POLY.L Regulatory News (POLY)

Polymetal International plc

Ore Reserves, Mineral Resources and Exploration update as at 1 January 2018

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") provides an Exploration update for the year ended 31 December 2017, and reports its Ore Reserves and Mineral Resources as at 1 January 2018 in accordance with the JORC Code (2012).

2017 HIGHLIGHTS 

· In 2017, the Company continued to use conservative gold and silver price assumptions from the previous year of US$ 1,200/oz and US$ 16/oz, respectively.

· The Company increased its Ore Reserves by 5% to 20.9 Moz of gold equivalent (GE) on the back of successful exploration at Albazino, Komar and Dukat, as well as initial reserve estimates at Kapan and Nezhda.

· Gold reserves were up 5% at 18.4 Moz, while silver reserves decreased 3% to 158 Moz. At the same time, copper reserves grew 25% to 82 Kt.

· Mineral Resources (in addition to Ore Reserves) increased 10% to 18.2 Moz of GE, mainly driven by initial resource estimates for the Pesherniy and Nezhda deposits, as well as resource additions at the deeper levels of Mayskoye and Dukat.

· The average grade in Ore Reserves was stable year-on-year at 3.9 g/t of GE and remains one of the highest in the sector. At the same time, the average grade in Mineral Resources increased 11% to 4.7 g/t of GE due to high-grade resource additions at new projects.

· Polymetal completed 421 km of exploration drilling in 2017, up 48% year-on-year as the scope of exploration expanded to include new assets, mostly Prognoz and Nezhda, in addition to continued exploration efforts at existing operations.

"In 2017, Polymetal succeeded in extending life-of-mine at producing assets and continued to invest in the next leg of our growth", - said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "We expect 2018 to result in further significant extensions of our reserves and resources".

Ore Reserves and Mineral Resources summary (1)

1) Mineral Resources are additional to Ore Reserves. Mineral Resources and 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.

2) Zinc was not included in the calculation of the gold equivalent for the Ore Reserves and Mineral Resource statement as at 01.01.2017 due to immateriality

2018 OUTLOOK

In 2018, Polymetal will continue to invest in exploration with the goal to expand the pace and scope of drilling, as well as prospect evaluation. The key objectives are as follows:

· To achieve resource-to-reserve conversions at existing operations with relatively shorter LOM

· Polymetal aims to complete initial ore reserves estimates for the following deposits in 2018:

o Irbychan and Yolochka at Omolon

o Saum and Pesherny at Voro

o Levoberezhny and Kundumi at Okhotsk

o Primorskoye and Perevalnoye (revaluation) at Dukat

· To prepare an updated mineral resource estimate and achieve resource-to-reserve conversion at Nezhda to include the southern flank of ore zone 1 and smaller mineralised zones

· To compete an audited JORC-compliant resource estimate for Prognoz largest ore zones, Main and Swamp

· To prepare an updated mineral resources estimate for Viksha based on new drilling data and metallurgical studies

· To continue step-out and in-fill drilling at Kyzyl to increase reserves for open pit mining

Ore Reserves reconciliation, gold equivalent, Moz

1) Please refer to the Appendix for the gold equivalent conversion ratios and applicable methodology.

Mineral Resources and Ore Reserves as at 1 January 2018 (1) 

1) Mineral Resources and Ore Reserves in accordance with the JORC Code (2012). Mineral Resources are additional to Ore Reserves. Mineral Resources and Ore Reserves for Lead are not presented due to their 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.

Any discrepancies in calculations are due to rounding.

1) Discrepancies in calculations are due to rounding.

EXPLORATION RESULTS

Dukat hub

· At the Dukat hub, the Company achieved a 70% increase in additional mineral resources. This success was primarily driven by additional exploration at the deeper levels of the Lunnoye deposit and the discovery of previously unknown veins at the Dukat flanks. In 2018, prospecting activities are set to continue at the northern and eastern flanks of Dukat.

· At the Primorskoye property, 6.9 km of exploration drilling was completed at ore zones 1 and 3 with a goal to trace ore bodies along the strike and at depth. In 2018, the Company intends to conduct further prospecting activities at other ore zones with the goal to increase the resource base of the deposit and delineate ore bodies in zones 1 and 3.

· At Perevalnoye, exploration continued by in-fill drilling from the underground with trial ore stoping expected to lead to a material upgrade in resources at the deposit.

Omolon hub

· At Omolon, the completion of initial ore reserve estimates for new veins at Birkachan and Sopka open pit have largely offset reserve depletion in 2017.

· At Irbychan, exploration has previously focused on in-fill drilling at the Central and Northern ore zones. In 2018, the focus will shift to the Eastern zone.

· At Yolochka, 6.7 km of in-fill drilling was completed at the Central and Southern zones. Both zones remain open at depth. The Company also completed prospecting drilling at the flanks and the Promezhutochnaya zone.

· At Nevenrekan, exploration activities were previously focused on in-fill drilling at zone 2, with several high-grade intercepts confirming potential for profitable underground mining. As a result of prospecting drilling at ore zone 1 new high-grade ore zones were discovered. In 2018, the Company plans to complete regular drilling at zones 1 and 5 as well as surveying activities at the flanks of the deposit.

Okhotsk hub

· 48.0 km of exploration drilling has been completed in the Okhotsk region in 2017, a 70% increase compared to the previous year.

· At Levoberezhny (35 km from Svetloye), in-fill drilling confirmed the continuity of mineralisation and the option of using heap leaching to extract gold.

· 12.8 km were drilled at Kundumi within the Central and Western ore zones resulted in a material increase in mineral resources. In 2018, the Company plans to undertake an additional 15 km of core drilling targeting both resource-to-reserve conversion and further resource growth.

· At Khotorchan and Gyrbykan, multiple new veins have been discovered during the year. In 2018, Polymetal plans to complete resource definition drilling and start open-pit mining on previously discovered veins.

Albazino

· Ore reserves increased by 12% year-on-year to 2.3 Moz GE, driven by the initial ore reserve estimate for Farida open pit (169 Koz GE) and Anfisa underground (47 Koz GE).

· In 2018, exploration will focus on delineating resources and estimating mineral resources at new ore zones, namely Tatiana and Kuyan.

Mayskoye

· 610 Koz of gold were added to mineral resources following a 33 km drilling campaign. This brings total additional mineral resources for Mayskoye to 3.8 Moz of gold, up 19% year-on-year.

Voro hub

· In 2017, the Company increased Voro's mineral resources by 28% to 1.0 Moz GE with the discovery of a new gold deposit at Pesherny (30 km from the CIP plant). An initial resource estimate comprised 449 Koz of gold at an average grade of 6.7 g/t. In 2018, we plan to continue exploring this highly promising property that may significantly extend the life-of-mine and halt production decline at Voro.

· At Saum, mineral resource grew to reach 67.4 Kt of copper equivalent at an average grade of 2.9%. In 2018, we plan to complete the feasibility study for the property.

· At Voro open pit, exploration focused on the assessment of mineralisation below the ultimate pit floor. Mineral resources grew by 86 Koz of gold equivalent at 2.6 g/t. The results suggest feasibility of underground mining after open pit mining is completed. Ore bodies are open along strike with drilling to continue in 2018.

Varvara hub

· At Komar, 30 km of exploration drilling at the Central and Southern zones was completed in 2017, driving a significant ore reserves increase of 524 Koz of gold (+49%). In 2018, exploration activities are set to continue at the northern and south-eastern parts of the deposit.

· 12.1 km of drilling was completed at Elevator - a new prospect that is situated 8 km northeast of the Komar deposit. New thick ore bodies were discovered below the previously mined oxidized ore. Exploration will continue in 2018.

Kapan

· At Kapan, Polymetal prepared an initial JORC-compliant reserve estimate as at January 1, 2018, which comprises 558 Koz GE at an average grade of 4.3 g/t. Additional mineral resources were estimated at 1,632 Koz GE at an average grade of 6.1 g/t.

· At Lichkvaz (70 km from Kapan) an initial JORC-compliant reserve estimate was prepared by Polymetal and comprised 134 Koz GE at 3.9 g/t, while additional mineral resources amounted to 257 Koz GE at 5.0 g/t.

Kyzyl

· At Bakyrchik, 49 holes totaling 8.3 km were drilled at the eastern flank of the deposit with results indicating strong potential to increase open pit reserves. In-fill drilling leading to an updated ore reserve estimate is planned for 2018.

Nezhda

· 33.7 km of exploration drilling was completed. The drilling campaign resulted in an initial JORC-compliant ore reserve estimate for open pit mining at ore zone 1 that comprised 15.5 Mt of ore with an average grade of 4.0 g/t GE containing 2.0 Moz of GE (350 Koz pro rata to Polymetal's current ownership of 17.7%).

· Additional mineral resources for Nezhda were estimated at 55.9 Mt of ore with an average grade of GE 5.0 g/t, containing 8.9 Moz of GE (1,576 Koz of GE pro rata to Polymetal's current ownership of 17.7%).

· In 2018, Polymetal will focus on upgrading the open-pittable resources at the southern flank of ore zone 1 and producing the initial reserve estimate for underground mining at ore zone 56.

Prognoz

· In 2017, Polymetal acquired a 5% indirect interest in Prognoz - the largest undeveloped primary silver deposit in Russia with JORC mineral resources of 292 Moz at 586 g/t (estimated by Micon). During the year, Polymetal undertook 37.3 km of exploration drilling at the deposit to confirm the resources of Main and Swamp ore zones. The results of the drilling campaign have largely confirmed the parameters of mineralisation at the deposit.

· In 2018, Polymetal intends to expand the scope of drilling at the property to include South, Quiet and Spring ore zones as well as trace Main and Swamp ore zones along strike and down dip. The Company plans to increase its stake to 50% with the deal set to close in H1 2018.

Viksha

· 39.6 km of exploration drilling was completed at the Viksha PGM deposit in Karelia with a view to improve the understanding of geological controls and enable a future reserve estimate. An updated Mineral Resources estimate is expected in Q3 2018.

Ore Reserves as at 1 January 2018 (1)

1) Ore Reserves in accordance with the JORC Code (2012). Discrepancies in calculations are due to rounding.

2) Initial estimate prepared by Polymetal as at 01.01.2016. Price: Ag = US$15/oz. and Pb = US$1,700/t. Revised estimate was not performed due to lack of material changes.

3) Cu grade in Ore Reserves only represents average grade in flotation feed. Ore Reserves for flotation: 1.8 Mt Proved and 3.2 Mt Probable.

4) Initial estimate prepared by Polymetal as at 01.01.2014. Price: Au = US$1,300/oz. Revised estimate was not performed due to lack of material changes.

5) Initial estimate prepared by CSA as at 28.07.2016. Price: Au = US$1,100/oz. Revised estimate was prepared by Polymetal as at 01.01.2018 (accounts only for depletion and change in ownership). Ore Reserves are presented in accordance with the Company's ownership of 50%.

6) Initial estimate prepared by Polymetal as at 01.01.2016. Price: Au = US$1,100/oz, Ag = US$15/oz and Cu = US$5,000/t. Revised estimate was prepared by Polymetal as at 01.01.2018 (accounts for change in ownership)

7) Stockpiled Ore Reserves.

8) Stockpiled Ore Reserves

9) Initial estimate prepared by Polymetal as at 01.01.2016. Price: Au = US$1,100/oz and Ag = US$15/oz. Revised estimate was not performed due to lack of material changes.

10) Initial estimate prepared by Polymetal as at 01.07.2014. Price: Au = US$1,300/oz, Ag = US$20/oz, Cu = US$7,000/t and Zn = US$1,700/t. Revised estimate was not performed due to lack of material changes.

11) Stockpiled Ore Reserves.

12) Initial estimate prepared by Polymetal as at 01.01.2018.

13) Initial estimate prepared by Polymetal as at 01.01.2018.

14) Initial estimate prepared by RPA Inc. as at 01.01.2015. Price: Au = US$1,200/oz. Revised estimate was not performed due to lack of material changes.

15) Initial estimate prepared by Polymetal as at 01.07.2017. Ore Reserves are presented in accordance with the Company's ownership equal to 17.66%. Revised estimate was not performed due to lack of material changes.

16) Ore Reserves are presented in accordance with the Company's ownership equal to 42.65%.

17) Initial estimate prepared by Snowden as at 01.01.2015. Price: Au= US$1,300/oz. Only Ore Reserves estimate for Heap Leach. Revised estimate was not performed due to lack of material changes.

Mineral Resources as at 1 January 2018 (1)