Q2 2014 production results

RNS Number : 6982N

Polymetal International PLC

30 July 2014

 

Release time	IMMEDIATE
Date	30 July 2014

Polymetal International plc

Q2 2014 production results

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the second quarter and six months ended June 30, 2014.

HIGHLIGHTS

·     Polymetal produced 657 Koz of gold equivalent in the first half of 2014, an increase of 17% compared to the same period of the prior year. The original production guidance of 1.3 Moz is likely to be exceeded by approximately 5%.

·     Quarterly gold equivalent production in the second quarter was 335 Koz, up 4% year-on-year. Continued robust performance at the Amursk POX as well as improved grades and throughput at Dukat and Omolon more than offset planned grade erosion at Varvara and Khakanja. Quarterly gold production was 196 Koz, up 3% year-on-year. Silver production in Q2 was 8.1 Moz, up 8% year-on-year.

·     Contracts with three off-takers in China for Mayskoye concentrate were signed during the second quarter on terms which have been meaningfully improved compared to 2013 off-take agreements. The first shipments of concentrate from Mayskoye to the Amursk POX and Chinese off-takers will commence in August.

·     Net debt at 30 June 2014 decreased by US$ 7 million compared to 31 December 2013 to US$ 1,038 million while the Company paid dividends of US$ 31 million during the period. Free cash flow generation is expected to be significantly stronger in the second half of the year due to the planned de-stockpiling at Mayskoye and the seasonal reduction of the gap between production and sales.

·     The Company has announced the signing of the definitive agreement to purchase Kyzyl Project, a large gold deposit in Kazakhstan with JORC-compliant reserves of 7 Moz of gold at 7,5 g/t. The circular to shareholders on the proposed acquisition was mailed on 14 July 2014 and the General Meeting of Shareholders will take place on 14 August 2014. If approved by shareholders, the transaction is expected to close in Q4 2014.

·     In Q3 Polymetal's Board of Directors will consider the impact of the Kyzyl transaction on the internal project pipeline and formally review development approaches and timelines for Albazino-2, Svetloye, Maminskoye, and Kutyn.

 "Polymetal is consistently delivering robust operating performance", said Vitaly Nesis, CEO of Polymetal, commenting on the results. "We generate meaningful free cash flow at the current commodity prices and expect this trend to strengthen in the second half of the year, which should allow us to continue paying regular dividends, subject to Polymetal's stated dividend policy."

	3 months ended Jun 30,		% change1	6 months ended Jun 30,		% change1
	2014	2013		2014	2013
Waste mined, Kt	20,678	22,749	-9%	40,328	43,124	-6%
Underground development, rm	14,291	14,038	+2%	28,832	27,596	+4%
Ore mined, Kt	3,631	2,261	+61%	6,431	5,155	+25%
Open-pit	3,021	1,612	+87%	5,155	3,932	+31%
Underground	610	649	-6%	1,276	1,223	+4%
Ore processed, Kt	2,907	2,776	+5%	5,473	5,060	+8%
Production
Gold, Koz	196	190	+3%	386	311	+24%
Silver, Moz	8.1	7.5	+8%	15.5	14.0	+11%
Copper, tonnes	818	1,483	-45%	1,527	2,838	-46%
Gold equivalent, Koz2	335	323	+4%	652	559	+17%
Sales
Gold, Koz	181	193	-6%	352	295	+19%
Silver, Moz	7.9	5.2	+52%	13.9	10.9	+27%
Copper, tonnes	300	2,566	-88%	300	3,628	-92%
Revenue, US$m3	389	399	-3%	724	740	-2%
Net debt4	1,038	1,044	-1%	1,038	1,045	-1%
Safety6
LTIFR	0.22	-	NA	0.66	0.12	+450%
FIFR	0.22	-	NA	0.22	-	NA
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 1:60 Ag/Au and 5:1 Cu/Au conversion ratios.                 (3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges. (4) Non-IFRS measure, based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents. Comparative information is presented for 31 March 2014 (for the three months period) and 31 December 2013 (for the six months period).                 (5) NA = not available.                 (6) LTIFR =lost time injury frequency rate per one million hours worked; FIFR = fatal injury frequency rate per one million hours worked

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Wednesday, July 30, 2014 at 2:30 pm London time (5:30 pm Moscow time).

To participate in the call, please dial:

[phone] (free from Russia), or

[phone] (free from the UK), or

[phone] (free from the US), or 

any of the above numbers (from outside the UK, the US and Russia), followed by the access code 288632#, or follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2315

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 http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2315. A recording of the call will be available immediately after the call at [phone] (from within the UK), [phone] (from within the US) and [phone] (from within Russia), access code 288632#, from 6:30 pm Moscow time Wednesday, July 30, till 6:30 pm Moscow time Wednesday, August 6, 2014.

Enquiries

Media		Investor Relations
Instinctif Partners Leonid Fink Tony Friend	[phone]	Polymetal Maxim Nazimok Evgenia Onuschenko	[e-mail] [phone] (Russia) [phone] (UK)
Joint Corporate Brokers
Morgan Stanley Bill Hutchings Sam McLennan	[phone]	RBC Europe Limited Stephen Foss Jonny Hardy	[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.

DUKAT OPERATIONS

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Dukat
Underground development, m	7,741	7,838	-1%	15,461	15,828	-2%
Ore mined, Kt	336	322	+4%	695	634	+10%
Goltsovoye
Underground development, m	1,734	1,794	-3%	3,485	3,300	+6%
Ore mined (underground), Kt	51	48	+6%	93	86	+9%
Lunnoye + Arylakh
Waste mined, Kt	101	400	-75%	233	809	-71%
Underground development, m	1,267	1,825	-31%	2,743	3,244	-15%
Ore mined, Kt	111	113	-2%	206	223	-8%
Open-pit	19	29	-33%	36	65	-44%
Underground	91	84	+9%	170	158	+7%
PROCESSING
Dukat
Ore processed, Kt	426	406	+5%	825	818	+1%
Head grades
Gold, g/t	0.72	0.72	+0%	0.85	0.69	+23%
Silver, g/t	444	423	+5%	464	412	+13%
Recovery1
Gold	87.5%	83.5%	+5%	87.2%	83.4%	+5%
Silver	87.8%	85.8%	+2%	87.8%	85.5%	+3%
Production
Gold, Koz	8.3	8.0	+4%	20.0	15.5	+29%
Silver, Moz	5.2	4.8	+7%	11.0	9.4	+17%
Lunnoye
Ore processed, Kt	104	81	+28%	194	168	+16%
Head grades
Gold, g/t	1.3	1.2	+10%	1.2	1.1	+11%
Silver, g/t	411	428	-4%	385	423	-9%
Recovery1
Gold	83.0%	87.1%	-5%	81.2%	87.9%	-8%
Silver	92.2%	89.2%	+3%	91.4%	88.8%	+3%
Production
Gold, Koz	3.2	2.4	+35%	6.0	5.1	+19%
Silver, Moz	1.1	0.9	+25%	2.1	2.0	+6%
TOTAL PRODUCTION
Gold, Koz	11.6	10.4	+11%	26.0	20.6	+26%
Silver, Moz	6.3	5.7	+10%	13.1	11.3	+15%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)

Quarterly silver production at Dukat increased to 6.3 Moz, an increase of 11% compared to the same period of the prior year ("year-on-year") driven by the continuous improvement program at the Omsukchan concentrator and the Dukat underground mine. Silver production for the six months was 13.1 Moz, up 15% year-on-year, while gold production grew to 26 Koz, up 26% year-on-year.

At the Dukat underground mine, the amount of underground development was stable while the amount of ore mined decreased slightly to 336 Kt due to the increased proportion of stope preparation performed during the current quarter. At Goltsovoye, the amount of ore mined in Q2 grew 20% quarter-on-quarter and 6% year-on-year due to tangible improvements in dilution control and the reduction of mining losses.

After achieving exceptionally strong grades in ore mined and processed in Q1, silver grades in ore processed at the Omsukchan concentrator returned to their normalised levels. The decrease in grades was partially offset by further growth in plant throughput, which increased by 7% quarter-on-quarter to 426 Kt. Average recoveries during the quarter continued to be strong, at 87.7% for silver and 87.5% for gold, up 2% and 5% year-on-year, respectively.

Open-pit mining at Arylakh was fully completed during the quarter while the underground development is continuing. The first ore was mined from underground in the end of Q2. In the meantime additional amounts of ore are sourced from Lunnoye where ore mined grew by 16% quarter-on-quarter.

At Lunnoye plant, better grinding quality achieved thanks to the ramp-up of the new SAG mill contributed to a meaningful improvement in silver recoveries to 92.2% (up 2% quarter-on-quarter) while the amount of ore processed increased by 15% to 104 Kt. As a result, silver production on Lunnoye was 1.1 Moz, up 12% quarter-on-quarter.

ALBAZINO-AMURSK

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Waste mined, Kt	4,094	4,404	-7%	7,974	8,297	-4%
Ore mined (open pit), Kt	418	294	+42%	787	579	+36%
PROCESSING
Albazino concentrator
Ore processed, Kt	402	404	-0%	795	722	+10%
Gold head grade, g/t	4.7	5.7	-18%	4.8	6.1	-21%
Gold recovery1	87.7%	86.7%	+1%	87.6%	87.7%	-0%
Concentrate produced, Kt	35.7	36.9	-3%	63.6	70.6	-10%
Concentrate gold grade, g/t	46.4	54.3	-14%	52.5	54.3	-3%
Gold in concentrate, Koz2	53.2	64.3	-17%	107.4	123.3	-13%
Amursk POX
Concentrate processed, Kt	34.1	25.1	+36%	75.4	46.2	+63%
Gold head grade, g/t	51.5	47.1	+9%	52.9	48.3	+10%
Recovery	93.4%	81.7%	+14%	93.4%	78.7%	+19%
Gold produced, Koz	53.2	28.4	+88%	115.0	41.3	+179%
TOTAL PRODUCTION
Gold, Koz	53.2	59.5	-11%	115.0	72.4	+59%

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

Gold in concentrate produced at Albazino in Q2 decreased slightly by 2% quarter-on-quarter and 13% year-on-year as run-of-mine ore grades moved closer to the reserve average grade. This was partially offset by the debottlenecking at the processing plant which is now operating at an upgraded 1,600 Mtpa capacity.

Pre-stripping commenced at the new Olga pit which will supplement ore from the existing Anfisa pit.

Gold production at Albazino/Amursk in Q2 was 53 Koz, a decrease of 14% quarter-on-quarter due to work-in-process fluctuations. Throughput and recoveries were essentially flat at close-to-design levels.

MAYSKOYE

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Underground development, m	2,630	2,581	+2%	5,158	5,224	-1%
Ore mined (underground), Kt	132	195	-32%	318	340	-6%
PROCESSING
Ore processed, Kt	190	133	+43%	392	133	+194%
Gold head grade, g/t	9.9	5.6	+77%	8.7	5.6	+55%
Gold recovery1	80.9%	55.1%	+47%	80.7%	55.1%	+47%
Concentrate produced, Kt	25.5	9.4	+172%	46.4	9.4	+396%
Concentrate gold grade, g/t	59.9	43.9	+37%	59.0	43.9	+35%
Gold in concentrate, Koz2	49.1	13.2	+272%	88.1	13.2	+568%
Amursk POX
Concentrate processed, Kt	-	-	NA	1.7	-	NA
Gold head grade, g/t	-	-	NA	46.3	-	NA
Recovery	-	-	NA	79.5%	-	NA
Gold produced, Koz	-	-	NA	2.1	-	NA
TOTAL PRODUCTION
Gold, Koz	-	-	NA	2.1	-	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 internal downstream processing to saleable metal product.

The amounts of ore mined during the quarter were reduced due to the availability of stockpiles while the underground development at the mine was up 4% quarter-on-quarter and focused on preparing further stopes for mining.

The average grade processed at the Mayskoye concentrator increased 32% quarter-on-quarter to 9.9 g/t in Q2, bringing the H1 average in line with the reserve average due to tighter dilution control. As a result, gold in concentrate during Q2 was 49 Koz, up 26% quarter-on-quarter.

Average recoveries of 80.9% remain materially below the design level partially reflecting the adjustment to the off-take contract conditions stipulating penalties for certain impurities. Recoveries are expected to improve towards 85% in Q3 as the introduction of new custom-developed reagents enhances the ability to reject these impurities without incurring gold losses.

Contracts with three off-takers in China for Mayskoye concentrate were signed during the second quarter on terms which were meaningfully improved compared to 2013 off-take agreements. The contracts allow significant operating flexibility in terms of tonnage shipped.

65 Kt of Mayskoye concentrate have been delivered to the seaport of Pevek awaiting the start of the summer navigation period in the end of July. It is expected that the volume shipped out in the current year will be approximately evenly split between Amursk POX and off-take sales.

OMOLON OPERATIONS

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Sopka
Waste mined, Kt	1,218	2,377	-49%	2,457	4,122	-40%
Ore mined (open pit), Kt	272	71	+286%	501	464	+8%
Dalneye
Waste mined, Kt	-	152	-100%	879	152	+480%
Ore mined (open pit), Kt	-	-	NA	176	-	NA
Tsokol
Waste mined, Kt	1,327	1,272	+4%	2,380	1,855	+28%
Ore mined (open pit), Kt	45	62	-28%	125	112	+11%
Birkachan
Waste mined, Kt	329	1,041	-68%	528	1,932	-73%
Ore mined (open pit), Kt	630	217	+190%	695	586	+19%
TOTAL HUB
Waste mined, Kt	2,874	4,841	-41%	6,244	8,061	-23%
Ore mined (open pit), Kt	948	350	+171%	1,497	1,162	+29%
PROCESSING
Birkachan Heal Leach
Gold production, Koz	1.2	-	NA	1.2	-	NA
Kubaka Mill
Ore processed, Kt	203	173	+17%	400	357	+12%
Grade
Gold, g/t	8.6	6.9	+24%	7.3	5.1	+43%
Silver, g/t	266	260	+2%	146	129	+13%
Recovery1
Gold	95.5%	96.7%	-1%	94.9%	95.7%	-1%
Silver	84.5%	88.3%	-4%	84.3%	87.8%	-4%
Gold production, Koz	55.7	36.7	+52%	90.9	56.0	+62%
Silver production, Moz	1.4	1.2	+15%	1.4	1.2	+16%
TOTAL PRODUCTION
Gold, Koz	56.9	36.7	+55%	92.0	56.0	+64%
Silver, Moz	1.4	1.2	+15%	1.4	1.2	+16%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory

At Omolon, gold and silver production for the six months increased by 64% and 16% year-on-year, respectively,  driven by higher grade profile in ores from Tsokol and Sopka, as well as a 12% increase in throughput.

At Tsokol, the amount of ore mined declined by 43% quarter-on-quarter as the Kubaka plant has seasonally switched to processing ores from Sopka and Dalniy. In the meantime, stripping works are intensified.

At Sopka, the amount of ore mined increased further by 19% quarter-on-quarter due to re-allocation of mining fleet from Dalneye where mining will be resumed in Q4 2014 - Q1 2015. Open-pit mining at Sopka is expected to be completed in Q4 2014.

At the Birkachan open pit, 630 Kt of ore was mined during the quarter at a very low stripping ratio as the mining in the Eastern pit was completed in June. Underground development at Birkachan is expected to start in Q1 2015. At the Birkachan heap leach, irrigation of the existing leach pads has commenced in the quarter and first 1.2 Koz of gold were recovered from the solution.

VORO

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Voro
Waste mined, Kt	2,707	2,659	+2%	5,221	5,813	-10%
Ore mined (open pit), Kt	655	466	+40%	887	731	+21%
-     primary	246	201	+22%	477	405	+18%
-     oxidised	409	265	+54%	409	326	+26%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	310	262	+18%	310	262	+18%
Gold head grade, g/t	1.5	1.4	+8%	1.5	1.4	+8%
Gold production, Koz	4.5	4.7	-4%	10.6	8.8	+20%
Voro CIP
Ore processed, Kt	236	232	+2%	459	447	+3%
Gold head grade, g/t	6.3	6.2	+1%	5.9	6.1	-4%
Gold recovery	84.3%	79.1%	+7%	82.5%	79.6%	+4%
Gold production, Koz	31.5	33.9	-7%	63.4	67.6	-6%
TOTAL PRODUCTION
Gold, Koz1	35.9	38.6	-7%	74.0	76.4	-3%
Silver, Moz	0.021	0.028	-25%	0.043	0.048	-11%

Note:       (1) Including the effect of rounding

Gold production at Voro in during six months 2014 decreased slightly by 3% year-on-year to 74 Koz due to a scheduled decrease in grades at the CIP circuit, which was partially offset by increased grades and throughput at the heap leach facility.

The amounts of ore mined during six months 2014 were 21% higher year-on-year, with the majority of the increase attributable to oxidised ore for heap leaching.

VARVARA

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Waste mined, Kt	8,572	7,899	+9%	15,946	15,912	+0%
Ore mined (open pit), Kt	877	412	+113%	1,512	927	+63%
PROCESSING
Flotation
Ore processed, Kt	251	254	-1%	493	505	-2%
Grade
Gold, g/t	1.1	1.1	+1%	1.1	1.1	-6%
Copper	0.43%	0.69%	-38%	0.40%	0.67%	-40%
Recovery1
Gold	46.4%	57.6%	-19%	46.4%	58.4%	-21%
Copper	80.2%	91.0%	-12%	81.2%	90.4%	-10%
Production
Gold (in concentrate), Koz	3.5	4.9	-28%	6.9	9.8	-30%
Copper (in concentrate), t	818	1,483	-45%	1,527	2,838	-46%
Leaching
Ore processed, Kt	628	679	-8%	1,297	1,346	-4%
Gold head grade, g/t	1.1	1.2	-5%	1.2	1.2	-2%
Gold recovery1	76.8%	83.4%	-8%	76.6%	82.2%	-7%
Gold production (in dore), Koz	17.8	21.2	-16%	38.3	40.9	-6%
TOTAL PRODUCTION
Gold, Koz	21.3	26.1	-18%	45.1	50.7	-11%
Copper, t	818	1,483	-45%	1,527	2,838	-46%

Note:       (1) Technological recovery, includes gold and copper within work-in-progress inventory

At Varvara, gold production in Q2 in declined 11% quarter-on-quarter while copper production grew by 15% as grades and throughput increased moderately at the float circuit after the plant switched to the run-of-mine ore from processing stockpiles.

The current weakness in the copper concentrate market led to the accumulation of excess concentrate stockpiles at Varvara. To prevent further increases in working capital, the flotation circuit was temporarily switched off in July with freed grinding capacity diverted to leaching circuit. Copper concentrate production will be resumed shortly after the current stockpile is sold in full.

Medium-term mine plan for Varvara has been modified to accommodate increased processing of leach material with heavy emphasis placed on accelerated stripping of the South pit.   

KHAKANJA

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2014	2013		2014	2013
MINING
Khakanja + Yurievskoye
Waste mined, Kt	1,163	952	+22%	2,377	1,245	+91%
Ore mined, Kt	75	6	NM	82	293	-72%
Open-pit	75	6	NM	82	288	-71%
Underground	-	-	NA	-	5	-100%
Avlayakan
Waste mined, Kt	-	402	-100%	-	783	-100%
Underground development, m	919	-	NA	1,985	-	NA
Ore mined, Kt	5	26	-80%	8	41	-81%
Open-pit	-	26	-100%	-	41	-100%
Underground	5	-	NA	8	-	NA
Ozerny
Waste mined, Kt	1,169	1,192	-2%	2,333	2,203	+6%
Ore mined (open pit), Kt	25	29	-15%	345	140	+148%
TOTAL HUB
Ore mined (open pit), Kt	105	61	+71%	435	473	-8%
PROCESSING
Ore processed, Kt	158	151	+4%	307	302	+2%
Grade
Gold, g/t	3.4	4.1	-17%	3.6	3.9	-8%
Silver, g/t	125	159	-22%	122	167	-27%
Recovery1
Gold	94.9%	95.0%	-0%	90.0%	95.1%	-5%
Silver	73.9%	84.4%	-12%	76.6%	82.9%	-8%
TOTAL PRODUCTION
Gold, Koz	16.9	18.8	-10%	32.1	35.3	-9%
Silver, Moz	0.5	0.6	-26%	0.9	1.3	-30%

Note:       (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)

Gold production at Khakanja in Q2 2014 decreased 10% year-on-year to 16.9 Koz, while silver production was 0.5 Moz, down 26% year-on-year. These decreases were driven by planned grade declines as the Khakanja mine is nearing depletion and the feed is complemented by material from lower-grade stockpiles.

Mining at Ozerny concentrated on waste removal in the preparation for the ore mining campaign during the winter road operating season.

At Avlayakan, underground development is continuing at a stable pace of approx. 1 km per quarter and active ore mining from stopes will commence in Q3. High-grade ore shipment from Avlayakan resumed in July; this should result in stronger half-on-half gold production in H2 2014.

HEALTH AND SAFETY

The comprehensive safety review the Company launched in response to recent deterioration in its safety performance is ongoing. SRK Consulting was engaged to assist Polymetal in assessing the geomechanical aspects at our underground mines, with actionable recommendations expected to be compiled by the end of Q3.

OTHER DEVELOPMENTS

On 14 July 2014, Polymetal mailed the circular to shareholders on proposed acquisition of Kyzyl Project and the General Meeting of Shareholders will take place on 14 August 2014. In the meantime, Polymetal is making progress on obtaining the regulatory approvals for the transaction in Kazakhstan and other conditions precedent to closing of the transaction.

 

END

 

 

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