ArmInfo.The Kapan Mining and Processing Enterprise, a member of the Polymetal International plc group of companies, processed 312 thsd tons of ore in the first half of 2018, versus 246 thsd tons in the same period last year. In Q2 alone the volume of production amounted to 158 thousand tons of ore, versus 132 thousand tons in the previous year.
This is stated in the company's report on production results for the second quarter of 2018. According to the report, in Q2 the gold content per tonne of processed ore was 2,0 grams, which is 23% lower compared to the results of the quarter 2 of 2017, the silver content was 34 g. (-25%), copper - 0.32% (+ 2%) and zinc - 1.48% (+13%).
At the same time, gold recovery ratio was 84,7% (-1%), silver 85,2% (+0%), copper 95,8% (+5%) and zinc 86,7% (-4%). As a result, in the second quarter gold production totaled 7,7 thousand ounces (in H1-14,2 thsd tons), silver - 0.1 million ounces (0,2 mln tons), copper - 0.4 thousand tons (0,8 thsd tons) and zinc - 1.6 thousand tons (3,0 thsd tons). According to the report gold production for Q2 decreased slightly year-on-year as the upper levels of the mine with high-grade stopes were temporarily unavailable due to the official enquiry of the fatal incident on March 2. Ore mined volumes continued to grow, reflecting the positive results of ongoing improvement measures to debottleneck the underground mine, especially as mine personnel completed a full transition from manual to mechanized drilling. The processing volumes grew in line with mining.
Gold grades declined year-on-year as manual shrinkage with minimal dilution was completely phased out due to health and safety concerns. In the first 6 months of 2018, in the Shahumyan deposit operated by the company 9,684 meters of mining work (underground penetration) was conducted, versus 7,723 meters in the same period last year. In 6 months of 2018, 311 thousand tons of metal ore were mined versus 250 thsd tons in the same period of 2017. In the II quarter of 2018 alone the volume of production amounted to 154 thousand tons, which is 14% higher than the same period in 2017. "We achieved excellent operating results in the current quarter, and we confirm the production plan for the year," said Vitaly Nesis, Polymetal Group Chief Executive Officer.
In overall, Polymetal produced 619 Koz of gold equivalent (GE) in the first half of 2018, up 11% year-on-year and fully in line with guidance. Stronger production in the 2H will be driven by traditional seasonal concentrate de-stockpiling at Mayskoye, as well as first contributions from the recently launched Kyzyl operation. Gold sales for the quarter increased by 17%, which largely offset a 7% decline in silver sales as the Company generated a total of US$ 435 million in revenues, up 13% compared to previous year. During the quarter the Company generated significant free cash flow. Net debt increased by approximately US$ 75 million as the company paid US$ 129 million of final dividends for FY2017 (US$ 0.30 per share). As in prior years, the company expects significantly stronger free cash flow generation in the second half of the year on the back of higher production volumes and seasonal working capital drawdowns. The Company remains on track to meet its FY 2018 production guidance of 1.55 Moz of gold equivalent at TCC of US$ 650-700/GE oz and AISC of US$ 875-925/GE oz. Due to the seasonality of revenues, both TCC and AISC are expected to be at the higher end of the guidance range for the first half of the year. The cost guidance remains contingent on the Rouble/Dollar exchange rate dynamic that has a significant effect on the Group's Rouble denominated operating costs. Polymetal will announce its half-yearly financial results on 22 August 2018.
To recall, Polymetal company started operating in Armenia in 2015 by acquiring shares in Lichkvaz, which has a subsoil use right in respect of the Lichkvaz-Tey gold mine. The Kapan mine was acquired by Polymetal in 2016. The mine comprises a fully mechanised underground mine with a current capacity of approximately 400 ktpa, the Lichkvaz deposit, a conventional 750 ktpa flotation concentrator and various infrastructure facilities. Polymetal is one of the leading gold and silver mining companies in Russia, Kazakhstan and Armenia. It was founded in 1998. Has 19 years of experience in geological exploration, design, construction and commissioning of large mining enterprises. Polymetal independently carries out the whole complex of works on development of ore deposits - from geological prospecting to operation. The key element of the strategy is the foundation of processing centers (hubs), which allow the most effective and responsible use of financial and human resources, contribute to achieving higher returns on invested capital. In November 2011, Polymetal Int was the first Russian company to receive a premium listing on the London Stock Exchange (ticker POLY).
