TIDMPOG
RNS Number : 2367H
Petropavlovsk PLC
06 June 2017
06 June 2017
Petropavlovsk PLC
Exploration Update
Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together
with its subsidiaries, the "Group") is pleased to provide a further
update on the results of exploration work completed during 2016 and
2017.
Dr Pavel Maslovskiy, Chief Executive, comments:
"Petropavlovsk was built on exploration success. Since 2002, we
have discovered 31.4Moz of JORC Resources through exploration
activities. This has allowed us to produce an impressive 6.3Moz of
gold and created a solid base for future sustainable production
growth. Using our regional knowledge and technical expertise, our
team continues to prove our ability to unlock value through the
drill bit.
We have been concentrating our exploration efforts on the
discovery and development of mineral resources in the vicinity of
our main producing assets, and on upgrading resources to ore
reserves. We see new discoveries at our existing mines as the
optimal way to ensure sustainability, growth and long term value. I
am delighted to report a strong set of exploration results, which
are encouraging at all levels including target generation, and to
update you on our progress during 2017".
2016 Highlights:
-- 1.55Moz increase in JORC non-refractory reserves,
including:
-- 340% increase in non-refractory JORC Reserves at Elginskoye
(Albyn) to 1.24Moz, with feasibility study completed
-- First underground JORC Reserve of 370koz (all
non-refractory)
o New Pioneer NE Bakhmut underground JORC reserve of 165koz @
4.46g/t, supporting sustainable 6 year life of mine (LOM), with
strong JORC reserve and resource expansion potential
o Quartzitovoye 1 (Malomir) represents new 207koz @ 5.85g/t
underground reserve, supporting sustainable 6 year LOM, with
further JORC reserve and resource expansion potential
-- Highly promising discovery within Pioneer license area -
non-refractory deposit - Katrin
o Shallow orebody with 37m average thickness, 4g/t average grade
structure, hosted within a 1km long mineralised zone
o Key 2017 target for non-refractory Reserve and Resource and
near term production growth potential
-- Two new zones of mineralisation potentially suitable for open
pit mining discovered near Pioneer NE Bakhmut pit No 2
-- Underground potential at extensions below Albyn open pit and
near satellite deposits of Unglichikan, Ulgen and Yasnoye
-- 2017 - promising discovery
-- In May 2017 underground developments at Quartzitovoye
discovered previously unknown high grade zone with intersections
of:
o 5.32m @ 69.9g/t
o 1.8m @ 42.9 g/t
o 1.01m @ 12.2 g/t
-- Zone has current strike length of c.120m and remains open to
south and in down-dip direction
-- Group geologists think might be similar to high grade ore
body 55, which was the main contributor of Quartzitovoye's total
production to date of 615koz
-- Group revising its drilling program at Quartzitovoye to give
priority to exploration in this area
2017 Exploration Objectives:
-- Delineation and bringing non-refractory reserves into
production that are suitable for rapid access and extraction via
underground and open pit mining to improve short and mid term cash
flow
-- Adding high quality refractory and non-refractory resources
for potential open pit and underground extraction to facilitate
sustainable production growth in the longer term
-- 2017 estimated exploration budget is US$16m.
2017 Priority Exploration Targets:
-- At NE Bakhmut (Pioneer), underground drilling targeting high
grade non-refractory reserve and resource extensions, and
exploration of mineralisation continuity at depth offering near
term, low capex, shallow, non-refractory production upside
-- Exploration programme for new non-refractory deposit Katrin,
targeting near term non-refractory Reserve and Resource
expansion.
-- At Elginskoye and Unglichkan (Albyn), ongoing definition
drilling targeting reserve and resource expansion and preparing for
open pit mining.
-- At Albyn, deep level surface drilling below the reserve pit,
exploring mineralisation continuity for high grade underground
potential.
Exploration Update
Pioneer
The Pioneer 1,375km(2) area has various exploration
opportunities for both non-refractory and refractory resources,
including high grade mineralisation. In 2016, the Group
successfully executed a cost effective exploration programme,
focused mainly on near mine resource expansion and underground
resource to reserve conversion at NE Bakhmut. There has been
limited deep drilling from the surface at Bakhmut, Promezhutochnaya
and Andreevskaya, and we have been successful in identifying high
grade mineralisation below all three reserve pits.
NE Bakhmut (6km from Pioneer plant)
The NE Bakhmut deposit occurs along two faults, one striking
northeast, which continues southwest over 5km through the Bakhmut
and Promezhutochnaya deposits, with the second fault striking
south. NE Bakhmut is subdivided into five zones, three of which
were extensively mined from the open pit producing in excess of
1Moz of gold from ore with an average grade of 2.2g/t. This open
pit is now almost exhausted and an underground mine is being
developed there to extract the remaining reserves below.
Mineralisation potentially suitable for underground mining at NE
Bakhmut remains open at depth and along the strike.
2016 surface exploration drilling at NE Bakhmut targeted down
dip extensions of non-refractory high grade shoots. This resulted
in an increase in underground non-refractory resources to c.300koz
(198koz @ 4.3g/t increase) and a maiden reserve estimate of 165koz
@ 4.46g/t. Drilling confirmed that high grade mineralisation
continues at depth, with the deepest holes greater than 500m below
the surface (270m below the pit floor), intersecting potentially
economical grades and thicknesses. The last intersections at down
dip extensions include:
3.7m @ 30.65 g/t (NE Bakhmut 5, 103m below surface)
2.0m @ 5.2g/t (NE Bakhmut 3, 270m below open pit)
19.3m @ 11.1g/t (NE Bakhmut 2, 125m below open pit)
17.8m @ 3.44 g/t (NE Bakhmut 4, 110m below surface)
3.0m @ 12.0 g/t (NE Bakhmut 5, 160m below surface)
1.8m @ 8.1g/t (NE Bakhmut 4, 340m below surface)
0.8m @ 6.2 g/t (NE Bakhmut 4, 176m below open pit)
0.6m @ 6.3 g/t(NE Bakhmut 4, 157m below open pit)
Future exploration is planned from underground as mine
development progresses towards the high grade ore and drill
chambers are prepared. The objective is to further expand the
non-refractory underground reserve and to enhance our structural
understanding of the geological model.
Bakhmut and Promezhutochnaya (3km from Pioneer plant)
Bakhmut and Promezhutochnaya are two adjacent deposits located
within the same structural trend hosting NE Bakhmut. Bakhmut and
Promezhutochnaya together contain .0.7Moz of refractory reserves
with high grade non-refractory pay shoots extending down below the
planned refractory open pit. 2016 exploration drilling targeting
these high grade shoots intercepted mineralisation up to 350m below
the surface confirming continuity at depth, resulting in a maiden
JORC mineral resource for potential underground mining. Selected
drill intercepts include:
5.1m @ 18.68g/t
6.8m @ 12.7g/t
12.4m @ 6.99g/t
9.0m @ 12.8g/t
4.0m @ 10.3g/t
1.0m @ 78.0g/t
Andreevskaya (3km from Pioneer plant)
The Andreevskaya deposit is located south of the NE Bakhmut and
Promezhutochnaya deposits within a parallel southwest striking
fault structure. Andreevskaya has been extensively mined via open
pit, producing approximately 0.8Moz of gold from high grade ore
with an average grade of 5.9g/t. The Andreevskaya open pit is now
almost depleted, though resources suitable for underground mining
exist at depth.
2016 drilling at Andreevskaya resulted in an updated
non-refractory JORC underground mineral resource of 100koz @
8.3g/t. This current JORC resource situated immediately below the
depleted open pits represents an attractive near term mining
target, as early stage engineering models suggest they can be mined
via a short decline that begins near the bottom of the depleted
pit. We believe this resource estimate represents only a small
proportion of Andreevskaya's overall exploration potential.
Andreevskaya's underground Ore Reserve assessment is expected to be
completed during the course of 2017.
New discovery - Katrin - non-refractory deposit (20km from
Pioneer plant and 10km from Pokrovskiy)
Extensive exploration work in 2016 at the largely underexplored
Sosnovaya license, including the 9km long gold-arsenic anomaly
immediately southwest of Pioneer, resulted in the discovery of a
new promising non-refractory deposit, Katrin, which is located 2.5
km southwest from the Zheltunak Zapadnaya zone.
100 diamond drill holes, four trenches and a pre strip have been
completed at Katrin to date, covering an area of 840 x 400m.
Approximately 50% of the samples are awaiting assays. Four zones of
mineralisation (ore bodies) dipping at 30 to 60deg in a northern
direction have been confirmed.
Ore Body 1 has a north-eastern strike. It was explored over a
110m strike length by a pre-strip and then 180m further towards
south-west by drilling where it splits into three apophysis. The
average thickness and grade in the pre strip is 2.58g/t at 21.7m.
The south-western extension has intersection grades of 0.65-2.5g/t
with thicknesses between 1.6 and 7.3m. In the north-western
direction the orebody is terminated by a fault. The best grades (up
to 20.0g/t in selected samples) are found near this fault.
Mineralisation at the other side of the fault may be dislocated and
future exploration is planned to target this potential
extension.
Ore Body 2 has a west-east strike and is located 120m north-east
from Ore Body 1. It has been explored by 2 trenches and 4 drilling
profiles over a strike length of 320m. At both ends along the
strike it terminates at faults. There is potential for strike
extensions beyond these faults. Intersection grades vary between
1.03 and 2.91g/t with thicknesses between 2.8 and 7.4m.
Ore Body 3 also has a west-east strike, located 120m to the
north from Ore Body 2. It has been explored by one trench and three
drill profiles over a strike length of 240m. Intersection grades
vary between 2.96 and 15.74g/t with thicknesses between 2.1 and
12.0m.
Ore Body 4 has an additional west-east strike, located 300m to
the north from Ore Body 3. To date it has only one drill hole
completed on it and the strike extends for 320m on the basis of
geophysical anomaly. Two intersections in the drill hole include
9.5m at 0.52g/t and 4.1m at 1.04g/t.
In addition, another 8 drill holes returned 10 significant
intersections with grades between 0.59 and 3.9g/t and thicknesses
of 0.7 to 3.2m which do not belong to the identified ore bodies
offering resource upside potential.
Katrin is hosted within a known 1km silification zone,
suggesting potential for further discoveries. Mineralisation is
non-refractory and expected to be suitable for processing at
Pioneer and/or Pokrovskiy processing plants.
NE Bakhmut 2 (6km from the Pioneer processing plant)
Adjacent to the NE Bakhmut 2 pit, surface drilling intersected a
shallow, sub-horizontal mineralised zone only 30-35m below the
surface. Geological interpretations suggest this zone was formed as
a result of the NE Bakhmut hard rock orebody being eroded and
material deposited, forming a soft oxide mineralised seam.
Metallurgical test work confirmed that the material is suitable for
RIP processing. It is expected both the overburden and the ore will
be amenable to free digging making it a low cost open pit mining
target.
Exploration drilling in 2017 has confirmed a 300m strike
extension that remains open to the north and west. The average
mineralised thickness is approximately 6.0m @ 1.05g/t grade and
there is an audited JORC resource of 27koz of gold. A new zone of
hard rock gold mineralisation was identified directly below as a
result of Q1 2017 drilling. To date it has been intersected by
three drill holes, with significant intersections of 5.3m at
1.64g/t and 5.2m at 7.56g/t.
This is a key priority for near term non refractory reserve and
resource upgrades, in addition to offering near term production
upside with immaterial capital requirement.
Brekchievaya (15km from Pioneer plant)
2016 step out drilling identified a high grade 500m strike
extension at Brekchievaya, with thicknesses varying from 1.4m to
1.7m and average grades of 9.05g/t to 12.15 g/t. The orebody
remains open in down dip and strike directions.
Further exploration work is required during 2017.
Albyn
The 1,053km(2) Albyn license area has significant non-refractory
exploration potential. In 2016 the Group was successful in
increasing Albyn reserves by 62%, confirming its sustainable,
non-refractory production profile and long life of mine. Earlier
stage exploration surveying and trenching yielded encouraging
results at potential brownfield resource expansion targets such as
Ulgen, Sergeevskaya and Leninskoye.
Elginskoye (25km by Albyn plant)
The successful completion of the feasibility study on the
Elginskoye deposit resulted in a 340% increase in non-refractory
ore reserves to 1.23Moz.
Unglichikan (15km from Albyn mine)
A tight spaced drilling campaign was completed in 2016 to
prepare the south section of the Unglichikan orebody for open
mining in 2017 and further upgraded resource categories.
Exploration at Unglichikan continues with drilling at the south
side of the orebody over a strike length of 1,200m. The 2017
drilling results confirmed known mineralisation and extended it
down dip to a depth of 90 to 130m from the surface. The last
intersections include 4.7m at 5.34g/t, 14.7m at 2.97g/t, and 0.8m
at 26.9g/t - both grade and thickness increase with depth.
There are two known satellites to Unglichikan - Nikolaevskiy and
Gusak. Nikolaevsky is situated 1.8km south-east from Unglichikan.
Here trenching discovered two zones of mineralisation with
intersection grades up to 4.74g/t and thicknesses of up to 4.0m.
Gusak is located 4km south-west from Unglichikan. Trenching
discovered two subparallel zones with grades up to 6.6g/t and
thicknesses of up to 2.0m.
Yasnoye (28km from Albyn mine)
Yasnoye is a high grade, quartz vein underground mine, last
operated in the 1950s. 2016 trenching confirmed a 3km mineralised
extension. Initial assays from one of the five trenches developed
beyond the historically mined area confirmed the presence of a
subparallel, shallow dipping (30(o) along slope), gold bearing
structure. Selected intersects below:
12.2m @ 4.72g/t
6.0m @ 3.09g/t
6.0m @ 2.37g/t.
2.3m @ 22.9g/t
1.3m@25.5g/t
Exploration work, including pre-stripping the top soil and
systematic 5m spaced channel sampling and drilling, was completed
in Q1 2017.
Ulgen (30km from Albyn plant)
Ulgen is a potential satellite deposit of Albyn, situated 16km
west from Elginskoye. Exploration completed to date has proved a
3.2km strike length and mineralisation remains open in the
direction of the strike. A total of 24 individual mineralised zones
with strike lengths of up to 1.8km have also been discovered. The
two most significant zones have average thicknesses of 4.2m at an
average grade of 1.91g/t. Grades from other zones are up to
33.22g/t in selected samples. Two drill holes confirmed
mineralisation to a depth of at least 100m. With further
exploration ongoing, Ulgen is a priority target for non-refractory
resource potential in 2017.
Albyn pit
The Albyn orebody has been successfully mined from the open pit
since 2010. Mining confirmed the grade and structural continuity as
well as its non-refractory nature. Processing recoveries have been
consistently above 90%. The open pit is designed to a depth of
370m, however resource drilling has confirmed that the orebody
continues at depth and remains open. Selected intersections below
the Albyn reserve pit include:
8.5m @ 4.7g/t
2.0m @ 19.4g/t
1.0m @ 26.5g/t
2.0m @ 17.9g/t
4.8m @ 8.0 g/t
3.6m @ 6.6g/t
2.5m @ 6.6g/t
Albyn remains a significant exploration target for reserve and
resource expansion.
Malomir
Ahead of commencing refractory concentrate production at Malomir
from 2018, the targeted 2016 exploration programme was successful
in defining a maiden non-refractory underground reserve estimate of
207koz @ 5.85g/t, underpinning a six year life of mine production
plan.
At Quartzitovoye 1 (10km from the Malomir plant), drilling has
confirmed that high grade mineralisation continues at depth, with
the deepest holes greater than 440m below the surface (245m below
the reserve pit floor) intersecting potentially economical grades
and thicknesses. The orebody remains open in a down dip direction
offering potential to increase resources further through additional
exploration, which will be continued from the underground
workings.
Grade control sampling and drilling at the Quartzitovoye open
pit resulted in a 109koz (24%) increase in our non-refractory
resource estimate, providing further support for Malomir's
non-refractory, long term production plan.
In May 2017 Quartzitovoye underground developments discovered a
previously unknown high grade zone producing three intersections:
5.32m @ 69.9g/t, 1.8m @ 42.9 g/t and 1.01m @ 12.2 g/t. The zone is
steep dipping with an apparent strike length of c.120m. It remains
open to the south and in down-dip directions. The Group is revising
its drilling program at Quartzitovoye in order to give priority to
exploration of this area.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) NO 596/2014.
About Petropavlovsk
Petropavlovsk is one of Russia's leading gold mining companies.
As at 31 December 2016, the Company had produced approximately
6.3Moz of gold.
Petropavlovsk is in the construction phase of a state of the art
pressure oxidation facility to process the Company's substantial
refractory resource base. The Company's combined 3,600km(2) license
holding has untapped resource potential. The Company is a leading
employer and contributor to the development of the local economy in
the Amur region, Russian Far East, where it has operated since
1994.
Petropavlovsk is a shareholder (31.1%) of IRC Limited and is the
guarantor of the US$340m project finance facility (US$234m
principal outstanding, as at 31 December 2016). IRC is a vertically
integrated iron ore producer and developer in the Russian Far East
and North Eastern China. IRC is listed on the Hong Kong Stock
Exchange (Ticker: 1029.HK).
Petropavlovsk is listed on the Main Market of the London Stock
Exchange (Ticker POG.LN)
Enquiries
For more information, please visit www.petropavlovsk.net and
www.ircgroup.com.hk or contact:
Petropavlovsk PLC
Alya Samokhvalova
Grace Hanratty
+44 (0) 20 7201 8900
TeamIR@petropavlovsk.net
Maitland
Neil Bennett
James Isola
+44 (0) 20 7379 5151
Petropavlovsk-Maitland@maitland.co.uk
Note on exploration results reporting
If not stated otherwise all intersection thicknesses quoted are
apparent.
Forward-looking statements
This release may include statements that are, or may be deemed
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looking statements include all matters that are not historical
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Group's intentions, beliefs or current expectations concerning,
among other things, the Group's results of operations, financial
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of the industry.
By their nature, forward-looking statements involve risk and
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Forward- looking statements are not guarantees of future
performance and the development of the markets and the industry in
which the Group operates may differ materially from those described
in, or suggested by, any forward- looking statements contained in
this release. In addition, even if the development of the markets
and the industry in which the Group operates are consistent with
the forward-looking statements contained in this release, those
developments may not be indicative of developments in subsequent
periods. A number of factors could cause developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in law or regulation, currency fluctuations
(including the US dollar and Rouble), the Group's ability to
recover its reserves or develop new reserves, changes in its
business strategy, political and economic uncertainty. Save as
required by the Listing and Disclosure and Transparency Rules, the
Company is under no obligation to update the information contained
in this release.
Past performance cannot be relied on as a guide to future
performance.
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