Name: Dukat hub mine.

Location: The Dukat hub is located in Omsukchan, about 595 km from the city of Magadan in Russia.

Holding and Controlling Company: Polymetal International.

Brief Description: The Dukat hub is currently the world’s third largest silver deposit. The mine is accessible through multiple adits located near main ore zones and is relatively shallow, with all current and planned working levels located less than 100 m below the valley floor.

Brief History: Operations began with an early processing facility in the 1950s processing tin ore. However, after the discovery of the Dukat deposit, a new 250 000 t/d concentrator was built and commissioned in 1978, reaching a capacity of 550 000 t/d by 1987.

The plant was abandoned in 1998 following the collapse of the Soviet Union and the disruption of concentrate offtake in 1996.

Polymetal acquired the facility and its related infrastructure, including the mining assets at the Dukat mine in 1999, following the liquidation of the previous owner. Public Canadian company Pan American Silver owned the subsoil licence for the Dukat mine. CJSC Magadan Silver was formed in 2000, as a joint venture between Polymetal and Pan American Silver.

As part of the deal, Polymetal received an 80% stake in return for contributing the Dukat mine and Omsukchan concentrator, while Pan American Silver received 20% in exchange for the provision of the subsoil licence for Dukat. Polymetal acquired a 100% stake in the asset in 2005.

In 2002, operations at Dukat resumed with underground and openpit mining, including the relaunch of the Omsukchan concentrator following a major revamp that increased its capacity to 750 000 t/d.

Between 2006 and 2007, Section 1 underwent further improvement and debottlenecking, and a new tailings storage facility was built. An additional processing line Section 2 was built in 2007 to expand the Omsukchan concentrator.

The hub was established in 2008 by merging the Dukat and Lunnoye operating units that are united by geographic proximity and technological interdependence. They shared several support and auxiliary services including maintenance, planning and budgeting, supply chain management, human resources and payroll.

Section 2 was successfully commissioned in March 2010 and increased the concentrator’s capacity to 1.5-million tonnes a year. As a result of further debottlenecking, the concentrator’s capacity was increased to 1.8-million tonnes a year in 2014.

Openpit mining activities at Dukat were completed in 2015, with underground mining now being the only source of ore.

Products: Silver/gold.

Geology/Mineralisation: The Dukat deposit covers 11 km2 and comprises 87 distinct ore veins (only eight of them are fully depleted) and 34 ore zones. Ore bodies dip steeply, with an average width of 0.6 m to 21 m.

The five largest ore zones display continuity over several hundred metres and account for 85% of the ore reserves of the deposit. The largest orebody has a maximum thickness of up to 21 m and a strike length of about 1.2 km.

Major ore minerals include silver sulphides and silver sulphosalts, as well as native silver and native gold associated with sulphides.

Reserves: Total proven and probable reserves as at January 1, 2018, were estimated at 9.8-million tonnes grading 0.5 g/t gold and 295 g/t silver.

Resources: Total mineral resources as at January 1, 2018, were estimated at 1.8-million tonnes grading 1.0 g/t gold and 529 g/t silver.

Total inferred resources as at January 1, 2018, were estimated at 2.06-million tonnes grading 1.37 g/t gold.

Mining Method: Underground.

Major Infrastructure and Equipment: Underground mining at Dukat is characterised by wide, steeply dipping orebodies with good wall stability and consistent geometry down-dip and along strike.

Underground development and stoping at Dukat are fully mechanised, using trackless equipment. The ore is delivered by trucks to a centralised underground railway. The railway transports the ore to the crusher, which is located at the exit of the railway from the underground mine. Ore from the crusher and the adjacent ore storage yard is then transported to the Omsukchan concentrator by contractors.

The Omsukchan concentrator uses conventional sulphide flotation technology, with each section designed to treat different types of feedstock. To achieve optimal results, extensive geotechnological testing is used to determine the suitability of a particular ore for one of the sections and to assist in the selection of technological parameters (feed rate and reagent addition).

Section 1 is designed to treat simple metallurgical ores from the Dukat mine which typically yield higher recoveries with lower reagent consumption and generate concentrate that is amenable to cyanidation. The processing circuit comprises three-stage grinding – one semi-autogenous grinding (SAG) mill and two ball mills – followed by flash flotation and conventional flotation.

Section 2 is designed to treat ores that are technically more complicated, including feedstock from Goltsovoye, Lunnoye and old stockpiles. The processing circuit comprises two-stage grinding – one SAG mill and one ball mill – followed by gravity concentration, flash flotation and conventional flotation.

The final product (concentrate) from both sections is fed to a high-rate thickener where it is filtered, dried, cooled, and loaded into big bags. Every bag is sampled and tested to estimate silver recovery in cyanidation and, depending on the result of this testing, concentrate is trucked either for leaching to the Lunnoye plant or to the port of Magadan for further shipment to a third-party offtaker.

Prospects: Polymetal achieved a 70% increase in additional mineral resources at the Dukat hub, primarily driven by additional exploration at the deeper levels of the Lunnoye deposit and the discovery of previously unknown veins at the Dukat flanks.

Prospecting activities are set to continue at the northern and eastern flanks of Dukat in 2018.

About 6.9 km of exploration drilling was completed at Primorskoye property’s ore zones 1 and 3 to trace orebodies along the strike and at depth.

Polymetal intends to conduct further prospecting activities at other ore zones to increase the resource base of the deposit and delineate orebodies in zones 1 and 3 in 2018.

Contact: Polymetal investor relations Eugenia Onuschenko

Contact Details:

Polymetal International

Tel +44.20.7016.9506

Email ir@polymetalinternational.com

Website https://www.polymetalinternational.com/