OREANDA-NEWS. On July 20, 2009 JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced the completion of the updated Feasibility Study audit for the Albazino gold project. The Feasibility Study update was prepared by Polymetal Engineering and audited by Snowden Mining Industry Consultants Inc. (“Snowden”), reported the press-centre of Polymetal.

HIGHLIGHTS
Total resources of 3 million ounces of gold at an average grade of 4.3 g/t

Total reserves of 2.3 million ounces of gold at an average grade of 4.1 g/t (estimated using gold price of US700/oz and a cut-off grade of 1.65g/t). The level of confidence in reserves has been significantly upgraded with the majority of the reserves now reported in the Proved category (1.4 million ounces at 4.6 g/t)

The mine plan and schedule are achievable and consistent with the information provided in all areas of the Feasibility Study. Snowden has reviewed the pit designs and has found them to be appropriate and of sufficient detail to prove viability

The total pre-production capital cost is estimated at US238 million (VAT excluded).  This represents approximately a 9% increase over the initial estimate, mostly as a result of building in extra capacity at Amursk POX plant and unfavorable changes in Euro/US exchange rate

Polymetal reiterates its target to receive first gold pour in late 2010 and reach full mining and processing capacity by the end of 2011

“We have successfully met the first major milestone at Albazino project,” said Vitaly Nesis, CEO of Polymetal. “We are now focusing on the start-up of concentrator in Q3 of 2010 and incorporating feed from our recently acquired Mayskoye deposit into the design of Amursk POX plant.”

MINERAL RESOURCES AND ORE RESERVES
The Albazino Reserve and Resources statements as of May 2009 are presented below and are reported in accordance with the JORC Code (2004). Snowden considers Polymetal’s Albazino Mineral Resource as being a reasonable reflection of the input data and geological model, and is of acceptable quality for use in the Albazino feasibility study.

MINING
The mining operation at Anfisa and Olga ore zones will include two open pits. The development of the first will start in 2009, and the second in 2016. The waste mining face height has been set at 10m and the ore face height at 5m. Final bench heights will be 30m each with face angles and berm widths as defined by pit slope domains. Snowden considers the bench and face geometries are considered appropriate and achievable.

Polymetal has nominated a pit deepening rate of 30m/year with a maximum of 50m/year which translates to rate of 5-10 ore benches a year and 3-5 waste benches a year. This is considered conservative compared to international standards and therefore this assumption does not present a risk to the project.

The average strip ratio for the operation is approximately 8.1 t/t.

METALLURGY AND PROCESSING
As Albazino ore is refractory, Polymetal will construct a concentrator at the mine site to produce gold bearing flotation concentrate. This concentrate will be shipped to Amursk, where a technologically advanced pressure oxidation (POX) circuit will be used to liberate and recover the contained gold.

The concentrator will use a mill-float/mill-float protocol and low flotation pulp density which should effectively maximize the concentrate grade produced from a viscous pulp with high slime content. The feasibility study targets a gold flotation recovery of 87.5% into a concentrate representing 10% mass pull. Pilot plant test work supports the gold recovery/mass pull used in the feasibility study.

LOGISTICS
The feasibility study proposes to process the ore in Albazino at the mine site to produce a flotation concentrate. The flotation concentrate will be filtered and dried, and then shipped by road and barge to Amursk where the POX and gold recovery facilities will be constructed. Concentrate will be shipped to Amursk in 2 t bags. Road transportation will be year-round, but the barging operation will be restricted to a six month window when the river is ice-free.

Based on Snowden’s review of the feasibility study and its site visit, Snowden concludes that project logistics have been addressed in a reasonable fashion.

ENVIRONMENTAL, HEALTH AND SAFETY, AND COMMUNITY RELATIONS
As part of this audit, Snowden has reviewed the Environmental, Health and Safety and Community relations (EHSC) portions of the feasibility study. The feasibility study covers the project environmental assessment in detail, addressing all major areas. Snowden’s discussions with Polymetal show that these studies have been carried out to Russian legislation and standards.

Based on Snowden’s review of the feasibility study and the site visit, Snowden concludes that environment, health and safety, and community relations have been addressed adequately in the feasibility study.

UPSIDE POTENTIAL
Numerous exploration targets have been identified in the immediate region of the two main ore zones, Anfisa and Olga, which themselves are not fully defined by drilling. Anfisa has extension potential to the northeast, to the south, and down dip. The Olga ore zone has extension potential to the north, south, down dip and at depth.

Exploration is continuing on site to expand the resource base. Polymetal is targeting 6 million ounces resource by the end of 2011.

Six ore zones within the boundaries of Albazino ore region have been prospected thus far. Only two of those, Anfisa and Olga, have been explored sufficiently for this feasibility study.

This feasibility study also does not include any underground development possibilities, which is due to low gold grades at depth. However, further exploration of ore bodies that have not yet been completely delineated down-dip, may increase the resources significantly to consider a combined open-pit and underground operation.

Polymetal will continue to provide regular updates on the project’s progress.