EQS-News: Polyus Finance Plc: Operating results for the first half of 2022

Press Release                                                                                             21 September 2022

PJSC Polyus

Operating results for the first half of 2022

KEY HIGHLIGHTS

• Total gold output amounted to 1,068 thousand ounces, compared to 1,263 thousand ounces in the first half of 2021. This decline was driven by lower production of refined gold across all deposits due to lower average grades in ore processed. Doré gold volumes totalled 1,186 thousand ounces, down 9% year-on-year. The difference in total gold output and doré gold production reflects the accumulation of unrefined gold to be further processed in 2022.
• Volumes of ore mined decreased 16% year-on-year to 28,149 thousand tonnes, reflecting lower ore volumes mined across all operating assets except Kuranakh.
• Volumes of ore processed amounted to 23,777 thousand tonnes, up 2% on the same period of the previous year driven by higher processing volumes at Olimpiada, Verninskoye and Natalka.
• Recovery rate decreased to 81.8%, compared to 82.1% in the first half of 2021.

CONSOLIDATED OPERATING RESULTS

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Olimpiada	427.7	512.3	-17%	570.6	-25%
Blagodatnoye	171.3	209.8	-18%	220.5	-22%
Natalka	211.2	240.4	-12%	262.9	-20%
Verninskoye	136.8	142.4	-4%	149.8	-9%
Kuranakh	106.8	110.3	-3%	127.5	-16%
Alluvials	9.8	25.2	-61%	115.9	-92%
Refined gold, koz	1,063.6	1,240.4	-14%	1,447.2	-27%
Flotation concentrate production, t	2,441	11,830	-79%	3,547	-31%
Antimony in flotation concentrate, t	400	1,919	-79%	580	-31%
Gold in flotation concentrate, koz	4.0	22.8	-82%	7.0	-43%
Gold payable in concentrate, koz	3.1	17.4	-82%	5.4	-43%
Total gold output, koz	1,067.6	1,263.2	-15%	1,454.2	-27%
Rock moved, km³	73,981	64,707	14%	71,723	3%
Stripping ratio, m³/t	2.2	1.5	47%	1.7	29%
Rock moved, kt	189,993	166,481	14%	185,209	3%
Stripping ratio, t/t	5.7	3.9	46%	4.5	27%
Ore mined, kt	28,149	33,666	-16%	33,655	-16%
Ore processed, kt	23,777	23,295	2%	24,600	-3%
Recovery rate, %	81.8%	82.1%	-0.3ppts	83.2%	-1.4ppts
Total doré & slime gold output, koz	1,186.2	1,308.1	-9%	1,428.3	-17%

 

ESG UPDATE

1H Highlights

• Coronavirus: overall status of immunization is 83%.
• LTIFR^[i] at 0.15 (FY 2021 - 0.18), with one fatality recorded at Polyus operations.
• No major environmental incidents during the period.

Coronavirus update

• Almost all regions of the Company's presence softened or canceled anti-Covid measures.
• The Company has softened the requirements for business trips - employees should be vaccinated not later than a year ago (previously - not later than 6 months ago).
• The overall status of immunization as of 30.06.22 in the Polyus Group was 83%.

Health & Safety

• In response to one fatality reported during the period, an investigation was initiated and an off-schedule training was provided for workers at the business unit.
• Employees of Polyus MC LLC have completed first-aid training which also included legal and mental health aspects.
• Polyus has donated around 2 tonnes of medication to the Federal Siberian Research and Clinical Center in Krasnoyarsk to celebrate the Day of the Medical Worker.

Environment and Climate

• Polyus has won Mining Magazine Awards 2021, ranking first in the Emissions and Transition categories for the Company's initiatives in transitioning to renewable energy.
• Polyus and Irkutsk National Research Technical University launched the first Eco Hackathon for students who are looking to contribute to protecting the environment in their home region.
• Polyus has published a special report on the safety of tailings storage facilities, prepared according to the Global Industry Standard on Tailings Management (GISTM). This is the first detailed report produced by a Russian company issued in line with the Global Standard.

Local communities

• Polyus held a theater festival in the Republic of Sakha (Yakutia) from 2-8 June, which was visited by about 4,000 people. The festival's aim was to support the unique culture of Yakut people. It also featured a modern art exhibition from a Moscow museum.
• Polyus contributed to the popularization of geology in Krasnoyarsk: two geology museums received support with the exhibitions' layouts and a new city park dedicated to geologists was opened.

ESG Ratings and indices

• International rating agencies have suspended the assessment of all Russian companies.
• Polyus continues to disclose ESG data for CDP, FTSE Russel, COP UN, RAEX ESG Corporate Rating.
• Polyus plans to expand its participation in ESG ratings and rankings by joining national ESG initiatives.

Olimpiada

1H 2022 Highlights

• Volumes of ore processed amounted to 7,613 thousand tonnes.
• Average grades in ore processed decreased to 2.37 g/t.
• Recovery rate stood at 81.2%.
• Total gold output was 432 thousand ounces.

 

Gold output

Doré gold output stood at 474 thousand ounces in the first half of 2022, down 14% year-on-year, driven by lower average grades in ore processed. Total gold output (refined and concentrate) declined 19% compared to the corresponding  period of the previous year, to 432 thousand ounces. On a semi-annual basis, doré gold output decreased 16%, while total gold output was down 25%.

Mining works

In the first half of 2022, Polyus intensified stripping activities and started ore mining from the low-grade areas of the fourth stage of the Vostochny pit. Hence, volumes of rock moved rose 25% year-on year and amounted to 75,093 thousand tonnes (27,765 km³).   

Volumes of ore mined declined to 5,863 thousand tonnes, down 8% year-on-year. The average grade in ore mined decreased to 2.04 g/t, down from 3.16 g/t in the previous year.

Ore processing

Volumes of ore processed totalled 7,613 thousand tonnes, up 4% compared to the first half of 2021.

Following a decline in average grades in ore mined, the average grade in ore processed decreased to 2.37 g/t, from 3.03 g/t in the corresponding period of 2021. As a result, the recovery rate declined to 81.2%.

Polyus proceeded with a number of initiatives aimed at stabilizing the current processing parameters at 15.0 million tonnes per annum. This included ongoing installation of an additional flotation concentrate thickener and completed introduction of two additional magnetic separators. Alongside stabilizing throughput, Polyus is further improving the BIO complex by ongoing installation of four additional reactors at BIO-2.

Mining works and ore processing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Rock moved, km³	27,765	22,217	25%	28,028	-1%
incl. stripping, km³	25,641	19,906	29%	26,067	-2%
Stripping ratio, m³/t	4.4	3.1	42%	4.8	-8%
Rock moved, kt	75,093	60,136	25%	75,791	-1%
incl. stripping, kt	69,230	53,754	29%	70,382	-2%
Stripping ratio, t/t	11.8	8.4	40%	13.0	-9%
Ore mined, kt	5,863	6,382	-8%	5,409	8%
Average grade in ore mined, g/t	2.04	3.16	-35%	2.38	-14%
Ore processed, kt	7,613	7,316	4%	7,745	-2%
Average grade in ore processed, g/t	2.37	3.03	-22%	2.98	-20%
Recovery, %	81.2%	83.1%	-1.9ppts	84.8%	-3.6ppts
Doré gold, koz	473.7	551.3	-14%	561.5	-16%
Refined gold output, koz	427.7	512.3	-17%	570.6	-25%
Flotation concentrate production, t	2,441	11,830	-79%	3,547	-31%
Antimony in flotation concentrate, t	400	1,919	-79%	580	-31%
Gold contained in concentrate, koz	4.0	22.8	-82%	7.0	-43%
Total gold output, koz	431.7	535.1	-19%	577.6	-25%

Blagodatnoye

1H 2022 Highlights

• Volumes of ore processed totalled 4,419 thousand tonnes.
• Recovery rate stood at 86.0%.
• Doré gold output amounted to 179 thousand ounces.

 

Gold output

Doré gold output in the first half of 2022 amounted to 179 thousand ounces, down 17% compared to the first half of 2021, mainly due to lower average grades in ore processed. Refined gold output decreased 18% year-on-year to 171 thousand ounces. On a semi-annual basis, doré gold output and refined gold output declined 20% and 22%, respectively.

Mining works

Volumes of rock moved rose 7% year-on-year and amounted to 39,590 thousand tonnes (14,187 km³).

Volumes of ore mined in the first half of 2022 decreased to 5,022 thousand tonnes, down 43% compared to the corresponding period of the previous year. Grades in ore mined declined 20% year-on-year to 1.06 g/t.

This decrease occurred due to the sequence of mining works. The Company has completed mining activities at the second stage of the pit, while operations at the third stage are temporarily conducted at lower-grade zones of the pit.

Ore processing

Compared to the first half of 2021, volumes of ore processed decreased 1% to 4,419 thousand tonnes in the reporting period. Following a temporary decline in grades in ore mined, grades in ore processed decreased to 1.48 g/t, from 1.73 g/t in the first half of 2021.

Despite a 14% decline in head grades, recovery rate decreased only by 0.6ppts to 86.0% on a year-on-year basis. Recovery rate was supported by the mineralogy of ore feed with minimal content of carbon and arsenic.

Mill 5

In the first half of 2022, the main contractor for the Mill 5 project completed the shift camp and was in the final stage of closing the thermal envelope of the buildings of comminution and hydromet circuits. Foundation works for an in-pit crushing and conveying (IPCC) system are in progress. Polyus is also advancing the installation of the SAG-mill. The construction of the Yenashimo river diversion channel and installation of reinforced-concrete structures of the river bridge were in progress.

Mining works and ore processing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Rock moved, km³	14,187	13,265	7%	14,854	-4%
incl. stripping, km³	12,394	10,110	23%	11,201	11%
Stripping ratio, m³/t	2.5	1.1	n/a%	1.1	n/a%
Total rock moved, kt	39,590	36,941	7%	41,365	-4%
including stripping, kt	34,568	28,105	23%	31,140	11%
Stripping ratio, t/t	6.9	3.2	n/a%	3.0	n/a%
Ore mined, kt	5,022	8,836	-43%	10,225	-51%
Average grade in ore mined, g/t	1.06	1.33	-20%	1.38	-23%
Ore processed, kt	4,419	4,475	-1%	4,542	-3%
Average grade in ore processed, g/t	1.48	1.73	-14%	1.78	-17%
Recovery, %	86.0%	86.6%	-0.6ppts	87.0%	-1ppts
Doré gold, koz	178.6	216.2	-17%	222.7	-20%
Refined gold output, koz	171.3	209.8	-18%	220.5	-22%

Natalka

1H 2022 Highlights

• Volumes of ore processed increased 3% year-on-year.
• Recovery rate rose to 74.0% from 71.4% on a year-on-year basis.
• Doré gold output totalled 238 thousand ounces.

Gold output

Doré gold output in the first half of 2022 declined 6% year-on-year to 238 thousand ounces, reflecting lower head grades. Refined gold output amounted to 211 thousand ounces, compared to 240 thousand ounces in the first half of 2021. On a semi-annual basis, refined gold output was down 20%, while doré gold output decreased 9% to 238 thousand ounces. Unrefined gold doré volumes will be processed in the second half of 2022.

Mining works

Volumes of rock moved increased 5% to 38,243 thousand tonnes (14,823 km³) compared to the first half of 2021. This increase was mainly driven by improved performance of mining equipment operating on-site. In line with the sequence of mining works, volumes of ore mined decreased to 9,965 thousand tonnes, a 14% decline from the first half of 2021. The average grades in ore mined decreased to 1.24 g/t (1.36 g/t in the first half of 2021), as Polyus intensified mining activities at a lower-grade pit area.

Ore processing

Volumes of ore processed increased to 6,164 thousand tonnes, up 3% on a year-on-year basis, as a result of mill hourly throughput increase to 1,562 t/h. Following the decrease in average grades in ore mined, the average grade in ore processed declined 7% to 1.66 g/t from 1.79 g/t in the first half of 2021.

Recovery rate increased by 2.6 ppts year-on-year to 74.0% in the first half of 2022. This reflects implementation of operational improvements targeting recovery rate, including calibration of processing parameters of the flash flotation circuit, optimization of the ball loading of both the SAG and ball mills and selection of optimal parameters for the SAG mill discharge grates.

Mining works and ore processing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Rock moved, km³	14,823	14,047	6%	13,686	8%
incl. stripping, km³	10,960	9,542	15%	9,180	19%
Stripping ratio, m³/t	1.1	0.8	38%	0.8	38%
Total rock moved, kt	38,243	36,257	5%	35,298	8%
including stripping, kt	28,278	24,641	15%	23,682	19%
Stripping ratio, t/t	2.8	2.1	33%	2.0	40%
Ore mined, kt	9,965	11,616	-14%	11,616	-14%
Average grade in ore mined, g/t	1.24	1.36	-9%	1.35	-8%
Ore processed, kt	6,164	6,000	3%	6,387	-3%
Average grade in ore processed, g/t	1.66	1.79	-7%	1.74	-5%
Recovery, %	74.0%	71.4%	2.6ppts	72.6%	1.4ppts
Doré gold, koz	237.9	252.1	-6%	260.8	-9%
Refined gold output, koz	211.2	240.4	-12%	262.9	-20%

Verninskoye

1H 2022 Highlights

• Volumes of ore processed went up 13% year-on-year.
• Average grades in ore processed declined to 2.70 g/t.
• Doré output rose to 152 thousand ounces.

 

Gold output

Doré gold output stood at 152 thousand ounces, up 9% on the corresponding period of the previous year. This increase was attributable to higher volumes of ore processed during the reporting period. At the same time, refined gold output amounted to 137 thousand ounces, down 4% compared to 142 thousand ounces in the first half of 2021. The discrepancy in total gold output and doré gold production reflects the accumulation of unrefined gold to be further processed in 2022. On a semi-annual basis, doré gold output and refined gold output declined 1% and 9%, respectively.

Mining works

Volumes of rock moved increased 3% to 17,614 thousand tonnes (6,523 km³), compared to the first half of 2021. In line with the sequence of mining works, volumes of ore mined decreased 24% year-on-year and amounted to 2,282 thousand tonnes.

The average grade in ore mined decreased to 2.22 g/t during the reporting period, from 2.28 g/t in the first half of 2021.

Ore processing

Volumes of ore processed amounted to 1,949 thousand tonnes, up 13% year-on-year, reflecting the sequence of maintenance works as well as improved hourly throughput of the mill, which stood at a record high of 467 t/h. Average grades in ore processed declined to 2.70 g/t during the reporting period, from 2.82 g/t in the first half of 2021, reflecting lower grades in ore mined and increased processing rate.

Mining works and ore processing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Rock moved, km³	6,523	6,312	3%	5,937	10%
incl. stripping, km³	5,679	5,205	9%	5,273	8%
Stripping ratio, m³/t	2.5	1.7	47%	2.9	-14%
Total rock moved, kt	17,614	17,042	3%	16,031	10%
including stripping, kt	15,332	14,054	9%	14,237	8%
Stripping ratio, t/t	6.7	4.7	43%	7.9	-15%
Ore mined, kt	2,282	2,988	-24%	1,794	27%
Average grade in ore mined, g/t	2.22	2.28	-3%	2.11	5%
Ore processed, kt	1,949	1,720	13%	1,888	3%
Average grade in ore processed, g/t	2.70	2.82	-4%	2.81	-4%
Recovery, %	89.9%	90.0%	-0.1ppts	90.0%	-0.1ppts
Doré gold , koz	152.3	140.2	9%	154.4	-1%
Refined gold output, koz	136.8	142.4	-4%	149.8	-9%

Kuranakh

1H 2022 Highlights

• Volumes of ore mined rose 31% year-on-year to 5,017 thousand tonnes.
• Doré gold output amounted to 112 thousand ounces.

 

Gold output

Doré gold output in the first half of 2022 remained flat at 112 thousand ounces. Refined gold output fell 3% year-on-year to 107 thousand ounces. On a semi-annual basis, doré gold output decreased 10% and refined gold output declined 16%, reflecting the seasonality of heap leach operations.

Mining works

Under the mine plan, Polyus intensified stripping activities at Kuranakh. Volumes of rock moved increased 21% on a year-on-year basis and totalled 19,453 thousand tonnes (10,683 km³). Volumes of ore mined amounted to 5,017 thousand tonnes, up 31% on the first half of 2021.

Ore processing

Volumes of ore processed at the Kuranakh Mill amounted to 3,059 thousand tonnes, remaining broadly flat on a year-on-year basis. Average grade in ore processed at the Mill amounted to 1.21 g/t, down 2% year-on-year, while the recovery rate stood at 88.7%.

The Company is progressing with the project to expand the throughput capacity at the Kuranakh mill to 7.5 million tonnes per annum. Polyus advanced with early construction works (earthworks, dismantling works, enhancement of existing foundations for sorption columns) and signed contracts for most long-lead key pieces of equipment.

Heap leaching

Leaching activities recommenced in May 2022. Heap leaching facilities processed 573 thousand tonnes in the first half of 2022, with an average grade of 0.76 g/t. Doré gold output totalled 6 thousand ounces.

Mining works and ore processing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Rock moved, km³	10,683	8,866	20%	9,218	16%
incl. stripping, km³	7,808	6,654	17%	6,574	19%
Stripping ratio, m³/t	1.6	1.7	-6%	1.4	14%
Total rock moved, kt	19,453	16,105	21%	16,724	16%
including stripping, kt	14,436	12,261	18%	12,113	19%
Stripping ratio, t/t	2.9	3.2	-9%	2.6	12%
Ore mined, kt	5,017	3,844	31%	4,611	9%
Average grade in ore mined, g/t	1.06	1.13	-6%	1.02	4%
Total ore processed, kt	3,632	3,784	-4%	4,038	-10%
Mill
Ore processed, kt	3,059	3,027	1%	3,007	2%
Average grade in ore processed, g/t	1.21	1.24	-2%	1.19	2%
Recovery, %	88.7%	88.9%	-0.2ppts	88.4%	0.3ppts
Doré gold, koz	105.8	105.8	0%	101.5	4%
Heap-leach
Ore processed, kt	573	757	-24%	1,031	-44%
Average grade in ore processed, g/t	0.76	0.67	13%	0.68	12%
Recovery, %	72.3%	72.3%	0.0ppts	72.3%	0.0ppts
Doré gold, koz	5.9	6.2	-5%	22.6	-74%
Total doré gold, koz	111.7	112.0	0%	124.1	-10%
Refined gold output, koz	106.8	110.3	-3%	127.5	-16%

 

Alluvials

1H 2022 Highlights

• As usual, the washing season resumed in April 2022.
• Gold in slime production amounted to 32 thousand ounces.
• Refined gold output totalled 10 thousand ounces.

In the first half of 2022, alluvial deposits produced 32 thousand ounces of gold in slime, down 12% on the corresponding period of the previous year. This decline was primarily due to lower volumes of sands washed, which were driven by a sequence of mining works.

Refined gold output totalled 10 thousand ounces, down 61% compared to the first half of 2021.

Sands washing

	1H'22	1H'21	Y-o-Y	2H'21	H-o-H
Sands washed, 000 m³	2,111	2,425	-13%	7,191	-71%
Average grade, g/m³	0.47	0.47	0%	0.45	4%
Gold in slime, koz	32.0	36.3	-12%	104.8	-69%
Refined gold output, koz	9.8	25.2	-61%	115.9	-92%

 

Sukhoi Log

1H 2022

• Polyus is proceeding with project design.

 

Project developments

In the reporting period, the Company finalized the geotechnical parameters for the open pit and defined the specifications of the main technological equipment for the processing plant. Polyus has also finalized mine planning and processing plant design and progressed with the general layout, infrastructure and tailings storage facility design.

The Company has also finalized comprehensive engineering studies required for the feasibility study stage and progressed with engineering studies required for the project design documentation.

Additional drilling activity at Sukhoi Log

Polyus has drilled ca.31 km out of its 77 km 2022 in-fill drilling campaign. This will allow the Company to better define the gold mineralization within the future pit area, where Polyus expects to carry out mining activities during the first years of Sukhoi Log's operations, and enable more accurate planning and sequencing of the mining works.

Other activities

In the reporting period, the Company progressed with the construction project for the Vitim substation and 220 kV gridline, which are within Polyus' project scope for the technical connection of Sukhoi Log to the existing power grid.

Polyus has also completed a detailed instrumental survey of bridges and roads on the Taksimo - Sukhoi Log route. This exercise is required for the construction and operation of the Sukhoi Log external infrastructure.

In addition, Polyus progressed with the project design documentation for warehousing storage capacity expansion at Taksimo Yard.

Enquiries:

Investor and Media contact

Victor Drozdov, Director Communications & Investor Relations (CIR) Department 

drozdovvi@polyus.com

 

 

Forward looking statements  

This announcement may contain "forward-looking statements" concerning Polyus and/or Polyus Group. Generally, the words "will", "may", "should", "could", "would", "can", "continue", "opportunity", "believes", "expects", "intends", "anticipates", "estimates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of Polyus' and/or Polyus Group's operations. Many of these risks and uncertainties relate to factors that are beyond Polyus' and/or Polyus Group's ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as of the date of this announcement. Polyus and/or any Polyus Company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.

^[i] Based on a 200,000 work hours' factor.

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