DJ Polymetal International plc: Ore Reserves, Mineral Resources and Exploration update as at 1 January 2019
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Polymetal International plc (POLY)
Polymetal International plc: Ore Reserves, Mineral Resources and Exploration update as at 1
January 2019
08-March-2019 / 10:00 MSK
Dissemination of a Regulatory Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Release time IMMEDIATE LSE, MOEX: POLY / ADR: AUCOY
Date 8 March 2019
Polymetal International plc
Ore Reserves, Mineral Resources and Exploration update as at 1 January 2019
Polymetal International plc announces its exploration update for the year ended 31 December 2018,
and reports its Ore Reserves and Mineral Resources as at 1 January 2019 in accordance with the
JORC Code (2012)1.
"In 2018, Polymetal significantly expanded its mineral inventory on the back of a twofold
increase in Ore Reserves at Nezhda, a 5-year life-of-mine extension at Mayskoye and confirmation
of a world-class resource at Prognoz", - said Vitaly Nesis, Group CEO of Polymetal, commenting on
the results. "In 2019 we will continue to focus on extending the life-of-mine at producing
assets".
2018 HIGHLIGHTS
? Group Ore Reserves increased by 15% year-on-year and are now estimated at 24.0 Moz of gold
equivalent (GE). The main drivers were the successful resource-to-reserve conversion at
Mayskoye and the completion of a revised estimate at Nezhda following the Company's
consolidation of 100% ownership in the property. The share of gold in Ore Reserves increased to
93%.
? Mineral Resources (in addition to Ore Reserves) grew 44% year-on-year to 26.3 Moz of GE on
the back of an initial Mineral Resource estimate at Prognoz and Bolshevik (Kyzyl), as well as
the revised estimate at Nezhda. The share of gold in Mineral Resources stands at 80%, silver at
17%.
? The average grade in Ore Reserves remained largely unchanged over the previous year at 3.8
g/t of GE and remains one of the highest in the sector. The average grade in Mineral Resources
increased 8% to 5.1 g/t of GE on the back of high-grade additions at Nezhda and Prognoz.
? In 2018, the Company continued to use conservative price assumptions of US$ 1,200/oz for gold
and lowered the silver price from US$ 16/oz to US$ 15/oz.
? GE Ore Reserves per share grew 6% year-on-year.
? Polymetal completed 350 km of exploration drilling in 2018.
1) Hereinafter Ore Reserves and Mineral Resources are reported as from continuing operations
(Kapan mine sold in January 2019 was classified as a discontinued operation as at 1 January
2019).
Ore Reserves and Mineral Resources summary (1)(2)
1 January 2019 (1) 1 January 2018 Change, %
Ore Reserves (Proved 24.0 20.9 +15%
+ Probable), gold
equivalent Moz
Gold, Moz 22.3 18.4 +21%
Silver, Moz 135.0 158.0 -15%
Copper, Kt 49.1 81.6 -40%
Zinc, Kt (2) 18.1 85.8 -79%
Average reserve 3.8 3.9 -2%
grade, g/t
Ore Reserves per 0.05 0.05 +6%
share, GE oz/per
share
Mineral Resources 26.3
(Measured +
Indicated +
Inferred), gold
equivalent Moz 18.2 +44%
Gold, Moz 21.0 15.7 +34%
Silver, Moz 354.9 109.1 +225%
Copper, Kt 73.6 147.9 -50%
Zinc, Kt 42.6 221.8 -81%
Lead, Kt 197.8 - +100%
Average resource 5.1 4.7 +8%
grade, g/t
1) Ore Reserves and Mineral Resources from continuing operations (Kapan mine sold in January 2019
classified as a discontinued operation as at 1 January 2019).
2) Mineral Resources are additional to Ore Reserves. Ore Reserves of Lead are not presented due
to the immateriality and are not included in the calculation of the gold equivalent. PGM Mineral
Resources are presented separately and are not included in the calculation of the gold
equivalent. Discrepancies in calculations are due to rounding.
2019 OUTLOOK
In 2019, Polymetal will continue to invest in both near-mine and green-field exploration
projects. One key area of focus will be the implementation of new exploration techniques
including airborne geophysics and 2-D seismics. The Company is also evaluating the benefits of
investing in junior explorers through strategic cooperation agreements.
The key objectives are as follows:
? Complete a full revaluation of Ore Reserves and Mineral Resources at Kyzyl based on actual
operating statistics and additional exploration results
? Achieve upgrade of inferred resources into higher categories and/or resource-to-reserve
conversion at the following properties:
? Saum and Pescherny at Voro
? Levoberezhny at Svetloye
? Perevalnoye and Lunnoye deep horizons at Dukat
? Elevator at Varvara
? Flanks and smaller ore bodies at Nezhda
? Eastern extension of Bakyrchik at Kyzyl
? Prepare updated Mineral Resource estimates at Prognoz and Viksha
? Prepare an updated Ore Reserve and Mineral Resource estimate at Veduga
Ore Reserves and Mineral Ore Reserves Mineral Resources
Resources by metal (excluding
Kapan) (1)
Gold 93% 80%
Silver 6% 17%
Copper 1% 2%
Zinc 0% 0%
Lead - 1%
Total 100% 100%
1) Ore Reserves and Mineral Resources from continuing operations (Kapan mine sold in January 2019
was classified as a discontinued operation as at 1 January 2019). Discrepancies in calculations
are due to rounding.
Ore Reserves reconciliation, gold equivalent, Moz (1)(2)
Ore Reserves, 01.01.2018 20.9
Metals to gold equivalent conversion price -0.1
ratio change (1)
Depletion -1.8
Revaluation +1.9
Change in ownership (continuing operations) +3.7
Ore Reserves, 01.01.2019 24.5
Operations classified as discounted after -0.5
the reporting date
(Kapan mine sold in January 2019)
Ore Reserves from continuing operations 24.0
Net change +3.2 +15%
1) Discrepancies in calculations are due to rounding.
2) For the gold equivalent conversion ratios and applicable processing technology please refer to
the Appendix.
Mineral Resources and Ore Reserves as at 1 January 2019 (excluding Kapan) (1)
Tonnage Grade Content
Mt GE, g/t GE, Moz
Mineral
Resources
Measured 20.2 2.8 1.8
Indicated 48.1 4.9 7.6
Measured 68.3 4.3 9.4
+
Indicated
Inferred 91.6 5.7 16.9
Measured 159.9 5.1 26.3
+
Indicated
+
Inferred
Ore
Reserves
Proved 67.0 2.6 5.7
Probable 128.2 4.5 18.4
Proved + 195.2 3.8 24.0
Probable
1) Ore Reserves and Mineral Resources from continuing operations (Kapan mine sold in January 2019
was classified as a discontinued operation as at 1 January 2019). Mineral Resources and Ore
Reserves in accordance with the JORC Code (2012). Mineral Resources are additional to Ore
Reserves. Ore Reserves for Lead are not presented due to their immateriality and are not included
in the calculation of the gold equivalent. A detailed table of Mineral Resources and Ore Reserves
on a by-mine basis are presented below. PGM Mineral Resources are presented separately and are
not included in the calculation of the gold equivalent. Any discrepancies in calculations are due
to rounding.
Exploration areas and volumes (mine site Drilling, km
exploration excluded) (1)
2018 2017
Brownfield
Kyzyl 7.3 8.3
Albazino 46.6 30.2
Mayskoye 29.5 33.4
Varvara 53.2 108.5
Varvara - 35.6
Komar 15.9 59.3
Elevator 15.5 12.1
Other 21.8 1.5
Voro 30.8 11.0
Voro flanks 12.5 3.1
Tamunier - 1.0
Pescherniy 18.3 6.8
Dukat hub 27.6 28.8
Dukat flanks 8.5 15.8
Lunnoye flanks 4.7 2.3
Primorskoye 8.6 6.9
Terem 0.7 3.8
Perevalnoye 5.1 -
Omolon hub 21.3 18.4
Olcha 4.5 2.6
Yolochka - 6.7
Irbychan 6.0 4.7
Nevenrekan 5.2 4.4
Other 5.6 -
Svetloye 5.9 17.2
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Svetloye 2.2 2.0
Levoberezhny 3.7 15.2
Okhotsk (sold December 2018) 15.9 30.8
Subtotal 238.3 286.7
Greenfield
Yakutia 85.7 70.9
Nezhda 25.9 33.7
Prognoz 59.8 37.3
Karelia (Viksha) 14.7 39.6
Urals 11.4 22.9
Other - 0.8
Subtotal 111.9 134.2
Total 350.2 420.9
1) Discrepancies in calculations are due to rounding.
EXPLORATION RESULTS
In 2018, exploration efforts were mostly focused on exploration projects in close proximity to
the Company's producing assets in the Magadan, Sverdlovsk and Khabarovsk regions, and on new
assets in Yakutia and Karelia. Exploration activities were carried out on 51 licensed properties
with 350 km of drilling completed in the course of 2018.
Kyzyl
? At Bolshevik (7 km from the concentrator), the Company completed an initial Mineral Resource
estimate comprising 704 Koz of gold with an average grade of 3.4 g/t.
? At Bakyrchik, exploration activities in 2018 were carried out with a goal to prepare an
updated Ore Reserve estimate in 2019. Exploration drilling at the Promezhutochniy and Glubokiy
Log ore zones (41 drill holes totaling 7.3 km) resulted in an increase in mineral resources
according to the sum of the Inferred and Indicated categories.
? In 2019, Polymetal plans to complete a full revaluation of Ore Reserves and Mineral Resources
at the Bakychik deposit based on actual operating data and fresh exploration results.
Albazino
? In 2018, exploration activities were focused on preparing open-pittable reserves at the
Farida and Ekaterina 1&2 ore zones for mining. Drilling volumes increased 54% year-on-year,
totaling 46.6 km.
? A 33% increase in additional mineral resources was achieved at Albazino, adding 403 Koz of
gold. Total Mineral Resources now comprise 1.6 Moz of GE with an average grade of 4.6 g/t.
? In 2019, the Company plans to carry out prospecting and evaluation activities at the Syransk
and Urkachik properties.
Mayskoye
? In 2018, Polymetal continued its exploration efforts at Mayskoye, adding 777 Koz of gold to
reserves as a result of successful resource-to-reserve conversion and extending its life of
mine by 5 years. The updated Ore Reserve estimate now comprises 10 Mt of ore at 6.9 g/t
containing 2.2 Moz of gold. This represents a sizeable increase over the previous estimate with
a 49% increase in tonnage, a 5% improvement in grade and a 55% jump in gold contained.
? Additional Mineral Resources at Mayskoye as at 1 January 2019 are estimated at 2.8 Moz of
gold with an average grade of 11.4 g/t.
? In 2019, the Company continue exploration with the goal to further extend its life-of-mine.
Exploration activities will focus on delineating ore bodies and further resource growth.
Varvara hub
? In 2018, at Komarovskoye, exploration efforts were mostly focused on the Elevator property, a
new prospect situated 8 km east of the Komar deposit. The Company drilled a total of 31.4 km at
Komarovskoye and completed the delineation of gold ore bodies at the northern and southern
flanks. In 2019, exploration activities will be focused on the western flanks of the Elevator
property.
? At Komar, additional Mineral Resources increased by 225 Koz of GE on the back of lower
stripping and mining costs, and consequently, expansion of the open-pit.
? At the East Tarutin gold-copper deposit (owned by Polymetal since 2018), the Company intends
to restart exploration activities with the goal to complete a JORC-compliant Ore Reserve
estimate in 1H 2020. This will require more than 32 km of drilling at the property in 2019.
Voro hub
? In 2018, the Company increased Voro's mineral resources by 19% to 1.2 Moz GE, primarily
driven by additions from the Saum and Pescherniy properties. This will allow for an extension
of Voro's life of mine and halt the production decline.
? At Pesherny (30 km from the CIP plant), exploration activities drove a 12% increase in
Mineral Resources, which now comprise 505 Koz of gold with an average grade of 7.7 g/t. In
2019, the Company plans to complete 10 km of drilling with the goal to upgrade open-pit and
underground resources to the Indicated category.
? At Saum, the Company achieved a twofold increase in Mineral Resources, adding 400 Koz of GE
with an average grade of 9.8 g/t. In 2019, efforts will focus on 0.8 km of in-fill drilling of
conductivity anomalies, and the completion of geophysical surveys aimed at the discovery of new
ore bodies.
? At the Voro open pit, exploration was mostly focused on the assessment of mineralization
below the ultimate pit floor at the northern flanks of the property where ore bodies are not
delineated down-dip and along strike. As a result, new ore bodies were discovered, and known
ore bodies were traced. In 2019, the Company plans to finalize the assessment of mineralization
below the pit.
Dukat hub
? At Lunnoye, depletion was partially offset by reserve additions of 37 Koz of GE, which was
mainly driven by positive exploration results at the south-western flank of ore zone 9.
? In 2019, Polymetal plans to complete the assessment of Perevalnoye and prepare an updated
Mineral Resource and Ore Reserve estimate for the property. Prospecting at the Dukat flanks and
deeper levels of Lunnoye is set to continue. The Company also plans to complete an
aerogeophysical survey at the Dukat ore field and its flanks with a total area of approximately
1000 km2.
Omolon hub
? At Olcha, Mineral Resources (including Ore Reserves) increased by 39 Koz of GE as a result of
the 2018 exploration campaign.
? At Nevenrekan, 62 Koz of GE were added to Mineral Resources, with the updated estimate now
comprising 164 Koz of GE with an average grade of 12.4 g/t. In 2019, the Company plans to
complete the delineation of ore body 1 and further prospecting activities aimed at identifying
ore bodies under basalt.
? In 2019, Polymetal plans to complete prospecting activities at the north-western flank of the
Tsokol property and prepare Yolochka for the start of open-pit mining.
Svetloye
? At Svetloye, an increase in additional Mineral Resources was achieved, adding 86 Koz of gold.
In 2019, the Company plans to undertake additional prospecting drilling and trenching at the
flanks of the Svetloye deposit.
? At Levoberezhny (35 km from Svetloye), the results of in-fill drilling confirmed the
continuity of mineralisation and the viability of using heap-leaching to recover gold.
Nezhda
? In 2018, exploration activities were focused on preparing open-pit reserves in ore zone 1 for
open-pit mining. A total of 26 km was drilled at the property.
? An updated Ore Reserve and Mineral Resource estimate was prepared in accordance with the JORC
Code (2012) as of April 1, 2018:
? Mineral Resources (inclusive of Ore Reserves) comprise of 12.4 Moz of gold equivalent
("GE") with an average GE grade of 4.5 g/t, a 1.6 Moz increase compared with the previous
estimate.
? The estimate of Proved and Probable Ore Reserves increased by 2.4 Moz of GE and now
contains 38 Mt at an average grade of 3.6 g/t GE for 4.4 Moz of GE contained.
? Open-pit reserves increased by 55% from 2.0 Moz to 3.1 Moz; open-pit reserves now comprise
70% of total reserves.
? The FS envisions 25 years of production from 2021 to 2045. The life of mine plan includes
19 years of conventional open-pit mining from 2019 to 2037, and 17 years of production from
underground ore from 2029 to 2045.
? The estimate has been updated with 217 additional drill holes (39 km) and is based on data
from a total 64,708 m of diamond drilling completed by Polymetal between 2015 and 2018 in
addition to the 339,392 m of drilling completed by previous owners. Two hundred and
ninety-four mineralised intersections were identified based on fire assay results.
? Mineral Resources for the open pit were estimated up to a depth of 250 m from the surface,
with the underground portion estimated up to a depth of 440 m from the surface.
Prognoz
? In 2018, Polymetal increased its interest in Prognoz to 100% and completed 60 km of in-fill
drilling that resulted in an updated JORC-compliant Mineral Resource estimate. The Mineral
Resource estimate was prepared by Polymetal and independently audited by SRK Consulting
(Russia) Ltd, effective as at 1 August 2018. In-fill drilling results exceeded our expectations
and strengthened our belief that Prognoz may succeed Dukat as one of the largest primary silver
deposits in the world. The new estimate incorporates data from 532 additional diamond drill
holes (71,2 km) completed by Polymetal in 2017-2018.
? Compared with the previous Mineral Resource estimate completed by Micon in 2009, Polymetal
added lead and used higher cut-off grades together with conservative extrapolation parameters
to ensure a more robust and reliable estimate. As a result, the new estimate in comparison with
the previous one has the following key characteristics:
? Silver equivalent contained totaled 256 Moz at 789 g/t
? Pure silver contained decreased by 19% from 293 Moz to 237 Moz
? Average silver grade increased by 25% from 586 g/t to 731 g/t
? Average vein width increased by 15% from 1.9 m to 2.2 m
? The share of open-pit resources comprises 46%
? The share of resources within the Indicated category increased from 50% to 61%
? The share of resources in two largest veins (Main and Swamp) increased from 73% to 80%
? In 2019 Polymetal plans to complete:
? 24.3 km of diamond drilling to upgrade the existing inferred resources to indicated
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