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NORNICKEL REPORTS FIRST HALF 2020 INTERIM CONSOLIDATED IFRS FINANCIAL RESULTS

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MMC Norilsk Nickel (MNOD)
NORNICKEL REPORTS FIRST HALF 2020 INTERIM CONSOLIDATED IFRS FINANCIAL
RESULTS

11-Aug-2020 / 14:00 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

PRESS RELEASE

Public Joint Stock Company «Mining and Metallurgical Company «NORILSK
NICKEL» (PJSC «MMC «NORILSK NICKEL», «Nornickel», the «Company», the
«Group»)

NORNICKEL REPORTS FIRST HALF 2020 INTERIM CONSOLIDATED IFRS FINANCIAL
RESULTS

Moscow, August 11, 2020 - PJSC MMC Norilsk Nickel, the world's largest
producer of palladium and high-grade nickel and a major producer of platinum
and copper, reports interim consolidated IFRS financial results for six
months ended June 30, 2020.

1H2020 HIGHLIGHTS

· Consolidated revenue increased 7% y-o-y to USD 6.7 billion owing to
higher prices of palladium, rhodium and gold as well as the ramp-up of
Bystrinsky project;

· EBITDA decreased 51% y-o-y to USD 1.8 billion due to the USD 2.1 billion
environmental provision related to the reimbursement of environmental
damages caused by the fuel spill at the industrial site of the Heat and
Power Plant ? 3 in the Kayerkan neighborhood of Norilsk;

· CAPEX increased 10% y-o-y to USD 0.6 billion owing to the launch of
construction of strategic projects such as the expansion of the Talnakh
concentrator (TOF-3 project), the development of South Cluster mining
project and complex environmental programme aiming at radical reduction of
sulfur dioxide emissions at the Polar Division;

· Net working capital increased to USD 1.0 billion in line with the
medium-term target level;

· Free cash flow increased 21% y-o-y to USD 2.7 billion;

· Net debt/EBITDA ratio increased to 1.2x as of June 30, 2020;

· In 1H2020, Nornickel paid interim dividend for 9 months of 2019 in the
amount of USD 1,567 million and final dividend for 2019 in total amount of
USD 1,264 million;

· Building up liquidity cushion with USD 1,565 million from a syndicated
USD 4,150 million borrowing drawn down in March and April, after the loan
limit was increased from USD 2,500 million in February, and additional RUB
60 billion drawn from a revolving credit line;

· On May 29, 2020, diesel fuel leaked from the emergency fuel tank at the
heat and power plant ?3 (HPP-3) due to sudden sinking of support posts
based in permafrost. Clean-up of the incident was launched immediately,
when by the end of the reporting period most of the fuel leaked into soil
and water was collected, with most of the contaminated being removed;

· Throughout 1H2020, a comprehensive set of initiatives was developed and
rolled to ensure operations sustainability and social security in the
regions of operations amidst the spread of coronavirus. Safeguarding the
health and safety of employees and providing full support to the regional
communities and authorities was the top priority, with USD 95 million (net
of VAT) spent into preventive initiatives and charity.

RECENT DEVELOPMENTS

· On July 6, 2020, Federal Environment Supervision Agency
(Rosprirodnadzor) published its assessment of environmental damages from
the fuel spill incident as RUB 147.78 billion (approximately USD 2.1
billion) and sent the Company request for the voluntary compensation of
this damage. On August 4, 2020, the Company sent a letter to
Rosprirodnadzor expressing its readiness to have a dialogue over the
reimbursement of the environmental damages, noting that the assessment of
damages required should be adjusted based on the actual data once the
consequences of the incident are completely remediated and all due expert
assessments are complete. The Company sees the possibility for an
out-of-the court settlement of all issues related to the assessment of
environmental damages, terms and timing of the compensation terms within
the established working group;

· In July 2020, the Company entered into a RUB 10 billion committed
revolving credit facility, with no funds were drawn as of the publication
date of this release.

KEY CORPORATE HIGHLIGHTS

USD million (unless stated otherwise) 1H2020 1H2019 Change,%
Revenue 6,711 6,292 7%
EBITDA¹ 1,838 3,719 (51%)
EBITDA margin 27% 59% (32 p.p.)
Net profit 45 2,997 (98%)
Capital expenditures 551 500 10%
Free cash flow² 2,679 2,206 21%
Net working capital² 1,038 9854 5%
Net debt² 7,287 7,0604 3%
Net debt/12M EBITDA 1.2x 0.9x4 0.3x
Dividends paid per share (USD)³ 17.9 - 100%

1) A non-IFRS measure, for the calculation see the notes below.

2) A non-IFRS measure, for the calculation see an analytical review document
("Data book") available in conjunction with Consolidated IFRS Financial
Results on the Company's web site.

3) Paid during the current period

4) Reported as of December 31, 2019

MANAGEMENT DISCUSSION AND ANALYSIS

The President of Nornickel, Vladimir Potanin, commented on the results,

"First half of 2020 turned out to be very challenging for our Company. The
coronavirus pandemic had a significant ripple effect on the global economy
as all major consumers of our products experienced an unprecedented downturn
of business activity. Even though most analysts are currently forecasting a
quick economic recovery, we remain cautious regarding the recovery prospects
for our metals' demand at least until the end of this year.

COVID-19 challenged not only our operating model, health and well-being of
our employees and their families, but literally all the Company's
stakeholders in the regions of our operations. Owing to the timely support
that we have provided to local authorities and regional healthcare, socially
vulnerable communities, small and medium enterprises, as well as
safeguarding measures for our employees, the Company managed to pass the
peak of the pandemic without any material impact on operations. We remain
committed to continue our support to the regions of our operations to combat
the spread of coronavirus.

The end of the first half was also marked by an unprecedented in our own
history environmental incident, when the leak of diesel fuel at the
industrial site of the Heat and Power Plant ? 3 in the Kayerkan neighborhood
of Norilsk resulted in an adverse environmental impact. We immediately
started a comprehensive clean-up operation to collect the leaked fuel and
remove contaminated soil, actively engaging third parties, including
government and private partners, as well as launched a number of initiatives
to prevent such incidents in the future. We have also engaged into an active
cooperation with the various government bodies regarding the rehabilitation
of the incident.

Overall, we would like to reiterate reduction of the environmental impact
and improving ecological performance as strategic priorities of the Company.
In spite certain issues with the mobilization of a third party contractor
workforce in Norilsk as well as new risks for the shipment of imported
equipment due to coronavirus pandemic, we have launched the active
construction phase of our flagship desulfurization project in Norilsk and
the expansion of Talnakh concentrator. We reiterate our strategic target to
decrease sulfur dioxide emissions in Norilsk by 90% in 2025.

Our revenue in the first half of 2020 increased 7% to USD 6.7 billion owing
to higher palladium and rhodium prices. Our EBITDA, however, decreased 51%
to USD 1.8 billon due to a USD 2.1 environmental provision, with EBITDA
margin falling to 27% and net income reducing to USD 45 million. At the same
time, free cash flow increased 21% to USD 2.7 billion as the environmental
provision was not a cash item.

The leverage remained at a low level with net debt to EBITDA ratio
increasing to 1.2x. Amidst the high level of uncertainty on global markets,
the Company increased its liquidity cushion by drawing down some of the
available credit lines. We continued our long run campaign to refinance debt
portfolio, having managed to further decrease the average cost of debt
despite an increase of gross debt. Financial stability is among strategic
our priorities. The world's leading credit rating agencies appreciate strong
financial standing of the Company, having confirmed our credit ratings at
investment grade level".

HEALTH AND SAFETY

The lost time injury frequency rate (LTIFR) decreased 29% y-o-y from 0.28 to
0.20 in 1H2020, remaining well below the global mining industry average.
Furthermore, the number of lost time injuries decreased 27% y-o-y (from 15
to 11) following the roll-out of base corporate industrial safety standards
of, launch of a risk control project aiming at the reduction of safety
related risks and improvement of labour safety management system
initiatives.

Regretfully, in 1H2020 Company suffered five fatal injuries. The management
considers the health and safety of its employees as the key strategic
priority, targeting zero fatality rate, and continues to implement a wide

(MORE TO FOLLOW) Dow Jones Newswires

August 11, 2020 07:00 ET ( 11:00 GMT)
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