Q4 and full year 2013 production results

RNS Number : 1289Y

Polymetal International PLC

21 January 2014

 



Release time	IMMEDIATE
Date	21 January 2014

Polymetal International plc

Q4 and full year 2013 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 fourth quarter and twelve months ended December 31, 2013.

HIGHLIGHTS

·     Polymetal has exceeded its original annual production guidance and produced 1.28 Moz of gold equivalent in 2013, up 21% year-on-year. This achievement was driven by the successful ramp-up at Amursk POX and Mayskoye and strong operational delivery at the Dukat hub. Gold equivalent production for the fourth quarter was 310 Koz, up 27% year-on-year.

·     Annual gold production was 805 Koz, up 37% year-on-year with significant increases coming from Albazino and Mayskoye. Annual silver production was 27.2 Moz, up 3% year-on-year as increased throughput at the Dukat hub more than offset the grade-driven decline at Khakanja.

·     The Amursk POX plant successfully delivered a full quarter at design throughput and recovery (averaging 93% in Q4), an important strategic milestone for the Company which now possesses a unique competitive advantage in the FSU.

·     The Company successfully progressed with scheduled stockpile reductions in Q4, with total gold equivalent sales significantly exceeding production by 93 Koz. De-stockpiling was driven mainly by the Dukat hub and Albazino.

·     Positive cash flows resulted in a further decrease in net debt by US$ 138 million during the quarter, to US$ 1,045 million, driven by continued strong operating cash flow and decreased capital spending.

·     The Company re-iterates its production guidance of 1.3 Moz of gold equivalent for 2014 and 1.35 Moz for 2015. In 2014, Polymetal expects total cash costs of US$ 700-750 / gold equivalent ("GE") oz, all-in sustaining cash costs of US$ 975-1025 /GE oz, and capital expenditure of US$ 250 million (including exploration and capitalised stripping).

"Polymetal has beaten its original production guidance for the second consecutive year", said Vitaly Nesis, CEO of Polymetal, commenting on the results. "Despite challenging market conditions the Company continues to generate strong free cash flows and retains flexibility for further growth opportunities".

	3 months ended Dec 31,		% change1	12 months ended Dec 31,		% change1
	2013	2012		2013	2012
Waste mined, Mt	21,028	20,001	+5%	84,956	85,173	-0%
Underground development, km	13,883	12,779	+9%	55,339	46,717	+18%
Ore mined, Kt	2,581	3,099	-17%	10,376	12,591	-18%
Open-pit	1,983	2,677	-26%	7,975	10,937	-27%
Underground	598	422	+42%	2,401	1,654	+45%
Ore processed, Kt	2,728	2,374	+15%	10,749	9,809	+10%
Production
Gold, Koz	212	137	+54%	805	589	+37%
Silver, Moz	5.7	5.9	-5%	27.2	26.5	+3%
Copper, tonnes	749	1,670	-55%	4,841	6,567	-26%
Gold equivalent, Koz2	310	245	+27%	1,282	1,063	+21%
Sales
Gold, Koz	268	179	+50%	818	593	+38%
Silver, Moz	7.8	7.8	-1%	27.4	27.8	-2%
Copper, tonnes	1,204	1,830	-34%	6,165	6,697	-8%
Revenue, US$m3	492	574	-14%	1,715	1,856	-8%
Net debt4	1,045	1,1834	-12%	1,045	1,0374	+1%
Safety6
LTIFR	1.15	0.90	+28%	0.57	0.59	-3%
FIFR	0.20	-	NA	0.06	-	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 30 September 2013 (for the 3 month period) and for 31 December 2012 (for the 12 month period), respectively.                 (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 Tuesday, January 21, 2014 at 11:30 am London time (3:30 pm Moscow time).

To participate in the call, please dial:

[phone] (free from Moscow), or

[phone] (free from the UK), or

[phone] (toll-free from the US), or

any of the above numbers (from outside the UK, the US and Russia), followed by the access code 285210#, or follow the link:

http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=2164 

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=2164. A recording of the call will be available immediately after the call at [phone], [phone] and [phone], access code 285210#, from 4:30 pm Moscow time Tuesday, January 21, till 4:30 pm Moscow time Tuesday, January 28, 2014.

Enquiries

Media		Investor Relations
College Hill Leonid Fink Tony Friend	[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 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 Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Dukat
Waste mined, Kt	-	102	-100%	-	967	-100%
Underground development, m	7,302	6,826	+7%	30,717	24,311	+26%
Ore mined, Kt	308	298	+3%	1,253	1,328	-6%
Open-pit	-	18	-100%	-	149	-100%
Underground	308	279	+10%	1,253	1,178	+6%
Head grades
Open-pit
Gold, g/t				-	0.51	-100%
Silver, g/t				-	267	-100%
Underground
Gold, g/t				0.91	0.72	+26%
Silver, g/t				423	402	+5%
Goltsovoye
Underground development, m	1,873	1,592	+18%	7,102	5,248	+35%
Ore mined (underground), Kt	44	34	+30%	168	84	+99%
Silver head grade, g/t				624	548	+14%
Lunnoye + Arylakh
Waste mined, Kt	144	606	-76%	1,034	2,591	-60%
Underground development, m	1,540	1,298	+19%	6,612	4,601	+44%
Ore mined, Kt	85	90	-5%	394	370	+7%
Open-pit	12	34	-63%	86	167	-48%
Underground	73	56	+29%	308	203	+52%
Head grades
Open-pit
Gold, g/t				0.52	0.74	-30%
Silver, g/t				442	519	-15%
Underground
Gold, g/t				1.26	1.32	-5%
Silver, g/t				345	294	+17%
PROCESSING
Dukat
Ore processed, Kt	393	366	+7%	1,574	1,439	+9%
Head grades
Gold, g/t	0.72	0.67	+7%	0.73	0.67	+8%
Silver, g/t	425	382	+11%	425	401	+6%
Recovery1
Gold	80.8%	84.4%	-4%	83.7%	81.0%	+3%
Silver	85.9%	85.9%	+0%	86.3%	84.3%	+2%
Production
Gold, Koz	6.7	6.9	-3%	30.3	25.2	+21%
Silver, Moz	4.3	4.0	+6%	18.3	15.5	+18%
Lunnoye
Ore processed, Kt	81	82	-1%	338	333	+1%
Head grades
Gold, g/t	1.2	0.9	+24%	1.1	1.2	-4%
Silver, g/t	348	373	-7%	391	411	-5%
Recovery1
Gold	86.3%	88.6%	-3%	85.6%	90.2%	-5%
Silver	89.7%	87.7%	+2%	89.3%	87.7%	+2%
Production
Gold, Koz	2.5	2.1	+21%	10.2	11.0	-7%
Silver, Moz	0.8	0.8	+3%	3.8	3.7	+2%
TOTAL PRODUCTION
Gold, Koz	9.2	9.0	+2%	40.6	36.2	+12%
Silver, Moz	5.1	4.8	+6%	22.1	19.2	+15%

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

Quarterly silver production at Dukat increased by 6% compared to same period of prior year ("year-on-year") driven mainly by debottlenecking at the Omsukchan concentrator. Silver production for the FY 2013 was 22.1 Moz, up 15% year-on-year, and was further supported by improvements in average grades at the Dukat and Goltsovoye mines and increased recovery rates.

De-stockpiling of flotation concentrate produced at Dukat continued during the quarter, mostly through sales to off-takers, and silver sales in the quarter exceeded production by 1.8 Moz, fully closing the gap between production and sales which originated in the first half of the year.

Underground development at Dukat for FY 2013 increased by 26% year-on-year, with more than 1.25 Mt of ore mined from underground in 2013 and average silver grade in ore mined increasing by 5% to 423 g/t. The Company is currently re-evaluating its long-term mining plan for Dukat underground. It is expected that, as a result of updated rigorous economic analysis and additional in-fill drilling performed from deeper horizons, ore blocks from certain remote ore zones and veins will be excluded from reserves and resources estimates as investment in future underground access to this material cannot be fully justified.

At Goltsovoye, following a significant amount of development in 2012, ore mined nearly doubled year-on-year, and the average grades increased by 14% to 624 g/t silver contributing to the increased grades in the Omsukchan concentrator feedstock.

At Arylakh, the transition to underground mining is in progress with open pit expected to close in Q2 2014. At Lunnoye underground mining is expected to shift from Q3 2014 more heavily towards Zone 7 mine with lower gold and higher silver grades.

The new SAG mill has been successfully commissioned at Lunnoye plant which now has the capacity to process 400kt of ore per annum. Additional feed will come from existing stockpiles and potentially from the new satellite mine at Olcha.

KHAKANJA

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Khakanja + Yurievskoye
Waste mined, Kt	922	401	+130%	3,096	4,435	-30%
Underground development, m	-	225	-100%	-	1,489	-100%
Ore mined, Kt	-	368	-100%	294	1,359	-78%
Open-pit	-	330	-100%	290	1,211	-76%
Underground	-	38	-100%	5	148	-97%
Head grades
Open-pit
Gold, g/t				1.4	2.2	-35%
Silver, g/t				143	220	-35%
Underground
Gold, g/t				7.9	6.3	+26%
Silver, g/t				12	12	+2%
Avlayakan
Waste mined, Kt	178	470	-62%	1,287	1,637	-21%
Underground development, m	811	-	NA	919	-	NA
Ore mined, Kt	21	20	+6%	84	79	+6%
Head grades
Gold, g/t				8.9	15.0	-41%
Silver, g/t				119	124	-4%
Ozerny
Waste mined, Kt	1,239	449	+176%	4,714	449	+950%
Ore mined (open pit), Kt	153	56	+174%	319	56	+472%
Head grades
Gold, g/t				3.6	4.8	-26%
Silver, g/t				40	46	-14%
PROCESSING
Ore processed, Kt	156	160	-2%	619	622	-1%
Grade
Gold, g/t	8.2	5.2	+57%	5.7	4.8	+19%
Silver, g/t	116	233	-50%	147	277	-47%
Recovery1
Gold	87.3%	96.2%	-9%	92.3%	95.6%	-3%
Silver	84.6%	80.2%	+5%	84.2%	80.0%	+5%
TOTAL PRODUCTION
Gold, Koz	35.7	25.3	+41%	103.4	90.8	+14%
Silver, Moz	0.5	0.9	-48%	2.4	4.4	-44%

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

Gold production at Khakanja in Q4 was 35.7 Koz, up 10% quarter-on-quarter and 41% year-on-year, on the back of continued processing of high-grade ore from Avlayakan. Gold production for the full year increased by 14% while silver production decreased by 44% as a result of structural change in the plant's feedstock year-on-year: processing of high silver grade ore from Khakanja's pit 3 was substituted by ore from Ozerny and Avlayakan.

At Khakanja open-pit mine, the pushback at pit 1 continues and ore mining is expected to be resumed in Q2 2014. Ores from Avlayakan, Ozerny and existing stockpiles were used in processing during the period.

Underground development is progressing at Avlayakan in accordance with the schedule and increased more than 7 times quarter-on-quarter. Open pit mining ceased in November. 78 Kt of Avlaykan ore were safely shipped by sea during the 2013 navigation season, compared to 41 Kt in 2012. The decline in average grades in ore mined is expected to reverse following the ramp-up of the Avlayakan underground mine in 2014.

Ore mining seasonally intensified at Ozerny, with 153 Kt mined during the quarter. Transportation by winter road commenced in December, with first 19 Kt of ore delivered to Khakanja.

As a result of additional studies performed, the commencement of underground mining at Khakanja has been postponed indefinitely due to geotechnical concerns with the corresponding reserve being re-classified as resource. The resulting reduction in life-of-mine is expected to be compensated by reserve additions at Ozerny which are based on the results of ongoing step-out drilling.

VORO

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Voro
Waste mined, Kt	2,745	2,747	-0%	11,099	11,265	-1%
Ore mined (open pit), Kt	347	325	+7%	1,787	1,684	+6%
-     primary	205	183	+12%	807	758	+6%
-     oxidised	141	142	-0%	981	926	+6%
Gold head grades
-     primary, g/t				5.7	5.8	-1%
-     oxidized, g/t				1.5	1.7	-11%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	164	142	+15%	850	901	-6%
Gold head grade, g/t	1.2	1.2	+3%	1.4	1.6	-13%
Gold recovery	72.9%	74.1%	-2%	73.7%	74.1%	-0%
Gold production, Koz	8.0	9.6	-17%	23.5	32.2	-27%
Voro CIP
Ore processed, Kt	230	225	+2%	924	917	+1%
Gold head grade, g/t	5.0	5.0	-1%	5.7	5.3	+7%
Gold recovery	79.7%	79.5%	+0%	79.9%	78.9%	+1%
Gold production, Koz	27.4	30.1	-9%	126.2	118.5	+7%
TOTAL PRODUCTION
Gold, Koz1	35.4	39.6	-11%	152.7	154.4	-1%
Silver, Moz	0.014	0.033	-58%	0.079	0.154	-48%

Note:       (1) Including the effect of rounding

Gold production at Voro in 2013 decreased marginally by 1% year-on-year and comprised 153 Koz. The modest grade and throughput decline at the heap leaching circuit was fully offset by increased average grade and continued improvements in throughput at the CIP circuit. Quarterly gold production decreased by 11% year-on-year due to temporary increase in work-in-progress at the smelting section of the CIP plant.

The open-pit mine at Voro demonstrated strong performance throughout the year and in Q4, with the amount of ore mined (both primary and oxidised) up 6% year-on-year. While average grades in the primary ore were broadly flat, there was some scheduled grade decline in the oxidised ore in 2013.

VARVARA

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Waste mined, Kt	7,883	6,597	+19%	31,053	26,072	+19%
Ore mined (open pit), Kt	558	811	-31%	2,008	3,609	-44%
- float ore				499	1,031	-52%
- leach ore				1,510	2,577	-41%
Head grades
- gold, float ore, g/t				1.3	1.3	+6%
- copper, float ore, %				0.64%	0.81%	-21%
- gold, leach ore, g/t				1.2	0.9	+28%
PROCESSING
Flotation
Ore processed, Kt	244	256	-5%	1,005	992	+1%
Grade
Gold, g/t	1.4	1.0	+41%	1.3	1.2	+2%
Copper	0.39%	0.75%	-49%	0.58%	0.76%	-24%
Recovery1
Gold	52.9%	57.1%	-7%	56.2%	60.7%	-7%
Copper	81.5%	91.4%	-11%	88.5%	91.6%	-3%
Production
Gold (in concentrate), Koz	5.2	4.3	+20%	21.1	22.4	-6%
Copper (in concentrate), t	749	1,670	-55%	4,841	6,567	-26%
Leaching
Ore processed, Kt	662	673	-2%	2,671	2,654	+1%
Gold head grade, g/t	1.3	1.1	+11%	1.3	1.2	+9%
Gold recovery1	80.0%	83.9%	-5%	81.7%	84.6%	-3%
Gold production (in dore), Koz	22.0	22.0	-0%	85.7	78.6	+9%
TOTAL PRODUCTION
Gold, Koz	27.2	26.4	+3%	106.8	101.0	+6%
Copper, t	749	1,670	-55%	4,841	6,567	-26%

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

At Varvara, gold production for the full year 2013 was 107 Koz, up 6% year-on-year. Copper production dropped to 4.8 Kt as a result of planned grade decline.

Throughput at both flotation and leaching circuits in 2013 was stable. In the flotation circuit, copper recoveries in 2013 decreased by 3% year-on-year driven by significant change in copper grade profile and related changes in ore technological properties, while gold grades remained stable.

The amounts of ore mined in Q4 increased further by 7% compared to the previous quarter, but remained below 2012 level as the pushback in North-West and North-East pits continues, while average gold grades in ore mined during the year have increased by 6% and 28% for float and leach ores, respectively.

Starting from October Varvara discontinued purchases of 3rd-party ore due to its declining quality. This will result in declining grades in the leaching circuit in 2014.

OMOLON OPERATIONS

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Sopka
Waste mined, Kt	995	1,580	-37%	5,912	9,054	-35%
Ore mined (open pit), Kt	159	295	-46%	672	1,271	-47%
Head grades
Gold, g/t				3.9	2.3	+73%
Silver, g/t				142.1	96.7	+47%
Dalneye
Waste mined, Kt	1,986	-	NA	3,695	-	NA
Ore mined (open pit), Kt	268	-	NA	584	-	NA
Head grades
Gold, g/t				3.6	-	NA
Silver, g/t				73.8	-	NA
Tsokol
Waste mined, Kt	1,442	1,054	+37%	4,998	3,284	+52%
Ore mined (open pit), Kt	68	46	+48%	223	101	+121%
Gold head grade, g/t				4.8	5.2	-8%
Birkachan
Waste mined, Kt	-	1,664	-100%	1,932	9,133	-79%
Ore mined (open pit), Kt	-	445	-100%	586	1,290	-55%
Gold head grade, g/t				1.8	1.8	+1%
TOTAL HUB
Waste mined, Kt	4,423	4,298	+3%	16,537	21,471	-23%
Ore mined (open pit), Kt	495	786	-37%	2,065	2,662	-22%
PROCESSING
Kubaka Mill
Ore processed, Kt	217	184	+18%	767	724	+6%
Grade
Gold, g/t	4.0	3.7	+10%	5.1	5.9	-13%
Silver, g/t	8	15	-47%	118	135	-13%
Recovery1
Gold	93.9%	89.4%	+5%	95.3%	94.2%	+1%
Silver	78.8%	69.1%	+14%	88.4%	87.9%	+1%
Gold production, Koz	24.0	20.1	+19%	115.2	129.0	-11%
Silver production, Moz	0.1	0.1	-47%	2.6	2.7	-4%
TOTAL PRODUCTION
Gold, Koz	24.0	20.1	+19%	115.2	129.0	-11%
Silver, Moz	0.1	0.1	-47%	2.6	2.7	-4%

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

At Omolon, gold production in Q4 increased by 19% year-on-year driven by higher grade ore from Tsokol and increased throughput. Gold equivalent production for the full year was 158 Koz, down 9% year-on-year mainly as a result of expected average grade decline in ore from Sopka.

At Tsokol, volumes of waste and ore mined have increased considerably for Q4 and full year as mining volumes were re-allocated to the deposit following suspension of the Birkachan mine. Ore mined increased by another 58% in Q4 compared to the previous quarter as the share of ore from Tsokol is seasonally increased in the Kubaka plant's feed.

Mining at Dalneye is continuing at full scale, and the first 42 Kt of ore were trucked by winter road to the Kubaka mill during Q4, ahead of schedule. Trucking of ore from Sopka is expected to commence in February 2014.

The Birkachan open pit is expected to be put on permanent care and maintenance in Q3 2014 after brief summer mining campaign. This will result in the reduction of reserve and resource estimates for the deposit. The decision on the timing and other parameters of underground mining at Birkachan is expected to be made in Q4 2014 following the completion of in-fill drilling.

Sopka heap leach project has been further postponed from 2015 to 2016. Consequently, the last pushback in the Sopka pit has also been excluded from the mine plan with some loss of reserves below the current pushback boundary. The potential for underground mining at Sopka will be assessed by Q4 2014.

Reserve attrition at Birkachan and Sopka is expected to be largely compensated for by resource-to-reserve conversion at Oroch and new resource additions from Burgali and Nevenrekan, all expected in 2014.

ALBAZINO-AMURSK

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Waste mined, Kt	3,494	4,256	-18%	16,135	15,160	+6%
Ore mined (open pit), Kt	398	263	+51%	1,338	1,216	+10%
Gold head grade, g/t				5.5	5.4	+2%
PROCESSING
Albazino concentrator
Ore processed, Kt	406	286	+42%	1,513	1,226	+23%
Gold head grade, g/t	5.0	6.0	-17%	5.6	5.3	+6%
Gold recovery1	88.5%	87.8%	+1%	88.2%	86.9%	+1%
Concentrate produced, Kt	34.7	31.8	+9%	139.8	114.8	+22%
Concentrate gold grade, g/t	51.3	47.1	+9%	53.1	49.0	+8%
Gold in concentrate, Koz2	57.3	48.3	+19%	238.6	180.7	+32%
Concentrate sold, Kt	5.5	8.6	-36%	49.3	40.1	+23%
Payable gold in concentrate sold, Koz3	9.4	13.0	-28%	79.1	63.5	+25%
Amursk POX
Concentrate processed, Kt	40.2	5.7	+606%	127.2	15.9	+702%
Gold head grade, g/t	50.1	36.5	+37%	49.8	38.0	+31%
Recovery	93.0%	77.1%	+21%	86.0%	78.7%	+9%
Gold produced, Koz	58.7	4.1	NM	158.7	13.9	NM
TOTAL PRODUCTION
Gold, Koz	68.0	17.1	+299%	237.7	77.4	+207%

Notes:     (1) To concentrate

                (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production

                (3) Included in total production upon sale to off-taker

Gold production at Albazino/Amursk in 2013 amounted to 238 Koz and exceeded original production guidance, which marks the successful completion of the ramp-up process at the Amursk POX plant and related concentrate de-stockpiling.

Gold in concentrate produced at Albazino in Q4 and FY 2013 increased by 19% and 32% year-on-year, respectively, driven mainly by the considerable increase in plant throughput where an annual run-rate of 1.6 Mtpa has been achieved.

The open-pit mine at Albazino continues to run in accordance with the mine plan and with a stable grade profile. The amounts of ore mined increased 10% year-on-year, and a further increase in mine capacity is expected in 2014 to match the increased concentrator throughput.

Sales to off-takers in China during 2013 have increased by 25% year-on-year and comprised 79 Koz and have now been fully completed, with no further off-take required from 2014.

The Amursk POX plant has delivered a full quarter of stable performance at the design parameters in terms of both throughput and recovery. Gold production was 58 Koz in Q4 while average recovery reached 93%. The remedial measures at the Amursk POX plant have been completed. Further optimisation programme is now in place to ensure continuous improvements in recovery and cost profile of the operation.

MAYSKOYE

	3 months ended Dec 31,		% change	12 months ended Dec 31,		% change
	2013	2012		2013	2012
MINING
Underground development, m	2,357	2,838	-17%	9,989	11,068	-10%
Ore mined (underground), Kt	174	15	NM	667	40	NM
Gold head grade, g/t				7.4	9.9	-26%
PROCESSING
Ore processed, Kt	176	-	NA	488	-	NA
Gold head grade, g/t	7.8	-	NA	7.1	-	NA
Gold recovery1	81.9%	-	NA	77.7%	-	NA
Concentrate produced, Kt	19.6	-	NA	48.7	-	NA
Concentrate gold grade, g/t	57.3	-	NA	55.3	-	NA
Gold in concentrate, Koz2	36.1	-	NA	86.6	-	NA
Concentrate sold, Kt	7.6	-	NA	30.3	-	NA
Payable gold in concentrate sold, Koz3	12.8	-	NA	48.4	-	NA
TOTAL PRODUCTION
Gold, Koz	12.8	-	NA	48.4	-	NA

Notes:     (1) To concentrate

                (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production

(3) Included in total production upon sale to off-taker

Total gold in concentrate produced at Mayskoye during 2013 was 87 Koz, of which 48 Koz were sold to off-takers and included in total gold production.

The Mayskoye concentrator has continued to refine the metallurgical parameters of ore processing for different ore zones. The amounts of throughput have stabilised at design parameters. In the meantime, the Company manages concentrate yield versus recovery curve in order to achieve optimal cost performance through potential reduction of shipping costs. As a result, average recoveries in Q4 were lower compared to Q3 and comprised 82%.

First lots of concentrate from Mayskoye were shipped to the Amursk POX in November and trial processing of these lots will commence shortly. The results of the trial processing will inform the decision on the split of concentrate between off-take and own processing in 2014.

HEALTH AND SAFETY

Polymetal deeply regrets to report a fatal incident in Q4 at Ozerny open-pit mine (Khakanja hub), where a serious violation of internal and statutory safety rules by a blastman resulted in his fatal injury. The Company continues to investigate the case, and has already implemented a number of additional safety measures and enforcements to the existing safety rules across its operating mines.

2014 OUTLOOK AND KEY EVENTS CALENDAR

The Company confirms its FY 2014 and FY 2015 production guidance. Total gold equivalent production is expected at 1.3 Moz and 1.35 Moz, respectively. Updated production plans by mine for 2014 are available in the Company's investor presentation on our website www.polymetalinternational.com.

In 2014, total cash costs are expected to be US$700-750/GE oz, based on current commodity prices and exchange rates. Further improvement in all-in sustaining cash costs to US$975 - 1,025/GE oz is expected on the back of continuing decrease in capital expenditure and implementation of cost control initiatives at the head office level.

The Company expects total capital expenditure in 2014 of US$ 250 million, including:

·     maintenance capex - US$ 140 million;

·     capitalised exploration - US$ 60 million;

·     capitalised stripping - US$ 50 million.

The Company plans to issue the following key updates during the first quarter:

·     Reserves and resources update - March 2014;

·     Preliminary financial results for FY 2013 - 31 March 2014.

 

END

 

 

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