Reserves and resources results announcement

RNS Number : 8532Q

Polymetal International PLC

12 November 2012

 



Release time	IMMEDIATE
Date	12 November 2012

Polymetal International plc

Reserves and resources results announcement for Tsokol, Ozerny, Avlayakan, Dalniy

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to provide an update on Ore Reserves and Mineral Resources for Tsokol, Ozerny, Avlayakan, and Dalniy deposits according to JORC Code 2004.

Highlights

·     As of July 1, 2012 Ore Reserves at our four deposits (Tsokol, Ozerny, Avlayakan, Dalniy) were estimated at 4.4 Mt of ore with the average grade of 7.2 g/t of Au Eq¹ containing 1.0 Moz of Au Eq (86% gold, 14% silver). Ore Reserves were estimated using gold price of $1300/oz and silver price of $23/oz. This is the first estimate of Ore Reserves for all of these properties with additions representing 7% of the Group's reserves as of 1 January, 2012.

Ore Reserves	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Ore Reserves (proved+ probable)
Tsokol Kubaka	1,150	6.2	11	6.4	228	391	235
Ozerny	800	5.3	34	5.8	135	882	150
Avlayakan	470	19.2	132	21.4	290	1,992	323
Danliy	1,960	3.5	85	4.9	218	5,344	307
Total Reserves	4,380	6.2	61	7.2	871	8,609	1,015

·     All of the properties belong to operating processing hubs owned by Polymetal. Two deposits are already in production (Tsokol, Avlayakan) with the remaining two (Ozerny, Dalniy) expected to start producing ore and generating cash flows within the next 18 months.

·     Discovery costs of approximately $80/oz of reserves (including original asset acquisition costs) are very attractive given high grade of the deposits, the ability to process ore at the existing processing facilities with very modest further investment, and further significant exploration upside.

·     As of July 1, 2012 Mineral Resources (in addition to ore resources) were estimated at 2.3 Mt with the average grade of 4.8 g/t of Au Eq containing 0.36 Moz of Au Eq (88% gold, 12% silver). Mineral Resources were estimated using gold price of $1500/oz and silver price of $26/oz.

·     Substantial exploration potential identified, particularly at Ozerny and Tsokol.

"These additions to ore reserves are very important for the Company as they allow us to extend the life-of-mine of both Khakanja and Omolon by 2 years while materially improving the grade outlook compared with other remaining reserves at these operations" said Vitaly Nesis, CEO of Polymetal. "Such results demonstrate excellent returns on investment in our brownfield exploration activities and we expect further reserve additions at Khakanja and Omolon in 2013".

¹ Gold equivalent at 60:1 Ag oz/Au oz conversion ratios

Asset details

·     Tsokol Kubaka forms the part of Omolon operations and is located 3 km away from the Kubaka mill. Open-pit mining at the deposit started in Q1 2012 and is expected to continue till the end of 2016 at the rate of 200 ktpa followed by 2 years of underground mining at 100 ktpa. All ore will be processed at the Kubaka mill.

Tsokol is a conventional low-sulfide epithermal deposit with main veins open along strike (down plunge). Substantial further exploration potential for narrow-vein selective underground mining exists at the property which will be assessed in due course as the pit deepens.

·     Ozerny is a satellite deposit to Khakanja and located 70 km from the processing plant and accessible only by winter road. Ore from Ozerny will be processed at Khakanja in 2013-2016 at the average rate of 200 ktpa.

Ozerny is a large brecciated shear zone on the contact between volcanic and sedimentary rocks. Mineralisation is open at surface along strike in one direction with active exploration drilling ongoing (6,192 m drilled, 44 thousand m3 of trenches made in 2012). Excellent potential exists to expand the size of reserve by both resource conversion and identifying ore body extensions by step-out drilling.

·     Avlayakan is a part of the AK standalone green-field exploration project with a trial open-pit mine feeding the Khakanja processing plant. AK is located 740 km from Khakanja with ore transportation limited to summer months due to seasonal sea navigation. It is expected that open-pit mining will continue until 2014 followed by underground mining in 2015-2018 enabling average ore shipment rate of 70 ktpa.

This approach to ore utilisation is expected to change if additional significant reserves are discovered at AK project enabling the construction of a stand-alone new operation with on-site processing facility. Active drilling is ongoing at the AK project (6,760 m drilled in 2012) with the objective of identifying new high-grade veins. Polymetal expects the development decision on the AK project to be taken in Q4 2013.

·     Dalniy forms the part of Omolon operations and is located 5 km away from the operating Sopka mine. Sopka is 150 km away from the Kubaka mill with ore transportation limited to winter road.  Pre-stripping at Dalniy is expected to commence in Q3 2013 with ore mining to start in 2014. 

High-grade ore is expected to be trucked to the Kubaka mill in 2015-2017 at 100-150 ktpa while low-grade ore will be processed at the Sopka heap leach facility to be launched in 2015. The actual tonnage split (internal cut-off grade) between high-grade and low-grade ore will be determined at the time of the mining based on then prevailing metal prices and actual operating costs. 

Ore Reserves and Mineral Resources 

Tsokol

Ore Reserves 1,2,3,4	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Proved
Open Pit	330	5.6	8	5.8	60	87	61
Underground	70	10.9	23	11.3	25	52	25
Existing Stockpile	20	3.9	5	4.0	2	3	3
Subtotal Proved	420	6.4	11	6.6	87	142	89
Probable
Open Pit	570	4.9	9	5.1	90	167	93
Underground	160	10.1	16	10.4	52	82	53
Subtotal Probable	730	6.0	11	6.2	142	249	146
Proved+Probable
Open Pit	900	5.2	9	5.3	150	255	154
Underground	230	10.3	18	10.6	76	134	79
Existing Stockpile	20	3.9	5	4.0	2	3	3
Total Proved+Probable	1,150	6.2	11	6.4	228	391	235

¹ Mill only

² As of 01.06.2012

³ Open Pit at COG AuEqv=1.15g/t

⁴ Underground Mining at COG AuEqv=4.9g/t

Ozerny

Ore Reserves 1,2,3,4	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Proved	560	5.4	34	6.0	97	615	108
Probable	240	4.9	35	5.5	38	267	42
Total Proved+Probable	800	5.3	34	5.8	135	882	150

¹ Mill only

² Open Pit only

³ As of 01.07.2012

⁴ At COG AuEqv=2.7g/t

Avlayakan

Ore Reserves 1,2,3,4	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Proved
Open Pit	30	13.8	107	15.6	13	104	15
Underground	-	-	-	-	-	-	-
Existing Stockpile	110	17.7	58	18.7	63	204	66
Subtotal Proved	140	16.9	68	18.0	76	308	81
Probable
Open Pit	70	12.8	63	13.8	29	142	31
Underground	260	22.1	184	25.2	185	1,542	210
Subtotal Probable	330	20.1	159	22.8	213	1,684	241
Proved+Probable
Open Pit	100	13.1	77	14.4	42	246	46
Underground	260	22.1	184	25.2	185	1,542	210
Existing Stockpile	110	17.7	58	18.7	63	204	66
Total Proved+Probable	470	19.2	132	21.4	290	1,992	323

¹ Mill only

² As of 01.07.2012

³ Open Pit at COG AuEqv=8.05g/t

⁴ Underground Mining at COG AuEqv=9.9g/t

Dalniy

Ore Reserves 1,2,3,4	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Proved
Heap Leach	1,630	2.5	54	3.4	130	2,831	177
Mill	330	8.3	237	12.2	88	2,513	130
Subtotal Proved	1,960	3.5	85	4.9	218	5,344	307
Probable
Heap Leach	-	-	-	-	-	-	-
Mill	-	-	-	-	-	-	-
Subtotal Probable	-	-	-	-	-	-	-
Proved+Probable
Heap Leach	1,630	2.5	54	3.4	130	2,831	177
Mill	330	8.3	237	12.2	88	2,513	130
Total Proved+Probable	1,960	3.5	85	4.9	218	5,344	307

¹ Open Pit only

² As of 01.06.2012

³ Mill at COG AuEqv=7.25g/t

⁴ Heap Leach at COGAuEqv=1.1g/t

Total Mineral Resources 

Mineral Resources 1	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Measured+Indicated+Inferred
Tsokol Kubaka	510	6.3	11	6.4	103	184	106
Ozerny	960	2.9	17	3.2	90	517	98
Avlayakan	190	13.1	150	15.6	80	916	96
Danliy	630	2.1	43	2.8	42	868	57
Total Mineral Resources	2,290	4.3	34	4.8	315	2,485	356

¹ Mineral Resources are presented as additional to Ore Reserves

Tsokol

Mineral Resources 1,2,3,4,5	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Measured
Open Pit	10	5.1	8	5.3	2	3	2
Underground	10	6.6	14	6.9	2	5	2
Subtotal Measured	20	5.9	11	6.1	4	7	4
Indicated	50	3.4	8	3.5	5	12	6
Open Pit	90	5.8	10	5.9	17	30	17
Underground	140	4.9	9	5.1	22	42	23
Subtotal Indicated
Measured+Indicated
Open Pit	60	3.7	8	3.8	7	15	7
Underground	100	5.8	11	6.0	19	35	19
Subtotal Measured+Indicated	160	5.0	10	5.2	26	50	27
Inferred
Open Pit	10	2.1	5	2.2	1	2	1
Underground	340	7.0	12	7.2	76	133	78
Subtotal Inferred	350	6.8	12	7.0	77	134	79
Measured+Indicated+Inferred
Open Pit	70	3.4	7	3.6	8	16	8
Underground	440	6.7	12	6.9	95	168	98
Total Measured+Indicated+Inferred	510	6.3	11	6.4	103	184	106

¹ Mineral Resources are presented as additional to Ore Reserves

² Mill only

³ As of 01.06.2012

⁴ Open Pit at COGAuEqv=1.0g/t

⁵ Underground Mining at COGAuEqv=3.0g/t

Ozerny

Mineral Resources 1,2,3,4,5	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Measured	220	2.5	26	2.9	18	187	21
Indicated	490	2.9	13	3.2	46	206	50
Measured+Indicated	710	2.8	17	3.1	64	392	70
Inferred	250	3.2	16	3.5	26	125	28
Total Measured+Indicated+Inferred	960	2.9	17	3.2	90	517	98

¹ Mineral Resources are presented as additional to Ore Reserves

² Open Pit only

³ Mill only

⁴ As of 01.07.2012

⁵ At COGAuEqv=1.32g/t

Avlayakan

Mineral Resources 1,2,3,4,5	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Measured
Open Pit	10	12.1	112	14.0	4	36	4
Underground	10	10.1	157	12.8	3	51	4
Subtotal Measured	20	11.1	135	13.4	7	87	9
Indicated
Open Pit	50	11.3	75	12.6	18	121	20
Underground	50	14.0	113	15.9	23	181	26
Subtotal Indicated	100	12.6	94	14.2	41	302	46
Measured+Indicated
Open Pit	60	11.4	81	12.8	22	157	25
Underground	60	13.4	120	15.4	26	232	30
Subtotal Measured+Indicated	120	12.4	101	14.1	48	389	54
Inferred
Open Pit	-	-	-	-	-	-	-
Underground	70	14.4	234	18.3	32	528	41
Subtotal Inferred	70	14.4	234	18.3	32	528	41
Measured+Indicated+Inferred
Open Pit	60	11.4	81	12.8	22	157	25
Underground	130	13.9	182	17.0	58	760	71
Total Measured+Indicated+Inferred	190	13.1	150	15.6	80	916	96

¹ Mineral Resources are presented as additional to Ore Reserves

² Mill only

³ As of 01.07.2012

⁴ Open Pit at COGAuEqv=5.85g/t

⁵ Underground Mining at COGAuEqv=9.4g/t

Dalniy

Mineral Resources 1,2,3,4,5	Tonnage	Grade			Content
	Kt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Measured	430	2.0	41	2.7	28	572	38
Indicated	200	2.2	46	3.0	14	295	19
Measured+Indicated	630	2.1	43	2.8	42	868	57
Inferred	-	-	-	-	-	-	-
Total Measured+Indicated+Inferred	630	2.1	43	2.8	42	868	57

¹ Mineral Resources are presented as additional to Ore Reserves

² Open Pit only

³ Heap Leach only

⁴ As of 01.06.2012

⁵ At COGAuEqv=0.5g/t

The previous assessment of Mineral Resources for all 4 deposits was reflected in the Group's Annual Report 2011 as a part of Ore Reserves and Mineral Resources update as at January 2012.

This estimate was prepared by employees of JSC Polymetal Management Company and CJSC Polymetal Engineering, subsidiaries of the Company, led by Valery Tsyplakov, who assumes overall responsibility for the Mineral Resources and Ore Reserves Report. Mr Tsyplakov is the Managing Director of CJSC Polymetal Engineering and has 12 years' experience in gold and silver mining. He is a Member of the Institute of Materials, Minerals & Mining (MIMMM), London, and a Competent Person under the JORC Code.

Other Competent Persons employed by the Company are responsible for relevant research on which the Mineral Resources and Ore Reserves estimate is based. They include:

·     Geology and Mineral Resources - Vladimir Ryabukhin, Advisor to Director General of JSC Polymetal Management Company, MIMMM, with 38 years' relevant experience;

·     Geology and Mineral Resources - Mikhail Fomkin, Head of Geologic Modelling, MIMMM, with 26 years' relevant experience;

·     Mining and Ore Reserves - Igor Epstein, Head of Mining Process Department, MIMMM, with 30 years' relevant experience;

·     Concentration and Metals - Igor Agapov, Deputy Director of Science and Technology, MIMMM, with 14 years' relevant experience;

·     Environmental Issues - Tatiana Kuleshova, Director for Ecology, MIMMM, with 21 years' relevant experience.

All Competent Persons have given consent for their material to be included in the Report, based on the information provided by them and in the form and the context in which the material is hereby presented.

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 Sam McLennan Sandip Patodia	[phone]	Canaccord Genuity Roger Lambert	[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

 

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