Download 2004 Annual Report - Polymetal

koye gold mine. This cost increasecan be attributed to expeditedstripping works. However, the to−tal cash costs at all of the miningassets of the company remainedbelow the global average. In 2005,we see additional possibilities forlowering cash costs even further.In 2004, Polymetal was the firstcompany in Russia to launch itsown export of precious metals,which allowed us to effectivelybrand ourselves on the marketand develop an international cred−it history. The high level of trustfrom international financial institu−tions was illustrated when a poolof foreign banks headed by Stan−dard Bank London (GB) arranged alarge−scale, long−term syndicatedloan facility for our company. Thisarrangement was recognized byTrade Finance magazine as theDeal of the Year.Comprehensive reorganizationduring the previous period allowedus to create a transparent andmobile managerial structure −better able to effectively addressthe needs of the company andchanging conditions in the globalprecious metals market. Verti−cal integration, with a unified andcentralized managerial and tech−nological center, allows for highlyefficient project management andresults in a well−run organization.By separating the research andscientific center into a subsidiary,we were able to quickly createRussia’s leading engineering com−pany focused in the area of prac−tical and fundamental project de−sign at the deposits. In 2004, theengineering company successfullycompleted projects with severallarge third−party mining and met−allurgy companies.We have already set a number ofhighly ambitious goals for 2005:to increase gold production to 9tons and silver production to 550tons − allowing us to strengthenour position on the Russian goldmarket and become one of thefive top silver producers in theworld. At the same time, throughefficient use of new technologies,we are planning to continue de−creasing cash costs.Another no less important goal forus is to increase the company’slong−term mineral reserve base.In 2005, we expect reserves toincrease by 12 tons of gold and500 tons of silver (these increas−es will cover the following year’sproduction).In 2005, we will continue to takecomprehensive steps to optimizethe debt portfolio of the companyand to attract long−term financ−ing from international capital mar−kets − effectively lowering interestrates and extending credit peri−ods.In the next year, Polymetal will con−tinue to work to ensure that all ofour operations comply with inter−national standards. We are plan−ning to complete recalculating andauditing our mineral reserve basein accordance with JORC interna−tional standards. In addition, weare upgrading our environmentalpractices, industrial security andlabor, health and safety to meetinternational standards, in partic−ular those set by the World Bank.Achieving these ambitious, globalgoals is only possible because ofPolymetal’s professional employ−ees. We have formed a dedicatedteam capable of efficiently imple−menting the most complex proj−ects in the mining industry. Main−taining and developing this teamis a key to the company’s futuresuccess.On behalf of the company’s man−agement, I express my gratitudeto all of the employees of Polymetalfor their high−quality work and toour shareholders and partnersfor their support of us throughoutour development. It is my utmostbelief that through the combinedefforts of the entire team, we willcontinue to strengthen our posi−tion as the most efficient companyin the precious metals market.V. Nesis,CEOMNPO Polymetal OJSCChief Executive Officer’s Statement9