Kopy Goldfields

Q1, JANUARY – MARCH 2024 (January – March 2023)

• Revenue TUSD 17,223 (26,107)
• EBITDA TUSD 1,567 (1,163)
• Loss for the period TUSD -4,212 (-3,130)
• Loss per share before dilution USD -0.0047 (-0.0035)

Significant events after the reporting period

• The Group signed an addendum to a credit facility for the change of covenants level which should result in reclassification of short-term borrowings into long-term.
• The Board of directors has proposed a voluntary redemption of up to approximately 17% of the Kopy Goldfields outstanding shares, in an offer that will entitle all minority shareholders to request redemption of all their shares in the Company.

SUMMARY OF FINANCIAL INFORMATION

Production growth supported by high gold prices

In Q1 2024 Kopy Goldfields reported an increase of gold production compared to Q1 2023 and continued strengthening operational efficiency at the Yubileyniy site and at the Zolotaya Zvezda project. The Malyutka project and the placer are on track to be fully operational later in the year. An increase of the international gold price both quarter-on-quarter and year-on-year supported the financial performance but were offset by higher interest rates.

Production
The total consolidated production in Q1 2024 increased by 11% compared to Q1 2023 which was driven by the Yubileyniy CIP plant results and the Malyutka project launch in 2023. The total unconsolidated production from the Zolotaya Zvezda Mayskiy project amounted to 2.36 koz in the reporting period compared to 0.53 koz in Q1 2023.

Financial performance
The Company’s EBITDA improved in the reporting period compared to Q1 2023 and the EBITDA margin increased from 4% to 9%. The average realized gold price reached 2,038 USD/oz in Q1 2024 compared to 1,856 USD/oz in Q1 2023.
Total Cash Costs (TCC) and All-in Sustaining costs (AISC) per oz produced slightly decreased in Q1 2024 compared to Q1 2023 by 2% and 5% respectively, reflecting improved efficiency.
However, financial costs increased due to further increases in Net debt, following capital investments in our key production assets, and higher interest rates, resulting in a higher net loss than in Q1 2023.

Investments
The Malyutka project is currently in the commissioning phase and the full capacity is expected to be reached later in the year. We look forward to increasing HL production from the site but the commissioning phase can last longer than we initially anticipated.
Investments into the Yubileyniy plant upgrade are on track. We plan to commence the updated mill and shift to the new processing chart by the end of 2025. That would allow us to increase the capacity of the plant and improve the recovery rate.
The new mill at the Zolotaya Zvezda’s Mayskiy processing plant has been tested now. We aim to commission it later in 2024. Production at Chazy Gol is expected to start in this quarter.

ESG
During the first quarter of 2024, we continued progressing in our ESG strategy across all Russian subsidiaries. The objective for 2024 is to stabilize the Lost Time Injury Frequency Rate (LTIFR) at the 2023 level.
In Q1 2024 Kopy Goldfields continued its reconstruction program at the Yubileyniy shift camp as the well-being of the Company’s shift employees is still a priority.
Also, we explored further the financing options to support environmentally friendly projects. The Company plans to construct solar power stations at the Yubileyniy site in the Khabarovsk region.
In the reporting period, the Company started the tendering process for the preparation and approval process of Complex Environmental Permits (CEP) which must be obtained until the end of 2024 for all production sites.

Macro environment
Despite favorable international gold prices, the overall situation remains challenging. The Key rate of the Russian Central Bank is still 16% which implies high cost of servicing the Company’s debt. New export duties introduced in Q4 2023 also negatively affected our financials as the domestic gold prices are linked to the international ones. International and Russian sanctions, policies and implementation continue to tighten implying a challenging business environment.

Outlook
We are close to the end of the CAPEX intense business cycle as we about to fully commission the Malyutka project and complete the upgrade of the Yubileyniy plant. We target to increase the gold production as planned and also to improve the technological efficiency at the production sites. There are clear development prospects in the Khakasia region and we plan to pursue geological and production opportunities there together with our partner. This should provide for improved profitability and debt reductions going forward.
The Company and its operations are increasingly exposed to sanctions and other restrictions in both Russia and internationally. In addition, policy decisions by third parties further discourage cross-border transactions and also restrict liquidity and shareholder flexibility with respect to their shares. Kopy Goldfields, and its shareholders, face increasing difficulties and significant risks. We also recognize that there is strong pressure on the Company and the Swedish shareholders to cease operations in Russia, and have therefore evaluated a number of strategic alternatives to secure the business and offer an exit in a balanced way for all the Company's stakeholders.
Therefore, the Board of directors is proposing today a voluntary redemption of up to approximately 17 percent of the outstanding shares, in an offer that will entitle all minority shareholders to request redemption of all their shares in the Company.

Mikhail Damrin
CEO Kopy Goldfields