Polymetal announces first quarter 2010 production results

Download PDF version Listen Printable version

Saint-Petersburg, Russia, April 15, 2010 – JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced its production results for the quarter ended March 31, 2010.

HIGHLIGHTS

• Quarterly gold production grew by 54% compared with Q1 2009 due to increased throughputs and grades at Voro and Dukat as well as contribution of a full quarter of Varvarinskoye production. Without taking Varvarinskoye into account, quarterly gold production increased 26%
• Higher throughputs at Dukat as well as significantly higher silver grades at Lunnoye and Khakanja led to a 12% increase in silver production compared with Q1 2009
• Varvarinskoye performance is steadily improving with ore grade continuing to be the major driver. Targeted investment in additional mining fleet and cost containment expected to start bearing fruit in the second half of 2010
• Albazino-Amursk construction remains on schedule and on budget. At Albazino all infrastructure is essentially in place with equipment installation at the concentrator to be started in May
• Omolon is fully prepared to pour gold from the dump leach in June and from the CIP plant in August
• Both Omolon and Mayskoye feasibility studies are finalized, but audits’ results are delayed due to inclement weather preventing audit teams from site access. The results of both studies are now expected to be released in Q3 2010
• Polymetal reiterates its guidance to produce 430-450 Koz of gold, 19-20 Moz of silver and 4.0-5.0 Kt of copper, or 775-800 Koz of gold equivalent (based on 1:60 Ag/Au and 5:1 Cu/Au conversion ratios) in 2010

“In 1Q 2010 we were able to achieve all of our operational and development goals despite extreme winter weather across our mines and projects,” said Vitaly Nesis, CEO of Polymetal.

“Strong production growth and excellent progress on Albazino-Amursk and Omolon underscore our steady movement towards achieving our short-term and long-term objectives”.

DUKAT OPERATIONS

Silver production at Dukat in the first quarter was flat compared to Q1 2009. Gold production was up 20%. Both gold and silver recoveries were down due to ramp-up difficulties and unavailability of fresh water due to freezing of permanent waterways.

Both underground development and waste stripping at Dukat were negatively impacted by abnormal low temperatures and heavy snowfall with supply of spare parts disturbed for the most of January. These shortfalls are not expected to have any impact on production as the mine has sufficient ore prepared for extraction in drilled stopes.

Underground development at Goltsovoye is accelerating, with the mine still on track to start ore production from stopes in Q3 2010.

Silver production at Lunnoye was up 38% compared to Q1 2009, while gold production remained flat. Higher grade silver ore from Arylakh open pit is currently being processed with Lunnoye underground capacity impacted by ground stability issues in one of the stopes immediately below the old open pit.

KHAKANJA

Silver production almost doubled due to a significant increase in processed silver grades, coming from pit 3. Gold production was essentially flat.

Open pit mining at Yurievskoye has been completed. All of the ore (160 Kt) has now been transported to the plant. Exploration drilling is now under way at Yurievskoye to determine the viability of underground mining at this satellite deposit with the development decision expected in Q3 2010.

Detailed engineering for underground operation at the main Khakanja deposit is progressing on schedule. Key parameters of the future mine will be determined in Q4 2010.

VORO

Gold production at Voro jumped 51% compared to Q1 2009. Primary ore production from the CIP was up 59% (the plant is operating at full design capacity), while gold production from the heap leach increased 15%.

Mining of the oxide ore at the South Voro pit is expected to commence in Q2 2010. At Degtyarskoye, 67 Kt of high grade ore has been mined and trucked to the Voro CIP for processing. Overall, Voro operation is on track to achieve record yearly gold production in 2010.

VARVARINSKOYE

Q1 2010 was the first full quarter at Varvarinskoye with Polymetal as the owner of the mine. A number of initiatives are being undertaken by the management to improve the operating performance of the mine, some of which include:

• Lowering dilution. This will be aided by the purchase of drilling and excavating equipment, more suitable to working with the Varvarinskoye narrow width ore bodies as well as improved grade control practices
• Catching up on insufficient waste stripping. This will be aided by the purchase of additional excavators and trucks. Performing the necessary stripping work is expected to allow the mill to be loaded to its full capacity by mid-2011
• Improving quality assurance and control procedures and processes. A new department responsible for the independent overview of the process control and product quality has been created. Reconstruction for the new assay testing laboratory has also commenced, following the purchase of new control and testing equipment.
• Renegotiating key outsourcing contracts (RC drilling, blasting, mining fleet maintenance) and gold-copper concentrate offtake agreement

In Q2 2010 it is panned to carefully analyze the potential to improve recoveries and reduce reagent consumption in CIL circuit.

ALBAZINO-AMURSK

Pre-stripping at Anfisa pit continues on schedule with first ore planned to be mined and stockpiled in Q2 2010. All site infrastructure is commissioned, including accommodation camp, tailings dam with diversion ditch, diesel-powered genset station, and water boreholes with associated pipelines. Crusher and mill foundations are complete with installation of equipment planned to commence in May.

The majority of earth works at the Amursk POX facility have been completed. Foundation works are now in full swing. Construction of the power line from the Amursk power plant as well as all the piping required for the delivery of water to the plant has also commenced. The Company is on track to commission the facility in Q2 2011.

MAYSKOYE

At Mayskoye, underground development is continuing. First stopes are expected to be ready for production in the first half of 2011.

Construction of water reservoir and tailings impoundment is continuing and is scheduled to be completed in Q3 2010. Foundation works for the flotation concentrator will commence in Q2 2010. All of the steel required for the construction of the structural steel frame will be delivered during the summer 2010 navigation period, to be installed in the winter of 2010/2011.

OMOLON OPERATIONS

Waste mining at Birkachan successfully started 2 months ahead of original schedule. Stacking of the low-grade ore will commence in May, whilst the processing of the high grade ore will start at the CIP plant in August 2010.

Mining at Sopka is continuing with the ore being stockpiled on site. Earth works for the new Merrill Crowe section at the Kubaka plant have commenced.

PERSONNEL

Vladimir Ryabukhin, 64, stepped down as the Company’s Executive Vice President – Mineral Resources, and assumed the position of an advisor to the CEO. Mr. Ryabukhin has been working at Polymetal since the Company’s foundation in 1998, played a crucial role in creating the Company’s asset portfolio, and will continue to contribute his unique experience to the Company’s further growth in his new position.

Mr. Sergey Trushin, 43, previously Chief geologist at Albazino and Khabarovsk regional exploration, was appointed EVP – Mineral Resources. After graduating from the Novocherkassk Polytechnic Institute with a degree in mining engineering and geology in 1991, Mr. Trushin began his career as an exploration geologist, working in the Khabarovsk Territory of the Far East of Russia. In 1998-2010 Mr. Trushin has been working at Albazino and was the key person behind transforming it from a grassroots prospect into a multi-million ounce deposit.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Thursday, April 15, 2010 at 6:00pm Moscow time (3:00pm London time; 10:00am New York time).

To participate in the call, please dial:

+7 495 580 9543 (toll-free from Russia), or

0800 358 0886 (toll-free from the UK), or

+44 207 153 2027 (from outside the UK and/or Russia), or follow the link:

http://www.cyber-presentation.de/cgi-bin/visitors.ssp?fn=visitor&id=1190

Please be prepared to introduce yourself to the moderator or register.

Recording of the call will be available on Polymetal’s website and at the above link immediately after the call. It will also be available at +44 207 959 6720 (toll-free from the UK), access code 142785#, from 7:30pm Moscow time Thursday, April 15, till 11:59pm Moscow time Thursday, April 22, 2010.

ABOUT POLYMETAL

Polymetal is a Russian gold and silver miner with operations and development projects in Russia and Kazakhstan. The Company produced 0.6 million of gold equivalent ounces in 2009 and is targeting to double its total production by 2012 mostly as a result of commissioning of the new projects, all of which are now under construction. A key element of Polymetal’s strategy is creation of processing hubs with the goal to ensure the most efficient and responsible utilization of financial and human capital by treating ores and concentrates from various sources at centralized locations.

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.

Next Previous

Back to all news