DJ Polymetal: Ore Reserves, Mineral Resources and Exploration update as at 1 January 2020
Polymetal International plc (POLY)
Polymetal: Ore Reserves, Mineral Resources and Exploration update as at 1 January 2020
27-Feb-2020 / 10:00 MSK
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Release time IMMEDIATE LSE, MOEX: POLY / ADR: AUCOY
Date 27 February 2020
Polymetal International plc
Ore Reserves, Mineral Resources and Exploration update as at 1 January 2020
Polymetal International plc announces its Ore Reserves and Mineral Resources as at 1 January 2020 in
accordance with the JORC Code (2012)[1] and exploration update for the year ended 31 December 2019.
"Significant growth in Ore Reserves at Kyzyl and a two-fold increase in reserves at Veduga were the
key drivers behind the Group's Ore Reserves extension", said Vitaly Nesis, Group CEO of Polymetal.
"In 2020, we will focus on reserves and resources updates at some of our key development projects and
will continue exploration activities to extend the life of existing mines".
2019 HIGHLIGHTS
? Group Ore Reserves increased by 5% year-on-year to 25.2 Moz of gold equivalent (GE) due to
successful exploration results with the subsequent re-evaluation of Ore Reserves at Kyzyl, Veduga,
Kutyn and initial estimate at Primorskoye (Dukat hub). GE Ore Reserves per share also grew by 5%.
? Mineral Resources (additional to Ore Reserves) declined by 4% year-on-year to 25.4 Moz of GE. The
Lichkvaz disposal and conversion of Mineral Resources to Ore Reserves at Kyzyl, Primorskoye and
Veduga were largely compensated by initial Mineral Resources estimate of Elevator (Varvara hub) and
increase of resources at Albazino and Svetloye.
? The average grade in Ore Reserves remained largely unchanged over the previous year at 3.7 g/t of
GE. It continues to be one of the highest within the sector globally. The average Mineral Resources
grade also remained stable at 5.2 g/t of GE.
? In 2019, the Company maintained conservative price assumptions for both Ore Reserve and Mineral
Resource estimates at US$ 1,200/oz for gold and US$ 15/oz for silver.
? Polymetal completed 198 km of exploration drilling in 2019. Drilling expenses amounted to US$
18.1 million.
Ore Reserves and Mineral Resources summary (1), (2)
1 January 2020 1 January 2019 Change, %
Ore Reserves (Proved + 25.2 24.0 +5%
Probable), gold
equivalent Moz
Gold, Moz 23.7 22.3 +6%
Silver, Moz 116.0 135.0 -14%
Average reserve grade, 3.7 3.8 -2%
g/t
Ore Reserves per share, 0.054 0.051 +5%
GE oz/per share
Mineral Resources 25.4 26.3 -4%
(Measured + Indicated +
Inferred), gold
equivalent Moz
Gold, Moz 20.3 21.0 -3%
Silver, Moz 337.7 354.9 -5%
Average resources grade, 5.2 5.1 +1%
g/t
1) Ore Reserves and Mineral Resources from continuing operations. Kapan mine was classified as a
discontinued operation as at 01.01.2019 and is not included in this estimate; Lichkvaz, Oroch,
Sopka Kvartsevaya, Dalneye and Irbychan mines were classified as discontinued operations as at
01.01.2020 and are not included in this estimate.
2) Mineral Resources are additional to Ore Reserves. Total Ore Reserves and Mineral Resources
numbers include base metals (copper, zinc and lead). 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.
2020 OUTLOOK
In 2020, Polymetal will continue to invest in both near-mine and greenfield exploration projects in
order to increase Ore Reserves.
The key objectives are as follows:
? Prepare initial Ore Reserve estimate for East Bakyrchik (Kyzyl)
? Prepare initial Ore Reserve estimate for Prognoz
? Complete Ore Reserve estimate update at Veduga
? Prepare initial Ore Reserve estimate for Voro refractory ore
? Prepare initial Mineral Resource estimate at Talgiy (Albazino)
? Upgrade Mineral Resources categories at Elevator.
The Company also plans to further develop its cooperation with junior exploration companies and enter
into several new strategic partnerships. In 2020, the results of the first field season of the work
of existing junior partners are expected.
Ore Reserves and Mineral Resources structure by metal as at 1 January 2020 (1)
Ore Reserves Mineral Resources
Gold 94% 80%
Silver 5% 17%
Base metals 1% 3%
Total 100% 100%
1) Ore Reserves and Mineral Resources from continuing operations. Lichkvaz, Oroch, Sopka
Kvartsevaya, Dalneye and Irbychan mines were classified as discontinued operations as at 01.01.2020
and are not included in this estimate.
Ore Reserves reconciliation, GE Moz (1)
Ore Metals Depletion Revaluation Change Initial Ore
Reserv to gold (2) in Ore Reserv
es, equival ownershi Reserve es,
01.01. ent p (3) estimate 01.01.
2019 convers 2020
ion
price
ratio
change
(1)
24.0 +0.1 -1.8 +2.5 -0.1 +0.5 25.2
1) For the gold equivalent conversion ratios and applicable processing technology, please refer to
the Appendix.
2) Including the effect of the expected sale and stockpiles write-off of Sopka Kvartsevaya (-199
Koz) and Dalneye (-58 Koz) deposits.
3) Lichkvaz sale.
Ore Reserves and Mineral Resources as at 1 January 2020 (1)
Tonnage Grade Content
Mt GE, g/t GE, Moz
Ore Reserves
Proved 64.3 2.5 5.2
Probable 145.3 4.3 20.0
Proved + Probable 209.5 3.7 25.2
Mineral Resources
Measured 16.5 3.2 1.7
Indicated 44.8 5.0 7.1
Measured + Indicated 61.2 4.5 8.8
Inferred 91.7 5.6 16.5
Measured + Indicated + Inferred 152.9 5.2 25.4
1) Ore Reserves and Mineral Resources from continuing operations. Lichkvaz, Oroch, Sopka
Kvartsevaya, Dalneye and Irbychan mines were classified as discontinued operations as at 01.01.2020
and are not included in this estimate. Mineral Resources and Ore Reserves are reported in
accordance with the JORC Code (2012). Mineral Resources are additional to Ore Reserves. A detailed
table of Mineral Resources and Ore Reserves on a by-mine basis are presented below. PGM Mineral
Resources are presented separately and not included in the calculation of the gold equivalent. Any
discrepancies in calculations are due to rounding.
Exploration areas and volumes (mine site exploration excluded) (1)
Drilling, km
2019 2018
Brownfield
Kyzyl 5.3 7.3
Albazino 13.2 26.8
Mayskoye - 29.5
Varvara hub 45.3 53.2
Voro hub 23.3 32.9
Omolon hub 11.8 21.3
Svetloye hub 2.8 5.9
Dukat hub 0.6 27.6
Okhotsk (sold December 2018) - 15.9
Subtotal 102.4 220.6
Greenfield
Yakutia 43.1 85.7
Nezhda 1.8 25.9
Prognoz 41.4 59.8
Veduga 19.2 -
Kutyn 16.1 19.8
Viksha 11.9 14.7
Urals 3.9 9.3
Other 1.9 -
Subtotal 96.1 129.6
Total 198.5 350.2
1) Any discrepancies in calculations are due to rounding.
EXPLORATION RESULTS
In 2019, exploration was focused on areas in close proximity to the Company's existing assets.
Exploration activities were carried out at 52 licensed properties. 13 new licenses were obtained for
geological studies, exploration and production of gold, silver, PGMs and copper. In total, 198 km of
drilling was completed.
Kyzyl
? The updated Ore Reserve and Mineral Resources estimate for Bakyrchik conducted in 2019
incorporates data from additional 239 diamond drill holes, 41.5 km of drilling, which resulted in
the extension of mineralization zones within the existing ore bodies and update of the resource
model. According to the updated estimate, open-pit reserves now equal to 3.9 Moz of gold with an
average grade of 5.6 g/t. Underground reserves increased to 4.3 Moz with an average grade of 7.1
g/t. Additional Mineral Resources declined by 374 Koz to 3.5 Moz with an average grade of 5.4 g/t
due to conversion to Ore Reserves. Life of open-pit increased from 10 years to 14 years.
? In 2019, Polymetal continued exploration drilling at Kyzyl's second ore zone, East Bakyrchik
(Promezhutochniy and Glubokiy Log sections), to study the possibility of the open-pit expansion. 24
drill holes totaling 5.3 km of drilling were completed resulting in clarification of ore bodies'
contours and the mineralization boundaries.
? In 2020, the Company plans to update Ore Reserve and Mineral Resource estimate to include the
results of East Bakyrchik evaluation.
Albazino
? In 2019, exploration activities were focused on additional prospecting of the Mineral Resources
at Ekaterina 2 mine. Additional Mineral Resources increased by 159 Koz to 1.8 Moz GE with an
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average grade of 4.6 g/t
? Exploration was carried out at the Talgiy section of the Urkachik area (47 thousand m3 of
trenches, 4.7 km of drilling). In 2020, Polymetal plans to continue exploration drilling at Talgiy
in order to prepare initial Mineral Resource estimate. Additional resources are expected to be
established on the flanks of the deposit due to the identification of new ore bodies and evaluation
of new prospective areas (Pikhtovy site).
Varvara hub
? At Elevator, 4.8 km of drilling was completed, aiming to explore primary gold ore for open-pit
mining. Based on exploration activity in 2019 and previous years, an initial Mineral Resource
estimate was prepared. Resources amounted to 402 Koz of gold with an average grade of 1.8 g/t.
Inclusion of Elevator's resources offset the decrease in resources at Varvara and Komar
attributable to changes in the boundaries of the Mineral Resources. Total hub's additional Mineral
Resources decreased by 150 Koz to 1.5 Moz of GE.
? At Vostochno-Tarutinsky gold-copper deposit, 28.3 km were drilled, including 21.7 km of
exploration drilling, in order to prepare an initial Mineral Resource estimate.
? In 2020, the Company plans to continue exploration on the flanks of the Elevator deposit aiming
to upgrade the categories of Mineral Resources and convert them into Ore Reserves.
Voro hub
? Additional Mineral Resources of Voro hub remained mostly unchanged over the previous year at 1.3
Moz of GE with an average grade of 4.9 g/t.
? At Voro, a total of 10.5 km of exploration drilling was completed in 2019 to estimate underground
mineral resources on the northern flank and to estimate mineral resources of the oxidized ores for
open-pit mining on the western flank.
? At Pescherny, 12.4 km was drilled. Technological studies and a set of field and laboratory
hydrogeological and engineering-geological studies were completed.
? In 2020, Polymetal plans to prepare an initial Ore Reserve and the updated Mineral Resource
estimate of Pescherny deposit, as well as to complete exploration of the underground resources at
Voro deposit and to continue exploration in its surrounding area.
Omolon hub
? 5.6 km of exploration drilling was completed at the Nevenrekan deposit to close the ore bodies
along the strike at zone 1 and assess their extension. Mineral Resources increased by 78 Koz to 242
Koz of GE with an average grade of 19.3 g/t.
Svetloye hub
? In 2019, exploration was carried out on the remote flanks of Svetloye deposit. An increase in
additional Mineral Resources of 109 Koz at Emmy and Lyudmila ore zones was obtained due to an
improvement in the quality of the ore and wider ore bodies.
? In 2020, the Company plans to continue exploration drilling and trenching on the flanks of Emmy
and Lyudmila ore zones aiming to further increase mineral resources base.
Dukat hub
? According to the initial estimate, Ore Reserves of Primorskoye deposit amounted to 12.2 Moz
silver equivalent with an average grade of 3,113 g/t at a cut-off grade of 1,115 g/t of silver
equivalent (for processing at Lunnoye plant). Additional Mineral Resources as a result of the
conversion decreased by 20.3 Moz in silver equivalent.
Nezhda
? In 2019, exploration activities were focused on the southern flanks of the Nezhda deposit.
According to the preliminary estimates, an increase in the open-pit Mineral Resources is possible.
? In 2020, Polymetal plans to continue exploration activities on the flanks of the deposit to
identify new mineralized zones and update the mineralization estimates of the known ore bodies.
Prognoz
? In 2019, the Company conducted 41.4 km of drilling, including 31.1 km of exploration drilling,
5.3 km of geotechnical drilling for plant construction, 2.5 km of hydrogeological drilling and 2.4
km of technological drilling.
? In 2020, Polymetal plans to prepare an initial Ore Reserve and an updated Mineral Resource
estimates of Prognoz deposit as well as to carry additional exploration activity out on the flanks
and surrounding areas of the deposit.
Veduga
? In 2019, the Company prepared an updated Mineral Resource and Ore Reserve estimate based on
exploration activities conducted in 2017-2018. As at 01.01.2020, the deposit's Ore Reserves[2]
totaled 2.7 Moz of gold with an average grade of 4.5 g/t, which is 1.4 Moz more than in the
previous evaluation. Additional Mineral Resources halved to 200 Koz due to conversion to Ore
Reserves.
? In 2019, the Company carried out 19.2 km of exploration drilling at the deeper levels of the
known ore bodies.
? In 2020, Polymetal plans to evaluate the potential ore body 1 to a horizon of -650 m and also
continue to identify new resources at the Strelka ore zone. The Company expects to achieve an
increase of at least 1 Moz of gold in Mineral Resources as a result of this exploration campaign.
Kutyn
? In 2019, 16.1 km of exploration drilling and 56.9 thousand m3 of trenches were completed at
Kutyn. Based on the results of drilling conducted in 2017-2019, an updated geological model and
Mineral Resource and Ore Reserve estimate were prepared.
? Ore Reserves increased by 425 Koz compared to the previous estimate and amounted to 812 Koz of
gold with an average grade of 3.0 g/t. Mineral Resources totaled 785 Koz with an average grade of
3.7 g/t.
? In 2020, additional exploration and evaluation work will be carried out on the flanks of the
explored ore zones to verify new promising areas. Detailed drilling will be performed in the main
ore zones within the expected open-pit oxidized boundaries to convert Mineral Resources into Ore
Reserves.
PGMs
? Exploration drilling was carried out at Kenti and Shargi ore zones at the Viksha PGM deposit in
Karelia aiming to upgrade the Mineral Resources categories. The resource model of the Viksha
deposit was updated, reflecting changing metal prices as well. As a result, total Mineral Resources
decreased to 5.7 Moz of PdEq, while the share of Measured and Indicated Resources increased from
13% to 65%.
? In 2020, exploration activities are set to continue at the flanks of the Kenti and Shargi ore
zones with a view to upgrade the resources of the deposit.
Ore Reserves as at 1 January 2020 (1)
Tonnage Grade Content
Kt Au, Ag Cu Zn Pb GE Au Ag Cu Zn Pb GE
g/t g/t % g/t Koz Koz Kt Koz
% % Kt Kt
Proved
Standalone 6,510 4.4 924 - - - - 924
mines
Albazino 4,430 3.5 - - - - 3.5 492 - - - - 492
Mayskoye 1,220 7.1 - - - - 7.1 282 - - - - 282
Kyzyl 860 5.4 - - - - 5.4 150 - - - - 150
project
(Bakyrchik)
(2)
Dukat hub 6,020 3.7 113 50,9 - 0.5 0.5 725
89
Dukat 4,680 0.5 261 - - - 3.6 69 39,2 - - - 542
47
Lunnoye 1,070 1.1 271 - - - 4.3 39 9,35 - - - 148
0
Goltsovoye 60 - 355 - - - 4.4 - 671 - - - 8
Arylakh 180 0.7 260 - - - 3.9 4 1,46 - - - 22
2
Perevalnoye 30 - 247 - 1.62 1.43 3.9 0 259 - 0.5 0.5 4
Varvara hub 18,090 1.0 545 - 8.6 - - 600
Varvara (3) 13,700 0.8 - 0.46 - - 0.9 363 - 8.6 - - 417
Komar 4,390 1.3 - - - - 1.3 183 - - - - 183
Omolon hub 4,660 3.0 436 1,16 - - - 449
6
Birkachan 3,610 2.2 7 - - - 2.3 260 862 - - - 269
Olcha 240 7.2 21 - - - 7.4 53 152 - - - 54
Tsokol 370 5.0 7 - - - 5.0 59 83 - - - 59
Kubaka
Yolochka 440 4.6 5 - - - 4.7 65 68 - - - 66
(4)
Voro hub 13,600 1.7 724 849 - - - 730
Voro 8,790 1.5 3 - - - 1.5 429 849 - - - 436
Maminskoye 4,810 1.9 - - - - 1.9 295 - - - - 295
(5)
Svetloye 1,290 2.7 110 - - - - 110
hub
Svetloye 1,290 2.7 - - - - 2.7 110 - - - - 110
Development 14,080 3.8 1,62 7,60 - - - 1,7
and 6 3 06
exploration
projects
Nezhda (6) 11,730 3.6 20 - - - 3.9 1,37 7,60 - - - 1,4
2 3 52
Veduga (7) 490 2.7 - - - - 2.7 42 - - - - 42
Kutyn (8) 1,860 3.5 - - - - 3.5 211 - - - - 211
Total 64,250 2.5 4,47 60,6 8.6 0.5 0.5 5,2
Proved 8 07 43
Probable
Standalone 58,420 6.0 11,2 - - - - 11,
mines 54 254
Albazino 11,080 4.1 - - - - 4.1 1,44 - - - - 1,4
6 46
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