Q2 2015 production results

RNS Number : 9544S

Polymetal International PLC

14 July 2015

 



Release time	IMMEDIATE
Date	14 July 2015

Polymetal International plc

Q2 2015 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, 2015.

HIGHLIGHTS

·     Polymetal has demonstrated solid operating results in the second quarter of 2015. The Company reported gold equivalent production of 334 Koz matching the results of the second quarter of 2014. Quarterly gold production was 186 Koz, down 5% as compared to Q2 2014 ("year-on-year"), while silver production in the second quarter was 8.9 Moz, up 9% year-on-year.

·     Production for the 1H 2015 was 633 Koz of gold equivalent, down 3% year-on-year. Traditionally, higher production is expected in the second half of the year driven by seasonal de-stockpiling of Mayskoye concentrate accumulated during 1H of the year.

·     Polymetal continued to generate free cash flow (after capital expenditure) in the second quarter. Net debt at 30 June 2015 decreased by US$ 16 million compared to 31 December 2014 to US$ 1,233 million while US$ 139 million of dividends was paid out to shareholders. Free cash flow generation is expected to be even 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.

·     At Kyzyl, the final statutory certification of open-pit reserves has been successfully received which represents a major milestone on the path toward full permitting of the project. Site preparation works have commenced with all major engineering contracts for external infrastructure in place. The feasibility study release is scheduled for October 2015 with construction targeted to commence in Q2 2016.

·     Polymetal deeply regrets to report a fatality at one of our mines in May. The Company is continuing the comprehensive safety review and expects the results of that review in Q3 2015.

·     The Company remains in a strong position to meet its annual production guidance of 1.35 Moz of gold equivalent in 2015, along with its total cash cost guidance of US$ 575 - 625/GE oz and all-in sustaining cash costs of US$ 750-800/GE oz.

"We continue to demonstrate strong operational and financial delivery. It is deeply satisfying to have largely stable production and free cash flow generation against the backdrop of weakening commodity prices", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results.

	3 months ended Jun 30,		% change1	6 months ended Jun 30,		% change1
	2015	2014		2015	2014
Waste mined, Mt	16.8	20.7	-19%	32.9	40.3	-18%
Underground development, km	18.6	14.4	+29%	35.9	29.6	+21%
Ore mined, Kt	2,685	3,631	-26%	6,008	6,431	-7%
Open-pit	1,966	3,021	-35%	4,495	5,155	-13%
Underground	719	610	+18%	1,514	1,276	+19%
Ore processed, Kt	2,793	2,907	-4%	5,437	5,473	-1%
Production
Gold, Koz	186	196	-5%	371	386	-4%
Silver, Moz	8.9	8.1	+9%	15.6	15.5	+1%
Copper, tonnes	138	818	-83%	138	1,527	-91%
Gold equivalent, Koz2	334	335	-0%	633	652	-3%
Sales
Gold, Koz	182	181	+0%	354	352	+1%
Silver, Moz	8.8	7.9	+11%	14.0	13.9	+1%
Copper, tonnes	-	300	-100%	398	300	+33%
Revenue, US$m3	350	389	-10%	648	724	-11%
Net debt, US$m4	1,233	1,258	-2%	1,233	1,249	-1%
Safety5
LTIFR	0.18	0.05	+260%	0.21	0.14	+50%
FIFR	0.05	0.05	0%	0.07	0.05	+40%
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 and includes the liability for dividend payable. Comparative information is presented for 31 March 2015 (for the three months period) and 31 December 2014 (for the six months period).                 (5) LTIFR =lost time injury frequency rate per 200,000 hours worked; FIFR = fatal injury frequency rate per 200,000 hours worked.

PRODUCTION BY MINE

	3 months ended Jun 30,		% change1	3 months ended Mar 31,	% change1	6 months ended Jun 30,		% change1
	2015	2014		2015		2015	2014
GOLD EQ. (KOZ) 2
Dukat operations	127	116	+10%	118	+8%	245	244	+0%
Albazino-Amursk	54	53	+1%	56	-5%	110	115	-5%
Mayskoye	9	-	NA3	11	-22%	20	2	NM4
Omolon operations	72	80	-9%	29	+146%	102	116	-12%
Voro	30	36	-17%	41	-27%	71	75	-5%
Varvara	18	25	-31%	20	-13%	38	53	-29%
Okhotsk operations	25	25	0%	22	+10%	47	47	-1%
TOTAL	334	335	0%	298	+12%	633	652	-3%

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) NA = not available.

(4) NM = not material

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Tuesday, 14 July, 17:00 Moscow time (15:00 London time).

To participate in the call, please dial:

8 10 8002 041 4011 access code 363612# (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) or follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2873

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=2873. 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 295114#, from 6:00 pm Moscow time Tuesday, July 14, till 6:00 pm Moscow time Tuesday, July 21, 2015.

Enquiries

Media		Investor Relations
Instinctif Partners Leonid Fink	[phone]	Polymetal Maxim Nazimok Evgenia Onuschenko Elena Revenko	[e-mail] [phone] (Russia) [phone] (UK)
Joint Corporate Brokers
Morgan Stanley Bill Hutchings Sam McLennan	[phone]	RBC Europe Limited Tristan Lovegrove 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
	2015	2014		2015	2014
MINING
Dukat
Underground development, m	9,149	7,741	+18%	18,030	15,461	+17%
Ore mined (underground), Kt	410	336	+22%	794	695	+14%
Goltsovoye
Underground development, m	1,845	1,734	+6%	3,619	3,485	+4%
Ore mined (underground), Kt	49	51	-4%	111	93	+20%
Lunnoye + Arylakh
Waste mined, Kt	-	101	-100%	-	233	-100%
Underground development, m	1,313	1,267	+4%	2,710	2,743	-1%
Ore mined, Kt	92	111	-17%	186	206	-10%
Open-pit	-	19	-100%	-	36	-100%
Underground	92	91	+1%	186	170	+9%
PROCESSING
Dukat
Ore processed, Kt	440	426	+3%	879	825	+7%
Head grades
Gold, g/t	0.7	0.7	-3%	0.6	0.9	-29%
Silver, g/t	506	444	+14%	461	464	-1%
Recovery1
Gold	85.2%	87.5%	-3%	84.5%	87.2%	-3%
Silver	86.4%	87.8%	-2%	85.5%	87.8%	-3%
Production
Gold, Koz	7.8	8.3	-6%	13.9	20.0	-31%
Silver, Moz	5.7	5.2	+10%	10.7	11.0	-3%
Lunnoye
Ore processed, Kt	106	104	+2%	210	194	+8%
Head grades
Gold, g/t	1.5	1.3	+17%	1.6	1.2	+26%
Silver, g/t	425	411	+3%	429	385	+11%
Recovery1
Gold	90.6%	83.0%	+9%	90.0%	81.2%	+11%
Silver	89.1%	92.2%	-3%	88.5%	91.4%	-3%
Production
Gold, Koz	4.4	3.2	+36%	9.6	6.0	+58%
Silver, Moz	1.2	1.1	+10%	2.6	2.1	+25%
TOTAL PRODUCTION
Gold, Koz	12.3	11.6	+6%	23.4	26.0	-10%
Silver, Moz	6.9	6.3	+10%	13.3	13.1	+2%

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

Quarterly silver and gold production at Dukat hub increased by 6% and 10%, respectively year-on-year and by 10% and 8% respectively quarter-on-quarter as the grades at the Dukat mine were significantly above the average reserve grades thus fully compensating for the lower-than-average grades experienced in Q1.

Processing volumes at both Dukat and Lunnoye increased as the processing plants benefited from the results of the continuous improvement program.

The amount of ore mined at Dukat underground mine grew 22% year-on-year as mine capacity increased to match the expanded throughput at the Omsukchan concentrator. This was made possible by a significant increase in the amount of underground development.

Recoveries from Dukat ore declined largely as a result of switching from 3^rd-party concentrate sales to in-house concentrate processing (leaching) at Dukat and Lunnoye. The decision to re-direct concentrate flows was made in response to lower silver prices and weaker rouble. The impact of both factors made cost savings from internal processing outweigh revenue losses from 3^rd-party recoveries.

Lunnoye has demonstrated a very strong set of the results, with significantly improved grades due to input of ore from Arylakh underground and related improvement in recoveries.

ALBAZINO-AMURSK

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Waste mined, Kt	4,217	4,094	+3%	8,139	7,974	+2%
Underground development, m	1,219	784	+55%	2,204	1,479	+49%
Ore mined (open pit), Kt	330	418	-21%	729	787	-7%
PROCESSING
Albazino concentrator
Ore processed, Kt	404	402	+1%	803	795	+1%
Gold head grade, g/t	5.4	4.7	+15%	5.2	4.8	+9%
Gold recovery1	88.0%	87.7%	+0%	88.1%	87.6%	+1%
Concentrate produced, Kt	33.4	35.7	-6%	65.6	63.6	+3%
Concentrate gold grade, g/t	57.2	46.4	+23%	56.1	52.5	+7%
Gold in concentrate, Koz2	61.4	53.2	+15%	118.2	107.4	+10%
Amursk POX
Concentrate processed, Kt	34.2	34.1	+0%	73.5	75.4	-2%
Gold head grade, g/t	52.4	51.5	+2%	51.0	52.9	-4%
Recovery	94.0%	93.4%	+1%	94.1%	93.4%	+1%
Gold produced, Koz	53.5	53.2	+1%	109.6	115.0	-5%
TOTAL PRODUCTION
Gold, Koz	53.5	53.2	+1%	109.6	115.0	-5%

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 completion of downstream processing at the Amursk POX

As Albazino/Amursk is now operating at its full design capacity, the gold production, recoveries, and ore and concentrate processing volumes in the second quarter generally remained stable quarter-on-quarter.

Gold production for the six months was down 5% year-on-year driven by throughput reduction related to the 3-week planned maintenance of the POX plant in April.

Ore mining volumes at the Albazino open-pit decreased by 21% as mining increasingly concentrated on pre-stripping at the new Olga pit. Underground development at the Olga zone continues to grow with the goal to start ore stoping in Q4 2015.

MAYSKOYE

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Underground development, m	3,169	2,630	+20%	5,994	5,158	+16%
Ore mined (underground), Kt	143	132	+8%	366	318	+15%
PROCESSING
Mayskoye concentrator
Ore processed, Kt	214	190	+12%	437	392	+12%
Gold head grade, g/t	6.8	9.9	-31%	7.5	8.7	-14%
Gold recovery1	85.9%	80.9%	+6%	86.9%	80.7%	+8%
Concentrate produced, Kt	21.4	25.5	-16%	45.4	46.4	-2%
Concentrate gold grade, g/t	58.5	59.9	-2%	62.6	59.0	+6%
Gold in concentrate, Koz2	40.3	49.1	-18%	91.4	88.1	+4%
Amursk POX
Concentrate processed, Kt	5.8	-	NA	12.7	1.7	+629%
Gold head grade, g/t	57.8	-	NA	58.1	46.3	+26%
Recovery	94.0%	-	NA	94.1%	79.5%	+18%
Gold produced, Koz	8.9	-	NA	20.4	2.1	+874%
TOTAL PRODUCTION
Gold, Koz	8.9	-	NA	20.4	2.1	+874%

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.

For the first six months, gold production at Mayskoye was fully generated by in-house POX processing of the material delivered in the 2014 navigation season. Concentrate is currently stockpiled in the port of Pevek until the start of the 2015 navigation period in July.

Three off-take contracts with the Chinese processors have been agreed including one long-term (5-year) agreement and the concentrate shipments to China will start in August.

Grade processed decreased to 6.8 g/t. Both reduction in the cut-off grade driven by lower rouble and higher recoveries and higher mining dilution during the thawing season contributed to this dynamics. Grade is expected to improve as the mine becomes drier in the summer and autumn.

OMOLON OPERATIONS

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Sopka
Waste mined, Kt	1	1,218	-100%	1	2,457	-100%
Ore mined (open pit), Kt	-	272	-100%	-	501	-100%
Dalneye
Waste mined, Kt	10	-	NA	1,042	879	+19%
Ore mined (open pit), Kt	10	-	NA	635	176	+260%
Tsokol
Waste mined, Kt	13	1,327	-99%	396	2,380	-83%
Underground development, m	101	-	NA	101	-	NA
Ore mined (open pit), Kt	11	45	-77%	176	125	+41%
Birkachan
Waste mined, Kt	666	329	+102%	670	528	+27%
Underground development, m	574	-	NA	1,254	-	NA
Ore mined (open pit), Kt	184	630	-71%	184	695	-73%
Ore mined (underground), Kt	1	-	NA	1	-	NA
Oroch
Waste mined, Kt	1,501	-	NA	1,501	-	NA
Ore mined (open pit), Kt	37	-	NA	37	-	NA
TOTAL HUB
Waste mined, Kt	2,191	2,874	-24%	3,611	6,244	-42%
Underground development, m	675	-	NA	1,355	-	NA
Ore mined (open pit), Kt	242	948	-74%	1,033	1,497	-31%
Ore mined (underground), Kt	1	-	NA	1	-	NA
PROCESSING
Birkachan Heap Leach
Gold production, Koz	-	1.2	-100%	0.2	1.2	-87%
Kubaka Mill
Ore processed, Kt	209	203	+3%	415	400	+4%
Grade
Gold, g/t	7.3	8.6	-14%	6.0	7.3	-18%
Silver, g/t	282	266	+6%	163	146	+12%
Recovery1
Gold	96.5%	95.5%	+1%	96.1%	94.9%	+1%
Silver	87.2%	84.5%	+3%	86.8%	84.3%	+3%
Gold production, Koz	45.3	55.7	-19%	73.5	90.9	-19%
Silver production, Moz	1.6	1.4	+19%	1.7	1.4	+17%
TOTAL PRODUCTION
Gold, Koz	45.3	56.9	-20%	73.7	92.0	-20%
Silver, Moz	1.6	1.4	+19%	1.7	1.4	+18%

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

At Omolon, gold production decreased by 20% year-on-year while silver production increased 19% as the Kubaka plant was processing ore from Sopka stockpiles, which has a lower gold grade, but a high silver grade.

At Tsokol, underground mining has started following the cessation of open-pit activity. First ore stoping is planned for Q1 2016.

At Dalneye, open-pit mining was completed in the quarter and the mining fleet was moved to Oroch where first 37 Kt of ore were mined.

VORO

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Voro
Waste mined, Kt	2,565	2,707	-5%	5,182	5,221	-1%
Ore mined (open pit), Kt	558	655	-15%	915	887	+3%
-     primary	405	246	+65%	707	477	+48%
-     oxidised	153	409	-63%	208	409	-49%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	181	310	-42%	181	310	-42%
Gold head grade, g/t	1.6	1.5	+3%	1.6	1.5	+3%
Gold production, Koz	5.9	4.5	+32%	10.9	10.6	+3%
Voro CIP
Ore processed, Kt	232	236	-2%	454	459	-1%
Gold head grade, g/t	4.0	6.3	-36%	4.1	5.9	-30%
Gold recovery1	79.1%	84.3%	-6%	78.6%	82.5%	-5%
Gold production, Koz	23.5	31.5	-25%	59.3	63.4	-6%
TOTAL PRODUCTION
Gold, Koz	29.4	35.9	-18%	70.2	74.0	-5%
Silver, Moz	0.036	0.021	+72%	0.063	0.043	+47%

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

Gold production at Voro in Q2 2015 decreased by 18% year-on-year to 29.4 Koz driven by the planned decrease in grade and related decline in CIP recoveries.

Heap leach stacking continues at a reduced throughput as mining concentrates on primary ore in the deeper levels of the open pit.

VARVARA

	3 months ended Jun 30,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Waste mined, Kt	7,344	8,572	-14%	14,420	15,946	-10%
Ore mined (open pit), Kt	732	877	-17%	1,532	1,512	+1%
PROCESSING
Flotation
Ore processed, Kt	77	251	-69%	77	493	-84%
Grade
Gold, g/t	1.0	1.1	-15%	1.0	1.1	-9%
Copper	0.29%	0.43%	-31%	0.29%	0.40%	-27%
Recovery1
Gold	39.1%	46.4%	-16%	39.1%	46.4%	-16%
Copper	71.9%	80.2%	-10%	71.9%	81.2%	-11%
Production
Gold (in concentrate), Koz	0.7	3.5	-79%	0.7	6.9	-89%
Copper (in concentrate), t	138	818	-83%	138	1,527	-91%
Leaching
Ore processed, Kt	773	628	+23%	1,671	1,297	+29%
Gold head grade, g/t	0.8	1.1	-28%	0.8	1.2	-29%
Gold recovery1	77.1%	76.8%	+0%	78.6%	76.6%	+3%
Gold production (in dore), Koz	16.1	17.8	-9%	36.3	38.3	-5%
TOTAL PRODUCTION
Gold, Koz	16.8	21.3	-21%	37.0	45.1	-18%
Copper, t	138	818	-83%	138	1,527	-91%

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

At Varvara, gold production in Q2 2015 decreased by 21% driven by lower grade. Throughput at the leaching circuit increased by 23% as the mills used in the flotation circuit continued to be temporarily redirected to process the gold ore in order to compensate the suspension of the circuit.

The copper circuit was restarted on June 1, after positive feedback was received from a European copper concentrate off-taker based on trial product shipped in Q1. Currently the circuit processes low-grade stockpiled copper-gold ore. Mining will be re-directed towards the float feed on a stable basis once a long-term off-take contract is secured.

A trial lot of 3rd-party gold ore will arrive on site shortly with further efforts under way to find external sources of feed.

OKHOTSK OPERATIONS

	3 months ended Mar 31,		% change	6 months ended Jun 30,		% change
	2015	2014		2015	2014
MINING
Khakanja
Waste mined, Kt	529	1,163	-54%	1,478	2,377	-38%
Ore mined (open-pit), Kt	104	75	+38%	180	82	+118%
Avlayakan
Underground development, m	1,208	919	+31%	2,005	1,985	+1%
Ore mined (underground), Kt	24	5	+352%	55	8	+619%
Ozerny
Waste mined, Kt	-	1,169	-100%	42	2,333	-98%
Ore mined (open pit), Kt	-	25	-100%	105	345	-70%
TOTAL HUB
Ore mined, Kt	128	105	+22%	340	435	-22%
Open-pit	104	100	+4%	285	428	-33%
Underground	24	5	+352%	55	8	+619%
PROCESSING
Ore processed, Kt	157	158	-1%	310	307	+1%
Grade
Gold, g/t	4.1	3.4	+18%	3.9	3.6	+10%
Silver, g/t	89	125	-29%	89	122	-27%
Recovery1
Gold	95.0%	94.9%	+0%	94.9%	90.0%	+5%
Silver	68.4%	73.9%	-7%	67.5%	76.6%	-12%
TOTAL PRODUCTION
Gold, Koz	19.5	16.9	+16%	37.3	32.1	+16%
Silver, Moz	0.3	0.5	-35%	0.6	0.9	-36%

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

Gold production at Okhotsk operations in Q2 2015 increased by 16% year-on-year while silver production was down 35%. The decrease was mainly driven by the depletion of high-silver ore blocks in the Khakanja open pit.

Gold recoveries were relatively stable quarter-on-quarter and increased meaningfully year-on-year due to the change in the mix of ores processed. Processing of high-grade material from Avlayakan underground mine will start in Q3.

At Khakanja, open pit mining has now been completed. The mining fleet from Ozerny and Khakanja will be re-directed to the Svetloye project.

In 1H 2015 the Company has obtained full set of construction permits for the Svetloye project. Summer navigation started on time, and the construction is progressing on schedule. Mining at Svetloye is on track to start in Q4 2015.

KYZYL PROJECT

In Q2 2015, Polymetal obtained a final statutory certification of the open-pit reserves with Statutory Reserve Committee in Kazakhstan (non-JORC ore reserve estimate and conditions feasibility study). This paves the way for the submission of the statutory feasibility study for construction permitting. Development of the engineering design criteria is now competed. Site preparation works have commenced and all major engineering contracts for external infrastructure (water pipeline, power grid, heat supply, road diversion) have been awarded.

Polymetal is on track to publish the full feasibility study for the project in Q4 2015 and start full-scale construction in Q2 2016.

HEALTH AND SAFETY

Polymetal regrettably reports the loss of our colleague during the second quarter 2015 at the Goltsovoye underground mine, Dukat hub. On May 3, a drift miner was fatally injured when he was replacing a drill bit.

Polymetal attaches great importance to its workers' health and safety. In response to this event, the Company has launched in-depth external audit of safety management systems at all underground operations within the Group.

 

END

 

 

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