Polymetal International plc

Dear ladies and gentlemen, welcome to the Solico Resources Full Year 2025 Financial Results Webcast. Joining us today are Vitaly Nesis, Chief Executive Officer, and Evgeny Anushenko, Chief Financial Officer. We will begin with a presentation followed by a Q&A session. You can submit your questions in writing via the webcast platform. Vitaly, over to you.

Thanks a lot, Kirill. Welcome to the traditional financial results call for Select4Resources. Today we'll cover the results for financial year 2025 and we'll provide update on our strategic projects and outlook for 2026. I will start with the national disclaimer on forward-looking statements. Please take care to read it carefully. And I will start with the key figures for 2025. Obviously, this year, the last year, rather, was quite successful for the company. Despite the material decrease in payable production, of which more later, Solidcore managed to demonstrate substantial improvements in all measures of profitability. Obviously, this was mostly due to very favorable bull price environment, but nonetheless, we are pleased to report a very strong set of results. And I think probably the most important result in 2025 was the fact that the company reported no lost time injuries among our employees and our contractors. We also had zeroed the loss to work-related injuries. And we are proud to report that 2025 was the eighth consecutive year with no fatalities at Solid Core's operations in Kazakhstan. In terms of highlights for 2025, production went down, payable production went down mostly as a result of inventory accumulation at a most fast in Russia. But we managed to record a 37% increase in adjusted EBITDA on only 13% rise in revenue. So the margins have improved quite strong. In terms of cost performance, I will just briefly note that the dynamics was almost fully due to external factors, and as a result, our underlying net earnings increased by 40%. Net operating cash flow suffered again as a result of inventory accumulation, but that is a temporary phenomenon which will be reversed this year. CapEx continued to grow, plus 23%. As has been highlighted many times earlier, Solid 4 is ramping up our very aggressive CapEx program, and 2025 indicated the move in that direction. In terms of net cash, it increased. So our leverage levels are very comfortable. We are very well funded for our CapEx program. Turning to poor reserves and mineral resources, the year was marked by relatively stable dynamics. We did not replace all of our reserve to expect material increases as we remain very consistent and persistent in our exploration. In terms of production, annual payable gold equivalent output was 395,000 ounces. and that was mostly driven by the decrease of payable gold production at Gazelle due to delays in third-party concentrate processing. More or less, mine level output was more or less stable at 580,000 ounces of gold. And the difference between payable production and mine output was almost fully tied up in inventory at the level. Turning to inventory, specifically, we are now substantially, we have substantially bent down the path of winding down the excess payable metal inventory, mostly at Gazelle. In the middle of the last year, the inventory was 258,000 ounces. Now it's 158,000 ounces. So we still have approximately, dependent on the month of the year, 80,000 to 100,000 ounces of excess payable gold inventory tied up and concentrated. as of the end of the last year. We have continued to bring those levels down in 2026, and I would like to highlight the start of commercial cooperation with Kazikmas, where we have started to ship our concentrate for tile processing in December of last year. We expect that cooperation with KFMS will further to strategic goals of solid core. First of all, the reduction of dependence on Russian post-processing. And secondly, the sustainable and quick reduction of concentrate inventory levels. So far, the amount of concentrate processed through KFMS is significantly lower than what we do in Russia at Vox. But we are optimistic about the dynamics later this year and hopeful this step will unlock other strategic opportunities for SOLIDWORKS. So overall, not yet fully done with the reduction in working capital, but making good progress on this very important form. And I pass the presentation to Eugenia, who will take you through the detailed analysis of financial statements.

Thank you very much, Vitaly. So as Vitaly mentioned, Thanks to the favorable gold price environment, our revenue rose this year to $1.5 billion by 13%. So at Gazil, revenue increased 4% to $892 million. So higher gold prices more than compensated 34% drop in volumes. And at Varvara, revenue jumped 48% to $608 million on stable volumes and also stronger pricing. The remaining excess of gazelle concentrate inventories are expected to be released during 2026, which will drive our production guidance and sales guidance to 540,000 ounces. Next, please. So in terms of the total cash costs, they were 17% up to 1,100 per ounce, and the three main drivers behind the increase were the gazelle sales deferrals, spreading cost over a few ounces, domestic inflation above 12%, and higher mineral extraction tax linked to the gold price. The 10-day depreciation by 11% provided a partial offset of this increase. In terms of the total cash cost by mine, at Gazil, TCC rose 8%, and at Varvara, The increase was 13% to $1,556, basically to remember the same factors as I mentioned before. On the next slide, you can see the cost breakdown. So 30% is price-linked mineral extraction tax in dollars, and then 30% is the dollar and oil-linked cost, and 30% of our costs that didn't get eliminated. So that means that the gold-linked mining tax is becoming an increasing share as prices rise and the mineral extraction rate increased to 11% from 7.5% starting from the January, 2026. All in-sustaining cash costs were slightly above 1500 per ounce and the 18% increase was driven by the same factors which were driven in total cash cost, plus higher sustaining capital expenditure and SG&A expenses. At Kazil, all-in sustaining cash cost was flat at roughly 1,000 rounds, as lower sustaining capital capex offset inflation and demonstrated incredible free cash flow generation at current gold prices. At Varmara, all-in-sustaining cash costs rose 15% to slightly above $2,000 per ounce, reflecting investments in tavern storage construction as well as railroad spur at Kamar and fleet upgrades. In terms of the adjusted EBITDA, which grew 37% to $972 million, So the Kazoo contributed almost 700 million to the group EBITDA, and Barbaro contributed 332 million. The EBITDA margin expanded to 65%, up from 54%. And in the breach, you can see that higher gold prices added more than $500 million and partially upset by $231 million from lower sales volumes. and $69 million from high unit cost. So turning to the net cash position, net cash increased 24% to 464 million. We generated net operating cash flow of $600 million and deployed it towards capital expenditures, so 255 million went to CAPEX, and we spent $150 million on M&A and other investments. This included also the mandatory share buyback. So the gross debt was reduced to $267 million, and the average cost of debt was 5.7%. I would like to say that we are advancing negotiations with several international banks for up to $600 million to $700 million financing for IFPSPOK's construction. So in February, we signed an indicative term sheet with EFW, which is a German development bank. Another 300 million is expected to be provided by European Bank for Construction and Development, and another 300 million by a club of international lenders. We expect the main facility agreement to be signed at the end of the second quarter this year. And with that, Vitaly, over to you in terms of capital expenditure.

As I have mentioned already, GAF-X has continued to increase on the upward path. Clearly, the single most important project for SolidCore in 2025 was IFC Spots, which claimed more or less half of total capital expenditures for the company. But we continue to invest in other initiatives as well. Against the background of very favorable commodity prices, we ramped up investments in same-business capital, including sailing storage facilities upgrades, fleet renewals, and other sort of improvement initiatives. We have done so consciously. It's been a long-standing corporate policy with Solid4 to invest more in paying business projects during the periods of positive market conditions with the view to be able to reduce discretionary capex spending if in the future the market conditions deteriorate. So we spent... quite a lot on our same business and also on the green energy initiatives. The capitalized stripping, on the other hand, is going down as the life of the open business at Kizil is approaching its end, and this year will mark the first year of heavy spending on Kizil and LeBron. And on balance sheet, Evgenia will continue the presentation.

So at the year end, we held $731 million in cash and $135 million of undrawn credit lines. We also invested roughly $100 million in short-term investments. So it's a very strong liquidity position, and overall we feel comfortable in the current environment. And over to you, Vitaly, in terms of capital allocation.

Nothing really changes in terms of capital allocation priorities. We continue to advance our long-term capital-heavy projects, the POX, Surumbet, and potentially Best for PIP. M&A, to be frank, we have not been able to be really that active yet. In M&A in 2025, the market for assets has been overheated from my perspective, even the dynamics in gold and actually overpriced. So M&A remains an important direction, but I'm not sure how much we'll be able to allocate to that. We continue to step up the exploration effort and, as I have mentioned, the investment in business decisions. Clearly, the one question that preoccupies the board of directors very much is the dividend issue or rather capital distributions, speaking more broadly. We have set out three preconditions to kind of unblock that allocation of capital. We have successfully addressed what I believe is the single most difficult issue, which is the blocked shares in NSD. The mandatory buyback of those shares held under Euroclear has been successfully completed. In terms of third-party concentrate selling legal risks, as I have mentioned again, we have made some progress in terms of diversifying the processing of concentrate away from Fox and Russia, but we are still some way off kind of full protection or full geo-risking from that risk. We also are in the process of requesting the extension of the Comfort Ladder to continue cooperation with Amos Fox from OPEC. I think as we ramp up cooperation with Kazakhstan, maybe with other non-Russian dollars, of our concentrate, and we receive OPAC extension, and we see continued progress towards the completion of our own box facility in Cabotan, this red cross will start to mark into check. In terms of sufficient financing, this is really a work in progress. recent advances in terms of project financing for EPOS. We also have started discussions on project financing for SerumVet. So I think this third precondition is unlikely to be a blocking issue for our capital distributions. To ramp up, we are not yet there. The company is not yet ready to seriously consider That's why the board does not recommend dividend based on the results of 2025. But the general feel is that we are making steady, will be slow progress towards the resolution of this vaccine issue. And I do hope that we will see that resolution in 2026. Turning to 2026 guidance, as has already been mentioned, we expect a big jump in payable production, but that actually will be driven by the inventory release in terms of the mine level production. It will be more or less flat, a couple percent increase from 2025. Total cash costs, I expect it to increase significantly. There are two factors that drive our expectation of this jump. First of all, the new mineral extraction tax rate is now linked to gold prices in a staggered manner, with the maximum rate now set at 11%, and that keeps in relatively low price levels. So we expect almost doubling of EBT in 2026. And secondly, Kazakh tenge has appreciated sharply in US dollar in the second half of 2025 and continue to strengthen in 2026. So we expect the strong headwinds from domestic currency and strong headlines from the continued persistent strong domestic inflation in CapEx 10, definitely above 10%. So almost 20% expected increase in TTC and a corresponding increase in all the remaining cash flows. However, the biggest jump we will see in CapEx 2026 will be one of the two big capex years for ELC Sparks, and we'll start spending heavily on Syrenbeth and, to a lesser extent, on Kazil Underground, while maintaining a heavy base of investment and exploration. So almost double of capex we expect in 2026, fully in line, with our strategy to invest, to increase the size of the company. Turning to sensitivity, just to give you a sense of how external parameters impact our profitability measures, clearly, gold price is crucially important. But increasingly, Cardiac 10G plays a big role. Then 10G per dollar movement doesn't look on this page to produce a big impact. But just to give you a sense, the rate was over and above 550 10G per dollar, you know, 16 months ago. But now it's 470, 480. So we are talking about a pretty significant impact even before we take into account the inflationary impact. Turning to projects update, I will briefly walk you through three key projects. At EFC's FOSS, engineering and contracting of key equipment and contractors, port of claim delivered and installed. We have successfully completed the public hearings process and are very near the completion of international environmental and social impact assessment. Those things are the prerequisite for signing definitive documentation with a consortium of international banks. So the project is moving along nicely. At CERBIVET, engineering is 60% complete. The statutory documentation is under development. This will be the first project which will be designed fully in-house by South Pole Engineering, as opposed to Yeltsin Spots, where from HEDGE is taking place upon Virginia. The deficit feasibility study on CERB that is nearing completion, and we target the water pool of the project together with the full financial model in September. And in terms of VESHA fee, where we have a state. Exploration is ongoing. We expect the mineral resource update in May, and final investment decision is still targeted for the second half of 2026. Just a couple of picture slides. This is the FOCS. building at the IELTS Fox construction site. As you can see, the structural seal for the building housing is complete. We have started to put on the roof and the settings. And the place itself is now fully grounded in the final position. And assuming that we have started site preparation ahead of the final announcement decision, We are quite confident that we will approve the project. Just to give you a sense of why I'm so positive, the base case feasibility study is done at $30,000 per ton of tin, with the conservative scenario at $25,000 per ton of tin, whereas the spot price is now close to $45,000. So I think this project will be a huge beneficiary of positive market conditions. And with this, I will wrap up the presentation, and we'll turn to questions. We'll start with online questions. Can you please provide some additional information about your growth project, such as production, capex, or industry cost level? And furthermore, is there any news about a top-down or box suit? In terms of, yes, this box, I think all of the relevant information you can find on our site in the section with historical presentations. The financial September of this year. Baxi has been stalled somewhat by the permitting process by about six months as we resolve agricultural land usage issues with our farming neighbors, but we still expect first production closer to the end of this year, maybe early next year. We are still awaiting the government approval for the transaction. And judging from the multiple recent transactions in the Kazakhstan mineral extraction industry, it's not unlikely that we will need to discuss this project, not with the previous owner, but maybe with the user. So now the fact is fully on ice. Could you please comment about your thinking about opportunities in Middle East, North Africa, including Oman, becoming recently more attractive due to geopolitical uncertainty and price volatility? Well, we continue to push ahead in Oman, and we actually have signed a couple of term sheets in that country, hopefully transitioning to definitely the communication stage and closing of the transactions. in the second quarter of this year. We also are looking at other countries, but I think the recent upheaval related to Iran is not likely to have an immediate impact on availability and usability of the budget. So we continue to press ahead at our own pace. We have talked about $400, $500 million gap, actually, 2026, 2028, in your recent order cycle. This is a massive expansion versus the original guidance. Can you explain this? Yes, this is very easily explained. Previously, we have not included CIRMVET, and this is probably the single largest contributor to the increased guidance. Now, we also now factor in, our investment outside of Kazakhstan, first and foremost in Oman. And also, realistically, with the strengthening of Kazakh Tenge, we will also see some capex inflation within the same scope. So, these would be the three factors. The company is currently creating 3.5 times LPM EBD multiple. Why is this? What is the company doing to improve its valuation? I think this is already a big improvement. 12 months ago, I personally continued to view limited liquidity as the key restriction on the company's valuation, and we are pursuing multiple a path to improvement in liquidity. One of the key obstacles is the limitations related to AAX infrastructure. Now, Sallifor will lead the discussion on the ways AAX can improve its performance at the MinEx Forum in Astana in April. We are very active in constructive dialogue with the exchange on what they can do to improve the infrastructure. So I'm hopeful this concerted effort will lead to better liquidity and better valuations. In terms of dividends, there are several questions on that. I think I covered this issue during the basic presentation. Just to wrap up, we are moving towards that goal, but not yet there. When are we going to relist on a major exchange? This is a great question. We have had private discussions with regulators and exchanges in multiple locations. The unpleasant answer to that is as long as reliance on U.S. sanctioned box facility remains in place, This is probably not on the books. We list, let me put it this way, the freedom from the Russian boss should be reasonably close at hand to ensure smooth passage through the regulatory pools at the exchange. We do not provide updates on interim financial positions. So we'll need to wait until the release of the first half financial statements. What are the legal risks you're referring to regarding third-party concentrated law? What's the legality of this not clarified and guaranteed prior to signing the investment with Russian assets? It is clarified and guaranteed on the Russian side. But I would like to remind you that we operate under a one-year conflict letter issued by OFAC. And that letter permits SolidWorks to continue commercial and production interaction with Amus Plus. This conflict letter will last until late May of this year. We need an extension. and obviously we are quite optimistic about receiving this extension, but the risk that it's not received, or it's not received promptly, weighs pretty heavily on our evaluation of legal risks, which are important for solvable. What are capex levels expected? for 2027 and 2028, what is maintenance CapEx for Brazil and Barbada going for? CapEx level, I think, should stabilize at around $500 million per year for this year and two next years. And maintenance CapEx for Brazil, the key driver will obviously be an underground mine project, which will need to spend about $200 million $250 million on a study in this year and completing in 2029. Bavaro, on the other hand, will be relatively light. Is the high growth rate encouraging refractory growth project developments in the region that may offer potential concrete feed-for-the-box? Absolutely. This is spot on. We are seeing huge, huge activity in Kazakhstan. the interest in the gold sector has skyrocketed. On the one hand, this reduces our ability to find and execute attractive M&A transactions. On the other hand, the optionality of FOX over the last couple of years has increased tremendously. We have seen a lot of preliminary interest of those would be producers of refractory flux. Over the long term, what capital structure do you consider optimal? Maybe you can provide any range in terms of debt to equity and then debt to the deal. Historically, five, six years back, we indicated the comfort range from about one to about two times I still think this is a pretty reasonable target, but to move towards those parameters, we need to have unrestricted access to international capital markets, which we currently don't. So, this is still some way off in the future, and we need a substantial liquidity cushion as we move forward with our aggressive CapEx program. What are the milestones for your T-Spline construction and timeline for these milestones? What are the economics of goal being processed by CapEx in terms of the milestones? I think the key milestone is the completion permitting process, full completion, which we are targeting for the first quarter of 2027. The second substantial milestone is the completion of physical construction and transition to the completion of the engineering systems. Those would be for the quarter of 2027. And then the start of commissioning, which should be late 2020. In terms of the economics of Kerecmit versus Amuzk, given the strength in Tengi and Ubal, Kerecmit is actually better, mostly because of significant reduction in transportation costs. Not hugely, but we are talking about maybe $30, $50 per month, so CapEx misses better, but the throughput is so dominant. That's why we continue to rely on the most parts for the majority of all concentrated. In terms of updated production guidance and CapEx guidance, as I have said, global CapEx and production should be quite stable, 2026 to 2030. What is driving the ship towards selling most of the gold domestically in Kyrgyzstan? Well, we sell all of our gold domestically in Kyrgyzstan. This is the policy of the central bank. We total process concentrate in the and then we sell the rate domestically. This is state policy. Have there been any recent changes in taxation? As I have mentioned, the mineral extraction tax, or what was the world's rate, has increased substantially and is now dependent on the gold price. It's difficult to forecast whether this regime will be stable. substantial tightening of tax administration, and we have recently gone through three-year tax audits at Goodwill and Bavara, and we definitely see that tax authorities are taking a much more muscular approach on contentious issues and on the green areas in America. So nothing positive. should come from taxation. I will ask Evgenia to answer the question about the cost of funds.

Sure. So our average cost of funds last year was roughly 5.5%. We are still benefiting from the low rate loans that we attractive several years ago. But if you, I mean, speaking of our cost of funds today, I think any new funding will come at a cost of, I don't know, software plus 2 or plus 3%. So we will see a gradual increase in our cost of debt going forward.

Will you disclose the operating input source? construction. Did you already pay any money to previous stock stock shareholders? No, we did not, but we have spent some money on exploration and metallurgical evaluation of the deposit. This money is notionally linked to the asset, so we We are waiting for the clarification of the government's position vis-a-vis the census. Mr. Nathas, are you entering your role presently? Any aspiration to continue as CEO indefinitely? I think I definitely don't have any aspiration to continue as CEO indefinitely, but I feel both moral obligation and objective necessity. to see both Fox and Cerambet fully ramped up and have permission to design capacity. So, for the next five years, I see myself with solid form, for sure. What is the potential structure of investments in Oman? Those would be classical, European dream ventures, targeted, focused on late-stage We invest to drill and perform other studies, and by completing these activities, we gain a certain percentage of ownership in the effort. Then, as the effort progresses further, we fund the pre-feasibility study to prove a relatively clean, What is the sensitivity of AIC with respect to crude oil price? Which oil benchmark is relevant to solid fuel? I think the U.S. is the relevant benchmark because the bulk of diesel price fuel is bought from Russia. reserved for agriculture and other socially important activities. I would say that the doubling of oil price should have approximately $50, maybe $60 per ounce impact on our TCC. M&A seems very active in Kazakhstan. How could this impact Salesforce corporate strategy? It's a great question. It has already impacted our corporate strategy by focusing our M&A aspirations more on other less-traveled jurisdictions. I've mentioned Homeland. We have opened the representative office in Tajikistan. We are looking at other less conventional jurisdictions. Kazakhstan has received a huge amount of attention from the global mining industry, and as a result, it is extremely difficult, as I have already mentioned, to find interesting and value-driven Can you update us on current process and operations on Russian FOX? Is everything running okay? No, you can say true. Well, we have no transparency on processing operations on FOX. What I can say is that there is no accumulation of materials, so whatever we send there, we receive back reasonably regularly and without delays. However, it had to be that without government's it would have been difficult to wind down the accumulated stockpile. So the Russian POS is treating the current flow nicely, and Kavakmes is instrumental in reducing the accumulated . Could you please provide government approval has next to zero chances of closing and I would venture to say that probably we'll need to negotiate something from the stretch with most likely the new one. Does the total gap for EFT spots remain estimated at $1 billion? Yes. We see so far no scope And given the fact that imported equipment and materials represent a very hefty chunk of capex, the appreciation of Kazakh tenge will have an impact on capex, but not very dramatic. I think for that and pursuing that, where we will try to get as much CapEx as possible domestically. The impact of strong 10-year will be materially more significant, and as a result, the original CapEx figure of $250 million is likely to be re-estimated as a hard line. So we are done with questions from the webcast. Do we have any other sources of questions?

No, there are no other sources of questions.

Ladies and gentlemen, thank you very much for your active participation in the webcast. Please do not hesitate to direct further questions to our IR team. We'll respond promptly. Again, thank you very much and have a nice day.