REG - Polymetal Int PLC - Q2 2016 production results <Origin Href="QuoteRef">POLYP.L</Origin>

Polymetal International PKAnnouncement

19/07/2016 07:25

RNS Number : 5591E
Polymetal International PLC
19 July 2016
Release time
IMMEDIATE
Date
19 July 2016
Polymetal International plc
Q2 2016 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 second quarter and six months ended June 30, 2016.
HIGHLIGHTS
 Polymetal's Q2 2016 production was in line with the Company's plans at 262 Koz of gold equivalent. This amounted to a 12% year-on-year reduction mainly due to the planned grade declines at Okhotsk and Omolon as well as traditionally volatile quarterly grade performance at Dukat. 
 Production for 1H 2016 was 522 Koz of gold equivalent, down 8% year-on-year, in line with the 2016 production plan. Materially stronger 2H production is expected to be driven by seasonal de-stockpiling of the Mayskoye concentrate, the start-up of the Svetloye heap leach at Okhotsk, and stronger grades at Dukat and Okhotsk.
 Polymetal continued to generate free cash flow in Q2 and paid a US$ 55 million final dividend. Free cash flow generation is expected to be significantly stronger in 2H driven by stronger production and the traditional seasonal working capital drawdown.
 At Kyzyl, full-scale construction commenced, with initial focus on external infrastructure and bulk earthworks for the processing plant building and auxiliary structures. The receipt of the final mining permit and the arrival of the full mining fleet on site enabled smooth ramp-up of the open pit operations. Kyzyl project remains on track to produce first concentrate in Q3 of 2018.
 Operational turn-around activities of our recently acquired Kapan mine have started, with the medium-term guidance to be released together with the FY2016 production results. Current management's focus is on improving underground mine productivity and reserve modeling.
 The acquisition of Komarovskoye is expected to close in Q3 with detailed integration plans drawn up and ready to be executed immediately after the transfer of ownership to Polymetal.
 Polymetal regrettably reports two fatal incidents at the Albazino and Dukat underground mines during the second quarter of 2016. The Company continues to implement additional measures to reinforce safety risk management procedures in order to fully eliminate fatalities at its expanded underground mining operations.
 Polymetal remains on track to meet its 2016 guidance of 1.26 Moz of gold equivalent at TCC of US$ 525-575/GE oz and AISC of US$ 700-750/GE oz. 
"Polymetal remains on track to meet our annual production and cost guidance. We have also made remarkable progress in ensuring sustainable medium-term growth", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "With the recent commodity price increase, we remain strongly committed to free cash flow generation and the payment of regular dividends". 

3 months ended Jun 30,
% change1
6 months ended Jun 30,
% change1

2016
2015
2016
2015







Waste mined, Mt
21.9
16.8
+30%
35.7
32.9
+8%
Underground development, km
23.6
18.6
+27%
43.7
35.9
+22%
Ore mined, Kt
2,734
2,685
+2%
5,732
6,008
-5%
Open-pit
1,852
1,966
-6%
4,043
4,495
-10%
Underground
883
719
+23%
1,689
1,514
+12%
Ore processed, Kt
2,778
2,793
-1%
5,285
5,437
-3%
Production






Gold, Koz
169
186
-9%
338
372
-9%
Silver, Moz
7.0
8.9
-21%
14.2
15.6
-9%
Copper, tonnes
707
138
NM
955
138
NM
Gold equivalent, Koz2
262
297
-12%
522
568
-8%
Sales






Gold, Koz
157
182
-14%
319
354
-10%
Silver, Moz
6.5
8.8
-26%
13.0
14.0
-7%
Copper, tonnes
131
-
NA
131
398
-67%
Revenue, US$m3
307
350
-12%
593
648
-8%
Net debt, US$m4
1,435
1,383
+4%
1,435
1,298
+11%
Safety5






 Fatalities
2
1
+100%
2
3
-33%
LTIFR
0.13
0.05
+154%
0.18
0.14
+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 1:80 Ag/Au, 5:1 Cu/Au and 2:1 Zn/Auconversion 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 31 March 2016 (for the three months period) and 31 December 2015 (for the six months period).
 (5) LTIFR =lost time injury frequency rate per 200,000 hours worked. 
 (6) NA = not available, NM - not material
PRODUCTION BY MINE

3 months 
ended Jun 30,
% 
change1
6 months 
ended Jun 30,
%
change1

2016
2015
2016
2015







GOLD EQ. (KOZ) 2






Dukat
88
98
-10%
187
189
-1%
Albazino-Amursk
54
54
+1%
114
110
+4%
Mayskoye
10
9
+15%
25
20
+21%
Omolon
38
66
-42%
68
95
-29%
Voro
29
30
-4%
57
71
-20%
Varvara
22
18
+24%
35
38
-6%
Okhotsk
15
23
-38%
30
45
-33%
Kapan
6
-
NA
6
-
NA
TOTAL
262
297
-12%
522
568
-8%
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 and 2:1 Zn/Au conversion ratios.
CONFERENCE CALL AND WEBCAST
Polymetal will hold a conference call and webcast on Tuesday, 19 July, 14:30 Moscow time (12:30 London time).
To participate in the call, please dial:
8 10 800 204 140 11 access code 99428940 # (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=3813
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=3813. A recording of the call will be available immediately after the call at +44 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 302839#, from 14:30 Moscow time Tuesday, July 19, till 14:30 Moscow time Tuesday, July 26, 2016.
Enquiries
Media
Investor Relations
FTI Consulting
Leonid Fink
Jenny Payne
+44 20 3727 1000
Polymetal
Maxim Nazimok
Evgenia Onuschenko
Maryana Nesis 
ir@polymetalinternational.com
+7 812 313 5964 (Russia)
+44 20 7016 9503 (UK)
Joint Corporate Brokers
Morgan Stanley
Sam McLennan Richard Brown
+44 20 7425 8000
RBC Europe Limited
Tristan Lovegrove
Marcus Jackson
+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 Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Dukat






Underground development, m
9,011
9,149
-2%
17,586
18,030
-2%
Ore mined (underground), Kt
382
410
-7%
802
794
+1%







Goltsovoye






Underground development, m
1,509
1,845
-18%
3,263
3,619
-10%
Ore mined (underground), Kt
46
49
-7%
93
111
-16%







Lunnoye + Arylakh






Underground development, m
1,442
1,313
+10%
2,545
2,710
-6%
Ore mined (underground), Kt
103
92
+12%
211
186
+13%







PROCESSING






Dukat






Ore processed, Kt
484
440
+10%
984
879
+12%
Head grades






Gold, g/t
0.6
0.7
-19%
0.6
0.6
-8%
Silver, g/t
356
506
-30%
368
461
-20%
Recovery1






Gold
85.7%
85.2%
+1%
85.8%
84.5%
+1%
Silver
84.8%
86.4%
-2%
85.0%
85.5%
-1%
Production






Gold, Koz
7.5
7.8
-3%
14.8
13.9
+7%
Silver, Moz
4.6
5.7
-19%
9.9
10.7
-8%
Lunnoye 






Ore processed, Kt
110
106
+4%
218
210
+4%
Head grades






Gold, g/t
1.4
1.5
-7%
1.6
1.6
+3%
Silver, g/t
425
425
+0%
462
429
+8%
Recovery1






Gold
92.4%
90.6%
+2%
92.5%
90.0%
+3%
Silver
92.3%
89.1%
+4%
92.4%
88.5%
+4%
Production






Gold, Koz
5.0
4.4
+14%
10.7
9.6
+12%
Silver, Moz
1.5
1.2
+22%
3.0
2.6
+17%
TOTAL PRODUCTION






Gold, Koz
12.5
12.3
+2%
25.5
23.4
+9%
Silver, Moz
6.1
6.9
-12%
12.9
13.3
-3%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)
Quarterly gold production at Dukat increased by 2%, while silver production fell by 12% year-on-year driven mostly by the volatility of the grade profile at the Dukat underground mine, which produced exceptionally high grades in Q2 2015. 
Throughput at the Omsukchan concentrator increased 10% year-on-year driven by the positive impact of the continuous improvement program. The shortfall between underground mine production and plant throughput was covered by processing carbonaceous ore from Lunnoye and old lower-grade stockpiles. This has depressed the average grade in the period.
Grades at the Dukat underground mine are expected to improve in Q3 as higher-grade ore bodies discovered last year during down-dip drilling are brought into production.
ALBAZINO-AMURSK

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Waste mined, Kt
4,524
4,217
+7%
8,619
8,139
+6%
Underground development, m
1,513
1,219
+24%
2,932
2,204
+33%
Ore mined, Kt
434
330
+31%
886
729
+21%
Open-pit
365
330
+11%
753
729
+3%
Underground
69
-
NA
132
-
NA







PROCESSING






Albazino concentrator






Ore processed, Kt
430
404
+6%
830
803
+3%
Gold head grade, g/t
5.1
5.4
-5%
5.0
5.2
-3%
Gold recovery1
87.2%
88.0%
-1%
86.5%
88.1%
-2%
Concentrate produced, Kt
35.6
33.4
+7%
68.6
65.6
+5%
Concentrate gold grade, g/t
53.9
57.2
-6%
53.0
56.1
-5%
Gold in concentrate, Koz2
61.8
61.4
+1%
116.9
118.2
-1%







Amursk POX






Concentrate processed, Kt
33.2
34.2
-3%
73.2
73.5
-0%
Gold head grade, g/t
51.8
52.4
-1%
51.4
51.0
+1%
Recovery
94.1%
94.0%
+0%
94.1%
94.1%
+0%
Gold produced, Koz
54.0
53.5
+1%
114.2
109.6
+4%
TOTAL PRODUCTION




-

Gold, Koz
54.0
53.5
+1%
114.2
109.6
+4%
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/Amursk has delivered a solid quarterly operational performance with gold production up 1% year-on-year at 54Koz. Both the Albazino concentrator and the Amursk POX plant demonstrated consistent gold recoveries of 87.2% and 94.1%, respectively. 
Albazino underground mine productivity and dilution control continued to improve. The fatality which occurred at the mine in June has prompted repeated evaluation of safety procedures and appropriate underground support systems. 
The POX debottlenecking review has been completed and will be submitted for the final Board review in August.


MAYSKOYE

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Underground development, m
4,704
3,169
+48%
10,032
5,994
+67%
Ore mined (underground), Kt
168
143
+17%
289
366
-21%







PROCESSING






Mayskoye concentrator






Ore processed, Kt
178
214
-17%
326
437
-25%
Gold head grade, g/t
5.2
6.8
-24%
5.6
7.5
-25%
Gold recovery1
88.1%
85.9%
+3%
87.9%
86.9%
+1%
Concentrate produced, Kt
17.7
21.4
-18%
33.0
45.4
-27%
Concentrate gold grade, g/t
45.8
58.5
-22%
49.4
62.6
-21%
Gold in concentrate, Koz2
26.0
40.3
-36%
52.3
91.4
-43%







Amursk POX






Concentrate processed, Kt
5.8
5.8
+1%
11.7
12.7
-8%
Gold head grade, g/t
53.0
57.8
-8%
55.3
58.1
-5%
Recovery
94.1%
94.0%
+0%
94.1%
94.1%
+0%
Gold produced, Koz
10.3
8.9
+15%
24.7
20.4
+21%







TOTAL PRODUCTION






Gold, Koz
10.3
8.9
+15%
24.7
20.4
+21%
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.
For the first six months, gold production at Mayskoye increased by 21% to 24.7 Koz year-on-year, entirely produced at the Amursk POX facility at an average recovery rate of 94%. 
The underground mine reached 100% of design capacity in terms of tonnage with dilution remaining materially above plan and affecting the grades in the ore processed during the period. Grades mined have been trending up through the quarter and are expected to improve in Q3.
With the summer navigation period starting in July, the Mayskoye concentrate stockpiled in the seaport of Pevek will be predominantly shipped to third-party off-takers as Amursk POX capacity will be partially taken up by third-party material. 


OMOLON

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Dalneye






Waste mined, Kt
-
10
-100%
-
1,042
-100%
Ore mined (open pit), Kt
-
10
-100%
-
635
-100%







Tsokol






Waste mined, Kt
-
13
-100%
-
396
-100%
Underground development, m
1,017
101
NM
1,932
101
NM
Ore mined (open pit), Kt
-
11
-100%
-
176
-100%
Ore mined (underground), Kt
23
-
NA
29
-
NA







Birkachan






Waste mined, Kt
986
666
+48%
1,382
670
+106%
Underground development, m
705
574
+23%
705
1,254
-44%
Ore mined (open pit), Kt
56
184
-70%
358
184
+94%
Ore mined (underground), Kt
4
1
NM
4
1
NM







Oroch






Waste mined, Kt
1,461
1,501
-3%
2,907
1,501
+94%
Ore mined (open pit), Kt
192
37
+416%
409
37
NM







TOTAL HUB






Waste mined, Kt
2,447
2,191
+12%
4,289
3,611
+19%
Underground development, m
1,722
675
+155%
2,637
1,355
+95%
Ore mined, Kt
275
243
+13%
800
1,033
-23%
 Open-pit
248
242
+2%
768
1,033
-26%
 Underground
27
1
NM
33
1
NM







PROCESSING






Kubaka Mill






Ore processed, Kt
213
209
+2%
417
415
+1%
Grade






Gold, g/t
4.7
7.3
-35%
4.8
6.0
-20%
Silver, g/t
118
282
-58%
73
163
-55%
Recovery1






Gold
86.5%
96.5%
-10%
89.9%
96.1%
-6%
Silver
80.1%
87.2%
-8%
79.7%
86.8%
-8%
Gold production, Koz
30.0
45.3
-34%
58.3
73.5
-21%
Silver production, Moz
0.7
1.6
-59%
0.7
1.7
-56%
TOTAL PRODUCTION






Gold, Koz
30.0
45.3
-34%
58.3
73.7
-21%
Silver, Moz
0.7
1.6
-59%
0.7
1.7
-56%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory
Year-on-year gold and silver production at Omolon decreased by 34% and 59%, respectively as high-grade high-recovery ore from Sopka has been replaced by feedstock from Dalneye and Oroch.
Underground mining at Birkachan resumed, while Tsokol underground mine was ramped up to its full capacity of 10 Kt per month. 
Small-scale open-pit pushbacks at Birkachan and Oroch are currently under way to take advantage of better gold prices and lower costs. Additional ore from these developments will serve as a cushion against potential shortfalls at underground mines.
VORO

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Voro






Waste mined, Kt
2,664
2,565
+4%
5,315
5,182
+3%
Ore mined (open pit), Kt
329
558
-41%
634
915
-31%
- primary
246
405
-39%
538
707
-24%
- oxidised 
83
153
-46%
96
208
-54%







PROCESSING






Voro Heap Leach






Ore stacked, Kt
612
181
-66%
612
181
-66%
Gold head grade, g/t
1.2
1.6
-25%
1.2
1.6
-25%
Gold production, Koz
2.6
5.9
-56%
5.5
10.9
-50%
Voro CIP






Ore processed, Kt
253
232
+9%
498
454
+10%
Gold head grade, g/t
4.4
4.0
+8%
4.4
4.1
+5%
Gold recovery1
78.1%
79.1%
-1%
78.4%
78.6%
-0%
Gold production, Koz
25.9
23.5
+10%
50.8
59.3
-14%
TOTAL PRODUCTION






Gold, Koz
28.5
29.4
-3%
56.3
70.2
-20%
Note: (1) Technological recovery, includes gold within work-in-progress inventory
 (2) Historic pad restacked in Q2 
Gold production at Voro decreased year-on-year by 3% at 28.5 Koz, driven by a planned decline in gold production at the heap leach facility, while processing at the CIP plant continued at a stable pace.
VARVARA

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Waste mined, Kt
4,566
7,344
-38%
9,454
14,420
-34%
Ore mined (open pit), Kt
577
732
-21%
1,236
1,532
-19%
- float ore
25
29
-15%
29
96
-70%
- leach ore
552
703
-21%
1,208
1,436
-16%







PROCESSING






Flotation






Ore processed, Kt
232
77
+201%
354
77
+361%
Grade






Gold, g/t
1.4
1.0
+50%
1.3
1.0
+35%
Copper
0.35%
0.29%
+18%
0.33%
0.29%
+14%
Recovery1






Gold
75.0%
39.1%
+92%
70.2%
39.1%
+79%
Copper
75.0%
71.9%
+4%
72.6%
71.9%
+1%
Production






Gold (in concentrate), Koz
4.9
0.7
 NM
6.5
0.7
NM
Copper (in concentrate), t
567
138
NM
816
138
NM







Leaching






Ore processed, Kt
597
773
-23%
1,224
1,671
-27%
Gold head grade, g/t
0.8
0.8
-3%
0.8
0.8
-11%
Gold recovery1
76.2%
77.1%
-1%
74.5%
78.6%
-5%
Gold production (in dore), Koz
14.0
16.1
-13%
24.9
36.2
-31%
Total ore processed, kt
829
849
-2%
1,578
1,748
-10%
TOTAL PRODUCTION






Gold, Koz
18.9
16.8
+12%
31.4
37.0
-15%
Copper, t
567
138
NM
816
138
NM
Note:  (1) Technological recovery, includes gold and copper within work-in-progress inventory
Q2 Varvara gold production increased 12% year-on-year while copper output jumped more than four-fold. 
Flotation circuit feedstock came mostly from the new high-grade North-Eastern pit and historical stockpiles. The leaching circuit benefited from a significant increase in third-party ore purchases. As a result, total ore processed through the two circuits increased by 11% quarter-on-quarter with further improvements expected as feedstock availability improves.
Detailed mine planning for the Komarovskoye deposit is well under way with open pit mining at the property expected to commence shortly after the acquisition completes (expected in Q3 2016). 
OKHOTSK OPERATIONS

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Khakanja 






Waste mined, Kt
-
529
-100%
-
1,478
-100%
Ore mined(open-pit), Kt
-
104
-100%
-
180
-100%







Ozerny






Underground development, m
-
-
NA
-
42
-100%
Ore mined (underground), Kt
-
-
NA
-
105
-100%







Avlayakan






Underground development, m
1,259
1,208
+4%
2,331
2,005
+16%
Ore mined (underground), Kt
19
24
-21%
61
55
+10%







Svetloye






Waste mined, Kt
236
-
NA
505
-
NA
Ore mined (open pit), Kt
332
-
NA
652
-
NA







TOTAL HUB






Waste mined, Kt
236
529
-55%
505
1,520
-67%
Ore mined, Kt
351
128
+175%
712
340
+109%
 Open-pit
332
104
+221%
652
285
+129%
 Underground
19
24
-21%
61
55
+10%







PROCESSING






Ore processed, Kt
157
157
+0%
309
310
-0%
Grade






Gold, g/t
2.4
4.1
-40%
2.5
3.9
-36%
Silver, g/t
64
89
-28%
66
89
-25%
Recovery1






Gold
95.1%
95.0%
+0%
95.0%
94.9%
+0%
Silver
71.9%
68.4%
+5%
73.3%
67.5%
+9%
TOTAL PRODUCTION






Gold, Koz
11.7
19.5
-40%
24.0
37.3
-36%
Silver, Moz
0.2
0.3
-26%
0.5
0.6
-19%
Note: (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)
Gold production at Okhotsk in Q2 2016 decreased by 40% year-on-year while silver production was down 26%. This is mainly due to a planned grade decrease as the plant was mainly processing low-grade historical ore stockpiles. Production in H2 will increase significantly as higher-grade ore from Avlayakan will arrive after the start of the summer navigation.
At Svetloye, construction is progressing as scheduled, with the crusher, the Merrill Crowe section, the genset unit, and the boiler house already completed and tested. The heap leaching pad preparation is currently 60% complete, fully on track to start ore stacking in early August and solution application in late August. 
KAPAN

3 months ended Jun 30 (1),
% change
6 months ended Jun 30(1),
% change

2016
2015
2016
2015
MINING






Kapan






Underground development, m
2,401
-
NA
2,401
-
NA
Ore mined (underground), Kt
69
-
NA
69
-
NA







PROCESSING






Ore processed, Kt
64
-
NA
64
-
NA
Grade






Gold, g/t
2.3
-
NA
2.3
-
NA
Silver, g/t
42.8

NA
42.8

NA
Copper, %
0.27%
-
NA
0.27%
-
NA
Zinc, %
1.52%

NA
1.52%

NA
Recovery






Gold 
84.1%
-
NA
84.1%
-
NA
Silver
84.1%

NA
84.1%

NA
Copper
92.3%
-
NA
92.3%
-
NA
Zinc
91.2%

NA
91.2%

NA







TOTAL PRODUCTION






Gold, Koz
3.4
-
NA
3.4
-
NA
Silver, Moz
0.1
-
NA
0.1
-
NA
Copper, t
139

NA
139

NA
Zinc, t
705
-
NA
705
-
NA
(1) Since the acquisition date (28 April 2016)
Kapan was acquired in April 2016. Currently the management focus is on integration activities and changes to operating practices. 
The ongoing initiatives include equipment productivity gap analysis against internal benchmarks, changes to motivation system, and targeted in-fill drilling. 
In-fill and step-out drilling is underway at Lichkvaz, a satellite deposit that should provide additional tonnage to the existing concentrator.
KYZYLPROJECT

3 months ended Jun 30,
% change
6 months ended Jun 30,
% change

2016
2015
2016
2015
MINING






Bakyrchik 






Waste mined, Kt
7,470
-
NA
7,470
-
NA
Early in the second quarter of 2016, open-pit mining (pre-stripping) was launched at Kyzyl, targeting the removal of historic waste stockpiles located on site of the future open-pit. Full operating capacity was achieved in May 2016. The final mining permit was received in June 2016, paving the way for the timely launch of drill-and-blast operations. 
Binding contracts for all major processing equipment (mills, flotation cells, press filters, pumps, crusher) have been signed, mostly with European suppliers. 
Site activities are progressing as planned with the launch of full-scale construction of the processing plant and auxiliary structures, and the completion of road access and water tower construction in June. Construction is now focused on foundations and structural steel for the processing plant building. 
HEALTH AND SAFETY
Polymetal regrets to report of two fatal incidents at the Dukat and Albazino underground mines in the second quarter of 2016. The incidents occurred on April 14 and June 30 respectively, and were both caused by a rock-fall at the underground mine. We are deeply saddened over the loss of our colleagues. 
The safe operation of our mines remains a top priority for Polymetal. The Company is determined to commit further effort and resources to make sure that we provide a safe operating environment for all workers throughout the Group by taking the necessary steps to ensure that such events do not occur again in the future. 
PERSONNEL
Mr. Igor Finogenov (57) has been appointed President of Polymetal Management Company. He will be responsible for high-level interaction with governments in the countries of Polymetal's operations. Between 2006 and 2015, Mr Finogenov was Chairman of the Board and Deputy of the Russian Federation Plenipotentiary Representative at the Eurasian Development Bank (EDB). Mr. Finogenov is a former assistant to the Minister of Finance of the Russian Federation (2005-2006) and previously served as President and Chairman of the Board at NOMOS Bank (2000-2005). Since 2009, Mr. Finogenov is a member of the Foreign Investors Council chaired by the President of the Republic of Kazakhstan and he was also previously an advisor to the President of the Chamber of Commerce of the Russian Federation. Between 1998 and 2000, Mr Finogenov worked as an advisor to the Deputy General Director at the Federal State Company Rosvooruzhenye and prior to this, between 1994 and 1998, Mr. Finogenov was Chairman of the Board at NOMOS Bank. Mr. Finogenov is a graduate of the Leningrad Shipbuilding Institute and the All-Union Academy of Foreign Trade. He has also studied at York University (Canada) and has completed the Program for Management Development course at Harvard Business School. He has received numerous awards during his career, including the Order of Friendship (2010) and Order 'Dostyk' of the II degree (2011).
Mr. Dmitry Ushkov (43) has been appointed managing director of the newly acquired Kapan mine in Armenia. He will also oversee exploration projects in Armenia, including Lichkvaz. Mr Ushkov has been with Polymetal since 2009, first as the deputy managing director of Sopka Kvartsevaya mine, from 2010, as the chief engineer at Omolon and later as the technical director of the JSC Polymetal Management branch in Magadan. Mr. Ushkov began his career in 1995 in Karelskiy Okatysh iron ore company. He is a graduate of the Plekhanov State Mining Institute in Saint-Petersburg, with a major of mining engineer in open-pit mining. 

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