Polymetal upbeat on growth in ore reserves

Polymetal reported a 10% increase in its group ore reserves in 2020 on Monday, to 27.9 million ounces of gold equivalent, which was driven by initial ore reserve estimates at East Bakyrchik, Prognoz, and Pesherny.

The FTSE 100 Russia-focussed miner said those improvements more-than-compensated for depletion and ownership dilution at Veduga.

Gold equivalent ore reserves per share grew by the same 10%.

The company’s share of ore reserves for open-pit mining stood at 53%, up by two percentage points year-on-year, while its share of refractory reserves amounted to 72%, declining by two percentage points.

Both of those developments were attributable to the Prognoz reserve initial estimate, the board said.

Its share of silver in ore reserves increased by five percentage points to 11%, also on the back of the “significant” contribution from Prognoz.

Mineral resources, in addition to ore reserves, declined by 14% year-on-year to 21.8 million ounces of gold equivalent, primarily due to resource-to-reserve conversion.

That conversion was partially offset by new mineral resource estimates at Albazino and Veduga.

Mineral resources inclusive of ore reserves were “essentially stable”, the board reported, at 49.7 million ounces of gold equivalent.

The average grade in ore reserves was marginally up year-on-year, and stood at 3.8 grams per tonne of gold equivalent.

Its average gold equivalent grade in additional mineral resources was down 10% year-on-year, while Polymetal said its gold equivalent grades continued to be “one of the highest” within the sector globally.

Polymetal maintained “conservative” price assumptions for both ore reserve and mineral resource estimates at $1,200 per ounce for gold and $15 per ounce for silver.

It said its short-term price assumptions, used for tactical mine planning and sequencing, were $1,500 per ounce and $20 per ounce, respectively.

“We delivered maiden reserve estimates at several of our projects resulting in a substantial increase in total group ore reserves,” said chief executive officer Vitaly Nesis.

“We are confident in our ability to continue per share reserve accretion while maintaining conservative price assumptions.

“This year we are going to significantly advance our greenfield exploration with the aim of extending our resource base at a relatively low funding cost.”

At 0804 GMT, shares in Polymetal International were up 3.24% at 1,467.5p.