Polymetal’s Gold Production up 13% in Q3 2007 Compared with Q2 2007, Key Investment Projects on Track for On-time Delivery
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JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company"), announced its production results for the quarter ended September 30, 2007.
HIGHLIGHTS
|
|
3 months ended Sep 30, |
% change1 |
9 months ended Sep 30, |
% change |
||
|
|
2007 |
2006 |
2007 |
2006 |
||
|
Ore mined, Kt |
761 |
700 |
9% |
2,305 |
1,961 |
18% |
|
Open-pit |
619 |
629 |
-2% |
1,876 |
1,607 |
17% |
|
Underground |
142 |
111 |
28% |
429 |
353 |
21% |
|
Ore processed, Kt |
1,013 |
1,017 |
0% |
2,387 |
2,186 |
9% |
|
Production |
|
|
|
|
|
|
|
Gold, Koz |
66 |
69 |
-5% |
179 |
186 |
-4% |
|
Silver, Moz |
4.1 |
4.4 |
-7% |
12.1 |
13.0 |
-7% |
|
Notes: (1) % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. It applies to all the tables herein |
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- Compared with Q2 2007, gold production grew by 13%, from 58 Koz to 66 Koz, whereas silver production decreased by 5 %, from 4.4 Moz to 4.1 Moz
- Based on these results and Q4 2007 production forecast, Polymetal narrows down its production guidelines for full year 2007 to 240-245 Koz of gold and 16-16.5 Moz of silver
- All three Polymetal's medium-term investment projects achieved crucial milestones en route to completion
- Without taking into account possible acquisitions, Polymetal targets to produce 250-270 Koz of gold and 17-18 Moz of silver in full year 2008
"We are very pleased with strong gold production and rapid progress on key development projects," said Vitaly Nesis, CEO of Polymetal, commenting on the results. "Both our overall performance and approaching status of a hedge-free company provide a very bullish outlook for the coming years."
Dukat
In Q3 2007, underground development at Dukat accelerated in an effort to access higher grade ore in 2008. Capacity ramp up at underground operations achieved record ore production rates thanks to improved fleet availability.
New SAG mill was erected and new tailings storage facility was commissioned in September 2007 as a part of processing plant expansion. Nachalnoye-2 JORC-compliant reserve audit results are expected to come out in November 2007.
Dukat production results are presented in the following table:
| 3 months ended Sep 30, | % change | 9 months ended Sep 30, | % change | |||
| 2007 | 2006 | 2007 | 2006 | |||
| Waste mined, Kt | 654 | 640 | 2% | 2,125 | 1,590 | 34% |
| Underground development,m | 2,381 | 2,138 | 11% | 7,559 | 7,586 | 0% |
| Ore mined, Kt | 227 | 220 | 3% | 709 | 676 | 5% |
| Open-pit | 87 | 109 | -20% | 289 | 323 | -11% |
| Underground | 140 | 111 | 26% | 421 | 353 | 19% |
| Ore processed, Kt | 226 | 236 | -4% | 646 | 642 | 1% |
| Head grades | ||||||
| Gold, g/t | 1.1 | 1.1 | 1% | 1.1 | 1.2 | -3% |
| Silver, g/t | 467 | 530 | -12% | 478 | 568 | -16% |
| Recovery1 | ||||||
| Gold | 76% | 75% | 1% | 79% | 77% | 2% |
| Silver | 79% | 78% | 0% | 79% | 81% | -2% |
| Production | ||||||
| Gold, Koz | 7.0 | 6.2 | 13% | 20 | 18 | 11% |
| Silver, Moz | 3.0 | 3.2 | -6% | 8.3 | 9.5 | -13% |
| Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate) | ||||||
Lunnoye
Although quarterly throughput at the Lunnoye processing plant decreased due to the scheduled re-lining of the SAG mill, the plant is still on track to deliver record processing volumes for the full year 2007.
Increased silver and decreased gold head grades during Q3 2007 resulted from higher percentages of ore coming from Arylakh (Lunnoye satellite).
Lunnoye production results are presented in the following table:
| 3 months ended Sep 30, | % change | 9 months ended Sep 30, | % change | |||
| 2007 | 2006 | 2007 | 2006 | |||
| Waste mined, Kt | 635 | 450 | 41% | 2,135 | 1,517 | 41% |
| Underground development,m | 134 | 78 | 72% | 575 | 134 | 329% |
| Ore mined, Kt | 83 | 88 | -5% | 395 | 216 | 83% |
| Open-pit | 81 | 88 | -7% | 387 | 216 | 80% |
| Underground | 2 | 0 | - | 8 | 0 | - |
| Ore processed, Kt | 68 | 86 | -21% | 220 | 201 | 9% |
| Head grades | ||||||
| Gold, g/t | 0.9 | 2.7 | -67% | 2.1 | 2.5 | -17% |
| Silver, g/t | 351 | 315 | 11% | 372 | 324 | 15% |
| Recovery1 | ||||||
| Gold | 92% | 93% | -2% | 93% | 93% | 0% |
| Silver | 86% | 88% | -3% | 88% | 89% | 0% |
| Production | ||||||
| Gold, Koz | 2.7 | 7.5 | -64% | 16 | 15 | 3% |
| Silver, Moz | 0.8 | 0.8 | -10% | 2.5 | 1.9 | 37% |
| Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate) | ||||||
Khakanja
At Khakanja, pre-stripping activities on open pit 2 have been completed; first ore is expected to be mined by the end of Q4 2007.
In Q3 2007, recoveries improved significantly due to continuous effort on plant automation and reagent optimization.
Khakanja production results are presented in the following table:
| 3 months ended Sep 30, | % change | 9 months ended Sep 30, | % change | |||
| 2007 | 2006 | 2007 | 2006 | |||
| Waste mined, Kt | 1,412 | 915 | 54% | 4,383 | 2,644 | 66% |
| Ore mined, Kt | 235 | 139 | 68% | 512 | 492 | 4% |
| Open-pit | 235 | 139 | 68% | 512 | 492 | 4% |
| Ore processed, Kt | 156 | 129 | 20% | 454 | 375 | 21% |
| Head grades | ||||||
| Gold, g/t | 4.1 | 6.1 | -32% | 4.3 | 7.3 | -41% |
| Silver, g/t | 161 | 203 | -21% | 166 | 272 | -39% |
| Recovery1 | ||||||
| Gold | 96% | 92% | 4% | 94% | 92% | 3% |
| Silver | 52% | 47% | 10% | 51% | 47% | 8% |
| Production | ||||||
| Gold, Koz | 19 | 25 | -25% | 59 | 81 | -27% |
| Silver, Moz | 0.4 | 0.4 | -8% | 1.2 | 1.6 | -24% |
| Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate) | ||||||
Voro
In Q3 2007, new compressor station and oxygen plant were commissioned at Voro, which resulted in substantial improvement in recoveries which should further strengthen in Q4 2007.
Record gold output was achieved at CIP plant mostly driven by tight grade control and selective stockpiling.
Voro production results are presented in the following table:
| 3 months ended Sep 30, | % change | 9 months ended Sep 30, | % change | |||
| 2007 | 2006 | 2007 | 2006 | |||
| Waste mined, Kt | 2,579 | 2,326 | 11% | 6,903 | 6,470 | 2% |
| Ore mined, Kt | 216 | 292 | -26% | 689 | 577 | 19% |
| Oxidized | 60 | 87 | -31% | 189 | 118 | 60% |
| Primary | 156 | 206 | -24% | 500 | 459 | 9% |
| Ore processed, Kt | 563 | 566 | 0% | 1,066 | 968 | 10% |
| Oxidized | 428 | 438 | -2% | 709 | 649 | 9% |
| Primary | 136 | 127 | 6% | 358 | 318 | 12% |
| Gold head grades, g/t | ||||||
| Oxidized | 1.8 | 2.5 | -31% | 2.1 | 2.2 | -6% |
| Primary | 6.4 | 5.2 | 24% | 6.3 | 5.7 | 10% |
| Gold recovery1 | 79% | 76% | 3% | 80% | 77% | 4% |
| Gold production, Koz | 37 | 30 | 21% | 84 | 71 | 19% |
| Heap leach | 14 | 14 | 3% | 27 | 26 | 3% |
| CIP | 23 | 17 | 37% | 58 | 45 | 28% |
| Silver production, Moz | 0.020 | 0.023 | -15% | 0.051 | 0.050 | 3% |
| Notes: (1) CIP technological recovery only. Heap leach recoveries are meaningful for full year only due to seasonality factor | ||||||
DEVELOPMENT PROJECTS
Albazino
Public hearings for POX plant in Amursk held in September 2007 demonstrated strong support for the project in local communities.
During Q3 2007, 4,832 meters were drilled at Anfisa and Olga ore zones; 5 drill rigs are currently working on site. JORC-compliant resource update expected to come out in December 2007 is fully on track to deliver 2 Moz of gold resource.
On the engineering side, flotation and preliminary POX testing continue to demonstrate viability of the selected flow sheet with high recoveries (85-90%) and low concentrate mass pulls (5-7%).
HEDGING AGREEMENTS
As of October 18, Polymetal has to deliver 2.8 Moz of silver under the hedging contracts (11.1 Moz of silver has been shipped to date).
CONFERENCE CALL
Polymetal will hold a conference call to discuss the third quarter production results on Friday, Oct 19, 2007 at 6:00pm Moscow time (3:00pm London time; 10:00am New York time).
To participate in the call, please dial +1 800 762 4832 (toll-free from the US) or +1 4... (international). Please be prepared to introduce yourself to the moderator.
Recording of the conference call will be available at +1 8... (toll-free from the US) or +1 320 365 3844 (international), access code 891767, from 9:30pm Moscow time on Friday, Oct 19, till 11:59pm Moscow time on Friday, Oct 26.
Corporate Finance and Investor Relations Department