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Prognoz

The largest undeveloped primary silver deposit in Russia

Key facts

Location Verkhoyansk, Republic of Sakha, Yakutia. Russia
Ownership 100%
Investment decision expected in 2H 2021
Ore Reserves (JORC) 142 Moz of Ag at 560 g/t
Additional Mineral Resources (JORC) 100 Moz of Ag at 552 g/t average grade
Mining Open-pit (9 years)
Capacity ~1 Mtpa
Processing Flotation
Construction CapEx ~$250m

Overview

Prognoz is the largest undeveloped primary silver deposit in Russia located in Yakutia and currently one of the world’s top silver development projects. It comprises large high-grade Ore Reserves of 142 Moz of Ag at 560 g/t, while its annual production is estimated at 13.5 Moz of silver. The Preliminary Feasibility Study assumes total project CAPEX at US$ 319 million including US$ 250 million of construction costs.

Polymetal envisions a relatively low-capital and fast development approach for the asset that is based on open-pit mining and conventional processing. The investment decision is expected to be taken by Polymetal’s Board of Directors in Q4 2021.

Location History Geology Reserves and Resources

The 56 km2 licence area for Prognoz is situated in the Verkhoyansk municipal district of the Republic of Sakha (Yakutia) in a mountainous region with elevations ranging from 300 m — 1,100 m above sea level.The property is located approximately 980 km from the regional center of Yakutsk (population of 300,000) and 720 km by road from Polymetal’s Nezhda project.

First data concerning the silver-polymetallic mineralization on the Prognoz property were obtained in 1968-1971. From 1973 to 1977 additional geological mapping was completed at the property, along with an extensive exploration program. Exploration activities yielded positive results with 11 mineralized zones with high grades of silver, lead and zinc identified. Between 1987 and 1990, the Yanskaya Exploration Expedition carried out additional exploration works, identifying the mineral composition and main parameters of the mineralised zones. From 1990 to 1998, Prognoz was explored by Yangeologia, which conducted further trenching, core drilling, soil and bedrock sampling, as well as geophysical surveying.

Between 2006 and 2008, an intensive in-fill drilling program with with 873 drill holes totaling 78,925 m was completed, confirming the historical trenching and drilling results. In 2009, the property’s first JORC-compliant resource estimate was prepared by Micon. As part of the resource estimate, pilot plant testwork was performed, demonstrating robust silver recovery levels into both gravity and flotation concentrates. Since 2009, the asset was on care and maintenance.

Polymetal entered into the project in 2017, acquiring a 5% indirect stake for US$ 3 million and in 2018 increased its interest to 100%.

The property is located within the Verkhoyansk mobile belt of northeastern Yakutia. Silver-copper-lead-zinc mineralization, represented by quartz-carbonate-sulphide veins, is located in a sequence of sedimentary rocks composed of Triassic sandstones and siltstones. Nine mineralised zones are defined, with Main and Swamp being the largest (strike length of up to 4 km). Mineralized material is partially oxidised with the depth of weathering varying widely dependent on relief and proximity of water table.

Prognoz Open Pit Ore Reserves1

Tonnage, Mt Ag Grade, g/t Ag Content, Moz
Probable 7.88 560 142

Prognoz Additional Mineral Resources2

Tonnage, Mt Ag Grade, g/t Ag Content, Moz
Indicated
Open Pit 1.67 519 28
Underground 0.98 508 16
Total Indicated 2.65 515 44
Inferred
Open Pit 2.17 626 44
Underground 0.79 475 12
Total Inferred 2.96 585 56
Indicated + Inferred
Open Pit 3.84 579 72
Underground 1.77 493 28
Total
Indicated + Inferred
5.61 552 100

Notes:
(1) This table represents the Ore Reserve estimate as at 1 March 2020 for silver only using the US$ 15/oz silver price. Full disclosure of Ore Reserve estimate in accordance with JORC Code (2012) will be soon available in the CSA report on our web site in the Results center - https://www.polymetalinternational.com/en/investors-and-media/reports-and-results/result-centre/#tab-25.
(2) This table represents Mineral Resource estimate as at 1 March 2020 for silver only using US$ 15/oz silver price. Discrepancies in calculations are due to rounding. Full disclosure of Mineral Resource estimate in accordance with JORC Code (2012) will be soon available in the CSA report on our web site in the Results center - https://www.polymetalinternational.com/en/investors-and-media/reports-and-results/result-centre/#tab-25.

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2019