Polymetal Int PLC POLY Reserves and resources results announcement

  Polymetal Int PLC (POLY) - 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

· AsofJuly 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  Eq^1 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.

                     Tonnage           Grade                   Content
Ore Reserves           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

                      Tonnage           Grade                  Content
Ore Reserves ^1,2,3,4   Kt    Au, g/t  Ag,   AuEqv, g/t  Au,    Ag,   AuEqv,
                                       g/t               Koz    Koz     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

                      Tonnage          Grade                   Content
Ore Reserves ^1,2,3,4   Kt    Au, g/t  Ag,    AuEqv,    Au,    Ag,    AuEqv,
                                       g/t      g/t     Koz    Koz      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

                      Tonnage          Grade                   Content
Ore Reserves ^1,2,3,4   Kt    Au, g/t  Ag,    AuEqv,    Au,  Ag, Koz  AuEqv,
                                       g/t      g/t     Koz             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

                      Tonnage          Grade                   Content
Ore Reserves ^1,2,3,4   Kt     Au,    Ag,   AuEqv, g/t  Au,  Ag, Koz  AuEqv,
                               g/t    g/t               Koz             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^

                            Tonnage         Grade               Content
Mineral Resources ^1          Kt     Au,    Ag,   AuEqv,   Au,   Ag,   AuEqv,
                                     g/t    g/t    g/t     Koz   Koz     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

                                Tonnage        Grade              Content
Mineral Resources ^1,2,3,4,5      Kt     Au,   Ag,   AuEqv,  Au,  Ag,  AuEqv,
                                         g/t   g/t    g/t    Koz  Koz    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                             510    6.3   11     6.4    103  184    106
Measured+Indicated+Inferred

^

^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

                                Tonnage        Grade              Content
Mineral Resources ^1,2,3,4,5      Kt     Au,   Ag,   AuEqv,  Au,  Ag,  AuEqv,
                                         g/t   g/t    g/t    Koz  Koz    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                             960    2.9   17     3.2     90  517    98
Measured+Indicated+Inferred

^

^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

                                Tonnage        Grade              Content
Mineral Resources ^1,2,3,4,5      Kt     Au,    Ag,  AuEqv,  Au,  Ag,  AuEqv,
                                         g/t    g/t    g/t   Koz  Koz    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                             190    13.1   150   15.6    80  916    96
Measured+Indicated+Inferred

^

^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

                                Tonnage        Grade              Content
Mineral Resources ^1,2,3,4,5      Kt     Au,   Ag,   AuEqv,  Au,  Ag,  AuEqv,
                                         g/t   g/t    g/t    Koz  Koz    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                             630    2.1   43     2.8     42  868    57
Measured+Indicated+Inferred

^

^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   +44 20 7457    Polymetal          ir@polymetalinternational.com
               2020
Leonid Fink                   Maxim Nazimok      

Tony Friend                   Evgenia Onuschenko +7 812 313 5964 (Russia)

                              Elena Revenko      +44 20 7016 9503 (UK)
    Joint Corporate Brokers       
Morgan Stanley +44 20 7425    Canaccord Genuity  +44 20 7523 8350
               8000
Sam McLennan                  Roger Lambert

Sandip Patodia



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