Polymetal International Q4 production report

DividendMax Ltd.

Polymetal International Q4 production report

Polymetal International plc Q4 and Full Year 2012 production results

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's production results for the fourth quarter and twelve months ended December 31, 2012.

HIGHLIGHTS

Polymetal demonstrated strong operational performance throughout the year. Total gold equivalent production of 1,063 Koz was up 31% compared to 2011 and exceeded the original guidance of 1 Moz by 6%. These excellent results were driven by stable performance at all mature mines, with a notable improvement achieved at Dukat, and successful ramp-up at Omolon and Albazino;

Metal sales for the full year exceeded production for both gold and silver, representing an expected de-stockpiling of concentrate and refined metals inventories (most importantly, at Dukat and Omolon) and thus contributing to stronger operating cash flows.

Annual gold production was 589 Koz, up 33% year-on-year driven mainly by the successful ramp-up at Omolon and Albazino. Annual silver production was 26.5 Moz, up 33% year-on-year as a result of higher grades and recoveries at Dukat, successful processing of high-grade Sopka ore at Omolon, and increased silver grades at Khakanja.

Design daily concentrate throughput at Amursk POX was achieved in late November 2012. However, due to the presence of unexpectedly high chlorine concentrations in process water and certain design weaknesses the plant had to be shut down in late December and currently operates at 60% of design throughput and 9-14 percentage points below design recovery (80-85%). The Company is implementing a series of corrective measures and expects that recovery will slowly improve over Q2 and Q3 while full throughput will be reached in Q4. Polymetal is reviewing the option of resuming Albazino concentrate sale to 3rd-party off-takers for 2013.

A dramatic increase of resource base at Albazino to 6 Moz of gold contained and successful exploration at Kutyn and Svetloye indicate that Polymetal is on track to make development decisions on new asset development in H2 of 2013.

The first special dividend in the Company's history of US$ 0.50 per share was paid in January, demonstrating Polymetal's commitment to capital discipline and resulting in a sector-leading dividend yield.

The Company re-confirms its 2013 production guidance of 1.2 Moz of gold equivalent. Polymetal currently views as moderate the risk of this guidance not being achieved (amounting to approximately 5% of total gold equivalent production) due to delays in ramping up to the design capacity at the POX facility.

Given current macroeconomic environment and particularly recent significant appreciation of the Russian rouble vs. the US Dollar, Polymetal expects total cash costs in 2013 to be approx. US$ 700-725/GE oz and capital expenditures (inclusive of exploration) of approx. US$ 300 million.

"2012 became a year of solid operating results, with reliable delivery on increased production guidance and the successful ramp-up of new mines", said Vitaly Nesis, CEO of Polymetal, commenting on the results. "The operating performance was further supported by substantial increase in resource base, paving the way for development decisions on the third generation of growth assets. In 2013 Polymetal team will be fully focused on unlocking the potential of the Amursk POX plant and the launch of Mayskoye".

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