OREANDA-NEWS. October 27, 2009. JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced its production results for the quarter and nine months ended September 30, 2009, reported the press-centre of Polymetal.

HIGHLIGHTS
Quarterly gold production grew by 3% compared to Q3 2008 mainly due to higher throughput at the expanded CIP plant at Voro

Silver output increased 8% compared to Q3 2008 due to higher recoveries at Khakanja and higher grades at Lunnoye. Recoveries at Dukat decreased significantly as a result of flow-sheet fine-tuning during the commissioning of the plant expansion

Albazino-Amursk project construction continues on schedule with the target to commence commissioning in Q3 2010. Civil works are complete with the focus now shifting to structural steel works

Mining at Albazino, Degtyarskoye and Sopka Kvartsevaya (“Sopka”) started in the third quarter. Underground development re-commenced at Mayskoye.

The Company narrows down its 2009 production target to 290-300 Koz of gold (previously announced 280-300 Koz) and 17.0-17.5 Moz of silver (previously announced 17-18 Moz)

In 2010 Polymetal targets to produce 350-370 Koz of gold and 19-20 Moz of silver. These numbers do not include any production from Varvarinskoye mine in Kazakhstan.

“We delivered another quarter of solid operating performance and our production is fully in line with year-ago projections,” said Vitaly Nesis, CEO of Polymetal. “The key task is currently to overcome commissioning issues at Dukat and fully ramp up the plant by the end of this year”.

DUKAT OPERATIONS
Silver production at Dukat in the quarter was flat despite average head grades rising significantly compared with Q3 2008. This was due to lower silver recoveries and accumulation of concentrate at Dukat during the commissioning of the plant expansion.

Underground mining operations continued to expand with the total ore mined underground increasing by 52% from Q3 2008.

The expanded plant started commissioning in late August and is currently ramping up to full design capacity of 125 Kt per month. Issues with recovery during commissioning of the new flash flotation and concentrate drying equipment have affected silver production in the quarter, but were largely addressed by late September.

Lunnoye gold and silver production is up 34% and 24% respectively from Q3 2008, due to processing of higher-grade ore from Arylakh.

Underground development started at Goltsovoye deposit. 7,200 meters of definition drilling were completed on site generally confirming the width and the grade of original resource estimates.

Updated resource and maiden reserve estimates for the deposit are planned for release in Q3 2010.

KHAKANJA
Gold production decreased by 8% compared to Q3 2008 due to lower gold grades at depth at the Khakanja pit 1 in line with the mining plan. The processing of high-grade Yurievskoye ore is expected to start in Q1 2010 after the winter road becomes operational.

Silver production is up quarter-on-quarter by 12%. This trend is expected to continue due to higher silver recoveries from Khakanja ore at deep levels of the mine.

VORO
Primary ore throughput increased 24% compared to Q3 2008 as the CIP plant ramped up to its full design capacity of 900 Ktpa. Grade remained above the reserve average as mining dilution was reduced to less than 10% thanks to implementation of new blasting techniques. CIP gold production rose 18%, less than throughput, due to the delay in the shipment of gold to refinery.

Heap leach gold production was down 10%, despite a 13% increase in oxide ore throughput and higher grade of ore stacked, because of lack of process water after unusually hot and dry summer.  September was rainy and full-year metal recovery from the heap is expected to be in line with the last year’s results.

Mining at the Degtyarskoye deposit has commenced with 59 Kt of ore mined during the quarter.  First ore from Degtyarskoe was processed in October yielding relatively high recoveries of above 85%.

ALBAZINO/AMURSK
The construction phase of Albazino development project continues on schedule. Pre-stripping at Albazino pit 1 has commenced with 2 drill rigs, 2 hydraulic excavators, and 4 90-ton trucks working on site. Polymetal is on track to commence ore mining in Q2 2010.

Earth foundation works for the processing plant and all infrastructure have been completed, with the work now focusing on the construction and installation of the structural steel frames for the plant and other buildings.

The road from Albazino to the port of Oglongi is now 80% complete, with fuel depots on site and at Oglongi commissioned. Tailings facility with the diversion channel is 75% complete.

The construction of the POX facility to treat concentrates from Albazino and Mayskoye has also commenced in October. The earthworks are currently under way in order to prepare for the laying of foundations.

MAYSKOYE
Polymetal has re-commenced underground development following the acquisition of a 9% stake in the asset from Highland Gold. The development is based on a revised underground mine plan with lower annual production.

The Company is currently revising the geological model for the deposit by incorporating the data from 70 diamond drill holes completed in 2007-2008. Detailed mapping for sulfur and organic carbon is also under way.

The release of the feasibility study results for Mayskoye, together with the JORC-compliant reserve estimates and detailed development timeline, is currently planned for Q1 2010.

OMOLON OPERATIONS
Mining at Sopka has commenced in the third quarter. The ore is currently being stockpiled. The processing of that ore is expected to start in Q3 2011 after the construction of the Merrill Crowe circuit at Kubaka processing plant is complete.

First gold was produced from the test heap leach at the Birkachan deposit. The stacking of ore has stopped due to the onset of winter, and will resume in April 2010. First results in terms of leaching speed and reagent consumption fully support the economic viability of the operation.

The results of the trial heap leach will be incorporated in the feasibility study, expected to be published in February 2010.

PERSONNEL
Denis Gospodarikov, 32, previously deputy MD-finance at Voro (Sep 2005 – Sep 2009) was appointed MD of Omolon operations. Mr. Gospodarikov started his career at Polymetal corporate headquarters in 2002 after receiving a degree in economics from the Saint-Petersburg State Mining Institute. Such a rapid career development represents the Company’s focus on identifying and fast-tracking the young talent within the organization.