Polymetal is pleased to announce its Q3 2006 and 9-month production results, for the period ending September 30th, 2006.
Polymetal is pleased to announce its Q3 »06 and 9-month production results, for the period ending September 30th, 2006.
Results overview
9-month results for 2006 show a 5% decrease in mined ore from the same period in 2005 to 1,962 th. tons. This decrease was primarily due to a 7% drop in open-pit mined ore (to 1,609 th. oz.). At the same time, ore mined from underground operations increased 5% to 353 th. oz.
The drop in open-pit mining volumes was due to a temporary problem at the Vorontsovskoye deposit related to pit drainage. The increase in volume from underground mining was primarily because of positive results at Dukat.
Processed ore increased 14% in the first nine months of 2006 (compared to the first nine months of 2005) and reached 2,186 th. tons. This increase is primarily due to two factors: increased production capacity at Khakanjinskoye and the growth in production at Vorontsovskoye«s Stage II.
During the first nine months of 2006, gold production rose 2% to 186 th. oz., again primarily due to increased production capacity at Vorontsovskoye«s Stage II.
As previously forecast, the Company«s silver production declined 7% in the reported period to 12,965 th. oz. This decline was due to long-term developments at the Lunnoye deposit, including: a lower average ore head grade and the transition from open pit to underground mining.
9-month gold sales increased 7% to 185 th. oz. And the average sales price1 increased dramatically to 602 USD/oz., compared to 424 USD/oz. for the same period in 2005. The average sales price of gold in Q3 »06 was 620 USD/oz. compared to 425 USD/oz. in Q3 »05.
Silver sales for the reported nine-month period (2006) were 12,927 th. oz. - a 7% drop from the previous year«s figures. This fall-off is the result of a dip in silver production during the same period. However, the average sales price of silver2 increased significantly to 8.8 USD/oz., compared to 7.1 USD/oz. in the same period in 2005. Third quarter figures also mirrored this increase. The average sales price for Q3 »06 was 8.9 USD/oz., compared to 7.1 USD in the same period in 2006.
Note: summary figures for all mines; total figures may not match the sum of individual figures because of rounding.
Note: London fixed prices (gold and silver) were obtained from www.kitco.com
Operational overview
Dukat
During Q3 »06, the Company performed preparatory work for building foundations under the second circuit SAG-mill and the first section of the sand flotation system. Launching stage II of the gold recovery plant is expected to increase production capacity. Work on stage III of the tailing dumps continued.
Lunnoye
In Q3 »06, the Company worked on preparing the deposit«s underground mine. Key preparatory projects include: special ventilation adit construction and a basic transportation gallery.
During the current period, the Company completed key infrastructure projects at the satellite Arlyakh deposit, including: a road connecting Lunnoye and Arlyakh, a fly-in, fly-out settlement for workers, the delivery of mining-transportation equipment and the estimation of old geological waste.
Khakanjinskoye
The Company conducted technical re-equipping of the deposit during the reported period, including purchasing additional dump trucks and excavators.
In an effort to increase production capacity to 600 th. tpa, the Company launched a project for semi-dry tailing storage. This project is expected to increase recovery rates and decrease the volume of needed chemical reagents.
Vorontsovskoye
In a bid to increase recovery rates from heap leaching (at plant 1), the Company started up a project to re-excavate old-year heaps by dragline.
In the third quarter of 2006, the Company also put into operation a new pulp aeration system that will be used in primary ore processing. The Company expects that this new system will increase recovery rates.
Exploration overview
Magadan Region
Through its newly established subsidiary - Dukat Geological Exploration Company - the Company is conducting an ambitious and challenging exploration program focused on Dukat«s near and far flanks. In the third quarter, the Company received a license for the Dukat prospective area. The mineral resources of the area are 61 mln. oz. of silver (1900 tons) based on information in the licensing agreement.
Sverdlovsk Region
During the third quarter of 2006, the Company received an exploration license for Rudnichniy field and launched preparations for geological exploration at the site. Primary geological exploration (deep geochemical searches) are currently ongoing at the newly licensed Katasminskiy field in the Sverdlovsk Region.
Khabarovsk Territory
During the reported period, the Company completed geological exploration at Khakanjinskoye«s deep levels. The Company also conducted preliminary information gathering at the Khakarinskaya area.
In the summer of »06, the Company purchased 100% of <<Resource Albazino,>> including the operating license for the Albazino gold deposit. The Company carried out deep geochemical searches over a 10 sq. km. area to prepare for more extensive search operations in 2007. In addition, Snowden is in the process of preparing a JORC Code-compliant audit of the deposit.
Strategic alliance with AngloGold Ashanti
In the third quarter of 2006, the Company announced a strategic alliance with AngloGold Ashanti. The joint venture will focus on identifying, acquiring and developing gold deposits in certain Russian regions. Each of the two parties - the Company and AngloGold Ashanti - will contribute assets equal to 50% of the JV. Initially, the JV is expected to include the following projects: Veduga, Bogunay and Anenskoye (Krasnoyarsk Territory) and Aprelkovskoye-Peshkovsky ore knot (Chita Region).
Key highlights
· January - Published a JORC Code-compliant mineral reserve and resource report;
· January - Released 2005 results that showed production growth. Gold production increased 15% to 243 th. oz. Silver production rose 10% to 18,937 th. oz.
· February - Created two specialized geological exploration companies: Northern Urals Geological Exploration (Sverdlovsk Region) and Dukat Geological Exploration (Magadan Region)
· February - Export delivery of silver to the LBMA to assist the Kolyma refinery in obtaining the LBMA «Good Delivery» certificate;
· February - Signed an agreement with the Omsukchan region (Magadan region) local administration for social-economic cooperation in the sum of 20 mln. rubles annually for four years;
· March - Retired ruble-denominated three year maturity bonds and paid the last coupon thereon;
· May - Completed successful corporate re-branding;
· June - Signed a $160 mln. comprehensive risk insurance program for Dukat and Lunnoye«s production assets;
· June - Received a license for geological survey of gold and silver at the Arkinskiy ore field (Khabarovsk Territory);
· June - Discovered new gold and silver deposit, Anenskiy, in the Krasnoyarsk Territory
· July - Acquired 100% of <<Resource Albazino>> and the operating license for the Albazino gold deposit (Khabarovsk Territory) from Far Eastern Resources;
· August - Received an exploration license (search and estimation) for the Rudnichniy gold field (Sverdlovsk Region);
· August - Received an exploration license (search and estimation) for the Dukat prospective area (Magadan Region);
· September - Completed an environmental audit (conducted by SRK Consulting, Britain) that certified the Company met World Bank-established ecological standards;
· September - Completed a preliminary strategic alliance agreement with AngloGold Ashanti for geological exploration, acquisition and development of gold deposits in Russia.
These materials contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.