Greenfield mine underpins rise in gold reserves at Polymetal

FTSE 100-listed Russian gold and silver producer Polymetal has unveiled an operational update on its ore reserves and mineral resources, revealing increases in gold equivalent reserves as of January 1st.

In 2012, the group reported that it increased ore reserves by 6.0% to 15.1m ounces (Moz) of gold equivalent, while mineral resources - additional to ore reserves - grew by 35% to 18.7 Moz of gold equivalent.

The major contributor to growth in gold mineral resources was the doubling of the resource base at Albazino, a greenfield mine, adding a total 3.1 Moz of gold mineral resources, the group said.

At the group's Varvara operation, copper ore reserves nearly doubled to 83,000 tonnes and gold ore reserves increased by 39% to 1.2Moz. The group said that this was mostly as a result of additional in-fill and step-out drilling at the deposit.

Revaluation of resources at Varvara resulted in growth in copper mineral resources to 281,000 tonnes, representing a four-fold increase, in addition to a 1.0 Moz increase in gold mineral resources.

Furthermore, an initial mineral resource estimate was made for Tamunier, a greenfield property in Ekaterinburg region, resulting in the addition of 1.5 Moz of gold mineral resources.

The group reported that average reserve grade remained at a high 3.9 grammes per tonne of gold (g/t) equivalent, and average resource grade at 3.3 g/t of gold equivalent.

A modest decrease in average grades was mainly related to reserve and resource additions of lower-than-average grade at Varvara and Tamunier, respectively, the group said.

Silver mineral resources decreased, and the group said that this was mainly due to resource-to-reserve conversions at Goltsovoye, Tsokol, Ozerny and Avlayakan.

Vitaly Nesis, Chief Executive Officer of Polymetal, commented: "A meaningful increase in reserves and resources during 2012 is a result of our continued focus on exploration".

"Reserve additions at our existing operations offset depletion and extended life of mine, while newly estimated resources, especially at Albazino, are laying the foundations for the next generation of our assets. We expect further significant reserve growth in 2013".

Polymetal's share price was down 0.59% to 933p at 09:18 on Wednesday.

MF