Talking about 2020, you can see that we're in good shape to meet our forecast. We are giving quite a broad range for -- sorry, a little bit ahead of the slides. So first quarter was quite successful on the side of operations, of our own operations, of mining our own ore, as well as processing third-party concentrate.

We're also on schedule of construction of the flotation unit on Pioneer, which will double our flotation operating capacity, and on schedule to commission it in fourth quarter of 2020. You can see that our target, Slide #17, is to consistently enlarge processing through POX of our own concentrate and reduce our dependence on third-party concentrate. One of the major reasons is that processing of our own concentrate is more -- margin is higher. Accordingly, costs are lower.

And one more takeaway of this slide, if you look on the right side, the contribution of refractory, the plan of contribution of refractory ores in our processing facilities starting from 2019 and up to 2022 is to take away the, out of this graph, refractory material. You will see how -- what could be the possibility of declining of our production if we would stay only with nonrefractory material and would not having pressure oxidation. So the strategy taken by company more than 10 years ago appeared to be absolutely justified.

We have historically a very good track record of adding our reserves and resources. I can remind you that, except the Pokrovka deposit which is now depleted, all the gold mined and all the reserves and resources we have at the moment, it's a result of our own exploration success. In these numbers and figures, you will not see anything we bought, anything nonorganic.

And there is one note on this slide which is very important, which says about Tokur. We still have quite interesting and promising potential for enlarging and improving the quality, I mean, first of all, grades of our reserves. There is a big potential of Elginskoye deposit from, again, from the amount of the reserves and resources. But also, we're allocating at the moment higher grades, which can boost the production on Albyn. And we started more detailed exploration of Tokur deposit because it's our big -- satellites of Tokur deposits is a good potential to enlarge production on organic basis.

All of these actions, measures we are taking, efforts on production side, they are reflected in our balance sheet and derisking our balance sheet, reducing the cost of debt, our financial director will mention this in more details, and reducing our one of the most important metrics, it's the ratio of net debt-to-EBITDA. To the end of 2019, it's around 2. And we are looking to the end of 2020, reduce it further.

As I said, guidance for 2020, Slide 20, on production side is quite broad. And the major reason for this, it's the access to third parties concentrate. We are much more certain about our own production, but we seriously depend on third-party concentrate. And when we were giving this forecast at the beginning of the year, the uncertainty was about how much concentrate we will manage to finalize the contracts. And it's still uncertain. The reason why we're reiterating this broad forecast in May of the year is now we believe that there is uncertainty of impact of COVID, of pandemic on our suppliers. That's why we are still staying with this broad projection, though it's almost 0.5 year plus.

We are hoping to maintain reasonably robust total cash costs and reduced CapEx and of course utilize -- start utilizing the Pioneer flotation, new Pioneer flotation facilities, through the end of the year, in fourth quarter. And also, you can see some guidance on our performance in 2021 to 2024, and I will be glad to answer any questions regarding this.

So actually, in my short report, I mentioned all these items we reflected on Slide 21, that group strategy is, first of all, operational efficiency, efficiency of pressure oxidation through increasing production of our own concentrate, strengthening balance sheet, dealing with IRC issue and organically maintain and grow our reserves and resources.

Now comes financial part of our presentation. So Danila, will you please switch in.

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Danila Kotlyarov, Petropavlovsk PLC - CFO [3]

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Thank you very much, Pavel. I will switch on Slide 23. Just give me a second.

(technical difficulty)

Yes, it's much better now. Yes. Ladies and gentlemen, please if you can look at Slide #23 with the key financial results of the last year, which Pavel Maslovskiy has mentioned already are exceptional.

As you can see on the slide, the volume of sales of gold is the main driver of the increase in amount of the -- in the volume of revenues and the underlying metric of EBITDA of the group.

On the next slide, 24, you can see the key highlights of the results. As you can -- know, the majority of the indicators are in green, except of the TCC, of which I will give the comments later. And basically, the results of the net profit, which was a result of a number of the factors which affected this -- which affected the profit last year, in the year 2018, which are mostly noncash, like the valuation write-off of IRC and reduced -- we have reduced capitalization of the interest.

On the next slide, you can see the bridge between the EBITDA of the year 2018. In the last year, during that, the vast majority of the increase, as I mentioned already, is because of the increase of the volume of sales of the gold.

On the next slide, 26, you can see the breakdown and explanation of the mine increase in the cost. So as you can see, there was a 10% increase in the total -- the TCC of the group, with the main reason of switching of -- around the processing of the nonrefractory ore with the refractory ore and additional costs associated with the processing of it, as Pavel Maslovskiy mentioned as well. Separately, we can see additional costs related to the procurement of the external concentrate processing versus the production of our own. We share or mention also the ruble inflation, which adversely affected the cost of operations, including the cost of the diesel, of electricity, and partly, this was offset with improvement in the grades and recoveries and also with the minor depreciation of the ruble.

On the next slide, you can see the breakdown of the cost across the ore mines and the explanations of the deviations. As I mentioned already, the majority of the negative change is because of the additional costs associated with the processing of refractory ore.

On the next slide, you can see the structure of operating cost last year against the year 2018 with a notable difference of the cost associated with the procurement of the external concentrate processed on the pressure oxidation.

On the next slide, we have information about the CapEx. You can see there the total amount of the capital expenditures. Last year is lower against the previous year, and that is a result of the commissioning of the pressure oxidation, of course.

And on the last slide I want to draw your attention to is that -- is the number of the initiatives which the group is taking, which are aiming on the improvement of the liquidity and the management of the volatility of the price. As number one, I would like to give information, I said we received the confirmation of the GPB, the Gazprombank, for agreed increase and extending the available limit of the gold advances until the year 2024, and with the total amount, if you use the current exchange rate, which is nearly USD 0.5 billion. And this is an important source of the liquidity, which the company is able to utilize if required.

And secondly, I would like to mention and to draw your attention that the hedging arrangement which the group had before and which have been fixed at the lower level of the gold prices have fully expired last year. And this year, in line with the group's liability analysis, the company has entered into number of the fixed and gold hedges, primarily using the instrument of the 0 cost collar, allowing for significant participation in the positive movement both in the price of the gold and also exchange rate, although, I think, given the protection on the desired level in line with the liability analysis.

I guess that's the end of the part, which I would like to talk about. And I hand you over to Alya now.

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Alfiya Samokhvalova, Petropavlovsk PLC - CEO & Executive Director [4]

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Thank you, Danila. Moving next to another very important aspect of our business, which is central to the way we are running Petropavlovsk, sustainability.

Let's go to Slide #32. And in this part of presentation, I would like to talk about extensive work that we have already done in 2019, where we are now and what are our aspirations going forward.

Sustainability was always very important to the way we are running our business. But 2019 became a transformational year truly for the company, not only from operational and financial point of view from the improvements we made in those areas, but from the way we started bringing sustainability thinking in every aspect of our business and in every decision-making process.

Let's look at the results. Our aspirations in 2019 were to improve key aspects of health and safety, corporate social responsibility and environmental management. If we're talking about health and safety, we achieved an unprecedented decrease in LTIFR, 36%. And this is one of the most important parameters, measuring safety of working environment for our employees.

Significant part of -- or contributors to this reduction were a safety campaign to raise awareness amongst our staff and also our updates we have done to POX and underground safety policies. We also made very good progress on corporate social responsibility, where we set for ourselves a comprehensive program of shareholder relationship engagement. And we started building up our -- well, improving and building upon what we already have with our relationship with all stakeholders. And we will proceed with further implementations of this program in 2020 as well.

We also were able to obtain independent limited assurance statement from independent agency in order to bring our reporting standards in line with the best international practices. From an environmental perspective, we have made a tremendous progress. We achieved 15% reduction in greenhouse gas emissions. Also, we achieved a 0 discharge of water. I will talk about all these achievements in further details in the following slide. And I just wanted to probably go around this slide to emphasize that in line with our growing focus on ESG, last year, we conducted a materiality assessment to define the sustainability topics that are most important to our business, to our stakeholders. This will enable us to report on the themes in accordance with core option -- with the core principles of GRI Standards.

Let's look at the Slide #33. Let's talk about a very important initiative which has -- was developed by the company in 2019. We have joined the UN Global Compact, which is a core part of our commitment to align our business with global initiatives in the area of sustainable development. We recognize that the number of sustainable development goals within this, the UN Global Compact, are quite wide. So we tried to -- in order achieved the biggest impact, we tried to identify SDGs which are -- which will benefit the most, the communities, the environment, our stakeholders.

And we've chosen 5 of such SDGs, which you can see on the Slide 33. So the findings and conclusions of management were presented to the members of Sustainability Committee of the Board, and who has carried out unprecedented amount of work on this. And the Sustainability Committee agreed with the management that this probably should be for 2019 and 2020 the areas of focus of the company. So though we do recognize the importance of 17 other SDGs, we will be focusing on those 5 in 2020.

Let's look at Slide 34. So I wanted to talk a little bit in more details here about improvements to our health and safety track record. We recognize both the personal responsibility of each employee at every site and workplace and the group's accountability for the safety measures and actions to create the safety environment. And we are striving for 0 injury records.

So during 2019, we continued to implement stricter and more rigorous safety controls across the group's operations. We're also addressing any gaps in knowledge of safety procedures. Training was conducted for relevant departments to reinforce the drive to create a safer workplace and to highlight everyone's personal responsibility in achieving these goals as well. As a result, in addition to a 36% decrease in lost time injury frequency rate, which I have already mentioned before, we were able to report 0 fatalities in 2019, of which we are very proud of.

Talking about, a little bit more general about our workforce, I would like to emphasize one aspect of which we, in general, we are very proud of, and this is our diversity of our workforce and the gender diversity, which we managed to secure in spite of the fact the company operates in male-dominated industry. You can see that almost 25% of our staff are female.

Moreover, picking up on the themes of corporate governance about which Pavel Maslovskiy was talking a little bit earlier, I'm pleased to note that now we have 3 female directors on the Board of mining company, FTSE 250 company. And I think it's pretty much an achievement. And the fact that very soon we'd have a female leader of the Board is really -- does really distinguish our company as a company which is led on the basis -- on the principles of diversity and inclusion.

Let's now move to Slide 35. So our success was not only limited last year to health and safety record, but also it could be seen in the environmental stewardship. Obviously, working in an industry like mining, environmental safety is one of the most important aspects of ESG for us. And we are always committed to upholding the highest standards of environmental management. Effective environmental protection is a key element of business strategy and fundamental to day-to-day operations, are fundamental to our planning, to our decision-making.

Recognizing that our operations involve a number of environmental risks, we have developed environmental management systems that help identify and manage those risks and achieve resource and energy efficiency. EMS at all our operational sites are fully certified for compliance with ISO 14001. Our environmental risk management strategies are based on continuous and rigorous monitoring, training, external assurances by the state bodies and emergency preparedness. Hence, we had no moderate or serious environmental incidents and received no environmental fines in 2019, which is, I think, pretty impressive.

Using modern technology code by [DESC] that doesn't require open points or exposed tanks, we were able to maintain 0 water discharge. On the energy and emission front, whilst our total energy consumption did indeed increased by slightly less than 9%, this was far less than our production volumes increase, resulting in 11% improvement in intensity. Similarly, we saw a certain percent improvement in our greenhouse gas emission intensity in 2019. This was aided by multiple factors, key among which are the reduced usage of coal and series of energy-saving initiatives, like the waste heat recovery system and -- at the POX Hub.

Let's move to the Slide 36, and we can talk about our -- in general, our standing amongst our peers. Though, as I mentioned, we had pretty impressive -- we have done pretty impressively in ESG area in 2019, these achievements of last year, they don't mean obviously that we will stop striving to get even better results in every ESG parameter. We constantly monitor every industry's new development, best practices, engineering improvements. And obviously, we check our achievements against our peer group. And whilst we already, in a number of indicators, like for example mentioned gender diversity or greenhouse gas emission we are really leaders of the industry, there are obviously a number of parameters where we need to work more to be at the same level as the best industry performance. So we recognize these areas, and these areas will be truly our focus in 2020. And hopefully, next year, I will be here to report to you in forward.

So you can see here some key -- just really main plans, goals and aspirations for 2020 and obviously beyond because we are not going to stop on that. And on the health and safety front, we remain committed to drive towards 0 harm environment, and that will be done via robust policies, ongoing group-wide training programs and aim to perform in 2020 no worse in terms of LTFIR (sic) [LTIFR] as we did this year when, as I said, we achieved significant reduction.

And those measures, which Pavel Maslovskiy was talking about implemented by the company in response to a pandemic situation, the speed of these measures, the comprehensiveness of them and which resulted so far at 0 cases on our enterprises, shows you actually the efficiency of management and the way we are approaching health and safety of our employees.

On the corporate social responsibility, we plan to develop further direct engagement between management and personnel. And that will be built up on open dialogue with local communities, and we will implement the policies we've developed throughout last year and throughout this year, we will be improving these policies and looking for others to implement, which will put us in line with top performance in the industry worldwide.

Last but by no means least, this year marks the first time we have included a measurable target for greenhouse gas emission intensity reduction. Yes, it is not huge. It's 1% from 2019 levels. But I think it's very important to bear in mind that 2020 is the first full year of POX Hub operations, which in itself is fairly energy-intensive operation. And even with this in mind, we are managing to achieve a reduction in this key parameter. So we will be developing on our long-term intensity targets in 2020 as well. And as I already mentioned, I really hope that in a year's time, we will be able to report to you about our further achievements, not only in operational and financial field, but also everything which concerns sustainability of our business. Thank you very much.

With this, I would like to pass to Patrick, who will be holding Q&A session.

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Questions and Answers

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [1]

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Thank you, Alya. Very impressive indeed. I've just received a note that people are trying to submit Q&A via the link that I mentioned before. That doesn't seem to be working. If you can see my name, it's been switched to my e-mail address, pp@petropavlovsk.net. If you could please e-mail me your questions, and I'll filter them to the speakers. While waiting for that, I had a couple that came in during the presentation, so we might just start with those.

First one, the Pioneer flotation plants, assuming commissioning goes smoothly at the end of 2020, so the end of this year, what will be the increase in total own gold production next year versus this year? Pavel, do you want to take that one up?

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [2]

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Yes. On the slide, on our forecast, for 2020, we are showing that we're expecting roughly between around 7%, 8% of growth for 2021, growth of our own production. It's -- the major impact is the flotation plant.

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Alfiya Samokhvalova, Petropavlovsk PLC - CEO & Executive Director [3]

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I think maybe worth mentioning, and this is vitally important, and this is part of our strategy, because those ounces are really high-margin ounces as opposed to third parties.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [4]

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Thank you. The next question, Malomir's throughput of 4 million tonnes per year is exceeding nameplate capacity by 10%. Is there any further upside left at Malomir? And can the same success be applied to the Pioneer flotation plant once it becomes operational? Again to you, Pavel.

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [5]

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Indeed, we are successful. 4 million, while the design capacity of the plant is 3.6 million, is good achievement. So if anything, we can do it maybe [30%], we can't expect more throughput for the plant.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [6]

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Thank you. And another question, we would like to understand how third-party processing expenses are spread across or incorporated in the different divisions, which could be Albyn, Malomir or Pioneer. So it's understanding whether third-party processing expenses are being allocated.

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [7]

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Danila?

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Danila Kotlyarov, Petropavlovsk PLC - CFO [8]

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Give me a sec, yes, I can answer that. All the costs associated with the portion of the third-party concentrate, allocated at Pioneer mine.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [9]

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Thank you, Danila. A question from [Tim Yip of JS Funds]. Could you give a little bit more detail about the guidance on working capital for this year? Financial year 2020 working capital and our guidance.

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Danila Kotlyarov, Petropavlovsk PLC - CFO [10]

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If I might, I can answer that one. In terms of the working -- just give me second. In terms of a change in the working capital, we can give a comment, that we have a number of big items over the course of the last year. And I think what probably you're interested in is the amount of the gold advances and probably also the movement in the working capital in relation with the procurement of the [Asian] concentrate which we are buying externally.

In terms of the gold advances, we -- in accordance with the schedule with the banks, we are looking at a significant decline on the gold advances at the end of the year. [Although the number of gold advances] are taken and are utilized as an instrument of the optimal structuring of the process of buying concentrate. And [in relation to --] scheduled utilization is closely related with the schedule of the procurement of the concentrate. And we cannot give exact outlook on that. Also, as I mentioned, in terms of the gold advances, of the longer-term gold advances which I mentioned before, we expect that the -- this amount be significantly lower at the year-end. I hope that answers the question.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [11]

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Thanks, Danila. Another question on Albyn and the shift from the Albyn pit to the Elginskoye pit. If we could please just have an update on how that's progressing as that transition is ongoing at the moment.

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [12]

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We are planning to start shipping the ore from Elginskoye and start processing it in the fourth quarter of 2020. This target is moved because we have some additional excesses to original estimates ore on the main Albyn pit. But at the moment, the road is -- the infrastructure there on Elginskoye and the road to Elginskoye from the plant is ready. And we are doing stripping on the deposit. So we're absolutely even slightly ahead of the plan. Originally, it was August, September, but now we see that it's not earlier than October, we will need to switch to Elginskoye.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [13]

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Thank you, Pavel. I have a question from Raiffeisen Bank analyst, Mikhail Solodov. Could you please understand the effect of the gold hedges on our achieved price in the first quarter of this year, for the quarter that's just passed, and how that compares with the first quarter of last year? What the hedging effect was on the achieved gold price.

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Danila Kotlyarov, Petropavlovsk PLC - CFO [14]

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Patrick, I can answer that. I can answer this one. In terms of the effect of the hedges over the course of the Q1 of this year, as we mentioned already -- as I mentioned already earlier, all the hedges which we entered at the level of the price which is much lower against the spot, they have expired at the end of the last year. And hence, we have no any adverse effect of the hedges on the realized price of the gold over the Q1 of this year. If talking about the -- if talking about what was an adverse effect of the hedges on the gold price over the Q1 of the last year, I need to check the number. Although in terms of the -- if you look at the accounts, if I recollect correctly, the overall negative effect on the realized price of the gold over the course of the last year was around $50 an ounce. About Q1, I need to check this information.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [15]

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Okay. We can come back on that one. Perhaps, Danila, just continuing on the hedging theme. I've had a question from a private investor. Just trying to understand the size of the new hedging program we have in place, for example, 3,500 ounces a month doesn't sound like very much. Could you perhaps give a little bit more detail on the intentions for that program?

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Danila Kotlyarov, Petropavlovsk PLC - CFO [16]

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Yes. It's an excellent question, I believe. Yes. If we look at the price environment and the volatility of the price environment over the course of the Q1 and basically H1 of this year, obviously, we know what is going on and what kind of swing, we noticed in terms of the price of the gold, in terms of the exchange rate, interest rates and obviously, we are at work -- we are looking at what kind of actions are appropriate in that regard. In the last slide, which I was talking about, I basically relayed there that we are in the process of formulating the policy in regard with the viability analysis and viability on the group which is part of the -- of our annual accounts and also in light of the changes in the market. If we look at the amount of hedges of the gold, which we made already, yes, the amount -- the total volume is not all big although we believe that this deal we entered to is in line with the strategy of the company.

In light of the trends in the market, as I mentioned already, we are looking at this. We're analyzing the future of the price of the gold, and we will get back with the [-- when it's improved], and we'll inform the investors on that. At this point of time, yes, the amount of hedges is not all big, and it's more opportunistic.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [17]

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I have a question on IRC. We announced a transaction this quarter. Would it be possible to update the audience on how that deal is progressing with Stocken, please?

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [18]

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Well, we are aware through the communication with Gazprombank that they are in process of financial and legal due diligence. Some questions are coming from them. So it's work in -- it's job in progress, so I can't estimate. It's their decision. But one thing I can confirm, that they are working on it because they are chasing us with questions, us and the counterparty.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [19]

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Pavel, I'm joining 2 questions from 2 different analysts here. One is what was, at the end of 2019, the status of our gold prepays? What level were they? And where do we expect that to be over the course of 2020?

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [20]

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Danila?

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Danila Kotlyarov, Petropavlovsk PLC - CFO [21]

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I can answer that. The total amount of the gold -- yes. Total amount of the gold advances, and the details of that are in our annual accounts, is roughly 180 million. And out of which about [2 million was really what gold advances] which I talked about already. At this moment of time, the total amount of the gold advances is lower, at the level which is roughly 120 million. And as I mentioned already, answering another question about this, we expect a significant decline of the gold advance until the year-end.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [22]

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Thank you, Danila. I think we only have time for a couple more questions. One more from a covering analyst. Are you renegotiating the terms for the buy-in of the minority stake at TEMI? So that's the 25% stake that we're looking to acquire, another transaction announced this year. What is the time line here? And could we please have an update, please?

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [23]

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Thank you. We have almost a year time to exercise the option. It will expire in May 2021. So in the environment of growing share price and changing situation with the company, we are looking to try, to the extent it's possible, to renegotiate and fix the higher price for the shares, which we are paying or, in another way, how we are fixing this price. To remind you, when we fixed for the deal, which was announced and then put it into the circular, and it happened at the end of January, we fixed the highest achievable price, almost 19p. But between that time and the GM, the share price went up to 26p. So -- and a number of our shareholders require to review this approach, trying to renegotiate, which the management will try to do. But at the moment, when we will be released from this COVID situation, it's very difficult to do by my computer, by TV.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [24]

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Thank you, Pavel. So I've only really got one more question. Do we have any plans to improve the cost of debt in 2020?

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Pavel Alexeyevich Maslovskiy, Petropavlovsk PLC - COO [25]

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Danila?

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Danila Kotlyarov, Petropavlovsk PLC - CFO [26]

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Yes, I can answer that one. As Pavel Maslovskiy already mentioned in the beginning, the improvement of the leverage, decrease of the leverage and improvement of the cost of the borrowing and the maturity of the borrowing is the priority of the management. And on the basis of the innovation -- of the levels where the public -- or debt of the company is traded at the moment, we believe we optimistically are looking on the possibility on the improvement of the cost of the borrowing. And as I mentioned already, it's a priority. I can add also that although the gold advances of the banks which we are talking about, although this is not really debt, it's a different kind of instrument, although we can, already mentioned, that over the course of this year, we have achieved a significant improvement of the cost of this. I hope that answers it.

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Alfiya Samokhvalova, Petropavlovsk PLC - CEO & Executive Director [27]

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Maybe I can add that the debt which we have now was attractive historically when the company was in a very different situation. They are absolutely unprecedented and impressive turnaround when the company -- which company has made last year hopefully should be reflected in agencies -- rating agencies' assessment of the business. And obviously, it will depend on the market. But having behind us results like this and hopefully some ratings improvements, I share Danila's optimism that the company's business is in a much more robust position to secure much better terms of debt.

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Patrick Pittaway, Petropavlovsk PLC - Head of IR [28]

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Thank you, Alya. I have no more questions. So really just to wrap up, thank you for the presenters. I do apologize for the technical issues. Thank you for the questions that did come in. You can always reach out to us during the day if you have further questions. But this now concludes our webcast. Thank you for joining us.

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Alfiya Samokhvalova, Petropavlovsk PLC - CEO & Executive Director [29]

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Thank you very much.