Polus — Interim / Quarterly Report 2021

May 27, 2021

PJSC “Polyus” Condensed consolidated interim financial statements for the three months ended 31 March 2021 (unaudited)

PJSC “POLYUS” CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

	Three months ended 31 March
Notes	2021	2020
Gold sales	5	1,017
Other sales	11	11
Total revenue		1,028
Cost of gold sales	6	(301)
Cost of other sales		(10)
Gross profit		717
Selling, general and administrative expenses	7	(73)
Other expenses, net	8	(32)
Operating profit		612
Finance costs, net	9	(51)
Interest income		3
Loss on revaluation of derivative financial instruments, net	10	(12)
Foreign exchange loss, net		(15)
Profit / (loss) before income tax		537
Income tax (expense) / benefit		(87)
Profit / (loss) for the period		450
Profit / (loss) for the period attributable to:
Shareholders of the Company		449
Non-controlling interests		1
		450
Weighted average number of ordinary shares ’000
- for basic earnings per share	19	134,690
- for diluted earnings per share	19	135,043
Earnings / (loss) per share (US Dollar per share)
- basic		3.33
- diluted		3.32

PJSC “POLYUS” CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

	Three months ended 31 March
	2021	2020
Profit / (loss) for the period	450	(389)
Other comprehensive loss for the period
Items that may be subsequently reclassified to profit or loss:
Effect of translation to presentation currency	(67)	(361)
Other comprehensive loss for the period	(67)	(361)
Total comprehensive income / (loss) for the period	383	(750)
Total comprehensive income / (loss) for the period attributable to:
Shareholders of the Company	384	(746)
Non-controlling interests	(1)	(4)
	383	(750)

PJSC “POLYUS” CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

	Notes	31 Mar. 2021	31 Dec. 2020
Assets
Non-current assets
Intangible assets	11	131	132
Property, plant and equipment	12	4,083	4,121
Inventories	14	541	519
Deferred tax assets		108	109
Derivative financial instruments	15	21	17
Other receivables and non-current assets		25	28
		4,909	4,926
Current assets
Inventories	14	590	595
Deferred expenditure		33	17
Advances paid to suppliers and prepaid expenses		44	29
Trade and other receivables	16	26	133
Taxes receivable	17	75	120
Income tax prepaid		23	30
Cash and cash equivalents	18	1,800	1,445
		2,591	2,369
Total assets		7,500	7,295
Equity and liabilities
Capital and reserves
Share capital	19	5	5
Additional paid-in capital	19	2,380	2,410
Treasury shares	19	(226)	(288)
Translation reserve		(3,109)	(3,044)
Retained earnings		3,696	3,272
Equity attributable to shareholders of the Company		2,746	2,355
Non-controlling interests		90	91
		2,836	2,446
Non-current liabilities
Borrowings	20	2,813	3,329
Derivative financial instruments	15	330	330
Deferred tax liabilities		264	259
Site restoration, decommissioning and environmental obligations		58	63
Other non-current liabilities		40	57
		3,505	4,038
Current liabilities
Borrowings	20	703	225
Derivative financial instruments	15	49	42
Trade and other payables	21	290	399
Taxes payable	22	98	101
Income tax payable		19	44
		1,159	811
Total liabilities		4,664	4,849
Total equity and liabilities		7,500	7,295

PJSC “POLYUS” CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

	Equity attributable to shareholders of the Company
	Notes	Number of outstanding shares ’000	Share capital	Additional paid-in capital	Treasury shares	Translation reserve	Retained earnings	Total	Non- controlling interests
Balance at 31 December 2019		133,196	5	2,049	(103)	(2,727)	2,586	1,810	103
Profit / (loss) for the period		-	-	-	-	-	(408)	(408)	19
Other comprehensive income / (loss)		-	-	-	-	(338)	-	(338)	(23)
Total comprehensive income / (loss)		-	-	-	-	(338)	(408)	(746)	(4)
Equity-settled share-based compensation (LTIP), net of tax		-	-	9	-	-	-	9	-
Execution of conversion option by bondholders	156	-	4	15	(3)	-	16	16	-
Shares awarded under LTIP	370	-	(13)	36	(5)	(24)	(6)	(6)	-
Purchase of additional ownership in SL Gold	246	-	5	24	-	2	31	31	(2)
Balance at 31 March 2020		133,968	5	2,054	(28)	(3,073)	2,156	1,114	97
Balance at 31 December 2020		134,705	5	2,410	(288)	(3,044)	3,272	2,355	91
Profit for the period		-	-	-	-	-	449	449	1
Other comprehensive loss		-	-	-	-	(65)	-	(65)	(2)
Total comprehensive income / (loss)		-	-	-	-	(65)	449	384	(1)
Equity-settled share-based compensation (LTIP), net of tax	19	-	-	4	-	-	-	4	-
Shares awarded under LTIP	19	351	-	(34)	74	-	(39)	1	1
Share buyback	19	(62)	-	-	(14)	-	14	-	-
Other	11	-	-	2	-	-	2	2	-
Balance at 31 March 2021		135,005	5	2,380	(226)	(3,109)	3,696	2,746	90

PJSC “POLYUS” CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

	Three months ended 31 March
Notes	2021	2020
Operating activities
Profit / (loss) before income tax	537	(451)
Adjustments for:
Finance costs, net	9	51
Interest income		(3)
Loss on revaluation of derivative financial instruments, net	10	12
Depreciation and amortisation		81
Foreign exchange loss, net		15
Other		5
		698
Movements in working capital
Inventories		(21)
Deferred expenditure		(17)
Trade and other receivables		107
Advances paid to suppliers and prepaid expenses		(16)
Taxes receivable		37
Trade and other payables and accrued expenses		16
Taxes payable		(22)
		782
Cash flows from operations		782
Income tax paid		(96)
Net cash generated from operating activities		686
Investing activities
Purchase of property, plant and equipment (excluding purchase of additional ownership in LLC SL Gold and construction of the Omchak high-voltage power grid) and intangible assets		(196)
Purchase of additional ownership in LLC SL Gold		-
Payments for the

	5 - (8)
Interest received	3
11
Net cash utilised in investing activities	(193)
(202)
Financing activities
1
Proceeds from borrowings	-
112
Repayment of borrowings	(4)
(230)
Interest paid	(68)
(87)
Commissions on borrowings paid	-
(4)
Repayments of lease liability	(5)
(4)
Net (payment) / proceeds on exchange of interest payments under cross currency swaps	9
(1)
10
Net payment on exchange of interest payments under interest rate swaps	9
(1)
-
Payments for close out of revenue stabilizer programme	-
(32)
Increase of ownership in subsidiaries	(24)
-
Payment for share buyback	19
(32)
-
Unpaid dividends for previous periods returned	1
-
Other	2
-
Net cash utilised in financing activities	(132)
(235)
Net increase in cash and cash equivalents	361
107
Cash and cash equivalents at the beginning of the period	18
1,445
1,801
Effect of foreign exchange rate changes on cash and cash equivalents	(6)
(30)
Cash and cash equivalents at the end of the period	18
1,800
1,878

Significant non-cash transactions relating to investing (right-of-use assets recognition and LTIP payments in treasury shares) and financing activities (lease liabilities recognition) are disclosed in the notes 13 and 19 to these condensed consolidated interim financial statements, respectively.

PJSC “POLYUS” NOTES TO THE CONSOLIDATED / CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)
(in millions of US Dollars)

7

1. GENERAL

Public Joint Stock Company Polyus (the “Company” or “Polyus”) was incorporated in Moscow, Russian Federation, on 17 March 2006. The principal activities of the Company and its controlled entities (the “group”) are the extraction, refining and sale of gold. The mining and processing facilities of the group are located in the Krasnoyarsk, Irkutsk, Magadan regions and the Sakha Republic of the Russian Federation. The group also performs research and exploration works. Further details regarding the nature of the business of the significant subsidiaries of the group are presented in note 27. The shares of the Company are “level one” listed on the Moscow Exchange. Global depository shares (“GDSs”) each representing interest in ½ of ordinary share in the Company are traded on the main market for listed securities of the London Stock Exchange plc (“LSE”). The controlling shareholder of the Company is Polyus Gold International Limited (“PGIL”), a company registered in Jersey. The most senior parent of the Company is Wandle Holdings Limited, а company registered in Cyprus. As of 31 March 2021 and 31 December 2020, the ultimate controlling party of the Company was Mr. Said Kerimov.

2. BASIS OF PREPARATION AND PRESENTATION

2.1. Going concern

In assessing the appropriateness of the going concern assumption, management has taken account of the group’s financial position, expected future trading performance, its borrowings, available credit facilities and its capital expenditure commitments, expectations of the future gold price, currency exchange rates and other risks facing the group. After making appropriate enquiries, management considers that the group has adequate resources to continue in operational existence for at least the next 12 months from the date of signing these condensed consolidated interim financial statements and that it is appropriate to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2.2. Compliance with the International Financial Reporting Standards (“IFRS”)

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting (“IAS 34”). Accordingly, the condensed consolidated interim financial statements do not include all information and disclosures required for a complete set of financial statements, and should be read in conjunction with the group’s consolidated financial statements for the year ended 31 December 2020.

2.3. Basis of presentation

The entities of the group maintain their accounting records in accordance with the laws, accounting and reporting regulations of the jurisdiction in which they are incorporated and registered. The accounting principles and financial reporting procedures in these jurisdictions may differ substantially from those generally accepted under IFRS. Accordingly, such financial information has been adjusted to ensure that the condensed consolidated interim financial statements are presented in accordance with IFRS. The condensed consolidated interim financial statements of the group are prepared on the historical cost basis, except for derivative financial instruments and certain trade receivables, which are accounted for at fair value.

2.4. IFRS standards first time applied in 2021

The following is a list of new or amended IFRS standards and interpretations that have been applied by the group in these condensed consolidated interim financial statements:

PJSC “POLYUS” NOTES TO THE CONSOLIDATED / CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)
(in millions of US Dollars)

8

Title	Subject	Effective for annual periods beginning on or after	Effect on the condensed consolidated interim financial statements
Interest Rate Benchmark Reform phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	Replacement of LIBOR with alternative Risk-free Rates	1 January 2021	No effect

2.5. IFRS standards to be applied after 2021

The following standards and interpretations, which have not been applied in these condensed consolidated interim financial statements, were in issue but not yet effective:

Title	Subject	Effective for annual periods beginning on or after	Effect on the condensed consolidated interim financial statements
Amendment IFRS 3	Updates of references to or from the Conceptual Frameworks to the IFRS standards	1 January 2022	No effect
Amendment IAS 16	Proceeds before Intended Use	1 January 2022	Under review
Amendment IFRS 1	Subsidiary as a first-time adopter	1 January 2022	No effect
Amendment IAS 41	Taxation in fair value measurements	1 January 2022	No effect
Amendment IAS 37	Onerous Contracts—Cost of Fulfilling a Contract	1 January 2022	No effect
Amendment IFRS 9	Fees in the ‘10 per cent’ test for derecognition of financial liabilities	1 January 2022	No effect
IFRS 17	Insurance contracts	1 January 2023	No effect
Amendments to IFRS 17	Insurance contracts	1 January 2023	No effect
Amendment IAS 1	Classification of Liabilities as Current or Non-Current	1 January 2023	No effect
Amendment IAS 8	New definition of the accounting estimates	1 January 2023	No effect
Amendment IAS 1	Disclosure of accounting policy	1 January 2023	No effect

3. SIGNIFICANT ACCOUNTING POLICIES

The same accounting policies, presentation and methods of computation have been followed in these condensed consolidated interim financial statements as were applied in the group’s audited consolidated financial statements for the year ended 31 December 2020. IAS 34 requires calculation of income tax benefit/expense for interim reporting periods to be based on the expected annual effective income tax rate. Non-taxable / (non-deductible) gains / (losses) on revaluation of certain Derivative financial instruments as well as certain other items of less predictable nature are excluded from determining the expected annual effective income tax rate, which may result in significant variations of effective income tax rate between different interim periods. The group presents its condensed consolidated interim financial statements in the US Dollar (“USD”), as management believes it is a more convenient presentation currency for international users of the condensed consolidated interim financial statements of the group as it is a common presentation currency in the mining industry. As of 31 March 2021, quarterly-end RUB/ US Dollar exchange rate used in the preparation of the condensed consolidated interim financial statements was 75.70 (31 December 2020: 73.88).

PJSC “POLYUS” NOTES TO THE CONSOLIDATED / CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)
(in millions of US Dollars)

9

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The critical accounting judgements, estimates and assumptions made by management of the group and applied in the accompanying condensed consolidated interim financial statements for the three months ended 31 March 2021 are consistent with those applied in the preparation of the consolidated financial statements of the group for the year ended 31 December 2020.

5. SEGMENT INFORMATION

For management purposes the group is organised by separate business segments identified on a combination of operating activities and geographical area bases with separate financial information available and reported regularly to the chief operating decision maker (“CODM”), determined as the Budget Committee and the Investment Committee. The following is a description of operations of the group’s identified reportable segments and those that do not meet the quantitative reporting threshold:

• Olimpiada business unit (Krasnoyarsk region of the Russian Federation) – mining (including initial processing) and sale of gold from the Olimpiada mine, as well as research, exploration and development work at the Olimpiada deposit.
• Blagodatnoye business unit (Krasnoyarsk region of the Russian Federation) – mining (including initial processing) and sale of gold from the Blagodatnoye mine, as well as research, exploration and development work at the Blagodatnoye deposit.
• Natalka business unit (Magadan region of the Russian Federation) – mining (including initial processing) and sale of gold from the Natalka mine, as well as research, exploration and development work at the Natalka deposit.# PJSC “POLYUS” NOTES TO THE CONSOLIDATED / CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED)

(in millions of US Dollars)

● Verninskoye business unit (Irkutsk region of the Russian Federation) – mining (including initial processing) and sale of gold from the Verninskoye mine, research, exploration and development works at the Smezhny and Medvezhy Zapadny deposits.
● Kuranakh business unit (Sakha Republic of the Russian Federation) – mining (including initial processing) and sale of gold from the Kuranakh mines.
● Alluvials business unit (Irkutsk region of the Russian Federation) – mining (including initial processing) and sale of gold from several alluvial deposits.
● Exploration business unit (Krasnoyarsk, Irkutsk, Amur and other regions of the Russian Federation) – exploration and evaluation works in several regions of the Russian Federation other than those related to Sukhoi Log deposit.
● Sukhoi Log business unit (Irkutsk region of the Russian Federation) – exploration and evaluation works at the Sukhoi Log deposit.
● Unallocated – the group does not allocate segment results of companies that perform management, investing activities and certain other functions. Neither standalone results nor the aggregated results of these companies are significant enough to be disclosed as operating segments because quantitative thresholds are not met.

The reportable gold production segments derive their revenue primarily from gold sales. The CODM performs an analysis of the operating results based on these separate business units and evaluates the reporting segment’s results, for purposes of resource allocation, based on the measurements of:

● Gold sales;
● Ounces of gold sold, in thousands;
● Adjusted earnings before interest, tax, depreciation and amortisation and other items (Adjusted EBITDA);
● Total cash cost (TCC);
● Total cash cost per ounce of gold sold (TCC per ounce ); and
● Capital expenditures.

Business segment assets and liabilities are not reviewed by the CODM and therefore are not disclosed in these condensed consolidated interim financial statements. The group’s non-current assets are located in the Russian Federation.

Business units

Business units	Gold sales	Ounces of gold sold in thousands	Adjusted EBITDA	TCC	TCC per ounce (US dollar)	Capital expenditures
For the three months ended 31 March 2021
Olimpiada	434	243	310	95	395	28
Blagodatnoye	165	92	121	33	359	21
Natalka	205	115	144	43	377	20
Verninskoye	116	65	87	22	338	15
Kuranakh	97	54	59	29	539	12
Alluvials	-	-	(5)	-	-	4
Exploration	-	-	-	-	-	4
Sukhoi Log	-	-	-	-	-	9
Unallocated	-	-	23	(4)	-	14
Total	1,017	569	739	218	386	127
For the three months ended 31 March 2020
Olimpiada	357	226	252	85	377	25
Blagodatnoye	165	103	117	37	361	8
Natalka	151	95	94	39	414	38
Verninskoye	108	69	78	24	353	16
Kuranakh	80	51	44	29	568	6
Alluvials	-	-	(4)	-	-	4
Exploration	-	-	-	-	-	4
Sukhoi Log	-	-	-	-	-	4
Unallocated	-	-	8	1	-	19
Total	861	544	589	215	394	124

2 Unaudited and not reviewed

Adjusted EBITDA reconciles to the IFRS reported figures on a consolidated basis as follows:

	Three months ended 31 March
	2021
Profit / (loss) before income tax	537
Finance costs, net (note 9)	51
Interest income	(3)
Depreciation and amortisation	81
Foreign exchange loss, net	15
Loss on revaluation of derivative financial instruments, net (note 10)	12
Equity-settled share-based plans (LTIP) (note 19)	10
Expenses related to COVID-19 (note 25)	24
Special charitable contributions	7
Impairment of property, plant and equipment	-
Loss on disposal of property, plant and equipment and intangible assets	5
Adjusted EBITDA	739

The measurement of TCC per ounce of gold sold reconciles to the IFRS reported figures on a consolidated basis as follows:

	Three months ended 31 March
	2021
Cost of gold sales (note 6)	301
Adjusted for:
Depreciation and amortisation (note 6)	(94)
Effect of depreciation, amortisation, accrual and provisions in inventory change	22
Expenses related to COVID-19 in cost of gold sales	(11)
TCC	218
Ounces of gold sold, in thousands	569
TCC per ounce of gold sold, USD per ounce	386

Gold sales

	Three months ended 31 March
	2021
Refined gold	1,017
Gold in flotation concentrate	-
Total	1,017

Gold sales reported above represent revenue generated from external customers. There were no inter-segment gold sales during the three months ended 31 March 2021 and 2020. Gold sales in the Alluvial business unit are more heavily weighted towards the second half of the calendar year, with all annual sales usually occurring from May until October. There were no gold sales outside of Russian Federation during the three months ended 31 March 2021 and 2020.

Reconciliation of capital expenditures to the property plant and equipment additions (note 12) is presented below:

	Three months ended 31 March
	2021
Capital expenditures	127
Construction of the Omchak high-voltage power grid	-
Stripping activity assets additions (note 12)	67
Less: intangible and other non-current assets additions	(5)
Property plant and equipment additions (note 12)	189

6. COST OF GOLD SALES

	Three months ended 31 March
	2021
Depreciation and amortisation	94
Employee compensation	87
Consumables and spares	64
Mineral extraction tax	50
Fuel	25
Power	15
Other	24
Total cost of production	359
Increase in stockpiles, gold-in-process and refined gold inventories	(58)
Total	301

7. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

	Three months ended 31 March
	2021
Employee compensation	54
Depreciation and amortisation	6
Taxes other than mineral extraction tax and income taxes	4
Professional services	2
Distribution expenses related to gold flotation concentrate	1
Other	6
Total	73

8. OTHER EXPENSES, NET

	Three months ended 31 March
	2021
Expenses related to COVID-19 (note 25)	13
Special charitable contributions	7
Loss on disposal of property, plant and equipment and intangible assets	5
Impairment of property, plant and equipment	-
Other	7
Total	32

9. FINANCE COSTS, NET

	Three months ended 31 March
	2021
Interest on borrowings	47
Interest on lease liabilities	1
Loss / (gain) on exchange of interest payments under cross currency swaps	1
Loss on exchange of interest payments under interest rate swaps	1
Unwinding of discounts	1
Bank commission and write-off of unamortised debt cost due to early extinguishment	-
Total	51

10. LOSS ON REVALUATION OF DERIVATIVE FINANCIAL INSTRUMENTS, NET

	Three months ended 31 March
	2021
Revaluation loss on cross currency swaps	(13)
Revaluation loss on revenue stabiliser	-
Revaluation gain / (loss) on interest rate swaps	1
Revaluation loss on conversion option	-
Total	(12)

11. INTANGIBLE ASSETS

		Internally- generated software	Purchased software	Internally- generated other	Total
Cost
	At 31 December 2019	85	28	30	143
	Additions	5	1	2	8
	Reclassification	-	1	-	1
	Amortisation charge	(1)	(2)	(1)	(4)
	Effect of translation to presentation currency	(16)	(4)	(6)	(26)
	At 31 March 2020	72	24	26	122
	Cost	95	28	34	157
	Accumulated amortisation and impairment	(12)	(8)	(5)	(25)
	Net book value at 31 December 2020	83	20	29	132
	Additions	3	1	1	5
	Reclassification	2	(2)	-	-
	Amortisation charge	(1)	(2)	-	(3)
	Effect of translation to presentation currency	-	(1)	(2)	(3)
	Cost	99	26	33	158
	Accumulated amortisation and impairment	(12)	(10)	(5)	(27)
	Net book value at 31 March 2021	87	16	28	131
Accumulated amortisation and impairment
	At 31 December 2019	(9)	(8)	(3)	(20)
	Effect of translation to presentation currency	(16)	(4)	(6)	(26)
	At 31 March 2020	(8)	(8)	(4)	(20)
	At 31 December 2020	(12)	(8)	(5)	(25)
	Effect of translation to presentation currency	-	(1)	(2)	(3)
	At 31 March 2021	(12)	(10)	(5)	(27)
Net book value at 31 December 2019		76	20	27	123
Net book value at 31 March 2020		64	16	22	102
Net book value at 31 December 2020		83	20	29	132
Net book value at 31 March 2021		87	16	28	131

12. PROPERTY, PLANT AND EQUIPMENT

	Fixed assets	Stripping activity assets	Capital construction in progress	Exploration and evaluation assets	Total
Cost
	At 31 December 2019	4,484	918	717	641
	Additions	-	53	112	11
	Transfers	69	-	(69)	-
	Disposals	(1)	-	-	-
	Depreciation charge	(108)	(18)	-	-
	Impairment	-	-	-	(2)
	Effect of translation to presentation currency	(566)	(130)	(139)	(126)
	Other	(1)	-	-	1
	At 31 March 2020	3,615	776	609	519
	Cost	4,130	971	629	590
	Accumulated depreciation and impairment	(1,767)	(346)	(61)	(25)
	Net book value at 31 December 2020	2,363	625	568	565
	Additions	-	67	103	19
	Transfers	148	-	(148)	-
	Disposals	-	-	(1)	-
	Depreciation charge	(104)	(22)	-	-
	Effect of translation to presentation currency	(56)	(16)	(13)	(14)
	Other	5	-	(1)	(5)
	At 31 March 2021	4,178	1,014	566	590
Accumulated depreciation and impairment
	At 31 December 2019	(1,686)	(301)	(63)	(30)
	Depreciation charge	(108)	(18)	-	-
	Impairment	-	-	-	(2)
	Effect of translation to presentation currency	(566)	(130)	(139)	(126)
	At 31 March 2020	(1,424)	(254)	(51)	(24)
	At 31 December 2020	(1,767)	(346)	(61)	(25)
	Depreciation charge	(104)	(22)	-	-
	Effect of translation to presentation currency	(56)	(16)	(13)	(14)
	At 31 March 2021	(1,822)	(360)	(58)	(25)
Net book value at 31 December 2019		2,798	617	654	611
Net book value at 31 March 2020		2,191	522	558	495
Net book value at 31 December 2020		2,363	625	568	565
Net book value at 31 March 2021		2,356	654	508	565

The carrying value of rights-of-use assets included in fixed assets is disclosed in note 13.# Mineral rights

The carrying values of mineral rights included in fixed assets and exploration and evaluation assets were as follows:

	31 Mar. 2021	31 Dec. 2020
Mineral rights presented within:
- fixed assets	55	57
- exploration and evaluation assets	340	346
Total	395	403

Exploration and evaluation assets

The carrying values of exploration and evaluation assets were as follows:

	31 Mar. 2021	31 Dec. 2020
Sukhoi Log	404	409
Chertovo Koryto	31	31
Olimpiada	31	27
Razdolinskoye	28	29
Burgakhchan area	18	17
Panimba	16	17
Bamsky	15	15
Natalka	7	7
Blagodatnoye	6	6
Other	9	7
Total	565	565

Depreciation and amortisation charges are allocated as follows:

	Three months ended 31 March 2021	2020
Depreciation in change in inventory	22	29
Capitalised within property, plant and equipment	26	27
Less: amortisation of intangible and other non-current assets	(3)	(4)
Total depreciation capitalised as part of other assets	45	52
Depreciation and amortisation within cost of production (note 6)	94	96
Less: depreciation in change in inventory	(22)	(29)
Selling, general and administrative expenses (note 7)	6	6
Cost of other sales	3	1
Total depreciation in profit or loss	81	74
Total depreciation of property, plant and equipment	126	126

13. LEASES

The most significant leases of the group are office leases. Movements of the right-of-use assets presented within Property, Plant and Equipment (note 12) were as follows:

	Three months ended 31 March 2021	Three months ended 31 March 2020
	Related party transactions	Non-related party transactions
Carrying value as of the beginning of the period	46	11
Changes in right-of-use assets due to lease indexation, modification and recognition of new contracts	-	5
Depreciation charge	(1)	(2)
Effect of translation to presentation currency	(1)	-
Carrying value as of the end of the period	44	14

Movements of the lease liabilities presented within Borrowings (note 20) were as follows:

	Three months ended 31 March 2021	Three months ended 31 March 2020
	Related party transactions	Non-related party transactions
Carrying value as of the beginning of the period	51	19
Changes in lease liabilities due to lease indexation, modification and recognition of new contracts	-	5
Foreign exchange loss, net	1	1
Interest on lease liabilities	1	-
Repayments of lease liability	(2)	(2)
Effect of translation to presentation currency	(1)	(1)
Carrying value as of the end of the period	50	22

14. INVENTORIES

	31 Mar. 2021	31 Dec. 2020
Inventories expected to be used after 12 months
Stockpiles	526	505
Gold-in-process	15	14
	541	519
Inventories expected to be used in the next 12 months
Stockpiles	152	150
Gold-in-process	108	101
Antimony in gold-antimony flotation concentrate and silver	10	4
Refined gold and gold in flotation concentrate	5	4
Materials and supplies	344	365
Less: obsolescence provision for materials and supplies	(29)	(29)
	590	595
Total	1,131	1,114

15. DERIVATIVE FINANCIAL INSTRUMENTS

	31 March 2021	31 December 2020
	Non-Current	Current
Total derivative financial assets	21	-
Cross currency swaps	21	-
	Non-Current	Current
Cross currency swaps	322	49
Interest rate swaps	8	-
Total derivative financial liabilities	330	49

Cross currency swaps

The following terms were in place as of 31 March 2021:

Nominal (USD million)	Interest payments	Expiration date	Frequency
Group pays (USD million)	Group receives (RUB million)
173	semi-annually LIBOR + 4.45%	12.1%	July 2021
82	semi-annually 5.9%	12.1%	July 2021
125	quarterly 5.09%	MosPrime 3m + 0.2%	March 2024
965	quarterly 5.00%	MosPrime 3m - 0.45%	April 2024
310	semi-annually 3.23%	7.4%	October 2024
125	quarterly 2.8%	MosPrime 3m + 0.27%	March 2025

Interest rate swaps

The following terms were in place as of 31 March 2021:

Nominal (USD million)	Frequency	Group pays	Group receives	Expiration date
150	monthly	2.425%-2.44%	LIBOR	February 2024

16. TRADE AND OTHER RECEIVABLES

	31 Mar. 2021	31 Dec. 2020
Trade receivables for gold-bearing products	6	115
Other receivables	33	32
Less: allowance for other receivables	(13)	(14)
Total	26	133

17. TAXES RECEIVABLE

	31 Mar. 2021	31 Dec. 2020
Reimbursable value added tax	74	118
Other prepaid taxes	1	2
Total	75	120

18. CASH AND CASH EQUIVALENTS

	31 Mar. 2021	31 Dec. 2020
Current USD bank accounts	1,422	1,115
Current RUB bank accounts	20	69
Bank deposits denominated in USD	278	178
Bank deposits denominated in RUB	80	83
Total	1,800	1,445

Bank deposits within cash and cash equivalents include deposits with original maturity less than three months or repayable on demand without loss on principal and accrued interest denominated in RUB and USD and accrue interest at the following rates:

Interest rates:	31 Mar. 2021	31 Dec. 2020
- Bank deposits denominated in USD	0.5-0.9%	0.5-0.9%
- Bank deposits denominated in RUB	3.6-4.7%	4.0-4.7%

19. SHARE CAPITAL AND RESERVES

Authorised share capital of the Company as of 31 March 2021 comprised issued and fully paid 136,069 thousand ordinary shares at par value of RUB 1 each, of which 1,064 thousand were included within treasury shares.

Equity-settled share-based compensation (long-term incentive plan)

PJSC Polyus grants long-term incentive awards according to which the members of management of the group are entitled to a conditional award in the form of PJSC Polyus’ ordinary shares, which vest upon achievement of financial and non-financial performance targets on expiry of performance periods. Expenses arising from the LTIP are recognised in the condensed consolidated interim statement of profit or loss within Employee compensation included within Selling, general and administrative expenses.

Share buyback

During the three months ended 31 March 2021, the group completed a share buyback started in December 2020 by acquiring 62 thousand of the Company’s ordinary shares from its shareholders. As of 31 December 2020 a liability in the amount of USD 14 million was recognised in respect of shares to be delivered.

Weighted average number of ordinary shares

The weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share (“EPS”) is as follows (in thousands of shares):

	Three months ended 31 March 2021	2020
Ordinary shares in issue at the beginning of the period	134,705	133,196
Conversion of convertible bond	-	156
Shares awarded under LTIP	351	370
Purchase of additional ownership in SL Gold (payable in treasury shares)	-	246
Share buyback	(62)	-
Other	11	-
Ordinary shares in issue at the end of the period	135,005	133,968
Weighted average number of ordinary shares – basic EPS	134,690	133,308
Dilutive effect of potentially issuable shares under LTIP	353	242
Weighted average number of ordinary shares – diluted EPS	135,043	133,550

	Profit / (loss) after tax attributable to the shareholders of the Company (million USD)	Profit / (loss) after tax attributable to the shareholders of the Company for diluted EPS calculation (million USD)
Three months ended 31 March 2021	449	449
2020	(408)	(408)

20. BORROWINGS

	Nominal rate %	31 Mar. 2021	31 Dec. 2020
Eurobonds with fixed interest rate due in 2022	4.699%	481	481
Eurobonds with fixed interest rate due in 2023	5.250%	785	785
Eurobonds with fixed interest rate due in 2024	4.7%	469	468
Notes due in 2029 (Rusbonds) with noteholders’ early repayment option in 2024	7.4%	264	270
Notes due in 2025 (Rusbonds) with noteholders’ early repayment option in 2021	12.1%	198	203
Credit facilities with financial institutions nominated in RUR with variable interest rates	Central bank rate + 2.3% MosPrime + 0.2% / + 0.27% / - 0.45%	1,098	1,128
Credit facilities with financial institutions nominated in USD with variable interest rates	USD LIBOR + 1.40% / + 1.65%	149	149
Lease liabilities nominated in USD and RUR	5.26%	72	70
Sub-total		3,516	3,554
Less: current portion of long-term borrowings due within 12 months		(703)	(225)
Long-term borrowings		2,813	3,329

Unused credit facilities

As of 31 March 2021, the group has unused credit facilities in the total amount of USD 1,213 million (31 December 2020: USD 1,243 million).

Pledge

As of 31 March 2021 and 31 December 2020, all shares of JSC TaigaEnergoStroy belonging to the group were pledged to secure a credit line. Additionally, the group pledged proceeds from certain gold sale agreements as a security for another credit facility.

Other matters

There were a number of financial covenants under several loan agreements in effect as of 31 March 2021 according to which the respective subsidiaries of the Company and the Company itself are limited in their level of leverage and other financial and non-financial parameters.##D FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 31 MARCH 2021 (UNAUDITED) (in millions of US Dollars)

The group tests covenants quarterly and was in compliance with the covenants as of 31 March 2021.

21. TRADE AND OTHER PAYABLES

	31 Mar. 2021	31 Dec. 2020
Employee compensation payable	79	94
Interest payable	35	57
Trade payables	65	49
Accrued annual leave	39	33
Share buyback (note 19)	-	33
Payables for shares of PJSC Lenzoloto	-	24
Dividends payable	2	2
Other accounts payable and accrued expenses	70	107
Total	290	399

22. TAXES PAYABLE

	31 Mar. 2021	31 Dec. 2020
Value added tax	21	33
Social taxes	40	24
Mineral extraction tax	17	24
Property tax	4	5
Other taxes	16	15
Total	98	101

23. RELATED PARTIES

There were no transactions with related parties throughout three months ended 31 March 2021, except for those presented within note 13 and compensation of the key management personnel as detailed below.

Key management personnel

	Three months ended 31 March 2021	2020
Short-term compensation to key management personnel accrued	6	5
Equity-settled share-based compensation (LTIP)	8	21
Total	14	26

24. COMMITMENTS

Commitments for future lease payments due under non-cancellable lease agreements excluded from the scope of IFRS 16

The Land in the Russian Federation on which the group’s production facilities are located is owned by the state. The group leases this land through operating lease agreements, which expire in various years through to 2065. Future lease payments due under non-cancellable operating lease agreements excluded from IFRS 16 scope (note 13) were as follows:

	31 Mar. 2021	31 Dec. 2020
Due within one year	8	8
From one to five years	24	24
Thereafter	48	49
Total	80	81

Capital commitments

The group’s contracted capital expenditure commitments are as follows:

	31 Mar. 2021	31 Dec. 2020
Projects in Krasnoyarsk	103	97
Project Natalka	74	73
Project Sukhoi Log	28	-
Other capital commitments	24	26
Total	229	196

During the three months ended 31 March 2021, following the analysis of involvement of each individual member of the key management personnel in the decision making process within the group, it was concluded that certain members were to be excluded from the list. Amounts for the three months ended 31 March 2020 were updated, respectively.

25. OPERATING ENVIRONMENT - IMPACT OF COVID-19 PANDEMIC

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The group may face increasingly broad effects of COVID-19 due to its negative impact on the global economy and major financial markets from production interruptions or closure of facilities, supply chain disruptions, quarantines of personnel, reduced demand and difficulties in raising financing. The significance of COVID-19 on the group’s business largely depends on the duration and the incidence of the pandemic effects on the world and Russian economy. The health and safety of employees remains the group’s utmost focus. The group continues to monitor the COVID-19 threat level and assess the potential health risks for its employees, with all monitoring systems in place. The impact on the group’s operations was principally limited to provision of temporary accommodation and treatment facilities at the group’s production sites for the affected employees, implementation of additional sanitary measures, and charitable contributions to hospitals and other institutions in group’s operating regions. Costs directly attributable to dealing with the COVID-19 pandemic comprise additional compensation paid to employees, donations to regional administrations, hospitals and other institutions as well as additional health and safety expenses. The group’s direct and incremental costs related to COVID-19 were included in the following captions of the condensed consolidated interim financial statements as follows:

	Three months ended 31 March 2021	2020
Cost of gold sales (Employee compensation)	11	-
Other expenses, net	13	-
Total expenses related to COVID-19 recognised in profit or loss	24	-
Increase in stockpiles, gold-in-process and refined gold inventories	4	-
Property plant and equipment additions (infrastructure facilities and stripping activity asset)	7	-
Total costs related to COVID-19	35	-

26. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash and cash equivalents, current trade and other receivables and accounts payable approximate their fair value given the short-term nature of these instruments. Non-current other receivables are discounted at discount rates derived from observable market input data. Trade receivables for gold-bearing products are carried at fair value through profit or loss (Level 2 of the fair value hierarchy in accordance with IFRS 13).

Determination of fair value of derivative financial instruments

Derivative financial instrument	Valuation technique	Inputs to valuation techniques used to measure fair value	Fair value hierarchy of inputs in accordance with IFRS 13
Cross-currency swaps	Discounted cash flow valuation technique	Spot currency exchange rates, USD LIBOR and RUB interest rates	Level 2
Interest rate swaps	Discounted cash flow valuation technique	USD LIBOR rates	Level 2

The fair value of derivative financial instruments includes an adjustment for credit risk in accordance with IFRS 13. The adjustment is calculated based on the expected exposure. For positive expected exposures, credit risk is based on the observed credit default swap spreads for each particular counterparty or, if they are unavailable, for equivalent peers of the counterparty. For negative expected exposures, the credit risk is based on the observed credit default swap spread of the group’s peer.

Borrowings and deferred consideration are carried at amortised cost. The fair value of the group’s borrowings excluding lease liabilities is estimated as follows:

	31 March 2021	31 December 2020
	Carrying amount	Fair value
Eurobonds (Level 1)	1,735	1,830
Borrowings (Level 2)	1,247	1,248
Rusbonds (Level 1)	462	470
Total	3,444	3,548

The fair value of all of the group’s borrowings except for the Eurobonds and Rusbonds is within Level 2 of the fair value hierarchy in accordance with IFRS 13. The fair value of the Eurobonds and Rusbonds is within Level 1 of the fair value hierarchy in accordance with IFRS 13, because the Eurobonds and Rusbonds are publicly traded in an active market. The fair value of borrowings and bonds is determined using a discounted cash flow valuation technique with reference to observable market inputs: spot currency exchange rates, forward USD LIBOR and RUB interest rates, the company’s own credit risk and quoted price of the convertible bonds.

27. INVESTMENTS IN SIGNIFICANT SUBSIDIARIES

The basis of distribution of accumulated retained earnings for companies operating in the Russian Federation is defined by legislation as the current year net profit of the company, as calculated in accordance with Russian accounting standards. However, the legislation and other statutory laws and regulations dealing with profit distribution are open to legal interpretation and accordingly management believes at present it would not be appropriate to disclose an amount for distributable profits and reserves in these condensed consolidated interim financial statements.

Information about significant subsidiaries of the group

Subsidiaries	Nature of business	Effective % held at 31 Mar. 2021	Effective % held at 31 Dec. 2020	Incorporated in Russian Federation
JSC Polyus Krasnoyarsk	Mining (open pit)	100	100	Yes
JSC Polyus Aldan	Mining (open pit)	100	100	Yes
JSC Polyus Verninskoye	Mining (open pit)	100	100	Yes
JSC GMC Lenzoloto	Holding company of Alluvials business unit	100	100	Yes
JSC Polyus Magadan	Mining (open pit)	100	100	Yes
LLC Polyus Stroy	Construction	100	100	Yes
LLC Polyus Sukhoi Log (renamed, previously LLC SL Gold)	Exploration and evaluation of the Sukhoi Log deposit	100	100	Yes
JSC Polyus Krasnoyarsk regional investment program (Blagodatnoye business unit)				Yes

JSC Polyus Krasnoyarsk is undertaking an investment project to increase mining and processing facilities of the Blagodatnoye mine (thereafter «Mill-5 project»). According to the Directive of the Government of the Krasnoyarsk region JSC Polyus Krasnoyarsk was included in the register of the participants of regional investment projects (thereafter «RInvP») starting from 2021. As a result, the subsidiary has been granted a right to apply reduced corporate income tax rates in relation to the Mill-5 project income and reducing MET coefficients in relation to minerals extracted under the Mill-5 project. Considering expected start of production under the Mill-5 project, JSC Polyus Krasnoyarsk expects to apply the following reduced tax rates:

• Mineral extraction tax (MET): 0% for 2025 - 2026 increasing by 1.2% every two years thereafter to 6%. Amount of tax savings should not exceed the amount of investments in Mill-5 project;
• Corporate income tax: 5% for 2025 - 2028.# JSC Polyus Verninskoye regional investment program (Verninskoye business unit)

The group expects that during 2021 the amount of mineral extraction tax savings is likely to exceed the amount of investments in regional investment program, in which case JSC Polyus Verninskoye would no longer be able to benefit from the reduced mineral extraction tax and income tax rates (as of 31 March 2021 savings have not exceeded investments).

28. EVENTS AFTER THE REPORTING DATE

There were no events subsequent to the reporting date that would adjust amounts of assets, liabilities, income or expenses or that should be disclosed in these condensed consolidated interim financial statements.