Russian gold sector

consolidation play
 Russian gold space
• Russian gold production doubled since 1995.

• The gold sector transformed from a government

dominated to a combination of private large-
medium size gold miners sometimes with foreign
participation.

• Russian gold miners in 2014-2015 became one of

the world lowest cost gold miners thanks to the
dramatic depreciation of Russian currency.

2
 Gold production in Russia
300$ 289$

255$
250$
225$
211$
Gold%produc*on,%tonnes%

205$ 203$
200$ 185$
177$ 174$
171$ 168$ 164$ 163$
154$
150$ 143$
132$
123$ 124$ 124$
115$

100$

50$

0$
1995$ 1996$ 1997$ 1998$ 1999$ 2000$ 2001$ 2002$ 2003$ 2004$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$ 2014$

Based on E&Y report 3

 Top 10 Russian gold miners
GeoProMining' GV)Gold)
(inlc.'Armenia)' 3%)

60% 4%' Susumangold)

3%)
UGC)
52.7% 4%)
Gold%produc*on%in%2014,%tonnes%

Highland)Gold)
Polyus'Gold'
50% Mining)
5%) 33%'
Nordgold)
7%)

40%
Petropavlovsk)
12%)

30% 26.3%
Kinross)Gold) Polymetal)
(Russian)unit)) 17%)
19.5% 19.4% 12%)
20%
10.6%
10% 7.3% 6.8% 6.2% 5.5% 4%

0%
d%

k%

g%

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s

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pa
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us

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Based on E&Y report 4

 The idea
• The idea is to buyout some Russian gold miners from Top
10 and create a company similar to the largest Russian
gold producer Polyus Gold.

• Russia is the third global gold producer and it has second

largest gold ore resources so it is a significant player of the
global gold market. Russian gold miners benefit from weak
local currency that leads to lower than ever cash costs.

• Given that fact that Russian gold miners are linked to gold
prices nominated in american dollars, Russian companies
can easily borrow and pay US$ nominated loans.

5
 Gold%produc*on%in%2014,%tonnes%

Based on E&Y report

0%
10%
20%
30%
40%
50%
60%
Po
l yu
s %G
Ki ol
n d%
US$8bn company
52.7%

ro
s s%G
Po
l ym
ol et
d%
(R a l%
26.3%
us
si a
n%
un
Pe it)
tro % 19.5%
pa
vlo
vs
k%
19.4%

Hi No
gh rd
l an go
d% ld
%

6
Go
10.6%

ld
%M
Ge in
oP in
g%
7.3%

ro
M
in
in UG
g%(
i nl C%
6.8%

c.%
Ar
m
en
i a)
%
6.2%

GV
%G
ol
Su d %
5.5%

su
m
an
go
Consolidated production of these 6-7

l
4%

d%
companies will match Polyus Gold’s size
Potential targets for the play
 GeoProMining’s role
GeoProMining is a perfect platform to start the consolidation
process because:

• It has a team of seasoned professionals with expertise in

geology, metallurgy, production, finance.

• The team can quickly scan the Russian gold sector to pick
right companies due to GPM’s deep knowledge of the sector
and connections with all major gold miners in Russia.

• Sberbank Capital (subsidiary of Sberbank which is N1 bank

is Russia) is a shareholder of GeoProMining and it leads to
certain opportunities not available to others.