Polymetal reports 'significant' increase in reserves at Komar

Polymetal International reported a “significant increase” in ore reserves at its Komar gold deposit in Kazakhstan on Wednesday.

The FTSE 250 company said the updated reserve estimate was prepared under 2012 JORC standards, and incorporated data from 387 diamond drill holes completed after Polymetal had agreed to acquire the asset in the second quarter of 2016.

In total, the exploration campaign comprised of 68,016 metres of diamond drilling.

As a result of the campaign, reserves had now grown by 535 Koz of gold while the grade remained stable at 1.8 g/t.

Polymetal said most of the additional ounces represented an upgrade and conversion of inferred resources in the southern part of the property, as well as new mineralised material discovered along strike in the extreme northern part of the 5km-long deposit.

The re-designed open pit has a stripping ratio of 13 mt/mt, roughly at the same level as the previously designed open pit.

It said the maximum mining depth remained unchanged at 190 m below the surface level, adding that mineralisation was open along strike in the northerly direction and down-dip in the southern part of the deposit.

Polymetal said it now plans to mine, transport by rail and process approximately 2 Mt of Komar ore per year at the Varvara processing plant, compared with the 1 Mt per annum ore production rate envisaged at the time of the acquisition.

During the first nine months of 2017, 1.4 Mt of Komar ore was processed at Varvara.

The additional Komar ore would displace the lower-grade material from the Varvara deposit and consequently, increase production and result in lower costs at the Varvara processing hub.

Mine-to-mill transportation costs for Komar ore are low, Polymetal claimed, and comprised approximately $4.50 per tonne.

That would make processing Komar ore at the existing plant at Varvara a “superior option” compared to the construction of a new on-site processing facility in terms of return on invested capital, the board said.

Total upgraded ore reserves were estimated as at 1 June at 24 Mt of ore with a grade of 1.8 g/t for 1.4 Moz of gold contained.

Polymetal said that represented a significant increase over the previous estimate with a 60% increase in tonnage and a 57% increase in gold content, further extending the Varvara hub mine life by three years, until 2032.

“We are very happy about the positive exploration results at Komar,” said Polymetal group CEO Vitaly Nesis.

“The reserve expansion, increased processing capacity and associated economies of scale have far outstripped our expectations at the time of the acquisition.

“Polymetal plans to continue exploration at Komar with the goal to further extend the life-of-mine of the Varvara hub.”