OREANDA-NEWS. On January 21, 2009 JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”), announced its production results for the quarter and the full year ended December 31, 2008, reported the press-centre of Polymetal.

HIGHLIGHTS
Quarterly gold and silver production grew by 16% and 20% respectively backed by improved grades at Khakanja and increased throughputs at Voro (primary ore) and Dukat as a result of partial commissioning of expansions at the both processing plants

Annual gold production increased by a healthy 15% and amounted to 285Koz beating both the initial guidance provided in January 2008 (250-270Koz) and the updated guidance provided in October 2008 (260-280Koz)

Annual silver production grew by 8% to 17.2Moz, in line with both the initial guidance (17-18Moz) and the updated guidance (16.5-17.5Moz)

Annual gold and silver sales amounted to 281Koz and 17.7Moz respectively with total revenue growing by 62% and achieving the record level in Polymetal’s history of US 500 million

Albazino-Amursk project remains the key priority and the Company is confident of its ability to finance it despite the financial crisis

The Company reiterates 280-300Koz of gold and 17-18Moz of silver as a production guidance for 2009 and continues to target a 50% EBITDA margin on the mine level

“2008 results are the best testimony to our ability to deliver consistently on our responsible long-term growth program”, said Vitaly Nesis, CEO of Polymetal. “In 2009 we will continue to leverage the existing asset base as well as aggressively move development-stage projects towards production”.
 
OPERATING MINES
In October 2008, the Company announced it was reviewing the option of increasing cut-off grades at Dukat in response to a drastic decline of silver prices in the third quarter; this initiative was implemented which explains a 22% improvement of silver head grades compared to Q3 2008 (417 g/t).

Recovery improvement was achieved due to commissioning of extra capacity being part of the expansion project which enabled to improve grind and increase flotation residence time.

Full mechanical completion of the expanded processing plant is planned for Q1 2009, commissioning is expected to be slightly delayed due to continuing weakness of silver prices.

Lunnoye
At Lunnoye, underground mine is now fully operational with 3 stopes being in extraction. Processing of larger proportion of the underground ore improved gold grade, throughput, and recoveries in the fourth quarter.

Throughput in 2009 is expected to decline as cut-off grade at Arylakh (a satellite mine with lower gold and higher silver grade ore) is raised due to weak silver prices; reduction in operating time will be used for mill maintenance.

Khakanja
At Khakanja, the results continue to be partly driven by the quality ore mined at Yurievskoye.

Though mining at Yurievskoye is year-round, transportation of the ore mined there to the processing plant is seasonal as the winter road functions from January to April. As a result, higher head grades at the processing plant are expected in Q1 2009 compared with the last quarter of 2008.

Waste mining continued to increase as pit 3 is being pre-stripped with first ore production scheduled for Q1 of 2010.

Voro
Increase in volumes of waste mined is explained by concentration of mining on waste stripping in preparation for increased throughput at CIP plant.

At the same time, grade control program continues to deliver good results with dilution significantly below design parameters.

In line with previous forecasts, CIP plant expansion achieved a 100% mechanical completion; commissioning started on January 11.

Heap leach plant achieved record throughput for the year. Ore processed in Q4 2008 was lower compared with Q4 2007 as stacking was stopped two weeks ahead of planned time due to cold weather.

DEVELOPMENT PROJECTS
Albazino/Amursk
Polymetal continued to progress on the development of Albazino/Amursk, a key priority project, on schedule. Construction activities at Albazino site and auxiliary facilities are ongoing.

Albazino resource estimate prepared internally in compliance with the JORC Code (2004) is expected to be released in Q1 2009; reserve estimate release based on the updated feasibility study is planned for Q2 2009.

Polymetal views the Amursk POX facility as a potential processing hub for refractory concentrates from across the Far East of Russia hosting a number of refractory gold deposits which are not being developed due to the absence of viable processing technology.

Detailed design of both Albazino concentrator and Amursk POX facility is being performed with a view to be able to double processing capacity of each of the plants.

Kubaka
Exploration program at Birkachan (the closest to the processing plant and the most prospective deposit in the acquired from Kinross Gold Corporation Kubaka package) has been completed with 11,440 meters drilled in 2008. Polymetal plans to publish Birkachan JORC-compliant resource statement along with the detailed timeline in Q1 2009.

Large-scale bulk testing of ROM ore dump leach (results of which are necessary to finalize the feasibility study which is expected to be completed by the end of 2009) will be conducted at Birkachan over the summer of 2009.

In 2009, it is planned to complete 26,000 meters of diamond and RC drilling which will be mostly concentrated on Birkachan flanks and Oroch (a deposit located 120 kilometers to the south from Kubaka) flanks.