Q1 2012 production results

RNS Number : 3705B

Polymetal International PLC

16 April 2012

 



Release time	IMMEDIATE
Date	16 April 2012

Polymetal International plc

Q1 2012 production results announcement

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the first quarter 2012 ended March 31, 2012.

HIGHLIGHTS

	3 months ended Mar 31,		% change1
	2012	2011
Waste mined, Kt	18,691	18,752	+0%
Underground development, m	11,159	7,715	+45%
Ore mined, Kt	3,111	1,893	+64%
Open-pit	2,708	1,591	+70%
Underground	404	301	+34%
Ore processed, Kt	2,196	1,683	+30%
Production2
Gold, Koz	101	82	+24%
Silver, Moz	5.7	3.2	+74%
Copper, tonnes	1,555	1,744	-11%
Gold equivalent, Koz3	203	145	+41%
Sales
Gold, Koz	105	93	+13%
Silver, Moz	5.9	3.0	+99%
Copper, tonnes	1,884	1,079	+75%
Revenue, US$m4	377	229	+64%
Safety
LTIFR	0.7	0.9	-38%
FIFR	-	-	n/a
Notes:     (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all the tables in this release                 (2) From Q2 2011 Polymetal has applied the new methodology for reporting metals produced: production previously reported upon shipment of dore, precipitate or concentrate from the mine sites to third party refineries or off-takers, is now reported when dore and precipitate are received at the gold rooms or when the concentrate is fully prepared for shipment at the mine site. The comparative numbers for Q1 2011 are restated to reflect the new methodology. (3) Based on 1:60 Ag/Au and 5:1 Cu/Au conversion ratios                   (4) Calculated based on consolidated management accounts. Unaudited

·     First quarter operating performance was strong, with gold equivalent production growing 41% year-on-year to 203 Koz on the back of strong improvements at Omolon and Dukat.  Additional 32 Koz of payable gold is contained within concentrate produced at Albazino during the quarter.

·     Gold production in the quarter increased 24% y-o-y to 101 Koz while silver production jumped 74% to 5.7 Moz.

·     Processing of high-grade ore from Sopka commenced at Omolon with approx. 318 Kt of ore trucked to the Kubaka mill on the winter road to date.

·     Albazino processing plant reached design recoveries and throughput in March.

·     Subsequent to the end of the period, on April 5, first dore bar containing 263 oz of gold was poured at the Amursk POX facility.

·     The Company is well on track to deliver on FY2012 gold equivalent production guidance of 1 Moz.

"The first quarter results, including successful start-up of production at the Amursk POX plant, achievement of design recoveries at Albazino, and smooth operation of winter road at Omolon, give us further confidence in achieving our ambitious 2012 targets," said Vitaly Nesis, CEO of Polymetal.

"The effect of these achievements will be fully visible through meaningful production growth in the second quarter. Further during the year, we will be focusing on timely ramp-up of the POX plant, and the start-up of Mayskoye concentrator."

DUKAT OPERATIONS

	3 months ended Mar 31,		% change
	2012	2011
MINING
Dukat
Waste mined, Kt	317	155	+104%
Underground development, m	6,035	3,029	+99%
Ore mined, Kt	372	276	+35%
Open-pit	71	46	+55%
Underground	301	230	+31%
Goltsovoye
Underground development, m	910	884	+3%
Ore mined (underground), Kt	6	18	-67%
Lunnoye + Arylakh
Waste mined, Kt	742	571	+30%
Underground development, m	915	371	+147%
Ore mined, Kt	90	69	+30%
Open-pit	42	38	+10%
Underground	48	31	+54%
PROCESSING
Dukat
Ore processed, Kt	385	280	+37%
Head grades
Gold, g/t	0.6	0.8	-28%
Silver, g/t	360	378	-5%
Recovery3
Gold	79.3%	73.3%	+8%
Silver	81.6%	74.9%	+9%
Production
Gold, Koz	5.8	3.9	+48%
Silver, Moz	3.7	1.9	+99%
Lunnoye
Ore processed, Kt	85	68	+26%
Head grades
Gold, g/t	1.5	1.2	+25%
Silver, g/t	424	390	+9%
Recovery3
Gold	92.1%	91.5%	+1%
Silver	87.6%	87.3%	+0%
Production
Gold, Koz	3.7	2.4	+56%
Silver, Moz	1.0	0.7	+34%
TOTAL PRODUCTION
Gold, Koz	9.5	6.3	+51%
Silver, Moz	4.7	2.6	+80%

Quarterly silver production at the Dukat operations increased 80% year-on-year driven by a strong improvement in throughput and recovery at the Omsukchan concentrator. 

At Dukat underground mine, development increased almost twofold as increased ore tonnage is sourced mainly from underground.

Ore mining started at Nachalny-2 satellite pit at Dukat leading to a significant increase in the amounts of material moved.

At Goltsovoye, underground mining concentrated on ore body access in anticipation of intensive stope mining in the second quarter.

At Lunnoye, grades processed improved significantly as underground dilution was reduced meaningfully following the change of the mining method from sub-level open stoping to cut-and-fill.

Lunnoye processing plant demonstrated record throughput following the replacement of the SAG mill shell in the Q3 2011.

KHAKANJA

	3 months ended Mar 31,		% change
	2012	2011
MINING
Khakanja + Yurievskoye
Waste mined, Kt	1,788	2,546	-30%
Underground development, m	443	330	+34%
Ore mined, Kt	324	82	+296%
Open-pit	287	81	+257%
Underground	37	1	NM
Avlayakan
Waste mined, Kt	355	214	+66%
Ore mined (open pit), Kt	9	15	-42%
PROCESSING
Ore processed, Kt	149	158	-6%
Grade
Gold, g/t	3.6	4.6	-20%
Silver, g/t	259	158	+64%
Recovery1
Gold	94.9%	94.7%	+0%
Silver	77.4%	73.2%	+6%
TOTAL PRODUCTION
Gold, Koz	16.1	21.7	-26%
Silver, Moz	0.9	0.6	+53%
Notes:     (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)

Gold and silver production at Khakanja decreased by 26% and increased by 53%, respectively, year-on-year as most ore processed in the quarter came from the pit 3 at Khakanja with low gold grades and elevated silver grades. Higher production levels in Q4 2011 compared to Q1 2012 were further influenced by processing of high grade ores from Avlayakan and Sopka completed in 2011.

At Avlayakan, open pit mining has been completed in the Central pit with current activity concentrated on the stripping at the North-eastern pit. Shipping of 50 Kt of high-grade ore from Avlayakan to Khakanja is planned for in 2012.

At Ozerny, preparation for mining works is in full swing.  Winter road and two ice bridges have been constructed, equipment and materials delivered, construction of temporary camp and infrastructure facilities have also been completed.  Open-pit mining at Ozerny is expected to start in Q4 of 2012.

VORO

	3 months ended Mar 31,		% change
	2012	2011
MINING
Voro
Waste mined, Kt	2,632	2,744	-4%
Ore mined (open pit), Kt	184	199	-8%
Degtyarskoye
Waste mined, Kt	273	416	-34%
Ore mined (open pit), Kt	21	59	-64%
Fevralskoye
Waste mined, Kt	65	72	-10%
Ore mined (open pit), Kt	-	4	-100%
PROCESSING
Voro Heap Leach
Ore stacked, Kt	-	-	n/a
Gold head grade, g/t	-	-	n/a
Gold recovery1	n/a	n/a	n/a
Gold production, Koz	4.9	5.1	-5%
Voro CIP
Ore processed, Kt	219	211	+4%
Gold head grade, g/t	5.6	5.5	+2%
Gold recovery	78.6%	78.8%	-0%
Gold production, Koz	27.2	23.5	+16%
TOTAL PRODUCTION
Gold, Koz	32.1	28.6	+12%
Silver, Moz	0.033	0.03	+9%
Notes: (1) Heap leach recoveries are meaningful for full year only due to the influence of seasonality

Gold production at Voro grew 12% year-on-year as both grade processed and throughput at the CIP increased modestly. 

Mining at Degtyarskoye is expected to be fully completed by the end of this year with open pit reclamation taking additional six months.

Trial mining at Fevralskoye indicated that the nature of mineralization makes sizable open-pit mining at the deposit unlikely. The company is currently reviewing strategic options in regard to this asset with the decision expected to be made in Q2 of 2012.

VARVARA

	3 months ended Mar 31,		% change
	2012	2011
MINING
Waste mined, Kt	5,857	6,526	-10%
Ore mined (open pit), Kt	917	768	+19%
PROCESSING
Flotation
Ore processed, Kt	227	230	-1%
Grade
Gold, g/t	1.4	1.2	+14%
Copper	0.80%	0.90%	-11%
Recovery1
Gold	54.6%	62.6%	-13%
Copper	90.5%	90.9%	-0%
Production
Gold (in concentrate), Koz	5.1	5.5	-8%
Copper (in concentrate), t	1,555	1,744	-11%
Leaching
Ore processed, Kt	680	601	+13%
Gold head grade, g/t	1.2	1.0	+18%
Gold recovery1	86.8%	79.4%	+9%
Gold production (in dore), Koz	19.5	13.1	+49%
TOTAL PRODUCTION
Gold, Koz	24.6	18.6	+32%
Copper, t	1,555	1,744	-11%
Notes:     (1) Technological recovery, includes gold and copper within work-in-progress inventory

At Varvara, year-on-year gold production grew 32% on the back of head grades growth, with all other operating parameters relatively unchanged. Copper production declined by 11% mainly as a result of copper grade declining in accordance with the mine plan.

Gold recovery in the flotation circuit declined by 13 percentage points as the mining centered on relatively complicated mineralization in the eastern part of the pit.

OMOLON OPERATIONS

	3 months ended Mar 31,		% change
	2012	2011
MINING
Sopka
Waste mined, Kt	1,721	591	+191%
Ore mined (open pit), Kt	400	30	NM
Ore trucked to Kubaka, Kt	300	29	NM
Birkachan
Waste mined, Kt	1,552	1,577	-2%
Ore mined (open pit), Kt	485	199	+144%
Tsokol
Waste mined, Kt	304	0	n/a
Ore mined (open pit), Kt	12	0	n/a
PROCESSING
Kubaka Mill
Ore processed, Kt	172	135	+27%
Gold head grade, g/t	4.1	1.7	+136%
Gold recovery	93.6%	89.4%	+5%
Gold production, Koz	18.8	6.5	+188%
TOTAL PRODUCITON
Gold, Koz	18.8	6.5	+188%
Silver, Moz	0.04	0.01	+190%
Notes:     (1) Heap leach recoveries are meaningful for full year only due to the influence of seasonality

Gold production at Omolon almost tripled year-on-year driven mostly by grade improvement as mining at Birkachan open pit accessed higher-grade material at the bottom of the pit.

The winter road used to truck high grade ore (average grade of approx. 8.4 g/t gold and 270 g/t silver) from Sopka to Kubaka operated well with more than 300 Kt trucked since the beginning of operation in late December 2011 (compared to the total of 44 Kt trucked during the full year 2011).

High-grade ore processing using the newly commissioned Merrill Crowe circuit commenced in late March, which is expected to result in significant production increases in Q2 of 2012.

Mining at Sopka intensified, with an almost three-fold increase year-on-year as mining accesses deeper levels of mineralization.

Open-pit mining at Tsokol deposit, only 1 km away from the Kubaka mill, has started with the objective to produce 60 Kt of ore at 4 g/t gold in 2012.

ALBAZINO-AMURSK

	3 months ended Mar 31,		% change
	2012	2011
MINING
Waste mined, Kt	3,150	3,341	-6%
Ore mined (open pit), Kt	280	153	+83%
PROCESSING
Ore processed, Kt	278	-	n/a
Gold head grade, g/t	4.2	-	n/a
Gold recovery1	84.1%	-	n/a
Concentrate produced, Kt	21.8	-	n/a
Concentrate gold grade, g/t	45.4	-	n/a
Gold in concentrate, Koz2	31.7	-	n/a
TOTAL PRODUCITON
Gold, Koz	-	-	-
Notes:     (1) To concentrate                 (2) For information only; not considered as gold produced and therefore not reflected in the table representing total production

Albazino has achieved its design recovery level in March and produced 21.8 Kt of concentrate with 31.7 Koz of contained gold.

The concentrate was trucked to Amursk for further processing. The concentrate stockpiled now totaling 61 Koz of contained gold is not included in total metal production volumes.  It is expected that some concentrate will be sold to a Chinese off-taker in Q2 and Q3 of this year.

The POX plant has successfully poured its first gold on April 5th and is expected to reach design parameters by the end of the third quarter of 2012.

MAYSKOYE

	3 months ended Mar 31,		% change
	2012	2011
MINING
Underground development, m	2,856	3,065	-7%
Ore mined (underground), Kt	12	20	-41%

Underground development at Mayskoye is continuing at a stable pace with the commencement of stoping scheduled for the Q4 of 2012 to coincide in time with the planned start-up of the concentrator.

On March, 12 Mayskoye production site has been connected to the regional power grid. This is expected to lead to a material decline in cash costs of production once the operation is up and running at full throughput.

Equipment installation as well as the laying of pipes and ducts has progressed during the quarter.  It is currently expected that the concentrator will be started up in December of 2012.

CONFERENCE CALL AND WEBCAST

Polymetal will hold a conference call and webcast on Monday, April 16, 2012 at 5:30pm Moscow time (2:30pm London time; 9:30am New York time).

To participate in the call, please dial:

810 8002 198 4011 (toll-free from Russia), or

0800 358 5256 (toll-free from the UK), or

1 877 941 6013 (toll-free from the US), or

[phone] (from outside the UK, the US and Russia), or follow the link:

http://www.cyber-presentation.de/cgi-bin/visitors.ssp?fn=visitor&id=1713

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

Recording of the call will be available on Polymetal's website (www.polymetal.ru) and at the above link immediately after the call. It is also will be available at 0800 358 9369 (toll-free from the UK) or [phone] (from outside the UK), access code 4531507#, from 7:30pm Moscow time Monday, April 16, till 11:59pm Moscow time Monday, April 23, 2011.

Enquiries

Media		Investor Relations
College Hill Leonid Fink Tony Friend	[phone]	Polymetal Pavel Danilin Maxim Nazimok	[phone]
Joint Corporate Brokers
Morgan Stanley Edward Knight Sandip Patodia	[phone]	Canaccord Genuity John Prior 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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