POLY.L Regulatory News (POLY)

Polymetal International plc

Reserves and resources results announcement for Tsokol, Ozerny, Avlayakan, Dalniy

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to provide an update on Ore Reserves and Mineral Resources for Tsokol, Ozerny, Avlayakan, and Dalniy deposits according to JORC Code 2004.

·; As of July 1, 2012 Ore Reserves at our four deposits (Tsokol, Ozerny, Avlayakan, Dalniy) were estimated at 4.4 Mt of ore with the average grade of 7.2 g/t of Au Eq1 containing 1.0 Moz of Au Eq (86% gold, 14% silver). Ore Reserves were estimated using gold price of $1300/oz and silver price of $23/oz. This is the first estimate of Ore Reserves for all of these properties with additions representing 7% of the Group's reserves as of 1 January, 2012.

·; All of the properties belong to operating processing hubs owned by Polymetal. Two deposits are already in production (Tsokol, Avlayakan) with the remaining two (Ozerny, Dalniy) expected to start producing ore and generating cash flows within the next 18 months.

·; Discovery costs of approximately $80/oz of reserves (including original asset acquisition costs) are very attractive given high grade of the deposits, the ability to process ore at the existing processing facilities with very modest further investment, and further significant exploration upside.

·; As of July 1, 2012 Mineral Resources (in addition to ore resources) were estimated at 2.3 Mt with the average grade of 4.8 g/t of Au Eq containing 0.36 Moz of Au Eq (88% gold, 12% silver). Mineral Resources were estimated using gold price of $1500/oz and silver price of $26/oz.

·; Substantial exploration potential identified, particularly at Ozerny and Tsokol.

"These additions to ore reserves are very important for the Company as they allow us to extend the life-of-mine of both Khakanja and Omolon by 2 years while materially improving the grade outlook compared with other remaining reserves at these operations" said Vitaly Nesis, CEO of Polymetal. "Such results demonstrate excellent returns on investment in our brownfield exploration activities and we expect further reserve additions at Khakanja and Omolon in 2013".

1 Gold equivalent at 60:1 Ag oz/Au oz conversion ratios

·; Tsokol Kubaka forms the part of Omolon operations and is located 3 km away from the Kubaka mill. Open-pit mining at the deposit started in Q1 2012 and is expected to continue till the end of 2016 at the rate of 200 ktpa followed by 2 years of underground mining at 100 ktpa. All ore will be processed at the Kubaka mill.

Tsokol is a conventional low-sulfide epithermal deposit with main veins open along strike (down plunge). Substantial further exploration potential for narrow-vein selective underground mining exists at the property which will be assessed in due course as the pit deepens.

·; Ozerny is a satellite deposit to Khakanja and located 70 km from the processing plant and accessible only by winter road. Ore from Ozerny will be processed at Khakanja in 2013-2016 at the average rate of 200 ktpa.

Ozerny is a large brecciated shear zone on the contact between volcanic and sedimentary rocks. Mineralisation is open at surface along strike in one direction with active exploration drilling ongoing (6,192 m drilled, 44 thousand m3 of trenches made in 2012). Excellent potential exists to expand the size of reserve by both resource conversion and identifying ore body extensions by step-out drilling.

·; Avlayakan is a part of the AK standalone green-field exploration project with a trial open-pit mine feeding the Khakanja processing plant. AK is located 740 km from Khakanja with ore transportation limited to summer months due to seasonal sea navigation. It is expected that open-pit mining will continue until 2014 followed by underground mining in 2015-2018 enabling average ore shipment rate of 70 ktpa.

This approach to ore utilisation is expected to change if additional significant reserves are discovered at AK project enabling the construction of a stand-alone new operation with on-site processing facility. Active drilling is ongoing at the AK project (6,760 m drilled in 2012) with the objective of identifying new high-grade veins. Polymetal expects the development decision on the AK project to be taken in Q4 2013.

·; Dalniy forms the part of Omolon operations and is located 5 km away from the operating Sopka mine. Sopka is 150 km away from the Kubaka mill with ore transportation limited to winter road. Pre-stripping at Dalniy is expected to commence in Q3 2013 with ore mining to start in 2014.

High-grade ore is expected to be trucked to the Kubaka mill in 2015-2017 at 100-150 ktpa while low-grade ore will be processed at the Sopka heap leach facility to be launched in 2015. The actual tonnage split (internal cut-off grade) between high-grade and low-grade ore will be determined at the time of the mining based on then prevailing metal prices and actual operating costs.

Ore Reserves and Mineral Resources 

Tsokol

1 Mill only

2 As of 01.06.2012

3 Open Pit at COG AuEqv=1.15g/t

4 Underground Mining at COG AuEqv=4.9g/t

Ozerny

1 Mill only

2 Open Pit only

3 As of 01.07.2012

4 At COG AuEqv=2.7g/t

Avlayakan

1 Mill only

2 As of 01.07.2012

3 Open Pit at COG AuEqv=8.05g/t

4 Underground Mining at COG AuEqv=9.9g/t

Dalniy

1 Open Pit only

2 As of 01.06.2012

3 Mill at COG AuEqv=7.25g/t

4 Heap Leach at COGAuEqv=1.1g/t

Total Mineral Resources 

1 Mineral Resources are presented as additional to Ore Reserves

Tsokol

1 Mineral Resources are presented as additional to Ore Reserves

2 Mill only

3 As of 01.06.2012

4 Open Pit at COGAuEqv=1.0g/t

5 Underground Mining at COGAuEqv=3.0g/t

Ozerny

1 Mineral Resources are presented as additional to Ore Reserves

2 Open Pit only

3 Mill only

4 As of 01.07.2012

5 At COGAuEqv=1.32g/t

Avlayakan

1 Mineral Resources are presented as additional to Ore Reserves

2 Mill only

3 As of 01.07.2012

4 Open Pit at COGAuEqv=5.85g/t

5 Underground Mining at COGAuEqv=9.4g/t

Dalniy

1 Mineral Resources are presented as additional to Ore Reserves

2 Open Pit only

3 Heap Leach only

4 As of 01.06.2012

5 At COGAuEqv=0.5g/t

The previous assessment of Mineral Resources for all 4 deposits was reflected in the Group's Annual Report 2011 as a part of Ore Reserves and Mineral Resources update as at January 2012.

This estimate was prepared by employees of JSC Polymetal Management Company and CJSC Polymetal Engineering, subsidiaries of the Company, led by Valery Tsyplakov, who assumes overall responsibility for the Mineral Resources and Ore Reserves Report. Mr Tsyplakov is the Managing Director of CJSC Polymetal Engineering and has 12 years' experience in gold and silver mining. He is a Member of the Institute of Materials, Minerals & Mining (MIMMM), London, and a Competent Person under the JORC Code.

Other Competent Persons employed by the Company are responsible for relevant research on which the Mineral Resources and Ore Reserves estimate is based. They include:

·; Geology and Mineral Resources - Vladimir Ryabukhin, Advisor to Director General of JSC Polymetal Management Company, MIMMM, with 38 years' relevant experience;

·; Geology and Mineral Resources - Mikhail Fomkin, Head of Geologic Modelling, MIMMM, with 26 years' relevant experience;

·; Mining and Ore Reserves - Igor Epstein, Head of Mining Process Department, MIMMM, with 30 years' relevant experience;

·; Concentration and Metals - Igor Agapov, Deputy Director of Science and Technology, MIMMM, with 14 years' relevant experience;

·; Environmental Issues - Tatiana Kuleshova, Director for Ecology, MIMMM, with 21 years' relevant experience.

All Competent Persons have given consent for their material to be included in the Report, based on the information provided by them and in the form and the context in which the material is hereby presented.

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