Download 2004 Annual Report - Polymetal

Victor R. Wulfert,Managing DirectorAnatoly G. Staheev,Executive DirectorVyacheslav I. Zaitsev,Chief GeologistIn 2004, gold production at thewill increase significantly, which willallow us to create a complete andeconomically efficient cycle of pro−duction of precious metals fromgeological surveys to gold bars inone geographic region.During the next period, the com−pany plans to maintain the rate ofmining operations it achieved in2004, which will allow us to steadi−ly deplete the hilly part of the pit,provide the plant with ore withthe necessary head grade andmeet the planning parameters ofstripped and prepared reservesby the beginning of 2006. Thecompany will also analyze the pos−sibility of increasing the capacityof the plant to process concen−trate from the Dukat deposit andore from the Lunnoye deposit.In 2005, Polymetal Engineeringintends to finish preparing a fea−sibility study of the conditions forprocessing mineral resourcesproduced by underground miningand to design a project to pro−cess these minerals.In addition, measures for decreas−ing losses of precious metals andincreasing production capacity atthe plant are planned for 2005,including:implementing a computerized,automated information retriev−al system of the entire produc−tion process. This system willhave numerous positive effects,including: allowing us to improvecontrol and speed of managingthe ore processing, to minimizeprecious metals losses to wastetailings, to lower human error inthe production process and toreduce the number of technicalpersonnel;industrial field testing and implmentation of new mill linings toincrease the plant’s ore pro−cessing capacity and stabilizegrinding parameters ;reconstructing the MerrillCrow zone.The most significant step forPolymetal in regard to its silverproduction projects is to begin ex−ploring the Arylakh deposit (whichis in the proximity of the Lunnoyedeposit). The Arylakh deposit hasa relatively low capacity with a highaverage head grade of silver. Us−ing this deposit for mining and theexisting infrastructure at Lun−noye will have a dramatic syner−getic effect on the developmentof these two projects. In 2005,to begin developing the Arylakhdeposit, the company will startconstructing a roadway and pre−paring the production area of themine. The company will also engagein further geological surveys ofnear and far flanks at the Lunnoyedeposit.Indicator Unit 2004 2003 2004/2003Total rock mined m 3 917 390 833 581 10,1%including stripping m 3 802 365 709 849 13,0%Ore minedm 3 114 980 123 732 (7,1%)th. tons 283 999 305 615 (7,1%)Au ave. head grade g/ton 3,2 3,3 (3,8%)Ag ave. head grade g/ton 431,5 450,5 (4,2%)Ore processed th. tons 257 368 246 385 4,5%Au ave. head grade g/ton 3,7 3,2 15,6%Ag ave. head grade g/ton 499,3 453,4 10,1%Au recovery rate % 91% 92% (1,1%)Ag recovery rate % 90 89 1,1%Au produced th. Oz. 31,3 17,0 84,1%Ag produced th. Oz. 3 689 3 053 20,8%Au sales th. Oz. 32,8 13,4 144,8%Ag sales th. Oz. 3 247 3 172 2,4%Total cash costs * $US/oz. Ag 1,68 2,55 34,1%Note:* Precious metals production at the Dukat and Lunnoye deposits is a single technological process. The above figuresare calculated for both deposits together. Gold is a co−product at this deposit. [This fact was taken into accountduring] Ccalculations are based on Gold Institute Standards.Lunnoe deposit25