Polymetal: Q2 2019 production results

Polymetal International plc (POLY) Polymetal: Q2 2019 production results 24-Jul-2019 / 09:00 MSK Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.     Release time   IMMEDIATE                                                           LSE, MOEX, AIX: POLY / ADR: AUCOY Date 24 July 2019   Polymetal International plc Q2 2019 production results   Polymetal reports strong production for the second quarter and the six months ended June 30, 2019.   "Excellent results from Kyzyl drove our production growth while other operations delivered strong performances", said Vitaly Nesis, Group CEO of Polymetal." HIGHLIGHTS The Company's Q2 gold equivalent ("GE") production grew 19% year-on-year to 384 Koz as Kyzyl delivered at full capacity with 81 Koz of gold produced in the quarter. GE production from continuing operations was up 29% year-on-year. Q2 gold production was up 30% over the previous year at 302 Koz. Silver production was down 11% at 6.0 Moz on the back of asset disposals. GE production for H1 2019 was 756 Koz, up 22% year-on-year. We expect stronger production in 2H driven by seasonal concentrate de-stockpiling at Mayskoye. Revenue for Q2 increased 13% year-on-year to US$ 492 million, with gold sales rising 31% on strong production. Silver sales fell 22% due to a temporary logistical lag between production and sales to be eliminated in H2. The Company is well positioned to meet its full-year 2019 production guidance of 1.55 Moz of GE and reiterates its cost guidance: TCC of US$ 600-650/ GE oz and AISC of US$ 800-850/ GE oz1. Polymetal generated significant free cash flow in Q2. Net debt remained unchanged during the quarter at US$ 1,700 million as of 30 June 2019, while the Company paid US$ 146 million of final dividends for FY 2018 (US$ 0.31 per share). As in previous years, we expect significantly stronger free cash flow generation in the second half of the year on the back of higher production volumes and seasonal working capital drawdown. We are saddened to report a fatal accident that occurred on 10 May 2019. A pump station operator died at Omolon. The Company's risk management activities increasingly focus on behavioral and cultural issues underpinning unsafe labor practices. We remain committed to our strategic objective of zero fatalities. At Nezhda, mining activities focused on constructing pit access roads. Construction proceeded according to schedule with the concentrator building comfortably on track for full winterization by the time the cold season starts in November. The project is expected to start up in Q4 2021. At POX-2, detailed engineering of the facility is in full swing. All long-lead equipment has been contracted. Site preparation activities including deforestation and topsoil removal are in progress. The project is on track for launch in H2 2023.   Note: (1) The cost guidance remains contingent on the Russian rouble and Kazakh tenge exchange rate dynamics, which has a significant effect on the Group's operating costs.     3 months ended June 30, % change1 6 months ended June 30, % change1   2019 2018 2019 2018               Waste mined, Mt 40.0  32.1 +25% 77.6 60.9 +27% Underground development, km 26.1 31.8 -18% 54.3 64.4 -16% Ore mined, Mt 4.3 3.4 +30% 8.6 6.5 +31% Open-pit 3.3 2.2 +53% 6.5 4.2 +55% Underground 1.0 1.2 -13% 2.1 2.4 -12% Ore processed, Mt 4.1 3.7 +11% 7.6 7.0 +8% Production             Gold, Koz 302 232 +30% 602 446 +35% Silver, Moz 6.0 6.8 -11% 11.0 12.7 -14% Copper, Kt 0.6 0.9 -38% 1.4 1.6 -13% Gold equivalent, Koz2 384 324 +19% 756 619 +22% Sales             Gold, Koz 314 239 +31% 604 445 +36% Silver, Moz 5.6 7.3 -22% 10.3 12.1 -15% Copper, Kt 0.7 1.2 -44% 1.0 1.5 -30% Revenue, US$m3 492 435 +13% 946 789 +20% Net debt, US$m4 1,700 1,704 -0% 1,700 1,518 +12% Safety5             LTIFR 0.22 0.17 +29% 0.23 0.16 +44% Fatalities 1 0 +1 2 1 +1 Notes: (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all tables in this release.  (2) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios.  (3) Calculated based on the unaudited consolidated management accounts. (4) Non-IFRS measure based on unaudited consolidated management accounts. Comparative information is presented for 31 March 2019 (for the three months period) and 31 December 2018 (for the six months period).  (5) LTIFR = lost time injury frequency rate per 200,000 hours worked. PRODUCTION BY MINE   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018               GOLD EQ. (KOZ)1             Kyzyl 81 - NA 159 - NA Dukat 82 76 9% 158 155 2% Albazino-Amursk 55 63 -13% 136 153 -11% Omolon 46 54 -16% 99 86 15% Mayskoye - - NA 5 - NA Varvara 39 31 24% 76 66 16% Voro 29 28 3% 57 54 4% Svetloye 52 45 16% 61 53 15% TOTAL (continuing operations) 384 297 +29% 751 568 +32% Okhotsk - 12 -100% - 24 -100% Kapan - 15 -100% 5 27 -82% TOTAL (including discontinued operations) 384 324 +19% 756 619 +22% Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au conversion ratios. CONFERENCE CALL AND WEBCAST Polymetal will hold a conference call and webcast on Wednesday, 24 July 2019 at 12:00 London time (14:00 Moscow time). To participate in the call, please dial: 8 800 500 98 63 access code 34668237# (free from Russia), or [phone] (free from the UK), or [phone] (free from the US), or  follow the link: https://webcasts.eqs.com/polymetal20190724. Please be prepared to introduce yourself to the moderator or register. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at https://webcasts.eqs.com/polymetal20190724. A recording of the call will be available immediately after the call at [phone] (from within the UK), [phone] (USA Toll Free) and [phone] (from within Russia), access code 418860357#, from 14:30 Moscow time Wednesday, 24 July, till 14:30 Moscow time Wednesday, 31 July, 2019. Enquiries Media   Investor Relations FTI Consulting Leonid Fink Viktor Pomichal [phone] Polymetal Eugenia Onuschenko Timofey Kulakov   [e-mail] [phone] (UK)   [phone] (Russia) Joint Corporate Brokers   Morgan Stanley Andrew Foster Richard Brown Panmure Gordon Charles Lesser James Stearns [phone]       [phone] RBC Europe Limited Marcus Jackson Jamil Miah [phone]     FORWARD-LOOKING STATEMENTS THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED     KYZYL   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING             Waste mined, Mt 16.5 14.9 +11% 32.3 28.7 +13% Ore mined (open-pit), Kt 511 323 +58% 1,033 397 +160%               PROCESSING             Ore processed, Kt 512 74 NM 988 74 NM Gold grade, g/t 6.6 2.5 +159% 6.7 2.5 +164% Gold recovery 87.8% 41.7% +111% 87.3% 41.7% +110% Concentrate produced, Kt 28.5 1.3 NM 58.3 1.3 NM Concentrate gold grade, g/t 104.2 46.5 +124% 100.0 46.5 +115% Gold in concentrate, Koz1 95.5 2.0 NM 187.4 2.0 NM               Concentrate shipped, Kt 17.3 - NA 36.9 - NA Payable gold shipped, Koz 40.4 - NA 91.2 - NA               Amursk POX             Concentrate processed, Kt 12 - NA 20 - NA Gold grade, g/t 128.9 - NA 124.7 - NA Gold recovery 93.4% - NA 93.8% - NA Gold produced, Koz 40.9 - NA 68.3 - NA               TOTAL PRODUCTION             Gold, Koz 81.4 - NA 159.5 - NA Note:   (1) For information only; not considered as gold produced and therefore not reflected in the table representing total production. It will be included in total production upon shipment to off-taker or dore production at Amursk POX. Kyzyl continued to outperform in Q2. The operation continued to benefit from high-grade softer ore and exceeded design specifications on throughput, grade and production. Half-year gold production came in at 159.5 Koz of gold with 187.4 Koz of gold produced in concentrate. The average concentrate recovery rate increased to 87.8% despite low mass pulls achieved to improve transportation economics and attractiveness of concentrate for Chinese off-takers. Share of gold in low-carbon concentrate processed at the Amursk POX exceeded 50%. The processing plant is now running at a rate of 2 Mt per annum - above its nameplate capacity of 1.8 Mtpa. Recent performance tests demonstrate that further improvement in throughput can be achieved with US$ 3 million investment in hydrocyclones and concentrate filtering area. Open-pit mining continued at a stable pace. A detailed technical study is under way to re-optimize the open pit under updated operational and economic assumptions with the results, including the updated Ore Reserves estimate, to be presented in Q4 2019.   DUKAT OPERATIONS   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING                           Underground development, km 14.9 15.2 -2% 30.0 29.4 +2% Ore mined, Kt 649 626 +4% 1,252 1,221 +3%               PROCESSING             Omsukchan concentrator             Ore processed, Kt 516 513 +1% 1,029 996 +3% Grade             Gold, g/t 0.5 0.5 -1% 0.5 0.5 +0% Silver, g/t 306 291 +5% 295 302 -2% Recovery1             Gold 85.3% 87.0% -2% 85.7% 86.6% -1% Silver 86.6% 88.2% -2% 86.9% 88.0% -1% Production             Gold, Koz 7.0 7.1 -1% 14.4 14.3 +1% Silver, Moz 4.3 4.1 +5% 8.3 8.4 -1%   Lunnoye plant             Ore processed, Kt 117 114 +2% 232 227 +2% Grade             Gold, g/t 1.3 1.2 +13% 1.4 1.2 +14% Silver, g/t 264 323 -18% 266 340 -22% Recovery1             Gold 85.1% 85.4% -0% 85.7% 85.3% +0% Silver 90.1% 90.2% -0% 90.1% 91.0% -1% Production             Gold, Koz 4.4 3.6 +22% 9.1 7.6 +20% Silver, Moz 0.9 1.1 -15% 1.8 2.2 -19% TOTAL PRODUCTION             Gold, Koz 11.4 10.7 +7% 23.6 21.9 +8% Silver, Moz 5.3 5.2 +1% 10.1 10.6 -5% Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory The Dukat hub demonstrated a stable performance in Q2 with silver output up 1% year-on-year to 5.3 Moz. Silver grades at the Omsukchan concentrator increased by 5% as it processed high-grade ore from the Terem satellite underground mine. Stronger performance at Omsukchan has compensated for a planned decrease in grade at the Lunnoye plant. Gold output increased 7% year-on-year to 11.4 Koz, driven mainly by increase in gold grade at Lunnoye. Underground development declined by 2% as Goltsovoye approaches the end of its reserves with mining focused on pillar removal.   ALBAZINO   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING             Albazino             Waste mined, Mt 5.6 5.4 +3% 11.1 10.5 +6% Underground development, Km 2.6 2.3 +10% 4.9 4.7 +4% Ore mined, Kt 545 478 +14% 1,026 930 +10% Open-pit 404 370 +9% 766 715 +7% Underground 141 108 +31% 259 216 +20%               PROCESSING             Albazino concentrator             Ore processed, Kt 431 441 -2% 856 860 -1% Gold grade, g/t 4.0 4.8 -18% 4.2 5.0 -17% Gold recovery1 86.9% 85.0% +2% 85.2% 85.8% -1% Concentrate produced, Kt 33.7 35.0 -4% 69.3 68.9 +1% Concentrate gold grade, g/t 44.1 51.7 -15% 44.3 54.4 -19% Gold in concentrate, Koz2 47.7 58.1 -18% 98.6 120.3 -18%               Amursk POX             Concentrate processed, Kt 38 32 +17% 91 82 +10% Gold produced, Koz 55.1 63.0 -13% 136.4 152.8 -11%               TOTAL PRODUCTION             Gold, Koz 55.1 63.0 -13% 136.4 152.8 -11% Notes: (1) To concentrate (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in total production after dore production at the Amursk POX At Albazino, gold in concentrate production decreased by 18% to 47.7 Koz driven by continued processing of a lower grade ore from the Ekaterina-1 open pit. This, in turn, impacted total gold output which fell 13% year-on-year to 55.1 Koz. Grade decline was partially compensated by an increase in recoveries from 83.7% in Q1 to 86.9% in Q2. Underground mine productivity continued to improve with ore mined up 14% year-on-year as underground development at the Ekaterina-2 underground mine continues according to plan. Ekaterina-2 should become the main source of higher-grade ore starting from H2 2020. AMURSK POX   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 Concentrate processed, Kt 50 32 +55% 111 82 +34%     Albazino 36 27 +32% 81 71 +14%     Kyzyl 12 - NA 20 - NA     Other1 2 5 -66% 10 11 -14% Gold recovery 93.4% 96.7% -3% 94.3% 97.1% -3% Average gold grade, g/t 67.7 59.3 +14% 63.7 58.1 +10% Average sulphur grade 12.6% 8.8% +43% 12.6% 8.4% +50% Total gold produced2, Koz 96.0 63.0 +52% 204.7 152.8 +34%     Albazino 49.5 50.6 -2% 116.0 130.5 -11%     Kyzyl 40.9 - NA 68.3 - NA     Other1 5.6 12.3 -55% 20.4 22.4 -9% Notes: (1) Veduga and purchased concentrates which are included in reportable production in the Albazino segment                 (2) For information only. Already accounted for in production at operating mines. Quarterly gold production at the Amursk POX increased 52% to 96 Koz on the back of the increased volume of concentrate processed and Kyzyl-driven higher average concentrate grade. The introduction of large quantities of Kyzyl concentrate to the feed significantly changed operating parameters and led to a temporary decline in recoveries by 3 percentage points from 96.7% to 93.4%. Over the last two months, the POX team successfully introduced new operating procedures that resulted in recoveries climbing back up over 95%. The changes focus on tighter control of feed variability. The Amursk POX underwent a planned 15-day shutdown, the first one since the launch of the debottlenecked facility in November. No material issues have been identified. OMOLON OPERATIONS   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING                           Waste mined, Mt 1.9 1.6 +13% 3.2 2,.7 +20% Underground development, Km 3.3 3.2 +5% 6.5 6.3 +3% Ore mined, Kt 730 97 +650% 1,378 482 +186%     Open-pit 625 5 NM 1,159 298 +289%     Underground 105 92 +13% 220 184 +19%               PROCESSING             Birkachan Heap Leach             Ore stacked, Kt 493 472 +4% 546 472 +16% Gold grade, g/t 1.2 1.1 +6% 1.2 1.1 +6% Gold production, Koz 2.1 1.0 +101% 2.1 1.0 +101%               Kubaka Mill             Ore processed, Kt 208 216 -4% 428 422 +1% Grade             Gold, g/t 5.0 5.2 -4% 6.5 5.0 +30% Silver, g/t 125 171 -27% 72 102 -29% Recovery1             Gold 97.1% 95.7% +1% 95.5% 95.4% +0% Silver 88.8% 88.2% +1% 79.1% 81.7% -3% Gold production, Koz 34.9 39.7 -12% 86.4 70.1 +23% Silver production, Moz 0.7 1.1 -37% 0.8 1.2 -31% TOTAL PRODUCTION             Gold, Koz 37.0 40.7 -9% 88.4 71.1 +24% Silver, Moz 0.7 1.1 -37% 0.8 1.2 -31% Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory In Q2, gold and silver production decreased by 9% and 37% respectively on the back of lower grades at Kubaka Mill which processed ore from Sopka low-grade stockpiles. H1 gold output increased 24% year-on-year as higher-grade ore from Olcha was introduced to the feed in Q1.  At Birkachan, open-pit mining rate achieved 500 Kt per in Q2, while heap leach operation has doubled production on the back of higher stacking volumes and higher gold grade. Open-pit mining at Sopka is completed. The mining fleet has re-located to a new satellite deposit, Yolochka (80 km from the Kubaka mill), where mining commenced and will continue for 12 months. MAYSKOYE   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING             Waste mined, Mt 1.4 1.4 +3% 2.6 1.9 +33% Underground development, km 5.3 6.0 -12% 10.8 12.1 -11% Ore mined, Kt 220 285 -23% 438 463 -5% Open-pit 70 110 -36% 134 132 +2% Underground 150 174 -14% 305 331 -8%               PROCESSING             Ore processed, Kt 207 213 -3% 426 416 +2% Gold grade, g/t  6.6   8.3 -21%  6.1   6.7 -9% Gold recovery 69.9% 71.4% -2% 76.5% 77.5% -1% Gold in concentrate, Koz2 25.2 26.2 -4% 58.6 55.0 +7%               Gold produced in dore from concentrate (POX), Koz  -    -   NA  -    -   NA Gold produced in dore from carbon, Koz3  -    -   NA 4.6  -   +100% Payable gold in concentrate shipped to offtakers, Koz  -    -   NA  -    -   NA               TOTAL PRODUCTION             Gold, Koz  -    -   NA 4.6 -   NA Notes: (1) To concentrate (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production. Included in  total production upon sale to off-taker or dore production at Amursk POX (3) Gold produced from carbon at Amursk POX At Mayskoye, gold in concentrate decreased by 4% year-on-year to 25.2 Koz on the back of lower processing volumes and reduced grades in ore from the open-pit as the processing plant at Mayskoye switched over to the seasonal treatment of oxide feed. The management selected conveyor ore haulage for the long-term upgrade of the underground mine materials handling system. The key considerations in the decision included lower capital intensity, lower execution risk and greater flexibility (compared with the conventional shaft). Total investment in the project is estimated at approximately US$45m in 2020-2022. The project is expected to yield US$150/oz cost savings in diesel fuel, electricity and maintenance as well as to reduce operation's carbon footprint. The expected IRR is 45%. In parallel, Polymetal selected Paterson & Cooke, a UK engineering firm, to evaluate options regarding conversion from conventional tailings to cemented paste backfill. Potential benefits include lower dilution in flat-dipping ore bodies and the reduction of surface waste disposal. Detailed study results are expected in Q4 2019. VARVARA   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING             Waste mined, Mt 11.6 7.6 +53% 22.7 14.7 +55% Ore mined, Kt 977 711 +38% 1,938 1,386 +40%               PROCESSING             Flotation             Ore processed, Kt 130 104 +25% 277 180 +54% Grade             Gold, g/t 1.1 1.4 -20% 1.1 1.3 -13% Copper 0.52% 0.51% +1% 0.55% 0.53% +3% Recovery1             Gold 51.1% 71.8% -29% 60.3% 67.7% -11% Copper 90.8% 92.6% -2% 91.4% 91.5% -0% Production             Gold (in concentrate), Koz 1.9 2.6 -27% 4.5 4.2 +8% Copper (in concentrate), Kt 0.6 0.5 +16% 1.3 0.9 +48%               Veduga ore toll processed, Kt2 31 32 -3% 63 43 +46%               Leaching             Ore processed, Kt 784 723 +8% 1,535 1,498 +3% Gold grade, g/t 1.4 1.3 +8% 1.4 1.4 +2% Gold recovery1 87.7% 87.5% +0% 86.5% 86.9% -0% Gold production (in dore), Koz 34.1 26.3 +30% 65.5 57.5 +14%               Total ore processed, Kt 945 858 +10% 1,875 1,721 +9%   TOTAL PRODUCTION             Gold, Koz 35.9 28.9 +25% 69.9 61.7 +13% Copper, Kt 0.6 0.5 +16% 1.3 0.9 +48%   Note:  (1) Technological recovery, includes gold and copper within work-in-progress inventory. Does not include toll-treated ore (2) To be further processed at Amursk POX. In Q2, Varvara delivered a solid gold production increase of 25% to 35.9 Koz. The jump was driven by increases in throughput, gold grade and recovery at the leaching circuit, all benefiting from higher Komar ore tonnage. Flotation circuit production declined as it did not process high-grade 3rd-party material available in 2018. Varvara continued to toll-treat high-grade ore from Veduga and plans to process more than 100 Kt in 2019.   VORO   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING                           Waste mined, Mt 0.4 0.9 -58% 0.8 1,.9 -59% Ore mined, Kt 210 272 -23% 479 575 -17%               PROCESSING             Voro Heap Leach             Ore stacked, Kt - 1.8 -100% - 1.8 -100% Gold grade, g/t - 1.5 -100% - 1.5 -100% Gold production, Koz 6.4 2.1 +202% 11.1 3.7 +201%   Voro CIP             Ore processed, Kt 270 252 +7% 519 498 +4% Gold grade, g/t 3.5 4.2 -16% 3.5 4.0 -14% Gold recovery1 85.7% 81.1% +6% 86.3% 80.8% +7% Gold production, Koz 22.6 26.2 -14% 44.9 50.8 -11% TOTAL PRODUCTION             Gold, Koz 29.0 28.3 +2% 56.0 54.5 +3% Note: (1) Technological recovery, includes gold within work-in-progress inventory Q2 gold production at Voro increased 2% year-on-year to 29.0 Koz driven by seasonal contributions from the residual heap leach operation. Higher gold recoveries partially offset a planned decline in grade at the CIP plant. Ore mined volume continued to decrease as the open pit nears the end of its life in Q3 2019. Exploration drilling identified substantial mineralisation below the open pit with technical studies currently under way to determine the feasibility of underground mining. SVETLOYE   3 months ended June 30, % change 6 months ended June 30, % change   2019 2018 2019 2018 MINING             Waste mined, Mt 0.4 0.1 +222% 0.8 0.2 +251% Ore mined (open pit), Kt 453 335 +35% 867 661 +31%               PROCESSING             Ore stacked, Kt 414 434 -4% 598 653 -8% Gold grade, g/t 3.5 3.8 -7% 4.0 3.8 +4% Gold production, Koz 51.8 44.7 +16% 61.0 53.0 +15%               TOTAL PRODUCTION             Gold, Koz 51.8 44.7 +16% 61.0 53.0 +15% At Svetloye, gold production increased 16% to 51.8 Koz as the operation has achieved the third full year of operation. However, rainy weather in Q2 impacted the pace of stacking and availability of high-grade material.  DEVELOPMENT UPDATE At Nezhda, mining and construction activities proceeded according to plan. Pouring of concrete for the concentrator building and mill is complete. Construction of the mine camp and storage facilities is complete. The construction of the haulage road between the mine and the concentrator commenced in May. Statutory permitting process entered its final phase with the submission of full design documentation to the Chief Environmental Expertise, a government agency in charge of environmental permitting. At POX-2, Polymetal signed comprehensive contract for the detailed engineering of high-pressure sections of the facility with Hatch. Equipment for the concentrate preparation section (roll crushers, acid-resistant mills, steep-angle conveyors) and intensive cyanidation unit has been contracted. The land use rights for construction have now been received. Construction of a new concentrate storage facility is under way. At Veduga, Polymetal published an updated JORC-compliant Ore Reserve estimate which comprised 18.9 Mt of ore with an average grade of 4.6 g/t containing 2.8 Moz of gold (a 111% increase in gold contained). Exploration drilling is ongoing with further resource and reserve upgrade expected in Q1 2020. SUSTAINABILITY, HEALTH AND SAFETY In Q2, our LTIFR stood at 0.22 (versus 0.17 in Q2 2018) with a total of 6 work-related incidents recorded across the Group (5 incidents in Q2 2018). The increase is driven by minor incidents that occurred on site but not during the production process. We regret to report a fatality that occurred on 10 May 2019 at our Omolon operation. A pump station operator died at the Kubaka pit. We extend our sincere condolences to the family, friends and colleagues of the deceased employee. Earlier in Q2, Polymetal provided full disclosure on its tailings storage facilities management in response to public investor enquiries to mining companies, while two of Polymetal gold production operations, Voro and the Amursk POX plant, became certified as being in full compliance with the International Cyanide Management Code.

ISIN:	JE00B6T5S470
Category Code:	MSCH
TIDM:	POLY
Sequence No.:	14439
EQS News ID:	845725

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