Polymetal International plc (POLY) 
Polymetal: Q2 2019 production results 
 
24-Jul-2019 / 09:00 MSK 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY 
Date         24 July 2019 
 
Polymetal International plc 
 
Q2 2019 production results 
 
      Polymetal reports strong production for the second quarter and the six 
           months ended June 30, 2019. 
 
       "Excellent results from Kyzyl drove our production growth while other 
  operations delivered strong performances", said Vitaly Nesis, Group CEO of 
           Polymetal." 
 
           HIGHLIGHTS 
 
? The Company's Q2 gold equivalent ("GE") production grew 19% year-on-year 
to 384 Koz as Kyzyl delivered at full capacity with 81 Koz of gold 
produced in the quarter. GE production from continuing operations was up 
29% year-on-year. 
 
? Q2 gold production was up 30% over the previous year at 302 Koz. Silver 
production was down 11% at 6.0 Moz on the back of asset disposals. 
 
? GE production for H1 2019 was 756 Koz, up 22% year-on-year. We expect 
stronger production in 2H driven by seasonal concentrate de-stockpiling at 
Mayskoye. 
 
? Revenue for Q2 increased 13% year-on-year to US$ 492 million, with gold 
sales rising 31% on strong production. Silver sales fell 22% due to a 
temporary logistical lag between production and sales to be eliminated in 
H2. 
 
? The Company is well positioned to meet its full-year 2019 production 
guidance of 1.55 Moz of GE and reiterates its cost guidance: TCC of US$ 
600-650/ GE oz and AISC of US$ 800-850/ GE oz1. 
 
? Polymetal generated significant free cash flow in Q2. Net debt remained 
unchanged during the quarter at US$ 1,700 million as of 30 June 2019, 
while the Company paid US$ 146 million of final dividends for FY 2018 (US$ 
0.31 per share). As in previous years, we expect significantly stronger 
free cash flow generation in the second half of the year on the back of 
higher production volumes and seasonal working capital drawdown. 
 
? We are saddened to report a fatal accident that occurred on 10 May 2019. 
A pump station operator died at Omolon. The Company's risk management 
activities increasingly focus on behavioral and cultural issues 
underpinning unsafe labor practices. We remain committed to our strategic 
objective of zero fatalities. 
 
? At Nezhda, mining activities focused on constructing pit access roads. 
Construction proceeded according to schedule with the concentrator 
building comfortably on track for full winterization by the time the cold 
season starts in November. The project is expected to start up in Q4 2021. 
 
? At POX-2, detailed engineering of the facility is in full swing. All 
long-lead equipment has been contracted. Site preparation activities 
including deforestation and topsoil removal are in progress. The project 
is on track for launch in H2 2023. 
 
    Note: (1) The cost guidance remains contingent on the Russian rouble and 
  Kazakh tenge exchange rate dynamics, which has a significant effect on the 
           Group's operating costs. 
 
             3 months ended      %     6 months ended      % 
                June 30,      change1     June 30,      change1 
              2019     2018             2019     2018 
 
Waste         40.0     32.1    +25%     77.6     60.9    +27% 
mined, Mt 
Underground   26.1     31.8    -18%     54.3     64.4    -16% 
development 
, km 
Ore mined,    4.3      3.4     +30%     8.6      6.5     +31% 
Mt 
Open-pit      3.3      2.2     +53%     6.5      4.2     +55% 
Underground   1.0      1.2     -13%     2.1      2.4     -12% 
Ore           4.1      3.7     +11%     7.6      7.0      +8% 
processed, 
Mt 
Production 
Gold, Koz     302      232     +30%     602      446     +35% 
Silver, Moz   6.0      6.8     -11%     11.0     12.7    -14% 
Copper, Kt    0.6      0.9     -38%     1.4      1.6     -13% 
Gold          384      324     +19%     756      619     +22% 
equivalent, 
Koz2 
Sales 
Gold, Koz     314      239     +31%     604      445     +36% 
Silver, Moz   5.6      7.3     -22%     10.3     12.1    -15% 
Copper, Kt    0.7      1.2     -44%     1.0      1.5     -30% 
Revenue,      492      435     +13%     946      789     +20% 
US$m3 
Net debt,    1,700    1,704     -0%    1,700    1,518    +12% 
US$m4 
Safety5 
LTIFR         0.22     0.17    +29%     0.23     0.16    +44% 
Fatalities     1        0       +1       2        1       +1 
      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 tables in this release. 
 
          (2) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 
                                       Zn/Au conversion ratios. 
 
             (3) Calculated based on the unaudited consolidated 
                                           management accounts. 
 
           (4) Non-IFRS measure based on unaudited consolidated 
      management accounts. Comparative information is presented 
         for 31 March 2019 (for the three months period) and 31 
                     December 2018 (for the six months period). 
 
        (5) LTIFR = lost time injury frequency rate per 200,000 
                                                  hours worked. 
 
           PRODUCTION BY MINE 
 
                    3 months       %        6 months        % 
 
                 ended June 30,  change  ended June 30,   change 
                  2019    2018            2019     2018 
 
GOLD EQ. (KOZ)1 
Kyzyl              81       -      NA     159       -       NA 
Dukat              82      76      9%     158      155      2% 
Albazino-Amursk    55      63     -13%    136      153     -11% 
Omolon             46      54     -16%     99       86     15% 
Mayskoye           -        -      NA      5        -       NA 
Varvara            39      31     24%      76       66     16% 
Voro               29      28      3%      57       54      4% 
Svetloye           52      45     16%      61       53     15% 
TOTAL             384      297    +29%    751      568     +32% 
(continuing 
operations) 
Okhotsk            -       12    -100%     -        24    -100% 
Kapan              -       15    -100%     5        27     -82% 
TOTAL             384      324    +19%    756      619     +22% 
(including 
discontinued 
operations) 
 
          Notes: (1) Based on 1:80 Ag/Au, 5:1 Cu/Au, 2:1 Pb/Au and 2:1 Zn/Au 
           conversion ratios. 
 
           CONFERENCE CALL AND WEBCAST 
 
Polymetal will hold a conference call and webcast on Wednesday, 24 July 2019 
           at 12:00 London time (14:00 Moscow time). 
 
To participate in the call, please dial: 
 
8 800 500 98 63 access code 34668237# (free from Russia), or 
 
+44 203 009 24 80 (free from the UK), or 
 
+1 646 722 49 14 (free from the US), or 
 
  follow the link: https://webcasts.eqs.com/polymetal20190724 [1]. Please be 
           prepared to introduce yourself to the moderator or register. 
 
           Webcast replay will be available on Polymetal's website 
           (www.polymetalinternational.com [2]) and at 
https://webcasts.eqs.com/polymetal20190724 [1]. A recording of the call will 
be available immediately after the call at +44 20 3364 5147 (from within the 
      UK), +1 646 722 4969 (USA Toll Free) and +7 495 249 16 71 (from within 
 Russia), access code 418860357#, from 14:30 Moscow time Wednesday, 24 July, 
           till 14:30 Moscow time Wednesday, 31 July, 2019. 
 
           Enquiries 
 
Media                     Investor Relations 
 
FTI          +44 20 3727  Polymetal ir@polymetalinternational.com 
Consulting   1000 
 
                          Eugenia   +44 20 7887 1476 (UK) 
Leonid Fink               Onuschenk 
                          o 
 
Viktor 
Pomichal                  Timofey 
                          Kulakov 
                                    +7 812 334 3666 (Russia) 
 
Joint Corporate Brokers 
 
Morgan       +44 20 7425  RBC       +44 20 7653 4000 
Stanley      8000         Europe 
                          Limited 
 
Andrew 
Foster                    Marcus 
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Richard 
Brown                     Jamil 
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Panmure 
Gordon       +44 20 7886 
             2500 
 
Charles 
Lesser 
 
James 
Stearns 
 
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", "INTS", "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 
 
           KYZYL 
 
               3 months ended     %      6 months ended     % 
                  June 30,      change      June 30,      change 
               2019     2018             2019     2018 
MINING 
Waste mined,   16.5     14.9     +11%    32.3     28.7     +13% 
Mt 
Ore mined      511       323     +58%   1,033      397    +160% 
(open-pit), 
Kt 
 
PROCESSING 
Ore            512       74       NM     988       74       NM 
processed, 
Kt 
Gold grade,    6.6       2.5    +159%    6.7       2.5    +164% 
g/t 
Gold          87.8%     41.7%   +111%   87.3%     41.7%   +110% 
recovery 
Concentrate    28.5      1.3      NM     58.3      1.3      NM 
produced, Kt 
Concentrate   104.2     46.5    +124%   100.0     46.5    +115% 
gold grade, 
g/t 
Gold in        95.5      2.0      NM    187.4      2.0      NM 
concentrate, 
Koz1 
 
Concentrate    17.3       -       NA     36.9       -       NA 
shipped, Kt 
Payable gold   40.4       -       NA     91.2       -       NA 
shipped, Koz 
 
Amursk POX 
Concentrate     12        -       NA      20        -       NA 
processed, 
Kt 
Gold grade,   128.9       -       NA    124.7       -       NA 
g/t 
Gold          93.4%       -       NA    93.8%       -       NA 
recovery 
Gold           40.9       -       NA     68.3       -       NA 
produced, 
Koz 
 
TOTAL 
PRODUCTION 
Gold, Koz      81.4       -       NA    159.5       -       NA 
 
Note: (1) For information only; not considered as gold produced and 
therefore not reflected in the table representing total production. It will 
be included in total production upon shipment to off-taker or dore 
production at Amursk POX. 
 
Kyzyl continued to outperform in Q2. The operation continued to benefit from 
     high-grade softer ore and exceeded design specifications on throughput, 
grade and production. Half-year gold production came in at 159.5 Koz of gold 
           with 187.4 Koz of gold produced in concentrate. 
 
   The average concentrate recovery rate increased to 87.8% despite low mass 
    pulls achieved to improve transportation economics and attractiveness of 
 concentrate for Chinese off-takers. Share of gold in low-carbon concentrate 
           processed at the Amursk POX exceeded 50%. 
 
 The processing plant is now running at a rate of 2 Mt per annum - above its 
   nameplate capacity of 1.8 Mtpa. Recent performance tests demonstrate that 
        further improvement in throughput can be achieved with US$ 3 million 
           investment in hydrocyclones and concentrate filtering area. 
 
   Open-pit mining continued at a stable pace. A detailed technical study is 
under way to re-optimize the open pit under updated operational and economic 
  assumptions with the results, including the updated Ore Reserves estimate, 
           to be presented in Q4 2019. 
 
           DUKAT OPERATIONS 
 
               3 months ended      %     6 months ended      % 
                  June 30,       chang      June 30,       chang 
                                   e                         e 
               2019      2018            2019      2018 
 
MINING 
 
Underground    14.9      15.2     -2%    30.0      29.4     +2% 
development, 
km 
Ore mined,      649       626     +4%    1,252     1,221    +3% 
Kt 
 
PROCESSING 
Omsukchan 
concentrator 
Ore             516       513     +1%    1,029      996     +3% 
processed, 
Kt 
Grade 
Gold, g/t       0.5       0.5     -1%     0.5       0.5     +0% 
Silver, g/t     306       291     +5%     295       302     -2% 
Recovery1 
Gold           85.3%     87.0%    -2%    85.7%     86.6%    -1% 
Silver         86.6%     88.2%    -2%    86.9%     88.0%    -1% 
Production 
Gold, Koz       7.0       7.1     -1%    14.4      14.3     +1% 
Silver, Moz     4.3       4.1     +5%     8.3       8.4     -1% 
 
Lunnoye 
plant 
Ore             117       114     +2%     232       227     +2% 
processed, 
Kt 
Grade 
Gold, g/t       1.3       1.2    +13%     1.4       1.2    +14% 
Silver, g/t     264       323    -18%     266       340    -22% 
Recovery1 
Gold           85.1%     85.4%    -0%    85.7%     85.3%    +0% 
Silver         90.1%     90.2%    -0%    90.1%     91.0%    -1% 
Production 
Gold, Koz       4.4       3.6    +22%     9.1       7.6    +20% 
Silver, Moz     0.9       1.1    -15%     1.8       2.2    -19% 
TOTAL 
PRODUCTION 
Gold, Koz      11.4      10.7     +7%    23.6      21.9     +8% 
Silver, Moz     5.3       5.2     +1%    10.1      10.6     -5% 
 
          Notes: (1) Technological recovery, includes gold and silver within 
           work-in-progress inventory 
 
 The Dukat hub demonstrated a stable performance in Q2 with silver output up 
     1% year-on-year to 5.3 Moz. Silver grades at the Omsukchan concentrator 
     increased by 5% as it processed high-grade ore from the Terem satellite 
   underground mine. Stronger performance at Omsukchan has compensated for a 
           planned decrease in grade at the Lunnoye plant. 
 
Gold output increased 7% year-on-year to 11.4 Koz, driven mainly by increase 
           in gold grade at Lunnoye. 
 
  Underground development declined by 2% as Goltsovoye approaches the end of 
           its reserves with mining focused on pillar removal. 
 
           ALBAZINO 
 
               3 months ended      %     6 months ended      % 
                  June 30,       chang      June 30,       chang 
                                   e                         e 
               2019      2018            2019      2018 
MINING 
Albazino 
Waste mined,    5.6       5.4     +3%    11.1      10.5     +6% 
Mt 
Underground     2.6       2.3    +10%     4.9       4.7     +4% 
development, 
Km 
Ore mined,      545       478    +14%    1,026      930    +10% 
Kt 
Open-pit        404       370     +9%     766       715     +7% 
Underground     141       108    +31%     259       216    +20% 
 
PROCESSING 
Albazino 
concentrator 
Ore             431       441     -2%     856       860     -1% 
processed, 
Kt 
Gold grade,     4.0       4.8    -18%     4.2       5.0    -17% 
g/t 
Gold           86.9%     85.0%    +2%    85.2%     85.8%    -1% 
recovery1 
Concentrate    33.7      35.0     -4%    69.3      68.9     +1% 
produced, Kt 
Concentrate    44.1      51.7    -15%    44.3      54.4    -19% 
gold grade, 
g/t 
Gold in        47.7      58.1    -18%    98.6      120.3   -18% 
concentrate, 
Koz2 
 
Amursk POX 
Concentrate     38        32     +17%     91        82     +10% 
processed, 
Kt 
Gold           55.1      63.0    -13%    136.4     152.8   -11% 
produced, 
Koz 
 
TOTAL 
PRODUCTION 
Gold, Koz      55.1      63.0    -13%    136.4     152.8   -11% 
 
           Notes: (1) To concentrate 
 
 (2) For information only; not considered as gold produced and therefore not 
     reflected in the table representing total production. Included in total 
           production after dore production at the Amursk POX 
 
    At Albazino, gold in concentrate production decreased by 18% to 47.7 Koz 
    driven by continued processing of a lower grade ore from the Ekaterina-1 
          open pit. This, in turn, impacted total gold output which fell 13% 
     year-on-year to 55.1 Koz. Grade decline was partially compensated by an 
           increase in recoveries from 83.7% in Q1 to 86.9% in Q2. 
 
    Underground mine productivity continued to improve with ore mined up 14% 
 year-on-year as underground development at the Ekaterina-2 underground mine 
   continues according to plan. Ekaterina-2 should become the main source of 
           higher-grade ore starting from H2 2020. 
 
           AMURSK POX 
 
               3 months ended      %     6 months ended      % 
                  June 30,       chang      June 30,       chang 
                                   e                         e 
               2019      2018            2019      2018 
Concentrate     50        32     +55%     111       82     +34% 
processed, 
Kt 
Albazino        36        27     +32%     81        71     +14% 
Kyzyl           12         -      NA      20         -      NA 
Other1           2         5     -66%     10        11     -14% 
Gold           93.4%     96.7%    -3%    94.3%     97.1%    -3% 
recovery 
Average gold   67.7      59.3    +14%    63.7      58.1    +10% 
grade, g/t 
Average        12.6%     8.8%    +43%    12.6%     8.4%    +50% 
sulphur 
grade 
Total gold     96.0      63.0    +52%    204.7     152.8   +34% 
produced2, 
Koz 
Albazino       49.5      50.6     -2%    116.0     130.5   -11% 
Kyzyl          40.9        -      NA     68.3        -      NA 
Other1          5.6      12.3    -55%    20.4      22.4     -9% 
 
          Notes: (1) Veduga and purchased concentrates which are included in 
           reportable production in the Albazino segment 
 
  (2) For information only. Already accounted for in production at operating 
           mines. 
 
  Quarterly gold production at the Amursk POX increased 52% to 96 Koz on the 
      back of the increased volume of concentrate processed and Kyzyl-driven 
           higher average concentrate grade. 
 
       The introduction of large quantities of Kyzyl concentrate to the feed 
significantly changed operating parameters and led to a temporary decline in 
    recoveries by 3 percentage points from 96.7% to 93.4%. Over the last two 
  months, the POX team successfully introduced new operating procedures that 
      resulted in recoveries climbing back up over 95%. The changes focus on 
           tighter control of feed variability. 
 
 The Amursk POX underwent a planned 15-day shutdown, the first one since the 
  launch of the debottlenecked facility in November. No material issues have 
           been identified. 
 
           OMOLON OPERATIONS 
 
               3 months ended     %      6 months ended     % 
                  June 30,      change      June 30,      change 
               2019     2018             2019     2018 
 
MINING 
 
Waste mined,   1.9       1.6     +13%    3.2      2,.7     +20% 
Mt 
Underground    3.3       3.2     +5%     6.5       6.3     +3% 
development, 
Km 
Ore mined,     730       97     +650%   1,378      482    +186% 
Kt 
Open-pit       625        5       NM    1,159      298    +289% 
Underground    105       92      +13%    220       184     +19% 
 
PROCESSING 
Birkachan 
Heap Leach 
Ore stacked,   493       472     +4%     546       472     +16% 
Kt 
Gold grade,    1.2       1.1     +6%     1.2       1.1     +6% 
g/t 
Gold           2.1       1.0    +101%    2.1       1.0    +101% 
production, 
Koz 
 
Kubaka Mill 
Ore            208       216     -4%     428       422     +1% 
processed, 
Kt 
Grade 
Gold, g/t      5.0       5.2     -4%     6.5       5.0     +30% 
Silver, g/t    125       171     -27%     72       102     -29% 
Recovery1 
Gold          97.1%     95.7%    +1%    95.5%     95.4%    +0% 
Silver        88.8%     88.2%    +1%    79.1%     81.7%    -3% 
Gold           34.9     39.7     -12%    86.4     70.1     +23% 
production, 
Koz 
Silver         0.7       1.1     -37%    0.8       1.2     -31% 
production, 
Moz 
TOTAL 
PRODUCTION 
Gold, Koz      37.0     40.7     -9%     88.4     71.1     +24% 
Silver, Moz    0.7       1.1     -37%    0.8       1.2     -31% 
 
           Note: (1) Technological recovery, includes gold and silver within 
           work-in-progress inventory 
 
   In Q2, gold and silver production decreased by 9% and 37% respectively on 
      the back of lower grades at Kubaka Mill which processed ore from Sopka 
          low-grade stockpiles. H1 gold output increased 24% year-on-year as 
           higher-grade ore from Olcha was introduced to the feed in Q1. 
 
    At Birkachan, open-pit mining rate achieved 500 Kt per in Q2, while heap 
       leach operation has doubled production on the back of higher stacking 
           volumes and higher gold grade. 
 
 Open-pit mining at Sopka is completed. The mining fleet has re-located to a 
  new satellite deposit, Yolochka (80 km from the Kubaka mill), where mining 
           commenced and will continue for 12 months. 
 
           MAYSKOYE 
 
               3 months ended     %     6 months ended      % 
                  June 30,      chang      June 30,       chang 
                                  e                         e 
               2019      2018           2019      2018 
MINING 
Waste mined,    1.4      1.4     +3%     2.6       1.9    +33% 
Mt 
Underground     5.3      6.0    -12%    10.8      12.1    -11% 
development, 
km 
Ore mined,      220      285    -23%     438       463     -5% 
Kt 
Open-pit        70       110    -36%     134       132     +2% 
Underground     150      174    -14%     305       331     -8% 
 
PROCESSING 
Ore             207      213     -3%     426       416     +2% 
processed, 
Kt 
Gold grade,     6.6      8.3    -21%     6.1       6.7     -9% 
g/t 
Gold           69.9%    71.4%    -2%    76.5%     77.5%    -1% 
recovery 
Gold in        25.2      26.2    -4%    58.6      55.0     +7% 
concentrate, 
Koz2 
 
Gold             -        -      NA       -         -      NA 
produced in 
dore from 
concentrate 
(POX), Koz 
Gold             -        -      NA      4.6        -     +100% 
produced in 
dore from 
carbon, Koz3 
Payable gold     -        -      NA       -         -      NA 
in 
concentrate 
shipped to 
offtakers, 
Koz 
 
TOTAL 
PRODUCTION 
Gold, Koz        -        -      NA      4.6        -      NA 
 
           Notes: (1) To concentrate 
 
 (2) For information only; not considered as gold produced and therefore not 
     reflected in the table representing total production. Included in total 
          production upon sale to off-taker or dore production at Amursk POX 
 
           (3) Gold produced from carbon at Amursk POX 
 
At Mayskoye, gold in concentrate decreased by 4% year-on-year to 25.2 Koz on 
     the back of lower processing volumes and reduced grades in ore from the 
  open-pit as the processing plant at Mayskoye switched over to the seasonal 
           treatment of oxide feed. 
 
   The management selected conveyor ore haulage for the long-term upgrade of 
   the underground mine materials handling system. The key considerations in 
     the decision included lower capital intensity, lower execution risk and 
greater flexibility (compared with the conventional shaft). Total investment 
       in the project is estimated at approximately US$45m in 2020-2022. The 
         project is expected to yield US$150/oz cost savings in diesel fuel, 
         electricity and maintenance as well as to reduce operation's carbon 
           footprint. The expected IRR is 45%. 
 
 In parallel, Polymetal selected Paterson & Cooke, a UK engineering firm, to 
evaluate options regarding conversion from conventional tailings to cemented 
   paste backfill. Potential benefits include lower dilution in flat-dipping 
      ore bodies and the reduction of surface waste disposal. Detailed study 
           results are expected in Q4 2019. 
 
           VARVARA 
 
              3 months ended      %   6 months ended June   % 
                 June 30,       chang         30,          chan 
                                  e                         ge 
               2019      2018            2019      2018 
 
MINING 
Waste          11.6      7.6    +53%     22.7      14.7    +55% 
mined, Mt 
Ore mined,     977       711    +38%    1,938      1,386   +40% 
Kt 
 
PROCESSING 
Flotation 
Ore            130       104    +25%     277        180    +54% 
processed, 
Kt 
Grade 
Gold, g/t      1.1       1.4    -20%     1.1        1.3    -13% 
Copper        0.52%     0.51%    +1%    0.55%      0.53%   +3% 
Recovery1 
Gold          51.1%     71.8%   -29%    60.3%      67.7%   -11% 
Copper        90.8%     92.6%    -2%    91.4%      91.5%   -0% 
Production 
Gold (in       1.9       2.6    -27%     4.5        4.2    +8% 
concentrate 
), Koz 
Copper (in     0.6       0.5    +16%     1.3        0.9    +48% 
concentrate 
), Kt 
 
Veduga ore      31        32     -3%      63        43     +46% 
toll 
processed, 
Kt2 
 
Leaching 
Ore            784       723     +8%    1,535      1,498   +3% 
processed, 
Kt 
Gold grade,    1.4       1.3     +8%     1.4        1.4    +2% 
g/t 
Gold          87.7%     87.5%    +0%    86.5%      86.9%   -0% 
recovery1 
Gold           34.1      26.3   +30%     65.5      57.5    +14% 
production 
(in dore), 
Koz 
 
Total ore      945       858    +10%    1,875      1,721   +9% 
processed, 
Kt 
 
TOTAL 
PRODUCTION 
Gold, Koz      35.9      28.9   +25%     69.9      61.7    +13% 
Copper, Kt     0.6       0.5    +16%     1.3        0.9    +48% 
 
           Note: (1) Technological recovery, includes gold and copper within 
           work-in-progress inventory. Does not include toll-treated ore 
 
           (2) To be further processed at Amursk POX. 
 
    In Q2, Varvara delivered a solid gold production increase of 25% to 35.9 
Koz. The jump was driven by increases in throughput, gold grade and recovery 
      at the leaching circuit, all benefiting from higher Komar ore tonnage. 
 
      Flotation circuit production declined as it did not process high-grade 
           3rd-party material available in 2018. 
 
     Varvara continued to toll-treat high-grade ore from Veduga and plans to 
           process more than 100 Kt in 2019. 
 
VORO 
 
              3 months ended     %      6 months ended      % 
                 June 30,      change      June 30,       chang 
                                                            e 
              2019      2018            2019      2018 
 
MINING 
 
Waste          0.4      0.9     -58%     0.8      1,.9    -59% 
mined, Mt 
Ore mined,     210      272     -23%     479       575    -17% 
Kt 
 
PROCESSING 
Voro Heap 
Leach 
Ore             -       1.8    -100%      -        1.8    -100% 
stacked, Kt 
Gold grade,     -       1.5    -100%      -        1.5    -100% 
g/t 
Gold           6.4      2.1    +202%    11.1       3.7    +201% 
production, 
Koz 
 
Voro CIP 
Ore            270      252     +7%      519       498     +4% 
processed, 
Kt 
Gold grade,    3.5      4.2     -16%     3.5       4.0    -14% 
g/t 
Gold          85.7%    81.1%    +6%     86.3%     80.8%    +7% 
recovery1 
Gold          22.6      26.2    -14%    44.9      50.8    -11% 
production, 
Koz 
TOTAL 
PRODUCTION 
Gold, Koz     29.0      28.3    +2%     56.0      54.5     +3% 
 
     Note: (1) Technological recovery, includes gold within work-in-progress 
           inventory 
 
  Q2 gold production at Voro increased 2% year-on-year to 29.0 Koz driven by 
  seasonal contributions from the residual heap leach operation. Higher gold 
    recoveries partially offset a planned decline in grade at the CIP plant. 
 
 Ore mined volume continued to decrease as the open pit nears the end of its 
 life in Q3 2019. Exploration drilling identified substantial mineralisation 
  below the open pit with technical studies currently under way to determine 
           the feasibility of underground mining. 
 
           SVETLOYE 
 
              3 months ended     %      6 months ended      % 
                 June 30,      change      June 30,       chang 
                                                            e 
              2019      2018            2019      2018 
 
MINING 
Waste          0.4      0.1    +222%     0.8       0.2    +251% 
mined, Mt 
Ore mined      453      335     +35%     867       661    +31% 
(open pit), 
Kt 
 
PROCESSING 
Ore            414      434     -4%      598       653     -8% 
stacked, Kt 
Gold grade,    3.5      3.8     -7%      4.0       3.8     +4% 
g/t 
Gold          51.8      44.7    +16%    61.0      53.0    +15% 
production, 
Koz 
 
TOTAL 
PRODUCTION 
Gold, Koz     51.8      44.7    +16%    61.0      53.0    +15% 
 
 At Svetloye, gold production increased 16% to 51.8 Koz as the operation has 
     achieved the third full year of operation. However, rainy weather in Q2 
      impacted the pace of stacking and availability of high-grade material. 
 
           DEVELOPMENT UPDATE 
 
  At Nezhda, mining and construction activities proceeded according to plan. 
     Pouring of concrete for the concentrator building and mill is complete. 
       Construction of the mine camp and storage facilities is complete. The 
      construction of the haulage road between the mine and the concentrator 
           commenced in May. 
 
 Statutory permitting process entered its final phase with the submission of 
full design documentation to the Chief Environmental Expertise, a government 
           agency in charge of environmental permitting. 
 
          At POX-2, Polymetal signed comprehensive contract for the detailed 
 engineering of high-pressure sections of the facility with Hatch. Equipment 
      for the concentrate preparation section (roll crushers, acid-resistant 
       mills, steep-angle conveyors) and intensive cyanidation unit has been 
    contracted. The land use rights for construction have now been received. 
           Construction of a new concentrate storage facility is under way. 
 
        At Veduga, Polymetal published an updated JORC-compliant Ore Reserve 
    estimate which comprised 18.9 Mt of ore with an average grade of 4.6 g/t 
 containing 2.8 Moz of gold (a 111% increase in gold contained). Exploration 
drilling is ongoing with further resource and reserve upgrade expected in Q1 
           2020. 
 
           SUSTAINABILITY, HEALTH AND SAFETY 
 
   In Q2, our LTIFR stood at 0.22 (versus 0.17 in Q2 2018) with a total of 6 
  work-related incidents recorded across the Group (5 incidents in Q2 2018). 
     The increase is driven by minor incidents that occurred on site but not 
           during the production process. 
 
   We regret to report a fatality that occurred on 10 May 2019 at our Omolon 
    operation. A pump station operator died at the Kubaka pit. We extend our 
   sincere condolences to the family, friends and colleagues of the deceased 
           employee. 
 
   Earlier in Q2, Polymetal provided full disclosure on its tailings storage 
    facilities management in response to public investor enquiries to mining 
  companies, while two of Polymetal gold production operations, Voro and the 
     Amursk POX plant, became certified as being in full compliance with the 
           International Cyanide Management Code. 
 
ISIN:          JE00B6T5S470 
Category Code: MSCH 
TIDM:          POLY 
Sequence No.:  14439 
EQS News ID:   845725 
 
End of Announcement EQS News Service 
 
 
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(END) Dow Jones Newswires

July 24, 2019 02:02 ET (06:02 GMT)

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