Mineral resource estimate for Lichkvaz project in Armenia

Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries – “Polymetal”, the “Company”, or the “Group”) is pleased to announce the successful completion of an audit of Mineral Resources by CSA Global Pty Ltd (“CSA Global”) for the 100%-owned Lichkvaz project.

HIGHLIGHTS

Total underground Mineral Resources in accordance with the 2012 JORC Code confirmed by independent auditors, CSA Global, comprised of 4.3 Mt of ore averaging 4.2 g/t for 0.6 Moz of gold equivalent.

Lichkvaz is located in the Meghri area of the Syunik-Marz province of southern Armenia, 380 km south of Yerevan. The infrastructure in the area is well-developed with power, water, accommodation and a skilled labour force readily available. The main economic elements at the deposit are gold and copper, with silver considered a by-product.

Polymetal intends to transport ore mined at Lichkvaz 70 km to the Kapan concentrator for processing. The acquisition of the Kapan concentrator together with the underground mine and related infrastructure was completed by Polymetal on 28 April 2016 (details of the transaction were provided in the press releases dated 2 March and 28 April 2016).

“We are very pleased with the results of exploration and audit work at Lichkvaz. This is an important contribution towards our production expansion at the nearby Kapan concentrator”, said Vitaly Nesis, Group CEO of Polymetal. “The asset displays consistently high grades and relatively simple geology while retaining further significant exploration potential”.

NEXT STEPS

In 2016, Polymetal plans to undertake significant additional drilling at the property with the objective to produce a JORC-compliant ore reserve estimate and a combined Life-of-Mine Plan for Kapan and Lichkvaz in Q3 of 2017.

MINERAL RESOURCE STATEMENT

Lichkvaz Mineral Resource statement has been audited by independent consultant CSA Global and reported in accordance with the JORC Code (2012) as presented below. The mineral resource estimate is based on 15,800 metres of drilling across 70 diamond drill holes.

Lichkvaz Underground Mineral Resources as at 1 January 2016

Notes:
1) A cut-off grade of 2.1 g/t gold equivalent has been applied.
2) GE – Gold equivalent was calculated using conversion factors of 1.7 for copper and 100 for silver. Metal prices used were US$1,100/oz for gold, US$5,000/t for copper and US$15/oz for silver
3) Conversion factor for silver to gold equivalent was calculated using the following formula:
kAg= ((Au Price/31.1035 - (Au Price/31.1035-Au Refinery cost) *(Taxes Au) /100 - (Au Refinery cost Au)) *(Au Recovery) / ((Ag Price/31.1035 - (Ag Price/31.1035-Ag Refinery cost) *(Taxes Ag) /100 - (Ag Refinery cost)) *(Ag Recovery))
where, Taxes – mining taxes; Recovery – complete recovery from ore to refined metal.
4) Conversion factor for copper to gold equivalent was calculated using the following formula:
kCu = 100*((Au Price/31.1035- Au Refinery cost)*(1-Taxes Au%/Recovery Au%)*(Recovery Au%))/((Cu Price- Cu Refinery cost)*(1-Taxes Cu %/Recovery Cu %)*(Recovery Cu %))
5) Gold equivalent (g/t) was calculated using the following formula: GE = CAu + CAg / kAg + CCu * kCu, where,
CAu – in-situ gold grade, g/t, CAg – in-situ silver grade, g/t, CCu – in-situ copper grade, %.
6) Due to the effects of rounding the sum of individual values will not necessarily equal the total

GEOLOGY

The Lichkvaz gold deposit is a part of the Tethyan Belt and is timed to Debaklinsky fault zone which has sub-meridional stretch.

The gold sulfide mineralisation is localised in the tectonic structures of the northeastern strike which extends for about 1 km. The mineralised bodies within the mineralised zones do not have sharp boundaries and are delineated by sampling.

The mineralisation-bearing zone is traced for 950 meters along strike and is not closed off in either direction. The vertical scale of the mineralization is more than 600 meters and is open depth. True thickness of ore bodies vary from 1 to 10 m with an average of 4 m, and the maximum depth is about 400 m from the surface.

The material composition of the ore is a characteristic of disseminated and vein-disseminated deposits with gold-copper-polymetallic mineralisation.

Mineralisation outcrops were traced by 21.4 km of trenches at surface, 8 levels of underground exploration workings (26 km), 15 raises (826 m) and 23 historical and 70 recent (2015) inclined diamond drillholes to 400 m depth. All historical data were used to control the interpretation of mineralized bodies, though excluded from the grade estimation. Trenches and drillholes are located along the strike length of the mineralisation and are oriented across strike, adits were developed along the strike of mineralised bodies. The recent (2015) exploration drillhole grid is generally 60 m х 60 m.

COMPETENT PERSONS

CSA Global’s review was completed by Mr Dmitry Pertel – Principal Resource Geologist.

The information in this release that relates to the Mineral Resources is based on and fairly represents information which has been compiled by Mr Dmitry Pertel who is a member of the Australian Institute of Geoscientists. Mr Pertel has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Pertel is a full time employee of CSA Global Pty Ltd and has consented to the inclusion of the matters in this report based on his information in the form and context in which it appears.