders at the AGM that will be held on 30 June 2017. The dividend record date is expected to be between 10 and 20 July 2017.

Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:

We will continue evaluating additional brownfield production growth opportunities at our existing portfolio of Tier 1 assets.
We are delighted to indicate to the market our intention to pay both a regular and a special dividend under our dividend policy and remain focused on maximizing shareholder returns.»

Projects Update

The projects in the pipeline include one greenfield and seven brownfield development projects.

Natalka Operations Status Update

• Construction works at Natalka, the Company’s main greenfield project, areprogressing well with early pre-commissioning already well advanced. The primary crusher, the main SAG mill and the main ball mill have undergone a successful trial run. Polyus has finalized delivery of all process equipment. The installationof all gravity concentrators and electrowinning cells has beencompleted. The installation of thickeners is under way. The construction of power facilities and auxiliary infrastructure is ongoing. Major equipment vendors are on site to assist with the commissioning.
• Mining at Natalka was relaunched in January 2017 and 6koz of gold wasproduced at the 100 kt pilot plant in 2016.
• The Company anticipates commissioning the Natalka project by the end of 2017, followed by a ramp-up period to achieve the project’s design parameters.
• Following the ramp-up, annual production at Natalka is expected to reach c. 420–470 koz for the life of mine.

Brownfield Development Projects Update

• Krasnoyarsk Business Unit:
  • Reconfiguration of Mill No. 1 to process higher-grade ore from Olimpiada deposit. This project was completed in September 2016 and underpinned theincrease of the processing capacity to 3.0 mtpa.
  • An additional bio-oxidation circuit at Olimpiada’s Mills No. 1, 2 and 3 complex. The project is on track and BIO-4 is expected to be completed by the end of 2017, enabling Polyus to process all gold in concentrate into doré gold in-house.
  • Expansion of the Blagodatnoye Mill to 8.0 mtpa of throughput capacity. In 2016, Polyuscompleted the first stage of the Blagodatnoye Mill capacity expansion to 8.0 mtpa. This was followed by technical works in 2017, designed to ensure the Mill consistently operates at the current throughput capacity level and to support a further increase in recovery rates.
  • In addition, the Company is continuing the design works related to the heap leaching at Blagodatnoye. Commencement of the project in 2019 will enable Polyusto process up to 10 mtpa of stockpiled and in situ low-grade ore.
• Irkutsk Business Unit:
  • An increase of the Verninskoye Mill’s capacity to 3.0 mtpa. The first stage of the project was completed at the end of 2016. This resulted in the stabilization of the throughput capacity at 2.5 mtpa. The target designed throughput capacity of 3.0 mtpa is expected to be achieved before the end of 2018.
• Yakutia Business Unit:
  • An increase of the Kuranakh Mill’s capacity to 5.0 mtpa. With the first stage of the project being completed, the mill is currently operating at a throughput capacity of 4.5 mtpa. Further expansion of the processing capacity is planned, with completionexpected by the end of 2018.
  • The heap leaching project at Kuranakh is expected to be completed in 2017, resulting in the processing of 1.5 mtpa of the deposit’slow-grade and out-of-balance ores, which were stockpiled during mining operations in previous years.

Polyus

PJSC Polyus (www.polyus.com) is the largest gold producer in Russia and one of the top 10 gold miners globally by ounces produced. The Company also holds the fourth largest mineral resources base in the world.

Polyus group’s principal operations are located in Krasnoyarsk, Irkutsk and Magadan regions and the Sakha Republic (Yakutia).

Enquiries

Investor Contact
Victor Drozdov, Director Investor Relations
+7 (495) 641 33 77 drozdovvi@polyus.com

Media contact
Victoria Vasilyeva, Director Public Relations
+7 (495) 641 33 77 vasilevavs@polyus.com

Forward looking statement

This announcement may contain «forward-looking statements» concerning Polyus and/or Polyus group. Generally, the words «will», «may», «should», «could», «would», «can», «continue», «opportunity», «believes», «expects», «intends», «anticipates», «estimates» or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of Polyus’ and/or Polyus group’s operations. Many of these risks and uncertainties relate to factors that are beyond Polyus’ and/or Polyus group’s ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Polyus and/or any Polyus group company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.