Financial results for the fourth quarter and full year 2021

PJSC Polyus (LSE, MOEX — PLZL) («Polyus», the «Company», and together with the Company subsidiaries, the «group») has today released its consolidated financial results for the fourth quarter and full year 2021

Key highlights

Total gold sales volumes in the fourth quarter of 2021 amounted to 712 thousand ounces, down 8% compared to the third quarter due to seasonally lower production volumes at Alluvials and Kuranakh and lower production volumes at Verninskoye as a result of scheduled maintenance works. The Company sold a total of 2,736 thousand ounces of gold in the full year of 2021, down 3% compared to the prior year. This was primarily driven by lower production volumes at both Olimpiada and Blagodatnoye.
Revenue for the fourth quarter of 2021 totalled $1,293 million, down 8% compared to the previous quarter, while revenue for the full year amounted to $4,966 million, a 1% decrease year-on-year. This was driven by the aforementioned decline in production volumes.
The group’s TCC for the fourth quarter decreased by 4% to $412 per ounce compared to $427 per ounce in the previous quarter. This improvement was attributable to a seasonal decrease in output at the structurally higher-cost alluvial operations and higher sales volumes of antimony-rich flotation concentrate. The latter resulted in higher by-product credit ($13 per ounce in the fourth quarter of 2021 compared to $5 per ounce in the third quarter of 2021). In 2021, the group’s TCC increased by 12% to $405 per ounce compared to 2020. This reflects lower average grades in ore processed at Olimpiada and Blagodatnoye, ongoing inflation in consumables and an increase in the MET rate applied to Verninskoye and Natalka in line with the regional investment project («RInvP») regime for the deposits. These factors were partially offset by improved hourly-throughput performance at Olimpiada, Verninskoye and Natalka.
Adjusted for FX and gold price fluctuations, the group’s TCC for the full year 2021 came below the lower bound of the guidance range of $425-450 per ounce, which was based on the assumptions of FX rate of 65 roubles per dollar and a gold price of $1,300 per ounce. This was driven by an improved operational performance at Olimpiada and Verninskoye, proactive purchasing and procurement management initiatives and partial services and maintenances rollover from the fourth quarter of 2021 to the first quarter of 2022.
Adjusted EBITDA for the fourth quarter of 2021 amounted to $894 million, a 9% decrease compared to $986 million in the previous quarter, reflecting lower gold sales volumes during the quarter. In 2021, the group’s adjusted EBITDA stood at $3,518 million, a 5% decrease compared to the previous year, as a result of lower gold sales volumes and higher TCC on a per ounce basis.
Capital expenditures («capex») for the fourth quarter increased to $389 million, from $233 million in the previous quarter, as the Company accelerated its capex spending programme as planned. Capex for the full year of 2021 increased to $928 million from $653 million in the previous year. This increase reflects higher capital expenditures across all deposits, except Natalka.
Adjusted for FX fluctuations, capital expenditures for the full year 2021 came closer to the lower bound of the guidance range of $1,000-1,100 million, which was based on a FX rate assumption of 65 roubles per dollar.
The net debt (incl. derivatives)/adjusted EBITDA ratio decreased to 0.6x compared to 0.7x at the end of 2020, reflecting a lower net debt position.

Dividend update

The Company’s Board of Directors (the «Board») has preliminarily considered dividends for the second half of 2021 that it intends to recommend for approval at the Company’s annual general shareholders’ meeting. In accordance with the Company’s Dividend Policy, which implies a total dividend payout representing 30% of the Company’s EBITDA for the full year, dividends for the second half of 2021 will amount to the rouble equivalent of $548 million. Based on the current number of outstanding shares, the recommended dividend per share for the second half of 2021 is expected to be $4.03 per ordinary share. The total dividend payout for the full year of 2021 will correspond to $1,055 million. This amount includes $507 million paid out in the form of dividends for the first half of 2021.

COVID-19 update

In 2021, the Company allocated $94 million to measures aimed at preventing the spread of COVID-19. Out of this total amount, $78 million is included in Cost of gold sales (additional staff expenses related to extended working shifts) and Other expenses (COVID-19 test kits, medical services and support provided to regional hospitals) in amounts of $36 million and $42 million, respectively. The remaining $16 million was attributable to in-progress inventory and capitalised as part of property, plant and equipment in the Statement of Financial position. The expenses associated with COVID-19 and recognised as part of Cost of gold sales were excluded from both TCC and AISC calculations. At the same time, all P&L expenses related to COVID-19, in the amount of $78 million, were excluded from the adjusted EBITDA calculation.

Buyback programme

On the 31st of January 2022, Polyus launched an open-market buyback with maximum amount of $200 million, but not more than 1.4% of share capital, to be executed over the course of the next 6 months. As of 25th of February, the Company has not bought back any shares from an open-market.

OUTLOOK

Production guidance

Based on the mining plan and processing capabilities, we reiterate total gold output of ca. 2.8 million ounces of gold in 2022. Production guidance reflects an improvement in head grades at Olimpiada as the Company access to the high-grade ore material. The Company is continuing to implement brownfield development initiatives to strengthen its operational profile.

TCC guidance

The Company reiterates its 2022 TCC guidance and expects TCC to reside within the range of $425-$450 per ounce. This estimate is based on the assumption of a foreign exchange rate of 65 roubles per dollar and a gold price of $1,300 per ounce. The Company anticipates a gradual increase in TCC from 2021 levels, mainly driven by inflationary factors in key consumables and labour.

Capex guidance

The Company reiterates its 2022 capex guidance range of $1,100-1,200 million. The capex guidance reflects:
- ongoing construction of Mill 5 at the Blagodatnoye complex;
- the completion of the Bankable Feasibility Study and commencement of internal infrastructure construction at Sukhoi Log;
- Kuranakh mill expansion to 7.5 million tonne per annum and reconstruction of the tailings storage facility;
- mining fleet procurement for the Natalka mine;
- an increase in the exploration budget and mining fleet replacement at Alluvials as well as a rollover of IT capex spending from 2021.

COVID-19 expenses

Based on preliminary assessments, Polyus expects approximately $100 million of COVID-19 related expenses in 2022. These include salary increases for staff working extended shifts and the procurement of medical and personal protection equipment, as all preventive measures remain in place at all sites. The expenses associated with COVID-19 and recognised as part of Cost of gold sales will be excluded from both TCC and AISC calculations as well as from the adjusted EBITDA calculation.

Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:
In a challenging environment Polyus achieved solid operational and financial results and delivered on its 2021 guidance.
Sustained efforts to control our costs, including enhancing operational efficiencies and proactive procurement management, enabled us to achieve TCC at $412 per ounce, below our guidance of $425 — $450 per ounce. Even when adjusted for FX fluctuations, our cost performance was better than the initial range.
With regard to the outlook for 2022, we reiterate all of the targets provided at our Capital Markets Day in June 2021. Obviously, we are monitoring the geopolitical situation extremely closely. Our operations are continuing as normal, and we will keep the market appraised of any developments that may impact our business.
We will also continue to protect the welfare of our employees and to mitigate risks posed by COVID-19. We are conservatively budgeting approximately $100 million of COVID-19 related expenses in 2022, which is broadly in line with the expenses the Company incurred in 2021.

Comparative financial results

$ million (if not mentioned otherwise)	4Q 2021	3Q 2021	Q-o-Q	4Q 2020	Y-o-Y	2021	2020	Y-o-Y
Operating highlights
Gold production (koz)²	684	770	(11%)	710	(4%)	2,717	2,766	(2%)
Gold sold (koz)	712	776	8%	829	(14%)	2,736	2,817	(3%)
Realised prices
Weighted-average refined gold selling price, $/oz	1,802	1,787	(1%)	1,872	4%	1,798	1,786	1%
Financial performance
Total revenue	1,293	1,400	8%	1,515	15%	4,966	4,998	21%
Operating profit	751	843	(11%)	935	20%	2,959	3,066	3%
Operating profit margin	58%	60%	(2) ppts	62%	(4) ppts	60%	61%	(1) ppts
Profit for the period	521	664	22%	835	38%	2,278	1,646	(38%)
Earnings per share — basic (US Dollar)	3,85	4,87	21%	6,17	38%	16,82	11,89	(41%)
Earnings per share — diluted (US Dollar)	3,83	4,85	21%	6,15	38%	16,77	11,85	(42%)
Adjusted net profit³	573	663	14%	732	22%	2,287	2, 332	2%
Adjusted net profit margin	44%	47%	(3) ppts	48%	4 ppts	46%	47%	1 ppts
Adjusted EBITDA⁴	894	986	9%	1,138	21%	3,518	3,690	5%
Adjusted EBITDA margin	69%	70%	(1) ppts	75%	6 ppts	71%	74%	3 ppts
Net cash flow from operations	731	826	(12%)	895	18%	2,936	3,046	4%
Capital expenditure⁵	389	1233	67%	272	43%	928	653	42%
Cash costs
Total cash cost (TCC) per ounce sold ($/oz)⁶	412	427	(4%)	354	16%	405	362	(12%)
All-in sustaining cash cost (AISC) per ounce sold ($/oz)⁷	837	697	20%	613	37%	715	604	18%
Financial position
Cash and cash equivalents	1,343	1,675	(20%)	1,445	(7%)	1,343	1,445	(7%)
Net debt (incl. derivatives)⁸	2,197	1,950	13%	2,464	(11%)	2,197	2,464	(11%)
Net debt (incl. derivatives)/adjusted EBITDA (x)⁹	0.6	0.5	20%	0,7	(14%)	0.6	0,7	(14%)

Total Cash Costs

In the fourth quarter, the group’s TCC decreased by 4% to $412 per ounce compared to $427 per ounce in the previous quarter. This improvement was attributable to a seasonal decrease in output at the structurally higher-cost alluvial operations and higher sales volumes of antimony-rich flotation concentrate. The latter resulted in higher by-product credit ($13 per ounce in the fourth quarter of 2021 compared to $5 per ounce in the third quarter of 2021). In 2021, the group’s TCC increased 12% to $405 per ounce compared to 2020. This reflects lower average grades in ore processed at Olimpiada and Blagodatnoye, ongoing inflation in consumables and increase in the MET rate applied to Verninskoye and Natalka in line with the regional investment project (“RInvP”) regime for the deposits. These factors were partially offset by an improved hourly-throughput performance at Olimpiada, Verninskoye and Natalka.

TCC performance by mine, $/oz

	4Q 2021	3Q 2021
Olimpiada	360	354
Blagodatnoye	377	378
Natalka	389	338
Verninskoye	429	350
Kuranakh	608	563
Alluvials	1,196	900

	2021	2020
Olimpiada	369	312
Blagodatnoye	367	347
Natalka	368	355
Verninskoye	358	327
Kuranakh	569	518
Alluvials	950	847

In the fourth quarter, TCC at Olimpiada rose to $360 per ounce, a 2% increase compared to the third quarter of 2021. This increase reflects scheduled maintenance works, as well as a decline in average grades in ore processed (2.93 grams per tonne in the fourth quarter compared to 3.03 grams per tonne in the third quarter). This was partially offset by higher sales volumes of antimony-rich flotation concentrate, resulting in by-product credit of $28 per ounce in the fourth quarter compared to $14 per ounce in the third quarter. In 2021, TCC at Olimpiada amounted to $369 per ounce, up 18% compared to 2020. This was attributable to a decline in average grades in ore processed (3.00 grams per tonne in 2021 compared to 3.40 grams per tonne in 2020), a decrease in the share of lower-cost flotation concentrate in total gold sold and inflation across key consumables.

At Blagodatnoye, TCC amounted to $377 per ounce, remaining in line with the previous quarter. In 2021, TCC at Blagodatnoye were $367 per ounce, up 6% compared to the previous year, due to inflation across key consumables and higher maintenance expenses, in addition to lower average grades in ore processed (1.75 grams per tonne in 2021 compared to 1.82 grams per tonne in 2020).

In the fourth quarter, TCC at Natalka increased to $389 per ounce, up 15% compared to the previous quarter, driven by higher maintenance expenses. In 2021, TCC at Natalka increased to $368 per ounce, up 4% compared to $355 per ounce in 2020, driven by an increase in the MET rate (from 0% to 1.2%) applied to Natalka. This was partially offset by the higher average grades in ore processed (1.77 grams per tonne in 2021 compared to 1.72 grams per tonne in 2020).

In the fourth quarter, TCC at Verninskoye amounted to $429 per ounce, up 23% compared to the third quarter due to higher maintenance expenses. In 2021, TCC at Verniskoye increased to $358 per ounce, up 9% compared to the previous year, driven by increase in the MET rate (from 2.4% to 6%) applied to Verninskoye due to the conclusion of the regional investment project (“RInvP”) regime for the deposit. In addition, lower average grades in ore processed (2.82 grams per tonne in 2021 compared to 2.91 grams per tonne in 2020) negatively impacted the cost performance.

At Kuranakh, TCC rose to $608 per ounce, up 8% compared to the third quarter, due to scheduled maintenance works and a seasonal downscaling of heap leaching operations. In 2021, TCC at Kuranakh rose to $569 per ounce, up 10% compared to 2020, which reflects the inflation across key consumables and lower average grades in ore processed.

At Alluvials, TCC increased 33% to $1,196 per ounce, reflecting end of the washing season. In 2021, TCC at Alluvials amounted to $950 per ounce, up 12% compared to $847 per ounce in the previous year due to ongoing inflation in consumables and diesel prices.

All-in sustaining costs (AISC)

In the fourth quarter, the group’s AISC increased to $837 per ounce, up 20% reflecting higher sustaining capital expenditures. In 2021, the group’s AISC per ounce stood at $715 per ounce, driven by higher stripping expenses and higher sustaining capital expenditures.

All-in sustaining costs by mine, $/oz

	4Q 2021	3Q 2021
Olimpiada	564	655
Blagodatnoye	681	694
Natalka	672	581
Verninskoye	810	641
Kuranakh	983	822
Alluvials	1,959	994

	4Q 2021	3Q 2021
Olimpiada	618	515
Blagodatnoye	658	478
Natalka	626	529
Verninskoye	644	560
Kuranakh	865	756
Alluvials	1,277	1,141

In the fourth quarter of 2021, AISC at Olimpiada decreased to $564 per ounce driven by lower stripping activity during the period. AISC at Blagodatnoye amounted to $681 per ounce. AISC at Natalka increased to $672 per ounce due to higher sustaining capital expenditures and higher TCC per ounce in the reporting period. AISC at Verninskoye increased to $810 per ounce, while AISC at Kuranakh increased to $983/oz, both driven by higher sustaining capital expenditures, higher stripping activity and higher TCC per ounce in the reporting period.

In 2021, AISC at Olimpiada increased to $618 per ounce, driven by higher TCC per ounce and higher stripping expenses compared to the previous year. AISC at Blagodatnoye increased to $658 per ounce due to higher stripping expenses and higher sustaining capital expenditures during the period. AISC at Natalka increased to $626 per ounce, while AISC at Verninskoye increased to $644 per ounce, both in line with the TCC performance and driven by higher stripping expenses and higher sustaining capital expenditures in the reporting year. At Kuranakh, AISC increased to $865 per ounce, in line with the TCC performance and due to higher sustaining capital expenditures during the period. AISC at Alluvial increased to $1,277 per ounce.

Capex

In the fourth quarter, capital expenditures increased to $389 million, from $233 million in the previous period, as the Company accelerated its capex spending programme in line with a plan. For the full year of 2021 capital expenditures amounted to $928 million, up 42% compared to $653 million in the previous year. Adjusted for FX fluctuations, capital expenditures for the full year 2021 came closer to the lower bound of the guidance range of $1,000-1,100 million, which was based on a FX rate assumption of 65 roubles per dollar.

At Olimpiada, capital expenditures increased to $71 million in the fourth quarter of 2021 compared to $62 million in the previous reporting period. In 2021, capital expenditures at Olimpiada increased to $197 million year-on-year. Polyus proceeded with a number of initiatives aimed at stabilising the processing parameters at 15.0 million tonnes per annum. Alongside the increase in throughput, Polyus has improved the efficiency of the BIO complex, as a result of the modernization of the BIO-2 and BIO-3 units and the ongoing calibration of the flowsheet at the BIO complex. In addition, the Company continued to upgrade its mining fleet and completed the construction of the first stage of the pit-stop for truck maintenance on site.

At Blagodatnoye, capital expenditures increased to $110 million in the fourth quarter of 2021 compared to $61 million in the previous quarter. In 2021, capital expenditures at Blagodatnoye increased to $238 million compared to $71 million in 2020, reflecting the launch of the Mill 5 project.

Esta Construction, the major contractor for the Mill 5 construction project, proceeded with the foundation works of the hydromet and comminution circuits during the period, as well as the construction of infrastructure facilities on site. In addition, the contracting procedures for key processing equipment have almost been finalised with most of the key manufacturers selected and long-lead equipment contracted. For example, the Company signed a procurement agreement with FLSmidth for technological equipment for the construction of the Mill and in-pit crushing and conveying (IPCC) system. In addition, the Company continued to upgrade its mining fleet.

In the fourth quarter, capital expenditures at Natalka increased to $38 million, compared to $27 million in the previous reporting period. Polyus installed drainage pumping stations and the pipeline infrastructure for the main tailings storage facility. In 2021, capital expenditures at Natalka decreased to $110 million, down 11% year-on-year, as the Company completed the construction of the main tailings storage facilities (the second start-up complex) as well as the flash flotation roll-out at the Natalka mill during 2020.

At Verninskoye, capital expenditures increased to $28 million in the fourth quarter compared to $22 million in the previous quarter, reflecting prepayments for mining equipment and construction activities under the 2022 investment program. For the full year of 2021, capital expenditures at Verninskoye increased by 4%, compared to 2020, amounting to $79 million, due to an increase in scheduled maintenance works. In 2021, volumes of ore processed reached 3.6 million tonnes, up 10% compared to the previous year, exceeding the target capacity of 3.5 million tonnes per annum of the Verninskoye mill expansion project, which was completed in the first half of 2021.

At Kuranakh, capital expenditures in the fourth quarter of 2021 increased to $44 million due to the scheduled replacement of the mining fleet and the start of construction and procurement as part of the project to expand Kuranakh mill’s processing capacity to 7.5 million tonnes per annum.

For the full year of 2021, capital expenditures at Kuranakh increased twofold, compared to 2020, to $94 million, reflecting the active phase of construction activities for the second heap leaching pad, the reconstruction of tailings storage facilities and the scheduled replacement of the mining fleet. Polyus completed the construction of eight panels at the second heap leaching pad and commissioned the conveyor equipment. The Company is progressing with the project to expand throughput capacity at the Kuranakh mill to 7.5 million tonnes per annum. Construction began, with contracts signed for most of long-lead key technological equipment and progress made on the detailed design documentation.

At Alluvials, capital expenditures amounted to $13 million and $27 million in the fourth quarter of 2021 and full year 2021, respectively. This reflected the ongoing replacement of worn-out equipment, as well as exploration activities.

In the fourth quarter, IT-related capital expenditures increased to $31 million. This includes preparation for the anticipated introduction of an ERP system at Natalka, Kuranakh, Polyus Stroi, Polyus Project and HQ, as well as IT equipment deliveries for server hardware upgrade. In 2021, IT capex amounted to $51 million, up 46% compared to 2020, due to the implementation of the ERP system and the procurement of IT equipment and software.

At Sukhoi Log, Polyus is proceeding with the Bankable Feasibility Study (BFS). The Company finalised open pit geotechnical parameters, defined the parameters of the main technological equipment of the processing plant, and is currently in the final stages of mine planning as well as the general layout, infrastructure, processing plant and tailings storage facility design as part of the BFS. During the reporting period, the Company also progressed with comprehensive engineering studies required for the BFS and the project design documentation.

Polyus has completed its deep-level and flank exploration drilling campaign at Sukhoi Log and is currently proceeding with studies. In the reporting period, the Company completed engineering studies and started detailed design and construction of the Vitim substation and 220 kV gridline. The infrastructure is within Polyus’ project scope according to the agreement with the Federal Grid Company for the technical connection of Sukhoi Log to the existing power grid.

In addition, Polyus has launched the project design documentation stage for warehousing storage capacity expansion at Taksimo Yard. Project design documentation is expected to be completed in 2022.

Capex breakdown

$ million	4Q 2021	3Q 2021	Q-o-Q	2021	2020	Y-o-Y
Olimpiada	71	62	15%	197	183	8%
Blagodatnoe	110	61	80%	238	71	N.A.
Natalka	38	27	41%	110	123	(11%)
Verninskoye	28	22	27%	79	76	4%
Kuranakh	13	4	N.A.	27	23	17%
Alluvials	44	25	76%	94	47	100%
Sukhoi Log	31	16	94%	69	29	N.A.
IT capex	31	4	N.A.	51	35	46%

Capex breakdown

$ million	4Q 2021	3Q 2021	Q-o-Q	2021	2020	Y-o-Y
Olimpiada	71	62	15%	197	183	8%
Blagodatnoe	110	61	80%	238	71	N.A.
Natalka	38	27	41%	110	123	(11%)
Verninskoye	28	22	27%	79	76	4%
Kuranakh	13	4	N.A.	27	23	17%
Alluvials	44	25	76%	94	47	100%
Sukhoi Log	31	16	94%	69	29	N.A.
IT capex	31	4	N.A.	51	35	46%
Other[10]	23	12	92%	63	66	(5%)
CAPEX	389	233	67%	928	653	42%
Omchak electricity transmitting line	-	-	N.A.	-	24	(100%)
Items capitalised[11], net	62	70	(11%)	227	129	76%
Change in payables for purchase of property, plant and equipment	(36)	(5)	N.A.	(25)	(6)	N.A.
Purchase of PP&E[12]	415	298	39%	1,130	800	41%

In the fourth quarter, the total cash amount spent on the purchase of PP&E increased to $415 million, compared to $298 million in the previous quarter. This mainly reflects the respective increase in total capital expenditures outlined above.

In 2021, the total cash spent on the purchase of PP&E increased to $1,130 million, compared to $800 million in the previous year.

Conference call

A conference call for investors and analysts will be hosted by Pavel Grachev (Chief Executive Officer) and Mikhail Stiskin (Senior Vice President, Finance and Strategy) on 10 March 2022 at 14.00 (London) / 17.00 (Moscow).

To join the conference call, please dial:

Conference ID: 5292544

+44 (0)330 336 9601 (Local access)
0800 279 6877 (Toll free)

USA

+1 646-828-8073 (Local access)

800-289-0720 (Toll free)

Russia
+7 495 646 5137 (Local access)

8 10 800 2865 5011 (Toll free)

To access the replay, please dial:

Passcode: 5292544

+44 (0) 207 660 0134

USA

+1 719-457-0820

Russia

810 800 2702 1012

Polyus

Polyus is the world’s fourth-largest gold mining company by production volumes and the largest gold miner in terms of attributable gold Ore Reserves. The company demonstrates the lowest production costs among major global gold producers.

Its principal operations are located in Siberia and the Russian Far East: Krasnoyarsk, Irkutsk and Magadan regions and the Republic of Sakha (Yakutia).

Enquiries

Investor and Media contact

Victor Drozdov, Director Communications & Investor Relations (CIR) Department

+7 (495) 641 33 77

drozdovvi@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.

¹ On the assumption of foreign exchange rate of 65 roubles per dollar.
²Gold production is comprised of 684 thousand ounces of refined gold in the fourth quarter of 2021 and 2,687 thousand ounces of refined gold and 30 thousand ounces of gold in flotation concentrate in 2021 respectively.
³Adjusted net profit is defined by the group as net profit / (loss) for the period adjusted for impairment loss / (reversal of impairment), unrealised (gain) / loss on derivative financial instruments, net, foreign exchange (gain) / loss, net, and associated deferred and current income tax related to such items.
⁴Adjusted EBITDA is defined by the group as profit for the period before income tax, depreciation and amortisation, (gain) / loss on derivative financial instruments (including the effect of the disposal of a subsidiary and subsequent accounting at equity method), finance costs, net, interest income, foreign exchange loss / (gain), net, impairment loss / (reversal of impairment), (gain) / loss on property, plant and equipment disposal, expenses associated with an equity-settled share-based payment plan, expenses associated with covid-19, loss on transfer of Omchak power grid and special charitable contributions as required to ensure calculation of the Adjusted EBITDA is comparable with the prior period.
⁵Capital expenditure figures are presented on an accrual basis (here presented net of the Sukhoi Log deposit license acquisition cost and net of Omchak power grid construction cost). For details see reconciliation on page 6
⁶ TCC is defined by the group as the cost of gold sales, less property, plant and equipment depreciation and amortisation and change in allowance for obsolescence of inventory, expenses associated with covid-19 and adjusted by non-monetary change in inventory. TCC per ounce sold is the cost of producing an ounce of gold, which includes mining, processing and refining costs. The group calculates TCC per ounce sold as TCC divided by total ounces of gold sold for the period. The group calculates TCC and TCC per ounce sold for certain mines on the same basis, using corresponding mine-level financial information.
⁷AISC is defined by the group as TCC plus selling, general and administrative expenses, stripping activity asset additions, sustaining capital expenditures, unwinding of discounts on decommissioning liabilities, provision for annual vacation payment, employee benefit obligations cost, and change in allowance for obsolescence of inventory less amortisation and depreciation included in selling, general and administrative expenses. AISC is an extension of TCC and incorporates costs related to sustaining production and additional costs which reflect the varying costs of producing gold over the life-cycle of a mine. The group believes AISC is helpful in understanding the economics of gold mining. AISC per ounce sold is the cost of producing and selling an ounce of gold, including mining, processing, transportation and refining costs, general costs from both mine and alluvial operations, and the additional expenditures noted in the definition of AISC. The group calculates AISC per ounce sold as AISC divided by total ounces of gold sold for the period.
⁸Net debt is defined as non-current borrowings plus current borrowings less cash and cash equivalents and bank deposits. Net debt also includes assets and liabilities under cross-currency and interest rate swaps at the reporting date. Net debt excludes derivative financial instrument assets/liabilities other than cross-currency and interest rate swaps, site restoration and environmental obligations, deferred tax and other non-current liabilities. Net debt should not be considered as an alternative to current and non-current borrowings, and should not necessarily be construed as a comprehensive indicator of the group's overall liquidity.
⁹The group calculates net debt (incl. derivatives) to Adjusted EBITDA as net debt (including derivatives) divided by Adjusted EBITDA for the last twelve months.
¹⁰Reflects expenses related to exploration business unit and construction projects.
¹¹Including capitalised stripping costs. For more details see Note 12 of the condensed consolidated interim financial statements.
¹²Presented net of the Sukhoi Log deposit license acquisition cost and payments to Rostec.

Financial results for the fourth quarter and full year 2021 849 KB