PJSC Mining and Metallurgical Company Norilsk Nickel

Thanks. Good afternoon and good morning depending on where you calling from to us.

Thank you for joining us on this conference call. I will briefly introduce our speakers for today Mr.

Dyachenko, First Vice President and Operational Director; and Mr. Malyshev, Senior Vice President and Financial Director, Mr.

Grubman Senior Vice President and Head of Strategy and Business Development and Mr. Batekhin, Director for Marketing Department.

And now I am passing the floor to Mr. Malyshev.

Good afternoon, folks. I will start with a brief overview of our achievements for the year.

Consolidated revenue increased 28% year-on-year to US$11.7 billion. The growth was based on high prices for all metal and platinum and increased copper and palladium sales volumes.

EBITDA expanded more than 50% to $6.2 billion owing to higher revenue initial results derived from our efficiency and cost optimization program. In 2018 our EBITDA margin exceed 53% once again we have taken the lead and the profitability among the large diversified mining companies.

Net working capital decreased to US$867 million during 2018 and we released more than $1 billion this is consistent with our guidance touring to comfortable for the company level. CapEx decreased 22% year-on-year to US$1.6 billion mainly because in 2017 we had completed major projects first and foremost Britain's copper project.

Our free cash flow for 2018 was a record high and amounted to almost US$5 billion due to high EBITDA reduction of working capital and lower CapEx. Net debt EBITDA ratio went down to 1.1 as of the end of 2018.

Sustainability while our financial position is confirmed by external experts. All three international rating agencies as sales will create raising at investment grade.

And last but not the least in the fourth quarter 2018 we paid the interim dividend for the first half of 2018 for the total amount of approximately US$1.8 billion. Now I am passing the floor to First Vice President Mr.

Dyachenko who is going to discuss with you health and safety issues.

Good afternoon colleagues. If you look at Slide 3, you will see our achievement.

The first page will demonstrate that in 2013 till 2018 the team managed to reduce the level of our LTIFR by 71%. And as you see, we also significantly reduced the total number of accidents with lost time vis-à-vis 2017.

We decreased the total number of accidents, lost time accidents by 48% year-over-year and marginally reduced the number of fatal accidents. We do not stop short at that.

We believe that some of their fatal accidents well are quite unacceptable for us. We still have the aim to reduce that figure to zero.

And we are working steadily to decrease the lost time accident level. The company works on production culture, we want to improve our workstation, we do plan replacement and well we are pleased in this process.

To ensure safe labor and we hope that we'll be able to soon achieve this target. If you look at Slide 4, you will see what we are doing in terms of environmental protection in particular sulphur dioxide emissions.

We demonstrate the decreasing trend versus 2015 at Kola Division by 5%. We also demonstrate our reduction of the same figure by 30% for Kola.

Over this period as from 2015 to 2018 we had a number of events. We have mentioned on many occasions if we talk about Polar Division that's primarily closing down of nickel plant reconstruction and construction of the new set of nickel plant which easily allowed to use sulphur dioxide emissions in the sanitary area of Norilsk.

And secondly we manage to reduce the concentrate which is used for melting and reduce also their amount of other compound materials. If we talk about Kola Division, at Kola we managed to close down the facility at the [indiscernible] and thus we were able to shift all our emissions to high sources at smelting shop at Nickel Town.

Then sulphur dioxide reduction will be linked to shorter projects deployed at both divisions. I am passing the floor for a review of our ratings to Mr.

Vladimir Zhukov.

If you look at Slide 6, where we provide our recent shipments in DuPont Assessment of our performance in ESG area, we're glad to share this information with you. One of the leading ESG agencies sustained analytics based on 2018 performance, increased our reach into 69 points over 100 and our rating was confirmed at an average performer, that's an average indicator.

And the rating in the global mining was increased to number 13. You will remember that when we started in 2015, we were actually at the lower 10s and MSCI agency confirmed our rating at single B level and we were awarded this rating from this agency for two years.

FTSE4Good in July last year confirmed our stock as part of their indices and the total assessment was increased from 2.3 to 3.1 of 5 points. Therefore we believe that our objective achievement in labor safety and environmental protection are adequately asset by third party expertise.

Now, I'm passing the floor to Batekhin

If you look at Slide 8, you will see our review at macroeconomics. These are not very optimistic.

BMI index has been falling in all major regions. We expect a slowdown of economic growth in China and other major regions.

Dollar has appreciated, which resulted in a reduction of the cost of commodity basket. If you look at our market, our metal market, Slide 9.

Then if you have a broad view on that. In the nickel market there is deficit or shortfall which is reducing.

In the copper market we see a marginal deficit. In the palladium market we see a significant shortfall, and in platinum market we see surplus.

If we switch to nickel market, look at Slide 10 please. One of the major factors is that the more broader exchange stocks are being normalized.

Now they are amount - they're about 31 days of global consumption. It's below the historic levels for the nickel market and it's slightly below their normal level, which we expect to arrive to during this year.

Exchange stocks have been nearly halved and their outflow was very low but the year has just started. We can see - we think that the draw down will continue.

Of the metal that was taken during 2018 from exchange stocks, we believe that two-thirds was actually consumed and about one-third was just additional stock. One of the major factors in nickel supplies is NPI production.

If you look at Slide 11, the situation is by no optimistic in our view. We observe major increase of supply both of NPI and ore.

Regulation in Indonesia has changed. It's again allowed to export unprocessed nickel ore, which allows produce more NPI in China.

At the same time, NPI production also has grown in Indonesia, where they gradually step up processing capacity. If you look how the demand changed, stainless steel clearly remains the biggest consumer.

At Slide 10, you see how the demand increased. And the segment is broken down by different countries.

Here we see too clearly that these are China and Indonesia. In China, the growth itself was not very big.

It's about 0.5 million tons, but the high base effect still is there and China continues to dominate. Another interesting sector, this is battery sector at Slide 13.

It is not as big yet, but it is rapidly growing and a very promising one. What is positive for a Company that on top of increase of the number of batteries, we see change of the chemical composition, we see bigger nickel content which is favorable for our Company.

So far the pace of growth is very high but it's from the low base. We expect that last year the demand was about 70,000 tons.

This year that - it would be something like 90,000 tons. It's a small share of the nickel market but over time we're sure that it'll be the largest segment except for stainless steel.

If you look at Slide 14, we provide our review on the fundamentals of the palladium market. We believe that the market is pretty healthy.

This year we expect to see shortfall, it will be lower but it's still - there would be a shortfall. The market consumes more nickel than it is supplied.

Last year the consumption increased by 7%. This year we expect it to slow down to 5%.

Last year the supply growth coincided with the demand growth of about 7%. This year we expect some acceleration to 9%.

It is related to NPI and let's say Class 1 production again being down at some capacity. If we look at Slide 15, for copper situation, this market is pretty balanced.

2018 is characterized by the fact that supply disruptions were very low. While it's the lowest level in the recent 10 years, just 3%, it's a rare event.

I must say that at the start of 2018, the consent opinion that the number of disruptions will be much higher in percentage points. At the same time another risk was also monitored, reduction of corporate consumption China due to expected trade wars what else in - notwithstanding such fears.

Copper import to China has stepped up dramatically and indeed this growth rate did not impact copper consumption in China. Our initial expectations of the market were much worse.

Slide 16, we provide balance in copper. We see minor shortfall, 120,000 tons last year.

This year it will be slightly more than 320,000 tons. But given the size of this market these are minor figures.

And we make say that it is a balanced market. At the same time exchange inventories are at historical lower levels.

It doesn't mean that we're running out of copper. There are plenty of stocks which are not exchange stocks, which are not published.

But it's technical indicator which demonstrates a certain tension in copper trade. If you look at palladium market, look at the Slide 17 please.

Palladium is in system deficit. We expect that this year the deficit would be even more pronounced, notwithstanding the fact that there will be a minor recovery of production both in South Africa and Russia.

The demand is growing at the higher pace while production stepped up by 2% last year, a major on account of recycling we expect 3% growth in 2019. The demand will be up by 5%.

Again, it will be ahead of supply. Platinum market is in sustained surplus.

Slide 18. Nevertheless we see some lower investment demand.

It's logical. Platinum is heavily undervalued and long-term this metal will be attractive.

What will be putting pressure on this market, increased supply due to let's say releasing work-in-progress in South Africa. Consumption unfortunately practically - it may increase up to 1% no more.

Coming back to palladium market, Slide 19. We see that this market is becoming increasingly more limited in terms of supply.

Historically this market closes deficit gaps using ground stock. Some of them are transparent like ETF, and we see that in recent years the outflow was about half of stock that was stored there.

The forward curve demonstrates major backwardation in the market. It doesn't give a clearer picture of the future price but currently the market is very tight.

And we may further expect that the price will go down. Lease rates demonstrate shortfall of physical metal and the dramatic increase demonstrates its very hard top 10 physical metal in normal environment it will be about to their cost of library but current rates are much above the rates for cash.

The main driver for [indiscernible] metals is the automotive industry and demand is primarily driven by the regulation. At Slide 20 we provide some date to demonstrate how it impacts current and future consumption.

China is emerging as a major automotive market, the switch from China 5 to China 6 A and China 6 B regulations and without changing any other characteristics over the just by changing the standard. About 30% of platinum group metals will be required for each type for major shift.

In the Northern America we see similar trend although the average engine displacement is becoming smaller the metal loading for per car is increasing. In the European Union one of the major regulation objectives is restriction of greenhouse gases like CO2 well before it was expected that diesel engines will have toward this task.

Now we witness a reduction of share of diesel engines makes this challenge even tighter which means further loading of this metals in the vehicles. Another important trend that is electrification of cars which we discussed at Slide 21, what is important to emphasize often times electrification is treated by mass media something different than automotive manufacturers from their automotive manufacturers' perspective.

Electrification is done by production of hybrid cars that is a combustion of internal combustion and battery type engines. Pure DEV or BEV engines - their projections are very low in all OEM.

On the slide we have some experts from their public statements. If you see how the production volume changed we see generally a growth in the segment but the higher space is demonstrated by hybrid vehicles.

If we look at Slide 22, we are positive that the long-term palladium will be very strong without doubt it is difficult to precisely describe the future. We look at different scenarios in the automotive industry and the assessment and come the numbers of hybrid end BEV cars are very different, but even when we look at different scenarios we see that palladium consumption will increase dramatically due to the growing number of cars and to the fact that hybrid cars also need catalysts.

One of the main characteristics of palladium market it is that, it is the condition of premium as compared to platinum. It's a rare event if you look at Slide 23 and to what degree the situation is sustainable.

We are observing very carefully development of technologies after what value the palladium/platinum have for automotive industries and for technology itself. Currently palladium has a variety advantages both from technical engineering perspective against platinum that is form of tolerance and the ability to recover nitrogen from oxides which makes it a preferred option as compared to platinum.

For automotive companies affordability and reliability of supplies are primary factor, the price being the secondary factor for their business. So far we haven't seen any major threats for use of palladium but if you look generally at what is in store for us in the automotive industry in the long-term perspective Slide 24.

Generally we see that we will see increase of consumption of all bucket or metals palladium, nickel and copper which gives us a degree of optimism of the long-term perspective. We have looked at different types of cars which exists, Slide 25, and in each of these types we used practically all or nearly all bucket of metals.

No matter what torn evolution the sector takes this industry will remain a major source of demand for us. I am passing the floor to Mr.

Sergey Malyshev.

Thank you, Batekhin. I continue with the financial results.

I will start with our revenue. In 2018 physical sales of copper and palladium increased by 17% and 20%, copper sales increased due to higher wins of the concentrate processing is of palladium.

We sold metal from our palladium fund stock accumulated in 2017. Nickel and palladium sales volumes were flat year-on-year.

As you can see on the slide we have almost completely seized processing of third party seizure at our refining facilities. In 2018 market conditions were favorable for the company prices for three out four our cumulative went up.

The most significant increase was in nickel and palladium prices was increased by 25% and 19% respectively. Increased sales volumes and high palladium price changed the structural and metal bucket.

Palladium share increased to 34% nickel and copper had equal shares of 28% the share palladium fell to 5%. Next Slide sales/revenue, revenue from sales of nickel, copper and palladium increased.

We delivered specifically strong revenue growth in palladium that amounted to more than 50% driven by rising prices and destocking. Revenue from nickel increased by 25% mainly driven by price, revenue from copper was up 23% mainly owing to higher production volume.

A slight decrease in revenue from palladium sales was due to lower prices. Consolidated metal revenue in 2018, the consolidated revenue from metal sales increased 20% to US$11 billion driven equally by both macro and internal factors that contribute $1.3 billion each as I said those factors worked equally.

The geographic breakdown or sales did not change significantly Europe remained our key market with 54% of revenue. The share of sales to Asia increased to 27% due to higher sales volume from base metals mainly to China.

North and South America share increased due to higher palladium sales volumes. EBITDA, our EBITDA increased 56% amounting to 6.2 billion with EBITDA margin of 53%.

Macro factors contribution to EBITDA was more than $1.3 billion high commodity prices and weaker rubles were marginally offset by the negative impact on inflation. Operating factors brought us additional $823 million of EBITDA with release of metals from previous accumulated stock result an additional $0.5 billion of EBITDA.

Higher production volume and efficiency gains increased EBITDA by another US$213 million. On top of that, in 2018 we since project generated its first EBITDA, Chita project EBITDA of US$85 million.

Additional support was provided by the decrease in one-off social expenses in the amount of $91 million. Cash operating costs in 2018 operating costs, cash costs decreased by 2% or US$3.8 billion.

Macro factors decreased cash cost by $96 million as depreciation of Russia rubles was partly offset by inflation and growth expenses, operating factors are also worth mentioning. Now the cost of - higher processing volumes of respect.

Headcount reduction driven by our operating efficiency program saved us US$58 million. Cash cost adjusted for FX impact and cost of purchase metal incentive products increased by 2.5% that is lower than Russia's inflation.

Once again this confirms the Management's ability to control operating expenses. Net working capital, Slide 32.

As we pointed before, we promised to reduce [$21] billion sent or delivered on that promise. This metric decreased by 60% to $867 million, and we believe that this is a normalized level for us for the medium term.

I mean $1 billion. The working capital release was driven by the optimization of capital structure, emerging to more than $1 billion.

This initiative includes directional advances from key customers on more favorable terms and accretive reliance on vectoring. We also decreased palladium stock by $220 million.

As I mentioned before, metal accumulated at the end of 2017 was sold to our customers in 2018. Depreciation of Ruble, decreased working capital by additional $277 million.

Free cash flow, Slide 33. In 2018, free cash flow amounted to $4.5 billion due to higher EBITDA and year-on-year working capital dynamics.

We are amongst the industry's leaders in conversion of revenue to free cash flow. Slide 34, sensitivity.

Traditional slide, a substantial part or OpEx and CapEx is Ruble denominated. This explains high sensitivity or our results to the exchange rate of the national currency.

As we can see from the chart, at U.S dollar to Ruble rate of 69.5, a 1% change, here the rate translates into $25 million of EBITDA and $52 million of free cash flow change. Depreciation of Russian Ruble will reduce this act of exchange rate on this metrics and depreciation respectively will increase that.

In 2018, shares of ruble to OpEx and CapEx stood at 90% and 75% respectively. The share Ruble denominated CapEx increased from 67% to 75% primarily due to the end of active construction phase of Chita project and completion of Talnakh concentrator upgrade.

A substantial part of the expenses was denominated in a foreign currency. The share of Ruble denominated OpEx increased from 85% to 90%.

Slide 35, CapEx. In 2018 the Company's CapEx amounted to $1.6 billion.

The decrease year-on-year was driven by the completion of a number of key projects. First and foremost, here we refer to the end of active phase of Chita project construction and additionally optimized schedule of some projects as part of a technical solutions revision.

High investment at Kola MMC were driven by the ongoing modernization of refining facilities including nickel chloride and leaching project. About $900 million of the CapEx was spent on commercial projects and about $700 million on the Stay-in-Business project.

Slide 36, proactive debt. At the end of 2018, the Company's net debt stood at $7.1 billion.

The key driver of the decrease primarily was a record high free cash flow. Net debt-to-EBITDA ratio went back to a comfortable level of 1.1x.

In 2018, we continued our debt portfolio optimization aimed at the reduction of cost of debt. During this, we repaid $750 million Eurobonds and $677 million of Chita project financing, using the funds from syndicated loan we raised at the cost of LIBOR plus 1.5%.

The result of this and other similar actions resulted in savings of $10 billion year-on-year in interest payment. The Company continues to demonstrate strong liquidity of $5.7 billion as a result.

This includes $1.4 billion of cash and $4.3 billion of committed credit lines. This level of liquidity is well enough for debt payments for the coming three years.

As you can see, we do not expect substantial repayments in 2019. I would like to note that our financial positions come from by investment grade ratings received from all three leading agencies.

Now it's time to look at our key strategic project. I'm passing floor to Mr.

Dyachenko again.

I will start with Skalisty. Since 2018, we completed the work in one of the two shafts.

We're now at the level of 2,600 meters, and we're actively constructing the engineering of the shafts. So that in July the shaft will be conditioned which will allow us to start horizontal working [indiscernible] decisions.

Shaft too was mentioned on many occasions. The work is done according to schedule.

The construction is expected to be completed by the end of 2019. And during 2020 we'll see - well, it will be switch to continue more than duration.

We expect that it will work to full capacity to 2.4 million tons by 2024. However, currently we're several stages with this project and we produce about 2 million tons of rich ore.

The next project is at Slide 39. With the configuration of our refining capacity.

We have a huge project at Kola. The construction is being completed there and we're switching to new technology.

In 2018 we completed the first section. 104 units were switched to new technology.

We expect to reach full capacity by Q4 of 2019. If you look at Slide 40, you will see a brief description of Bystrinsky project.

The construction work has been completed there. The project is now operating in test mode.

We are now testing technology modes, ore grinding and flotation. We process about 4 million tons of ore and obtain EBITDA of $96 million.

In 2019 the target is to process 8 million tons of ore and by the end of the year to achieve full scale performance, so that in 2020 we work full scale as expected. For the next projects, I'm passing floor to Alex Grubman.

Thank you, Sergey Dyachenko. Good afternoon dear colleagues.

I will comment on some of our strategic projects. If you look at Slide 42, we'll provide some information of our sulfur projects that we're carrying in Norilsk area at Nadezhda smelter and the copper.

As of today we're completing project documentation and we expect that the head of growth expertise will issue the final opinion by late April of this year. We're glad to start in the second-half of 2019 construction works and to complete workings of the sulfur projects by the end of 2022.

Along with this drafting documents and processing relevant expert reviews, we started to prepare side boards at Nadezhda and at copper plants. You see the pictures taken there.

And we're also in the process of an active standard to a point general contractors for performance of this project. If you look at Slide 43, I will comment the project for the short stage of Talnakh Concentrator.

As we said before and the final investment decision will be taken in first half of 2019 and in the second half of 2019 we expect to start active work on the construction site. The joint venture of Norilsk Nickel with Russian platinum [indiscernible] palladium now we are at this stage of feasibility study which will be completed in Q4 of this year and then by the end of 2019 or 2020 based on this feasibility study we are going to take an investment decision on this project.

Now I am passing the floor to Sergey Batekhin to describe the next group of our projects.

If we come back to Slide 42 I want to mention another aspect of this project regarding environmental project at Kola site at polar division we're upgrading our concentrate facility and one of the main implication will be a reduction of environmental impact on the nearby towns. The project that carried out joint with - company construction proceeds according to schedule.

We expect to reach expected performance in the second half of this year. We'll reduce the load all smelter production by half by 2020 sulphur dioxide emissions will be decreased by 50% as compared to what we had in 2015 in terms of emissions.

If you look at Slide 43 if you look at the overall picture of development or capacity as we expect as we said that Kola site we are going to active page of our construction of our concentrator. At polar we are supporting our capacity in terms of mineral resources.

We are doing pre-feasibility study across all our mines which will allow us to not only to maintain production level but increase oil production well at the time horizon of 2024/2026. Pre-feasibility has been completed for the scope of [indiscernible].

We mentioned the geological work that we [indiscernible]. The research demonstrate the column exclusive ability of broader records on this deposit and we expect to approach update information Chita project is at the stage of ramping up its capacity and mastering technology.

And as we said were posting major environmental protection projects. If you look at slide 44, here we again see the story that they were discussed by Sergey Dyachenko we had here our investment programs stay in business over our projects intended to maintain current operations stay flat that US$800 million to US$900 million per annum that chart demonstrate the start of active phase on our environmental projects US$250 million in 2019 with broader annual spending in the range of US$700 million to US$800 million.

Our commercial projects which include over projects of developmental or mineral resource base and completion of construction at Bystrinsky Project will require both US$800 to US$900 million and we also demonstrate our auctions. We will submit to optional projects to the investment committee this year into the Board of Directors for their approval that Talnakh concentrator expansion and South cluster broader working of [indiscernible] mines.

Given favorable circumstances we'll see that in the range of 2020/2022 we'll spend about US$350 million to US$450 million annually. If you look at the slide 45, as usual we provide our projections for production of main metals for 2019/2020 for nickel we expect to exceed 220 per year that this all from Russian sources for copper and we'll continue to process additional concentrate that will be acquired by the company.

And to produce up to 2020 something like 450,000 tonnes of copper for platinum and palladium production will remain in the range of105/110 per year. And I am passing the floor to Mr.

Malyshev.

A final look Slide 45 we are discussing our outlook for 2019. My colleagues discussed our projections for and CapEx forecast is up to U.S.

$2.2 billion or U.S. $2.3 billion including a $250 million for sulphur project.

We expect net working capital to be US$1 billion at the end of 2019 and net debt to EBITDA ratio to be 1 to 1.2 depending on the commodity prices and exchange rates. Dividend as usual will be calculated based on the formula all of you are familiar with.

In May this year we may expect recommendation regarding the final dividend. Thank you.

We are prepared to switch to Q&A session.

Thank you for this opportunity what is better English or Russian. I have two questions in fact the first question is regarding that optional CapEx in 2019 was optional US$250 million.

When do you expect to take any decision that way or other way that's the first question. And the second question regarding Bystrinsky Project like 14 here we have two figures of EBITDA 96 million and 85 million for 2018 which of the figure is correct.

And on top of that could you provide some pro forma figure of sales for Bystrinsky for 2018?

I will start but both figures are correct, 85 that's external revenue, 96 includes intercompany that is sales of part of metal to the Polar Division internal sales will therefore for disclosing purposes we use two figures. For external I will use 85 million that for external purposes.

Thank you.

This is EBITDA revenue, it's EBITDA, EBITDA - I well made a mistake - it's EBITDA naturally. And some revenue figures for this project.

Generally we sold metal to about US$200 million. But the current status of this project since we're completing different formal procedures, it is being registered and it is now still in the commissioning process.

You cannot separate the sales revenue from other sales.

Thank you for your presentation. I have a question regarding the CapEx of 2019.

I see that you reduced the range of investments versus short expectations, before that you indicated US$2.3 billion to US$2.5 billion. How you arrived to a new figure?

We came to this figure by adjusting the construction schedule and we obtained clear view of different stage of construction. That is from our forecast we switched to the actual implementation of the project which is carried out along with official documents.

This is a more accurate schedule and more accurate figures.

And second question regarding the smelter fund. Do you plan to increase the amount of the smelter fund?

Palladium fund as such the size of the fund we've not planned set derivative over the production figures purchased from third parties and deliveries to end customers. It's a floating figure and well not make any plans for its size.

The purpose of this fund is to satisfy needs of our customers including using additional metal which is purchased from the market above the production figure of Norilsk itself.

Thank you. And the final question if possible.

Corporate governance; controlling shareholder has dramatically changed its seats on the board, each members of the Board of Directors. What is the resulting change of the Directors on your Board and what will happen or any implications?

We have not seen yet for Nornickel we have not seen yet any changes. Shareholder agreement was made with Rusal and it doesn't depend on the personal compositional of their Board of Directors, it's all stable.

Couple of questions first. Head count as of late 2018; do you plan any structural increase next year on account of Chita project?

And secondly, you slightly improved guidance for Chita in terms of production of iron ore but EBITDA assessment for 2019 is the same. Does it mean that you want to take conservative approach or do you expect higher cost in 2019?

I will comment on that now. The total headcount of the Company is about 75,700 people.

We expect that next year it will stay at about the same level. As for Bystrinskoye project, the current headcount is 1,900.

We expect some growth less by a quarter of total. But it will not impact the overall head count.

Well, thanks to continuation of our optimization program.

I will ask another question immediately. 75,700 is including Chita or separately?

Yes, Chita included.

Could you specify EBITDA and EBITDA margin for the sales from third-parties in 2018?

You're talking about what metal from third parties?

Palladium.

Well, it was indicated as sales to third party and revenue. We see sales but we don't know what sort of costs you use there and what is that margin there.

This is metal procured from third parties, which is sold as part of activities from our palladium fund. The margin is very, very low.

Margin is close to zero.

My question regarding Chita, you haven't yet answered that.

Yes, repeat it please.

In 2019, you slightly stepped up guidance for production of stainless steel at this project. But EBITDA projected is about the same.

Do you try to be conservative or you expect any growth of costs?

The first version.

Maybe I've missed during the presentation but could you specify what was the volume of physical sales in ounces of palladium through your palladium fund?

I can give figures for 2017-2018, about 1 million ounces.

A question about palladium fund. Could you specify what was the stock of fund late this year?

About 130,000 ounces.

[Operator Instructions] We don't have any questions in the Russian line. We switch to English line questions.

A couple of questions. Firstly one to [indiscernible], apologies if I missed the answer to this.

But can you give any details on whether you're seeing any evidence of switching from palladium into platinum from any of your existing auto catalysts or OEM customers? That's my first question.

Yes Daniel good afternoon. We have just discussed in our presentation that we don't see any changes pointing to that so far.

And a couple of questions to more like the company. At the Investor Day PMB in the fourth quarter last year you mentioned releasing the terms and conditions of the potential IPO of Bystrinsky in the second half of 2019.

Can you give us any updates on this process and can you also give an indication of whether you or your JV partners would be or both would be selling down it was taken and the project is IPO?

Thank you. We expect to have any clarity on this question in the second half of the year or rather towards the end of the year.

It was a similar projection that was made in November the strategy day in London.

Okay perfect thank you and last one from me you suggested the Arctic palladium joint venture is moving towards an investment decision end of this year early next year have you formalized and ownership structure with your joint venture partner on the project?

No, we do not yet disclosed this information probably. We're still negotiating and we have not yet finalized the decision.

You answered my question but just one more on Palladium. You talked about the level of inventories start within the ETS have been coming down over the last couple of years.

What's your fill for how much inventory that's outside or those ETS that's available and how long can that last given the market destined? Thank you.

This is $1 billion question. I think that the stock will run out somewhere between tomorrow and four more years.

My questions have been covered. Thanks guys.

Three questions for me. First one on key projects.

We know that the ramp up here in Q4 which has impact the production to your previous guidance. Could you please give more clarity on the nature of the issues and whether there are any outstanding ones at the moment.

And the second one perhaps on efficiency gains, on Slide 30, we acknowledge that it's the efficiency gains of $38 million or below the net inflation. So what was the cause of the relatively light efficiency gains and do you have any efficiency target going to '19?

And last question now, corporate production guidance we know it's at 450,000 tonnes for '19 and '20, what is the reason for that? Are they also due to secondary feed stock depletion that you have for '19 or for '22 and '23?

Thank you.

I am just at, for the first question yes really with a problem of which our tech company recognized as low quality supply at a whole production line stood at, we had to replace some corporate components, now the line is operational.

Hi there.

We didn't answer the previous question. '20 the first year where we deployed a long term program of ore efficiency, we believe that this is pretty good for the first good of implementation as for the next year, sources of additional efficiency and they will be well diversified.

We've given sound view of the strategy in London as for specific figures we mentioned for man hours, we do not yet give the overall figure and guidance, but it will be at least the same of that in 2018, not less than the same. Will you repeat your third question?

Thanks for the presentation this afternoon. I just had a question regarding an [indiscernible] earlier today where your CFO mentions you might tap foreign markets if cost decline further.

I was just wondering what sort of rate in the European market would be attractive to you? And then following on from that, when would any decision about refinancing your 2020 bonds you made and could you give an estimation of what your financing needs for the year ahead will be given your dividend and CapEx plans.

Thanks

As of today, as you've seen from our debt portfolio, we don't have any urgent need to raise debt in the capital market. We can see that all possible options we see that the situation in the public debt market is becoming more stable and we see more companies displaying interest towards this market segment.

At the same time, we see that currently the company has an opportunity to borrow at more attractive rates to give a more specific answer to your question. I will put it like that, that in fact if cost of the debt portfolio that we had the end of previous year is sort of benchmarked for us and an opportunity to maintain the current cost of debt, will be a criteria for tapping the European market and I would like to add that the objective of our treasure now is to expand the infrastructure, which will allow us to be ready to use any tool, any instrument in the market and we should have the stages of maximum ratings for any durations in the market environment.

We see some information statements, we see that the clarity for IPO projects will occur in November this year. We did not mention any specific months.

We said that we'll extend it this year clear by the end of this year.

Just to repeat a follow-up on my third question which was skipped, so on copper production, the guidance was capped at 450,000 tonnes for '19 and '20. Just wondering what is the cause of that?

Is it also due to the secondary receipt of feed stock depletion that was highlighted for a decrease in 2021 to 2023. Thank you.

Yes we confirm that. We expect that copper concentrate procured from Russia that we expect it that it will be processed in 2020, 2022.

We expect that temporarily our copper production volumes will decrease.

Hi there. Very quick follow-up question.

You commented about depressed levels, the cost inflation in 2018. Can you give us any guidance on your expectations for underlying cost inflation in 2019, Thanks

At about 4% on the preliminary level.

Ladies and gentlemen, we ran out of question, I'll give you another floor for closing remarks.

Thank you very much for joining us this conference call. I hope that you liked our performance in 2018.

In the next few weeks our team as usual will travel and U.K. and other countries and hope to see you personally and our discussion of our financial volume.

Thank you.