REG - Polymetal Int PLC - 3rd Quarter Results <Origin Href="QuoteRef">POLYP.L</Origin>

Polymetal International PKAnnouncement

20/10/2015 07:01

RNS Number : 7781C
Polymetal International PLC
20 October 2015
Release time
IMMEDIATE
Date
20 October 2015
Polymetal International plc
Q3 2015 production results
Polymetal International plc (LSE, MOEX: POLY; ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the third quarter and nine months ended September 30, 2015.
HIGHLIGHTS
 Polymetal reports another strong set of the results, with 1,061 Koz of gold equivalent produced during the nine month period ended 30 September 2015, an increase of 2% year-on-year.
 Gold equivalent production in the third quarter was 429 Koz, an increase of 28% quarter-on-quarter and 10% year-on-year driven by seasonal de-stockpiling of Mayskoye concentrate and a strong performance at Dukat and Albazino. Quarterly gold production was 270 Koz, up 4% year-on-year. Silver production in the third quarter was 9.3 Moz, up 21% year-on-year.
 Polymetal continued to generate free cash flow in the third quarter and paid out US$ 34 million of interim dividends to shareholders. Net debt at 30 September 2015 increased by US$35 million compared to 30 June 2015 to US$1,268million as the Company paid a net consideration of US$ 68 million for the settlement of the Kyzyl put option. As is normal, silver sales lagged production during the first three-quarters of the year, as most of silver is sold in the form of concentrate to offtakers which results in a longer work-in-progress cycle. This trend is expected to be reversed before year-end with the corresponding cash inflows.
 At Kyzyl, the external audit of the feasibility study is nearing completion, and the release of its results is scheduled for the third week of November. A significant capital expenditure reduction vs. earlier projections is expected, mostly due to the impact of depreciation of the Russian Rouble. Site preparation is already under way and full-scale construction is on track to commence in Q3 2016. 
 Polymetal will host an Analyst and Investor Day on November 16 in London to present and discuss the results of the Kyzyl feasibility study
 Polymetal is especially focused on remedial measures in response to three fatalities at our mines from 1st of August to the date of this report. The Company has established a dedicated Safety and Sustainability Committee of the Board. The Committee's role will be to oversee the results of in-depth external audit of safety management systems, and to assist and monitor Polymetal's management in developing and implementing additional measures to improve safety performance and overall risk management efficiency in this area.
 The Company remains in a strong position to meet its annual production guidance of 1.35 Moz of gold equivalent in 2015, along with its total cash cost guidance of US$ 525-575/GE oz and all-in sustaining cash costs of US$ 700-750/GE oz.
 Guidance for 2016 reconfirmed at 1.35 Moz of gold equivalent and for 2017 at 1.4 Moz of gold equivalent. 
"We are pleased to report another quarter of consistently strong operating results with significant free cash flow generation, underpinned by a disciplined business model that prioritizes shareholder returns", said Vitaly Nesis, Group CEO of Polymetal. "With the support of the new Board committee, our focus is to promptly address safety issues at our operations, and underground operations in particular, in order to ensure optimal working conditions for our employees".

3 months ended Sep 30,
% change1
9 months ended Sep 30,
% change1

2015
2014
2015
2014







Waste mined, Mt
17.2
19.5
-12%
50.0
59.8
-16%
Underground development, km
18.1
14.6
+24%
54.0
44.9
+20%
Ore mined, Kt
3,116
3,582
-13%
9,124
10,013
-9%
Open-pit
2,360
2,219
-19%
6,855
8,073
-15%
Underground
755
633
+14%
2,269
1,939
+17%
Ore processed, Kt
2,852
3,056
-7%
8,289
8,529
-3%
Production






Gold, Koz
270
259
+4%
642
646
-1%
Silver, Moz
9.3
7.7
+21%
24.9
23.2
+8%
Copper, tonnes
670
104
+543%
808
1,631
-50%
Gold equivalent, Koz2
429
388
+10%
1,061
1,040
+2%
Sales






Gold, Koz
261
254
+3%
614
606
+1%
Silver, Moz
8.4
7.3
+15%
22.4
21.3
+5%
Copper, tonnes
300
-
NA6
699
300
+133%
Revenue, US$m3
402
451
-11%
1,050
1,176
-11%
Net debt, US$m4
1,268
1,233
+3%
1,268
1,249
+2%
Safety5






LTIFR
0.17
0.05
+240%
0.18
0.13
+38%
FIFR
0.08
-
NA
0.07
0.05
+40%
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 1:60 Ag/Au and 5:1 Cu/Au conversion ratios.
 (3) Calculated based on the unaudited consolidated management accounts. Concentrate sales are recorded based on forward prices for the expected dates of final settlement and concentrate revenue is presented net of refining and treatment charges.
(4) Non-IFRS measure, based on unaudited consolidated management accounts. Net debt equals to current and non-current borrowings less cash and cash equivalents and includes the liability for dividend payable. Comparative information is presented for 30 June 2015 (for the three months period) and 31 December 2014 (for the nine months period).
 (5) LTIFR =lost time injury frequency rate per 200,000 hours worked; FIFR = fatal injury frequency rate per 200,000 hours worked.
 (6) NA - not available
PRODUCTION BY MINE

3 months 
ended Sep 30,
% 
change1
9 months 
ended Sep 30,
% 
change1
3 months 
ended Jun 30,
Q-o-Q, %
change1

2015
2014
2015
2014
2015
GOLD EQ. (KOZ)2








Dukat operations
140
113
+23%
384
357
+8%
127
+10%
Albazino-Amursk
64
62
+3%
173
177
-2%
54
+19%
Mayskoye
71
42
+69%
91
44
+107%
9
+694%
Omolon operations
66
69
-4%
168
185
-9%
72
-9%
Voro
34
42
-19%
105
117
-10%
30
+14%
Varvara
20
24
-15%
58
77
-24%
18
+16%
Okhotsk operations
34
37
-8%
81
84
-4%
25
+37%
TOTAL
429
388
+10%
1,061
1,040
+2%
334
28%
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 1:60 Ag/Au and 5:1 Cu/Au conversion ratios.
CONFERENCE CALL AND WEBCAST
Polymetal will hold a conference call and webcast on Tuesday, 20 October, 15:30 Moscow time (13:30 London time).
To participate in the call, please dial:
8 10 8002 041 4011 access code 840470# (free from Russia), or 
+44 (0) 20 3367 9453 (free from the UK), or
+1 866 907 5925 (free from the US), or 
any of the above numbers (from outside the UK, the US and Russia) or follow the link:
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=3127
Please be prepared to introduce yourself to the moderator or register.
Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=3127. A recording of the call will be available immediately after the call at +44 (0) 20 3367 9460 (from within the UK), +1 87 7642 3018 (from within the US) and +7 495 745 7948 (from within Russia), access code 296938#, from 16:30 Moscow time Tuesday, October 20, till 16:30 Moscow time Tuesday, October 27, 2015.
Enquiries
Media
Investor Relations
Instinctif Partners
David Simonson
Saule Jandossova
+44 20 7457 2020
Polymetal
Maxim Nazimok
Evgenia Onuschenko
Elena Revenko
ir@polymetalinternational.com
+7 812 313 5964 (Russia)
+44 20 7016 9503 (UK)
Joint Corporate Brokers
Morgan Stanley
Sam McLennan
+44 20 7425 8000
RBC Europe Limited
Tristan Lovegrove
Jonny Hardy
+44 20 7653 4000
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", "INTENDS", "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
DUKAT OPERATIONS

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Dukat






Underground development, m
8,218
7,389
+11%
26,248
22,850
+15%
Ore mined (underground), Kt
434
381
+14%
1,228
1,076
+14%







Goltsovoye






Underground development, m
1,996
1,640
+22%
5,615
5,125
+10%
Ore mined (underground), Kt
40
44
-10%
151
138
+10%







Lunnoye + Arylakh






Waste mined, Kt
-
-
NA
-
233
-100%
Underground development, m
1,478
1,180
+25%
4,188
3,923
+7%
Ore mined, Kt
106
89
+20%
293
295
-1%
Open-pit
-
-
NA
-
36
-100%
Underground
106
89
+20%
293
259
+13%







TOTAL HUB






Underground development, m
11,692
10,209
+15%
36,051
31,898
+13%
Ore mined (open pit), Kt
-
-
NA
-
36
-100%
Ore mined (underground), Kt
581
514
+13%
1,672
1,472
+14%







PROCESSING






Dukat






Ore processed, Kt
484
443
+9%
1,363
1,267
+8%
Head grades






Gold, g/t
0.7
0.6
+25%
0.6
0.8
-14%
Silver, g/t
477
388
+23%
467
437
+7%
Recovery1






Gold
84.2%
84.4%
-0%
84.4%
86.4%
-2%
Silver
86.4%
86.1%
+0%
85.8%
87.3%
-2%
Production






Gold, Koz
9.3
7.2
+29%
23.1
27.2
-15%
Silver, Moz
6.3
4.9
+30%
17.0
15.8
+7%
Lunnoye 






Ore processed, Kt
101
103
-2%
311
298
+4%
Head grades






Gold, g/t
1.4
1.4
+1%
1.5
1.3
+17%
Silver, g/t
418
392
+7%
426
388
+10%
Recovery1






Gold
92.3%
89.3%
+3%
90.7%
84.2%
+8%
Silver
89.7%
93.2%
-4%
88.9%
92.0%
-3%
Production






Gold, Koz
4.4
4.1
+5%
13.9
10.2
+37%
Silver, Moz
1.2
1.3
-2%
3.8
3.3
+15%
TOTAL PRODUCTION






Gold, Koz
13.7
11.3
+21%
37.0
37.4
-1%
Silver, Moz
7.6
6.1
+23%
20.8
19.2
+8%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)
Quarterly silver production at the Dukat hub increased by 23% year-on-year and by 11% quarter-on-quarter as the grades at the Dukat mine were significantly above the average reserve grades due to mining a very high-grade (~2,000 g/t Ag Eq) and newly discovered apophyse (off-shoot) at one of the veins. This is expected to be a one-off event, while quarterly volatility of the grades around the average reserve grade has been typical for the Dukat mine.
Quarterly gold production at the Dukat hub increased by 21% year-on-year and by 10% quarter-on-quarter as a result of higher grades processed at the Dukat plant and improved recoveries at both the Lunnoye and Dukat processing plants.
The amount of ore mined at the underground mines grew 13% year-on-year while underground development continued to grow and increased 15% year-on-year.
Processing volumes continued to increase (up 10% quarter-on-quarter) as the processing plants benefited from the results of the continuous improvement program. 
Lunnoye has demonstrated a very strong set of the results, with significantly improved grades due to input of high-grade ore from Arylakh underground. 
ALBAZINO-AMURSK

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Waste mined, Kt
4,576
4,104
+11%
12,715
12,078
+5%
Underground development, m
1,310
852
+54%
3,514
2,331
+51%
Ore mined (open pit), Kt
389
402
-3%
1,119
1,189
-6%







PROCESSING






Albazino concentrator






Ore processed, Kt
388
418
-7%
1,191
1,214
-2%
Gold head grade, g/t
5.5
4.8
+15%
5.3
4.8
+11%
Gold recovery1
86.0%
88.2%
-3%
87.4%
87.8%
-1%
Concentrate produced, Kt
34.7
35.7
-3%
100.3
99.4
+1%
Concentrate gold grade, g/t
52.6
49.1
+7%
54.8
51.3
+7%
Gold in concentrate, Koz2
58.6
56.5
+4%
176.8
163.8
+8%







Amursk POX






Concentrate processed, Kt
41.9
44.8
-6%
115.4
120.1
-4%
Gold head grade, g/t
55.3
46.7
+18%
52.6
50.6
+4%
Recovery
94.0%
94.0%
+0%
94.1%
93.6%
+0%
Gold produced, Koz
63.8
61.7
+3%
173.4
176.7
-2%
TOTAL PRODUCTION




-

Gold, Koz
63.8
61.7
+3%
173.4
176.7
-2%
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 completion of downstream processing at the Amursk POX
Albazino produced 63.8 Koz of gold in the third quarter, 3% higher year-on-year due to processing of higher grade material. Quarter-on-quarter gold production grew by 19% both because of higher grades and increased concentrate processing volumes at the Amursk POX plant. POX recoveries remained stable.
Gold production for the nine months was down slightly by 2% year-on-year driven by 4% throughput reduction, but was partially offset by the increase in grades and recoveries.
Underground development at the Olga zone continued at a stable pace. First ore from the stopes is scheduled to come into production during Q4 2015.


MAYSKOYE

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Underground development, m
3,446
2,983
+16%
9,440
8,141
+16%
Ore mined (underground), Kt
152
149
+2%
519
467
+11%







PROCESSING






Mayskoye concentrator






Ore processed, Kt
197
214
-8%
634
606
+5%
Gold head grade, g/t
5.3
9.1
-42%
6.8
8.8
-23%
Gold recovery1
83.2%
86.1%
-3%
86.0%
82.7%
+4%
Concentrate produced, Kt
17.6
24.8
-29%
63.0
71.2
-11%
Concentrate gold grade, g/t
49.1
68.0
-28%
58.8
62.2
-5%
Gold in concentrate, Koz2
27.8
54.2
-49%
119.2
142.3
-16%
Concentrate sold, Kt
29.7
22.3
+33%
29.7
22.3
+33%
Payable gold in concentrate sold, Koz
59.6
39.3
+52%
59.6
39.3
+52%







Amursk POX






Concentrate processed, Kt
4.1
1.8
+130%
16.8
3.5
+378%
Gold head grade, g/t
59.4
56.6
+5%
58.4
51.5
+13%
Recovery
94.0%
94.1%
-0%
94.1%
87.6%
+7%
Gold produced, Koz
11.5
2.8
+307%
31.8
4.9
+549%







TOTAL PRODUCTION






Gold, Koz
71.1
42.1
+69%
91.5
44.2
+107%
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 internal downstream processing to saleable metal product.
Mayskoye produced 91.5 koz of gold during 9M 2015. The production was split between the in-house POX processing and concentrate offtake to China that accounted for 65% of 9-months production. As at September 30, available for shipping stockpiles at Mayskoye amounted to 25 Kt of concentrate containing 47 Koz of gold.
Persistent geotechnical problems with ore stability were partially responsible for the recent fatalities. In response to these events the management has accelerated a planned changeover from drift-and-fill mining to sublevel open stoping with backfill. The new mining system will ensure that employees are not exposed to rock falls in the partially broken stopes as all development and production drilling will be done from waste openings.
As a result, the drift-and-fill stopes prepared for mucking now need to be re-developed which will negatively impact 2H 2015 ore tonnage and grade, forcing the processing of lower-grade historic stockpiles in Q3 and a 3-week concentrator stoppage in Q4.
The grades and ore volumes are expected to return to reserve averages in Q1 2016. The change in the mining system is expected to benefit the grade profile at the same time increasing mining costs with more precise estimates of the overall impact to become available in Q2 2016.
OMOLON OPERATIONS

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Sopka






Waste mined, Kt
-
1,080
-100%
1
3,536
-100%
Ore mined (open pit), Kt
-
341
-100%
-
842
-100%







Dalneye






Waste mined, Kt
-
276
-100%
1,042
1,155
-10%
Ore mined (open pit), Kt
-
39
-100%
635
215
+195%







Tsokol






Waste mined, Kt
-
905
-100%
396
3,285
-88%
Underground development, m
684
-
NA
785
-
NA
Ore mined (open pit), Kt
-
63
-100%
176
188
-6%







Birkachan






Waste mined, Kt
777
7
NM
1,447
535
+170%
Underground development, m
-
280
-100%
1,254
280
+348%
Ore mined (open pit), Kt
256
3
NM
441
698
-37%
Ore mined (underground), Kt
0
-
NA
1
-
NA







Oroch






Waste mined, Kt
1,127
-
NA
2,628
-
NA
Ore mined (open pit), Kt
195
-
NA
232
-
NA







TOTAL HUB






Waste mined, Kt
1,904
2,267
-16%
5,515
8,511
-35%
Underground development, m
684
280
+144%
2,039
280
+628%
Ore mined (open pit), Kt
451
446
+1%
1,484
1,943
-24%
Ore mined (underground), Kt
-
-
NA
1
-
NA







PROCESSING






Birkachan Heap Leach






Gold production, Koz
-
3.0
-100%
0.1
4.2
-97%







Kubaka Mill






Ore processed, Kt
207
211
-2%
622
610
+2%
Grade






Gold, g/t
6.3
7.6
-17%
6.1
7.4
-18%
Silver, g/t
227
200
+13%
184
165
+12%
Recovery1






Gold
94.6%
95.0%
-0%
95.6%
94.9%
+1%
Silver
88.3%
83.3%
+6%
87.4%
83.9%
+4%
Gold production, Koz
41.8
46.9
-11%
115.3
137.8
-16%
Silver production, Moz
1.5
1.1
+29%
3.1
2.6
+23%
TOTAL PRODUCTION






Gold, Koz
41.8
49.9
-16%
115.4
141.9
-19%
Silver, Moz
1.5
1.1
+28%
3.1
2.6
+22%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory
 (2) NM - not material
At Omolon, gold production decreased by 16% year-on-year while silver production increased 28% as the Kubaka plant was processing ore from Dalnee and Sopka stockpiles, with lower gold grades, but higher silver grades.
Birkachan open pit operations have resumed in full with underground mining pushed back by 5 to 6 quarters. This was made possible by significant drop in waste mining costs and changes in pit wall angles.
Open pit mining started at Oroch in Q2 and volumes continued to increase steadily in the third quarter.
At Tsokol, underground development continued with the goal to start ore stoping in Q1 2016.
VORO

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Voro






Waste mined, Kt
2,636
2,928
-10%
7,818
8,149
-4%
Ore mined (open pit), Kt
506
710
-29%
1,422
1,597
-11%
- primary
379
237
+60%
1,086
714
+52%
- oxidised 
127
473
-73%
336
883
-62%







PROCESSING






Voro Heap Leach






Ore stacked, Kt
243
376
-35%
423
686
-38%
Gold head grade, g/t
1.9
1.4
+41%
1.8
1.4
+23%
Gold production, Koz
8.3
8.0
+4%
19.2
18.6
+3%
Voro CIP






Ore processed, Kt
243
238
+2%
698
696
+0%
Gold head grade, g/t
4.0
5.3
-26%
4.1
5.7
-28%
Gold recovery1
79.2%
85.9%
-8%
78.8%
83.6%
-6%
Gold production, Koz
25.5
33.5
-24%
84.8
96.9
-12%
TOTAL PRODUCTION






Gold, Koz
33.8
41.5
-18%
104.0
115.4
-10%
Silver, Moz
0.020
0.029
-31%
0.082
0.071
+16%
Note: (1) Technological recovery, includes gold within work-in-progress inventory
Gold production at Voro in Q3 2015 decreased by 18% year-on-year to 33.8 Koz driven by the planned decrease in grade and related decline in CIP recoveries. Quarter-on-quarter gold production was up 15% mostly as a result of 40% increase in gold production at the heap leach plant driven by higher grades and the switch from Merrill Crowe recovery to Carbon-In-Column technology.
VARVARA

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Waste mined, Kt
8,051
7,848
+3%
22,471
23,793
-6%
Ore mined (open pit), Kt
1,014
1,178
-14%
2,546
2,690
-5%







PROCESSING






Flotation






Ore processed, Kt
234
54
+337%
311
547
-43%
Grade






Gold, g/t
1.2
1.8
-34%
1.1
1.1
+1%
Copper
0.39%
0.37%
+4%
0.36%
0.40%
-9%
Recovery1






Gold
48.1%
52.6%
-8%
46.2%
47.3%
-2%
Copper
72.3%
75.3%
-4%
72.2%
80.7%
-10%
Production






Gold (in concentrate), Koz
3.3
0.9
+284%
4.1
7.8
-47%
Copper (in concentrate), t
670
104
+543%
808
1,631
-50%
Leaching






Ore processed, Kt
594
844
-30%
2,265
2,141
+6%
Gold head grade, g/t
0.9
1.1
-17%
0.8
1.1
-25%
Gold recovery1
76.8%
75.2%
+2%
78.1%
76.1%
+3%
Gold production (in dore), Koz
13.7
22.6
-39%
50.0
60.9
-18%
TOTAL PRODUCTION






Gold, Koz
17.1
23.5
-27%
54.1
68.6
-21%
Copper, t
670
104
+543%
808
1,631
-50%
Note:  (1) Technological recovery, includes gold and copper within work-in-progress inventory
At Varvara, gold production in Q3 2015 decreased by 27% driven by lower grade and lower throughput.
In the third quarter, throughput at the leaching circuit temporarily decreased by 30% due to planned care and maintenance shutdown, while the copper circuit continued to process low-grade copper-gold ore from the stockpiles. 
In July 2015, Polymetal completed construction and launched a 13 km railway spur at Varvara enabling long-distance transportation of 3rd-party material and leading to a meaningful reduction in concentrate transportation costs.
The Kazakh tenge has lost more than 30% of its value after Kazakhstan government introduced a freely floating exchange rate for the currency. Devaluation of the tenge will have a major positive impact on Varvara's operating cost level in the second half of the year.
OKHOTSK OPERATIONS

3 months ended Sep 30,
% change
9 months ended Sep 30,
% change

2015
2014
2015
2014
MINING






Khakanja 






Waste mined, Kt
-
1,153
-100%
1,478
3,530
-58%
Ore mined(open-pit), Kt
-
94
-100%
180
177
+2%







Avlayakan






Underground development, m
985
950
+4%
2,990
2,935
+2%
Ore mined (underground), Kt
22
10
+116%
78
18
+330%







Ozerny






Waste mined, Kt
-
1,165
-100%
42
3,499
-99%
Ore mined (open pit), Kt
-
78
-100%
105
423
-75%







TOTAL HUB






Waste mined, Kt
-
2,319
-100%
1,520
7,029
-78%
Ore mined, Kt
22
183
-88%
363
618
-41%
 Open-pit
-
172
-100%
285
600
-53%
 Underground
22
10
+116%
78
18
+330%







PROCESSING






Ore processed, Kt
161
156
+3%
471
463
+2%
Grade






Gold, g/t
6.0
6.2
-3%
4.6
4.4
+4%
Silver, g/t
73
116
-37%
84
120
-30%
Recovery1






Gold
94.9%
95.6%
-1%
94.9%
92.6%
+2%
Silver
75.7%
71.9%
+5%
70.0%
75.1%
-7%
TOTAL PRODUCTION






Gold, Koz
28.9
29.5
-2%
66.2
61.6
+8%
Silver, Moz
0.3
0.4
-31%
0.9
1.3
-35%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)
Gold production at Okhotsk operations during 9M 2015 increased by 8% year-on-year as the company was processing high-grade material from Avlayakan underground mine. Silver production during nine months was down 35% driven by the depletion of high-silver ore blocks in the Khakanja open pit where mining was completed in Q2.
Gold recoveries were relatively stable quarter-on-quarter and increased meaningfully year-on-year due to the change in the mix of ores processed. 
At Svetloye, construction is progressing on schedule. Summer navigation was successfully completed with all materials delivered to the access point at Unchi. The accommodation camp and fuel storage depot are now commissioned. 
Open-pit mining is on track to start in Q4 2015. 
KYZYL
Project feasibility study has been completed and is currently being reviewed by the independent auditor. The release of findings is scheduled for the third week of November. Polymetal will host the Analyst and Investor Day on November 16 in London to present and discuss the results of the feasibility study. 
Equipment selection process under way with final commercial bids submitted and preferred suppliers identified. Contracts for the design of the tailings dump and relocation of historic waste stockpiles have been awarded.
Polymetal is on track to start full-scale construction in Q3 2016. 
HEALTH AND SAFETY
Polymetal suffered two fatalities during the third quarter 2015 at the Mayskoye underground mine. A drift miner was fatally injured by a rock mass fall in the underground mine on September 6, and a blastman suffered fatal injuries because of an accident with a charging machine on 7 September. On October 10, at the Avlayakan underground mine (Okhotsk operations) a blastman was fatally injured by unstable rock mass fall. 
Polymetal places great value on its workers' health and safety. In response to these and earlier events, considering the results of in-depth external audit of safety management systems, the Company continues to develop and implement additional measures to improve risk management efficiency. Polymetal has also launched pilot projects to test a more protective underground development system, and increased and upgraded the mining fleet. 
Safety and Sustainability Committee and Change to composition of Remuneration Committee
To address the recent deterioration in the safety performance and oversee management commitment to continuous improvement in health, safety and sustainability performance at all levels of the organisation, and, inter alia, review the HSE incidents, the Company further announces that it has established a new Safety and Sustainability Committee of the Board (the "Committee") to assist the Board of Directors in fulfilling its oversight responsibilities on matters relating to safety, health, environment, and social responsibility. The Committee will be comprised of Mr Homeniuk as Chair, Mr Skirrow, Ms Grnberg (all non-executive directors), and Mr Vitaly Nesis, the Group CEO.
Following the appointment of Leonard Homeniuk as the Chairman ofthe Committee, Christine Coignard, Senior Independent Non-Executive Director would replace Mr Homeniuk as Chair of Remuneration Committee and Mr Homeniuk would continue to serve as its member.
Terms of reference of the Committee is availableon the Company's websitewww.polymetalinternational.com. 
PERSONNEL
Igor Finogenov, the former President of the Eurasian Development Bank, joined the Boards of Kyzyl and Varvara as Chairman. Mr. Finogenov will be responsible for coordinating Polymetal's relations with the government authorities in Kazakhstan, including permitting, transaction vetting, taxation, and licencing. 

This information is provided by RNS
The company news service from the London Stock Exchange
  END
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