Download 2004 Annual Report - Polymetal

Andrey V. Novikov,Managing DirectorSergey N. Markov,Chief EngineerVictor V. Kozlov,Chief Geologistby the Vorontsovka settlement.The mined area was covered withstripped ore. We plan to completebiological recultivation in 2005and return the land to the Admin−istration of the KrasnoturyinskMunicipal District.In 2004, two methods of oreprocessing were used: oxidizedore was processed using heapleaching and primary ore was pro−cessed at the plant using the car−bon−in−pulp method.The plant for processing primaryore was launched in November2004 and was designed andequipped using the world’s mostadvanced technologies. Most ofthe machinery in the plant is im−ported. During the current, initialperiod of operation, set−up andlaunch work is occurring. Howev−er, ore processing will grow andby mid−2005, it is estimated thatthe plant will reach its project ca−pacity of 600,000 tpa of ore witha 81% gold recovery rate and a46% silver recovery rate.2005 targets for the plant in−clude: reaching project capacity,stabilizing the main productionprocesses and addressing theissue of semi−dry storage of tail−ings.Improving the technology forpreparing pile foundations forheap leaching and ore pelletizingin 2004 contributed to reduc−tions in production costs. Since2003, the company has beenpouring ore using a new stackerdesigned by our subsidiary engi−neering company. There has beena yearly increase in the volumeof ore poured in pile. In 2005, weplan to maintain ore pouring lev−els and process 800,000 tonsof ore through the heap leachingmethods. Actual recovery ratesfor precious metals closely matchthe expected rates and thus, al−low for efficient processing ofoxidized ore. Recovery rates forgold and silver are 80% and 36%,respectively. In addition, low pro−duction costs allow for process−ing off−balance oxidized ore. Thisprocessing will begin in 2005. TheVorontsovskoye deposit is one ofthe few deposits in the world thatutilizes the heap leaching methodyear−round.The company intends to develop aprogram for active geological sur−veys at the near and far flanks ofthe Vorontsovskoye deposit. Themineral reserve base will also beincreased by reviewing the cut−offgrades and by mining reservesbelow the current mining contourof the pit.Indicator Unit 2004 2003 2004/2003Total rock mined m 3 4 283 518 3 633 358 17,9%including stripping m 3 3 725 920 3 183 738 17,0%Ore minedm 3 557 598 449 620 24,0%th. Tons 953 728 752 660 26,7%Au ave. head grade g/ton 3,7 3,7 0,6%Ag ave. head grade g/ton 9,0 6,0 49,6%Ore processed th. Tons 908 749 827144 9,9%Au ave. head grade g/ton 3,6 3,9 (6,9%)Ag ave. head grade g/ton 8,9 6,7 34,0%Au recovery rate % 80% 80% 0%Ag recovery rate % 35% 35% 0%Au produced th. oz. 77,6 91,5 (15,2%)Ag produced th. oz. 56,7 63,2 (10,3%)Au sales th. oz. 82,7 95,3 (13,2%)Ag sales th. oz. 63,3 73,5 (13,9%)Total cash costs * $US/oz. Au 221 130 70%Note:* The calculations take into account that silver is a co−product at the Vorontsovskoye deposit (according to GoldInstitute Standards).Vorontsovskoye deposit27