Fourth quarter report – December 31, 2023

Q4, OCTOBER – DECEMBER 2023 (October – December 2022)

• Revenue TUSD 19,924 (29,550)
• EBITDA TUSD 3,190 (-7,020)
• Loss for the period TUSD -236 (-19,756)
• Loss per share before dilution USD -0.0003 (-0.022)

JANUARY – DECEMBER 2023 (January – December 2022)

• Revenue TUSD 86,485 (115,775). The Group recognized non-cash revenue from sale of gold of TUSD 32,619 during Q3 2022.
• EBITDA TUSD 18,259 (11,235)
• Loss for the year TUSD -1,334 (-29,480)
• Loss per share before dilution USD -0.0015 (-0.033)
• The Board of Directors proposes that no dividend is paid.

SUMMARY OF FINANCIAL INFORMATION

Focus on growth projects while improving operational efficiency

During Q4, the Company attention was focused on improving operational performance on all the production sites at the same time trying to keep development of the growth projects on track: the Malyutka project produced the first gold, construction activities at a new mill at the Zolotaya Zvezda project (Khakasia region) and capacity increase of the Yubileyniy mill (Khabarovsk region).

Production
The Company commissioned production at the Malyutka HL project with 2.42 koz of gold produced in Q4 2023. The project is located in the Khabarovsk region and hosts Probable reserves of 360 koz of gold in accordance with the last JORC statement. Construction activities at Malyutka were started in 2021 and open pit mine preparations commenced in the end of 2022. Currently the operations are in the test mood when the technical equipment, geological models and processing parameters are verified.
We proceeded with the technical improvements at the Yubileyniy mill and mine where we see opportunities to increse operational effciency further both with underground mining operations and mill performance.
Zolotaya Zvezda, the new project in the Khakasia region of Russia where we acquired a 25% stake in 2022, is our new focus area. Although we see significant upside in the project, during 2023 we were busy with revisioning of geological models and did confirmatory drilling of the existing reserves, examining the compliance paperwork for mine operations, reviewed H&S procedures, mine development plans and etc.
The total consolidated production in Q4 (without consolidation of Zolotaya Zvezda production results) amounted to 10.69 koz, an increase of 21% compared to the last quarter of 2022.
Following tightening compliance requirements in Russia, we consider putting some of our placer deposits on hold this year.

Financial performance
In Q4 2023, the Company improved EBITDA, EBITDA margin and Gross and Net profit/loss compared to Q4 2022. Both international and Ruble nominated gold price increased substantially during the quarter. TCC and AISC improved both for Q4 and for the full year 2023 compared to the relevant periods of 2022.
The capital development programs were primarily financed by debt resulting in higher net debt which we target to reduce in the future with the contribution from the growth projects. Due to the increase of the Russian Central Bank base rate to 16% in Q4 2023, the costs of servicing the Company’ debt have significantly increased and will effect financial performance in 2024.

Investments
The Malyutka project has entered the commissioning phase, with first gold produced, and will continue into 2024 until the project will reach the target production rate. Out of our total investments into development assets in 2023, almost 47% related to the Malyutka project.
The next major development project is Yubileyniy where we prepare to increase capacity to 400 ktpa and change the processing chart to CIP and avoid flotation stage. We target to commence the updated mill by the end of 2025.
Following the acquisition of a 25% interest in the Russian gold company Zolotaya Zvezda CJSC in 2022, the Company participates in pro-rata investments into the new project which include exploration activities, modernization and capacity increase of Mayskiy processing plant.

ESG
In 2023 Kopy Goldfields continued progressing in its ESG strategy and investigating various options in green financing. We achieved our key objective for 2023 as we stabilized the Lost Time Injury Frequency Rate (LTIFR) at the 2022 level. The Company continued the cooperation with various stakeholders in the Khabarovsk region and the Ayano-Maisky district.

Macro environment
2023 was the second very turbulent year after 2022 with additional sanctions introduced both within Russia and internationally negatively effecting the development of business in Russia. Although the mining industry in Russia has been adapting to the new challenges, many new growth projects were put on hold due to equipment and technology supply deficits, recruitment problems and lack of financing which is the major hurdle for the corporate growth strategies.
During Q4 2023, the international gold prices reached historic records and continued to grow in the beginning of 2024.
In Q4 2023, new export duties were introduced in Russia for certain types of export goods including gold. The new duty will tax additional revenues primarily from natural resource export and the rate of duty varies from 4% to 7%.

Outlook
2024 will be critical for the Company to reach production growth targets: both Malyutka and Yubileyniy should reach full capacity and new production records. To achieve that we continue to focus on the technical efficiency of the existing mines and carefully advance construction and comissioning activities at the new projects. We continue to pursue our long-term plans while we seek to manage and mitigate many challenges in the current environment.
The Company continuously monitors and adapts to the constantly changing circumstances and increasing challenges, while risks are increasing and our flexibility in developing the Group is exposed. We continue to review and evaluate strategic options to facilitate and secure efficient operations while balancing the interests of all stakeholders.

Mikhail Damrin,
CEO Kopy Goldfields