Download 2004 Annual Report - Polymetal

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KhakanjinskoyedepositThe Khakanjinskoye deposit be−gan operating in October 2003.And at the start of 2004, thefirst metal from this deposit wassent to the refinery. Results from2004 show, that gold productionwas 79,000 oz.[,] and silver pro−duction was 1,500,000 oz. Oremined reached 610,000 tons andore processed at the plant was212,000 tons, which is less thanhalf of the plant’s project capacity.The company plans to reach proj−ect capacity by mid−2005.Total cash costs in 2004 were$201/oz. Au. We anticipate that in2005 the Khakanjinskoye depositwill become our lowest cost pro−duction facility. Economic analy−sis indicates that after the plantreaches its project capacity, op−erating costs will decrease.The high level of capital expendi−tures in 2004 was due to mod−ernization projects at the plant.The company plans to significantlyreduce its capital expenditures in2005. However, future projects—− [,] including the launch of thesatellite Yurievskoye deposit andthe start of underground mining—− [,] will require significant addi−tional capital expenditures.2004 was the first full year ofoperation for the Khakanjinskoyedeposit (after its launch in Oc−tober 2003). In 2004, open−pitmining took place at the CentralZone (pit #1). During 2004, sig−nificant development − primarilyof infrastructure − occurred atthe deposit, including completingthe main mining work at pit #1 andbuilding a grid of service roads.And significantly, mining volumegrew substantially.By utilizing new, highly efficientimported machinery for shovel−ing and drilling, the mine was ableto reach its project capacity in2004. Additionally, the mine wasfully prepared for inspection bythe Russian National InspectionCommittee.According to preliminary data, thepit’s[quarry’s] monthly produc−tion capacity in 2005 will reach150,000 m3 of rock. Primarymining tasks at Khakanjinskoye in2005 will include upgrading theefficiency of equipment used fordrilling and explosives work, con−ducting detailed testing on thestability of the deposit’s sides andincreasing the final slope angle ofledges.During the first half of 2004, op−erations at the deposit focusedon startup and tuning work. Theseoperations allowed us to stabilizethe grinding facility and increaseoutput at the first grinding stageusing the new Outokumpu mill.These measures helped increasethe production capacity of the goldextraction plant to up to 30,000tons of ore per month.To increase the plant’s produc−tion capacity even further in2005, the company plans to re−construct the ore preparationfacility and the plant (crushing andgrinding processes). These steps28 Polymetal annual report 2004
Sergey G. Antipin,Managing DirectorSergey A. Egorov,Chief GeologistVladimir I. Fedorov,Head of the Plantwill allow us to process more than500,000 tpa of ore. And in the fol−lowing year − with the introductionof a third grinding stage − we planto increase production capacityto 600,000 tpa of ore. As part ofthe continuing process of improv−ing production and ensuring thatthe deposit is a world leader, thecompany plans to design a facilityfor the filtering and semidry stor−age of filter cakes from waste tail−ings.The company is also planning toincrease its mineral reserve baseby engaging in active geologicalsurveys in the near and far flanksof the Khakanjinskoye deposit andthe Okhotsk Region in general.Indicator Unit 2004 2003Total rock mined m 3 1 196 286 732 380including striping m 3 927 782 708 918Ore minedm 3 268 504 23 462th tons 610 553 54 783Au ave. head grade g/ton 7,2 6,3Ag ave. head grade g/ton 228,0 239,2Ore processed th. tons 212 720 31 899Au ave. head grade g/ton 13,3 10,6Ag ave. head grade g/ton 425,3 366,7Au recovery rate % 94% −Ag recovery rate % 49% −Au produced th. oz. 79,0 −Ag produced th. oz. 1 465 −Au sales th. oz. 75,8 −Ag sales th. oz. 1 127 −Total cash costs * $US/oz. Au 114 −Note:* The calculations take into account that silver is a co−product at the Khakanjinskoye deposit (according to GoldInstitute Standards). In 2003, only mining operations took place at the Khakanjinskoye deposit; no metal productionoccurred.Khakanjinskoye deposit29
Page 1 and 2: Annual report2004St. Petrsburg1
Page 3 and 4: Annual Report2004St. Petersburg3
Page 5 and 6: FinancialhighlightIndicator Meas. u
Page 7 and 8: 2004Key eventsFebruarynew managemen
Page 9 and 10: koye gold mine. This cost increasec
Page 11 and 12: MineralResourcesVladimir T. Ryabukh
Page 13 and 14: Igor V. Venatovsky,First Deputy CEO
Page 15 and 16: Sergey A. Cherkashin,CFOSalesFinanc
Page 17 and 18: Denis G. Pavlov,Head of TreasuryDep
Page 19 and 20: At the Dukat and Lunnoye depos−it
Page 21 and 22: ProductionfacilitiesoverviewProduct
Page 23 and 24: Victor R. Wulfert,Managing Director
Page 25 and 26: Victor R. Wulfert,Managing Director
Page 27: Andrey V. Novikov,Managing Director
Page 31 and 32: Vorontsovskoye(Northern Urals Gold,
Page 33 and 34: Alexander V. Bulavin,Head of Licens
Page 35 and 36: Dukat depositconducting a feasibili
Page 37 and 38: GlobalpositioningIn 2004, world sil
Page 39 and 40: CorporategovernancePolymetal follow
Page 41 and 42: Hazardous facilities at the deposit
Page 43 and 44: Personnel at mining facilitiesCompa
Page 45 and 46: Upgrading skillsIn 2004, the compan
Page 47 and 48: ManagementVitaly NESISCEOMr. Nesis
Page 49 and 50: ZAOPricewaterhouseCoopers AuditSred
Page 51 and 52: JSC “ISPA “POLYMETAL”STATEMEN
Page 53 and 54: JSC “ISPA “POLYMETAL”CONSOLID
Page 55 and 56: The Group’s 100% interest in avar
Page 57 and 58: Deferred developmentexpendituresIn
Page 59 and 60: NOTE 3Variable Interest EntityStart
Page 61 and 62: Investments mainly represent or−d
Page 63 and 64: Loans from NIKoil Bank in total ofU
Page 65 and 66: Future payments under capital lease
Page 67 and 68: Note 24Income TaxThe income tax exp
Page 69 and 70: In accordance with FAS 141, thecont
Page 71 and 72: NOTE 30Subsequent eventsBank loan r
Page 73 and 74: Vorontsovskoye (Northern Urals Gold
Page 75 and 76: Dukat and Lunnoye (Magadan Silver,
Page 77 and 78: 1) Per ounce of gold produced or so

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