Polymetal pleased with ore reserves update

Mining firm Polymetal International has extended the life-of-mine projections for its Khakanja and Omolon mines in Russia by two years after releasing the first set of ore reserves estimates for its Tsokol, Ozerny, Avlayakan, and Dalniy deposits.

As of July 1st, mineral Resources (in addition to ore resources) were estimated at 2.3m tonnes with an average grade of 4.8 grams per tonne (g/t) of gold equivalent (Au Eq) containing 0.36m ounces of Au Eq (88% gold, 12% silver). Mineral Resources were estimated using a gold price of $1500 per ounce and a silver price of $26 per ounce.

The Tsokol and Avlayakan deposits are already in production while the remaining two (Ozerny, Dalniy) are expected to start producing ore and generating cash flows within the next 18 months.

The mining firm said discovery costs of around $80 an ounce of reserves, including original asset purchase costs, are "very attractive" given the high grade of the deposits, along with the the ability to process ore at the existing processing facilities with very modest further investment, and also hold out the prospect of further significant exploration upside, particularly at Ozerny and Tsokol.

"Such results demonstrate excellent returns on investment in our brownfield exploration activities and we expect further reserve additions at Khakanja and Omolon in 2013," said Vitaly Nesis, Chief Executive Officer of Polymetal.

JH