Polymetal sees potential in Kutyn but still considering sale

An audit completed by consultancy Snowden confirmed ore reserves of 3.6m tonnes (t) at a grade of 3.3g/t of gold for 400,000 ounces (oz) of contained gold.

Mineral reserves, which are additional to ore reserves, are estimated at 2.3mt at 3.1g/t for 200,000oz of contained gold.

Chief executive Vitaly Nesis said he was "pleased" with the results of exploration work at Kutyn, located in the Khabarovsk Territory in east Russia.

"This capital-light heap-leaching project has excellent potential to generate cash flows in the medium-term; it also offers upside from conversion of the underground resources to ore reserves and a further exploration upside," he said.

The pre-feasibility study estimated that annual production would average 50,000oz of gold at an all-in sustaining cost of $750/oz. Pre-production capital expenditure would be $52m.

However, he said that the company is currently more focused on the development of the Kyzyl project in north-eastern Kazakhstan, which is due to start production in the second half of 2018. Ore reserves at Kyzyl are 6.7moz at an average grade of 7.5g/t.

This, Nesis said, is its "key priority project and we will, therefore, consider sale or partnership to advance the development of the asset".

Polymetal's shares were up 1.3% at 576.5p by 08:47 on Thursday.