Polymetal's ore reserves fall but mineral resources grow

Ore reserves decreased 5% to 19.8m ounces of gold equivalent mainly due to mining depletion and a downgrade at the Varvara mine in Kazakhstan which were partially offset by reserve additions from the acquisitions of Komar and Dolinnoye last year as well as an upgrade at Svetloye.

Mineral resources increased 29% to 16.5m ounces of gold equivalent, reflecting the Kapan and Komar acquisitions and initial mineral resources estimates at Levoberezhny and Lichkvaz.

Mineral resources, including of ore reserves, grew 5% to 36.4m ounces of gold equivalent.

The average grade in ore reserves fell 8% to 3.8 grams per ton of gold equivalent due to additions from the Komar mine, while the average grade for mineral resources decreased 11% to 4.2 grams per ton as a result of additions from Kapan.

The FTSE 250 company said that last year it used conservative gold and silver price assumptions in reserve and resource estimates of $1,200 per ounce and $16 per ounce, respectively, compared to $1,100 per ounce and $15 per ounce in 2015.

Exploration drilling volumes increased 40% year-on-year to 324km, as the company expanded its scope to include the newly acquired assets and joint ventures and it also gained nine new licences, bringing the total number to 86, of which 47 currently involve active exploration activities.

Chief executive Vitaly Nesis said: "In the course of 2016 we significantly strengthened the resource base of our operating mines and successfully advanced our long-term growth strategy.

“In 2017, we plan to focus on converting resource additions into reserves growth. The key elements of this plan involve initial reserve estimates at Nezhda and Kapan as well as material resource-to-reserve conversion at Kapan, Lichkvaz, Omolon and Komar."