OREANDA-NEWS. On May 30, 2007 Snowden Mining Industry Consultants (Australia) have completed a JORC-compliant audit of resources at Polymetal’s gold-silver-zinc Galka deposit, reported the press-centre of  Polymetal.

Audited resources in indicated and inferred categories are estimated at 1,6 Moz of gold equivalent. Galka is only 20 km away from Polymetal’s operating Voro mine in Russia’s Sverdlovsk region and should benefit from well-developed infrastructure in the immediate vicinity of the deposit. The company aims to expand the size of the resource to at least 3 Moz of gold equivalent by undertaking further exploration. Polymetal intends to complete the pre-feasibility study and prepare JORC-compliant estimate of ore reserves at Galka by the end of 2008.

The estimated size of the resource is 14,2 mln. tonnes of ore with an average head grade of 3,5 g/t of Au equivalent resulting in 1,6 mln.oz. of Au equivalent using the conservative cut-off grade (in situ) of 2,0 g/t of gold equivalent.

The following metals prices were used to estimate mineral economic resources: 600 $US/oz., Au, 10 $US/oz., Ag, and 2,500 $US/ton, zinc.

The Pre-Feasibility study on Galka is expected to produce separate estimates for gold-silver mineralization and zinc mineralization in order to optimize mining and processing as well as to highlight a predominantly precious nature of the deposit. Galka resource is presently fully open-pittable which fact, together with the opportunity to rely on the existing Voro infrastructure, should ensure competitive cost position of the potential mine. Galka ores are mostly represented by non-refractory sulfides with no penalty elements present and are thus amenable to conventional processing.

Polymetal obtained an exploration license for Galka in QI 2006 and started active exploration in the second quarter of that year with approximately 5000 m of diamond drilling completed as of the date of the audit. Exploration costs are estimated as 0,74 $US/oz. of Au equivalent. JORC-compliant resource audit has been completed in less than a year since the start of exploration.

Over the next two years, the Company plans to continue extensive exploration at the site. During 2007, Polymetal plans to drill 7000 meters, as well as conduct magnetic and electrical surveys on the flanks of the deposit. In QIII 2008 the Company plans to complete the pre-feasibility study, including JORC-compliant ore reserves and mineral resources estimation, and to conduct State expert review of the reserves. In QIV 2008 Polymetal intends to convert the exploration license into combined license (exploration and production) through the pioneer discovery procedure.

Polymetal believes that further exploration at Galka can at least double the mineral resources by the end of 2008. Some ore bodies have not been drilled yet, while some of known ore bodies remain open at depth and along strike.

Commenting on the audit results Vitaly Nesis, Polymetal CEO, stated: "The discovery of such a significant resource is a great success for Polymetal and a powerful testimony to our ability to deliver positive exploration results. The quality and the scale of the deposit allow us to be very optimistic and expect a material expansion of the mineral resource base at Galka in the nearest future. We target bulk open-pit mine with low costs producing not less than 200 koz per year of gold equivalent and hope to give substance to our expectations by producing a pre-feasibility study by the end of the next year".