OREANDA-NEWS.  August 04, 2014. Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries – “Polymetal”, the “Company”, or the “Group”) is pleased to announce the Group’s production results for the second quarter and six months.

HIGHLIGHTS

Polymetal produced 652 Koz of gold equivalent in the first half of 2014, an increase of 17% compared to the same period of the prior year. The original production guidance of 1.3 Moz is likely to be exceeded by approximately 5%.

Quarterly gold equivalent production in the second quarter was 335 Koz, up 4% year-on-year. Continued robust performance at the Amursk POX as well as improved grades and throughput at Dukat and Omolon more than offset planned grade erosion at Varvara and Khakanja. Quarterly gold production was 196 Koz, up 3% year-on-year. Silver production in Q2 was 8.1 Moz, up 8% year-on-year.

Contracts with three off-takers in China for Mayskoye concentrate were signed during the second quarter on terms which have been meaningfully improved compared to 2013 off-take agreements. The first shipments of concentrate from Mayskoye to the Amursk POX and Chinese off-takers will commence in August.

Net debt at 30 June 2014 decreased by USD 7 million compared to 31 December 2013 to USD 1,038 million while the Company paid dividends of USD 31 million during the period. Free cash flow generation is expected to be significantly stronger in the second half of the year due to the planned de-stockpiling at Mayskoye and the seasonal reduction of the gap between production and sales.

The Company has announced the signing of the definitive agreement to purchase Kyzyl Project, a large gold deposit in Kazakhstan with JORC-compliant reserves of 7 Moz of gold at 7,5 g/t. The circular to shareholders on the proposed acquisition was mailed on 14 July 2014 and the General Meeting of Shareholders will take place on 14 August 2014. If approved by shareholders, the transaction is expected to close in Q4 2014.

In Q3 Polymetal’s Board of Directors will consider the impact of the Kyzyl transaction on the internal project pipeline and formally review development approaches and timelines for Albazino-2, Svetloye, Maminskoye, and Kutyn.

“Polymetal is consistently delivering robust operating performance”, said Vitaly Nesis, CEO of Polymetal, commenting on the results. “We generate meaningful free cash flow at the current commodity prices and expect this trend to strengthen in the second half of the year, which should allow us to continue paying regular dividends, subject to Polymetal's stated dividend policy.”