OREANDA-NEWS. April 21, 2011. JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company") announced its production results for the quarter ended March 31, 2011, reported the press-centre of Polymetal.

Polymetal had a challenging first quarter as planned grade declines coupled with unexpected difficulties resulted in operational underperformance and project delays.

Quarterly gold production declined 12% year-on-year as excellent results at Varvara and new production from Omolon failed to offset planned decreases in production at Voro and Khakanja caused by declining grades.

Silver production declined 23% year-on-year due to the impact of the gravity circuit start-up on throughput at the Dukat mill and excessive dilution at Lunnoye underground. At the same time, quarter-on quarter silver production at the Dukat mill rose 9% on the back of grade and recovery improvements.

Amursk and Omolon suffered schedule setbacks leading to significant downward revisions to the production plans for these facilities for 2011. Long-term production forecasts for both assets remain unchanged.

The Company has reduced its 2011 production guidance to 470-500 Koz of gold (previously announced 620-660 Koz) and 18-19Moz of silver (previously announced 21-22Moz). Polymetal's production guidance for copper is unchanged at 6.0-7.0 Kt. Gold equivalent production guidance is therefore reduced to 800-850Koz, or approximately 20% down from the 1,000-1,060Koz range announced in October 2010 (based on 1:60 Ag/Au and 5:1 Cu/Au conversion ratios).

"Quarterly performance was clearly dismal and the resulting downward production guidance revision is painful," said Vitaly Nesis, CEO of Polymetal.

"Nevertheless, we remain confident in Polymetal's ability to deliver on its long-term targets and overcome operational challenges".