polymetal international plc annual report 2011  wwwpolymetalinternationalcom
delivering  
sustainable value delivering 
sustainable value
polymetal is a leading gold and silver mining group  
operating in russia and kazakhstan we are proud  
to be the first russian business to enter the ftse 100
 
we are a dynamic and progressive group with a simple 
objective – to deliver sustainable value to all our stakeholders  
we intend to achieve this through our commitment to  
our strategy business model and a culture of excellence 
throughout our operations
 
we aim to become the leading precious metals mining group  
in russia and the cis and we have a number of competitive 
advantages – including a robust project pipeline and strong  
track record – which we believe make us wellpositioned to 
achieve this objective
 
our approach is underpinned by a commitment to high 
standards of corporate governance corporate responsibility  
and sustainable development
 
we have a strong record of setting and achieving demanding 
targets and are confident about our growth prospects 
following our listing polymetal international plc annual report 201 1 1
financial statements appendices governance business review overview
contents
overview
2 at a glance
4 performance highlights
6 where we operate
business review
8 chairman’s statement
10 chief executive’s review
12 our business model
20 our strategy
22 operating review 
 22 overview
 26 dukat hub
 30 omolon hub
 34 amursk pox hub
 38 khakanja
 42 voro
 46 varvara
 50 standalone exploration projects
52 financial review
60 risk management
64 sustainability
governance
72 board of directors
72 senior management
74 corporate governance report
80 directors’ report
82 remuneration report
financial statements
86 statement of directors’ responsibilities
87 independent auditor’s report
88 consolidated income statement
88 consolidated statement of comprehensive income
89 consolidated balance sheet
90 consolidated statement of cash flows
91 consolidated statement of changes in equity
92 notes to the consolidated financial statements
appendices
137 reserves and resources
144 glossary
147 shareholder information
read more on page 72
corporate governance
a description of our approach to governance 
and its importance to the company
read more on page 22
operational review
an indepth review of our operations and their 
performance over the year
read more on page 12
a detailed description of our unique  
business model and how this enables  
us to generate value
our unique business model
read more on page 64
sustainability
how sustainability planning and responsible 
development are core to our strategy 2 polymetal international plc annual report 201 1
overview
polymetal at a glance
a transformational year
  premium listing on the  
london stock exchange and 
inclusion in ftse 100
  all time production volume 
record 250 koz of gold 
equivalent in q4
   ne w ly c o m m i s s i o n e d 
albazino concentrator 
reaching design parameters 
first shipments of concentrate 
to chinese offtakers
   completion of the expansion 
of the omsukchan 
concentrator dukat hub
  construction completed 
at amursk pox 
   m e r r i l l  cr o w e s e ct i o n 
successfully commissioned  
at the kubaka plant  
omolon hub
  beginning of underground 
mining at mayskoye
  longterm transportation 
agreement signed with 
fesco
  highgrade ore mining 
commenced at avlayakan
key achievements
the highlight of 2011 was our admission to the london 
stock exchange’s official list in november 
historically the russian financial markets have proved to be 
too limited and too volatile for a business such as polymetal 
these challenges create a significant disadvantage for both 
the company and its longterm stakeholders the london 
listing was a reflection of our intention to raise the company’s 
profile with the international investment community and 
improve its marketability 
we received a positive response to the ipo from the majority 
of existing shareholders and attracted many new investors 
the move has resulted in increased interest in polymetal from 
a more diversified investor base significantly improving the 
liquidity of the stock we now have greater access to capital 
to fund organic growth and create a currency for any potential 
consolidation opportunities 
our inclusion in the benchmark ftse 100 index brings with  
it additional tracker funds which will also considerably 
enhance our access to new finance
polymetal has always sought to uphold the highest standards 
of corporate governance and transparency and has further 
strengthened the board as part of the uk listing this focus 
on continuous improvement demonstrates our ongoing 
commitment to best practice in this field
premium
listed polymetal international plc annual report 201 1 3
financial statements appendices governance business review overview
locations
our portfolio
as at 31 december 2011
production
6
mining operations
dukat hub 
albazinoamurskmayskoye pox hub 
omolon hub 
voro standalone mine 
varvara standalone mine 
khakanja standalone mine
1
operation in construction mayskoye
52
licences
10

039
total licence area km
2

russia  
magadan region  
sverdlovsk region  
khabarovsk territory 
chukotka autonomous territory
kazakhstan  
kostanay region
gold
55
production 2011
copper
4
silver
41
ge equivalent  810 koz 
8 increase compared to 2010
key financial figures
 1326
sales revenue us million 
2010 us925 million
701
total cash cost usge oz
2
 
2010 us555ge oz
624
adjusted ebitda
3
 – total us million 
2010 us425 million
290
profit for the year us million 
2010 us239 million
810 koz
of gold equivalent 
2010 753 koz
8
increase of gold equivalent  
production on 2010
production output 
gold equivalent
143 moz
ore reserves ge oz
138 moz
mineral resources ge oz
42
average reserve grade ge gt
1  mineral resources and ore reserves are estimated  
in accordance with the jorc code 2004  
mineral resources are additional to ore reserves
2  total cash costs comprise cost of sales of the 
operating assets adjusted for depreciation expense 
rehabilitation expenses and writedown of inventory  
to net realisable value and general administrative  
and selling expenses of the operating assets  
gold equivalent sales volume is calculated based on 
average realised metal prices in the relevant period 
total cash cost per gold equivalent ounce sold is 
calculated as total cash costs divided by total gold 
equivalent unit ounces sold
3  the company defines adjusted ebitda a nonifrs 
measure as profit for the period adjusted for 
depreciation expense rehabilitation expenses 
writedown of inventory to net realisable value 
sharebased compensation listing expenses income 
on disposal of subsidiaries bargain purchase gain 
foreign exchange gainloss change in fair value  
of derivatives change in fair value of contingent 
consideration finance income finance costs and 
income tax expense adjusted ebitda margin  
is adjusted ebitda divided by revenue see note 6  
to the financial statements
reserves and resources
1
gold equivalent 4 polymetal international plc annual report 201 1
strong results 
reinforcing our strategy
financial highlights
43
revenue 
usm
overview
performance highlights 
47
adjusted ebitda
usm
12
diluted eps
 usshare
26
total cash cost 
usge oz
24
net debtadjusted 
ebitda
21
net income
1
usm
  rampup of the albazino 
concentrator and start of 
commercial production
  expansion of the 
omsukchan concentrator
  installation of the merrill
crowe section at the 
kubaka plant
8
capital expenditure
usm
capital projects completed in 2011
2011
2010
1326
925
2011
2010 425
624 2011
2010 239
290
2011
2010 555
701 2011
2010 066
074 2011
2010 185
141
2011
2010 444
480
1 profit for the financial year polymetal international plc annual report 201 1 5
financial statements appendices governance business review overview
operational highlights
environmental and social highlights
bottom
ore analysis  
at khakanja
top 
reviewing operations 
at varvara mine
mining at albazino
63
lost time injury 
frequency rate 
ltifr
18
social investments 
usm
26
air emissions
1
 
per 10 kt of ore produced
1 see page 71
8
gold equivalent  
production koz
47
ore mined
kt
12
ore processed 
kt
2011
2010 753
810 2011
2010 7474
11002 2011
2010 7845
8821
2011
2010 19
07 2011
2010
46
39
2011
2010 617
472 anadyr
khabarovsk
moscow
st  petersburg


magadan
kostanay
ekaterinburg




china
china
north 
korea
south 
korea
japan
finland
 mongolia 
russia 
kazakhstan
voro
900
ktpa
hl
900
ktpa
cip
voro degtyarskoye 
fevralskoye
south voro volchansky
varvara
42
mtpa
float  leach 
varvara
varvara flanks
overview
our operations
6 polymetal international plc annual report 201 1
khakanja
600
ktpa
merrillcrowe plant 
khakanja avlayakan  
yurievskoye
khakanja
ozerny
mayskoye amursk pox hub
850
ktpa
mayskoye concentrator anadyr
khabarovsk
moscow
st  petersburg


magadan
kostanay
ekaterinburg




china
china
north 
korea
south 
korea
japan
finland
 mongolia 
russia 
kazakhstan
dukat hub
15
mtpa
dukat concentrator
300
ktpa
lunnoye cil plant
dukat goltsovoye  
lunnoye arylakh
perevalny arylakh 
nachalny2
krasin zvezdny 
kamenisty
amursk pox hub
225
ktpa
amursk pox plant 
processing concentrate 
from albazino and 
mayskoye
albazino mayskoye 
chukotka
albazino south  
and east flank
polymetal international plc annual report 201 1 7
map key
financial statements appendices governance business review overview
omolon hub
850
ktpa
kubaka cip   
merrillcrowe plant
13
mtpa
birkachan hl plant
birkachan sopka
tsokol oroch dalneye
pyatinakh burgali
albazino amursk pox hub
15
mtpa
albazino concentrator
hub
potential hub
standalone mining operations
operating
developing
key exploration projects
seaport
head office 8 polymetal international plc annual report 201 1
business review
chairman’s statement
a year of achievement
a year of achievement
2011 was a tremendous year for 
polymetal both operationally and  
in terms of corporate development
not only did we deliver record levels 
of production we also achieved  
a premium listing on the london 
stock exchange in november –  
a month later gaining entry to the 
ftse 100 index as a result we  
have raised our international profile 
increased our transparency 
broadened our shareholder base  
and significantly improved our  
access to capital markets 
we have also maintained a strong 
focus on investment both in new  
and existing processing facilities  
and exploration as a result we have 
made significant progress across  
all our key investment projects
corporate governance
we have historically operated 
according to high standards of 
governance during the year we  
have paid particular attention to 
ensuring that our practices are 
further developed to reflect the 
change in our status and that  
we achieve compliance with the 
majority of the requirements of the 
uk corporate governance code 
our aim is to deliver progressively 
more effective stewardship and 
accountability to all our stakeholders 
through an ongoing process of 
review and assessment improved 
internal control systems and a 
renewed board are the key changes 
that we have implemented in 2011
we now have a stronger and more 
experienced board with half of the 
directors excluding the chairman 
being independent nonexecutives  
a careful and disciplined selection 
process has enabled us to attract 
board members with extensive 
international experience in the mining 
industry the new board has a 
greater role in strategic decision
making conducts indepth reviews 
of the company’s performance  
and is better positioned to maintain  
a constructive dialogue with our 
expanded stakeholder base the 
board’s audit and risk nomination 
and remuneration committees  
are also now chaired by – and are 
composed of – independent non
executives and the board chairman 
we have also implemented a range 
of policies and procedures that cover 
internal control financial reporting 
risk management and disclosure 
enabling us to fulfil all the obligations 
required of a uk premium listed 
company the directors and i are 
strongly committed to maintaining 
the highest standards of corporate 
governance and best practice 
our people
i would like to extend my sincere 
thanks to my fellow directors for their 
wise counsel and hard work in what 
has been a momentous year for 
polymetal this year’s good 
performance is the result of a 
collaborative effort on the part of all 
our people i am therefore extremely 
grateful to all our employees whose 
talents and commitment have 
contributed to our success to date 
i have become chairman of 
polymetal international at an 
extremely exciting point in the 
company’s development we 
are entering a new era and  
i have every confidence that 
polymetal is well positioned  
to build and sustain a strong 
future for all our stakeholders polymetal international plc annual report 201 1 9
financial statements appendices governance business review overview
share and dividend policy
over 83 of jsc polymetal 
shareholders converted their shares 
to polymetal international through the 
institutional share swap facility 
issf a mandatory tender offer 
mto for the remaining shareholders 
was launched in november and  
on completion in february 2012 we 
had achieved 9948 ownership of 
jsc polymetal while jsc polymetal 
delisted its global depositary receipts 
from the london stock exchange
when moving to the london stock 
exchange we carefully considered 
our approach to dividend payment 
as a result a new dividend policy 
was adopted in 2011 reflecting our 
commitment to meet shareholder 
expectations in an environment 
characterised on the one hand by 
high commodity prices and tight 
financial markets on the other  
a dividend of us020 per share is 
proposed by the board for payment 
for 2011 from 2012 we intend to  
pay annual dividends of 20 of net 
income provided that net debt
adjusted ebitda is less than 175
outlook
polymetal is entering a new era  
our strategy of improving efficiencies 
in existing mines creating centralised 
processing hubs to benefit from 
economies of scale and investing  
in exploration has given us the 
foundations to deliver longterm 
growth
despite continuing economic 
uncertainty across global markets 
we believe we have a robust 
business model and a clear strategy 
that will enable us to prosper in the 
years ahead we remain firmly 
focused on delivering the sustainable 
value that will establish polymetal as 
a world class mining company 
bobby godsell
chairman of the board of directors
24 april 2012
summary
board of directors and committees effective leadership 
for more information on our 
corporate governance
member of the board  
of directors
bobby godsell
 
vitaly nesis
jonathan best 
l 
marina grönberg
leonard homeniuk 
 
russell skirrow 
l
konstantin yanakov
jeanpascal duvieusart
charles balfour 
l  
l audit and risk committee
 
remuneration committee 
 nomination committee 
go to page 72
  successful premium listing 
on the london stock 
exchange
  improved governance 
systems and practices
  stronger more experienced 
board
  talented people throughout 
the business
  new dividend policy
  strong outlook for 
sustainable value
 chairman
 executive director
 nonexecutive director
 independent nonexecutive director 10 polymetal international plc annual report 201 1
business review
chief executive’s review
2011 was a year to remember 
for polymetal our listing on  
the london stock exchange  
in november and achieving 
record production volumes 
represent milestones of which 
we are particularly proud
record production levels
in 2011 we produced a record  
810 koz of gold equivalent ounces
1
 
this was achieved despite some 
grade decline at mature operations 
which was more than offset by 
production from new operations  
and the successful expansion  
of existing mines 
annual gold production was essentially 
flat at 443 koz with a further 28 koz  
of payable gold contained in albazino 
concentrate prepared for processing  
at the amursk pox plant silver 
production increased by 15 to  
199 moz a record for polymetal 
copper production was 69 kt 
up 73 on 2010 
the early months of the year were 
particularly challenging with various 
issues relating to grade quality and 
production processes resulting in an 
initial operational underperformance 
however as these issues were 
resolved the business subsequently 
performed well and we achieved our 
revised targets – reaching a runrate 
of 1 moz annual production in the last 
quarter of 201 1 this was supported  
in particular by the full rampup of the 
albazino plant and stabilisation of 
grades at our dukat hub
as a result we are now firmly on 
track to deliver on our target of  
14 moz gold equivalent production 
per annum by the end of 2014 
strong financial performance
201 1 was a very successful year for 
the company the increase in gold 
equivalent production and the growth 
in metal prices during the year 
pushed the revenues up 43 to a 
record us1326 million while cost 
pressures in russia and in the mining 
industry in general remained high  
we nevertheless believe we have  
been successful in managing our 
cash costs our cash costs were  
at us701 per gold equivalent  
ounce up 26 as a result of some 
operational challenges and low 
volumes due to the rampup of 
significant new operations at albazino 
and further influenced by russia’s 
domestic inflation and the rouble 
strengthening against the us dollar
adjusted ebitda which is a key 
metric of our core cash earnings 
increased by 47 to us624 million 
in line with revenue growth and the 
adjusted ebitda margin increased  
to 47 bottomline net earnings 
were up 21 driven by ebitda 
growth growth in noncash 
expenses and change in the 
effective tax rate
as a result of the cash raised at ipo 
and robust growth in operating cash 
1  based on 160 agau and 51 cuau conversion ratios
in shape for  
longterm growth polymetal international plc annual report 201 1 11
financial statements appendices governance business review overview
flows we have significantly reduced 
leverage to 141 net debtadjusted 
ebitda with the majority of debt 
65 being longterm both these 
factors give us and our investors 
comfort as to the company’s liquidity 
and funding 
robust project delivery 
i am very pleased to report that all our 
key projects are now progressing to 
plan and schedule the amursk pox 
facility was completed in december 
and has entered the commissioning 
stage in 2012 it will start processing 
refractory concentrates from albazino 
and in 201314 will reach design 
capacity with the inclusion of 
concentrate from the mayskoye mine 
much development and construction 
work has been completed at 
mayskoye our most remote mine  
with mills installed and the power 
substation nearing completion 
underground development has 
reached a steady rate of 1100 m  
per month 
the merrillcrowe circuit was 
successfully commissioned at the 
kubaka plant omolon hub and  
is ready to commence full scale 
processing of high grade sopka ore 
commitment to safety and 
responsible development
during the year we continued to 
demonstrate a strong commitment  
to responsible corporate citizenship 
we have maintained high 
environmental standards both at 
existing and new operations we 
have also continued to provide 
meaningful support to local 
communities wherever we operate
i would also like to highlight a marked 
improvement in safety at work last 
year we had no fatalities and our 
lost time injury frequency rate was 
63 lower than in 2010 this very 
successful outcome was achieved  
as a result of great efforts throughout 
our operations to improve safety 
policies and working practices 
these new policies have been  
strictly implemented to ensure full 
compliance across all locations and 
are supported by extensive training 
and relevant incentive arrangements
looking ahead
our teams are firmly focused on 
delivering further growth in 2012  
this will be driven by the startup  
of the amursk pox facility and the 
achievement of full production 
capacity at omolon 
in the year ahead we expect to 
produce 590640 koz of gold 2123 
moz of silver and 67 kt of copper 
we aim to increase our total annual 
gold equivalent production to over  
1 moz in the coming year and to  
14 moz by 2014
we continue to focus on operational 
excellence commitment to our 
strategic objectives and proven 
business model with our talented  
and dedicated workforce i am 
confident that we will continue to 
deliver sustainable value as we 
continue to grow
vitaly nesis 
chief executive 
24 april 2012
a secure demand
the global demand for gold  
is secure and dynamic 
 
key categories include
investment
gold will always play a vital role in  
any longterm savings or investment 
portfolios it is a foundation asset 
offering a hedge against currency 
and asset price volatility
jewellery
jewellery accounts for over 50  
of the market for gold growing 
affluence in the major markets of 
india and china will continue to 
drive demand for gold jewellery  
not just a decorative item but  
also as a key component of 
household savings
central banks and  
government agencies
gold reserves held by central banks 
have increased over the past two 
years the factors that motivated 
these purchases will remain relevant 
for the foreseeable future
industry and technology
gold is used in an increasingly 
wide range of consumer and 
industrial technologies it has 
unique technical properties of  
high conductivity resistance to 
corrosion malleability and ductility 12 polymetal international plc annual report 201 1
business review
a unique business model
how we deliver  
sustainable value
delivering
sustainable
value
maintaining exemplary governance
maintaining exemplary governance
focusing on highgrade assets
investing in exploration   
leveraging our hubbased system
today’s precious metals markets are highly competitive  
no single producer has a significant influence over selling prices 
on the other hand the world’s gold and silver resources are 
characterised by declining grades with increased complexity in 
mining and processing of ores as the higher quality resources 
are depleted worldwide success in this environment therefore 
depends to a large extent on our ability to increase the resource 
base and production volumes whilst simultaneously maintaining  
tight control of capital spending and operating costs 
we have developed a business 
model that enables us to achieve 
these objectives and which has 
demonstrated its effectiveness as the 
group has evolved we are strongly 
committed to this model and are 
confident that it will enable us to 
continue delivering growth and value polymetal international plc annual report 201 1 13
financial statements appendices governance business review overview
 focusing on highgrade assets
we also have a preference for openpit mining unless higher grades justify 
underground development grades and mining conditions are the key cost 
factors that drive return on invested capital in the precious metals industry 
by setting appropriate thresholds on head grades and focusing on openpit 
mines we are achieving better returns from our project portfolio
 investing in exploration
this will allow us to ensure a costeffective increase in our reserve base 
which is in turn the key source of longterm organic growth
 maintaining exemplary governance
in order to ensure proper steering of the company accountability  
to shareholders and attention to other stakeholders’ interests
 leveraging our hubbased system
allowing us to minimise processing and logistics costs and achieve 
economies of scale through creation of centralised facilities for the 
treatment of materials from different sources
there are three elements that form the substance of our 
business model – a focus on highgrade assets support and 
expansion of our hubbased operating system and investment  
in exploration – which are described below and in more detail  
in the following pages all these core elements are supported  
by exemplary governance
read more 
on page 14
read more 
on page 16
read more 
on page 18
read more 
on page 74 14 polymetal international plc annual report 201 1
 
average grade processed
focusing on  
highgrade assets
business review
a unique business model
2011 2010  change
gold equivalent gt 38 38 1
dukat 73 73 0
khakanja 74 101 26
voro 38 37 2
varvara 15 14 8
omolon 24 18 38
amursk hub 43 – na
14 moz
strategic target of gold equivalent 
production by 2014
42 gt
average reserve grade
38 gt 
average gold equivalent 
grade processed  polymetal international plc annual report 201 1 15
financial statements appendices governance business review overview
 
37 gt
albazino
96 gt
mayskoye
36 gt
omolon hub
gold equivalent reserve grade
albazino and omolon
rampup of new mines – in particular albazino and omolon –  
pushed grade quality up to 45 gt
mining operations at mayskoye
delivering
sustainable
value
delivering
sustainable
value
delivering
sustainable
value
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
focusing on highgrade assets
focusing on highgrade assets
focusing on highgrade assets
investing in exploration   
investing in exploration   
investing in exploration   
leveraging our hubbased system
leveraging our hubbased system
leveraging our hubbased system
20112014 growth is expected to come mostly 
from highgrade assets
  a l ba zi n o
  o mo l o n
  m a y s ko y e 16 polymetal international plc annual report 201 1
business review
a unique business model
the creation of the dukat amursk pox and 
omolon hubs highlights polymetal’s strategy  
of creating centralised processing facilities  
to treat ores and concentrates from various 
sources by the end of 2014 we expect these 
three hubs to be producing up to 70 of the 
group’s total production
 
omolon
the group’s newest operating hub includes the refurbished kubaka 
plant and two highgrade mines
leveraging our  
hubbased system polymetal international plc annual report 201 1 17
financial statements appendices governance business review overview
we believe this model provides us with several 
key advantages including
  allowing the group to bring small and 
mediumsize deposits into production  
by sharing processing plants and  
other infrastructure the development  
of standalone operations at such deposits  
is typically uneconomic
  providing the group with benefits in terms  
of capital expenditure and operating costs 
with larger processing plants enjoying higher 
productivity and energy efficiency as well as  
a smaller footprint per unit of capacity and
  allowing the group to use high calibre staff 
from its existing processing plants the 
group’s processing plant employees are 
generally better qualified and are therefore 
typically more difficult to recruit train and 
retain than mining personnel
we intend to create additional processing hubs 
in the future we will also review acquisition 
opportunities near our existing hubs and 
standalone mines with a view to creating 
additional synergies through leveraging the 
existing processing facilities
albazino
albazino is part of the amursk 
hub it comprises an openpit 
mine and a new flotation 
concentrator
dukat
the group’s first and largest asset 
since its acquisition in 1998 has been 
converted into a hub processing ore 
from four operating mines
delivering
sustainable
value
delivering
sustainable
value
delivering
sustainable
value
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
focusing on highgrade assets
focusing on highgrade assets
focusing on highgrade assets
investing in exploration   
investing in exploration   
investing in exploration   
leveraging our hubbased system
leveraging our hubbased system
leveraging our hubbased system 18 polymetal international plc annual report 201 1
business review
a unique business model
investing in exploration
investment in greenfield exploration with the  
aim of establishing the feasibility of constructing 
two new standalone mines by 2013 is a key 
objective for us typically our target standalone 
mines will need to meet the following internal 
criteria that drive the cost and ultimately the 
return on capital invested into the project
  minimum peak production of 300 koz of  
gold equivalent per year for at least ten years
  minimum mine life of 15 years
  minimum grades for nonrefractory ores  
of 153 gt depending on the processing 
method
drilling samples polymetal international plc annual report 201 1 19
financial statements appendices governance business review overview
exploration at prognozny
our key standalone exploration projects include
  avlayakankirankan khabarovsk territory
 kutyn khabarovsk territory
 svetloye khabarovsk territory
 prognozny magadan region
 tamunier sverdlovsk region
 elmus karelia
read more on page 50
new mineralised areas discovered  
in 2011 containing
1 internal nonjorc estimate
gold
4667 moz
1
delivering
sustainable
value
delivering
sustainable
value
delivering
sustainable
value
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
maintaining exemplary governance
focusing on highgrade assets
focusing on highgrade assets
focusing on highgrade assets
investing in exploration   
investing in exploration   
investing in exploration   
leveraging our hubbased system
leveraging our hubbased system
leveraging our hubbased system strategy objective kpi
2011 
performance
2010
performance

change
achieving design capacity
 achieve design capacity at projects currently in construction or rampup phase by the second half of 
2013 and achieve an annualised runrate of over 14 moz of gold equivalent ounces in 2014 assets 
in construction or rampup phase expected to generate production growth are the amursk pox hub 
the omolon hub and the dukat hub
  achieve design 
capacity at all plants 
and targeted 
production volumes  
14 moz
  gold equivalent produced koz
810 753 8
  revenue usm
1326 925 43
  complete key capex 
projects
  capital expenditure usm
480 444 8
  major project milestones completed   albazino – full ramp up
  amursk – completion of construction
  omolon – installation of the merrillcrowe section
investment in exploration 
nearmine
 investment in nearmine exploration with the aim of expanding the group’s reserve base and creating 
opportunities for production growth either through grade improvement or expansion of existing 
processing facilities assets targeted for this expansion are albazino within the amursk pox hub 
khakanja and voro
greenfield
 investment in greenfield exploration with the aim of establishing the feasibility of constructing two new 
standalone mines by 2013 we are targeting large deposits capable of sustaining production of at least 
300 koz of gold equivalent per year for at least ten years the group spent us66 million in exploration 
in 201 1 and plans to increase exploration spending up to us800 million in 2012
  invest in nearmine  
and greenfield 
exploration
  capital expenditure on exploration 
usm
66 59 13
  resources ge moz
138 135 3
  new mineralised areas discovered  ekaterina2 albazino  nadezhda albazino
 ozernoye khakanja
pursuing acquisitions 
pursuit of selected synergistic ‘bolton’ acquisition opportunities with a view to leveraging processing 
capacity infrastructure and operational expertise at our existing processing hubs or transforming 
current standalone mines into new hubs 
  synergetic bolton 
acquisitions
  transactions made during 2011   acquisition of the kutyn deposit – substantial oxidised mineral resources with 
easy openpit mining high heap leach recoveries and proximity to the sea
increasing profitability
deliver superior operating profitability by maintaining tight cost control focusing on return on capital 
in investment decisions and maintaining safe debt levels
   deliver superior 
operating profitability
  total cash cost usge oz
701 555 26
  adjusted ebitda usm
624 425 47
  a dj us t e d ebitda margin 
470 459 110bps
refining corporate governance
maintain high standards of corporate governance strictly adhering to the principles of sustainable 
development in our interaction with all stakeholders in our operations including communities 
employees and government bodies we are compliant with the majority of provisions of the uk 
corporate governance code and adequate provisions have already been made by the board  
to ensure full compliance in 2012 the group is also a participant in the un global compact  
a recognised international standard for sustainable development
   maintain high 
standards of corporate 
governance and 
sustainable 
development
  compliance with uk  
corporate governance code 
  refer to page 75 detailing 
how we have complied
  ltifr
07 19 63
  csr spending usm
40 39 3
business review
creating longterm value
20 polymetal international plc annual report 201 1
consistent strategy financial statements appendices governance business review overview
strategy objective kpi
2011 
performance
2010
performance

change
achieving design capacity
 achieve design capacity at projects currently in construction or rampup phase by the second half of 
2013 and achieve an annualised runrate of over 14 moz of gold equivalent ounces in 2014 assets 
in construction or rampup phase expected to generate production growth are the amursk pox hub 
the omolon hub and the dukat hub
  achieve design 
capacity at all plants 
and targeted 
production volumes  
14 moz
  gold equivalent produced koz
810 753 8
  revenue usm
1326 925 43
  complete key capex 
projects
  capital expenditure usm
480 444 8
  major project milestones completed   albazino – full ramp up
  amursk – completion of construction
  omolon – installation of the merrillcrowe section
investment in exploration 
nearmine
 investment in nearmine exploration with the aim of expanding the group’s reserve base and creating 
opportunities for production growth either through grade improvement or expansion of existing 
processing facilities assets targeted for this expansion are albazino within the amursk pox hub 
khakanja and voro
greenfield
 investment in greenfield exploration with the aim of establishing the feasibility of constructing two new 
standalone mines by 2013 we are targeting large deposits capable of sustaining production of at least 
300 koz of gold equivalent per year for at least ten years the group spent us66 million in exploration 
in 201 1 and plans to increase exploration spending up to us800 million in 2012
  invest in nearmine  
and greenfield 
exploration
  capital expenditure on exploration 
usm
66 59 13
  resources ge moz
138 135 3
  new mineralised areas discovered  ekaterina2 albazino  nadezhda albazino
 ozernoye khakanja
pursuing acquisitions 
pursuit of selected synergistic ‘bolton’ acquisition opportunities with a view to leveraging processing 
capacity infrastructure and operational expertise at our existing processing hubs or transforming 
current standalone mines into new hubs 
  synergetic bolton 
acquisitions
  transactions made during 2011   acquisition of the kutyn deposit – substantial oxidised mineral resources with 
easy openpit mining high heap leach recoveries and proximity to the sea
increasing profitability
deliver superior operating profitability by maintaining tight cost control focusing on return on capital 
in investment decisions and maintaining safe debt levels
   deliver superior 
operating profitability
  total cash cost usge oz
701 555 26
  adjusted ebitda usm
624 425 47
  a dj us t e d ebitda margin 
470 459 110bps
refining corporate governance
maintain high standards of corporate governance strictly adhering to the principles of sustainable 
development in our interaction with all stakeholders in our operations including communities 
employees and government bodies we are compliant with the majority of provisions of the uk 
corporate governance code and adequate provisions have already been made by the board  
to ensure full compliance in 2012 the group is also a participant in the un global compact  
a recognised international standard for sustainable development
   maintain high 
standards of corporate 
governance and 
sustainable 
development
  compliance with uk  
corporate governance code 
  refer to page 75 detailing 
how we have complied
  ltifr
07 19 63
  csr spending usm
40 39 3
polymetal international plc annual report 201 1 21
our corporate objective is to generate sustainable value  
for our stakeholders our strategy to achieve this remains 
consistent with clearly defined objectives key performance 
indicators targets and measurement processes 22 polymetal international plc annual report 201 1
business review
operating review
delivering a  
strong performance
in 2011 polymetal delivered another year of 
strong performance we produced 810 koz  
of gold equivalent ounces
1
 an increase of 8 
over 2010 while there was some grade decline 
at mature operations this was more than 
compensated for by new operations and  
the successful expansion of the dukat mill
key production achievements 
annual gold production was essentially flat at 443 koz 
with a further 28 koz of payable gold contained in 
albazino concentrates prepared for processing at the 
amursk pox plant silver production increased by 15 
to 199 moz an alltime record for polymetal copper 
production increased by 73 reaching 69 tonnes
throughout the year all our key projects progressed  
as planned see table below 
capital projects completed in 2011
  full rampup of the albazino processing plant 
and successful start of commercial production
  reconstruction of the omsukchan concentrator 
– gravity circuit launched 
  expansion of the kubaka plant – merrillcrowe 
section installed
  inaugural silver and gold concentrate sales 
dukat to kazakhstan albazino to china
  implementation of laser scanning of mining 
works at dukat for further automated mine 
planning
production highlights
2011 2010
 
change
stripping kt 80683 63283 27
underground  
development m 35150 23577 49
ore mined kt 11002 7474 47
 openpit 9636 6509 48
 underground 1366 965 42
ore processed kt 8821 7845 12
average grade  
processed ge gt 38 38 1
production
23
gold koz 443 444 0
silver moz 199 173 15
copper tonnes 6915 4003 73
sales
gold koz 448 440 2
silver moz 171 180 5
copper tonnes 6363 3991 59
safety
4
ltifr 07 19 63
fifr – 05 100
notes
1 based on 160 agau and 51 cuau conversion ratios
2  as of 1 april 2011 the group changed its methodology for calculating and reporting 
on the metals it produced previously production of metals contained in doré and 
zinc precipitate was recorded by the group upon shipment of the doré or precipitate 
from its mine gold rooms to third party refineries under the new methodology 
these metals are considered to be produced upon receipt of doré or precipitate at 
the group’s gold rooms in addition production of metals contained in concentrates 
was previously recorded upon shipment of concentrate to third party offtakers 
whereas under the new methodology these metals are considered to be produced 
when concentrate is bagged sampled and prepared for shipment the company 
believes that the new methodology is more accurate as it reflects the group’s 
physical production and eliminates variations associated with shipment cycles this 
mostly applies to concentrates where stockpile buildup accelerated during 2011 
to a lesser extent it also applies to doré and precipitate where shipment cycles 
have remained largely unchanged during 2011 consequently yearonyear 
comparisons have not been restated as the company believes such restatement 
would not lead to material differences to those results
3  polymetal reports production of metals contained in concentrates based on 
percentages payable for these metals by offtakers final assays are typically 
determined at the receiving smelters several months after shipment from the 
group’s mines
4 ltifr  lost time injury frequency rate fifr  fatal injury frequency rate polymetal international plc annual report 201 1 23
financial statements appendices governance business review overview
analysis of production results 
mining 
ore mined was 11002 kt 47 above 2010 levels  
the bulk of ore mined – around 88 2010 87 came 
from openpit mines a strong strategic preference for 
polymetal the largest increase – 1248 kt representing 
a 28 fold increase – came from omolon significant 
additional contributions came from the amursk hub with 
another 625 kt of ore due to start of underground mining 
at mayskoye and the openpit mine at albazino reaching 
full capacity
average grades in ore mined decreased slightly from 
44 gt of metal equivalent to 38 gt with the decline 
mostly coming from mature operations such as dukat 
khakanja and voro the grade decline at omolon was 
related to mine sequencing mostly heap leach ore mined 
at sopka this was compensated for by grade growth  
at new operations in particular albazino and mayskoye 
which both produce high grade refractory gold ores
processing 
ore processed was up 12 in 201 1 at 8821 kt the 
difference between ore mined and processed resulted 
principally from inability to operate a winter road at the start 
of 201 1 at omolon as a result ore from sopka could not 
be processed at the kubaka plant as originally planned 
however some sopka ore was delivered to khakanja  
by sea and processed there notable increases have  
been seen at dukat on completion of the omsukchan 
concentrator reconstruction and at varvara at both leach 
and float circuits in line with mining volume increases 
focus on pox 
first pressure oxidisation plant in russia
read more on page 34
average gold equivalent grades processed in 2011  
were stable compared to 2010 at 38 gt however  
the rampup of new mines – in particular albazino and 
omolon – in the second half of the year pushed the 
grade up to 45 gt in the fourth quarter next year we 
plan to process ore with grades close to our current 
reserve grade of 42 gt 
production 
throughout the year we consistently improved 
production results on a quarteronquarter basis as we 
overcame the operational challenges of the first half of 
the year and started to reap the rewards of rampingup 
new plants and reconstruction of existing facilities in the 
second half of the year as a result in q4 we achieved  
a record production level of 250 koz of gold equivalent 
representing a runrate of 1 moz per year 
major contributions to production growth resulted from 
three operations  
  dukat – which saw grade stabilisation by the year end 
and increased production capacity following gravity 
circuit completion
  amursk hub – the start of production and rampup  
of the albazino processing plant produced saleable 
flotation concentrate
  omolon – rampup of the kubaka plant which will be 
followed by a significant increase in production in 2012 
on the back of full use of sopka ore and introduction of 
the merrillcrowe section into commercial production
2011 2010

change
gold equivalent 
production koz 810 753 8
dukat 319 280 14
khakanja 128 170 25
voro 160 185 14
varvara 127 99 28
omolon 46 19 142
albazino 30 – na
amursk pox plant
the 225 ktpa plant uses pox and cyanidation technologies to process 
refractory ores
quarterly production data 
koz
187 192 184 189 145 194 221 250
100
109
116
119
82
102
124
52
5
78
5
63
5
65
5
54
9
83
9
88
9
106
9
gold silver copper
136
q1 2010 q2 2010 q3 2010 q4 2010 q1 2011 q2 2011 q3 2011 q4 2011 24 polymetal international plc annual report 201 1
business review
operating review
sales
2011 2010
 
change 
au koz 448 440 2
ag moz 170 180 5 
cu kt 6363 3991 59
gold equivalent koz
1
764 759 1 
1 based on 160 agau and 51 cuau conversion ratios
sales of metal in 2011 were 765 koz of metal equivalent 
representing a 1 increase over 2010 sales were  
lower than production volumes by 6 as some of the 
concentrate produced by the group was not delivered  
to thirdparty refineries the difference was shortterm  
in nature and is not expected to reoccur
during 2011 the group commenced successful sales of 
concentrates from its dukat and albazino plants dukat 
now sells most of its production in the form of flotation 
and gravitation concentrates to a thirdparty refinery in 
kazakhstan a decision made based on the economics 
of third party refining compared with inhouse refinery 
costs and recovery
concentrate produced at the albazino plant was sold  
to generate immediate cash flows from the amursk
albazino project prior to completion and commencement 
of commercial gold production at the amursk pox 
20000 tonnes of concentrate – with gold content at 
more than 40 gt – was successfully sold to a chinese 
offtaker additional sales may take place in 2012 
depending on market conditions and the exact timing  
of the amursk pox campup
exploration 
in 2011 we conducted exploration works in four  
regions of russia – khabarovsk karelia magadan  
and sverdlovsk – as well as in kazakhstan we currently  
have 52 licences for geological studies exploration and 
gold and silver mining our exploration projects portfolio 
includes 39 licences with a total area of approximately 
9664 km
2

delivering a strong performance
continued
in 2011 we conducted exploration projects in 25 licensed 
areas of which seven are at an advanced stage
key exploration objectives in 2011 included 
   increasing the resource base of existing processing 
facilities albazino dukat omolon varvara voro 
   ensuring a constant supply of ore for khakanja which 
currently has the shortest life of our existing mines
   exploring for new gold and silver deposits having a 
potential for the creation of new standalone mines 
2011 exploration projects
unit 2011 2010
 
change
exploration works
core drilling km 1297 840 54
trenching th m
3
1870 3150 41
geochemical 
sampling th assays 530 480 10
– trench th assays 116 190 39
– core th assays 719 600 20
geophysical 
sampling km
2
75 51 47
licences held
exploration licences 39 34 15
area covered km
2
9664 8908 8
as a result of these exploration activities we have 
identified new or expanded mineralised areas with 
estimated 4667 moz of contained gold internal  
nonjorc estimate in addition to our existing  
reserves and resources polymetal international plc annual report 201 1 25
financial statements appendices governance business review overview
reserves and resources
2011 2010 
 
change
ore reserves  
proved  probable ge moz 143 159 10
gold moz 92 100 8
silver moz 2970 3313 10
copper kt 434 580 26
mineral resources indicated  
measured  inferred ge moz 138 135 4
gold moz 104 95 10
silver moz 1811 2120 15
copper kt 740 800 8
total reserves and resources 282 293 4
we expect that a modest reduction in polymetal’s ore 
reserves in 2011 will be more than reversed in 2012  
as our exploration efforts translate into new significant 
reserve and resource additions
during 201 1 the group’s reserves and resources were 
revised as at 30 june 201 1 as part of an audit by mineral 
experts mineral expert reports and reserve and resource 
statements as of 30 june 201 1 can be reviewed in the 
prospectus dated 28 october 201 1 issued by the 
company in relation to the initial public offering of its shares 
on the london stock exchange as at 30 june 201 1 the 
group’s proved and probable ore reserves were 150 moz 
of gold equivalent and mineral resources measured 
indicated and inferred were 134 moz of gold equivalent
for more detail on reserves and resources and the 
statement by the competent persons please refer  
to page 137 
objectives for 2012 
our development strategy is aimed at optimising operations 
and increasing the effectiveness of our existing plants  
we also aim to improve current assets by developing their 
reserve and resource base – creating a new generation  
of assets – whilst maintaining total unit production costs  
at a level of no more than 50 of market prices
operations
in the coming year we expect to produce 590640 koz 
of gold 2123 moz of silver and 67 kt of copper as a 
result the group aims to increase its total annual gold 
equivalent production to over 1 moz
1
 the structure of 
production mix is shifting towards gold as opposed to 
silver our share of gold is expected to grow from 55  
in 2011 to more than 65 in 2012 
we are firmly focused on delivering further growth in  
2012 driven by the startup of the amursk pox facility  
and achievement of full production capacity at omolon 
other operations will support this by maintaining grade  
and volume 
in 2012 we are also targeting completion and rampup 
of the mayskoye concentrator this will contribute 
significant production volumes from 2013 as the 
concentrate produced at mayskoye will be further treated 
at the amursk plant by 2014 the existing portfolio of 
assets – including albazino and mayskoye – will achieve 
full capacity with annual gold equivalent production 
targeted at 14 moz
as part of our commitment to enhancing existing mining 
and processing facilities we have implemented a number 
of initiatives which include
  full implementation of jorcbased mine planning 
based on use of the datamine system for mine 
modelling and laser scanning mine planning will 
include full cycle from reserve and resource estimation 
and audit to detailed mine sequencing plans onsite
  design and implementation of automated production 
management systems including second generation 
automated enterprise management systems
  further implementation of energy saving solutions and 
audit of energy use including automated systems for 
energy saving and control
  research design and implementation of technologies 
for improving recoveries and optimization of ore 
processing geotechnological mapping
exploration
further growth post2014 will be mostly based on the 
results of ongoing exploration projects both greenfield 
and brownfield we believe these will lead to 
development of additional mines allowing us to leverage 
the existing processing capacity at the maturing mines 
delivering on the ongoing exploration projects and 
progressing further to feasibility studies and subsequent 
construction remains one of our strategic priorities
acquisitions
on the ma front polymetal continues to be focused 
on relatively small potential nearmine targets aimed 
at increasing ore feed for maturing operations such 
as varvara and voro
movements in gold 
ore reserves koz
movements in silver 
ore reserves moz
at 01 jan
2011
at 01 jan
2012
processed 
in 2011
revised
10042
563
320
9159
at 01 jan
2011
at 01 jan
2012
processed 
in 2011
revised
331
23
11
297
movements in gold 
ore reserves koz
movements in silver 
ore reserves moz
at 01 jan
2011
at 01 jan
2012
processed 
in 2011
revised
10042
563
320
9159
at 01 jan
2011
at 01 jan
2012
processed 
in 2011
revised
331
23
11
297 26 polymetal international plc annual report 201 1
business review
operating review
dukat
our cornerstone asset and largest silver mine
russia magadan region
managing director gennady kuzmenko
employees 191 1
located in the magadan region  
in the russian far east dukat is  
one of polymetal’s original assets  
it is the third largest silver deposit  
in the world the largest primary  
silver operation in russia and our 
flagship operation
the dukat hub was created in 2008 
by merging the dukat and lunnoye 
operating units it consists of the 
omsukchan concentrator which 
processes ore from the dukat  
and goltsovoye mines and the 
lunnoye processing plant which 
processes ore from the lunnoye  
and arylakh mines as well as 
concentrate from the omsukchan 
facility the dukat hub also includes 
the nachalny2 mine
3rd
largest silver deposit in the world
 
17
silver production in 201 1 17 0 moz
 
401 moz
silver reserves and resources moz
83 
adjusted ebitda growth  
201 12010 
the year ahead
in 2012 the dukat hub will 
continue to see a decrease  
in openpit mining volumes  
as openpittable deposits  
approach depletion however 
underground mining volumes at 
dukat goltsovoye and lunnoye 
will continue to grow and will 
become the key source of ore 
worked through a combination  
of open stoping and cutandfill 
methods to maintain full utilisation  
of the processing plant 
grades will remain at around 
current levels which combined 
with improved recoveries  
will allow us to achieve moderate 
growth in volumes of silver 
produced no major reconstruction 
or modifications are expected  
at the existing processing  
plants and nearmine exploration 
activities will continue with the aim 
of further strengthening the hub’s 
resource base polymetal international plc annual report 201 1 27
financial statements appendices governance business review overview 28 polymetal international plc annual report 201 1
mining
underground development at  
dukat and goltsovoye increased 
significantly during the year ore 
mined grew by 12 and 451 
respectively however both  
mines were experiencing some  
grade decline
at lunnoye and arylakh ore mined 
grew 12 with a modest silver 
grade decline 7 
in 2011 we also started mining at the 
nachalny2 deposit
processing
2011 saw significant improvements in 
recoveries and throughput following 
the successful completion of a 
lengthy and complex expansion 
project for the omsukchan 
concentrator installation of the 
gravity circuit was the last stage 
completed in 2011 whilst grades  
at the mine declined slightly overall 
grades processed improved due to 
the inclusion of highergrade feed 
from the goltsovoye mine as a 
result total silver production at the 
dukat plant increased by 23
dukat 
continued
2011 highlights
mining statistics
dukat goltsovoye lunnoye  arylakh total
2011 2010

change 2011 2010

change 2011 2010

change 2011 2010

change
stripping 810 2002 60 – – na 2837 2724 4 3647 4726 23
underground 
development 
m 15705 12244 28 4238 3518 20 2444 3139 22 22387 18901 18
ore mined kt 1197 1069 12 126 23 451 321 286 12 1644 1378 19
metal in  
ore mined 
grade gt
– gold 08 11 28 – – na 13 13 1 08 11 26
– silver 387 406 5 467 623 25 397 426 7 395 414 5
production statistics
omsukchan concentrator lunnoye processing plant total
2011 2010

change 2011 2010

change 2011 2010

change
ore processed 1432 1259 14 301 275 10 1733 1533 13
metal in ore processed grade gt
– gold 07 09 23 13 13 4 08 10 17
– silver 383 366 5 4141 4261 3 388 377 3
recovery
– gold 76 70 7 92 94 2
– silver 77 72 7 87 90 3
production na
– gold koz 25 27 9 12 11 11 37 38 3
– silver moz 136 111 23 34 34 2 170 145 17
gold equivalent koz 251 212 19 68 68 0 319 280 14
total cash costsilver equivalent oz usoz 140 99 42
adjusted ebitda usm 282 154 83
business review
operating review
    arylakh
    lunnoye
    perevalny 
    nachalny2
    dukat
    goltsovoye
magadan
omsukchan


1
1
2
3
4
5
6
2
processing plants
town 
4
5
6
mines
3
lunnoye
dukat
    arylakh
    lunnoye
    perevalny 
    nachalny2
    dukat
    goltsovoye
magadan
omsukchan


1
1
2
3
4
5
6
2
processing plants
town 
4
5
6
mines
3
lunnoye
dukat polymetal international plc annual report 201 1 29
financial statements appendices governance business review overview
at lunnoye ore processed increased 
by 10 the amount of silver 
produced was 2 lower than in 
2010 due to modest grade declines 
in ore processed however gold 
production increased by 11
in 2011 we successfully commenced 
sales of flotation concentrate to a 
third party refinery in kazakhstan 
more than 17 000 tonnes of 
concentrate were shipped the 
rationale for concentrate sales – as 
opposed to doré sales – was the 
better recoveries achieved by the 
third party refinery which offset the 
additional treatment charges and 
transportation costs sales of 
concentrate also enabled 
optimisation of the production 
programme for the lunnoye 
cyanidation circuit which is now  
only treating ores with higher 
potential recovery
nearmine exploration
key exploration activities in 2011 
were focused on goltsovoye as  
with of additional exploration works 
performed at ore zones 2 and 3  
we also completed exploration  
works at the krasin deposit an 
estimate of openpit resources  
at krasin is expected in 2012
processing facilities at dukat
mine information
dukat goltsovoye perevalny lunnoye arylakh total
status operating operating scoping operating operating
mineralisation type veinveinlet narrow vein veinveinlet mineralised
 zone
veinveinlet
mine type  underground
 and openpit
underground underground underground openpit
commencement of mining year 2001 2011 na 2000 2006
current lifeofmine end year 2021 2021 na 2023 2013
reservesresources
reserves
gold moz 05 – – 02 00 06
gold reserve grade gt 12 – – 18 07 12
silver moz 2159 – – 324 98 2583
silver reserve grade gt 550 – – 372 457 515
gold equivalent moz 41 – – 07 02 49
gold equivalent reserve grade gt 103 – – 80 83 98
resources
gold moz 01 – – 01 00 02
gold reserve grade gt 06 na na 16 09 07
silver moz 558 421 137 272 40 1428
silver reserve grade gt 293 850 364 350 490 392
gold equivalent moz 11 07 02 06 01 26
gold equivalent reserve grade gt 56 142 61 74 89 72
processing plants
omsukchan concentrator
type flotationgravitation
capacity ktpa 1500
commencement  
of production year 2002
ore sources dukat goltsovoye
lunnoye processing 
plant
type cyanide leaching
 and merrillcrowe
capacity ktpa 300
commencement  
of production year 2001
ore sources lunnoye arylakh 
concentrate from 
omsukchan
 concentrator operating review
omolon
created in 2009 the omolon hub 
currently includes two operating 
openpit mines birkachan and 
sopka and three development 
projects with highgrade ore and 
significant longterm potential  
the hub is based around the  
kubaka plant which will become  
a centralised processing facility for 
several operating and planned mines 
the year ahead
a trial heap leach facility to treat 
runofmine ore currently will 
operate at birkachan between 
may and october with the 
successful completion of trucking 
highgrade ore from sopka to the 
kubaka plant we are expecting to 
more than treble metal production 
supported by higher grades and 
the introduction of the merrill
crowe section we also plan to 
commence openpit mining at 
tsokol this high grade ore will 
then be sent to kubaka for 
processing together with 
birkachan ore
a new 8 mw coalfired boiler will 
be commissioned during the year 
and used mostly for heating the 
heap leach solution 
the group will continue to carry 
out nearmine exploration projects 
at tsokol oroch and dalneye with 
the aim of expanding the omolon 
hub reserves 
russia magadan region
managing director sergey antipin
employees 1064
30 polymetal international plc annual report 201 1
a turnaround story for 2012
business review
183
ore mined in 201 1 1928 kt
 
33 moz
gold equivalent reserves  
and resources
44 gt 
average gold equivalent reserve  
and resource grade
  completion of kubaka plant  
refurbishment polymetal international plc annual report 201 1 31
financial statements appendices governance business review overview 32 polymetal international plc annual report 201 1
omolon
continued
2011 highlights
mining statistics
birkachan sopka total
2011 2010

change 2011 2010

 change 2011 2010

 change
stripping 7925 3039 161 4956 2025 145 12880 5064 154
ore mined kt 1192 521 129 735 159 362 1928 680 183
metal in ore mined grade gt
– gold 16 14 14 26 72 63 20 28 28
– silver – – na 857 2248 62 327 527 38
production statistics
kubaka plant birkachan heap leach total
2011 2010

change 2011 2010
 
change 2011 2010

change
ore processed 574 223 157 – 459 na 574 682 16
metal in ore processed grade gt
– gold 24 22 10 – 16 na 24 18 38
recovery
– gold 92 91 1
production
– gold koz 39 13 210 4 6 30 43 18 136
– silver moz 01 00 291 – – na 02 00 341
gold equivalent koz 41 13 214 4 6 25 46 19 142
total cash costge oz usoz 1481 1162 27
adjusted ebitda usm 48 82 na
mining
ore mined increased nearly threefold 
with significant increases achieved at 
both birkachan and sopka deposits 
however adverse weather conditions 
and excessive snowfall restricted  
the amount of waste that could be 
removed from the birkachan mine  
in the first quarter and this led to  
a failure to operate a winter road  
to deliver ore from sopka to the 
kubaka plant some of the ore  
mined at sopka 23 kt was therefore 
shipped to khakanja for processing 
gold in ore mined at birkachan 
increased by 14 to 16 gt whilst  
at sopka lower grade ore 26 gt 
compared to 7 2 gt in 2010 was 
mined for further heap leading
in december 2011 we successfully 
completed construction of the winter 
road for the 2012 season it became 
operational on 30 december 2011 
and we are targeting to truck more 
than 250 kt of ore by the end of  
april 2012
processing
no ore was stacked to heap leach 
pads at birkachan in 2011 although 
we received 4 koz of gold from ore 
stacked in 2010
at the kubaka plant production 
trebled as a result of an increase in 
ore mined at birkachan combined 
with improved grades and recoveries 
however the plant operated below 
its potential capacity of 850 ktpa  
due lack of ore from sopka
overall annual gold production at 
omolon more than doubled in 2011 
business review
operating review
1

5
3
4
2
    birkachan
    tsokol
    oroch 
    sopka
    dalneye
evensk
1
2
3
4
5
processing plant
town 
mines
kubaka
1

5
3
4
2
    birkachan
    tsokol
    oroch 
    sopka
    dalneye
evensk
1
2
3
4
5
processing plant
town 
mines
kubaka polymetal international plc annual report 201 1 33
financial statements appendices governance business review overview
construction
during the year construction of a new 
processing section was undertaken 
to enable treatment of ores with high 
silver content – initially from  
the sopka deposit the upgraded 
plant includes new leaching  
countercurrent decantation and  
a merrillcrowe circuit which was 
successfully commissioned at the 
end of the year 
we also completed construction of 
an unpaved road between birkachan 
and kubaka a 180metre permanent 
bridge over the omolon river was 
also completed which means the 
road now operates all year round 
exploration
we have received exploration licenses 
for 91 km
2
 around kubaka the key 
project being burgali 40 km north of 
birkachan these areas saw extensive 
trenching and some drilling performed 
to identify highgrade deposits with 
openpit mining potential and improve 
of medium term grade profiles at the 
kubaka plant 
burgali was a new discovery in 2011 
we obtained several trench assays 
– the best grading 111 gt gold with 
a width of 17 9 m and core assays  
– the best grading 17 5 gt gold  
with a width of 69 m projects are 
continuing at the evaluation stage 
with major scoping drilling scheduled 
for 2012 
mine information
 birkachan sopka oroch tsokol dalneye total
status operating operating prefeasibilty construction feasibility
mineralisation type veinveinlet 
stockwork
veinveinlet veinveinlet veinveinlet veinveinlet
mine type  openpit
underground
from 2017
openpit openpit openpit openpit
commencement of mining year 2010 2010 na na na
current lifeofmine end year 2023 2018 na na na
reservesresources
reserves
gold moz 10 046 – – – 15
gold reserve grade gt 25 430 – – – 29
silver moz 43 1637 – – – 207
silver reserve grade gt 11 155 – – – 41
gold equivalent moz 11 073 – – – 18
gold equivalent reserve grade gt 27 69 – – – 36
resources
gold moz 03 01 02 03 02 11
gold reserve grade gt 33 44 33 81 40 42
silver moz 15 19 103 06 53 196
silver reserve grade gt 16 164 167 13 95 75
gold equivalent moz 03 01 04 03 03 14
gold equivalent reserve grade gt 36 71 60 83 56 55
processing activity at omolon
processing plants
kubaka
type cil merrillcrowe
capacity ktpa 850
commencement  
of production year 2010
ore sources birkachan sopka
birkachan
type heap leach
capacity ktpa na
commencement  
of production year 2010
ore sources birkachan operating review
amursk pox hub
the year ahead
underground development is 
currently underway on the central 
part of the mayskoye deposit with 
the aim of beginning production of 
primary ore from stopes in the first 
quarter of 2012
completion of the mayskoye 
concentrator is scheduled for q3 
2012 with the first gold concentrate 
to be produced towards the end  
of the year the concentrate will 
then be shipped to amursk during 
the navigation period typically 
between the end of june and  
the end of november
located in the khabarovsk territory  
in the russian far east the amursk 
hub is polymetal’s largest project  
it comprises two highgrade  
refractory gold deposits albazino  
and mayskoye and three  
processing facilities the amursk 
hydrometallurgical plant the  
albazino concentrator and the 
mayskoye concentrator
construction of the amursk pox 
plant has been completed and the 
first gold pour is scheduled for the 
first half of 2012
we have already secured shipping 
capacity from fesco the largest 
fleet operator in the far east for 
these shipments through a long
term agreement
additional exploration works at 
olga nadezhda and ekaterina2 
are expected to yield an increase  
in resource potential in the albazino 
area further exploration and 
probing will also be carried out in 
two standalone areas – kutyn and 
uchamin – where we expect to 
significantly increase the existing 
resource potential
future growth source with a highgrade profile
russia khabarovsk territory 
managing directors aleksander simon 
albazino vladimir shamin amursk 
aleksander zarubin
employees 1781
101 moz
gold reserves and resources 
73 gt 
average reserve and resources grade
2011 
first year of commercial production
34 polymetal international plc annual report 201 1
30 koz 
gold produced in 201 1
business review polymetal international plc annual report 201 1 35 polymetal international plc annual report 201 1 35
financial statements appendices governance business review overview 36 polymetal international plc annual report 201 1
amursk  
pox hub
continued
 2011 highlights
mining statistics
albazino mayskoye total
2011 2010

 change 2011 2010
 
change 2011 2010

 change
stripping 14584 10367 41 – – na 14584 10367 41
underground development m – – na 10999 4318 155 10999 4318 155
ore mined kt 841 278 202 79 16 380 920 295 212
metal in ore mined grade gt
– gold 43 37 16 98 87 13 48 35 37
the amursk hydrometallurgical plant 
uses pressure oxidation pox and 
cyanidation technologies to process 
refractory ores from the operational 
albazino mine and mayskoye under 
construction it has a design 
processing capacity of approximately 
225 ktpa of concentrate resulting in 
400440 koz of gold produced per 
annum depending on the gold grade 
albazino is a remote deposit located 
680 km from the amursk plant  
it comprises a highgrade gold 
openpit mine and a 15 mtpa onsite 
flotation concentrator and it achieved 
full design capacity in q3 2011 
albazino’s reserves are estimated  
to be 22 moz of gold 
mayskoye is located in the chaun 
district of the chukotka autonomous 
territory proved and probable 
reserves are estimated to be  
7 9 mt of ore grading 96 gt gold  
for 24 moz of contained gold 
ores at both these mines require 
pretreatment oxidation before 
conventional cyanidation to extract 
the sulphur component polymetal 
selected pox also known as 
autoclave leaching as the preferred 
processing option since – despite 
higher initial capital costs – it offers 
several advantages over alternative 
processes
these include the ability to treat 
various feedstocks in one facility 
higher recoveries lower operating 
costs and reduced environmental 
impact compared to other 
technologies such as bioleaching  
or roasting
 
mining
at albazino three times as much  
ore was mined in 2011 compared  
to 2010 as the mine has operated  
at full capacity while gold grades 
improved from 37 gt to 43 gt
at mayskoye underground 
development reached a steady  
state rate of 1100 m per month  
ore mined reached 79 kt grading  
98 gt gold as the mine intensified 
projects preparing feedstock for  
the concentrator
processing
the onsite flotation concentrator at 
albazino was successfully started in 
april 2011 the plant took 30 months 
from approval to completion and the 
construction was completed within 
budget despite some challenging 
logistical and climatic issues this 
was polymetal’s first launch of a 
greenfield mine since 2004 and it 
reached full capacity by the end of 
q3 2011 since then we have seen 
significantly improved recoveries at 
albazino as processing transitioned 
from semioxidised to primary ore 
reaching 88 in january 2012 
during the year we sold some 20 kt of 
gold concentrate containing 298 koz 
of payable gold to a chinese 
offtaker these sales allowed us to 
receive immediate cash flow from the 
project before completion of the pox 
plant at amursk additional sales may 
be considered in 2012 depending  
on the exact timing of the amursk 
pox startup another 23 kt of 
concentrate with 30 koz of contained 
gold produced in 2011 were 
delivered to amursk to accumulate 
feedstock for further processing  
at the pox plant
construction
the amursk pox facility entered the 
commissioning stage in december 
201 1 the start of 2012 saw testing  
of the autoclave integrity using high 
pressure steam and hot water and the 
first gold pour is scheduled for the first 
half of 2012 full rampup is expected 
towards the end of the year 
at mayskoye civil works were 
completed and mills installed with  
the majority of equipment and 
construction materials delivered  
in 2011 by sea work is currently 
focused on the flotation filtering  
and drying sections 
the power substation is nearing 
completion and is expected to link to 
the regional power grid in the first half 
of 2012 completion of construction 
is scheduled for q3 2012
business review
operating review
    albazino
    mayskoye
1
2
processing plants
town
port

mines
mayskoye
albazino
amursk pox
pevek
vanino
khabarovsk
nikolaevskonamur


komsomolskonamur


kherpuchi

oglongi
1
2
1
albazino
amursk pox
    albazino
    mayskoye
1
2
processing plants
town
port

mines
mayskoye
albazino
amursk pox
pevek
vanino
khabarovsk
nikolaevskonamur


komsomolskonamur


kherpuchi

oglongi
1
2
1
albazino
amursk pox
    albazino
    mayskoye
1
2
processing plants
town
port

mines
mayskoye
albazino
amursk pox
pevek
vanino
khabarovsk
nikolaevskonamur


komsomolskonamur


kherpuchi

oglongi
1
2
1
albazino
amursk pox polymetal international plc annual report 201 1 37
financial statements appendices governance business review overview
production statistics
albazino
2011 2010
 
change
ore processed 620 – na
metal in ore processed grade gt
– gold 43 – na
recovery
– gold 70 – na
production
– concentrate kt 43 –
– gold in concentrate koz 59
– including saleable gold koz 30 – na
gold equivalent production koz 30 – na
total cash costge oz usoz 1018 – na
adjusted ebitda usm excluding mayskoye 45 91 na
in february 2011 we signed a letter 
of intent with fesco transportation 
group for arrangement of the long 
term transportation of concentrate 
from mayskoye to amursk
exploration
exploration works near albazino 
revealed good potential for a further 
significant increase in reserves in the 
territories adjacent to the existing 
mine in august we started 
construction of an underground 
exploration decline at albazino  
to trace continuity of mineralisation 
as a result of our exploration 
projects we have established new 
mineralised areas with an estimated 
3243 moz of gold nonjorc 
estimates including 1213 moz  
at the olga and nadezhda zones  
and 23 moz at the newlydiscovered 
ekaterina2 zone 
in 2012 a new uchamin area will be 
included in the scope of exploration 
projects in 2011 results of reprobing 
exploration works performed by 
previous owners have revealed high 
resource potential with the possibility 
of openpit mining 
processing plants
albazino concentrator
type flotation
capacity ktpa 1500
commencement  
of production year 2011
ore sources albazino
mayskoye concentrator
type flotation
capacity ktpa 850
commencement  
of production year 2012
ore sources mayskoye
amursk pox
type pox  cyanidation
capacity ktpa 225 concentrate
commencement  
of production year 2012
ore sources concentrate from
 albazino and
 mayskoye
mine information
albazino mayskoye total
status operating construction
mineralisation type mineralised zones
refractory ore
narrow vein
refractory ore
mine type openpit underground
commencement of mining year 2009 2011
current lifeofmine end year 2020 2024
reservesresources
reserves
gold moz 22 24 46
gold reserve grade gt 37 96 68
resources
gold moz 06 48 55
gold reserve grade gt 31 83 77
reviewing operations at albazino ore analysis at mayskoye operating review
the year ahead
in 2012 we expect to deliver 
production growth at khakanja  
as ore from higher grade mines  
will constitute an increasing  
share of the overall supply  
to the processing plant
we expect to expand openpit 
mining at khakanja’s pit 3 to 
commence underground mining  
at khakanja and to begin openpit
located in the russian far east 
khakanja is one of polymetal’s 
principal assets comprising a 
standalone goldsilver openpit  
mine and a 600 ktpa merrillcrowe 
processing plant contributing mines 
include the main khakanja pit the 
small yurievskoye satellite deposit 
and a trial mine at the ak project 
see page 50 ‘standalone exploration 
projects’ for more information  
ore from sopka – part of the  
omolon hub – was also processed  
at khakanja prior to completion  
of refurbishmentof the kubaka 
processing plant
 
yurievskoye is accessible only  
by a winter road from january to 
april and underground mining 
commenced in 2010 following the 
completion of openpit operations 
mining at the new satellite ozerny 
operation towards the end of 
2012 with ore to be processed  
at khakanja in 2013 ozerny is  
of considerable importance to  
the group given the relatively  
short life of the khakanja mine 
2018 and the resulting potential 
underutilisation of the plant from 
2015 unless new reserves are 
discovered and mined
a key asset with underground potential 
russia khabarovsk territory
managing directors alexander akamov
employees 1071
38 polymetal international plc annual report 201 1
khakanja
128 koz
gold equivalent produced in 201 1 
83 gt
average gold equivalent grade  
in ore mined in 201 1 
13 moz
gold equivalent reserves and  
resources
 
71 gt
average gold equivalent reserve  
and resource grade
business review polymetal international plc annual report 201 1 39
financial statements appendices governance business review overview 40 polymetal international plc annual report 201 1
khakanja
continued
mining statistics
khakanja  yurievskoye avlayakan total
2011 2010

change 2011 2010

change 2011 2010

change
stripping 9601 10106 5 1191 33 3510 10792 10139 6
underground development m 1764 358 393 – – na 1764 358 393
ore mined kt 528 478 11 128 4 3475 657 481 36
metal in ore mined grades gt
– gold 29 66 56 171 13 1237 57 66 14
– silver 199 240 17 – – na 160 238 33
production statistics
khakanja plant
2011 2010

change
ore processed 617 622 1
metal in ore processed grades gt
– gold 46 66 31
– silver 1727 2049 16
recovery
– gold 92 95 3
– silver 78 63 23
production
– gold koz 84 127 33
– silver moz 26 26 2
gold equivalent koz 128 170 25
total cash costge oz usoz 672 478 41
adjusted ebitda usm 113 120 6
mining
at khakanja including the 
yurievskoye satellite deposit ore 
mined grew by 11 gold equivalent 
grade in ore mined declined as 
expected from 106 gt to 62 gt as 
a result of the depletion of the higher 
grade pit 1 and the start of mining  
at the lower grade pit 3
underground development at 
yurievskoye and openpit mining at 
the avlayakan trial mine intensified in 
2011 notably at avlayakan the 
average gold content in ore mined 
was 17 1 gt to deliver this high
grade ore to khakanja we built  
new port facilities at kiran which  
will be used for transportation  
of avlayakan ore going forward
based on the increased share of 
these two higher grade mines in the 
2012 mining programme we are 
looking to improve the grade profile 
at khakanja in 2012 
processing
during 2011 the plant processed ore 
at its full capacity – slightly above 
600 ktpa gold production declined 
by around one third to 84 moz 
principally as a result of lower grades 
from the main khakanja deposit 
while silver production remained flat 
due to significant improvement in 
recovery rates overall production 
levels were supported by additional 
higher grade ore coming from 
yurievskoye avlayakan and sopka
2011 highlights
business review
operating review
1
    yurievskoye
    avlayakan
1
2
processing plant
town
port

mines
okhotsk
2
khakanja
kiran
1
    yurievskoye
    avlayakan
1
2
processing plant
town
port

mines
okhotsk
2
khakanja
kiran polymetal international plc annual report 201 1 41
financial statements appendices governance business review overview
mine information
 khakanja yurievskoye ozerny total
status operating operating feasibility study
mineralisation type veinveinlet vein
mine type  
open pitunderground mining method
openpit to be
followed by
underground
openpit to be
followed by
underground openpit
commencement of mining year 2002 2007 na
current life of mine end year 2018 2013 na
reservesresources
reserves
gold moz 02 003 – 03
gold reserve grade gt 37 81 – 39
silver moz 162 005 – 162
silver reserve grade gt 242 11 – 230
gold equivalent moz 05 003 – 05
gold equivalent reserve grade gt 77 81 – 77
resources
gold reserve grade gt 32 70 55 48
silver moz 133 002 15 148
silver reserve grade gt 241 14 24 2190
gold equivalent moz 04 00 04 08
gold equivalent reserve grade gt 73 71 59 66
exploration
the group is undertaking several 
brownfield exploration projects with 
the aim of extending the economic 
life of khakanja during the year five 
target exploration areas close to 
khakanja saw drilling or substantial 
trenching this activity was part of 
our efforts to identify smallscale 
locations with potential for openpit 
operations 
at ozerny we have considerably 
increased the resource base at ore 
body 1 and are preparing for both 
statutory and jorccompliant 
reserve estimates in 2012 northern 
flanks of this ore body yielded grades 
ranging from 48 gt gold trench 
width 15 m to 64 gt goldcore 
width 4 m
the plant at khakanja ore transportation
processing plant
khakanja plant
type
cyanide leaching
 and merrillcrowe
capacity ktpa 600
commencement  
of production year 2003
ore sources khakanja
yurievskoye
avlayakan 
sopka temporary 42 polymetal international plc annual report 201 1
operating review
voro
the year ahead
in 2012 the total volume of ore 
mined at main vorontsovskoye 
deposit will slightly decrease  
with most of the decrease coming 
from oxidised ore ore mined  
at fevralskoye will be sent for  
trial processing at varvara  
at degtyarskoye we expect to see 
a continuing reduction in mining 
volumes with the lowgrade ore to 
be sent to varvara for processing 
voro is one of polymetal’s key assets 
contributing consistent cash returns 
located in the sverdlovsk region  
it comprises two openpit mines – 
voro and the smaller degtyarskoye 
and a newly developed mine at 
fevralskoye this asset also has a 
sizeable brownfield exploration area 
consisting of the south voro and 
volchansky projects primary  
and oxidised ores are processed  
at the 900 ktpa cip and 1 mtpa 
heap leach plants 
total production volumes at both 
heap leach and cip circuits will be 
stable along with a slight decrease 
in head grades processed
our exploration activities in 2012 
will be focused around increasing 
the resource base at the south  
of the voro area in both primary 
and oxidised ores
our lowest cost and highest margin mine
russia sverdlovsk region
managing directors andrey novikov
employees 889
553
cash cost per gold equivalent ounce  
in 201 1 usoz 
625
adjusted ebitda margin in 201 1 
160 koz 
gold equivalent produced in 201 1
business review polymetal international plc annual report 201 1 43
financial statements appendices governance business review overview 44 polymetal international plc annual report 201 1
voro 
continued
mining statistics
vorontsovskoye degtyarskoye fevralskoye total
2011 2010

 change 2011 2010

 change 2011 2010

 change 2011 2010

 change
stripping 10954 9465 16 1591 1566 2 243 – na 12788 11032 16
ore mined kt 1665 956 74 194 274 29 12 – na 1871 1230 52
metal in  
ore mined 
grade gt
– gold 36 51 30 42 57 26 24 – na 36 52 30
production statistics
voro cip voro heap leach total
2011 2010
 
change 2011 2010

change 2011 2010
 
change
ore processed 901 907 1 902 1024 12 1803 1931 7
metal in ore processed grade gt
– gold 59 61 4 17 16 7 38 37 2
recovery
– gold 78 80 3 74 73 2
production
– gold koz 125 149 16 32 34 6 157 183 14
– silver moz 01 02 na 004 – na 02 02 11
gold equivalent koz 127 149 14 32 34 4 160 185 14
total cash costge oz usoz 553 423 31
adjusted ebitda usm 175 131 33
mining
at vorontsovskoye ore mined in  
2011 grew by 74 compared to 
2010 the main increase was due  
to the start of mining of oxidised ore 
at the southern flanks of the main 
vorontsovskoye deposit while head 
grades reduced for the same reason
at degtyarskoye ore mined declined 
by 29 as the mine nears depletion 
this is also affecting the grade levels
we commenced mining at 
fevralskoye in early 2011 and are 
currently assessing the viability of 
further activity the average gold 
grade in ore mined was 24 gt  
it is planned that ore from this  
mine will be transported to  
varvara for processing
production
2010 was the year of peak 
performance for voro which is now 
entering its mature stage in 2011 
annual gold production decreased  
by 14 from 183 koz to 157 koz 
this was principally due to the 
expected decrease in grades and 
recoveries at the cip plant driven  
in turn by the exhaustion of the 
degtyarskoye satellite mine the 
higher share of oxidised ore mined  
at vorontsovskoye also pushed  
the overall grades processed 
down recoveries at both heap  
leach and cil plants were stable
2011 highlights
business review
operating review
ekaterinburg
karpinsk
serov

nijniy tagil
1
2


    degtyarskoye
    fevralskoye
1
2
processing plant
town 
mines
voro

ekaterinburg
karpinsk
serov

nijniy tagil
1
2


    degtyarskoye
    fevralskoye
1
2
processing plant
town 
mines
voro
 polymetal international plc annual report 201 1 45
financial statements appendices governance business review overview
mine information
 vorontsovskoye degtyarskoye fevralskoye total
status operating operating operating
mineralisation type mineralised zones gossan gossan
mine type openpit openpit openpit
commencement of mining year 1999 2010 2011
current lifeofmine end year 2026 2012 na
reservesresources
reserves
gold moz 14 – – 14
gold reserve grade gt 28 – – 28
silver moz 20 – – 20
silver reserve grade gt 4 – – 4
gold equivalent moz 14 – – 14
gold equivalent reserve grade gt 29 – – 29
resources
gold moz 01 – – 01
gold reserve grade gt 16 – – 16
silver moz 01 – – 01
silver reserve grade gt 3 – – 3
gold equivalent moz 01 – – 01
gold equivalent reserve grade gt 29 – – 29
exploration
exploration at voro is focused on 
volchansk where we commenced 
drilling towards the end of the  
year and at south voro where 
reconnaissance and geophysical 
activities began our main aim is  
to identify nearsurface mineralised 
areas that have the potential to 
extend the useful life of the heap 
leach facility at voro 
operating activities at voro
processing plants
voro cip
type flotation
gravitation
capacity ktpa 940
commencement  
of production year 2005
ore sources vorontsovskoye
 degtyarskoye
voro heap leach
type cyanide leaching 
and merrillcrowe
capacity ktpa na
commencement  
of production year 2000
ore sources vorontsovskoye
 degtyarskoye operating review
varvara
the year ahead
2012 will bring moderate 
production volume increase  
both for gold and copper the 
processing plant will undertake  
test processing of fevralskoye  
varvara is a fastgrowing standalone 
gold and copper mine – our first 
project in kazakhstan acquired  
in 2009 located in northwest 
kazakhstan it is 10 km from  
the russian border and has  
excellent transport infrastructure 
inexpensive energy and promising 
development potential 
and degtyarskoye ores which we 
expect to yield higher recoveries  
in addition we are aiming to 
complete exploration and scoping 
on the flanks of main varvara mine 
a success story in kazakhstan
kazakhstan kostanay region
managing directors nikolay goncharov
employees 689
66
adjusted ebitda growth 
20112010 
28 
gold equivalent production growth 
20112010
127 koz 
gold equivalent produced in 201 1
46 polymetal international plc annual report 201 1
business review polymetal international plc annual report 201 1 47
financial statements appendices governance business review overview 48 polymetal international plc annual report 201 1
varvara 
continued
mining statistics
varvara – float ore
2011 2010

change
stripping 25993 21955 18
ore mined kt 3983 3411 17
– float ore 1508 752 101
– leach ore 2475 2659 7
metal in ore mined grades
– gold gt – float ore 11 10 8
– gold gt – leach ore 08 09 4
– copper  float ore 06 07 13
production statistics
varvara – flotation varvara – leaching total
2011 2010
 
change 2011 2010
 
change 2011 2010
 
change
ore processed 950 793 20 2523 2283 11 3473 3076 13
metal in ore processed grades
– gold gt 13 11 17 11 11 3 11 11 2
– copper  09 07 23 – – na 024 018 30
recovery
– gold 61 55 12 82 77 6
– copper 89 82 9
production na
– gold koz 22 14 60 70 61 14 92 78 17
– copper t 69154 40029 69154 40029 73
gold equivalent koz 57 37 52 70 62 14 127 99 28
total cash costge oz usoz 747 626 19
adjusted ebitda usm 91 55 66
mining
total ore mined at varvara grew by 
17 with the increase coming from 
float ore with a high copper content 
gold content in leach ore decreased 
slightly to 08gt whilst the total 
amount of leach ore itself declined  
by 7
production
in 2011 we commenced purchases 
of ore from the nearby komarovskoye 
deposit which supported overall 
production and recovery levels
annual gold production at varvara 
grew by 17 in 2011 from 78 koz  
to 92 koz copper production rose 
by 73 from 4003 tonnes to 6915 
tonnes resulting from a considerable 
increase in float ore processed along 
with increased copper content and 
improved recoveries from 82 to 
89 as a result the mine met or 
exceeded all its design parameters 
2011 highlights
business review
operating review
kostanay

processing plant
town 
varvara
kostanay

processing plant
town 
varvara polymetal international plc annual report 201 1 49
financial statements appendices governance business review overview
mine information
varvara
status operating
mineralisation type stockstock work
mine type openpitunderground mining method openpit
commencement of mining year 2006
current lifeofmine end year 2023
reservesresources
reserves
gold moz 08
gold reserve grade gt 09
copper kt 434
copper content  044
gold equivalent moz 11
gold equivalent reserve grade gt 11
resources
gold moz 12
gold reserve grade gt 16
copper kt 740
copper content  044
gold equivalent moz 16
gold equivalent reserve grade gt 10
construction
in 2011 we began work on 
construction of a us15 million  
21 km railway spur to facilitate bulk 
transport of ores from other deposits 
to the varvara processing plant this 
will involve both third party ores and 
those from our own mines – such as 
the fevralskoye deposit which is part 
of our voro operations we expect  
to commission the line in the second 
half of 2013 
exploration
we have a licence to explore  
a 533 km
2
 area immediately 
surrounding varvara during the  
year we commenced exploration  
with a view to identifying the 
continuation of the main varvara 
mineralisation structure along strike 
the varvara plant delivering ore from varvara
processing plants
varvara plant
type cip
capacity ktpa 3150
commencement  
of production year 2002
ore sources varvarinskoye
 fevralskoye
varvara plant
type flotation
capacity ktpa 1050
commencement  
of production year 2001
ore sources varvarinskoye 50 polymetal international plc annual report 201 1
business review
pursuing standalone 
exploration projects
typically the standalone mines we 
target need to meet the following 
internal criteria that drive the cost  
and ultimately the return on capital 
invested into the project
 minimum peak production of  
300 koz of gold equivalent per  
year for at least ten years
 minimum overall mine life of 15 years
 minimum grades for nonrefractory 
ores
  – 15 gt for heap leaching
  –  2 gt for milling with grid power 
available 
  –  3 gt for milling with grid power 
unavailable
these thresholds typically translate 
into a minimum requirement of 7 moz 
for the size of resource for a new 
standalone operation and 5 moz  
for the size of reserve 
our key standalone projects are
avlayakankirankan the ‘ak project’
the ak project covers an area of  
323 km
2
 in the khabarosk territory 
approximately 250 km north east  
of albazino polymetal acquired the 
project in 2010 and began trial ore 
mining early in 2011 an openpit  
trial mine is currently under way at 
avlayakan with highgrade ore mined 
then trucked to the port of kiran 
shipped to okhotsk and then 
transported to the khakanja plant
in 201 1 the group completed 17 km 
of core drilling at the site we aim  
to bring the potential resource base  
of the ak project to the level of the 
group’s internal size threshold  
a prefeasibility study for the project 
– with a projectwide estimate of 
jorc reserves – is planned for the 
second half of 2013 
kutyn
polymetal acquired the kutyn deposit 
in 201 1 the licence area is 1 13 km 
north east of albazino only 25  
of which has been covered by 
exploration works in 2011 we 
undertook technological mapping  
of ores and achieved a recovery rate 
of more than 80 from heap leach 
testing at a relatively coarse crush 
size preliminary research results also 
supported high potential recoveries 
from cyanidation on higher grade ore
we plan to drill additional 20 km of 
diamond core holes in 2012 with a 
view to identifying the extent of known 
ore zones and testing any significant 
anomalies to date only a quarter  
of the 120 km
2
 licence territory has 
been sampled by drilling an external 
audit of jorccompliant resources  
is planned for the first half of 2013 
svetloye
svetloye is located 220 km south west 
of okhotsk eight major target areas 
of gold mineralisation have been 
discovered and initial metallurgical 
tests have confirmed a recovery rate 
of over 90 gold recovery through 
cyanide extraction with low cyanide 
consumption metallurgical test work 
is also underway at svetloye to 
determine the viability of heap 
leaching multiple targets are awaiting 
drilling on this 40 km
2
 land package 
no active exploration was undertaken 
in 201 1 plans for a further exploration 
strategy will be confirmed once the 
feasibility of heap leaching has been 
determined 
tamunier
located in the sverdlovsk region of 
russia the tamunier licence covers  
23 km
2
 the group completed 05 km 
of diamond core drilling here in 201 1 
with the aim of obtaining detailed 
delineation of productive mineralised 
polymetal pursues standalone exploration projects with  
the aim of discovering economically significant deposits polymetal international plc annual report 201 1 51
financial statements appendices governance business review overview
area and tracing mineralised structure 
in a recently acquired adjacent 18 km
2
 
licence area 
technological research of the 
tamunier ore has proved potential 
recoveries of up to 90 which 
support the feasibility of the mine in 
2012 we are planning to delineate high 
grade mineralised areas to assess 
resources which can be economically 
processed at our voro plant
prognozny 
acquired by the group with the 
kubaka processing plant in 2010 
prognozny is located 40 km from the 
sopka mine we completed 6 km of 
diamond core drilling and 30000 m
3
 
of trenching in 201 1 with the aim of 
tracing known mineralisation along 
strike and searching for deeper levels 
of goldbearing material 
elmus
the elmus licence area covers  
188 km
2
 in the republic of karelia  
in northwest russia and was 
acquired in 201 1 
 
we drilled 14 km in diamond core 
holes in 201 1 and plan to drill a further 
23 km in 2012 the results of these 
activities will help us to determine 
whether this location merits further 
exploration 
exploration in the sverdlovsk region business review
52 polymetal international plc annual report 201 1
financial review
key financial indicators and performance highlights
we had a very successful financial year
 revenue was up 43 to us1326 million driven by 
13 increase in gold equivalent ounces sold and a 26 
increase in the average realised gold price
 adjusted ebitda of us624 million up 47 and 
exceeding revenue growth adjusted ebitda margin was 
up 1 10bps to 47 despite rampup of new mines and 
operational challenges in the beginning of the year
 total cash cost of us701aueq oz up 26 compared 
to 2010 as a result of russia’s domestic inflation of 6 1 
rouble strengthening against the us dollar by 34  
and relatively high cost levels at omolon and albazino 
mines which have just commenced commercial 
production and are still in ramp up mode
 total cash cost of mature operations ex omolon  
and albazino was us642 aueq oz up 19  
compared to 2010
 diluted eps up 12 to us07 4 per share as net 
earnings increased by 21 to us290 million
 inaugural dividend of us020 per share proposed in 
accordance with the new dividend policy
 strong liquidity and funding profile net debtadjusted 
ebitda reduced to 141 with 65 of borrowings being 
longterm
key financial indicators
2011 2010
 
change
revenue usm 1326 925 43
adjusted ebitda usm 624 425 47
total cash cost  
usge oz 701 555 26
adjusted ebitda  
margin  470 459 24
net income 290 239 21
diluted eps usshare 074 066 12
net debt usm 879 785 12
net debtadjusted ebitda 141 185 24
operating cash flow before 
changes in working capital 
usm 462 333 39
operating cash flow usm 212 215 1
 
600
800
1000
1200
1400
1600
1800
2000
00
20
40
60
80
jan 2010 jan 2011 dec 2011
gold lhs usoz silver rhs usoz
goldsilver ratio rhs agau
precious metals market summary
2011 witnessed another period of strong price growth 
both for gold and silver with gold reaching its alltime 
high in the beginning of september at us1900oz and 
silver demonstrating even stronger growth going up to 
as much as us484oz in april with the goldsilver ratio 
standing at 32 a record low both gold and silver were 
rising on the back of continuing debt crisis in peripheral 
eu countries and us budget deficit problems which 
together with continued quantitative easing policy by  
the federal reserve system raised doubts both about 
euro and dollar longterm strength as a reserve currency 
gold and silver therefore were viewed as ‘safe haven’ by 
many institutions and private investors while silver price 
highs were purportedly also driven by speculative dealing 
to which the less liquid silver market is more sensitive 
by the end of the year there was a moderate price 
decline to us1564oz for gold and us27 8oz  
for silver as a result the average 2011 gold price  
was us1572oz up 28 and the silver price was 
us353oz up 75 compared to 2010 the goldsilver 
ratio during 2011 dropped to 45 agau compared to  
61 agau in the prior year
looking ahead to 2012 we believe that the gold price  
will stay above us1500oz as the key fundamental 
factors affecting the price are still in place for this year 
and are supporting the investment demand for gold  
for silver we expect a more modest price performance 
with an average level slightly above us30oz polymetal international plc annual report 201 1 53
financial statements appendices governance business review overview
accounting and reporting basis
the financial information presented for the polymetal 
international plc group represents the enlarged  
group from its formation on 2 november 2011 until  
31 december 2011 the enlarged polymetal international 
plc group was created following the completion of the 
institutional share swap facility ‘issf’ under which the 
company obtained a controlling shareholding in the 
open joint stock company polymetal ‘ jsc polymetal’ 
in accordance with international financial reporting 
standard ‘ifrs’ guidance for a reverse acquisition  
the assets and liabilities of the jsc polymetal group were 
not revalued although a non controlling interest was 
recognized for the interest in its net assets held by jsc 
polymetal shareholders who did not participate in the 
issf prior to this date the financial information presented 
is solely that of jsc polymetal on a consistent basis  
to that previously reported in accordance with ifrs 
other than for a reclassification within the issued equity 
balances this retrospective reclassification has been 
made to reflect the legal capital of polymetal international 
plc as if it had always been the legal parent company 
for more detail please refer to note 1 to the consolidated 
financial statements on page 92
revenue
in 2011 revenue grew by 43 to us1326 million 
driven mostly by significant increases in the gold and 
silver prices gold sales volume was up by 2 in line 
with production dynamics silver sales volumes were 
down 5 despite 15 production growth as we started 
to sell most of our silver produced at the dukat plant  
revenue
sales volumes 2011 2010
 
change
gold koz 448 440 2
silver moz 170 180 5
copper kt 64 40 59
gold equivalent sold
1
koz 851 750 13
1 based on actual realised prices
sales by metal 2011 2010
 
change
volume 
variance
 usm
price 
variance
 usm
gold usm 697 542 29 10 145
average realised price usoz 1556 1232 26
share of revenues 53 59 
silver usm 580 353 64 18 245
average realised price usoz 340 196 73
share of revenues 44 38 
copper usm 46 29 58
share of revenues 3 3 
total metal sales usm 1323 924 43  
other revenue 3 1 121
total revenue 1326 925 43  
the major silver producing segment in the form of silver 
concentrate to a third party offtaker in kazakhstan this 
has led to a oneoff increase in finished goods 
inventories representing concentrate in transit or awaiting 
treatment at thirdparty refineries
the average realised price for gold was us1556oz  
up 26 compared to 2010 and in line with market price  
of us1572oz the average realised silver price stood  
at us340oz up 73 compared to 2010 which again 
closely reflects the market price levels and movements
the share of gold in total revenue reduced from 59  
in 2010 to 53 in 2011 while the share of silver grew  
from 38 to 44 on the back of the significant change  
in the goldsilver price ratio in the market
revenue by segment
2011
2010
116
119
82
dukat voro khakanja varvara omolon amursk hub
us1326m
us925m
40 21 16 14 6 3
37 23 23 14
dukat continues to be the largest revenue contributor  
for the group with 40 of metal sales revenues coming 
from that segment voro and varvara contributed  
21 and 14 to the revenues respectively broadly 
unchanged from 2010 while the share of khakanja 
declined in 2011 from 23 to 16 as a result of a 25 
decrease in gold equivalent produced driven by a lower 
grade profile albazino generated its first sales of gold 
concentrate to a chinese third party offtaker in 2011 
amounting to 3 of total revenues and will become  
a meaningful revenue generating operation in 2012 business review
54 polymetal international plc annual report 201 1
key operating statistics
2011 2010
 
change
stripping kt 80683 63283 27
underground  
development m 35150 23577 49
ore mined kt 11002 7474 47
 openpit 9636 6509 48
  u nd e r g r o u nd 1366 965 42
average grade in ore mined 
gold equivalent gt 38 44 15
ore processed kt 8821 7845 12
average grade 
in ore processed  
gold equivalent gt 38 38 1
production   
 au koz 443 444 0
 ag moz 199 173 15
 cu kt 6915 4003 73
gold equivalent koz
1 
810 753 8
sales
 au koz 448 440 2
 ag moz 170 180 5
 cu kt 64 40 59
gold equivalent koz
2 
851 750 13
average headcount 8051 6912 16
1 based on 160 agau and 51 cuau conversion ratios
2 based on actual realised prices
cost of sales
total cost of sales grew by 37 in 2011 to us626 
million mainly on the back of volumebased growth  
both in ore mined by 47 and ore processed by 12 
the key cost drivers were the domestic inflation in russia 
6 1 cpi growth in 201 1 and appreciation of the rouble 
against the dollar 34 increase in average rate from 
2010 to 2011 the increased operating assets base 
which now fully includes omolon and albazino both 
currently higher cost assets contributed 21 of the  
37 increase while inflationary factors and production 
growth at other mines made up another 16
diesel fuel price inflation in particular is an important 
factor affecting our cost base and driving cost  
increases especially for remote mines generating  
power using diesel gensets and inhouse and third  
party transportation costs depending on the region  
the price of diesel fuel increased by 2050 in 2011
cost of sales 2011 2010
 
change
onmine costs 320 174 84
consumables and spare parts 111 67 66
services 120 61 99
labour 83 44 90
taxes other than income tax 2 0 na
other expenses 4 3 35
smelting costs 255 174 47
consumables and spare parts 117 80 46
services 88 57 54
labour 47 34 39
taxes other than income tax 0 0 na
other expenses 2 2 8
purchase of ore from third 
parties 17 11 50
mining tax 97 57 69
total cash operating costs 688 416 66
depreciation and depletion of 
operating assets 140 76 85
rehabilitation expenses 4 3 25
total costs of production 832 494 68
increase in metal inventories 215 53 305
writedown to net realisable value 6 15 59
total change in metal 
inventories 209 38 453
cost of other sales 3 2 87
total cost of sales 626 458 37
the total cost of labour within cash operating costs 
increased by 68 in 201 1 to a total of us130 million  
as a result of general labour cost inflation and also as  
a result of growth in the average number of employees 
directly involved in production by 46 as a result of 
production commencing at albazino and a full year  
of commercial production at omolon including the 
sopka mine the cost of labour at those operations  
was mostly included in inventory costs in 2010 another 
important factor was the increase in social tax rates  
in russia from 26 to 34 
financial review
continued polymetal international plc annual report 201 1 55
financial statements appendices governance business review overview
the cost of consumables and spare parts and the  
cost of services grew by 55 and 77 respectively 
mainly affected by mining and processing volume 
increases 47 and 12 respectively and further 
inflated by increased diesel and electricity prices  
as well as increases in us dollar costs for other 
consumables in line with general cpi levels specific  
cost increases throughout the year were related to 
a shift of mining and to some extent processing 
volumes mix towards more complex and expensive  
mines and locations in particular significant increases  
are attributable to increased ore and concentrate 
haulage costs at dukat omolon and khakanja  
as well as concentrate shipping costs and general 
transportation costs at albazino
mining tax represents a consistent 14 share of total 
cost of sales and has increased by 69 in 2011 on the 
back of soaring metal prices as well as an increased 
amount of total metal contained in ore mined in 2011
depreciation and depletion expenses nearly doubled  
in 2011 and amounted to us140 million as we put  
into production new mining and processing assets and 
completed several capex projects including expansion  
of the omsukchan factory at dukat the startup of a 
new mine at goltsovoye and a trial mine at avlayakan  
the launch of commercial production at albazino and  
the inclusion of a full year of mining and production at 
omolon the biggest increases are attributable to three 
mines where mining volumes significantly exceeded  
ore processed at relevant processing plants ore mined  
at sopka and not processed at kubaka omolon hub 
albazino ore and concentrate prepared for further 
processing and ore at the avlayakan trial mine at  
all locations mentioned depreciation charges mainly 
represented by depletion of mineral rights were mostly 
included in metal inventories at the yearend
in 201 1 a net metal inventory increase of us215 million 
was recorded as we have been building concentrate 
stockpiles at albazino awaiting further processing at 
amursk pox in 2012 and dukat concentrate in transit 
and in thirdparty refineries both largely representing 
oneoff factors the group has also been building ore 
stockpiles at sopka awaiting transportation by winter  
road at the beginning of 2012 mayskoe and avlayakan
cash operating costs
2011
2010
116
119
82
102
124
136
mining tax purchase or ore from third parties other expenses
labour services
consumables and spare parts
us688m
us416m
33 30 19 14
35 28 19 14
general administrative and selling expenses
2011 2010
 
change
labour 72 43 69
services 24 21 18
sharebased compensation 57 8 623
depreciation 4 2 106
other 12 9 34
total 170 82 107
general administrative and selling expenses grew from 
us82 million to us170 million with the bulk of the 
increase arising from increase in noncash sharebased 
compensation costs labour costs grew by 69 as a 
result of the start of production andor mining at omolon 
albazino and mayskoye whilst previously general and 
administrative costs of those operations were capitalised
other expenses
2011 2010
 
change
taxes other than income tax 113 145 22
listing expenses 95 – na
exploration expenses 302 81 273
omolon plant precommissioning 
expenses – 72 100
social payments 87 65 34
housing and communal services 64 43 49
loss on disposal of property 
plant and equipment 62 63 1
bad debt allowance 12 23 150
other expenses 73 64 13
total 783 555 41
other expenses grew by 41 to us783 million  
the increase was mostly comprised of listing expenses  
a us95 million oneoff item representing transaction 
costs of the company’s listing on the london stock 
exchange excluding costs related to new capital issued 
and an increase in exploration expenses us22 1 million 
related to assets where no probable or proved reserves 
were established other components demonstrated a 
moderate increase on the back of increased production 
asset base and general cost inflation business review
56 polymetal international plc annual report 201 1
we believe we have demonstrated a good ability  
to control costs in the face of both global and local 
inflationary pressures which the mining industry is facing 
total cash costs of gold equivalent ounce sold were  
us701ge oz up 26 compared to 2010 the cash 
cost dynamics was significantly influenced by omolon 
and albazino the former operating under design 
capacity during 2011 and the latter going through  
the rampup stage and reaching design volumes and 
recoveries in the last quarter of the year as a result  
both operations have demonstrated cash costs which 
are higher than the ones at our mature mines however  
we are confident that their 2012 performance will 
however be in line with the group’s average excluding 
these two operations total cash cost was us642ge oz 
or up just 19 compared to 2010 the key factors 
contributing to the growth in cash costs were the 
domestic inflation 61 and appreciation of the  
us dollar against the rouble 34 in 2011
total
total – 
new operations
albazino
omolon
total – 
mature operations
varvara
khakanja
voro
dukat
2011 2010
672
747
642
1481
1018
0
1294
478
140
99
553
423
626
540
1162
1162
701
555
total cash cost per ounce usoz
silver equivalent ounce for dukat gold equivalent 
ounce for all other operations and totals
financial review
continued
cash cost of sales
cash cost per ge ounce usoz gold equivalent sold silver for dukat koz
cash cost per gold equivalent ounce 2011 2010

change 2011 2010

change
dukat silver 140 99 42 15546 17608 12
voro 553 423 31 176 174 1
khakanja 672 478 41 138 175 21
varvara 747 626 19 120 101 19
total – mature operations 642 540 19 774 731 6
omolon 1481 1162 27 46 19 146
albazino 1018 – na 31 – na
total – new operations 1294 1162 11 77 19 314
total 701 555 26 851 750 13
cash cost per tonne milled ust ore processed kt
cash cost per tonne milled 2011 2010

change 2011 2010

change
dukat 138 109 27 1733 1533 13
voro 48 40 19 1803 1931 7
khakanja 173 113 53 617 622 1
varvara 30 25 20 3473 3076 13
total – mature operations 70 55 29 7627 7163 6
omolon 185 48 285 574 682 16
albazino 88 – na 620 – na
total – new operations 134 48 180 1194 682 75
total 79 54 46 8821 7845 12 polymetal international plc annual report 201 1 57
financial statements appendices governance business review overview
cash cost by mine
 at dukat the cash cost per silver equivalent ounce sold 
grew by 42 to us140ageq oz due to an increased 
share of underground mining goltsovoye and increased 
ore and concentrate haulage costs as well as 
significantly higher mining tax on the back of rapid growth 
in the average silver price by 73 yearonyear general 
inflation and increased diesel fuel prices also contributed 
to the growth however in the second half of 201 1 cash 
cost per silver equivalent dropped to us134ageq oz 
as the both grades and recoveries improved and silver 
prices slightly retreated from april highs
 at voro the cash cost per gold equivalent ounce sold  
in 201 1 was us553aueq oz the lowest among our 
assets cash cost of gold equivalent ounce increased by 
31 in 201 1 on the back of a decrease in average grade 
in ore mined from 52 gt to 36 gt and a resulting 
production volume decline combined with increased 
metal prices driving up mining tax as well as general 
inflationary factors
 khakanja’s cash cost per gold equivalent ounce sold 
was us672aueq oz up 41 compared to 2010 the 
growth in cost was driven mainly by the grade decline 
after processing of high grade ore from yurievskoe had 
been completed and the grades declined at the main 
khakanja mine coupled by avlayakan ore transportation 
costs and diesel fuel price growth
 varvara has demonstrated the least cost inflation among 
our assets with cash cost per gold equivalent ounce 
growing by 19 in 201 1 to us7 47aueq oz the growth 
was mainly driven by increased use of third party ore and 
metal prices pushing the mining taxes up on the positive 
side cost inflation has been limited due to average grade 
improvement and 13 growth in total ore processed at 
the mine with a 28 increase in gold equivalent 
production achieved in 201 1
 at omolon cash costs were us1481aueq oz sold 
significantly above the company’s and industry average 
as the group has been unable to reach this year’s 
production volume targets from a spike of us1833
aueq oz in first half of the year the group achieved a 
notable improvement to us1303 aueq oz in the 
second half on the back of significant increased grade  
in birkachan ore processed from 19 gt in 1h 201 1 to 
3 1 gt in 2h 201 1 and improved recoveries the group 
expects a radical improvement in the cost profile of the 
kubaka plant in 2012 as it will be able to process high 
grade ore from the sopka mine as originally planned and 
achieve more than a threefold increase in gold equivalent 
production volume
 at albazino the cash cost was us1018 aueq oz  
a high level driven by the rampup of both the mine and 
processing plant during 201 1 by the end of the year the 
processing plant has reached both its designed volume 
and recoveries so the group is quite positive about the 
2012 cost outlook
adjusted ebitda and ebitda margin
1
2011 2010
 
change
net income 290 239 21
finance cost net 25 21 18
income tax expense 119 67 76
depreciation and depletion 97 70 37
ebitda 530 398 33
sharebased compensation 57 8 623
exchange gainslosses 14 0 na
listing expenses 10 – na
change in fair value of contingent 
liability 7 4 89
rehabilitation costs 4 3 25
writedown of inventory 6 15 59
change in fair value of derivatives 2 1 104
gain on disposal of subsidiary
bargain purchase gain 5 4 38
adjusted ebitda 624 425 47
adjusted ebitda margin 470 459 110bps
adjusted ebitda by segment 2011 2010
 
change
dukat 282 154 83
voro 175 131 33
khakanja 113 120 6
varvara 91 55 66
omolon 5 8 159
amursk hub 6 14 60
corporate and other  
eliminations 36 12 191
total 624 425 47
1  the company defines adjusted ebitda a nonifrs measure as profit for the 
period adjusted for depreciation expense rehabilitation expenses writedown  
of inventory to net realisable value sharebased compensation listing expenses 
income on disposal of subsidiaries bargain purchase gain foreign exchange  
gainloss change in fair value of derivatives change in fair value of contingent 
consideration finance income finance costs and income tax expense adjusted 
ebitda margin is adjusted ebitda divided by revenue business review
58 polymetal international plc annual report 201 1
in 2011 adjusted ebitda grew by 47 to us624 
million slightly ahead of revenue growth this year the 
group fully benefited from increased metal prices 
production growth and our ability to keep costs under 
control in a challenging environment the adjusted 
ebitda margin grew slightly by 110bps to 47 0 dukat 
and voro contributed most to the adjusted ebitda 
growth adjusted ebitda at dukat grew by 83 to 
us282 million on the back of soaring silver prices  
and a 17 increase in silver production volumes while  
at voro the group benefited from the lowest cost base 
among its assets pushing adjusted ebitda up by 33 
despite some production volume decline at albazino 
excluding amursk and mayskoe both assets under 
construction in 201 1 the group has already achieved a 
positive adjusted ebitda contribution of us45 million
other income statement items
foreign exchange losses increased significantly from 
us03 million in 2010 to us136 million in 201 1 mainly 
stemming from the appreciation of the group’s mostly 
us dollar denominated borrowings against the russian 
rouble as the us dollar appreciated against the rouble 
by 56 yearonyear the company does not use any 
hedging instruments on foreign exchange other than  
a natural hedge arising from the fact that the majority  
of the group’s revenue is denominated or calculated  
in us dollars
a us68 million noncash loss was recorded in 2011 
arising from changes in the fair value of contingent 
consideration liabilities the change mainly arises from  
an increase in metal prices as the group is obliged to 
pay a perpetual 2 of revenues from deposits acquired  
as part of the acquisition of kubaka in 2008 in september 
201 1 the group fully settled deferred liabilities in relation  
to the acquisition of varvara by paying us55 million 
consideration to the previous owner
net income earnings per share and dividends
pretax earnings in 2011 were us409 million up 33 
compared to 2010 reflecting strong revenue growth  
and controlled cost dynamics the group’s effective tax 
rate in 201 1 was 29 up from 22 in 2010 as a result  
of an increase in various nondeductible expense items  
or expenses incurred in jurisdictions outside russia  
the biggest single nondeductible expense item was 
sharebased compensation a noncash item us57 
million in 2011 compared to us8 million in 2010  
other significant nondeductible expenses included 
contingent consideration and charitable and social 
expenses
as a result net income grew by 21 to us290 million 
basic earnings per share were us079 or 18 higher 
than 2010 the average number of shares in issue in 2011 
was 2 higher as a result of the ipo diluted earnings 
per share were us074 up 12 compared to 2010 and 
further influenced by an increase in the dilutive effect of 
shares potentially issuable by the company under the 
terms of its longterm employee incentive programme
from 2011 the company has implemented a new 
dividend policy for 2011 the directors propose to  
pay a dividend of us020 per share and from 2012  
the company intends to pay a dividend of 20 of net 
earnings provided that net debt to adjusted ebitda  
ratio is below 175
in 201 1 total capital expenditure was us480 million up 
8 compared to 2010 as the group was completing a 
number of major projects during the year the company 
expects that in 2012 it will see a considerable decrease  
in investment as most of the construction projects on  
the existing assets have been completed or are nearing 
completion
the major capital expenditure items in 2011 were
 us133 million has been invested in completion  
of construction at amursk pox and albazino 
concentrator with all major construction works 
completed at both sites in 2011 the concentrator 
already is up and running and the amursk pox is 
completing the commissioning stage
 us85 million was spent on construction of processing 
plant and underground mine at mayskoye where the 
group is targeting completion in q4 2012
 us68 million was invested in the omolon operations 
including installation of a merrillcrowe section and 
completion of refurbishment at the kubaka plant 
completed in december 2011 and expansion of the 
mining fleet at sopka and birkachan
 capital expenditure at dukat was us55 million 
representing mainly completion of refurbishment of the 
omsukchan concentrator gravity circuit installed and 
expansion of underground operations and fleet at 
dukat and goltsovoye mines
 other operating mines incurred less significant capital 
expenditures in 2011 mainly representing routine 
maintenance investment and upgrades to mining fleet
capital expenditure
usm
2011
2010
480
444
varvara corporate exploration captalised interest
amurskalbazino mayskoye omolon dukat khakanja voro
financial review
continued polymetal international plc annual report 201 1 59
financial statements appendices governance business review overview
 we have continued to actively invest in greenfield  
and brownfield exploration capital expenditure  
on exploration was us66 million up 12 compared 
to 2010
 total capital expenditure in 2011 includes us12 million 
of capitalised interest 2010 us14 million
cash flow
2011 2010
 
change
operating cash flows before 
changes in working capital 462 333 39
changes in working capital 250 118 113
total operating  
cash flows 212 215 1
investing cash flows 472 410 15
 
financing cash flows 
net changes in gross debt 191 178 8
proceeds from ipo 763 – na
other 47 – na
total financing  
cash flows 907 178 410
net increasedecrease in 
cash and cash equivalents 647 17 na
cash and cash equivalents  
at the beginning of the year 11 28 61
effect of foreign exchange 
rate changes on cash and 
cash equivalents 1 0 373
cash and cash equivalents 
at the end of the year 659 11 na
cash flows in 2011 were strong supported by metal 
prices and the inflow of funds from the ipo cash and 
cash equivalents increased from us11 million in 2010  
to us659 million as at 31 december 2011 as a result  
of the following
 operating cash flows before changes in working capital 
were us462 million up 39 from 2010 and supported 
by growth in adjusted ebitda
 changes in working capital were negative at  
us250 million 2010 us118 million mainly as  
a result of increase in metal inventories at omolon  
ore mined at sopka for further processing in 2012 at  
the kubaka plant and albazino concentrate produced 
for further processing at the amursk pox in 2012 and 
to a lesser extent at other mines where the amounts  
of ore mined exceeded processing capacity in 2011 
and stockpiles of saleable concentrate have built up
 investing cash flows were up 15 driven by progress  
at major capital expenditure projects in 201 1
 financing cash flows were us907 million mainly 
represented by the ipo proceeds of us763 million 
and us191 million net increase in debt
liquidity and funding
net debt 2011 2010
 
change
shortterm debt and current 
portion of longterm debt 348 91 285
share purchase obligation  
under mto 535  na
finance lease liabilities – 5 100
longterm debt 655 595 10
derivatives – 105 100
gross debt 1538 796 93
less cash and cash equivalents 659 11 na
net debt 879 785 12
net debt  adjusted ebitda 141 185 24
the group is keen to maintain a safe liquidity and funding 
profile underpinned by strong operating cash flows and 
robust shortterm and longterm liquidity management 
policies
the group’s net debt stood at us879 million as of  
31 december 201 1 representing a net debtadjusted 
ebitda ratio of 141 as a result of receipt of ipo proceeds 
received in november 201 1 and recognition of the  
mto obligation 
 
the group continues to focus on building a healthy  
debt profile which is comfortable both from the liquidity 
and cost standpoints the majority of our borrowings 
65 were longterm as at 31 december 201 1 while  
the average cost of debt remained at a low 32 in 201 1 
2010 3 1 supported by low base interest rates and  
our ability to negotiate competitive premiums on the back 
of the improved financial position of the company and  
our excellent credit history 
key 2012 financial targets
we are positively looking into 2012 it will be a year when 
we will be benefiting from the following factors
 achievable production targets of 1 moz of gold 
equivalent representing a 24 increase over the  
201 1 level
 completion of a major capital investment cycle in  
201 1 with significantly less capital expenditure planned 
for 2012
 completion of the rampup of new operations at omolon 
and albazino allowing the group to achieve robust cost 
performance
we therefore expect a strong financial year both in terms 
of earnings and free cash flow the company will continue 
to implement a rigid liquidity policy further pushing the 
debt level down in order to maintain net debtadjusted 
ebitda below 201 1 levels and to be able to generate  
the anticipated dividend flow to our shareholders 60 polymetal international plc annual report 201 1
business review
risks and risk management
effective risk identification 
and management
managing our risks well is critical to the long
term sustainability and success of the company 
we believe that delivery of sustainable value to 
our stakeholders should be based on effective 
risk identification and an appropriate response 
to each risk
risk management process
polymetal’s risk management process is designed to 
minimise the potential threats to achieving our strategic 
objectives the process incorporates the following stages
  identify and document risks
 assess quantify and classify  
each risk
 develop and implement risk mitigationcontrol 
strategies and 
  monitor report and review risk
the audit and risk committee of the board sets the 
agenda for the risk management policies and procedures 
of the group and is responsible for reviewing their 
effectiveness its duties include the review of
  policies and overall process to identify and assess 
business risks and manage their impact on the 
company and the group
  regular assurance reports from management internal 
audit external audit and others on matters related  
to risk and control and
  the timeliness of and reports on the effectiveness  
of corrective action taken by management
risk identification
an awareness of risk is embedded within the group and  
is grounded in our strong ethical values and proactive 
corporate culture our risk management philosophy is 
driven by the company’s board of directors and runs 
through all our management employee and connected 
stakeholder activities – from developing strategy  
to daytoday operations 
risk management is one of the key functions of the  
audit and risk committee strategic risks are identified 
by the board based on a detailed understanding of the 
company its markets and the legal social political 
economic technological environmental and cultural 
environments in which we operate our risk identification 
system considers not only single mutually exclusive  
risks but also multiple linked and correlated risks
risk matrices are used to record prioritise and track 
each risk through the risk management process these 
are regularly reviewed by the audit and risk committee
risk assessment
once identified potential risk factors are assessed to 
consider the impact consequences the event or events 
may have on achieving objectives and the likelihood 
probability of the event see table on top of page 61 
together these create a risk profile
risk response
when the appropriate ranking has been identified a 
response to each risk is formulated and implemented 
management assesses the effects of a risk’s likelihood 
and impact as well as costs and benefits a response  
is then evaluated that brings the risk within acceptable 
tolerance levels
monitoring and reporting
ongoing monitoring processes are embedded in 
polymetal’s business operations these track the 
effective application of internal control and risk 
management policies and procedures including internal 
audit and specific management reviews risk matrices 
are used to reevaluate and adjust controls in response 
to changes in company’s objectives business and the 
external environment
management is responsible for the implementation of 
effective followup procedures to ensure appropriate 
actions occur in response to changes in risk and  
control assessments polymetal international plc annual report 201 1 61
financial statements appendices governance business review overview
risk category risk description and potential effect risk response
1 
market risk
gold and silver price volatility can result in material 
and adverse movement in the group’s operating 
results revenues and cash flows
movement in gold equivalent price for all metals 
produced of 10 will cause ebitda to increase
decrease 19 in accordance with group budgeted 
figures for 2012
the group monitors gold and silver prices on an ongoing 
basis there are market signs which support analyst and 
investor confidence in the current levels of gold and silver 
prices the group has therefore decided not to hedge 
gold prices in order to maximise the benefits from the 
positive price trends
2 
production risks
the risk of failure to meet the planned production 
programme
failure to meet production targets may adversely 
affect operating performance and financial results  
of the group
annual quarterly and monthly production budgeting and 
subsequent monthly control against budget is designed 
to mitigate the risk the effectiveness and efficiency  
of the production process is ensured by the group’s 
engineering team senior management
21 
production risk 
– low grade  
potential dilution 
of ore
the risk of lower than expected metal grade or 
dilution is caused by complex mining and geological 
conditions mainly at underground mines
an approved production programme includes increased 
volume of operational prospecting works such as infill 
drilling and grade control sampling
22
production 
risk – ore and 
concentrate 
shipping
the company operates in remote locations that 
require complex and significant transportation of  
ore and goldsilver concentrates most of which is 
conducted by third party contractors production 
targets may not be reached if any element of the 
logistics chain is disrupted
to mitigate the logistics risk the group invests 
considerable amounts into construction and maintenance 
of permanent and temporary winter roads at exploration 
and production sites the group exercises effective 
control over the whole logistics chain including selection 
and operation of contractors
23
production risk – 
supply chain risks
the group’s production activity depends heavily on 
the effectiveness of supply chains these might be 
negatively affected by complex logistics to remote 
locations and delays in construction and delivery  
of purchased mining and processing equipment  
or spare parts
the group has implemented and constantly improves  
the supply chain system to closely link the production 
demand of resources with inventory levels optimise the 
number of order placements and ensure the intime 
inventory and equipment delivery to production sites
24
production risk – 
low recovery rate 
recoveries at the group’s processing plants may not 
reach planned levels due to complex technological 
properties of ore processed
to mitigate the risk the group invests considerable 
amounts in ore quality assessment procedures and 
seeks to control ore quality by formation of ore stacks 
with the required characteristics
 
3
production risk – 
construction and 
renovation
failure to meet return required from the major capital 
expenditure projects such as building new mines 
and processing facilities or production capacity 
increase  renovation at existing mines as a result of 
failure to meet project delivery timeline and budgets 
which can adversely affect the group’s financial 
results cash flow position and increase capital costs
most significant ongoing projects include launch  
of amursk pox facility and construction of  
mayskoye concentrator
the group’s engineering team is responsible for the 
oversight of capital expenditure projects including  
project support coordination of service organisations 
contractors constructors and cooperation with 
regulatory bodies
significant parts of exploration and development projects 
are performed by the group inhouse by polymetal 
engineering a subsidiary company with significant 
expertise and track record of designing and 
commissioning mines and processing plants
on complex projects such as construction of the 
amursk pox plant the group employs world class 
consultants with recognised international experience
catastrophic 
  significant impact on 
strategy or operational 
activities
  m u lt i ple si gn ifi c a n t 
stakeholder concern
major
  major impact on strategy  
or operational activities
  m aj or s t a k e h ol d e r 
concern
moderate
  se r iou s i m p a c t  
on strategy or  
operational activities
  mo de r a t e s t a k e h o l de r 
concern
minor 
  minor impact on strategy  
or operational activities
  l im i t e d s t a k e h o l d e r 
concern
insignificant
  mi n i ma l i mp a ct  
on strategy or  
operational activities
  low stakeholder concern
likelihoodprobability
almost certain occurs one or 
more times per year and is likely 
to reoccur within one year
likely occurs less than once a 
year and is likely to reoccur within 
five years
possible could occur or may 
reoccur at some point within 10 
years
unlikely has happened at some 
time or could happen within 20 
years
rare is highly unlikely that it 
could occur in the next 20 years
impactfinancial consequences
us50m us50mus10m us10us5m us5mus01m us01m
residual risk level
low
high medium 62 polymetal international plc annual report 201 1
business review
risks and risk management
effective risk identification  
and management 
continued
risk category risk description and potential effect risk response
4
legal risk
operating in developing countries such as russia 
and kazakhstan has a risk of changes in tax and 
other legislation which may occur from time to time 
the most sensitive areas are regulation of foreign 
investments private property and environmental 
protection
in the recent years however both russian  
and kazakh governments have become more 
predictable in implementing new regulations 
and taxes demonstrating consciousness of  
the investment climate
polymetal has a successful track record of operating  
in both russian and kazakh jurisdictions having 
developed its own expertise in corporate tax  
licensing and other legal areas 
the group’s financial and legal teams monitor current 
legislation and proposed changes and incorporate 
these into the practice
corporate and operating management teams are 
responsible for meeting the legal requirements in  
their operating activities head office and onsite  
legal teams guarantee appropriate controls over 
compliance issues
5
mergers and 
acquisitions
the group invests considerable amounts in  
gold mining assets and operations in the russian 
federation and kazakhstan there is a risk of failure 
to achieve expected benefits from any acquisition  
in the case of adverse changes in assumptions  
or inaccuracy of estimates made or where the 
information used for decision making was 
incomplete or inaccurate
failure to deliver expected benefits from an 
acquisition can results in adverse financial 
performance lower planned production volumes  
or problems with product quality
rigorous due diligence procedures are applied to the 
evaluation and execution of all acquisitions to assess 
the consequences of the acquisition based on 
economic ecological political and social factors
board andor shareholder approval is required for  
any acquisition 
6
environmental 
risks
environmental damage may arise from operations 
including air and water pollution from toxic waste 
waste storage and recycling is subject to 
government regulation potential impacts  
include fines and penalties statutory liability for 
environmental rehabilitation and other financial 
consequences that may be significant
the group has implemented a number of initiatives  
to monitor and limit the impact of its operations  
on the environment these include external expert 
assessment of pollution generated and adoption of 
industry best practice on the corporate level policies 
and procedures refer to page 69 of this report
7
political risk
operating in russia and kazakhstan involves some 
risk of political instability which includes but is  
not limited to changes in government negative 
policy shifts and civil unrest these may have an 
adverse effect on the group’s market value and 
operating environment
the group actively monitors political developments  
on an ongoing basis
we aim to maintain open working relationships with 
local authorities in the countries where we operate
8
currency risk
currency risk arises as the group’s revenue  
is linked to london bullion market association 
lbma gold and silver fixings and denominated  
in us dollars the expenses are mostly incurred 
and denominated in russian rubles
natural hedging is used to reduce the risk exposure 
revenue is matched with us dollar denominated debt
flexible budgeting is used to monitor the effect  
of exchange rate fluctuations on the group’s  
financial results
  polymetal international plc annual report 201 1 63
financial statements appendices governance business review overview
risk category risk description and potential effect risk response
9
human resources
failure to retain key employees or to recruit new  
staff mainly at the group’s mining and processing 
facilities may lead to increased staff costs 
interruptions to existing operations and delay  
in new projects
lack of skilled and knowledgeable staff at remote 
locations may occur due to extreme weather 
conditions
a working conditions improvement programme  
is in place
remuneration policies are designed to incentivise 
motivate and retain key employees
there is an increased focus on health and safety – 
refer to page 68 of this report and there is active 
promotion of a positive corporate culture within  
the group
10
liquidity risk
inability to raise sufficient funds to meet current 
operating or ongoing financial needs to develop 
new projects and growth
the group’s treasury function is responsible for 
ensuring that there are sufficient funds in place 
including loan facilities cash flow from operating 
activities and cash on hand to meet shortterm 
business requirements longterm credit lines are 
used to finance new projects and organic growth
in 2011 the group moved to the lse’s main market 
raising additional us768 million during its ipo  
part of the ipo proceeds will be used to reduce  
the current net debt level
11
failure to meet 
exploration 
objectives
exploration and development are capital and 
timeintensive activities and may involve a high 
degree of risk they are however necessary for  
the future growth failure to discover new reserves 
of sufficient magnitude could adversely affect the 
group’s medium and longterm growth prospects
the group invests considerable amounts in focused 
exploration projects to obtain sufficient information 
about the quantity and quality of expected reserves 
and to estimate expected cash flows the group’s 
team of mining and engineering specialists has a  
track record of successful greenfield and brownfield 
exploration leading to subsequent development  
of exploration fields into commercial production
12
interest rates
the group is exposed to interest rate risk as 
significant part of the group’s debt portfolio 
comprises us dollar denominated floating  
rate borrowings
based on analysis of the current economic situation 
the group has decided to accept the risk of floating 
interest rate rather than hedge it or borrow at fixed 
rates however the group does not rule out the 
possibility of fixing the interest rate on its borrowings  
in the future should assessment of the ongoing 
economic situation suggest this may be profitable
13
inflation risk
the group is exposed to potentially high rates of 
inflation in the russian federation and kazakhstan 
higher rates of inflation may increase future 
operating costs and have a negative impact on 
financial results if there is no related depreciation of 
the local currency against us dollar or an increase 
in lbma gold and silver fixings
as part of the budgeting process the group estimates 
possible inflation levels and incorporates them into 
cost planning
residual risk level
low
high medium business review
64 polymetal international plc annual report 201 1
sustainability – being  
a responsible business
polymetal aims to create shareholder value whilst protecting the 
interests of employees communities and wider society in order 
to underpin the company’s longterm success consequently 
responsible development and sustainability are crucial parts  
of our overall strategy
in our view sustainability is achieved 
through the provision of high quality 
jobs secure and safe employment 
protection of the environment and  
a positive relationship with local 
communities and other stakeholders 
we work hard to be a good 
corporate citizen in all of our 
operational locations
scope of sustainability actions
polymetal’s sustainability actions 
cover all group operations including 
the headquarters in st petersburg 
and each of the subsidiary 
companies
sustainability governance
sustainability is the ultimate 
responsibility of the group ceo  
vitaly nesis to assist him a technical 
council is convened monthly to review 
strategy and agree priorities and 
actions heads of department report 
to the council covering employees 
community outreach health  
and safety and environmental 
management the council defines 
and monitors sustainability strategy 
and oversees implementation  
of associated policies across all 
operating subsidiaries the latter  
is the responsibility of the relevant 
human resources communications 
health and safety and environmental 
heads within these businesses
the overall sustainability strategy is 
designed to meet the requirements 
of the un global compact
this voluntary international standard 
commits affiliated companies to 
compliance with ten principles in  
the areas of human rights labour 
environment and anticorruption  
in 2009 polymetal became an active 
member of the un global compact 
network in russia
the un global compact is the 
starting point for more detailed 
policies and associated management 
systems all of which are defined  
at group level and implemented 
through the head office and the 
subsidiary companies ongoing 
monitoring and regular audits ensure 
that performance is measured 
against the relevant regulatory  
and company internal requirements 
stakeholder engagement
our stakeholders help to define 
sustainability priorities and  
provide a vital check on how we  
are performing we are therefore  
open honest and clear in the way  
we communicate through corporate 
reporting company news briefings 
hotlines and digital channels 
sustainability priorities
our sustainability priorities are to
  operate with the full cooperation 
of local people government 
authorities and nongovernmental 
organisations ngos
 
  maintain productive relationships 
with local communities 
government authorities and 
ngos where mining processing 
or transportation is taking place
 
  provide excellent career 
opportunities and compensation 
levels for people with diverse  
skills and experience
 
  provide a safe healthy and 
positive working environment  
for all employees
 
  deal fairly with suppliers 
customers and business partners
 
  maintain an effective 
environmental management 
strategy in order to reduce any 
potential negative impact
stakeholders
  shareholders and investors 
  employees
  government and regulatory bodies 
  ngos 
  local communities  polymetal international plc annual report 201 1 65
financial statements appendices governance business review overview
recognition from our stakeholders
polymetal has received formal 
recognition for its actions from the 
following stakeholders in 2011
  local communities – for doctors’ 
visits and healthcare provision for 
children in remote villages material 
support for elderly and vulnerable 
people and for a proactive 
approach to tackling particular 
social problems
  ngos – for sponsoring cultural 
institutions promoting sports and 
supporting ecological education 
projects for young people
  indigenous minorities of the north 
imn associations – for ongoing 
support and cooperation with 
imn helping to preserve their 
cultural heritage and lifestyle
  managers in local sports 
healthcare educational and  
cultural organisations – for 
improving facilities and  
purchasing equipment and 
  local government authorities – for 
ongoing cooperation partnerships 
and a contribution to local and 
regional economic development 
through direct investment as well 
as tax payments
in 2011 the group ceo was given a 
‘for merit’ award by the khabarovsk 
local administration in recognition of 
his and the company’s contribution 
to social and economic development 
in the territory
communities
polymetal maintains positive working 
relationships with local authorities and 
communities where its subsidiaries 
operate we recognise that future 
business growth will be underpinned 
by such relationships in areas where 
we are planning new operations 
our community engagement 
priorities are
 education and healthcare 
 development of local infrastructure
 sports and healthy lifestyles
 local culture and creativity and 
 welfare of imn 
the standards expected of our 
subsidiaries and employees in 
relation to these priorities is set out  
in our corporate governance code 
and policy on social and charitable 
investments
community benefit in 2011
in 2011 our russian subsidiaries 
paid taxes and made payments  
to extrabudgetary funds of  
us40 million taxes paid by the 
group’s subsidiary in kazakhstan 
amounted to us3 million over 
and above our tax commitments  
we maintained and enhanced local 
infrastructure and services increased 
employment opportunities provided 
training and education for local people 
and operated a longterm programme 
of community investment 
community investment in 2011
we invested us40 million in 
communities with the principal 
emphasis on health education  
and sports related projects
the investments were made in all 
areas of our operations and most are 
part of longterm programmes many 
of which were started in 2010 the 
ongoing and future implementation is 
very much driven by local authorities 
communities and ngos we have 
established formal dialogue and 
feedback mechanisms with all of 
these stakeholder groups including 
surveys hotlines and public hearings 
through this process we have 
learned about the effectiveness of 
the programmes and made some 
changes for 2012 we have positive 
feedback and there is high level of 
support for the work
supporting the indigenous 
minorities of the north
maintaining longterm supportive 
relationships with imn communities 
is a priority for polymetal we work 
with such communities in chukotka 
magadan region and khabarovsk 
territory providing nomadic reindeer 
herding teams with materials fuel 
transport healthcare and food
social investments in 2011
health 15 
sports 39
education 27
cultural and creative 
potential 5
infrastructure 7
imn 7
“polymetal is currently the only  
company in the khabarovsk territory  
which recognises its responsibilities 
towards indigenous people 
polymetal recognises the importance  
of direct assistance for indigenous 
groups including promoting village life 
maintaining boarding schools  
and supporting the families of  
reindeer herdsmen”
lyubov passar
president of the khabarovsk  
territory association of indigenous 
minorities of the north 
working with indigenous minorities of the north business review
66 polymetal international plc annual report 201 1
sustainability – being  
a responsible business
continued
the association of imn in the 
khabarovsk territory described 
polymetal as “the best business 
providing assistance in preserving 
and developing ethnic cultures” 
employees
an ability to recruit and retain high 
quality motivated people is essential 
to the sustainable longterm growth 
of our business in line with the un 
global compact our main human 
resources objectives are
  to operate a fair and internationally 
competitive system of wages and 
benefits linked to collective and 
individual performance
  to operate an effective training and 
career development programme
  to ensure that all employees are 
trained in occupational safety and 
accident prevention procedures
we also work with younger people in 
the imn communities to explore and 
promote their own traditions and 
culture including sponsorship of 
celebrations involving music art  
and ethnography in 2011 we funded 
the publication of a book about the 
negidals the smallest of the imn 
communities whose future is under 
threat in the same year we began  
a longterm programme of support 
for reindeer herders in the okhotsk 
district khabarovsk territory this 
involves the purchase of materials 
veterinary medicines and transport 
repairs to equipment and grants to 
assist in building up reindeer herds
all of this work is done with the full 
cooperation of imn representatives 
regular meetings provide us with 
opportunities to identify their needs 
and assess the success of our 
funding programmes accordingly 
  to maintain an excellent working 
and living environment for 
employees and their families and
  to engender a positive working 
culture through clear and regular 
twoway communication
employment policies and profile
we have clearly defined human 
resources policies for all employees 
these cover recruitment professional 
development appraisal training 
resources and skills organisational 
design and motivation as at 
31 december 2011 we employed 
8747 people across the group 
with 6497 in production 599 in 
exploration and 735 in research 
development design logistics  
and management 
the group operates an equal 
opportunities policy and is 
committed to fair employment 
community investment priorities performance in 2011
to invest for the long term in communities 
adjacent to group operations to improve  
the living standards of local residents through 
timely completion of development projects  
to build residential and recreational facilities  
as part of wider community investment projects 
  refurbished and reopened a cinema in amursk
  built eight playgrounds in remote communities
  refurbished and equipped seven nurseries two schools  
11 hospitals and medical centres
  improved residential infrastructure including gas and electricity 
supply street lighting and heating
  provided medical services to 1500 people in remote communities
to improve twoway communication and 
access to information for and with remote 
communities including imn
  public ‘reporting’ meetings held with communities in all  
regions of operation
  adopted the deer breeding support programme after  
consultation with local communities
  contributed to consultative councils and working groups  
with community and local authority representatives 
  organised site visits for representatives of local communities 
to establish sports clubs and facilities  
in remote communities
  equipped sports halls and facilities in seven remote communities
  constructed and equipped a school stadium in polina osipenko 
district and ski school in krasnoturinsk
  organised and sponsored children’s sports competitions and 
supported three children’s hockey teams in remote communities  polymetal international plc annual report 201 1 67
financial statements appendices governance business review overview
injury compensation transport  
at work and transport to and from 
home when working in remote areas 
additional discretionary allowances 
are also granted to reflect particular 
roles and skills shortages in certain  
markets and across certain functions
freedom of association
in line with the un global compact all 
employees have the right to freedom 
of association and to enter collective 
agreements with the group as a 
consequence employee managed 
workers’ councils operate at all  
major operating subsidiaries where 
plants remain under construction  
or subsidiary companies have just 
joined the group local labour 
standards are fully adopted as  
a precursor to the establishment  
of formal workers’ councils
selection and appraisal
polymetal is committed to being  
an employer of choice for young 
educated and ambitious professionals 
we therefore offer a wide range of 
career paths backed by excellent 
benefits packages this emphasis  
on skills retention development and 
transfer provides many opportunities 
for internal candidates to progress 
within the business
given the growth of our business it is 
not always possible to identify suitable 
internal candidates so we also operate 
an extensive external recruitment 
practices for qualified people with  
a disability observing all applicable 
labour and employment laws 
wherever its businesses are located 
every employee has equal access  
to training career development and 
promotion programmes including 
those with disabilities 
employee compensation  
and benefits
polymetal is fully compliant  
with all labour laws in russia and 
kazakhstan in 2011 and 2010 our 
average salary levels were between 
330 higher when compared with 
other mining companies varying  
on a regionbyregion basis these 
levels are set through collective 
agreements with employees in each 
subsidiary which recognise that the 
salary is linked to the quality of an 
individual’s work and the overall 
performance of the group
expenditure on social benefits in 201 1 
was us3950 per employee these 
benefits include pensions medical 
care access to sports facilities clubs 
and competitions nursery and school 
provision food and accommodation 
when working away from home  
programme an important component 
is the ‘youthprofessionalismcareer’ 
scheme which in 201 1 offered 1 18 
students work experience at 9 plants 
including return travel accommodation 
and a salary under the scheme 
children of employees also receive 
education support to degree level with 
the guarantee of employment at the 
end of the course this has led to  
a significant increase in the number  
of student interns and graduates 
employed across the group 
training
ongoing professional development 
and training is essential for 
operational integrity safety and 
personal motivation our appraisal 
and training processes are therefore 
comprehensive and cover all aspects 
of the business a new appraisal 
system adopted in 2010 measures 
each employee’s personal 
development and identifies career 
paths within the group the training 
framework includes both distance 
and experiential learning and 
continuing professional development 
with opportunities to attend specialist 
courses conferences and 
exhibitions specialist engineering 
and environmental management 
training is also available polymetal 
engineering the internal centre of 
excellence places great emphasis 
on training and professional 
development for its engineers  
and environmental professionals 
number of employees 2011
production 74 
exploration 7
development projects 10 
research development 
design logistics and 
corporate management 9
polymetal has signed a fiveyear 
cooperation agreement with the  
north eastern state university
“we have a longstanding relationship with 
the university and over the last few years 
students have been completing pre
degree practical training at polymetal’s 
businesses in the magadan region we 
supervise this training review degree work 
and also take an active part in  
employment fairs the annual  
professional career event and practical 
research conferences organised  
by the north eastern state university”
yevgeniya prevyshkvinto
deputy head of human resources  
at the magadan branch of the polymetal 
management company
a university partnership business review
68 polymetal international plc annual report 201 1
sustainability – being  
a responsible business
continued
indicators 2011 2010  change
emergencies – – –
incidents – – –
accidents 11
➞
24 54
occurrences 14 14 0
occurrences with subcontractors 9
➞
10 10
injury frequency coefficient 13
➞
35 63
injury gravity coefficient 49
➞
75 35
lost time injury frequency rates 
ltifr 07
➞
19 63
fatal injury frequency rate fifr  –
➞
05 100
internal communications
given the scale and geographic 
spread of our business we use  
many communication channels to 
keep employees informed about 
groupwide developments our 
monthly newspaper the northern 
latitude is a key communications 
tool with different editions published 
according to specific group activities 
our regular employee surveys 
highlight the high regard in which  
the northern latitude is held
events are also important in terms  
of sharing experiences and building 
morale metallurgists’ geologists’ 
and miners’ days are celebrated 
across the group with awards 
ceremonies gala concerts sports 
competitions and activities for 
children and local communities 
gifts are distributed to first year 
schoolchildren on the day of 
knowledge and war veterans  
are recognised on victory day
in 2007  we initiated a formal employee 
feedback system to channel corporate 
information receive comments  
on management decisions and 
suggestions for improved working 
the system complies with iloosh 
2001 ohsas 18001 and gost r 
1200072009
in 2011 health and safety activity 
focused on
  ongoing implementation operation 
and refinement of the system
  reducing workplace injuries
  enhancing the culture of safety 
across all operations
  ensuring that the latest employee 
safety techniques and equipment 
are applied and
  enhancing safety training and 
techniques for motivating 
employees
we operate 102 production sites  
and processes each with its own  
risk profile these include open  
and underground mines geological 
exploration sites ore processing  
and explosive depots as well as 
transportation of people equipment 
spoil and ore every employee 
receives illustrated guides backed up 
by regular briefings and formal training 
sessions and is provided with the 
necessary equipment and workwear 
practices this feedback is channelled 
through mailboxes at every plant 
telephone hotlines direct contact with 
plant management direct contact 
with the group ceo the corporate 
website and the northern latitude 
we track feedback and ideas 
and are committed to responding 
within a certain time to all such 
communications in 201 1 397 
employee messages were delivered 
and responded to via this system 
for example employee feedback in 
mayskoye led to changes in the way 
food is purchased and delivered 
the provision of new equipment 
in factory canteens the building of 
new bathing facilities the opening 
of a physiotherapy unit and an 
improved library 
health and safety
our approach to health and safety is 
governed by our employee protection 
and workplace safety management 
system this is designed to detect 
assess and manage production  
risks ensure employee health and 
workplace safety and define the  
safe use of buildings and equipment 
workplace accidents
2007
2008
2009
2010
2011
10
14
16
24
11 polymetal international plc annual report 201 1 69
financial statements appendices governance business review overview
environment
polymetal’s operations generate 
hazardous and nonhazardous 
waste liquid effluent and air 
emissions use significant volumes  
of water and displace significant 
quantities of soil whilst complying 
with all relevant national and regional 
environmental legislation our 
environmental priorities are
  pollution prevention
  reduction in greenhouse  
gas emissions
  efficient use of energy and  
natural resources and
  effective management of waste
these priorities are addressed 
through the adoption and effective 
use of technology ongoing 
refinement of management 
processes rational use of natural 
resources reuse and recycling of 
waste efficient use and conservation 
this is backed up by ongoing internal 
audits that identify areas of poor and 
positive practice in order to maintain 
the integrity of the system
workplace accidents
in 201 1 there were 1 1 workplace 
accidents across the group none  
of which were fatal this reflected a 
major upgrade of the health and safety 
system following poor performance  
in 2010 which saw 24 such accidents 
six of which were fatal the severity  
of incidents in 201 1 was also reduced 
compared to the previous year with  
a 50 decrease in serious incidents
workrelated illness
no cases of productionrelated  
illness were recorded in 201 1 each 
employee receives as a minimum an 
annual health check from one of our 
medical professionals in some cases 
these checks identify the need for 
specific treatment for example 
treatment away from the workplace  
in one of our health centres
of energy employee involvement  
in environmental management  
and prevention of accidents with  
an environmental impact
environmental governance
group performance is managed  
by the environmental department  
at its headquarters in st petersburg 
from where the environmental 
management system is defined and 
monitored this system was revised 
and updated in 2011 in line with  
the iso 14001 standard and in 
accordance with relevant legislation 
in russia and kazakhstan
the group environmental 
department comprises specialists  
in water pollution management  
water treatment air quality land 
management and ecology each  
of our subsidiary companies has  
its own environmental team 
responsible for management and 
monitoring and the provision of 
monthly reports to the group  
our new shift risk assessment sra 
system is placing a much greater 
emphasis on personal health and  
safety assessment at the dukat and 
omolon hubs at the start of a shift 
each employee will make a note on  
an sra card about the nature and 
condition of their clothing and personal 
safety equipment and the type of work 
that they are about to do through this 
discipline the employees essentially  
carry out their own assessment of the 
degree of risk leading them to make  
a conscious decision about the 
acceptability or otherwise of that risk
experience has shown that the success 
of this approach depends largely on  
the attention paid to the process by the 
employee and their colleagues which  
in turn places more responsibility on 
foremen and supervisors this requires  
a high degree of communication and 
feedback from all parties which in turn 
improves safety practices consequently 
at the omolon hub we now require all 
foremen to maintain electronic sra logs 
the data from which is used to adjust 
safety procedures as and when new 
issues arise and the system is being 
rolled out across all group operations  
in the magadan region 
“having deployed sra we can see  
the benefits it brings in terms of personal 
responsibility and safety it is very  
much here to stay as an integral part  
of our overall health and safety 
management system”
konstantin savchuk
head of the industrial  
safety department
safety is a personal matter business review
70 polymetal international plc annual report 201 1
sustainability – being  
a responsible business
continued
air quality surface water and ground 
water samples collected through this 
system are analysed at laboratories 
certified to international standards 
we also have one of the largest 
inhouse engineering operations  
in the russian mining sector 
polymetal engineering employs  
more than 100 specialists in the 
design and construction of mines 
and processing facilities and since 
2010 has included an environmental 
management function
auditing and monitoring
environmental audit and monitoring 
activities are built into the overall 
environmental management system 
and comply with the requirements  
of relevant russian and kazakh 
legislation external audits are 
undertaken by state supervisory 
authorities such as the russian 
employee environmental training
our human resources department 
annually reviews environmental 
training opportunities at both  
national and international level  
an inhouse training programme also 
supplements ongoing professional 
development with site visits and 
attendance at conferences each 
year our environmental managers 
attend the allrussian industrial 
ecologists’ seminar for an update  
on environmental legislation specific 
courses attended by environmental 
specialists include those covering 
environmental management systems 
hazardous waste land reclamation 
water quality assessment and 
environmental security
federal service for supervision  
of natural resource usage
environmental teams at each plant 
supported by headquarters specialists 
and polymetal engineering monitor 
performance and ensure compliance 
against the group system and external 
standards
environmental compliance
environmental auditing and monitoring 
of group subsidiaries is undertaken  
by state regulatory authorities in  
line with the requirements of relevant 
environmental legislation
regulatory authorities specify that we 
make quarterly payments in line with 
the intensity of monitoring and auditing 
required in 201 1 these payments 
amounted to us23 million a third 
more than in 2010 and in line with  
the substantial expansion of our 
production capacities over this period 
“one of the main objectives for 
environmental specialists working  
at albazino is to prevent the pollution  
of surface and underground water 
industrial waste a mix of water and 
ongoing monitoring of water and soil 
quality is undertaken as a mandatory 
requirement across the whole of  
the albazino mining and processing  
plant the resulting samples are tested 
onsite by an independent laboratory”
lyudmila koval
environmental protection  
specialist at the khabarovsk  
branch of the polymetal  
management company
subsurface rock passes along the 
conveying pipe into a tailings pond 
where layers of impervious soil and  
a polyethylene membrane prevent  
any leaks after cleaning the water 
from the pond is used in the plant’s  
flotation process
“the preparation plant has installed 
tanks that store sediment from  
quarry and undersoil water 
as this water passes through  
filtration dams it is cleansed of oil  
and impurities particles beforeit is 
discharged to local water courses 
environmental management at albazino polymetal international plc annual report 201 1 71
financial statements appendices governance business review overview
environmental management performance
air emissions
total tonnes
stripping mined waste storage and energy 
generation and use are the main sources of air 
emissions mainly representing greenhouse gas
49806 2011
2010 46128
air emissions 
per 10 kt of ore produced
we continue to optimise energy usage at all plants 
production levels at existing mines and plants 
continued to grow consequently air emissions per 
tonne of ore reduced by 26 between 2010 and 201 1
472 2011
2010 617
greenhouse gas emissions 
per 10 kt of ore mined 
power and energy generation boiler houses diesel 
power plants are the main sources of greenhouse 
gas emissions 
more remote sites operating in the areas where 
electricity is generated using diesel gensets were 
operating in 2011 therefore the greenhouse gas 
emissions per tonne of ore mined grew by 5
199 2011
2010 190
waste volume
kt and type
the total volume of waste from all operating 
subsidiaries is broken down as follows
88 – mined waste
11 – tailings from metal production and
1 – other production and consumption waste 
the increase in 2011 reflects the addition of new 
processing facilities
65844 2011
2010 50478
waste 
per tonne of ore produced
in 2011 we further optimised production at dukat 
omolon and varvara this allowed us to reduce the 
volume of waste per tonne of ore produced between 
2010 and 2011 
5985 2011
2010 6754
waste water discharge  
to surface waters 
tonnes 
waste water discharge to surface waters from  
all company processing sites opencut mines  
and mine dumps
53181 2011
2010 45918
waste water 
per 10 kt of ore mined 
increased and widespread use of close water  
circuits at all of our processing facilities has led  
to a reduction of waste water volumes per tonne  
of ore produced
483 2011
2010 614
environmental incidents 
and fines
no environmental incidents environmental fines  
or penalty notices were issued in 2011 and 2010
environmental expenditure
us million
expenditure on environmental management  
and capital construction of environmental  
protection facilities excluding expenditure  
relating to compliance
56 2011
2010 30
laboratory testing for environmental 
impact analysis governance
72 polymetal international plc annual report 201 1
governance
01
04
07
02
05
08
03
06
09
an experienced team
01 bobby godsell
chairman
mr godsell is chairman of the nomination 
committee he is also chairman of business 
leadership south he is a member of the 
south african national planning commission 
and cochairman of the south african 
millennium labour council his previous roles 
have included president of the south african 
chamber of mines and chairman of eskom 
and he has over 30 years’ experience in the 
mining sector previously serving as chief 
executive of anglogold ashanti he has a  
ba from the university of natal and an ma 
from the university of cape town
04 konstantin yanakov 
nonexecutive director
mr yanakov has been a member of  
jsc polymetal’s board of directors since 
september 2008 he is also currently  
the cfo at cjsc ict prior to joining ict  
he held various posts at mdm bank before 
becoming the cfo of jsc polymetal  
he graduated from the government of 
russia’s finance academy with a degree  
in global economics and received a  
phd in economics from the russian  
state university of management in 2007   
mr yanakov received an mba from the 
london business school
02 charles balfour 
senior independent  
nonexecutive director
mr balfour is the senior independent 
member of the board of directors and  
is a member of the audit and risk 
remuneration and nomination committees 
he has over 40 years’ experience in the 
investment banking industry in the us uk 
france and hong kong including working for 
dillon read banque paribas durlacher and 
fleming family partners between 1993 and 
2004 mr balfour was an executive of nasdaq 
international and chairman from 2000 until 
2004 he is currently a director of humber 
power and humber energy mr balfour was 
educated at eton and the sorbonne in paris
05 jeanpascal duvieusart 
nonexecutive director
mr duvieusart is director of ppf advisory 
russia and has been a member of  
the supervisory board of ppf since 2010  
he joined mckinsey in 1992 and was 
managing partner for central europe and  
the cis from 2005 to the end of 2009  
mr duvieusart graduated from the catholic 
university of louvain belgium with a master’s 
degree and received an mba from the 
university of chicago in 1992
03 vitaly nesis 
chief executive officer
mr nesis was appointed chief executive in 
september 2011 he was jsc polymetal’s 
ceo from 2003 becoming a member of  
the board in june 2004 between 2002 and 
2003 he was ceo of vostsibugol and in 
2000 he was strategic development director 
at the ulyanovsk automobile plant from 
2001 to 2002 he headed the investment 
planning department at sual holding  
from 1999 to 2000 he worked for mckinsey 
in moscow and from 1997 to 1999 he was  
an analyst at merrill lynch in new york  
he graduated from yale university in 1997 
with a ba in economics
06 marina grönberg 
nonexecutive director
ms grönberg has been a member  
of jsc polymetal’s board of directors  
since september 2008 she is also a board 
member of mozaik holdings waterstone’s 
holdings the azbukaatticus publishing 
group mig credit marenco swiss 
helicopters ann capital management 
fund and chairman of glp and of cjsc 
sparretail she is a member of the 
supervisory board of euroset holdings 
president of the nadezhda charitable  
fund and of ann us and managing 
director of ann schweiz ms grönberg’s 
qualifications include degrees in law from 
moscow state law academy and in applied 
mathematics from moscow state university 
 chairman
 executive director
 nonexecutive director
 independent nonexecutive director polymetal international plc annual report 201 1 73
financial statements appendices governance business review overview
senior management 
vitaly savchenko 
chief operating officer
mr savchenko was appointed coo of  
jsc polymetal in 2009 and elected to the 
management board in september 2011 
from 2007 to 2009 he was director of  
the production department having held 
senior production technical and mining 
positions since 2004 from 1994 to 2003  
he worked at priargunskoe mining and 
chemical company latterly as a chief 
engineer mr savchenko graduated from  
the kyrgyz mining institute in 1994 with  
a degree in underground mineral mining 
engineering and is a recipient of a third
category miner’s glory medal
sergey cherkashin 
chief financial officer
mr cherkashin was appointed cfo of jsc 
polymetal in 2005 having previously held 
senior management positions in the food 
processing and machine building industries 
he was cfo of the timashevsk dairy plant 
sales director of the ulyanovsk automotive 
plant and deputy ceo of development at 
the volgograd dairy plant having previously 
been a consultant for at kearney in moscow 
mr cherkashin graduated from the moscow 
institute of physics and technology in 
applied mathematics and has completed  
a oneyear mba programme at the university 
of hartford
sergey trushin 
deputy ceo for mineral resources
mr trushin was appointed deputy ceo 
mineral resources in 2010 from 2008  
to 2010 he was chief geologist at the 
khabarovsk exploration company and 
between 2006 and 2008 he was chief 
geologist at albazino resources where  
he had held various positions since  
1998 in 1997  he was a geologist with 
dalnevostochnie resources and in the 
preceding six years he was a geologist  
with the production geological association 
‘dalgeology’ and the nizhneamursk 
exploration expedition mr trushin has  
a degree in geological surveying and  
mining engineering exploration from the 
novocherkassk state polytechnic institute
roman shestakov 
deputy ceo project development  
and construction
mr shestakov was appointed deputy  
ceo for development and construction  
of polymetal management company  
in 2009 having been chief engineer  
at gold of northern ural from 2007 to  
2009 during 20042005 he was a mining 
superintendent at the okhotsk mining and 
exploration company and in the preceding 
two years he was a mining engineer in  
the production and technical department  
of jsc polymetal he graduated from the 
mining department of the st petersburg 
state mining institute majoring in  
openpit mining
valery tsyplakov 
managing director  
jsc polymetal engineering
mr tsyplakov was appointed managing 
director polymetal engineering in 2004 
from 2000 to 2004 he held senior roles  
in the production and technology and 
technological research departments 
subsequently becoming deputy general 
director for mineral resources design  
and technology previously he served  
as department head at the soviet union 
research institute of aeronautical 
automation and prior to this at orhus 
university’s physics institute he was also 
a research fellow in the plasma physics 
department of the moscow physics and 
engineering institute from where he 
graduated in experimental nuclear physics 
he also holds a phd in physics and 
mathematics
pavel danilin 
deputy ceo strategic development
mr danilin was appointed deputy ceo  
for strategic development 2009 having 
previously been director of corporate 
finance and investor relations from 2003  
to 2005 he was head of corporate finance 
and between 2002 and 2003 he worked at 
cjsc ict in the same capacity from 1998 
to 2001 he was deputy head of the currency 
department and head of the financial 
resources department at the kaliningrad 
branch of bank petrocommerce mr danilin 
graduated in 1998 from kaliningrad state 
technical university in economics and 
management he gained an mba in 2007 
from the university of california at berkeley 
haas school of business
igor kapshuk 
chief legal officer
mr kapshuk was appointed chief legal 
officer in 2009 having been head of the 
legal department since 2005 and deputy 
head since 2003 between 2001 and 2003 
he held various positions including deputy 
general counsel head of the department 
for legal matters and head of the claims 
department at the siberia energy coal 
company and vostsibugol irkutsk from 
1999 to 2001 he worked as a legal advisor 
for pharmasintez and from 1997 to 1998 he 
worked at the irkutsk teapacking factory 
as a legal advisor and acting head of the 
legal department mr kapshuk graduated 
from the law school of irkutsk state 
university in 1995 
07 jonathan best 
independent nonexecutive director
mr best is chairman of the audit and  
risk committee and a member of the 
remuneration committee having been an 
independent member of jsc polymetal’s 
board since december 2006 he has more 
than 30 years’ experience in the mining 
industry in 2006 he served as the interim 
ceo of transsiberian gold prior to which  
he was cfo of anglogold ashanti ltd 
involved in the company’s formation  
and its listing in new york he is currently a 
nonexecutive director of anglogold ashanti 
holdings plc and a member of its audit 
committee he is chairman of sentula mining 
and bauba platinum where he serves on the 
nomination and remuneration committees 
mr best is chairman of the audit committees 
of metair investments and gulf industrials  
he is an associate of the chartered institute  
of management accountants and holds  
an mba from the university of the 
witwatersrand johannesburg
08 russell skirrow 
independent nonexecutive director
dr skirrow is a member of the audit  
and risk committee having been an 
independent member of polymetal’s board 
since september 2008 he has 17 years’ 
experience in investment banking including 
ten years at merrill lynch as head of global 
metals mining  steel research and 
subsequently as global chairman of the 
metalsmining team dr skirrow is chairman 
of dampier gold and has 12 years’ 
experience in the international mining industry 
having worked with companies such as gold 
fields south africa and western mining 
corporation in australia and the us he is a 
member of the institute of materials minerals 
 mining with chartered engineer status and 
a fellow of the financial services institute  
of australia he has a bsc in geology from 
durham university and a phd from the royal 
school of mines imperial college london
09 leonard homenuik 
independent nonexecutive director
mr homeniuk has been an independent 
member of the board since june 2010 he  
is chairman of the remuneration committee 
and a member of the nomination committee 
from 2004 to 2008 he served as president 
ceo and member of the board of directors 
of centerra gold and subsequently chairman 
of the board of trade ideas llc he has over 
35 years’ experience in the mineral sector 
having held executive positions with centerra 
gold kumtor gold and cameco corporation  
mr homeniuk received an msc from the 
university of manitoba and is a member of 
the ontario society of professional engineers 
the canadian institute of mining and metallurgy 
and the prospectors and developers 
association of canada he is an honorary 
professor of the kyrgyz mining institute governance
74 polymetal international plc annual report 201 1
corporate governance
dear shareholders
this was a very exciting year for us with the listing on the london stock 
exchange and entry to the ftse 100 index
i was excited to join the board as chairman committing my time and 
experience to create sustainable value to the company’s stakeholders  
i will do my best to ensure that the work of the board and overall 
governance system we operate at polymetal international will be 
conducted to the highest international standards
it is important that we build trust and reputation through our commitment 
to stringent governance practices and accountability 
we are complying with the majority of the provisions of the uk corporate 
governance code 2010 with adequate provisions made to ensure 
compliance in 2012 see details opposite our belief is that effective 
governance is realised through leadership and collaboration we have  
a renewed board with the balance of skills and experience needed to 
support and enhance the work of the executives in my role as chairman 
i will also ensure that we collaborate and operate with due diligence and 
discipline across the whole group
it is important that we encourage dialogue with stakeholders in order  
to guide and define our approach to governance and risk management 
now and in the future
as a board we are responsible for defining the longterm direction  
and strategic aims of the company we have a robust business model 
and a focused strategy that will deliver sustainable value underpinned  
by our commitment to high standards of governance enabling us to 
achieve our vision of being a worldclass mining company
bobby godsell
chairman  polymetal international plc annual report 201 1 75
financial statements appendices governance business review overview
statement of compliance with uk corporate  
governance code 
the directors are committed to maintaining high standards  
of corporate governance as a premium listed company 
polymetal international is required to comply with the uk  
code of corporate governance published in june 2010  
‘the uk code’ and where the provisions of the uk code 
have not been complied with to provide appropriate 
explanations in 2011 the company has complied with  
the provisions of the uk code except for the following
  b61 ‘performance evaluation of the board its committees 
and its individual directors 
  schedule a of the uk code recommends share options  
and awards should not vest in less than three years
the reason for noncompliance was the short period between 
the formation of the group and the year end b61 and the 
existence of share option arrangements prior to admission 
schedule a b61 will be complied with in 2012
following the admission of the company to trading on the 
london stock exchange in november 2011 certain planned 
improvements relating to corporate governance remained 
incomplete by the end of the year however arrangements 
have already been made by the board to ensure compliance  
in 2012 in these respects all matters subject to review andor 
approval by the board and its committees were included into 
the board’s and respective committees’ agenda the schedule 
and number of meetings planned for 2012 meets the 
requirements of the uk code 
the uk code recommends that share options and awards  
should not vest in fewer than three years during 2010 prior  
to the uk code becoming applicable to the company options  
were awarded to certain employees that could subject to the 
meeting of specific performance criteria vest in fewer than 
three years this was considered appropriate to align employee 
incentives with the company’s objectives
role and structure of the board
the company’s board comprises one executive director 
nonexecutive chairman and seven nonexecutive directors 
half of whom are independent nonexecutives – refer to the 
schedule below for the structure of the board and committees 
showing this status of each director
nonexecutive directors are determined by the board to  
be independent in character and judgement and to be free 
from relationships or circumstances which may affect  
or could appear to affect the director’s judgement
the role of independent directors at the board is to challenge 
the strategy and scrutinise the performance of management 
monitor performance of the company review the integrity  
of financial information and review the appropriateness  
of the company’s internal controls and risk management 
system
directors’ interests are disclosed in annual declarations  
and the company secretary is notified promptly of any 
changes before each board meeting directors confirm their 
independence and all directors disclose whether they hold any 
interests in any matters to be reviewed at the board meeting 
mr yanakov is a representative of powerboom investments 
limited ms grönberg is a representative of vitalbond limited 
ann and capital management fund limited and mr duvieusart 
is a representative of ppf group bv mr nesis is the brother of 
the beneficial owner of powerboom investments limited save 
for the potential conflicts inherent in these relationships there 
are no potential conflicts of interest between any duties owed 
by the directors or senior management to the company and 
their private interests or other duties
 
the company considers that the board and its committees 
have the appropriate balance of skills experience 
independence and knowledge of the company to enable  
them to discharge their respective duties and responsibilities 
effectively all directors have access to the advice and services 
of the company secretary and are able to take independent 
professional advice if necessary at the company’s expense
board composition
board member appointed executive nonexecutive independent
audit risk
 committee
 member
chairman
remuneration
 committee
 member
chairman
nomination
 committee
 member
chairman
bobby godsell 29 september 2011 ✓ chairman
vitaly nesis
1
29 september 2011 ✓
jonathan best
2
29 september 2011 ✓ ✓ chairman member
russell skirrow
3
29 september 2011 ✓ ✓ member
leonard homeniuk
4
29 september 2011 ✓ ✓ chairman member
charles balfour
5
29 september 2011 ✓ ✓ member member member
konstantin yanakov
6
29 september 2011 ✓
marina grönberg
7
29 september 2011 ✓
jeanpascal duvieusart 29 september 2011 ✓
1 mr nesis was appointed ceo of jsc polymetal the previous parent and reporting entity of the group on 30 june 2004
2 mr best was appointed nonexecutive director of jsc polymetal on 28 december 2006
3 dr skirrow was appointed nonexecutive director of jsc polymetal on 25 september 2008
4 mr homeniuk was appointed nonexecutive director of jsc polymetal on 29 june 2010
5 senior independent director
6 mr yanakov was appointed nonexecutive director of jsc polymetal on 25 september 2008
7 ms grönberg was appointed nonexecutive director of jsc polymetal on 25 september 2008 governance
76 polymetal international plc annual report 201 1
board meetings
in 2011 the board met twice following the listing in november 
2011 the board meets at least quarterly there are seven 
board meetings scheduled for 2012 
role of the board
the board is responsible for
  defining the commercial strategy and longterm objectives 
of the group
  approving annual operating and capital expenditure budgets 
and any material changes to them 
  overseeing the group’s operations ensuring competent  
and prudent management sound planning a strong system 
of internal control and compliance with all statutory and 
regulatory obligations 
  reviewing the performance of the group in the light of 
its business strategy objectives business plans and budgets 
and ensuring that any necessary corrective action is taken 
  approving any material extension of the group’s activities into 
new businesses or geographic areas and any decision to 
cease to operate all or any material part of the group’s 
business and
  ensuring a mutual understanding of objectives and 
maintaining constructive dialogue with shareholders 
the schedule of matters reserved for the board is reviewed  
at least annually
roles of the chairman chief executive officer and  
senior independent director
the board has approved division of responsibilities between 
the chairman and the chief executive officer ceo and the 
role of the senior independent director sid 
the chairman reports to the board and is responsible for the 
leadership and overall effectiveness of the board and setting 
the board’s agenda his responsibilities include
  effective running of the board
  ensuring there is appropriate delegation of authority from  
the board to executive management 
  promoting a culture of openness and debate by facilitating 
the effective contribution of nonexecutive directors in 
particular and ensuring constructive relations between 
executive and nonexecutive directors
  facilitating the effective contribution of nonexecutive  
directors and encouraging active engagement by all 
members of the board
  ensuring constructive relations between the executive  
and nonexecutive directors and
  ensuring that the views of the shareholders are 
communicated to the board as a whole so that all 
directors develop an understanding of their views 
in august 2011 mr godsell resigned from the board of  
african barrick gold to be able to commit sufficient time to  
his role as nonexecutive chairman of polymetal international  
mr godsell’s other significant commitments are as the chair of 
the board of optimum coal holdings a johannesburg listed 
medium size coal mining company and membership of the 
south african national planning commission a government 
commission in january 2012 he also accepted a nonexecutive 
directorship in the south african state owned industrial 
development corporation however the additional time 
commitment required by this additional role will be more than 
offset by the expected termination of his role on the board of 
optimum coal holdings which is in the process of being 
acquired by glencore plc this process should be complete  
by july 2012
the ceo is responsible for the daytoday management  
of the group and developing the group’s business strategy 
objectives budget and forecasts and once approved by the 
board overseeing their successful implementation the chief 
executive officer reports to the chairman and to the board 
directly all members of executive management report directly 
to the chief executive officer his responsibilities include
  development and proposal of group strategy including 
communicating annual plans and commercial objectives  
to the board 
  upholding the group’s responsibilities to its shareholders 
customers employees and other stakeholders
  identifying and executing strategic opportunities
  regularly reviewing the operational performance and strategic 
direction of the group
  making recommendations on remuneration policies 
executive remuneration and terms of employment for  
senior employees
  ensuring the development needs of the executive directors 
and senior management are identified and met and ensuring 
effective succession planning and
  ensuring effective communication with shareholders and that 
appropriate timely and accurate information is disclosed to 
the market with issues escalated promptly to the executive 
management and the board
senior independent director
charles balfour acts as the board’s senior independent  
director mr balfour is available to shareholders and as an 
intermediary for the other directors if necessary he attends 
meetings with a range of major shareholders to listen to  
their views in order to help develop a balanced understanding  
of the issues and concerns of major shareholders meetings 
between independent directors including mr balfour and  
major shareholders took place in 2011 prior to the admission  
of the company on the lse and year end arrangements have 
been made for such meetings to take place in 2012
corporate governance
continued polymetal international plc annual report 201 1 77
financial statements appendices governance business review overview
board and committee meetings’ attendance 
board
meetings
two
audit
committee
 meetings
 two
remuneration
 committee
meetings
nil
nomination
 committee
meetings
nil
bobby godsell all na na na
jonathan best all all na na
russell skirrow all all na na
leonard 
homeniuk all na na na
charles balfour all all na na
konstantin 
yanakov all na na na
marina grönberg all na na na
jeanpascal 
duvieusart all na na na
note 1  business conducted since formation of the remuneration committee on 
29 september 2011 was approved by written resolutions of the remuneration 
committee
note 2  nomination committee did not meet since its formation on 29 september 
to 31 december 2011
note 3  certain preipo matters were dealt with by an ipo committee of the board 
comprising bobby godsell vitaly nesis charles balfour and jonathan best
evaluation and reelection policies
nomination committee
the nomination committee is chaired by mr godsell and  
its other members are mr homenuik and mr balfour the 
committee has responsibility for making recommendations  
to the board on the composition of the board and its 
committees including appointments of additional and 
replacement directors the committee
  leads the process for board appointments and makes 
recommendations to the board
  regularly reviews the board structure size and composition 
including the skills knowledge independence experience 
and diversity and makes recommendations to the board 
about any changes that the committee considers necessary
  considers plans and makes recommendations to the  
board for orderly succession to the board and to senior 
management so as to maintain an appropriate balance of 
skills and experience within the company and on the board 
and to ensure progressive refreshing of the board taking 
into account the challenges and opportunities facing the 
company
  keeps under review the leadership needs of the group  
both executive and nonexecutive with a view to ensuring 
the continued ability of the group to compete effectively in 
the marketplace
  before any appointment is made by the board evaluate the 
balance of skills knowledge experience independence  
and diversity of the board and in the light of this evaluation 
prepares a description of the role and capabilities required 
for a particular appointment and the expected time 
commitment in identifying suitable candidates the 
committee shall and
  reviews the results of the board’s performance evaluation 
process that relate to the composition of the board and 
whether nonexecutive directors are spending enough  
time to fulfil their duties
during the process of identifying the chairman and the 
additional nonexecutive directors to form the board of 
company and in the two months period since admission  
the company has not employed external search consultants
in accordance with the articles of association of the company 
at every annual general meeting one third of the directors  
on the board must retire or if the number of directors is not 
divisible by three the number of directors nearest to one  
third shall retire from office but if any directors who has held 
office for three years or more since he or she was last 
appointed or reappointed at the date fixed for the annual 
general meeting must retire in accordance with the 
uk code all directors are subject to annual reelection 
the biographical details are set out on pages 72 to 73  
and the board considers that each of the directors will be  
an effective contributor to the success of the group
upon appointment directors receive a full induction including 
information about the company an outline of the role of a 
director and a summary of his or her responsibilities and 
ongoing obligations under legislation regulation and best 
practice a copy of uk listing authority‘ukla’ model code 
and details of the company’s procedure regarding directors’ 
share dealings and the disclosure of price sensitive information 
the company’s guidelines on matters reserved for the  
board terms of reference of the board committees and  
other governing documents of the company a field trip  
to some of the group’s major assets is scheduled in 2012  
for nonexecutive directors 
there were no meetings of the nomination committee from the 
date of admission to trading to the year end two meetings are 
scheduled in 2012 no evaluation of performance of the board 
its committees and individual directors was performed in 2011 
due to the short time from admission to the year end as 
required under b61
full terms of reference of the nomination committee 
are available at the company’s website  
wwwpolymetalinternationalcom
the board considers that the composition of the board and 
the nomination committee complies with the requirements  
of the uk corporate governance code
audit and risk committee 
the audit and risk committee is chaired by mr best and  
its other members are mr skirrow and mr balfour all 
independent nonexecutive directors the directors consider 
that mr best has recent and relevant financial experience  
refer to page 73 for details of mr best’s experience 
in addition the other members of the committee have  
a wide range of financial and other relevant experience governance
78 polymetal international plc annual report 201 1
the responsibilities of the audit and risk committee comprise
  monitoring the integrity of the group’s consolidated financial 
statements and reviewing its annual and interim financial 
statements including but not limited to the consistency of 
and any changes to accounting and treasury policies across 
the company and the group the methods used to account 
for significant or unusual transactions the reasonableness of 
significant estimates and judgements taking into account the 
views of the external auditor and the clarity and completeness 
of disclosure in the consolidated financial statements
  considering and making recommendations to the board to 
be put to the shareholders to consider at the annual general 
meeting in relation to the appointment reappointment 
resignation or removal of the group’s external auditors
  overseeing the group’s relationship with its external auditors 
and reviewing the effectiveness of the external audit process 
the committee meets with the external auditors at least 
once a year without management being present to discuss 
their remit and any issues arising from the audit
  reviewing the independence of external auditors and 
the appropriateness of the provision of any nonaudit 
services by the external auditor
  reviewing the effectiveness of the group’s system of internal 
controls and risk management systems
  monitoring and review of the effectiveness of the group’s 
internal audit function in the context of the group’s overall 
risk management system and
  reviewing the group’s policies and procedures for preventing 
and detecting fraud the systems and controls in place for 
preventing bribery and its policies for ensuring that the 
group complies with relevant regulatory and legal 
requirements 
full terms of reference of the audit and risk committee 
are available at the company’s website  
wwwpolymetalinternationalcom 
the ultimate responsibility for reviewing and approving 
the interim and annual financial statements remains with the 
board the committee gives due consideration to applicable 
laws and regulations the provisions of the uk code and the 
requirements of the listing rules in 2011 the audit and risk 
committee dealt with the following matters
  reviewed and approved financial and risk information 
included in the prospectus working capital model  
financial reporting procedures and long form report
  reviewed jsc polymetal’s results for the six months  
to 30 june 2011
  discussed and approved the committee work plan
  approved deloitte llp as external auditors
  discussed and recommended for approval by the board 
policies for compliance with the uk bribery act
  reviewed the group’s internal audit plan
  reviewed the group’s external audit plan
the audit and risk committee monitors the company’s 
relationship with external auditors relating to the provision  
of nonaudit services to ensure that auditor objectivity and 
independence is safeguarded this is achieved by disclosure  
of the extent and nature of nonaudit services see note 14  
to the consolidated financial statements and the prohibition of 
selected services being provided by the external auditor  
the audit and risk committee has considered information 
pertaining to the balance between fees for audit and nonaudit 
work for the company in 2011 and concluded that the nature 
and extent of nonaudit fees do not present a threat to the 
external auditor’s objectivity or independence
the appointment of deloitte llp as the group’s external 
auditors following the listing in 2011 with deloitte cis having 
been auditors of jsc polymetal since the last tendering 
process in 2008 is kept under annual review by the audit  
and risk committee
the committee’s assessment of the external auditors’ 
performance and independence underpins its 
recommendation to the board to propose to shareholders the 
reappointment of deloitte llp as auditors until the conclusion 
of the agm in 2013 resolutions to authorise the board to 
reappoint and determine their remuneration will be proposed 
at the agm on 13 june 2012
the board considers that the audit and risk committee 
complies with the requirements of the uk code
internal control and risk management
the company aims to ensure that all its activities are 
adequately controlled to mitigate risk and support the 
achievement of its objectives while avoiding the creation 
of excessive bureaucracy the system of internal controls 
is designed to manage rather than completely eliminate 
the risk to achieve the company’s business objectives 
in order to bring the residual risk to an acceptable level
in conducting its annual review of the effectiveness of risk 
management the board considers the key findings from the 
ongoing monitoring and reporting processes management 
assertions and independent assurance reports the board 
also takes account of material changes and trends in the risk 
profile and considers whether the control system including 
reporting adequately supports the board in achieving its risk 
management objectives
 
during the course of the year the board considered the group’s 
responsiveness to changes within its business environment  
the board is satisfied that there is an ongoing process which 
has been operational during the year and up to the date of 
approval of the annual report for identifying evaluating and 
managing the significant risks faced by the group
corporate governance
continued polymetal international plc annual report 201 1 79
financial statements appendices governance business review overview
internal audit
the internal audit function supports this aim by providing 
the directors through the audit and risk committee with  
an objective evaluation of the company’s and the group’s 
governance framework the internal audit function also aims 
to raise levels of understanding and awareness of risk and 
control throughout the group
the head of internal audit reports to the ceo and through  
the audit and risk committee to the board of directors where 
relevant the internal audit function will additionally report its 
findings to members of the company’s executive management
the internal audit’s annual work plan is designed to focus 
on matters arising from the operational risk matrix and is 
approved by the audit and risk committee in advance
the internal audit function uses an annual selfcertification 
process which requires managers throughout the group 
to personally confirm the testing of internal controls and 
compliance with group policies within their business or  
function and the steps taken to address actual or potential 
issues that are identified
management provides a timely response to issues raised 
by internal audit where possible the issues are resolved  
within one reporting period
internal control framework and activities
the management structure of the group and internal policies 
and procedures are aimed at maintaining a robust control 
framework within the group which will result in achievement  
of strategic objectives within the set risk tolerance levels  
this framework includes
  appropriate tone set from the top from the board level 
aimed at building the appropriate control environment
  proper risk identification and management system  
for more detail please refer to page 60
  strict division of responsibilities and adequate  
delegation of authority
  specific control activities implemented at all levels  
of the group and
  periodic review of effectiveness of controls
the governance framework reflects the specific structure  
and management of the group where authority and control  
are delegated by the board to different levels from the 
chief executive to the managers of the group’s operating 
entities and then downward to business and project managers 
as appropriate 
within this framework authority is delegated within clearly 
prescribed limits and decisions are escalated where either 
project size or risk profile require a higher level of authority
the board confirms that the actions it considers necessary  
have been or are being taken to remedy any failings or 
weaknesses in the group’s system of internal controls  
which it has determined to be significant from its review  
of that system this has involved considering the matters 
reported to it and developing plans and programmes that  
it considers are reasonable in the circumstances
uk bribery act 2010
the company and directors are committed to ensuring 
adherence to the highest legal and ethical standards  
this must be reflected in every aspect of the way in which the 
group operates bribery is a criminal offence in the countries  
in which the group operates and corrupt acts expose the 
group and its employees to the risk of prosecution fines  
and imprisonment as well as endangering the company’s 
reputation the group has adopted antibribery policies which 
extend across all of group’s business dealings in all countries 
and territories in which the group operates and apply to 
employees of the group as well as relevant business partners 
and other necessary individuals and entities the board 
attaches the utmost importance to this policy and applies  
a ‘zero tolerance’ approach to acts of bribery and corruption by 
any of the group’s employees or by business partners working 
on the group’s behalf and prohibits the payment offer or 
authorisation of bribes the receipt or acceptance of a bribe and 
the payment offer or promise to pay any facilitating payments 
any breach of this policy is regarded as a serious matter by the 
company and is likely to result in disciplinary action
as part of implementation of internal procedures to comply with 
the uk bribery act the group has implemented a formalised 
whistleblowing policy which describes processes in place for 
staff to communicate in confidence concerns about possible 
improprieties unethical or illegal activities and ensures that 
arrangements are in place for independent investigation of  
such matters
copies of the antibribery and corruption policy and the 
whistleblowing policy are available on request from the 
company’s offices governance
80 polymetal international plc annual report 201 1
the directors submit the annual report of polymetal 
international plc together with the audited financial  
statements of polymetal international plc for the year  
ended 31 december 2011
principal activities and business review 
polymetal international is a large gold and silver mining 
company operating central processing hubs and a number  
of standalone mines in russia and kazakhstan detailed 
information on the group’s business activities and financial 
performance can be found in overview and business review 
sections of this report on pages from 2 to 71 these sections 
also include description of likely future developments and  
any research and development activities held by the company 
and the group
principal risks and uncertainties
refer to pages 60 to 63 for a description of principal risk  
and uncertainties and the group’s response
corporate governance 
refer to pages 74 to 79 for a description of the group’s 
corporate governance structure and policies
going concern 
the business of the group its strategy and the factors that 
may affect future performance are described on pages 2  
to 51 of this report the risks in achieving the group’s strategic 
objectives together with assessment of their potential impact  
and mitigating actions are set out on pages 60 to 63 of this report 
the financial position of the group its cash flows and liquidity  
are further analysed on pages 52 to 59 of this report
the board having considered all relevant factors related 
to financial position risks and business prospects of the 
group have a reasonable expectation that the group 
has adequate resources to continue operations in the 
foreseeable future therefore the going concern basis is 
appropriately used in accounting and preparation of the 
financial statements for the year ended 31 december 2011
refer also to note 1 of the financial statements
directors
the directors their status and board committee memberships 
are set out on pages 72 to 73 of the report
directors’ interests
the information on directors’ interests in shares of the 
company is set out in the remuneration report on page 84
directors’ indemnities
to the extent permitted by the companies jersey law 1991 
the company indemnified every director or other officer 
of the company other than any person whether an officer  
or not engaged by the company as auditor out of the assets 
of the company against any liability incurred by him for 
negligence default breach of duty breach of trust or otherwise 
in relation to the affairs of the company this provision does 
not affect any indemnity that a director or officer is otherwise 
entitled to
directors’ report
supplier payment policy
the company’s and the group’s policy is to set the terms  
of payment with suppliers when agreeing the terms of  
each transaction ensure that the suppliers are made aware  
of the terms of payment and abide by the agreed terms of 
payment polymetal international plc is a holding company  
and therefore did not have any material trade creditors as  
at 31 december 2011
charitable and political donations
the company may not make a political donation to a political  
party or other political organisation or to an independent election 
candidate or incur any political expenditure unless such donation 
or expenditure is authorised by an ordinary resolution of 
shareholders and is passed before the donation is made or  
the expenditure incurred
many of the regions in which the group operates are 
considered socially and economically undeveloped areas of 
russia and kazakhstan the group pursues a responsible 
social strategy in those regions and views the implementation 
of longterm social programmes as a key factor in the 
sustainability of the group’s operations
the group’s social programmes focus on the social and 
economic development priorities in the regions in which  
it operates and aims to improve education and healthcare 
develop local infrastructure promote sports and healthy 
lifestyles promote the cultural and artistic potential of the  
local population and support local minorities
as part of this social programme the group has entered into 
social partnership agreements with municipalities and regional 
governments under these social partnership agreements  
the group organises and finances a variety of humanitarian 
projects and development and maintenance projects in these 
communities in addition the group also undertakes various 
social projects in accordance with the agreements with the 
public organisations of indigenous minorities of the north  
of russia ‘imn’ and in accordance with the group’s own 
charitable programmes more detail on these activities can 
be found on pages 64 to 71 of this annual report
in 2011 the group spent us40 million on social and 
community projects 2010 us39 million
capital structure
the structure of the company’s share capital is detailed 
in note 31 to the financial statements
there are no specific restrictions on the size of a holding or on 
the transfer of shares which are both regulated by the articles 
of association of the company and applicable legislation  
the directors are not aware of any agreements between 
holders of the company’s shares that may result in restrictions 
on the transfer of shares or on voting rights polymetal international plc annual report 201 1 81
financial statements appendices governance business review overview
there are a number of agreements that take effect alter or 
terminate upon a change of control of the company such as 
commercial contracts bank loan agreements and employees’ 
share plans none of these is considered to be significant  
in terms of their likely impact on the business of the group  
as a whole furthermore the directors are not aware of any 
agreements between the company and its directors or 
employees that provide for compensation for loss of office  
or employment that occurs because of a takeover bid 
substantial shareholdings in the company are disclosed  
on page 147
details of employee option schemes are set out in the 
remuneration report on pages 82 to 85
there were no acquisitions of the company’s own shares in 
2011 other than the 3305988 shares that were repurchased 
and cancelled out at a cost of 920 pence per ordinary share  
in december 2011 as part of the provision of stabilisation 
mechanism following the listing at 31 december 2011 the 
group and its subsidiaries legally held no treasury shares  
in the financial statements the group present treasury shares  
in jsc polymetal these were legally sold under a sale and 
repurchase arrangement for which the accounting treatment 
has been to continue to recognise the treasury shares as at 
31 december 2011 the company did not have any shareholder 
authorities to purchase its own shares
articles of the company can be altered from time to time by 
special resolution of the company a resolution is a special 
resolution when it is passed by threefourths of the members 
who being entitled to do so vote in person or by proxy  
at a general meeting of the company
 
the board may appoint a person who is willing to act to be  
a director either to fill a vacancy or as an additional director 
and in either case whether or not for a fixed term irrespective 
of the terms of his appointment a director so appointed shall 
hold office only until the next following annual general meeting  
if not reappointed at such annual general meeting he shall 
vacate office at its conclusion
 
the company may by ordinary resolution remove any director 
from office notwithstanding any provision of the company’s 
articles of association or of any agreement between the 
company and such director but without prejudice to any  
claim he may have for damages for breach of any such 
agreement no special notice needs to be given of any 
resolution to remove a director and no director proposed to  
be removed has any special right to protest against his or her 
removal the company may by ordinary resolution appoint 
another person in place of a director removed from office
dividends
the group’s net profit for the year ended 31 december 2011 
attributable to equity holders of the company was us290 
million 2010 us 239 million the directors have proposed 
the payment of dividend of us020 per share 2010 nil
annual general meeting
the annual general meeting of shareholders of the company 
will take place on 13 june 2012 at 11am bst time in  
le hocq suite radisson blu waterfront hotel rue de l ’etau  
st helier jersey je2 3wf channel islands a webcast will  
be available for shareholders who will not be able to attend  
the meeting in person
auditors
the directors confirm that at the date of approval of this  
annual report
  so far as the directors are aware there is no relevant audit 
information of which the company’s auditors are unaware 
and
  the directors have taken all reasonable steps to ascertain any 
relevant audit information and ensure the auditors are aware 
of such information
deloitte llp have expressed their willingness to continue 
in office as auditors and a resolution to reappoint them will be 
proposed at the forthcoming annual general meeting the 
audit and risk committee reviews both the level of the audit 
fee and the level and nature of nonaudit fees as part of its 
review of the adequacy and objectivity of the audit process
on behalf of the board
bobby godsell
24 april 2012 governance
82 polymetal international plc annual report 201 1
this report sets out the company’s remuneration policy  
and practice for its directors and provides details of their 
remuneration and share interests for the year ended 
31 december 2011 although it is not a requirement of  
jersey company law to have the directors’ remuneration  
report approved by shareholders the board believes that  
as a company whose shares are listed on the london stock 
exchange it is an element of good corporate governance  
for it to do so 
the report also meets the relevant requirements of the  
listing rules of the financial services authority and describes 
how the board applied the principles relating to the directors’ 
remuneration in the uk code accordingly a resolution to 
approve the report will be proposed at the annual general 
meeting of the company at which the financial statements  
will be put to shareholders for approval 
remuneration committee
the remuneration committee is chaired by mr homeniuk and 
its other members are mr best and mr balfour all members 
are independent nonexecutive directors
the principal role of the remuneration committee are 
  to make recommendations to the board on the group’s 
policy on remuneration of executive management 
  to determine within agreed terms of reference the 
remuneration of the chairman and of specific remuneration 
packages for each of the executive directors the company 
secretary and the members of the senior management 
including pension rights and any compensation payments
  to formulate suitable performance criteria for the 
performancebased pay of the executive management
  to review and oversee all aspects of any executive 
share scheme operated by or to be established by 
the company and
  to oversee and advise the board on any major changes  
in employee benefit structures throughout the company  
or the group
the full terms of reference of the remuneration committee 
can be found in the corporate governance section on the 
company’s website wwwpolymetalinternationalcom
the committee will meet at least twice a year in 2011 there 
were no meetings of the committee as the company was  
only admitted to trading on the lse in november 2011 
however the business conducted since formation of the 
remuneration committee on 29 september 2011 was 
approved by written resolutions of the remuneration 
committee two meetings of the committee are scheduled  
in 2012
the board considers that the composition of the remuneration 
committee complies with the requirements of the uk code
remuneration policy – executive directors  
salary bonuses share options longterm  
incentive schemes pension 
the company put in place an executive remuneration policy  
for directors and senior management that is comparable to 
ftse 100 and other international mining companies in order  
to attract and retain high quality executive talent at the top  
level that will help to maximise shareholder value
under the policy executive remuneration comprises a base 
salary an annual bonus and participation in a longterm 
employee incentive programme approved by shareholders  
no pension contributions are funded other than paid to vitaly 
nesis in accordance with russian law refer to page 85
base salary is reviewed and compared to ftse 100 and 
international mining companies annually by the remuneration 
committee salary increases are determined taking into 
account the company’s performance
annual bonus obtainable is a maximum of 150 of the base 
salary and focuses participants on achieving relevant annual 
performance goals including meeting budget on production 
total costs completion of new projects on time  
and within budgets and safety
longterm employee incentive programme
a longterm incentive share option plan is designed to reward 
participants for increasing the share price and delivering 
superior performance over a longterm horizon 
in september 2010 the board of jsc polymetal approved  
the employee incentive programme the employee incentive 
programme established a bonus fund the ‘bonus fund’ 
consisting of up to 30 million jsc polymetal shares the 
shares were to be transferred to participants in the programme 
the ‘participants’ in 2013 or 2014 pursuant to a prescribed 
formula linked to the price of the shares in those years
on 29 september 2011 and 30 september 2011 respectively 
the board of directors and the board of jsc polymetal 
approved several amendments to the employee incentive 
programme which amongst other matters provided that 
effective from admission of the company to the london  
stock exchange all awards made under the employee 
incentive programme will be satisfied by the transfer of  
shares of the company rather than shares of jsc polymetal 
to the participants the bonus fund consists of up to  
30 million shares
remuneration report  polymetal international plc annual report 201 1 83
financial statements appendices governance business review overview
the principal terms of the employee incentive programme  
are summarised below
  participants of the programme are executive directors and 
senior employees of the group selected at the discretion  
of the board the participants with an indication of the 
percentage of the bonus fund due to each participant were 
determined by the board of jsc polymetal on 8 november 
2010 and further supplemented by decisions of the 
management board of jsc polymetal over 150 employees 
have been selected to participate in the employee incentive 
programme of those employees 76 have received an 
entitlement to 85 per cent of the bonus fund pursuant  
to the decision of the board of jsc polymetal
  the total size of the bonus fund is to be determined 
according to a prescribed formula which is linked to  
share price performance
  exercise price shares from the bonus fund may 
be purchased by participants at the price of one penny 
per share
  performance conditions the number of shares awarded to 
each participant from the bonus fund is based on certain 
nonfinancial performance criteria such as job performance 
and career growth potential all at the discretion of the board 
or the executive management
  the employee incentive programme vesting date is 
11 june 2013 and may with respect to a particular 
participant at such participant’s discretion be postponed 
for one year until 11 june 2014 and
  vesting period if 2013 is chosen is 25 years which is shorter 
than the three years recommended by the uk code see 
note 32 of the financial statements
  vesting mechanism in the base case scenario the aggregate 
number of shares comprising the bonus fund will be 
determined on june 1 1 2013 the ‘programme implementation 
date’ according to the following formula
bf  m  x – s  x where 
m – maximum number of shares 
x – average weighted price of a share quotation  
period from 11 december 2012 to 11 june 2013 and
 s – strike price us1674 per share adjusted by  
the amounts of dividends paid 
eg to receive the maximum amount in full the 
averaged weighted price of a share must be  
us3348 3348167416741
the possible deviations from the base case scenario include
  extension of the participants’ rights to purchase shares from 
the bonus fund by one year at the sole discretion of each 
participant until june 11 2014 in this case x will be equal to 
the weighted average price of polymetal shares in us dollars 
during the quotation from 11 december 2013 to 11 june 2014 
and s will be equal to us1875 per share and
  the option to execute the rights to purchase all or part  
of the shares from the bonus fund before the programme 
implementation date under certain circumstances such 
as change of control of the company in this case both 
x and s will be adjusted accordingly
each time the dividends upon shares are paid prior to the 
exercise date the strike shall be reduced by the amount 
calculated according to the following formula
d112t365 where 
d – dividend paid per share 
t –  number of calendar days from the date of payment 
of dividends to the relevant exercise date
for the purposes of the relevant calculations the amounts  
of dividends shall be converted into us dollars at the relevant 
daily spot exchange rate xudluss published by the bank  
of england on its official website wwwbankofenglandcouk 
for the day the relevant dividends have been paid
mr nesis as the only executive director is subject to 
the employee incentive programme none of the nonexecutive 
directors are included in the programme
mr nesis has entered into an appointment letter with the 
company in relation to his appointment as a director the 
appointment of mr nesis as a director took effect from the  
date of admission of shares to trading on the lse and is 
subject to annual reelection in accordance with the articles of 
association mr nesis does not receive any fees in respect of 
his appointment as a director but is entitled to reimbursement 
of his reasonable expenses incurred in relation to the carrying 
out of his duties as a director appointment of mr nesis as a 
director may be terminated at any time in accordance with the 
articles of association mr nesis can terminate his appointment 
as a director on one month’s notice mr nesis is not entitled to 
receive any compensation in respect of his role as director on 
termination of his appointment as director
on 25 july 2008 jsc polymetal a subsidiary of the company 
incorporated in russia entered into an employment contract 
with mr nesis as its chief executive officer the general 
director further to the resolution of the board of directors of 
jsc polymetal dated 23 july 2008 pursuant to which mr nesis 
was appointed to this position the contract became effective 
on 1 september 2008 and was subsequently amended on  
5 september 2011 the contract was entered into for a period 
of five years and expires on 31 august 2013 under the terms 
of the contract the chief executive officer undertakes to 
perform general management of jsc polymetal arrange  
for its commercial economic social and other activities with  
a view to provide for jsc polymetal’s further development  
the contact can be terminated at any time in accordance  
with russian law
mr nesis receives a salary of rub 10356480 equivalent  
to us352000 in 2011 per annum under his employment 
contract with jsc polymetal the employment contract does 
not contain any specific grounds for early termination but may 
be terminated prior to its expiration in accordance with the 
russian labour law
save for the group’s contributions to the mandatory pension 
fund of the russian federation during the financial year ended 
31 december 2011 no amounts were set aside or accrued by 
the group to provide pension retirement or other benefits to 
the directors and senior management  governance
84 polymetal international plc annual report 201 1
remuneration report
continued
remuneration policy – nonexecutive directors
the company has a remuneration programme for independent 
members of the board of directors as well as a system of 
compensating them for the expenses incurred in connection 
with their duties as board members review of comparable 
companies was performed to determine average remuneration 
for nonexecutive members of the board of other ftse 100 
mining companies there is an annual review of the level  
of remuneration for nonexecutive directors 
nonexecutive director remuneration includes separate fees  
for chairmanship of the board for committee membership  
and for chairing a board committee nonexecutive directors 
also receive a fee for attending each meeting of the board the 
company also compensates independent board members for 
attendance at board meetings and for all reasonable expenses 
incurred by them in carrying out their duties as board 
members nonexecutive directors are not entitled to receive 
any pension benefits or options in the company
each of the nonexecutive directors save for mr yanakov  
mr duvieusart ms grönberg and mr godsell is entitled to 
receive an annual fee of £100000 less any statutory 
deductions mr godsell is entitled to receive an annual 
fee of £250000 as the chairman of the board each of the 
nonexecutive directors save for mr yanakov mr duvieusart 
and ms grönberg is entitled to reimbursement of his 
reasonable expenses incurred in relation to carrying out of his 
duties for the group in addition any nonexecutive director  
who is appointed chairman of the audit and risk committee  
of the board is entitled to a further £30000 per annum and a 
further £15000 per annum to serve as chairman of any other 
committee of the board members of a committee of the 
board save for the respective chairmen are entitled to an 
additional fee of £10000 per annum and all nonexecutive 
directors save for mr yanakov mr duvieusart and ms 
grönberg are entitled to a fee of £3000 for each meeting  
of the board or its committees which the director attends
directors’ contracts
the appointment of each of the nonexecutive directors  
took effect on and from admission until the next agm  
of the company subject to annual reelection
the appointment of any nonexecutive director may be  
terminated at any time in accordance with the articles of 
association the appointment of each nonexecutive director  
may be termined by either party on one month’s notice
a nonexecutive director is not entitled to receive any 
compensation on termination of his appointment each 
nonexecutive director is subject to confidentiality restrictions 
without limitation in time
the full terms and conditions of appointment of nonexecutive 
directors are available for inspection at the company’s 
registered office in jersey
amounts paid to third parties
no consideration was paid to or became receivable by  
third parties for making available the services of any person  
as a director of the company or while a director of the 
company as a director of any of the company’s subsidiary 
undertakings or otherwise in connection with the management 
of the company or any undertaking during the year ended  
31 december 2011
total shareholder return
total shareholder return graph represents performance of  
the company’s shares against ftse 100 index for the period 
since the admission of the company’s shares to trading on  
28 october 2011 to 31 december 2011 the selected ftse 
100 index is the most appropriate benchmark for the company 
as it has become a ftse 100 constituent in december 2011 
and its performance is measured externally and internally 
against that index
directors’ share interests
as at 31 december 2011 the directors who served during the 
year and subsequently together with their and their families’ 
beneficial interests in shares in the company were as follows
director
number 
of shares
percentage 
of issued
share capital

bobby godsell – 000
vitaly nesis
1
3000000 078
jonathan best – 000
russell skirrow – 000
leonard homeniuk – 000
the hon charles balfour – 000
konstantin yanakov – 000
marina grönberg – 000
jeanpascal duvieusart – 000
1  in addition to the 3000000 shares held by mr nesis mr nesis has been granted 
the option to acquire a number of shares in 2013 or 2014 pursuant to a prescribed 
formula which is linked to share price performance the maximum number of shares 
that mr nesis can acquire is 12000000 see page 83 for further details
80
85
90
95
100
105
110
115
120
125
28102011 28112011 28122011
polymetal international
ftse 100
total shareholder return
11891
9772 polymetal international plc annual report 201 1 85
financial statements appendices governance business review overview
audited information
directors’ emoluments us
name of director
feesbasic
 salary
pension
 contributions annual bonus
total 
2011
total 
2010
executive
vitaly nesis 332292 8193 797528 1138013 249649
nonexecutive
bobby godsell 79579 – – 79579 –
jonathan best 160371 – – 160371 88215
russell skirrow 184304 – – 184304 176597
leonard homeniuk 164815 – – 164815 161882
charles balfour 46563 – – 46563 –
konstantin yanakov – – – – –
marina grönberg – – – – –
jeanpascal duvieusart – – – – –
total nonexecutive 635634 – – 635634 426694
total 967926 8193 797528 1773646 676343
note where directors were previously directos of jsc polymetal their remuneration for the full 12 months 2011 and 2010 is shown
employee incentive programme
in 2010 mr nesis has been granted the option to acquire  
a number of ordinary shares in the capital of polymetal 
international plc in 2013 or 2014 pursuant to a prescribed 
formula which is linked to share price performance  
for details refer to the description of the programme on  
page 83 above the maximum number of shares that  
mr nesis can acquire is 12000000 the employee incentive 
programme vesting date is 11 june 2013 and may with 
respect to a particular participant at such participant’s 
discretion be postponed for one year until 11 june 2014
no options vested in 2011 no additional options were granted 
to mr nesis or other directors in 2011
approval
this report was approved by the board of directors on  
24 april 2012 and signed on its behalf by
mr leonard homeniuk
chairman remuneration committee 86 polymetal international plc  annual report 201 1
financial statements
the directors are responsible for preparing the annual report and financial statements in accordance with applicable law  
and regulations 
company law requires the directors to prepare financial statements for each financial year under that law the directors are 
required to prepare the group financial statements in accordance with international financial reporting standards as adopted 
for use in the european union ifrs the financial statements are required by law to be properly prepared in accordance  
with the companies jersey law 1991 international accounting standard 1 requires that financial statements present fairly for 
each financial year the group’s financial position financial performance and cash flows this requires the faithful representation 
of the effects of transactions other events and conditions in accordance with the definitions and recognition criteria for assets 
liabilities income and expenses set out in the international accounting standards board’s ‘framework for the preparation and 
presentation of financial statements’
in virtually all circumstances a fair presentation will be achieved by compliance with all applicable ifrss however the directors 
are also required to
  properly select and apply accounting policies
  present information including accounting policies in a manner that provides relevant reliable comparable and understandable 
information
  provide additional disclosures when compliance with the specific requirements in ifrss are insufficient to enable users to 
understand the impact of particular transactions other events and conditions on the entity’s financial position and financial 
performance and 
  make an assessment of the company’s ability to continue as a going concern
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the 
financial position of the company and enable them to ensure that the financial statements comply with the companies jersey 
law 1991 they are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the corporate and financial information included on the 
company’s website legislation in the uk and jersey governing the preparation and dissemination of financial statements  
may differ from legislation in other jurisdictions
responsibility statement 
we confirm that to the best of our knowledge
  the financial statements prepared in accordance with international financial reporting standards give a true and fair view  
of the assets liabilities financial position and profit or loss of the company and the undertakings included in the consolidation 
taken as a whole and
  the management report which is incorporated into the directors’ report includes a fair review of the development and 
performance of the business and the position of the company and the undertakings included in the consolidation taken  
as a whole together with a description of the principal risks and uncertainties that they face
by order of the board
vitaly nesis
chief executive officer
bobby godsell
chairman of the board
24 april 2012
statement of directors’ responsibilities polymetal international plc  annual report 201 1 87
appendices business review overview financial statements governance
independent auditor’s report to the members of  
polymetal international plc
we have audited the group financial statements the financial statements of polymetal international plc for the year ended  
31 december 2011 which comprise the consolidated income statement the consolidated statement of comprehensive 
income the consolidated balance sheet the consolidated statement of cash flows the consolidated statement of changes 
in equity and the related notes 1 to 35 the financial reporting framework that has been applied in their preparation is applicable 
law and international financial reporting standards ifrs as adopted by european union
this report is made solely to the company’s members as a body in accordance with article 113a of the companies jersey 
law 1991 our audit work has been undertaken so that we might state to the company’s members those matters we are 
required to state to them in an auditor’s report and for no other purpose to the fullest extent permitted by law we do not accept 
or assume responsibility to anyone other than the company and the company’s members as a body for our audit work for this 
report or for the opinions we have formed
respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ responsibilities the directors are responsible for the preparation of  
the financial statements and for being satisfied that they give a true and fair view our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable law and international standards on auditing uk and ireland 
those standards require us to comply with the auditing practices board’s ethical standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement whether caused by fraud or error this includes  
an assessment of whether the accounting policies are appropriate to the group’s circumstances and have been consistently 
applied and adequately disclosed the reasonableness of significant accounting estimates made by the directors and the overall 
presentation of the financial statements in addition we read all the financial and nonfinancial information in the annual report  
to identify material inconsistencies with the audited financial statements if we become aware of any apparent material 
misstatements or inconsistencies we consider the implications for our report 
opinion on financial statements
in our opinion the financial statements 
  give a true and fair view of the state of the group’s affairs as at 31 december 2011 and of the group’s profit for the year 
then ended
  have been properly prepared in accordance with ifrs as adopted by european union and
  have been properly prepared in accordance with the companies jersey law 1991
 
matters on which we are required to report by exception
we have nothing to report in respect of the following matters where the companies jersey law 1991 requires us to report  
to you if in our opinion
  proper accounting records have not been kept by the parent company or proper returns adequate for our audit have not been 
received from branches not visited by us or
  the financial statements are not in agreement with the accounting records and returns or
  we have not received all the information and explanations we require for our audit
under the listing rules we are required to review the part of the corporate governance statement relating to the company’s 
compliance with the nine provisions of the uk corporate governance code specified for our review
other matters
in our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the 
provisions of the uk companies act 2006 as if that act had applied to the company
we have reviewed the directors’ statement contained within the directors’ report in relation to going concern as if the 
company had been incorporated in the uk and have nothing to report to you in that respect
christopher thomas
for and on behalf of deloitte llp
chartered accountants and recognized auditor
london uk
24 april 2012 88 polymetal international plc  annual report 201 1
financial statements
note
year ended
31 december
2011
us’000
 year ended 
31 december 
2010
us’000
revenue 6 1326430 925376
cost of sales 7 625740 458114
gross profit 700690 467262
general administrative and selling expenses 11 169623 82100
other operating expenses 12 78344 55524
share of loss of associates and joint ventures 19 1952 1170
operating profit 450771 328468
gain on disposal of subsidiaries 4 4931 3580
foreign exchange loss net 13634 337
change in fair value of derivative financial instruments 29 1855 909
change in fair value of contingent consideration liability 29 6828 3616
finance income 4208 785
finance costs 15 28746 21541
profit before income tax 408847 306430
income tax expense 16 118985 67414
profit for the financial year 289862 239016
profit for the period attributable to 
equity shareholders of the parent 289323 239016
noncontrolling interest 539 –
  289862 239016
note
year ended
31 december
2011
us
 year ended 
31 december 
2010
us
earnings per share 
basic 31 079 067
diluted 31 074 066
 year ended 
31 december
 2011
 cents 
per share 
 year ended 
31 december
 2010
 cents 
per share 
 year ended 
31 december
 2011
us’000 
 year ended 
31 december 
2010
us’000 
final dividend proposed in relation to the year note 35 20 – 76537 – 
consolidated income statement
 year ended 
31 december
 2011
us’000
 year ended 
31 december
 2010
us’000
profit for the financial year 289862 239016
other comprehensive loss
effect of translation to presentation currency 115474 12937
total comprehensive income for the financial year 174388 226079
 year ended 
31 december
 2011
us’000
 year ended 
31 december 
2010
us’000
total comprehensive income for the financial year attributable to
equity shareholders of the parent 185033 226079
noncontrolling interest 10645 –
 174388 226079
consolidated statement of comprehensive income polymetal international plc  annual report 201 1 89
financial statements appendices governance business review overview
note
31 december
 2011
us’000
31 december 
2010
us’000
assets   
property plant and equipment 17 1901974 1643481
goodwill 18 108587 114712
investments in associates and joint ventures 19 23558 26821
noncurrent loans 20 8962 5187
deferred tax assets 16 62118 57676
noncurrent inventories 21 44318 21017
total noncurrent assets 2149517 1868894
current inventories 21 613216 368515
current vat receivable 111887 94148
trade and other receivables 22 67991 43683
prepayments to suppliers 38912 29025
income tax prepaid 11787 4378
cash and cash equivalents 23 658795 11056
total current assets 1502588 550805
total assets 3652105 2419699
liabilities and shareholders’ equity 
trade and other payables 27 79548 67028
current borrowings 24 348429 90610
accrued liabilities 27856 23303
share purchase obligation under mto 1 534597 –
income tax payable 13366 3993
other taxes payable 21327 13365
finance lease liabilities 25 – 4819
total current liabilities 1025123 203118
noncurrent borrowings 24 654666 595359
derivatives 29 – 105437
contingent consideration liability 29 22290 23754
deferred tax liabilities 16 79342 83345
environmental obligations 26 54463 45156
other noncurrent liabilities 1623 2578
total noncurrent liabilities 812384 855629
total liabilities 1837507 1058747
net assets 1814598 1360952
stated capital account 31 1566386 865483
treasury shares in jsc polymetal 395 457
sharebased compensation reserve 59239 7896
translation reserve 151029 49443
share purchase obligation under mto 1 561659 –
retained earnings 31 753572 537473
total equity attributable to the parent 1666114 1360952
noncontrolling interest 148484 –
total equity 1814598 1360952
the notes on pages 92 to 136 form part of these financial statements
these financial statements are approved and authorised for issue by the board of directors on 24 april and signed on its behalf by
vitaly nesis bobby godsell
chief executive officer chairman of the board
24 april 2012   
consolidated balance sheet financial statements
90 polymetal international plc  annual report 201 1
 notes
year ended
31 december
 2011
us’000
year ended
31 december
 2010
us’000
net cash generated by operating activities 34 212099 215215
cash flows from investing activities   
purchases of property plant and equipment 17 461632 403769
consideration for asset acquisitions 4 4761 8479
loans provided to third parties 20 1286 421
receipt of repayment of loans provided to third parties 156 14
loans provided to related parties 33 5029 3871
receipt of repayment of loans provided to related parties 33 1910 7845
contingent consideration payment 29 6943 1500
proceeds from subsidiary disposal 4 5300 –
net cash used in investing activities 472285 410181
cash flows from financing activities  
borrowings obtained 24 1695078 1142927
repayments of borrowings 24 1498518 960781
proceeds from issuance of shares of the company 31 762641 –
purchase of treasury shares in the company 31 46649 
payments on finance lease obligations 5217 4225
net cash generated by financing activities 907335 177921
net increasedecrease in cash and cash equivalents 647149 17045
cash and cash equivalents at the beginning of the financial year 23 11056 28317
effect of foreign exchange rate changes on cash and cash equivalents 590 216
cash and cash equivalents at the end of the financial year 23 658795 11056
consolidated statement of cash flows  polymetal international plc  annual report 201 1 91
financial statements appendices governance business review overview
 notes
polymetal
international
shares
outstanding
number
stated
capital
account
us’000
share
based
compensation
reserve
us’000
treasury
shares
in jsc
polymetal
us’000
translation
reserve
us’000
share
purchase
obligation
us’000
retained
earnings
us’000
total
equity
attributable
 to the
 parent
us’000
non
controlling
interest
us’000
total
equity
us’000
balance at  
1 january 2010 na 804329 – 481 36506 – 298457 1065799 – 1065799
total comprehensive income – – – – 12937 – 239016 226079 – 226079
amortisation of bonus  
received from depositary – 978 – – – – – 978 – 978
share based compensation – – 7896 – – – – 7896 – 7896
issue of treasury shares of  
jsc polymetal in exchange  
for assets 4 – 60176 – 24 – – – 60200 – 60200
balance at  
31 december 2010 na 865483 7896 457 49443 – 537473 1360952 – 1360952
total comprehensive income – – – – 104290 – 289323 185033 10645 174388
amortisation of bonus  
received from depositary – 819 – – – – – 819 – 819
share based compensation – – 56266 – – – – 56266 850 57116
issue of treasury shares of  
jsc polymetal in exchange  
for assets 4 31 – 66966 – 24 – – – 66990 – 66990
issuance of ordinary shares 
under issf 31 332641773 – – – – – – – – –
issuance of shares on ipo 31 53350000 762641 – – – – – 762641 – 762641
cancellation of treasury  
shares of the company 31 3305988 46649 – – – – – 46649 – 46649
share purchase obligation 
under mto 31 – – – – – 561659 – 561659 – 561659
reclassification to  
noncontrolling interest 1 – 82874 4923 38 2704 – 73224 158279 158279 –
balance at  
31 december 2011 382685785 1566386 59239 395 151029 561659 753572 1666114 148484 1814598
consolidated statement of changes in equity  financial statements
92 polymetal international plc  annual report 201 1
1 general
formation of the polymetal international plc group
polymetal international plc the company was incorporated on 29 july 2010 as a public limited company under companies 
jersey law 1991
on 2 november 2011 the company was admitted to the official list of the uk listing authority and commenced trading on the 
london stock exchange’s premium listed market the company is the new ultimate parent company of joint stock company 
polymetal jsc polymetal and its subsidiaries joint ventures and associates the jsc polymetal group and owns 8326 of  
the issued share capital of jsc polymetal as at 31 december 2011 with 811 held by third parties and 863 effectively held  
as treasury shares see note 31
on 30 september 2011 pmtl holding limited pmtl the company’s whollyowned subsidiary made an offer known as the 
institutional share swap facility or the issf to certain institutional shareholders of jsc polymetal to acquire their jsc polymetal 
shares and jsc polymetal gdrs the issf terms provided for the issue of new shares in the company in exchange for  
jsc polymetal shares or gdrs on a one for one basis 
the completion of the issf was conditional on the ipo such that 2 november 2011 was the date on which polymetal 
international plc via pmtl acquired control of the jsc polymetal group and the enlarged group the group was formed 
polymetal international issued new shares to those investors participating in the issf and who tendered these shares to pmtl 
polymetal international plc contributed jsc polymetal shares acquired in course of issf as a capital investment in pmtl
following completion of the issf pmtl became the owner of more than 50 of the issued share capital of jsc polymetal  
and in accordance with russian law launched a mandatory tender offer mto for all of the jsc polymetal shares or gdrs  
not held by it
the formation of the enlarged polymetal international group has been accounted for as a reverse acquisition under ifrs 3 
business combinations although the issf resulted in polymetal international plc becoming the controlling shareholder of the 
jsc polymetal group for accounting purposes in the consolidated financial statements jsc polymetal is treated as the acquirer 
of the company
the following accounting treatment has been applied to account for the reverse asset acquisition
  the consolidated assets and liabilities of the subsidiary joint stock company polymetal were recognised and measured  
at their prerestructuring carrying amounts without restatement to fair value
  the assets and liabilities of the company are recognized at their fair value and are consolidated from 2 november 2011  
the date at which the new company was formed
  comparative numbers presented in the consolidated financial statements are those reported in the consolidated financial 
statements of joint stock company polymetal for the year ended 31 december 2010 except for the presentation of the  
stated capital account which has been retrospectively restated to reflect the legal issued share capital of the company as  
the legal parent
  the group’s consolidated income statement and statement of other comprehensive income for the year ended 31 december 
2011 therefore comprises the results of the jsc polymetal group from 1 january 2011 to 1 november 2011 and the results  
of the group from 2 november 2011 to 31 december 2011 the group’s retained earnings and other reserves shown in the 
balance sheet as at 31 december 2011 and the statement of changes in equity are the effective 911 share after excluding 
treasury shares in the equity of the jsc polymetal group acquired by the company on formation of the group on 2 november 
2011 plus the subsequent equity movements of the group in the period to 31 december 2011
  the open mto offer represents an unavoidable obligation to transfer cash to any persons taking up the offer in accordance 
with ias 32 financial statements presentation a us5617 million roubledenominated liability was recognised at  
2 november 2011 with a corresponding debit recognised in reserves at 31 december the liability was retranslated  
at the year end exchange rate to us5346 million with the movement recognised within the translation reserve
notes to the consolidated financial statements  polymetal international plc  annual report 201 1 93
financial statements appendices governance business review overview
significant subsidiaries
as disclosed above at 31 december 2011 the company held an effective 911 interest in jsc polymetal through this 
subsidiary the company held the following significant mining and production subsidiaries
name of subsidiary deposits
country of
 incorporation
effective interest held 
by jsc polymetal 
31 december
 2011
31 december
 2010
cjsc zoloto severnogo urala vorontsovskoye russia 100 100
jsc okhotskaya ggc khakandjinskoye russia
yurievskoye 100 100
cjsc serebro magadana dukat
lunnoye
arylakh
goltsovoye russia 100 100
zk mayskoye llc mayskoye russia 100 100
jsc omolon gold mining company kubaka russia
birkachan 100 100
albazino resources llc albazino russia 100 100
amursky hydrometallurgy plant llc na russia 100 100
rudnik kvartsevy llc
sopka
 kartsevaya russia 100 100
jsc varvarinskoye varvarinskoye kazakhstan 100 100
significant shareholders
at 31 december 2011 the significant shareholders in the company are pearlmoon limited the ultimate beneficial owner of 
which is mr petr kellner 2086 powerboom investments limited the ultimate beneficial owner of which is mr alexander nesis 
1790 vitalbond limited and its affiliated companies the ultimate beneficial owner of which is mr alexander mamut 1012 
mbc development limited the ultimate beneficial owner of which is mr alexander mosionzhik 444 and staroak limited  
the ultimate beneficial owner of which is mr oleg shuliakovskii 427 no other parties control more than 3 of the company 
shares there were no changes to the significant shareholders’ ownerships as of 1 april 2012
going concern
in assessing its going concern status the group has taken account of its financial position anticipated future trading performance 
its borrowings and other available credit facilities and its capital expenditure commitments and plans it has also considered  
the us534 million payment made in february 2012 for the purchase of jsc polymetal shares not participating in the group 
reconstruction under the mandatory tender offer and the further payment expected in june 2012 to purchase the remaining 
jsc polymetal shares under the squeeze out meaning the compulsory acquisition of jsc polymetal shares under russian law 
together with the risks facing the group
the board is satisfied that the group’s forecasts and projections having taken account of reasonably possible changes in 
trading performance show that the group has adequate resources to continue in operational existence for at least the next  
12 months from the date of this document and that it is appropriate to adopt the going concern basis in preparing these 
consolidated financial statements
basis of presentation
the group’s annual consolidated financial statements for the year ended 31 december 2011 are prepared in accordance  
with international financial reporting standards ifrs as issued by the international accounting standards board iasb and 
endorsed by the european union ifrs includes the standards and interpretations approved by the iasb including international 
accounting standards ias and interpretations issued by the international financial reporting interpretations committee ifric
the financial statements have been prepared on the historical cost basis except for certain financial instruments which are 
measured at fair value 
the accounting policies set out in note 2 have been applied in preparing the consolidated financial statements for the year 
ended 31 december 2011 the group used ifrs effective as at 31 december 2011 in preparation of these consolidated 
financial statements
standards and interpretations in issue not yet adopted
the following new or amended ifrs accounting standards not yet adopted are expected to have a significant impact on 
the group
ifrs 9 financial instruments – classification and measurement reflects the first phase of the iasb’s three stage project to replace 
ias 39 the first phase deals with the classification and measurement of financial assets and financial liabilities the standard 
applies to annual periods beginning on or after 1 january 2015 financial statements
94 polymetal international plc  annual report 201 1
1 general continued
ifrs 10 consolidated financial statements replaces the portion of ias 27 consolidated and separate financial statements  
that addresses accounting for consolidated financial statements and sic12 consolidation – special purpose entities ifrs 10 
provides a single basis for consolidation with a new definition of control the standard applies to annual periods beginning on  
or after 1 january 2013
ifrs 11 joint arrangements replaces ias 31 interests in joint ventures and sic13 jointlycontrolled entities – nonmonetary 
contributions by venturers under ifrs 11 a joint arrangement is classified as either a joint operation or a joint venture and the 
option to proportionately consolidate joint ventures has been removed interests in joint ventures must be equity accounted  
this standard applies to annual periods beginning on or after 1 january 2013
ifrs 12 disclosures of interests in other entities will accompany ifrs 10 and ifrs 11 this standard combines the disclosure 
requirements previously covered by ias 27  related to consolidated financial statements ias 31 interest in joint ventures and  
ias 28 investments in associates as well as including additional disclosure requirements this standard applies to annual 
periods beginning on or after 1 january 2013
ifric 20 stripping costs in the production phase of a surface mine provides a model for accounting for costs associated  
with the removal of waste during the production phase of a surface mine including guidance on the apportionment of the costs 
incurred for obtaining a current and future benefit and how capitalised costs are depreciated this interpretation applies to annual 
periods beginning on or after 1 january 2013
the following new amended or revised ifrs accounting standards and interpretations not yet adopted are not expected to have 
a significant impact on the group
ifrs 13 fair value measurement provides a single framework for all fair value measurements and applies to annual periods 
beginning on or after 1 january 2013
an amendment to ias 1 presentation of financial statements which requires items to be grouped in other comprehensive 
income based on whether those items are subsequently reclassified to profit or loss the amendment is to be applied for  
annual periods beginning on or after 1 july 2012
an amendment to ias 12 income taxes is to be applied for annual periods beginning on or after 1 january 2012
an amendment to ias 19 employee benefits is to be applied retrospectively for annual periods beginning on or after 
1 january 2013
amendments have been made to ias 27 and it has been reissued as ias 27 separate financial statements the revised 
standard prescribes the accounting and disclosure requirements for investments in subsidiaries joint ventures and associates 
when an entity prepares separate financial statements the accounting and disclosure requirements for investments in 
subsidiaries joint ventures and associates in consolidated financial statements are prescribed by ifrs 10 ifrs 11 and ifrs 12 
the revised standard is to be applied for annual periods beginning on or after 1 january 2013 amendments have been made  
to ias 28 and it has been reissued as ias 28 investments in associates and joint ventures the revised standard prescribes the 
application of the equity method when accounting for investments in associates and joint ventures the revised standard is to be 
applied for annual periods beginning on or after 1 january 2013 the amendment to ifrs 7 financial instruments disclosures  
is effective for annual periods beginning on or after 1 july 2011
2 significant accounting policies
basis of consolidation
subsidiaries
the consolidated financial statements of the group include the financial statements of the company its subsidiaries and  
if applicable special purpose entities from the date that control effectively commenced until the date that control effectively 
ceased control is achieved where the company has the power to govern the financial and operating policies of an entity  
so as to obtain benefits from its activities
income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated income 
statement from the effective date of acquisition and up to the effective date of disposal as appropriate
when necessary adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line  
with those used by other members of the group
all intragroup balances transactions and any unrealised profits or losses arising from intragroup transactions are eliminated  
on consolidation
changes to the group’s ownership interests that do not result in a loss of control over the subsidiaries are accounted for as 
equity transactions the carrying amount of the group’s interests and noncontrolling interests are adjusted to reflect the change 
in their relative interests in the subsidiaries any difference between the amount by which the noncontrolling interest is adjusted 
and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the parent
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 95
financial statements appendices governance business review overview
when the group loses control of a subsidiary the profit or loss on the disposal is calculated as the difference between 1  
the aggregated fair value of the consideration received and the fair value of any retained interest and 2 the previous carrying 
amount of the assets including goodwill and liabilities of the subsidiary and noncontrolling interests
for nonwholly owned subsidiaries noncontrolling interests are initially measured at the noncontrolling interest’s proportion  
of the fair values of net assets recognised at acquisition thereafter a share of the profit or loss for the financial year and other 
movements in the net assets or liabilities of the subsidiary is attributed to the noncontrolling interests as shown in the income 
statement and balance sheet
business combinations
ifrs 3 business combinations applies to a transaction or other event that meets the definition of a business combination  
when acquiring new entities or assets the group applies judgement to assess whether the assets acquired and liabilities 
assumed constitute an integrated set of activities whether the integrated set is capable of being conducted and managed  
as a business by a market participant and thus whether the transaction constitutes a business combination using the guidance 
provided in the standard acquisitions of businesses are accounted for using the acquisition method the consideration for  
each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given liabilities incurred  
or assumed and equity instruments issued by the group in exchange for control of the acquiree acquisitionrelated costs  
are recognised in the consolidated income statement as incurred transaction costs incurred in connection with the business 
combination are expensed provisional fair values are finalised within 12 months of the acquisition date
where applicable the consideration for the acquisition may include an asset or liability resulting from a contingent consideration 
arrangement contingent consideration is measured at its acquisitiondate fair value and included as part of the consideration 
transferred in a business combination subsequent changes in such fair values are adjusted against the cost of acquisition 
retrospectively with the corresponding adjustment against goodwill where they qualify as measurement period adjustments 
measurement period adjustments are adjustments that arise from additional information obtained during the measurement 
period about facts and circumstances that existed at the acquisition date the measurement period may not exceed one year 
from the effective date of the acquisition the subsequent accounting for contingent consideration that does not qualify for  
as a measurement period adjustment is based on how the contingent consideration is classified contingent consideration  
that is classified as equity is not subsequently remeasured contingent consideration that is classified as an asset or liability is 
remeasured at subsequent reporting dates in accordance with ias 37 provisions contingent liabilities and contingent assets  
or ias 39 financial instruments recognition and measurement with the corresponding amount being recognised in profit or loss
at the acquisition date the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the 
acquisition date except that
  deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured 
in accordance with ias 12 income taxes and ias 19 employee benefits respectively
  liabilities or equity instruments related to sharebased payment arrangements of the acquiree or sharebased payment 
arrangements of the group entered into to replace sharebased payment arrangements of the acquiree are measured in 
accordance with ifrs 2 sharebased payment at the acquisition date and
  assets or disposal groups that are classified as held for sale in accordance with ifrs 5 noncurrent assets held for sale and 
discontinued operations are measured in accordance with that standard
where a business combination is achieved in stages the group’s previously held interests in the acquired entity are remeasured 
to fair value at the acquisition date ie the date the group attains control and the resulting gain or loss if any is recognised in 
the consolidated statement of comprehensive income amounts arising from interests in the acquiree prior to the acquisition date 
that have previously been recognised in equity are reclassified to profit or loss where such treatment would be appropriate if that 
interest was disposed of
goodwill and goodwill impairment
goodwill arising in a business combination is recognised as an asset at the date that control is acquired the acquisition date 
goodwill is measured as the excess of the sum of the consideration transferred the amount of any noncontrolling interests in 
the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree if any over the net of the 
acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed
if the group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred 
the amount of any noncontrolling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in  
the acquiree if any the excess is recognised immediately in the consolidated income statement as a bargain purchase gain
goodwill is not amortised but is reviewed for impairment at least annually for the purpose of impairment testing goodwill is 
allocated to each of the group’s cashgenerating units expected to benefit from the synergies of the combination cashgenerating 
units to which goodwill has been allocated are tested for impairment annually or more frequently when there is an indication that 
the unit may be impaired if the recoverable amount of the cashgenerating unit is less than its carrying amount the impairment 
loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit 
prorata on the basis of the carrying amount of each asset in the unit an impairment loss recognised for goodwill is not reversed 
in a subsequent period
on disposal of a subsidiary the attributable goodwill is included in the determination of the profit or loss on disposal financial statements
96 polymetal international plc  annual report 201 1
2 significant accounting policies continued
acquisition of mining licences
the acquisition of mining licences is often effected through a nonoperating corporate entity as these entities do not represent  
a business it is considered that the transactions do not meet the definition of a business combination and accordingly the 
transaction is accounted for as the acquisition of an asset the net assets acquired are accounted for at cost
investments in associates
an associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint 
venture significant influence constitutes the power to participate in the financial and operating policy decisions of the investee 
but does not extend to a not control or joint control over the enactment of those policies the results and assets and liabilities  
of associates are incorporated in the consolidated financial statements using the equity method of accounting
interests in joint ventures
a joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject 
to joint control ie when the strategic financial and operating policy decisions relating to the activities of the joint venture require 
the unanimous consent of the parties sharing control joint venture arrangements that involve the establishment of a separate 
entity in which each venturer has an interest are referred to as jointly controlled entities the group reports its interests in jointly 
controlled entities using the equity method of accounting
equity method of accounting
under the equity method an investment in an associate or jointly controlled entity investee is initially recognised in the 
consolidated balance sheet at cost and adjusted thereafter to recognise the group’s share of the profit or loss and other 
comprehensive income of the investee when the group’s share of the losses of an associate exceeds the group’s interest  
in that entity the group ceases to recognise its share of further losses additional losses are recognised only to the extent  
that the group has incurred legal or constructive obligations or made payments on behalf of the investee
any excess of the cost of acquisition over the group’s share of the net fair value of the identifiable assets liabilities and 
contingent liabilities of an investee recognised at the date of acquisition is recognised as goodwill which is included within the 
carrying amount of the investment any excess of the group’s share of the net fair value of the identifiable assets liabilities and 
contingent liabilities over the cost of acquisition after reassessment is recognised immediately in profit or loss
the requirements of ias 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to 
the group’s investments where an indicator of impairment exists or the carrying value of the asset contains goodwill with an 
indefinite useful life the entire carrying amount of the investment including goodwill is tested for impairment in accordance  
with ias 36 impairment of assets ias 36 as a single cash generating unit through the comparison of its recoverable amount 
the higher of value in use and fair value less costs to sell with its carrying amount any impairment loss recognised forms part  
of the carrying amount of the investment any reversal of that impairment loss is recognised in accordance with ias 36
when a group entity transacts with its investees profits and losses resulting from the transactions with the investee are 
recognised in the group’s consolidated financial statements only to the extent of interests in the associate that are not related  
to the group
functional and presentation currency
the functional currency for each entity in the group is determined as the currency of the primary economic environment  
in which it operates for all russian entities the functional currency is the russian rouble rub the investment holding 
companies including polymetal international plc also have a rouble functional currency as they are in substance an extension  
of the russian group and have significant roubledenominated intercompany loans in most cases the functional currency  
of the group’s entity located in kazakhstan and operating with significant degree of autonomy is the kazakh tenge kzt
the group has chosen to present its consolidated financial statements in us dollars us as management believes it is a more 
convenient presentation currency for international users of the consolidated financial statements of the group as it is a common 
presentation currency in the mining industry the translation of the financial statements of the group entities from their functional 
currencies to the presentation currency is performed as follows
  all assets and liabilities are translated at closing exchange rates at each reporting period end date
  all income and expenses are translated at the average exchange rates for the periods presented except for significant 
transactions that are translated at rates on the date of such transactions
  resulting exchange differences are included in equity and presented as movements relating to the effect of translation to the 
group’s presentation currency within the translation reserve and
  in the consolidated statement of cash flows cash balances at the beginning and end of each reporting period presented  
are translated using exchange rates prevalent at those respective dates all cash flows in the period are translated at the 
average exchange rates for the periods presented except for significant transactions that are translated at rates on the date  
of transaction
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 97
financial statements appendices governance business review overview
on the disposal of a foreign operation ie a disposal of the group’s entire interest in a foreign operation or a disposal involving 
loss of control over a subsidiary that includes a foreign operation a disposal involving loss of joint control over a jointly controlled 
entity that includes a foreign operation or a disposal involving loss of significant influence over an associate that includes a 
foreign operation all of the exchange differences accumulated in equity in respect of that operation attributable to the owners  
of the company are reclassified to profit or loss
in the case of a partial disposal that does not result in the group losing control over a subsidiary that includes a foreign 
operation the proportionate share of accumulated exchange differences are reattributed to noncontrolling interests and are  
not recognised in the consolidated income statement for all other partial disposals ie reductions in the group’s ownership 
interest in associates or jointly controlled entities that do not result in the group losing significant influence or joint control  
the proportionate share of the accumulated exchange differences is reclassified to the consolidated income statement
goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation 
are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each 
reporting period exchange differences arising are recognised in equity
exchange rates used in the preparation of the consolidated financial statements were as follows
31 december 
2011
31 december 
2010
russian roubleus dollar
year end 3220 3048
average for the year 2939 3036
kazakh tengeus dollar
year period end 14840 14740
average for the year 14660 14735
the rouble and kazakh tenge are not freely convertible currencies outside the russian federation and kazakhstan and 
accordingly any translation of rouble and kazakh tenge denominated assets and liabilities into us dollar for the purpose of  
the presentation of consolidated financial statements does not imply that the group could or will in the future realise or settle  
in us dollars the translated values of these assets and liabilities
foreign currency transactions
transactions in currencies other than the entity’s functional currencies foreign currencies are recorded at the exchange rates 
prevailing on the dates of the transactions all monetary assets and liabilities denominated in foreign currencies are translated at 
the exchange rates prevailing at the reporting date nonmonetary items carried at historical cost are translated at the exchange 
rate prevailing on the date of transaction nonmonetary items carried at fair value are translated at the exchange rate prevailing 
on the date on which the most recent fair value was determined exchange differences arising from changes in exchange rates 
are recognised in the consolidated income statement
property plant and equipment
mining assets
mining assets and leases include the cost of acquiring and developing mining assets and mineral rights mining assets are 
depreciated to their residual values using the unitofproduction method based on proved and probable ore reserves under  
the russian resource reporting code gkz which is the basis on which the group’s mine plans are prepared changes in 
proved and probable reserves are dealt with prospectively depreciation is charged on new mining ventures from the date that 
the mining asset is capable of commercial production in respect of those mining assets whose useful lives are expected to be 
less than the life of the mine depreciation over the period of the asset’s useful life is applied the difference in the depreciation 
charge which would have been applied had the group based the depreciation expense on jorc reserves is considered to  
be immaterial when there is little likelihood of a mineral right being exploited or the value of the exploitable mineral right has 
diminished below cost an impairment loss is recognised in the consolidated income statement
capital constructioninprogress assets are measured at cost less any recognised impairment depreciation commences  
when the assets are ready for their intended use mineral exploration and evaluation costs including geophysical topographical 
geological and similar types of costs are expensed as incurred when it has been determined that a mineral property can  
be economically developed as a result of established proven and probable reserves the costs incurred in exploration and 
development of such property including costs to further delineate the ore body are capitalised
nonmining assets are depreciated to their residual values on a straightline basis over their estimated useful lives when parts  
of an item of property plant and equipment are considered to have different useful lives they are accounted for and depreciated 
separately depreciation methods residual values and estimated useful lives are reviewed at least annually
estimated useful lives are as set out below
machinery and equipment up to 20 years
transportation and other assets up to 15 years financial statements
98 polymetal international plc  annual report 201 1
2 significant accounting policies continued
assets held under finance leases are depreciated over the shorter of the lease term and the estimated useful lives of the assets
gains or losses on disposal of property plant and equipment are determined by comparing the proceeds from disposal with  
the asset’s carrying amount at the date the gain or loss arising is recognised in the consolidated income statement
stripping costs
when it has been determined that a mining asset can be economically developed as a result of established proven and probable 
reserves the costs to remove any overburden and other waste materials to initially expose the ore body referred to as stripping 
costs are capitalised as a part of mining assets
postproduction stripping costs are recognised as a component of inventory and included in cost of sales in the same period  
as the revenue from the sales of inventory is recognised
estimated ore reserves
estimated proved and probable ore reserves reflect the economically recoverable quantities which can be legally recovered  
in the future from known mineral deposits the group’s reserves are estimated in accordance with gkz and the jorc code
leases
finance leases
leases under which the group assumes substantially all the risks and rewards of ownership are classified as finance leases 
assets subject to finance leases are capitalised as property plant and equipment at the lower of fair value or present value  
of future minimum lease payments at the date of acquisition with the related lease obligation recognised at the same value 
assets held under finance leases are depreciated over their estimated economic useful lives or over the term of the lease  
if shorter if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term the period of 
expected use is useful life of the asset
finance lease payments are calculated using the effective interest rate method and allocated between the lease finance cost 
which is included in finance cost and the capital repayment which reduces the related lease liability payable to the lessor
operating leases
operating lease payments are recognised as an expense on a straightline basis over the lease term contingent rentals arising 
under operating leases are recognised as an expense in the period in which they are incurred
impairment of property plant and equipment
an impairment review of property plant and equipment is carried out when there is an indication that those assets have suffered 
an impairment loss if any such indication exists the carrying amount of the asset is compared to the estimated recoverable 
amount of the asset in order to determine the extent of the impairment loss if any where it is not possible to estimate the 
recoverable amount of an individual asset the group estimates the recoverable amount of the cashgenerating unit to which  
the asset belongs
recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the estimated future 
cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the 
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted if the 
recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount the carrying amount  
of the asset or cash generating unit is reduced to its recoverable amount an impairment loss is recognised as an expense 
immediately in the consolidated income statement
where an impairment loss subsequently reverses the carrying amount of the asset or cashgenerating unit is increased to  
the revised estimate of its recoverable amount but only to the extent that the increased carrying amount does not exceed  
the original carrying amount that would have been determined had no impairment loss been recognised in prior periods
a reversal of an impairment loss is recognised in the consolidated income statement immediately
inventories
metal inventories
inventories including refined metals metals in concentrate and in process doré and ore stockpiles are stated at the lower of 
production cost or net realisable value production cost is determined as the sum of the applicable expenditures and expenses 
incurred directly or indirectly in bringing inventories to their existing condition and location refined metals are valued at the 
average total cost of production per saleable unit of metal work inprocess metal concentrate and doré are valued at the 
average total production costs at each asset’s relevant stage of production ore stockpiles are valued at the average cost  
of mining ore
net realisable value represents the estimated selling price for that product based on prevailing spot metal prices less estimated 
costs to complete production and selling costs
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 99
financial statements appendices governance business review overview
consumables and spare parts
consumables and spare parts are stated at the lower of cost or net realisable value cost is determined on the weighted average 
moving cost the portion of consumables and spare parts not reasonably expected to be used within one year is classified as  
a longterm asset in the group’s consolidated balance sheet net realisable value represents the estimated selling price less all 
estimated costs of completion and costs to be incurred in marketing selling and distribution
financial instruments
financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of 
the instrument
financial assets and financial liabilities are initially measured at fair value transaction costs that are directly attributable to  
the acquisition or issue of financial assets and financial liabilities other than financial assets and financial liabilities at fair value 
through profit or loss are added to or deducted from the fair value of the financial assets or financial liabilities as appropriate  
on initial recognition transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value 
through profit or loss are recognised immediately in the consolidated income statement
financial instruments designated as fair value through profit and loss fvtpl
a financial instrument other than a financial instrument held for trading may be designated as at fvtpl upon initial recognition if
  such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise or
  the financial instrument forms part of a group of financial assets or financial liabilities or both which is managed and its 
performance is evaluated on a fair value basis in accordance with the group’s documented risk management or investment 
strategy and information about the grouping is provided internally on that basis or
  it forms part of a contract containing one or more embedded derivatives and ias 39 financial instruments recognition and 
measurement permits the entire combined contract asset or liability to be designated as at fvtpl
financial instruments at fvtpl are stated at fair value with any gains or losses arising on remeasurement recognised in profit or 
loss fair value is determined in the manner described in note 29
financial assets
the effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating interest 
income or expense over the relevant period the effective interest rate is the rate that discounts estimated future cash receipts  
or payments including all fees and points paid or received that form an integral part of the effective interest rate transaction 
costs and other premiums or discounts through the expected life of the financial instrument or where appropriate a shorter 
period to the net carrying amount on initial recognition
effective interest rate method
nonderivative financial assets are classified into the following specified categories fvtpl available for sale afs financial 
assets and ‘loans and receivables’ the classification depends on the nature and purpose of the financial assets and is 
determined at the time of initial recognition no financial instruments have been classified as available for sale
income is recognised on an effective interest basis for financial instruments other than those financial assets classified as at fvtpl
loans and receivables
loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active 
market loans and receivables are measured at amortised cost using the effective interest rate method less any impairment 
interest income is determined by applying the effective interest rate except for shortterm receivables when the recognition of 
interest would be immaterial
afs financial assets
investments other than those classified as held for trading heldtomaturity or loans and receivables are classified as available  
for sale financial assets these assets are subsequently measured at fair value and unrealised gains and losses are recognised  
in equity until the investment is disposed or impaired at which time the cumulative gain or loss previously recognised in equity  
is included in the consolidated income statement
when an available for sale financial asset is considered to be impaired cumulative gains or losses previously recognised in other 
comprehensive income are reclassified to profit or loss in the period
impairment of financial assets
financial assets other than those at fvtpl are assessed for indicators of impairment at the end of each reporting period 
financial assets are considered to be impaired when there is objective evidence that as a result of one or more events that 
occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been affected 
for equity investments classified as afs a significant or prolonged decline in the fair value of the security below its cost is 
considered to be objective evidence of impairment financial statements
100 polymetal international plc  annual report 201 1
2 significant accounting policies continued
for all other financial assets objective evidence of impairment could include
  significant financial difficulty of the issuer or counterparty or
  breach of contract such as a default or delinquency in interest or principal payments or
  it becoming probable that the borrower will enter bankruptcy or financial reorganisation or
  the disappearance of an active market for that financial asset because of financial difficulties
for financial assets carried at amortised cost the amount of the impairment loss recognised is the difference between the 
asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective 
interest rate
the carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception  
of trade receivables where the carrying amount is reduced through the use of an allowance account when a trade receivable  
is considered uncollectible it is written off against the allowance account subsequent recoveries of amounts previously written 
off are credited against the allowance account changes in the carrying amount of the allowance account are recognised in the 
consolidated income statement
for financial assets measured at amortised cost if in a subsequent period the amount of the impairment loss decreases and 
the decrease can be related objectively to an event occurring after the impairment was recognised the previously recognised 
impairment loss is reversed through the consolidated income statement to the extent that the carrying amount of the investment 
at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not  
been recognised
derecognition of financial assets
the group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire or when it 
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity if the group 
neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset 
the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay if the group 
retains substantially all the risks and rewards of ownership of a transferred financial asset the group continues to recognise  
the financial asset and also recognises a collateralised borrowing for the proceeds received
financial liabilities
other financial liabilities
other financial liabilities including borrowings are subsequently measured at amortised cost using the effective interest method
derecognition of financial liabilities
the group derecognises financial liabilities when and only when the group’s obligations are discharged cancelled or they 
expire the difference between the carrying amount of the financial liability derecognised and the consideration paid and payable 
is recognised in the consolidated income statement
derivative financial instruments
the group may enter into a variety of derivative financial instruments to manage its exposure to certain risks further details  
of derivative financial instruments are disclosed in note 29
derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently 
remeasured to their fair value at the end of each reporting period the resulting gain or loss is recognised in the consolidated 
income statement immediately unless the derivative is designated and effective as a hedging instrument in which event the 
timing of the recognition in the consolidated income statement depends on the nature of the hedge relationship
derivatives embedded in nonderivative host contracts are treated as separate derivatives when their risks and characteristics 
are not closely related to those of the host contracts and the hybrid contracts are not measured at fvtpl
borrowing costs
borrowing costs directly attributable to the acquisition construction or production of qualifying assets which are assets that 
necessarily take a substantial period of time to get ready for their intended use or sale are added to the cost of those assets 
until such time as the assets are substantially ready for their intended use or sale
investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets  
is deducted from the borrowing costs eligible for capitalisation
all other borrowing costs are recognised in the consolidated income statement in the period in which they are incurred
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 101
financial statements appendices governance business review overview
cash and cash equivalents
cash and cash equivalents comprise cash balances cash deposits and highly liquid investments with original maturities  
of three months or fewer which are readily convertible to known amounts of cash and are subject to an insignificant risk  
of changes in value
provisions
provisions are recognised when the group has a present obligation legal or constructive as a result of a past event  
it is probable that the group will be required to settle the obligation and a reliable estimate can be made of the amount  
of the obligation
the amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the 
reporting date taking into account the risks and uncertainties surrounding the obligation where a provision is measured using 
the cash flows estimated to settle the present obligation its carrying amount is the present value of those cash flows
environmental obligations
an obligation to incur environmental restoration rehabilitation and decommissioning costs arises when disturbance is caused  
by the development or ongoing production of mining assets such costs arising from the decommissioning of plant and other 
site preparation work discounted to their net present value using a riskfree rate applicable to the future cash flows are provided 
for and capitalised at the start of each project as soon as the obligation to incur such costs arises these costs are recognised 
in the consolidated income statement over the life of the operation through the depreciation of the asset in the cost of sales line 
and the unwinding of the discount on the provision in the finance costs line costs for restoration of subsequent site damage 
which is created on an ongoing basis during production are provided for at their net present values and recognised in the 
consolidated income statement as extraction progresses
changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work that result from 
changes in the estimated timing or amount of the cash flow or a change in the discount rate are added to or deducted from the 
cost of the related asset in the current period if a decrease in the liability exceeds the carrying amount of the asset the excess is 
recognised immediately in the consolidated income statement
the provision for closure cost obligations is remeasured at the end of each reporting period for changes in estimates and 
circumstances changes in estimates and circumstances include changes in legal or regulatory requirements increased 
obligations arising from additional mining and exploration activities changes to cost estimates and changes to the risk free 
interest rate
employee benefit obligations
remuneration paid to employees in respect of services rendered during a reporting period is recognised as an expense in that 
reporting period the group pays mandatory contributions to the state social funds including the pension fund of the russian 
federation and kazakhstan which are expensed as incurred
taxation
income tax expense represents the sum of the tax currently payable and deferred tax income taxes are computed in 
accordance with the laws of countries where the group operates
current tax
the tax currently payable is based on taxable profit for the period taxable profit differs from profit as reported in the 
consolidated income statement because of items of income or expense that are taxable or deductible in other periods and items 
that are never taxable or deductible the group’s liability for current tax is calculated using tax rates that have been enacted or 
substantively enacted by the reporting date
deferred tax
deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated 
financial statements and the corresponding tax bases used in the computation of taxable profit deferred tax liabilities are 
generally recognised for all taxable temporary differences deferred tax assets are generally recognised for all deductible 
temporary differences to the extent that it is probable that taxable profits will be available against which those deductible 
temporary differences can be utilised such deferred tax assets and liabilities are not recognised if the temporary difference 
arises from goodwill or from the initial recognition other than in a business combination of other assets and liabilities in  
a transaction that affects neither the taxable profit nor the accounting profit
deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and 
associates and interests in joint ventures except where the group is able to control the reversal of the temporary difference and 
it is probable that the temporary difference will not reverse in the foreseeable future deferred tax assets arising from deductible 
temporary differences associated with such investments and interests are only recognised to the extent that it is probable that 
there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected  
to reverse in the foreseeable future financial statements
102 polymetal international plc  annual report 201 1
2 significant accounting policies continued
the carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that  
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered
deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is 
settled or the asset realised based on tax rates and tax laws that have been enacted or substantively enacted by the end of  
the reporting period the measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from 
the manner in which the group expects at the end of the reporting period to recover or settle the carrying amount of its assets 
and liabilities
 
deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current 
tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its 
current tax assets and liabilities on a net basis
current and deferred tax
current and deferred tax is recognised in the consolidated income statement except when they relate to items that are 
recognised in the consolidated statement of comprehensive income or directly in equity in which case the current and deferred 
tax also recognised in consolidated statement of comprehensive income or directly in equity respectively where current tax  
or deferred tax arises from the initial accounting for a business combination the tax effect is included in the accounting for the 
business combination
revenue recognition
revenue is derived principally from the sale of gold and silver bullions and copper gold and silver concentrate and is measured 
at the fair value of consideration received or receivable after deducting discounts
revenue from the sale of gold and silver bullion and sale of copper gold and silver concentrate is recognised when the risks and 
rewards of ownership are transferred to the buyer the group retains neither a continuing degree of involvement nor control over 
the goods sold the amount of revenue can be measured reliably and it is probable that the economic benefits associated with 
the transaction will flow to the group revenue from the sale of gold and silver bullion represents the invoiced value of metal 
shipped to the buyer net of value added tax vat
sale of gold and silver bullion
the group processes doré produced in the russian federation at dukat khakanja voro and omolon into london good 
delivery bars prior to sale this final stage of processing is carried out on a tolltreatment basis at four stateowned refineries 
the group sells gold and silver bullion to banks through longterm agreements the sales price as determined in the agreement 
may be variable based upon the london bullion market association lbma spot price or fixed but the group’s policy is not to 
enter into fixed price contracts for domestic sales title passes from the group to the purchaser at the refinery gate with revenue 
recognised at that point for export sales once the gold andor silver bars have been approved for export by russian customs 
they are then transported to the vault of the purchaser which is typically located in london title passes and revenue is 
recognised at the point when the gold andor silver bars are received by the purchaser
sales of copper gold and silver concentrate
the group sells copper gold and silver concentrate under pricing arrangements where final prices are determined by quoted 
market prices in a period subsequent to the date of sale concentrate sales are initially recorded based on forward prices for  
the expected date of final settlement revenue is recorded at the time of shipment which is also when risks and rewards pass  
to the buyer revenue is calculated based on the copper gold and silver content in the concentrate and using the forward 
london metal bulletin lmb or london metal exchange lme price to the estimated final pricing date adjusted for the specific 
terms of the relevant agreement until final settlement occurs adjustments to revenue are made to take into account the changes 
in metal quantities upon receipt of new information and assay revenue is presented net of refining and treatment charges which 
are subtracted in calculating the amount to be invoiced
the group’s sales of copper gold and silver concentrate are based on a provisional price and as such contain an embedded 
derivative that is required to be separated from the host contract for accounting purposes the host contract is the receivable 
from the sale of the concentrate at the forward exchange price at the time of sale the embedded derivative which does not 
qualify for hedge accounting is measured at fvtpl with changes in its fair value recognised within revenue 
in the consolidated income statement for each period prior to the final settlement
sharebased compensation
the group applies ifrs 2 sharebased payments to its accounting for sharebased compensation ifrs 2 requires companies 
to recognise compensation costs for sharebased payments to employees based on the grantdate fair value of the award
the fair value of sharebased payments is calculated by the group at the grant date using the twostage montecarlo simulation 
model the expense is recognised on a straightline basis over the vesting period of the awards
the fair value of the awards granted is recognised as a general and administrative expense over the vesting period with a 
corresponding increase in the sharebased compensation reserve where relevant the proceeds received on exercise of the 
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 103
financial statements appendices governance business review overview
awards net of any directly attributable transaction costs are credited to the stated capital account and the amounts recognised 
within the sharebased compensation reserve transferred to retained earnings
earnings per share
earnings per share calculations are based on the weighted average number of common shares outstanding during the period 
diluted earnings per share are calculated using the treasury stock method whereby the proceeds from the potential exercise  
of dilutive stock options with exercise prices that are below the average market price of the underlying shares are assumed  
to be used in purchasing the company’s common shares at their average market price for the period
3 critical accounting judgements and key sources of estimation uncertainty
the following are the critical judgements apart from those involving estimations see below that the management has made  
in the process of applying the group’s accounting policies and that have the most significant effect on the amounts recognised 
in consolidated financial statements
production start date
the group assesses the stage of each mine construction project to determine when a mine moves into the production stage 
the criteria used to assess the start date are determined by the unique nature of each mine construction project and include 
factors such as the complexity of a plant and its location
the group considers various relevant criteria to assess when the mine is substantially complete and ready for its intended use 
and moves into the production stage criteria considered but are not limited to the following
  the level of capital expenditure incurred compared to the construction cost estimates
  the completion of a sufficient level of testing on the mine plant and equipment
  the ability to produce gold and silver in saleable form within specifications and
  the ability to sustain ongoing commercial level of production of gold
when a mine construction project moves into the production stage and depreciation commences the capitalisation of certain 
mine construction costs and interest ceases and costs are either regarded as inventory or expensed except for capitalisable 
costs related to mining asset additions or improvements underground mine development or ore reserve development
acquisitions
ifrs 3 business combinations applies to a transaction or other event that meets the definition of a business combination  
when acquiring new entities or assets the group applies judgement to assess whether the assets acquired and liabilities 
assumed constitute an integrated set of activities and thus whether the transaction constitutes a business combination using the 
guidance provided in the standard in making this determination management evaluates the inputs processes and outputs of 
the asset or entity acquired 
as a result of this evaluation process management has determined that its 2011 acquisitions of kutynskaya ggk llc industriya 
llc and office llc did not meet the definition of a business combination and as such the group has accounted for these 
transactions as asset acquisitions see note 4 such purchases are recorded at cost allocated across the assets and liabilities 
acquired prorata to their fair values
key sources of estimation uncertainty
preparation of the consolidated financial statements in accordance with ifrs requires the group’s management to make 
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and 
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the 
reporting period the determination of estimates requires judgements which are based on historical experience current and 
expected economic conditions and all other available information actual results could differ from those estimates
the following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the 
reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities 
within the next financial period
the most significant areas requiring the use of management estimates and assumptions relate to
  fair value of net assets acquired and liabilities assumed in business combinations
  ore reserve estimates
  depreciation
  impairment of goodwill mining assets and other property plant and equipment
  inventory obsolescence and writedowns
  sharebased compensation
  environmental obligations
  contingencies and
  income taxes financial statements
104 polymetal international plc  annual report 201 1
3 critical judgements and key sources of estimation uncertainty continued
fair value of net assets acquired and liabilities assumed in business combinations
in accordance with the group’s policy the group allocates the cost of the acquired entity to the assets acquired and liabilities 
assumed based on their fair values as estimated on the date of acquisition any difference between the cost of the acquired 
entity and the fair value of the assets acquired and liabilities assumed is recorded as goodwill the group exercises significant 
judgement in the process of identifying tangible and intangible assets and liabilities valuing these assets and liabilities and 
estimating their remaining useful lives the valuation of these assets and liabilities is based on assumptions and criteria that  
in some cases include management’s estimates of discounted future cash flows 
if actual results are not consistent with estimates and assumptions considered the group may have to adjust its estimates of the 
fair values of assets and liabilities recognised and the goodwill balance during the measurement period such a remeasurement 
could have an impact on the amounts reported in the consolidated income statement in current and future periods
ore reserve estimates
an ore reserve estimate is an estimate of the amount of product that can be economically and legally extracted from the  
group’s properties ore reserve estimates are used by the group in the calculation of depletion of mining assets using  
the unitsofproduction method impairment charges and in forecasting the timing of the payment of decommissioning and  
land restoration costs also for the purpose of impairment review and the assessment of the timing of the payment of 
decommissioning and land restoration costs management may take into account mineral resources in addition to ore reserves 
where there is a high degree of confidence that such resources will be extracted
in order to calculate ore reserves estimates and assumptions are required about geological technical and economic factors 
including quantities grades production techniques recovery rates production costs transport costs commodity demand 
commodity prices discount rates and exchange rates estimating the quantity andor grade of ore reserves requires the size 
shape and depth of ore bodies to be determined by analysing geological data such as the logging and assaying of drill samples 
this process may require complex and difficult geological judgements and calculations to interpret the data
ore reserve estimates may change from period to period as additional geological data becomes available during the course of 
operations or if there are changes in any of the aforementioned assumptions such changes in estimated reserves may affect  
the group’s financial results and financial position in a number of ways including the following
  asset carrying values due to changes in estimated future cash flows
  depletion charged in the consolidated income statement where such charges are determined by using the unitsof
production method
  provisions for decommissioning and land restoration costs where changes in estimated reserves affect expectations about  
the timing of the payment of such costs and
  carrying value of deferred tax assets and liabilities where changes in estimated reserves affect the carrying value of the relevant 
assets and liabilities
depreciation
mining assets are depreciated using the unitsofproduction method except where the useful lives of the assets are shorter than 
the life of mine the unitsofproduction depreciation calculations are based on proved and probable reserves under the russian 
resource reporting code gkz which is the basis on which management’s mine plans are prepared for other property  
plant and equipment the straightline method is applied over the estimated useful life of the asset which does not exceed the 
estimated mine life based on proved and probable ore reserves as the useful lives of these assets are considered to be limited  
to the life of the relevant mine 
 
the calculation of the unitsofproduction rate of depreciation could be impacted to the extent that actual production in the future 
is different from current forecast production based on proved and probable ore reserves this would generally arise when there 
are significant changes in any of the factors or assumptions used in estimating ore reserves the group’s unitsofproduction 
depreciation rates are based on the gkz reserves figures which are different to the reserves calculated under the jorc 
reporting code and included into the group’s external reporting
impairment of goodwill mining assets and other property plant and equipment
the group considers both external and internal sources of information in assessing whether there are any indications that goodwill 
mining assets or other property plant and equipment owned by the group are impaired external sources of information the group 
considers include changes in the market economic and legal environment in which the group operates that are not within its 
control and that affect the recoverable amount of goodwill mining assets or other property plant and equipment
internal sources of information the group considers include the manner in which mining properties and plant and equipment  
are being used or expected to be used and indications of economic performance of the assets in determining the recoverable 
amounts of the group’s mining assets and other property plant and equipment the group’s management makes estimates  
of the discounted future aftertax cash flows expected to be derived from the group’s mining properties costs to sell the  
mining properties and the appropriate discount rate reductions in metal price forecasts increases in estimated future costs of 
production increases in estimated future capital costs reductions in the amount of recoverable reserves and resources andor 
adverse current economics can result in a writedown of the carrying amounts of the group’s goodwill mining assets or other 
property plant and equipment
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 105
financial statements appendices governance business review overview
in making the assessment for impairment assets that do not generate independent cash flows are allocated to an appropriate 
cashgenerating unit management necessarily applies its judgement in allocating assets that do not generate independent  
cash flows to appropriate cashgenerating units and also in estimating the timing and value of underlying cash flows within the 
valueinuse calculation subsequent changes to the cashgenerating unit allocation or to the timing of cash flows could impact 
the carrying value of the respective assets
inventory obsolescence and writedowns
in determining mine operating costs recognised in the consolidated income statement the group’s management makes 
estimates of quantities of ore stacked on leach pads and in process and the recoverable gold silver and copper in this material 
to determine the average costs of finished goods sold during the period changes in these estimates can result in a change in 
mine operating costs of future periods and carrying amounts of inventories
sharebased compensation
the group issued equitysettled share appreciation rights to certain employees equity−settled share appreciation rights  
are measured at fair value excluding the effect of nonmarket based vesting conditions at the date of grant the fair value 
determined at the grant date of the awards is expensed as services are rendered over the vesting period based on the group’s 
estimate of the rights that will eventually vest
the fair value of share based compensation is measured using the montecarlo model the expected life used in the model 
has been adjusted based on management’s best estimate for the effects of nontransferability exercise restrictions and 
behavioural considerations
the most significant assumptions used in estimation of the cost of equitysettled stock appreciation rights are the expected 
volatility of the company’s share price over the life of the award the riskfree interest rate used the level of expected forfeitures 
and the expectation at the grant date of the dividends to be paid over the life of the awards expected volatility is based on the 
historical volatility of return on the company’s gdrs
the riskfree rates used in the valuation model are based on us treasury zerocoupon issues with a remaining term equal  
to the expected life assumed at the date of grant
expected forfeitures are estimated using historical trends of executive director and employee turnover
at the grant date the group had not historically declared dividends as such the expected annual dividend per share was 
therefore nil any subsequent change in dividend policy will be taken into account when valuing options granted in the future
environmental obligations
the group’s mining and exploration activities are subject to various laws and regulations governing the protection of the 
environment the group’s provision for future decommissioning and land restoration cost represents management’s best 
estimate of the present value of the future cash outflows required to settle the liability which reflects estimates of future costs 
inflation movements in foreign exchange rates and assumptions of risks associated with the future cash outflows and the 
applicable interest rate for discounting the future cash outflows actual costs incurred in future periods could differ materially 
from the estimates additionally future changes to environmental laws and regulations life of mine estimates and discount rates 
could affect the carrying amount of this provision
contingencies
by their nature contingencies will only be resolved when one or more future events occur or fail to occur the assessment of 
such contingencies inherently involves the exercise of significant judgements and estimates of the outcome of future events
income taxes
the group is subject to income taxes in the russian federation and kazakhstan significant judgement is required in 
determining the provision for income taxes due to the complexity of legislation there are many transactions and calculations  
for which the ultimate tax determination is uncertain the group recognises liabilities for anticipated tax audit issues based on 
estimates of whether additional taxes will be due where the final tax outcome of these matters is different from the amounts  
that were initially recorded such differences will impact the income tax and deferred tax provisions in the period in which such 
determination is made
deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient 
taxable profit will be available to allow all or part of the deferred tax asset to be utilised the estimation of that probability includes 
judgements based on the expected performance various factors are considered in order to assess the probability of the future 
utilisation of deferred tax assets including past operating results operational plan expiration of tax losses carried forward  
and tax planning strategies if actual results differ from these estimates or if these estimates must be adjusted in future periods 
the financial position results of operations and cash flows may be negatively affected financial statements
106 polymetal international plc  annual report 201 1
4 acquisitions and disposals
a asset acquisitions
kutyn llc
on 29 april 2011 the group acquired a 100 interest in kutynskaya ggk llc kutyn from olsen business limited an 
unrelated party in exchange for 3500000 jsc polymetal gdrs the gdr share price on the acquisition date was us1914  
the group acquired kutyn as it holds the mining licence for kutyn gold deposit located in the khabarovsk region
kutyn does not meet the definition of a business pursuant to ifrs 3 2008 thus this acquisition was accounted for as an 
acquisition of a group of assets the allocation of the cost of acquisition to the group of assets acquired was as follows
us’000
mineral rights 67719
property plant and equipment 618
other liabilities 1347
net assets acquired 66990
consideration
fair value of gdrs transferred 66990
industriya llc
on 27 may 2011 the group acquired a 100 interest in industriya llc industriya from kuzmichev vv an unrelated party  
the group acquired industriya as it holds the hardrock gold exploration and mining licence for the elmus property the group 
paid cash consideration of us178 million industriya does not meet the definition of a business pursuant to ifrs 3 2008 thus 
it was accounted for as an acquisition of a group of assets the group purchased mineral rights of us182 million and other 
current liabilities of us004 million
office llc
on 13 may 2011 the group acquired a 100 interest in office llc office from ictkolyma llc an unrelated party for 
us1032 million of which us62 million was netted against advance provided to ictkolyma llc in 2010 the group acquired 
office as it holds three storeys of an office premises in magadan the cost of the office premises was us976 million with the 
residual amount of us06 million representing other assets and liabilities acquired
in the prior year the following transactions took place
rudnik avlayakan llc and kirankan llc
on 8 october 2010 the group acquired a 100 interest in rudnik avlayakan llc avlayakan and kirankan llc kirankan  
from doland business limited an unrelated party in exchange for 3500000 of jsc’s gdrs with a market price of us1720 
per gdr on the acquisition date the group acquired avlayakan and kirankan as they hold the mining licences for avlayakan 
and kirankan gold and silver deposits located in the khabarovsk region
avlayakan and kirankan did not meet the definition of a business pursuant to ifrs 3 2008 thus these acquisitions were 
accounted for as an acquisition of a group of assets the allocation of the cost of acquisition to the group of assets acquired  
was as follows
us’000
mineral rights 64297
property plant and equipment 916
construction in progress 492
other liabilities 440
noncurrent borrowings 5065
net assets acquired 60200
consideration
fair value of gdrs transferred 60200
pd rus llc
on 9 december 2010 the group acquired a 100 interest in pd rus llc pd rus from castalian trading limited an 
unrelated party the group acquired pd rus as it holds the mining and exploration licence for svetloye gold deposit located in 
the khabarovsk region the group paid a cash consideration of us925 million in the form of settlement of pd rus’s liabilities
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 107
financial statements appendices governance business review overview
pd rus did not meet the definition of a business pursuant to ifrs 3 2008 thus it was accounted for as an acquisition  
of a group of assets the allocation of the cost of acquisition to the group of assets acquired was as follows
us’000
mineral rights 7345
property plant and equipment 744
other assets 1161
net assets acquired 9250
consideration 
cash 9250
b disposal of subsidiary
cjsc northeastern coal company
on 29 june 2011 the group sold 100 of cjsc northeastern coal company for us53 million to an unrelated party  
cjsc northeastern coal company did not perform any operations during 2010 or 2011 the gain on disposal was calculated 
as follows
us’000
consideration received 5300
carrying value of property plant and equipment disposed of 5725
carrying value of other liabilities disposed of 5356
gain on disposal 4931
c disposal of subsidiary in exchange for an interest in an associate
in november 2010 a group subsidiary signed an agreement to establish jsc uralpolymetal uralpolymetal with valentorskiy 
rudnik llc and kuzmichev vv the group contributed 100 of its interest in north ural llc a subsidiary of the group holding 
the galka gold zinc and silver mining licence to uralpolymetal see note 19 the other investors also contributed assets in the 
entity with the group receiving a 33 equity interest in uralpolymetal
the carrying value of the net assets transferred to the equity investment on the date of disposal approximated fair value the 
amount disposed of was as follows
us’000
carrying value of assets disposed
mineral rights 3936
other assets 2641
net assets disposed of 6577
gain on disposal 3580
fair value of interest in associate undertaking acquired 10157
5 segment information
the group has seven reportable segments
  voro cjsc zoloto severnogo urala
  khakanja jsc okhotskaya ggc rudnik avlayakan llc and kirankan llc see note 4
  dukat cjsc serebro magadana cjsc ayax
  omolon jsc omolon gold mining company rudnik kvartseviy llc
  varvara jsc varvarinskoye
  amurskalbazino albazino resources llc amursky hydrometallurgy plant llc and
  mayskoye zk mayskoye llc
reportable segments are determined based on the group’s internal management reports and are separated based on the 
group’s geographical profile minor companies and activities management exploration purchasing and other companies which 
do not meet the reportable segment criteria are disclosed within corporate and other each segment is engaged in gold silver 
and copper mining and related activities including exploration extraction processing and reclamation the group’s segments 
are all based in the russian federation other than varvara which is based in kazakhstan
the measure which management and the chief operating decision maker the codm use to evaluate the performance of the 
group is segment adjusted ebitda which is defined as profit for the period adjusted for depreciation and amortization write
downs of inventory to net realisable value sharebased compensation expenses listing expenses rehabilitation expenses gains 
or losses arising on disposal of subsidiaries foreign exchange gains or losses changes in the fair value of derivatives changes  
in the fair value of contingent consideration finance income finance costs and income tax expenses the accounting policies  
of the reportable segments are consistent with those of the group’s accounting policies under ifrs as described in note 2 financial statements
108 polymetal international plc  annual report 201 1
5 segment information continued
revenue shown as corporate and other comprises principally intersegment revenue relating to the supply of inventories spare 
parts and fixed assets to the group’s production entities intersegment revenue is recognised based on costs incurred plus  
a fixed margin basis external revenue shown within corporate and other represents revenue from services provided to third 
parties by the group’s nonmining subsidiaries 
business segment current assets and liabilities other than current inventory are not reviewed by the codm and therefore are 
not disclosed in these consolidated financial statements
the segment adjusted ebitda reconciles to the profit before income tax as follows
as at and for the year  
ended 31 december 2011 
us’000 voro khakanja dukat omolon varvara
amursk 
albazino mayskoye
total
 reportable 
segments
corporate
 and other
intersegment
 operations 
and balances total
revenue from external 
customers 280206  214114  531964  73417  182004  44689 – 1326394  36 –  1326430 
intersegment revenue 458  202  1141  9157  8964 – –  19922  459043  478965 – 
share of loss of 
associates and joint 
ventures – – – – – – – –  1952 – 1952 
adjusted ebitda 175180  112885  281869  4815  91189  4523  10258 660203  14  36351 623866 
depreciation expense 24957  15852  23172  11137  13055  7631  246  96050  604 – 96654 
rehabilitation expenses 1753  804  938  88 – – – 3583 – – 3583 
writedown of inventory 
to net realisable value 16 2476 2657  3352  423  398  1893  6231 – – 6231 
listing expenses – – – – – – – – 9511 – 9511 
sharebased 
compensation – – – – – – – – 57116 – 57116 
operating profitloss 148486  98705  255102 9762 77711  3506 12397 554339  67217 36351 450771 
gain on disposal  
of subsidiaries 4931 
foreign exchange  
net loss 13634
change in fair value  
of derivatives 1855
change in fair value of 
contingent consideration 6828
finance income 4208 
finance costs 28746
profit before tax 408847
income tax expense 118985
profit for the year 
attributable to the 
equity holders of  
the parent 289862
current metal 
inventories 48911  49005  92378  89414  39279  47795  16768  383550  214  5057 378707
current nonmetal 
inventories 7379  35099  41897  45621  22175  35327  10679  198177  52526  16194 234509
noncurrent  
segment assets
property plant and 
equipment net 98872  151311  415421  229851  153505  483370  171645  1703975  197999 – 1901974
goodwill 13431  8242  64537  22377  108587 108587
noncurrent inventory 2947  6401  7356  9711  2842  8278  3912  41447  2871 – 44318
investments in 
associates and  
joint ventures 23558 23558
total segment assets 158109  255247  565294  374597  282338  574770  225381  2435736  277168  21251 2691653 
additions to noncurrent 
assets
property plant and 
equipment 12693  39148  71878  74858  15897  155188  94476  464138  19232  3821 479549 
acquired in acquisition 
of group of assets – 79912 – 79912
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 109
financial statements appendices governance business review overview
as at and for the year 
ended 31 december 2010 
us’000 voro khakanja dukat omolon varvara
amursk 
albazino mayskoye
total
 reportable 
segments
corporate
 and other
intersegment
 operations 
and balances total
revenue from external 
customers 213906 215300 345457 24649 125456 – – 924768 608 – 925376
intersegment revenue 310 57 116 – – – – 483 287462 287945 –
share of loss of 
associates and joint 
ventures – – – – – – – – 1170 – 1170
adjusted ebitda 131349 119831 153932 8202 54831 9104 5281 437356 7254 5223 424879
depreciation expense 22537 14030 21957 1662 9062 – 767 70015 319 – 70334
rehabilitation expenses 1059 524 170 232 877 – – 2862 – – 2862
writedown of inventory 
to net realisable value – 491 1043 384 13401 – – 15319 – – 15319
share based 
compensation – – – – – – – – 7896 – 7896
operating profit
loss 107753 104786 130762 10480 31491 9104 6048 349160 15469 5223 328468
gain on disposal of 
subsidiaries 3580
foreign exchange loss 337
change in fair value of 
derivatives 909
change in fair value of 
contingent consideration 3616
finance income 785
finance costs 21541
profit before tax 306430
income tax expense 67414 
profit for the year 
attributable to the 
equity holders of  
the parent 239016
current metal 
inventories 45086 18578 56497 34746 24315 12664 1541 193427 – – 193427
current nonmental  
inventories 7450 34227 35106 23674 16901 17983 6242 141583 45969 12464 175088
368515
noncurrent  
segment assets
property plant and 
equipment 118808 155799 424529 206352 152888 348589 123691 1530656 112825 – 1643481
goodwill – 14189 8707 – 68177 – 23639 114712 – – 114712
noncurrent inventories 2593 3042 6514 4146 – – – 16295 4722 – 21017
investments in 
associates and joint 
ventures – – – – – – – – 26821 – 26821
1806031
additions to  
noncurrent assets
additions to property 
plant and equipment 11828 9837 43354 60657 21766 204827 59748 412017 31543 – 443560
acquired on acquisition 
of group of assets – – – – – – – – 73794 – 73794 financial statements
110 polymetal international plc  annual report 201 1
6 revenue
revenue by major customers is as follows
year ended 
31 december
 2011
us’000
year ended 
31 december 
2010
us’000
vtb 241815 301015 
kazzink 136661 4901 
russian federation state fund of precious metals gohran 122048 7752
metalor sa 106870 80942 
sberbank 106430 76316 
hsbc 100314 9703 
other 250455 127963 
total sales to third parties 1064593 608592
sales to related parties 
nomosbank 258794 315405 
 258794 315405 
total metal sales 1323387 923997 
other 3043 1379 
total 1326430 925376 
revenue from transactions with individual customers which composed 10 or more of the group’s total revenue analysed  
by reporting segments is presented below
 
 
year ended 31 december 2011 us’000
dukat khakanja voro omolon total
vtb 191889 – 49926 – 241815
nomosbank – 177559 18288 62947 258794
kazzinc 136661 – – – 136661
total 328550 177559 68214 62947 637270 
 
 
year ended 31 december 2010 us’000
dukat khakanja voro omolon total
nomosbank 81641 167208 42084 24472 315405
vtb 235146 32797 33072 – 301015
total 316787 200005 75156 24472 616420
revenue analysed by geographical region of customers is presented below
year ended 
31 december
2011
us’000
year ended
 31 december
2010
us’000
sales within the russian federation 862763 780284
sales to china 119823 44515
sales to europe 207184 95676
sales to kazakhstan 136660 4901
total 1326430 925376
presented below is an analysis of revenue from gold silver and copper sales
 
year ended 31 december 2011 year ended 31 december 2010
thousand 
ouncestonne 
unaudited
average price 
us per 
troy ouncetonne 
unaudited us’000
thousand 
ouncestonne 
unaudited
average price 
us per 
troy ouncetonne 
unaudited us’000
gold thousand ounces 448 155610 697135 440 123209 542118
silver thousand ounces 17045 3404 580182 17961 1964 352721
copper tonne 6363 724030 46070 3991 730594 29158
total 1323387 923997
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 111
financial statements appendices governance business review overview
7 cost of sales
year ended
31 december 
2011
us’000
31 december 
2010
us’000
cash operating costs  
onmine costs note 8 319740 173922
smelting costs note 9 254817 173540
purchase of ore from third parties 16817 11198
mining tax 96955 57210
total cash operating costs 688329 415870
depreciation and depletion of operating assets note 10 140253 75709
rehabilitation expenses 3583 2862
total costs of production 832165 494441
increase in metal inventories 215492 53160
writedown to net realisable value note 21 6232 15319
total change in metal inventories 209260 37841
cost of other sales 2835 1514
total 625740 458114
8 onmine costs
year ended
31 december 
2011
us’000
31 december 
2010
us’000
consumables and spare parts 110695 66810
services 120398 60536
labour 83299 43743
taxes other than income tax 1839 242
other expenses 3509 2591
total note 7 319740 173922
9 smelting costs
year ended
31 december 
2011
us’000
31 december 
2010
us’000
consumables and spare parts 117407 80339
services 88069 57249
labour 47088 33900
taxes other than income tax 178 134
other expenses 2075 1918
total note 7 254817 173540
10 depletion and depreciation of operating assets
year ended
31 december 
2011
us’000
31 december 
2010
us’000
mining 106402 48211
smelting 33851 27498
total note 7 140253 75709
depreciation on operating assets excludes depreciation relating to nonoperating assets included in general administrative  
and selling expenses and depreciation related to assets employed in development projects where the charge is capitalised 
depreciation expense which is excluded in the group’s calculation of adjusted ebitda see note 5 also excludes amounts 
absorbed into unsold metal inventory balances financial statements
112 polymetal international plc  annual report 201 1
11 general administrative and selling expenses
year ended
31 december 
2011
us’000
31 december 
2010
us’000
labour 72291 42745
services 24177 20540
sharebased compensation 57116 7896
depreciation 4122 2005
other 11917 8914
total 169623 82100
12 other expenses 
 year ended 
31 december 
2011
us’000
31 december 
2010
us’000
exploration expenses 30212 8105
taxes other than income tax 11278 14467
listing expenses 9511 – 
social payments 8692 6468
housing and communal services 6357 4269
loss on disposal of property plant and equipment 6203 6296
omolon plant precommissioning expenses – 7156
bad debt allowance 1171 2333
other expenses 7262 6430
total 78344 55524
costs incurred in connection with the admission to the official list of the uk listing authority and the related group restructuring 
have been expensed costs incurred in relation to the issuance of the new primary equity at the time of admission have been 
deducted from the stated capital account
exploration expenses include an us132 million write down of evaluation and exploration assets relating to the dukat segment 
where management have decided to suspend development activities principally relating to the rogovikskaya field
13 employee costs
the weighted average number of employees as of 31 december 2011 was
year ended 
31 december 
2011
number
31 december 
2010
number
voro 848 830
khakanja 1021 914 
dukat 1824 1787 
omolon 913 607 
varvara 657 614 
amurskalbazino 897 581 
mayskoye 617 397 
corporate and other 1274 1182
total 8051 6912
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 113
financial statements appendices governance business review overview
 
 
year ended 
31 december 
2011
us’000
31 december 
2010
us’000
wages and salaries 204379 143107
social security costs 40040 23785
share based payments 57116 7896
total payroll costs 301535 174788
less employee costs capitalised 30250 41802
less employee costs absorbed into unsold metal inventory balances 30935 6398
employee costs included in operating costs 240350 126588
the group pays mandatory contributions to state social funds including the pension funds of the russian federation and 
kazakhstan which are expensed as incurred the group contributed us318 million and us153 million during the years 
ended 31 december 2011 and 2010 respectively
compensation for management personnel is disclosed within note 33
14 auditor’s remuneration
 
 
year ended 
31 december 
2011
us’000
31 december 
2010
us’000
fees payable to the auditor and their associates for the audit of the company’s annual report
united kingdom 250 –
overseas 555 877
total audit fees 805 877
auditrelated assurance services – half year review – 135 
taxation compliance services 28 30
other services 3482 –
total nonaudit fees 3510 165
total auditor remuneration 4315 1042
other services provided in the year relate to services in relation to the group listing and capital raising in the year see note 1 
us05 million of these costs were allocated to the stated capital account in line with the methodology as set out in note 31
15 finance costs
year ended
31 december
2011
us’000
31 december
2010
us’000
interest expense on borrowings 20074 16991
unwinding of discount on borrowings 5344 2138
unwinding of discount on decommissioning obligations 3328 2412
total 28746 21541
interest expense on borrowings excludes borrowing costs capitalised in the cost of qualifying assets of us125 million and 
us959 million during the years ended 31 december 2011 and 2010 respectively these amounts were calculated based on 
the group’s general borrowing pool and by applying an effective interest rate of 281 and 611 respectively to cumulative 
expenditure on such assets financial statements
114 polymetal international plc  annual report 201 1
16 income tax
the income tax expense for the year ended 31 december 2011 is as follows
31 december
2011
us’000
31 december
2010
us’000
current income taxes 127671 76922
deferred income taxes 8686 9508
118985 67414
a reconciliation between the reported amount of income tax expense attributable to profit before income for the year ended 
31 december 2011 is as follows
year ended 
31 december
2011
us’000
31 december
2010
us’000
profit before income tax 408847 306430
statutory income tax expense at the tax rate of 20 81769 61286
loss incurred in taxfree jurisdictions 5998 234
sharebased compensation 11423 1579
tax effect of nondeductible expenses and other permanent differences 14490 4315
prior year adjustment 5305 –
total income tax expense 118985 67414
the actual tax expense differs from the amount which would have been determined by applying the statutory rate of 20 for  
the russian federation and kazakhstan to profit before income tax as a result of the application of relevant jurisdictional tax 
regulations which disallow certain deductions which are included in the determination of accounting profit these deductions 
include sharebased compensation social related expenditures and other nonproduction costs certain general and 
administrative expenses financing expenses foreign exchange related and other costs
in the normal course of business the group is subject to examination by tax authorities throughout the russian federation  
and kazakhstan out of the large operating companies of the group tax authorities have audited ojsc okhotskaya mining and 
exploration company cjsc magadan silver for the period up to 2007  cjsc gold of northern urals for the period up to 2009 
and jsc varvarinskoye for the period up to 2010 according to russian and kazakhstan tax legislation previously conducted 
audits do not fully exclude subsequent claims relating to the audited period no significant adjustments have been proposed  
by the federal tax service of the russian federation and tax service of the republic of kazakhstan as at 31 december 2011
deferred taxation is attributable to the temporary differences that exist between the carrying amounts of assets and liabilities  
for financial reporting purposes and the amounts used for tax purposes
the following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the 
reporting period
environmental 
obligation
us’000
inventories
us’000
property plant
 and equipment
us’000
trade and 
other payables
us’000
tax losses
us’000
loan
us’000
other
us’000
total
us’000
at 1 january 2011 8881 2774 84262 822 36213 – 9903 25669
chargecredit
to profit or loss 2723 11538 2985 3663 21234 2875 7506 8686
exchange 
differences 614 942 3254 36 3786 251 324 241
at 31 december 
2011 10990 7822 78023 4521 53661 2624 2073 17224
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 115
financial statements appendices governance business review overview
deferred tax assets and liabilities are offset where the group has a legally enforceable right to do so the following is the analysis 
of the deferred tax balances after offset for financial reporting purposes
31 december 
2011
us’000
31 december 
2010
us’000
deferred tax liabilities 79342 83345
deferred tax assets 62118 57676
 17224 25669
tax losses carried forward represent amounts available for offset against future taxable income generated by jsc omolon gold 
mining company zk mayskoye llc albazino resources llc and the company during the period up to 2021 each legal entity 
within the group represents a separate taxpaying component for income tax purposes the tax losses of one entity cannot be 
used to reduce taxable income of other entities of the group as at 31 december 2011 and 31 december 2010 the aggregate 
tax losses carried forward were us2683 million rub 86 billion and us1811 million rub 552 billion respectively
the group believes that recoverability of the recognized net deferred tax asset dta of us621 million at 31 december 2011 is 
more likely than not based upon expectations of future taxable income in the russian federation and kazakhstan and available 
tax planning strategies
losses incurred in certain taxable entities in recent years have created a history of losses as of 31 december 2011 the group 
has concluded that there is sufficient evidence to overcome the recent history of losses based on forecasts of sufficient taxable 
income in the carryforward period
the group’s estimate of future taxable income is based on established proved and probable reserves which can be economically 
developed the income from the group’s proved and probable mineral reserves is a predictable source of future income and 
produces sufficient taxable income for realisation of the group’s net dta the group is projecting to generate sufficient taxable 
earnings to be able to fully realise its net dta even under various stressed scenarios the amount of the dta considered 
realisable however could be reduced in the near term if estimates of future taxable income during the carry forward period  
are reduced due to delays in production start dates decreases in ore reserve estimates increases in environmental obligations 
or reductions in precious metal prices
the group’s recognised tax losses carried forward expire as follows
 
31 december 
2011
us’000
year ended 31 december 2012 – 
 31 december 2013 13 
 31 december 2014 2735
 31 december 2015 7563
 31 december 2016 12385
 31 december 2017 21813
 31 december 2018 34359
 31 december 2019 43937
 31 december 2020 46916
 31 december 2021 98578
total losses carried forward for tax purposes 268299
the deferred tax liabilities for taxes that would be payable on the unremitted earnings of certain of the group subsidiaries have 
not been recognised as the group has determined that the undistributed profit of its subsidiaries will not be distributed in the 
foreseeable future the temporary differences associated with investments in subsidiaries for which deferred tax liabilities have 
not been recognised amount to us10663 million 2010 usnil financial statements
116 polymetal international plc  annual report 201 1
17 property plant and equipment
 
exploration 
and evaluation 
assets 
us’000
mining assets
us’000 
nonmining 
assets 
us’000
capital 
construction 
inprogress 
us’000
total 
us’000
cost     
balance at 1 january 2010 66364 1021066 62427 222115 1371972
additions 63053 87603 4741 288163 443560
transfers 59299 112470 1641 54812 –
change in decommissioning liabilities – 7836 – – 7836
acquired on acquisition of group of assets 565 72737 – 492 73794
eliminated on disposal of subsidiary 3936 – – – 3936
disposals 1633 12151 4259 – 18043
translation to presentation currency 572 9039 481 2528 12620
balance at 31 december 2010 64542 1280522 64069 453430 1862563
additions 63386 103286 12999 299878 479549
transfers 7945 208807 8726 209588 –
change in decommissioning liabilities – 5876 – – 5876
acquired on acquisition of group of assets – 70156 9756 – 79912
eliminated on disposal of subsidiary 5383 – 342 – 5725
disposals 13263 12580 1167 120 27130
translation to presentation currency 6464 96541 6577 32173 141755
balance at 31 december 2011 94873 1559526 87464 511427 2253290
exploration 
and evaluation 
assets 
us’000
mining assets 
us’000
nonmining 
assets 
us’000
capital 
construction 
inprogress 
us’000
total 
us’000
accumulated depreciation amortisation
balance at 1 january 2010 – 123546 5878 – 129424
charge for the year – 89610 7138 – 96748
disposals – 3965 1888 – 5853
translation to presentation currency – 1174 63 – 1237
balance at 31 december 2010 – 208017 11065 – 219082
charge for the year – 155875 6697 – 162572
disposals – 5949 468 – 6417
translation to presentation currency – 22776 1145 – 23921
balance at 31 december 2011 – 335167 16149 – 351316
net book value
1 january 2010 66364 897520 56549 222115 1242548
31 december 2010 64542 1072505 53004 453430 1643481
31 december 2011 94873 1224359 71315 511427 1901974
mining assets at 31 december 2011 included mineral rights with a net book value which amounted to us3635 million  
31 december 2010 us3843 million mineral rights of the group comprise assets acquired upon acquisition of subsidiaries  
and asset acquisitions
at 31 december 2010 property plant and equipment included leased assets with a net book value of us106 million  
all of which was machinery at 31 december 2011 there were no leased assets
exploration expenses include an us132 million write down of evaluation and exploration assets relating to the dukat segment 
where management have decided to suspend development activities principally relating to the rogovikskaya field
property plant and equipment with a total net book value of us1378 million including mineral rights with a net book value  
of us92 million were pledged as collateral to secure the group’s borrowings at 31 december 2010 see note 24  
no property plant and equipment were pledged as collateral at 31 december 2011
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 117
financial statements appendices governance business review overview
18 goodwill
31 december
2011
us’000
31 december
2010
us’000
at 1 january 114712 115729
translation effect 6125 1017
at 31 december 108587 114712
goodwill has been allocated for impairment testing purposes to the following cashgenerating units comprising operating 
segments
31 december
2011
us’000 
31 december
2010
us’000 
varvara 64537 68177
mayskoye 22377 23639
khakanja 13431 14189
dukat 8242 8707
total 108587 114712
the carrying amount of goodwill is reviewed annually to determine whether it is in excess of its recoverable amount the 
recoverable amount of cashgenerating unit is determined based on a fair value less costs to sell calculation fair value is based 
on the application of the discounted cash flow method dcf the dcf method is attributable to the development of proved 
and probable reserves the tail margin method an extension of the dcf method is attributable to the development of resources 
beyond proved and probable reserves assuming they could be developed after the end of the dcf forecast period resources 
used in calculations are based on the amounts of measured and indicated and inferred resources which are adjusted for a 
conversion factor in order to obtain a forecast production figure a steady state cash flow per unit of subject metal is usually 
applied to the annual resource recovery amount to determine the total annual cash flow based on past experience with an 
appropriate risk adjustment
the discount rate used in the calculations was fixed and equalled the polymetal wacc 9 both periods the dcf method  
is used based on proved and probable reserves and uses the following key assumptions
  production volumes
  commodity prices
  proved and probable reserves and
  production costs
 
recoverable reserves and resources are based on the proved and probable reserves and resources in existence at the end of 
the year production costs are based on management’s best estimate over the life of the mine estimated production volumes are 
based on detailed life of mine plans and take into account development plans for the mines approved by management as part of 
the longterm planning process commodity prices are based on latest internal forecasts benchmarked against external sources 
of information 
the tail margin method is used to value resources not currently included within an asset’s mine plan the methodology involves 
calculating an estimated unit cost per ounce in order to forecast net operating cash flows which are discounted to present value 
while applying the tail margin method the company used the following key assumptions
  production forecasts were calculated based on the weighted average amount of measured and indicated and inferred 
resources with a conversion factor of 07 for measured and indicated resources and 05 for inferred resources and
  steady state cash flow per unit of subject metal gold or silver was determined as the average of cash flows per unit of subject 
metal for the period during which their values in real terms were relatively stable
in management’s view no reasonably possible changes in the key assumptions would trigger an impairment charge of goodwill financial statements
118 polymetal international plc  annual report 201 1
19 investments in associates and joint ventures
the group’s investments in joint ventures and associates as at 31 december 2011 and 2010 consisted of the following
31 december 2011 31 december 2010
voting power 

carrying 
value
us’000
voting power 

carrying 
value
us’000
associates    
jsc uralpolymetal 333 11152 333 10901
joint ventures    
jv with anglogold ashanti limited 50 12406 50 15920
total  23558 26821
joint venture with anglogold ashanti limited
in february 2008 the company signed an agreement to set up a strategic alliance and a joint venture the joint venture with 
anglogold ashanti limited within the framework of this agreement each party owns 50 in the joint venture the joint venture 
was created in order to execute development projects in several territories of the russian federation in february 2012 the group 
acquired the remaining 50 interest in the joint venture see note 35 for further post balance sheet event disclosures
equity investment in jsc uralpolymetal
in november 2010 a group subsidiary signed an agreement to establish jsc uralpolymetal uralpolymetal with valentorskiy 
rudnik llc and kuzmichev vv the group contributed 100 of its interest in north ural llc a subsidiary of the group  
holding galka gold zinc and silver mining licence see note 4 to uralpolymetal in addition to galka assets contributed to 
uralpolymetal by other investors consist of an operating copper and zinc openpit mine an operating copper and iron ore 
underground mine and a processing plant within the framework of this agreement the group valentorskiy rudnik llc and 
kuzmichev vv each own 333 557 and 11 respectively of uralpolymetal uralpolymetal was established in order to 
execute development projects in the north ural region of the russian federation concerned with silver zinc copper and iron  
ore extraction and processing
the group’s ownership interests in the subsidiaries of the joint venture and uralpolymetal as at 31 december 2011 and 2010 
are as follows
country of 
incorporation
ownership interest 
31 december 
2011
31 december 
2010
joint venture with anglogold ashanti limited
cjsc enisey mining and geological company russia 50 50
imitzoloto llc russia 50 50
amikan llc russia 50 50
zoloto taigi llc russia 50 50
jsc uralpolymetal
polymetals of north ural llc russia 33 33
valentorskiy medniy karier llc russia 33 33
uraldragmet llc russia 33 33
the following tables summarise the aggregate financial position and the group’s share in the net losses of the joint venture with 
anglogold ashanti limited and the investment in uralpolymetal
anglogold ashanti limited 
100 basis
jsc uralpolymetal 
100 basis
31 december
2011
us’000
31 december
2010
us’000
31 december
2011
us’000
31 december
2010
us’000
noncurrent assets 84191 89159 45925 46952
current assets 659 477 9229 6722
noncurrent liabilities 24560 25013 7582 9215
current liabilities 4784 2592 12198 11824
equity 55506 62031 35374 32634
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 119
financial statements appendices governance business review overview
anglogold ashanti limited jsc uralpolymetal
year ended year ended 
31 december
2011
us’000
31 december
2010
us’000
31 december
2011
us’000
31 december
2010
us’000
revenue – – 28603 3266
net lossincome 5731 1820 2740 780
group’s share in joint venture’s net lossincome 2866 910 914 260
20 noncurrent loans
interest rate
31 december 
2011
us’000
31 december 
2010
us’000
anglogold ashanti limited note 33 78 6303 3455
employees 600 2659 1732
total 8962 5187
21 inventories
31 december 
2011
us’000
31 december 
2010
us’000
inventories expected to be recovered after twelve months
consumables and spare parts 44318 21017
total 44318 21017
inventories expected to be recovered in the next twelve months
ore stock piles 216243 103914
work in progress 111866 70023
copper gold and silver concentrate 27685 16762
dore 22889 2407
refined metals 24 321
total metal inventories 378707 193427
consumables and spare parts 234509 175088
total 613216 368515
during the year ended 31 december 2011 the group recognised a us28 million 2010 us135 million writedown to net 
realisable value of its ore stock piles in varvara due to poor gold and copper recovery on ore with lower content of precious 
metals respectively 
as of 31 december 2011 and 31 december 2010 amount of inventories held at nrv is nil
in addition during the year ended 31 december 2011 the group wrotedown us35 million of costs 2010 nil in omolon which 
did not significantly enhance the value of the ore stockpiles
during 2011 the group reversed previous obsolescence provisioning against consumables and spare parts inventory during the 
year ended 31 december 2011 in the amount of us06 million 2010 writedown of us18 million financial statements
120 polymetal international plc  annual report 201 1
22 trade and other receivables
 
31 december 
2011
us’000
31 december 
2010
us’000
trade receivables 37609 19765
nontrade receivables 28099 23574
shortterm loans provided to entity under common control 1522 –
shortterm loans provided to employees 1426 2507
shortterm loans provided to equity method investments 315 –
total trade and other receivables 68971 45846
less allowance for doubtful debts 980 2163
total 67991 43683
trade receivables mainly relate to jsc varvarinskoye for their sales of provisionally priced copper and gold concentrate  
and to cjsc serebro magadana for their sales of provisionally priced silver concentrate
31 december 
2011
us’000
31 december 
2010
us’000
kazzink 30960 4901
metalor s a 4440 3014
trafigura 2036 11096
other 173 754
total 37609 19765
the average credit period on sales of copper gold and silver concentrate at 31 december 2011 was 28 days 2010 22 days 
no interest is charged on trade receivables the group’s allowance for doubtful debt relates to its nontrade receivables  
the group’s trade receivables are neither past due nor impaired as at 31 december 2011 and 31 december 2010
nontrade receivables include amounts receivable from sale of fuel or operating lease of machinery to contractors the average 
credit period for nontrade receivables at 31 december 2011 was 143 days 2010 101 days no interest is charged on 
nontrade receivables
nontrade receivables disclosed above include those that are past due at the end of the reporting period for which the group 
has not recognised a bad debt allowance because there has not been a significant change in credit quality and the amounts are 
still considered to be recoverable such past due but not impaired receivables amounted to us28 million as at 31 december 2011 
2010 us108 million the majority of which mature within 90 days the group does not hold any collateral or other security 
over these balances nor does it have a legal right of offset against any amounts owed by the group to the counterparty
23 cash and cash equivalents
31 december 
2011
us’000
31 december 
2010
us’000
bank deposits – rub 15695 –
 – foreign currencies 629259
current bank accounts – rub 2110 2120
 – foreign currencies 11684 8884
other cash and cash equivalents 47 52
total 658795 11056
bank deposits as at 31 december 2011 bear interest of 35 per annum with an average maturity at inception of 90 days  
all us629 million of deposits held in foreign currencies was held in us dollars at 31 december 2011 2010 nil
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 121
financial statements appendices governance business review overview
24 borrowings
interest rate actual rate
31 december 
2011
us’000
31 december 
2010
us’000
borrowings at amortised cost   
bank loans    
us denominated    
 otkritie 1m libor275 305 250050
 raiffeisenbank 1m libor 31 340 150000 153000
 syndicate of banks 3m libor 3 388 136203 127133
 unicredit bank ag 3m libor  275 333 100000 100000
 unicredit bank 3m libor 275 333 100000 100000
 bsgv 3m libor 25 308 100000 –
 ing bank eurasia 3m libor 25 308 66667 75000
 bnp paribas 3m libor 25 308 50000 –
 sberbank 3m libor 65 681 – 50000
 gazprombank 3545 – 21000
 hsbc 3m libor 35 385 – 8070
rub denominated  
 hsbc mosprime 3 642 – 10828
 other  14774 –
loans from related parties note 33 35401 40938
total borrowings 1003095 685969
less current borrowings  348429 90610
noncurrent borrowings 654666 595359
the table below summarises maturities of borrowings
maturing during the year ended us’000
31 december 2012 348429
31 december 2013 244435
31 december 2014 223169
31 december 2015 185012
31 december 2016 2050
total 1003095
bank loans
as at 31 december 201 1 the group has us803 million of undrawn funds available under its credit facilities 2010 us237 million 
the most significant financial covenant in place is that the ratio of net debt to ebitda must not exceed 325 
otkritie
on 6 september 2011 the group entered into a general master repurchase agreement the gmra under the gmra 34450357 
polymetal shares representing approximately 86 of the issued share capital of jsc polymetal were transferred to otkritie 
securities limited in exchange for an aggregate purchase price of us250 million
the accounting substance of this arrangement is that it is a securitised loan it has been accounted for at amortised cost with 
interest accrued for the treasury shares have accordingly not been shown as sold and these shares are therefore excluded from 
the calculation of noncontrolling interest in the jsc polymetal group
on repurchase date the group has the obligation to repurchase all of the polymetal shares transferred under the gmra for the 
repurchase price which is calculated as the sum of i the price received for the relevant polymetal shares and ii the aggregate 
amount obtained by daily application of libor  275 to the relevant price for the number of days during the period 
commencing on the relevant transfer date and ending on the repurchase date
subsequent to the reporting date the group accelerated the repurchase date and repaid the loan in full on 16 february 2012  
in accordance with the terms of the gmra financial statements
122 polymetal international plc  annual report 201 1
24 borrowings continued
bsgv
in june 2011 the group entered into a longterm credit facility with bsgv which allows the group to borrow funds denominated 
in us dollars up to us1000 million to finance its current operations borrowings under this credit facility are available until  
may 2014 the credit facility is repayable in quarterly instalments interest is also payable quarterly the repayment of this 
longterm credit facility is guaranteed with a pledge of revenue under a sales agreement with rosbank see note 28 following 
the reorganisation of jointstock company ‘banque societe generale vostok’ ‘bsgv’ by way of merger with joint stock 
commercial bank ‘rosbank’ the rights of bsgv inured to the benefit of joint stock commercial bank ‘rosbank’  
open jointstock company
bnp paribas
in january 2011 the group entered into a longterm credit facility with bnp paribas which allows the group to borrow funds 
denominated in us dollars up to us500 million to finance the group’s general corporate purposes and for refinancing of 
shortterm and longterm indebtedness of the group borrowings under this credit facility are available until february 2015  
the credit facility is repayable in eleven equal quarter instalments starting from july 2012 interest is payable quarterly
the repayment of this longterm loan is guaranteed with a pledge of revenue under a sales agreement with nomosbank  
see note 28 a related party
raiffeisenbank
in october 2010 the group received a longterm facility from raiffeisenbank which allows the group to borrow funds up to  
us150 million the group used the funds in part to refinance longterm credit obtained from raiffeisenbank in december 
2009 the remainder is being used to finance its current operations the loan facility is available until september 2015  
interest is payable monthly
syndicate of banks including restructuring on 6 april 2011
upon the acquisition of jsc varvarinskoye the group assumed a longterm loan of us857 million payable to a syndicate  
of banks including investec bank ltd investec bank plc nedbank limited and natixis bank syndicate of banks this loan  
had a carrying amount of us747 million on 6 april 2011
in addition to the loan described above the group assumed obligations for amounts payable for previously realised flat forward 
gold sales and purchase contracts as at 6 april 2011 the group had not settled its liability under these contracts this had  
a carrying amount of us508 million on 6 april 2011
for repayment of these two liabilities a cash sweep arrangement was applied to all free cash flows generated from jsc 
varvarinskoye in accordance with the cash sweep agreement on each day following the quarterend jsc varvarinskoye shall 
pay 100 of the amount by which the cash inflow for the quarter exceeds us50 million in 2013 and 2014 35 and 65 
respectively of the obligation would become due if not previously repaid through the cash sweep arrangement
in addition the group had unrealised net derivative liabilities for the forward sale and purchase commitments which were 
presented separately see note 28 this had a carrying amount of us1007 million on 6 april 2011
on 6 april 2011 the group signed an agreement to restructure its debt obligations and related derivative gold forward sale  
and purchase contracts the restructuring as a result of this restructuring the group’s derivative forward sale and purchase 
commitments outstanding as at the date of the restructuring were converted to debt obligations based on the present value  
of the future net settlement payments of these derivative contracts following a partial immediate repayment of us148 million  
the remaining debt obligation held by three k exploration and mining limited a wholly owned subsidiary of the group was 
transferred to jsc polymetal all security arrangements held with the counterparty under the debt obligations and forward sale 
and purchase agreements such as pledges of shares and movable and immovable property plant and equipment have been 
foregone as part of this restructuring
the derivatives were previously recognised at fair value and no gain or loss arose on their conversion to debt the amendment  
to the previous debt obligations did not constitute a significant modification and it continues to be held at their previous carrying 
value these totalled us2262 million before and us2114 million after the repayment of us148 million the carrying value  
of the new debt arrangement at 6 april 2011 was therefore us2114 million for which the fair value was us221 million  
the difference will be accreted using the effective interest rate method as an additional interest charge over the term of the loan
the par value of the debt transferred net of repayment was us230 million
as of 31 december 2011 the group repaid us800 million and following schedule was agreed us300 million in 2013  
and us600 million in each of 2014 and 2015
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 123
financial statements appendices governance business review overview
unicredit bank ag incorporated in great britain
in november 2010 the group received a longterm loan from unicredit bank of us1000 million to finance its current 
operations and to refinance other credit facilities the loan is repayable in equal instalments on a quarterly basis through 
november 2015 interest is payable quarterly
the repayment of this longterm loan is partially guaranteed by the pledge of revenue under a sale agreement completed  
with hsbc bank see note 28
unicredit bank incorporated in the russian federation
in november 2010 the group received a longterm loan from unicredit bank of us1000 million to finance its current 
operations and to refinance longterm facilities obtained from unicredit bank in august and september 2009 the loan  
is repayable in equal instalments on a quarterly basis through november 2015 interest is payable quarterly
the repayment of this longterm loan is guaranteed by the pledge of revenue under a sale agreement completed with  
hsbc bank see note 28
ing bank eurasia
in december 2010 the group received a longterm loan from ing bank eurasia of us750 million to finance its  
current operations the loan is repayable in nine equal instalments on a quarterly basis through december 2013 interest  
is payable quarterly
nomosbank
in january 2010 the group received two longterm credit facilities from nomosbank a related party which allows the group  
to borrow funds denominated in euros up to euro 65 million us87 million as at 31 december 2011 to finance the purchase 
of equipment for amursky hydrometallurgy plant llc the credit facilities are repayable in ten equal semiannual instalments 
over five years starting from april 2011 interest is payable quarterly
in july 2010 the group received two longterm credit facilities from nomosbank a related party which allow the group  
to borrow funds denominated in euro up to euro 176 million and 13 million us26 million and us19 million as at  
31 december 2011 to finance the purchase of equipment for amursky hydrometallurgy plant llc borrowings under these 
credit facilities are available through to 2016 the credit facilities are repayable in ten equal semiannual instalments over five 
years starting from october and november 2010 respectively interest is payable quarterly
in september 2010 the group received an additional longterm credit facility from nomosbank denominated in canadian 
dollars up to canadian dollar 15 million us16 million as at 31 december 2011 to finance the purchase of equipment for 
amursky hydrometallurgy plant llc borrowings under this credit facility are available until december 2015 the credit facility  
is repayable in ten equal semiannual instalments over five years starting from december 2010 interest is payable quarterly
in october 2010 the group received a longterm credit facility from nomosbank denominated in canadian dollars up to 
canadian dollar 085 million us088 million as at 31 december 2011 to finance the purchase of equipment for amursky 
hydrometallurgy plant llc borrowings under this credit facility are available until december 2015 the credit facility is repayable 
in ten equal semiannual instalments starting from december 2010 interest is payable quarterly
in addition the group has certain undrawn facilities at 31 december 2011 including vtb hsbc gazprombank alfabank  
note 30
gazprombank
in february 2010 the group entered into a longterm credit facility with gazprombank which allows the group to borrow funds 
denominated in russian roubles or us dollars up to us748 million russian rouble 21 billion as at 31 december 2011  
to finance its current operations borrowings under this credit facility were available until december 2011 and were settled in  
full at that date the repayment term is established separately for each loan received from the credit facility at the time of the 
drawdown date each loan received from the credit facility must be repaid within twelve months of the drawdown interest  
is payable monthly based on a fixed rate determined by gazprombank for each tranche but not to exceed 14 annually for 
funds borrowed in russian roubles and 9 for funds borrowed in us dollars financial statements
124 polymetal international plc  annual report 201 1
25 finance lease liabilities
in april 2009 the group entered into finance sale and leaseback agreement denominated in russian roubles with nomos
leasing a related party the group leased certain of its machinery equipment and transport vehicles the lease term of finance 
lease was until july 2012 the group’s obligations under finance leases are secured by the lessors’ title to the leased assets
the implicit interest rate of underlying obligation under finance lease is fixed at 2425 per annum
future minimum lease payments for the assets under finance leases are as follows
31 december 
2010
current portion 4819
noncurrent portion –
present value of minimum payments 4819
interest payable over the term of lease 81
total future minimum lease payments 4900
the group proposed to the lessor to purchase the leased property and settle its leasing liabilities prior to the maturity dates 
accordingly the total amount of leasing obligations is classified as current as of 31 december 2010 the purchase was 
completed in january 2011 for the amount of us49 million including leasing liability of us48 million and interest of  
us01 million
26 environmental obligations
environmental obligations include decommissioning and land restoration costs and are recognised on the basis of existing 
project business plans as follows
31 december 
2011
us’000 
31 december 
2010
us’000 
opening balance 45156 32487
changes in the year
 – decommissioning liabilities 5876 7836
 – rehabilitation liabilities 3583 2862
unwinding of discount 3328 2412
amounts paid 213 161
translation effect 3267 280
closing balance 54463 45156
the principal assumptions used for the estimation of environmental obligations were as follows
2011 2010
discount rates 39728 3794
inflation rates 5718 3979
expected mine closure dates 123 years 124 years
the expected timings for the settlement of environmental obligations are as follows
31 december 
2011
us’000
31 december 
2010
us’000
within one year 424 256 
due from second to fifth year 11436 9141
due from sixth to tenth year 30339 25362
due from eleventh to fifteenth year 3687 5834
due from sixteenth to twentieth year 3309 –
due thereafter 5268 4563
total 54463 45156
the group does not hold any assets that are legally restricted for purposes of settling environmental obligations
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 125
financial statements appendices governance business review overview
27 trade and other payables
31 december 
2011
us’000
31 december 
2010
us’000
trade payables 61219 54217
labour liabilities 10049 7273
other payables 8280 5538
total 79548 67028
in 2011 the average credit period for payables was 51 days 2010 57 days there was no interest charged on the outstanding 
payables balance during the credit period the group has financial risk management policies in place which include budgeting 
and analysis of cash flows and payments’ schedules to ensure that all amounts payable are settled within the credit period
28 commitments and contingencies
commitments
capital commitments
the group’s budgeted capital expenditures’ commitments as at 31 december 2011 amounted to us427 million 
2010 us552 million
operating leases group as a lessee
the land in the russian federation and kazakhstan on which the group’s production facilities are located is owned by the state 
the group leases this land through operating lease agreements which expire in various years through 2058
future minimum lease payments due under noncancellable operating lease agreements at the end of the period were 
as follows
 
31 december 
2011
us’000
31 december 
2010
us’000
due within one year 1758 2148 
from one to five years 3065 2791 
thereafter 1594 1469 
total 6417 6408
forward sales commitments
under the sale agreements with nomosbank the company’s subsidiary jsc okhotskaya ggc are required to sell 45000 
ounces of gold and 3350000 ounces of silver during 2012 at a price determined by london bullion market association lbma
under the sale agreement with rosbank the company’s subsidiary cjsc zoloto severnogo urala is required to sell 39000 
ounces of gold during 2012 48000 ounces of gold during 2013 19000 ounces of gold during 2014 at a price determined 
by lbma 
under the sale agreement with sberbank the company’s subsidiary cjsc zoloto severnogo urala is required to sell 64000 
ounces of gold during 2012 at a price determined by lbma
under the sale agreements with gazprombank the company’s subsidiaries jsc omolon gold mining company and  
jsc okhotskaya ggc are required to sell 36000 ounces of gold till 28 february 2012 at a price determined by lbma
under the sale agreement with trafigura beheer bv the company’s subsidiary jsc varvarinskoe is required to sell 17 000 
ounces of gold during 2012 at a price determined by lbma and 4488000 tonnes of copper concentrate during 2012  
at a price determined by the london metal exchange lme and adjusted for further processing costs
under the sale agreement with glencore the company’s subsidiary jsc varvarinskoe is required to sell 9000 ounces  
of gold during 2012 at a price determined by lbma and 2448000 tonnes of copper concentrate during 2012 at a price 
determined by lme and adjusted for further processing costs financial statements
126 polymetal international plc  annual report 201 1
28 commitments and contingencies continued
contingencies
taxation
russian tax currency and customs legislation is subject to varying interpretations and changes which can occur frequently 
management’s interpretation of such legislation as applied to the transactions and activity of the companies of the group may  
be challenged by the relevant regional and federal authorities recent events within the russian federation suggest that the  
tax authorities may be taking a more assertive position in their interpretation of the legislation and assessments
as a result significant additional taxes penalties and interest may be assessed fiscal periods remain open to review by the 
authorities in respect of taxes for three calendar years preceding the year of review under certain circumstances reviews may 
cover longer periods
with regards to matters where practice concerning payment of taxes is unclear management estimated the tax exposure at  
31 december 2011 to be approximately us467 million 2010 us388 million including the cjsc serebro magadana tax 
litigation described below this amount had not been accrued at 31 december 2011 as management does not believe the 
payment to be probable
transfer pricing legislation which was introduced from 1 january 1999 provides the possibility for tax authorities to make transfer 
pricing adjustments and impose additional tax liabilities in respect of all controlled transactions provided that the transaction price 
differs from the market price by more than 20 controllable transactions include transactions with interdependent parties as 
determined under the russian tax code and all crossborder transactions irrespective whether performed between related or 
unrelated parties where the price applied by a taxpayer differs by more than 20 from the price applied in similar transactions by 
the same taxpayer within a short period of time and barter transactions there is no formal guidance as to how these rules should 
be applied in practice arbitration court practice in this respect is contradictory and inconsistent
the group’s subsidiaries regularly enter into controllable transactions eg intercompany transactions and based on the 
transaction terms the russian tax authorities may qualify them as nonmarket tax liabilities arising from intercompany 
transactions are determined using actual transaction prices it is possible with the evolution of the interpretation of the transfer 
pricing rules in the russian federation and the changes in the approach of the russian tax authorities that such transfer prices 
could potentially be challenged in the future given the brief nature of the current russian transfer pricing rules the impact of any 
such challenge cannot be reliably estimated although it may be significant
litigation
during the respective periods the group was involved in a number of court proceedings both as a plaintiff and as a defendant 
arising in the ordinary course of business
during 2009 a field tax audit was performed in relation to cjsc serebro magadana with respect to all taxes duties and 
contributions to social funds for the period from 1 january 2007 to 31 december 2007 including cjsc serebro territorii  
as a legal predecessor
as a result of this audit the tax authorities issued decision 121323 dated 31 march 2009 the most significant issues  
were the alleged understatement of profits tax by us184 million including interest and penalties and the understatement  
of mineral extraction tax by us44 million including interest and penalties owing to the potential application of transfer  
pricing rules in respect of export transactions with abn amro bank nv the tax authorities challenged the prices applied  
by cjsc serebro magadana previously cjsc serebro territorii owing to their deviation by more than 20 from london  
stock exchange fixings and accounting prices set by the central bank of the russian federation this deviation was caused  
by signing a flat forward sales contract with standard bank of london that provided for fixed prices that were agreed by  
cjsc serebro territorii in 2004 cjsc serebro territorii supplied silver to abn amro bank nv in 2007 in accordance with  
its obligations under the contract and at the fixed priced stipulated in the contract in 2004 the negotiated fixed prices were 
consistent with market prices however due to a significant increase in the price of silver in the intervening period by 2007  
the contract price was much lower than the london metal exchange price
cjsc serebro magadana appealed against this decision in the arbitration court and has been successful in the latest appeal 
the directors believe that cjsc serebro magadana should win any new challenge based on its argument that it was bound  
by the contractual obligations and had sound business reasons to apply such prices
in the opinion of management of the group there are no current legal proceedings or other claims outstanding which could 
have a material effect on the result of operations financial position or cash flows of the group and which have not been accrued 
or disclosed in the consolidated financial statements
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 127
financial statements appendices governance business review overview
29 fair value accounting
the following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value 
grouped into levels 1 to 3 based on the degree to which the fair value is observable as follows
  level 1 fair value measurements are those derived from quoted prices unadjusted in active markets for identical assets 
or liabilities
  level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are 
observable for the asset or liability either directly or indirectly and
  level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that  
are not based on observable market data unobservable inputs
at 31 december 2011 and 31 december 2010 the group held the following financial instruments
31 december 2011
us’000
level 1 level 2 level 3 total
receivables from provisional copper gold and silver concentrate sales – 37609 – 37609
contingent consideration liabilities – – 22290 22290
– 37609 22290 15319
31 december 2010
us’000
level 1 level 2 level 3 total
receivables from provisional copper gold and silver concentrate sales – 19011 – 19011
derivatives – 105437 – 105437
contingent consideration liabilities – – 23754 23754
– 86426 23754 110180
during the reporting periods there were no transfers between level 1 and level 2
receivables from provisional copper gold and silver concentrate sales
the fair value of receivables arising from copper gold and silver concentrate sales contracts that contain provisional pricing 
mechanisms is determined using the appropriate quoted forward price from the exchange that is the principal active market  
for the particular metal as such these receivables are classified within level 2 of the fair value hierarchy
derivatives
the fair value of derivative financial instruments is determined using either present value techniques or option pricing models that 
utilise a variety of inputs that are a combination of quoted prices and marketcorroborated inputs the fair value of the group’s 
derivative contracts is adjusted for the group’s credit risk based upon the observed credit default swap spread as appropriate 
the group closed the open derivative positions at 6 april 2011 as part of the restructuring as described in note 24
the table below sets forth a summary of changes in the fair value of the group’s level 2 financial liabilities for the year ended 
31 december 2011
 
31 december
2011
us’000
31 december
2010
us’000
opening balance 105437 149514 
change in fair value included in profit or loss 1855 909 
settlement 107292 44986
closing balance – 105437 financial statements
128 polymetal international plc  annual report 201 1
29 fair value accounting continued
commodity forward contracts
except for the forward sales contracts entered by jsc varvarinskoye other group’s forward sales contracts see note 28 qualify 
for the normal purchasesales or ‘own use’ exemption prior to their restructuring in april 2011 the fair value of varvarinskoye 
commodity forward contracts was determined by discounting contractual cash flows using a discount rate derived from observed 
us treasury yield curve rates contractual cash flows were calculated using a forward pricing curve derived from market forward 
prices for each commodity the commodity forward contracts were classified within level 2 of the fair value hierarchy
contingent consideration liabilities
in 2008 the group recorded a contingent consideration liability related to the acquisition of 981 of the shares in jsc omolon 
gold mining company omolon the fair value of the contingent consideration liability was determined using a valuation model 
which simulates expected production of gold and silver at the kubaka mine and future gold and silver prices to estimate future 
revenues of omolon this liability is revalued at each reporting date based on 2 of the life of mine revenues with the resulting gain 
or loss recognised in the consolidated income statement the liability recognised at 31 december 2011 was us223 million 
2010 us183 million
in 2009 the group recorded a contingent consideration liability related to the acquisition of 100 of shares in jsc varvarinskoye 
in kazakhstan the fair value of the contingent consideration liability was determined using a valuation model which simulates 
expected future prices of gold silver and copper against the gold strike price applied pursuant to the terms of the gold forward 
purchase contracts entered into see note 25 and the copper price as published by the lme as at the date when the gold forward 
purchase contracts described above were entered into the liability recognised at 31 december 2010 was us55 million and 
was fully settled in july 2011 the contingent consideration liability is classified within level 3 of the fair value hierarchy
the table below sets forth a summary of changes in the fair value of the group’s level 3 financial liabilities for the year ended 
31 december 2011
31 december
2011
us’000
31 december
2010
us’000
opening balance 23754 21775
change in fair value included in profit or loss 6828 3616
translation effect 1349 137
settlement 6943 1500
total 22290 23754
the directors consider that a change in a reasonably possible valuation assumption used would not have a material effect on 
the group
30 risk management activities
capital management
the group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising 
the return to stakeholders through the optimisation of the debt and equity balance the group’s overall strategy remains from 
prior years
the capital structure of the group consists of net debt borrowings as detailed in note 24 offset by cash and bank balances as 
detailed in note 23 and equity of the group comprising the stated capital account reserves and retained earnings as detailed 
in note 31
the group is not subject to any externally imposed capital requirements the group’s board reviews the capital structure of the 
group on a semiannual basis as part of this review the board considers the cost of capital and the risks associated with each 
class of capital
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 129
financial statements appendices governance business review overview
major categories of financial instruments
the group’s principal financial liabilities comprise borrowings derivatives finance lease liabilities trade and other payables  
the group has various financial assets such as accounts receivable loans advanced and cash and cash equivalents
31 december 
2011
us’000
31 december 
2010
us’000
financial assets
financial assets at fvtpl
receivables from provisional copper gold and silver concentrate sales 37609 19011
loans and receivables including cash and cash equivalents
cash and cash equivalents 658795 11056
trade and other receivable 30382 24672
noncurrent loans to related parties 8962 5187
total financial assets 735748 59926
financial liabilities 
financial liabilities at fvtpl
derivatives – 105437
contingent consideration liability 22290 23754
financial liabilities at amortised cost
share purchase obligation under mto 534597 –
current and noncurrent borrowings 1003095 685969
finance lease liabilities – 4819
trade and other payables 62738 55118
total financial liabilities 1622720 875097
trade and other payables exclude employee benefits and social security
the carrying values of cash and cash equivalents share purchase obligation trade and other receivables trade and other 
payables and shortterm debt recorded at amortised cost approximate to their fair values because of the short maturities of 
these instruments the estimated fair value of the group’s longterm debt calculated using the market interest rate available to 
the group as at 31 december 2011 is us5918 million and the carrying value as at 31 december 2011 is us6546 million 
see note 24 carrying values of the other longterm loans provided to related parties as at 31 december 2011 and 31 
december 2010 approximated to their fair values
the main risks arising from the group’s financial instruments are foreign currency and commodity price risk interest rate credit 
and liquidity risks
at the end of the reporting period there are no significant concentrations of credit risk for receivables designated at fvtpl  
the carrying amount reflected above represents the group’s maximum exposure to credit risk for such receivables
derivative financial instruments
presented below is a summary of the group’s derivative contracts recorded on the consolidated balance sheet at fair value
consolidated 
balance sheet 
location
31 december 
2011
us’000
31 december 
2010
us’000
flat forward gold sales and purchase contracts derivatives – 105437
receivable from provisional copper gold and silver concentrate sales accounts receivable 37609 19011 
location of gain
loss recorded
in profit or loss
year ended
31 december
2011
us’000
year ended
31 december
2010
us’000
flat forward gold sales and purchase contracts
change in fair value
 of derivatives 1855 909
receivable from provisional copper gold and silver concentrate sales revenue 5979 1660 
the group closed out the open derivative positions on 6 april 2011 as part of the restructuring as described in note 24 financial statements
130 polymetal international plc  annual report 201 1
30 risk management activities continued
foreign currency and commodity price risk
in the normal course of business the group enters into transactions for the sale of its commodities denominated in us dollars 
in addition the group has assets and liabilities in a number of different currencies primarily russian rouble and kazakh tenge 
as a result the group is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates
the group does not use derivative instruments to currently hedge its exposure to foreign currency risk
the carrying amounts of monetary assets and liabilities denominated in foreign currencies other than functional currencies  
of the individual group entities at 31 december 2011 and 31 december 2010 were as follows
assets liabilities
31 december 
2011
us’000
31 december 
2010
us’000 
31 december 
2011
us’000
31 december 
2010
us’000
us dollar 681023 28206 973395 791779
euro 274 27 49524 44585
gbp 5604 – 375 –
total 686901 28233 1023294 836364
currency risk is monitored on a monthly basis by performing a sensitivity analysis of foreign currency positions in order to verify 
that potential losses are at an acceptable level
the table below details the group’s sensitivity to changes of exchange rates by 10 which is the sensitivity rate used by the group 
for internal analysis the analysis was applied to monetary items denominated in respective currencies at the reporting dates
 
31 december 
2011
us’000
31 december 
2010
us’000
profit or loss rub to us dollar 34790 55438 
profit or loss rub to euro 6964 4471 
profit or loss rub to gbp 882 –
profit or loss kzt to us dollar 2518 21114
forward sales and purchase contracts
as at 31 december 2010 the group held the following derivative financial instruments which were subsequently closed out  
on 6 april 2011 as part of the restructuring as described in note 24
a flat forward gold sales contract was assumed on the acquisition of jsc varvarinskoye in october 2009 on the same date  
the group entered into an offsetting flat forward gold purchase contract with the same notional amount and monthly settlement 
dates as the aforementioned flat forward gold sales contract the gold forward purchase contract economically locks in the 
losses on the existing flat forward gold sales contract the contracts have total notional amounts of 320160 ounces of gold  
fixed forward sales price of us57425 per ounce and fixed forward purchase price of us112965 per ounce and monthly 
settlement dates between november 2009 and april 2014
the group was liable to pay a net settlement amount on each delivery date if any settlement were not paid on its applicable 
delivery date such settlement amount would accrue interest at 3 months libor plus 3 and shall be payable on 31 december 
2013 35 of the total and all interest accrued thereon to date and on 31 december 2014 the full balance of the settlement 
amount and all interest accrued thereon to date in addition a cash sweep mechanism applied to all free cash flows generated 
by varvarinskoye until all the obligations were fully repaid
as at 6 april 2011 and 31 december 2010 net settlement amounts of us508 million and us509 million respectively have 
not been paid and were recorded in the ‘noncurrent borrowings’ line of the balance sheet see note 24
these contracts had not been designated as hedging instruments changes in the fair value were recorded as part of gainloss 
on financial instruments in the consolidated income statement as the group has legally enforceable master netting agreements 
with counterparties and intends to settle the contracts on a net basis the flat forward gold sales and purchase contracts are 
presented net in the balance sheet as derivatives
during the period ended 6 april 2011 the group settled derivative contracts resulting in realised derivative losses of us19 million 
2010 loss of us09 million
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 131
financial statements appendices governance business review overview
provisionally priced sales
under a longestablished practice prevalent in the industry copper gold and silver concentrate sales are provisionally priced at 
the time of shipment the provisional prices are finalised in a contractually specified future period generally one to three months 
primarily based on quoted lbma or lme prices sales subject to final pricing are generally settled in a subsequent month  
the forward price is a major determinant of recorded revenue
lme copper price has averaged us8820 per tonne since january 2011 compared with the group’s recorded average 
provisional price of us8629 per tonne the applicable forward copper price at 31 december 2011 was us7 592 per tonne 
during the year 2011 decreasing copper prices resulted in a provisional pricing marktomarket loss of us04 million included 
in revenue at 31 december 2011 the group had copper sales of 3067 tonnes priced at an average of us7 682 per tonne 
subject to final pricing in the first quarter of 2012
lbma gold price averaged us1572 per ounce since january 2011 compared with the group’s recorded average provisional  
price of us1581 per ounce the applicable forward gold price at 31 december 2011 was us1525 per ounce during the third 
quarter 2011 decreasing gold prices resulted in a provisional pricing marktomarket loss of us12 million included in revenue  
at 31 december 2011 the group had gold sales of 67 751 ounces priced at an average of us1667 per ounce subject to final 
pricing in the first quarter of 2012
lbma silver price averaged us3530 per ounce since january 2011 compared with the group’s recorded average provisional 
price of us3850 per ounce the applicable forward silver price at 31 december 2011 was us3050 per ounce during the 
third quarter 2011 decreasing silver prices resulted in a provisional pricing marktomarket loss of us43 million included in 
revenue at 31 december 2011 the group had silver sales of 972092 ounces priced at an average of us294 per ounce 
subject to final pricing in the first quarter of 2012
interest rate risk
the group is exposed to interest rate risk because entities in the group borrow funds at both fixed and floating interest rates 
the risk is managed by the group by maintaining an appropriate mix between fixed and floating rate borrowings the group 
does not currently hedge its exposure to interest rate risk
the group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk section of 
this note
for floating rate liabilities the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting 
period was outstanding for the whole period a 100 basis point increase or decrease is used when reporting interest rate risk 
internally to key management personnel and represents management’s assessment of the reasonably possible change in 
interest rates
if interest rates had been 100 basis points higher or lower and all other variables were held constant the group’s profit for the 
year ended 31 december 2011 would decrease or increase by us65 million 2010 us69 million this is mainly attributable 
to the group’s exposure to interest rates on its variable rate borrowings
the group’s sensitivity to interest rates has increased during the current period mainly due to the increase in variable rate 
debt instruments
credit risk
credit risk is the risk that a customer may default or not meet its obligations to the group on a timely basis leading to financial 
losses to the group the group’s financial instruments that are potentially exposed to concentration of credit risk consist 
primarily of cash and cash equivalents and loans and receivables
accounts receivable are regularly monitored and assessed and where necessary an adequate level of provision is maintained 
trade accounts receivable at 31 december 2011 and 31 december 2010 are represented by provisional copper gold and  
silver concentrate sales transactions a significant portion of the group’s trade accounts receivable is due from reputable export 
trading companies with regard to other loans and receivables the procedures of accepting a new customer include checks by  
a security department and responsible onsite management for business reputation licences and certification creditworthiness 
and liquidity generally the group does not require any collateral to be pledged in connection with its investments in the above 
financial instruments credit limits for the group as a whole are not set up
the credit risk on liquid funds is limited because the counterparties are banks with high creditratings assigned by international 
creditrating agencies the major financial assets at the balance sheet date other than trade accounts receivable presented  
in note 22 are cash and cash equivalents at 31 december 2011 of us659 million 2010 us11 million financial statements
132 polymetal international plc  annual report 201 1
30 risk management activities continued
liquidity risk
liquidity risk is the risk that the group will not be able to settle all liabilities as they are due
the group’s liquidity position is carefully monitored and managed the group manages liquidity risk by maintaining detailed 
budgeting cash forecasting processes and matching the maturity profiles of financial assets and liabilities to help ensure that  
it has adequate cash available to meet its payment obligations
the following tables detail the group’s remaining contractual maturity for its financial liabilities with agreed repayment periods 
the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which 
the group can be required to pay the tables include both interest and principal cash flows to the extent that interest flows are 
floating rate the undiscounted amount is derived from interest rate curves at the end of the reporting period the contractual 
maturity is based on the earliest date on which the group may be required to pay
presented below is the maturity profile of the group’s financial liabilities as at 31 december 2011
less than
3 months
 
312 months 15 years
more than
5 years
31 december 
2011
us’000
total
31 december 
2010
us’000
total
derivatives – – – – – 117269
share purchase obligation under mto 534597 – – – 534597
borrowings 16877 361915 704117 – 1082909 781247
finance lease liability – – – – – 4900
trade and other payables 54749 7485 494 – 62728 55119
contingent consideration 393 3022 8265 27464 39144 31541
total 606616 372422 712876 27464 1719378 990076
31 stated capital account and retained earnings
the company was incorporated in jersey on 29 july 2010 as a public no par value company with limited liability under the 
companies jersey law 1991 for the purpose of becoming the new holding company of jsc polymetal
on incorporation the number of shares that the company was authorised to issue pursuant to its memorandum of association 
was an unlimited number of shares two shares were issued on incorporation at a price of us1 per share one of these subscriber 
shares referred to above was transferred to metal one limited a company incorporated in the british virgin islands on  
12 august 2010 on 13 august 2010 the company issued a further 9998 shares to metal one limited at a price of us1 per share 
these shares which were unpaid were redeemed on completion of the ipo
on 30 september 2011 pmtl the company’s wholly owned subsidiary made an offer known as the institutional share swap 
facility or the issf to certain institutional shareholders of jsc polymetal to acquire their polymetal shares and polymetal gdrs 
the consideration under the issf is the issue of new shares in the company in exchange for polymetal shares on a one for one 
basis under the issf which completed simultaneously with the ipo on 2 november 2011 332641773 new shares in the 
company were issued
on 2 november 2011 the company successfully completed its ipo 53350000 shares with no par value were issued at  
a price of 920 pence us1474 per share the net proceeds raised were us7626 million as part of the price stabilisation 
provisions 3305988 of the new shares were repurchased at a cost of us466 million and cancelled by the company in the 
five week period following the ipo
the total transaction costs incurred were us337 million us242 million of the transaction costs were attributable to the  
issue of new equity and have been deducted against the stated capital account while us95 million were attributable to the 
expenses associated with the above noted restructuring joint transaction costs were allocated based on the ratio of new shares 
issued in relation to total shares outstanding
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 133
financial statements appendices governance business review overview
as at 31 december 2011 the company’s issued share capital consisted of 382685785 ordinary shares of no par value each 
carrying one vote the company does not hold any ordinary shares in treasury the ordinary shares reflect 100 of the total 
issued share capital of the company
the movements in the stated capital account in the year were as follows
stated capital 
account
no of shares
treasury 
shares
no of shares
total 
no of shares
stated capital 
account
us’000
balance at 31 december 2010 na – – 865483
issue of treasury shares in jsc polymetal in exchange for assets – – – 66966
amortisation of bonus received from depository – – – 819
issuance of ordinary shares under issf 332641773 – 332641773 –
issuance of shares on ipo 53350000 – 53350000 762641
repurchased shares 3305988 3305988 – 46649
cancellation of repurchased shares – 3305988 3305988 –
noncontrolling interest arising on restructuring – – 82874
balance at 31 december 2011 382685785 – 382685785 1566386
retained earnings
reserves available for distribution to shareholders are based on the statutory historical financial information of the company  
as a standalone entity which are prepared in accordance with russian accounting standards and which differ significantly from 
ifrs russian legislation identifies the basis of distribution as accumulated profit however current legislation and other statutory 
regulations dealing with distribution rights are open to legal interpretation consequently actual distributable reserves may differ 
from the amount of accumulated profit under russian statutory accounting rules
weighted average number of shares diluted earnings per share
the group had potentially dilutive securities namely the group’s equitysettled share appreciation plan which was established 
during 2010 see note 32
basic and dilutive earnings per share were calculated by dividing profit for the year attributable to equity holders of the parent by  
the weighted average number of outstanding common shares before and after dilution respectively the calculation of the 
weighted average number of outstanding common shares after dilution is as follows
year ended
31 december 
2011
year ended
31 december 
2010
weighted average number of outstanding common shares 366969369 358732335
dilutive effect of share appreciation plan 25875610 3140220
weighted average number of outstanding common shares after dilution 392844979 361872555
there were no adjustments required to earnings for the purposes of calculating dilutive earnings per share in the current year 
2010 nil the dilutive effect of equitysettled share appreciation rights has been calculated using the treasury stock method
32 sharebased payments
in 2010 the group established an equity incentive plan the plan for executive directors and senior employees of the group  
in which the grant of equitysettled share appreciation rights up to 30 million shares in jsc polymetal the bonus fund was 
approved the number of awards to which a qualifying participant is entitled was determined by the board of jsc polymetal  
on 8 november 2010 group management believes that such awards better align the interests of its employees with those of  
its shareholders
under the terms of the plan these awards were eligible for immediate vesting on the group restructuring and listing however  
the executive director and senior managers waived that right and the entitlement to jsc polymetal shares was exchanged for  
an entitlement to polymetal international shares on a one to one basis with the same vesting conditions as existed previously  
as the cancellation and reissuance of the awards was done solely to preserve the existing rights of the award holders  
no accelerated share based charge has been recognised
the aggregate number of shares comprising the bonus fund will be determined on 11 june 2013 and will depend on the excess 
of the weighted average price of the company’s shares during the period between 11 march 2013 and 11 june 2013 over an 
established price of us1674
equitysettled stock appreciation rights granted have an exercise price of 1 penny vest at the end of a 26 year service period 
and are exercisable on the vesting day in one year from the vesting date financial statements
134 polymetal international plc  annual report 201 1
32 sharebased payments continued
the fair value of the awards granted during the year ended 31 december 2010 was estimated using a two – stage montecarlo 
model the fair value is then amortised on a straightline basis over the requisite service periods of the awards which is generally 
the vesting period use of twostage montecarlo option pricing requires management to make certain assumptions with respect 
to selected model inputs the following assumptions were used to determine the grant date fair value
  expected forfeitures this assumption is estimated using historical trends of executive director and employee turnover as the 
group typically only grants awards to senior employees and the turnover rate for such employees is minimal the group has 
estimated expected forfeitures to be 5 estimated forfeitures are adjusted over the requisite service period to the extent 
actual forfeitures differ or are expected to differ from such estimates changes in estimated forfeitures are recognised in the 
period of change and impact the amount of expense to be recognised in future periods
  expected volatility expected volatility has been estimated based on an analysis of the historical stock price volatility of the 
company’s gdrs from february 2007  when the jsc polymetal gdrs became publicly traded
  expected life the average expected life was based on the contractual term of the option of 36 years as the plan has a  
26 year vesting condition and the participant may exercise their right to redeem shares within one year after vesting occurs 
and such right is obtained the group used the 26 years expected term for the first stage of the montecarlo simulation  
the first date and 36 – for the second stage the second date
  fair value of common stock is equal to the market price of underlying gdrs at the grant date
  riskfree interest rate the riskfree rate is based on us treasury zerocoupon issues with a remaining term equal to the 
expected life assumed at the date of grant
at the grant date the group had not historically declared dividends and management believed the company would not declare  
a dividend over the life of the option as such the expected annual dividend per share was therefore nil any subsequent change 
in dividend policy will be taken into account when valuing options granted in the future
risk free rate 079 for the first date 124 for the second date
expected dividend yield nil
expected volatility 40
expected life years 26 for the first date 36 for the second date
fair value per share us dollars 1697
a summary of option activity under the plan for the year ended 31 december 2011 is presented below
awards
number
weighted average
 exercise price 
per share 
us
weighted average
 fair value of awards
 per share
us
weighted average 
remaining 
years
awards at 1 january 2011 29917460 003 496 345
forfeited 577778 003 496 –
nonvested awards at 31 december 2011 29339682 003 496 245
none of the share awards outstanding as at 31 december 2011 were exercisable as they are not fully vested for the year  
ended 31 december 2011 sharebased compensation in the amount of us57 million 2010 us79 million was recognised  
in general administrative and selling expenses in the consolidated income statement see note 11 as at 31 december 2011  
and 31 december 2010 the group had us757 million and us136 million respectively of unrecognised sharebased 
compensation expense related to nonvested equitysettled stock appreciated rights with a weighted average expected 
amortisation period of 245 years and 345 years respectively
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 135
financial statements appendices governance business review overview
33 related parties
related parties are considered to include shareholders affiliates associates joint ventures and entities under common 
ownership and control with the group and members of key management personnel in the course of its business the  
group entered into various transactions with nomosbank an entity in which alexander nesis a significant shareholder 
of the company note 1 also holds a substantial interest equity method investments and its employees and officers  
as follows
year ended
31 december 
2011 
’000
31 december 
2010 
’000
interest expense on loans provided by nomosbank 2339 1886
revenue from sales to nomosbank 258794 315405
other income from entities under common control 1559 –
lease payments to nomos leasing 5082 4819
outstanding balances are presented below
31 december 
2011
us’000
31 december 
2010
us’000
shortterm loans provided to equity method investments 315 –
longterm loans provided to equity method investments 6303 3455
shortterm loans provided to entity under common control 1522 –
total loans provided to related parties 8140 3455
shortterm loans provided by nomosbank 8318 14379
longterm loans provided by nomosbank 25223 24820
longterm loans provided by equity method investments 1860 1739
total loans provided by related parties 35401 40938
capital lease liabilities to nomos leasing – 4819
other accounts receivable from related parties 2940 175
interest receivable from nomosbank 1573 –
carrying values of other longterm loans provided to related parties as at 31 december 2011 and 31 december 2010 
approximate their fair values
details of the significant terms of the loans provided by related parties are disclosed in note 24 as at 31 december 2011  
and 31 december 2010 the group has certain forward sales commitments to related parties see note 28
the amounts outstanding at the balance sheet dates are unsecured and expected to be settled in cash no expense has been 
recognised in the reporting period for bad or doubtful debts in respect of the amounts owed by related parties all trade payable 
and receivable balances are expected to be settled on a gross basis
the remuneration of directors and other members of key management personnel during the periods was as follows
year ended 
31 december 
2011
us’000
year ended 
31 december 
2010
us’000
sharebased payments 28901 4264
shortterm benefits of board members 2278 982
shortterm employee benefits 1779 844
postemployment benefits 70 18
 benefits of board members include the remuneration of the board members of jsc polymetal
the remuneration of directors and key executives is determined by the remuneration committee having regard to the 
performance of individuals and market trends financial statements
136 polymetal international plc  annual report 201 1
34 notes to the consolidated statements of cash flows
notes
year ended
31 december 
2011
us’000
31 december 
2010
us’000
profit before tax 408847 306430
adjustments for
depreciation expense 96654 70334
writedown of exploration assets 17 13263 –
writedown of inventory to net realisable value 7 6232 15319
sharebased compensation 11 32 57116 7896
finance costs 15 28746 21541
finance income 4208 785
loss on disposal of property plant and equipment 12 6203 6296
change in fair value of contingent consideration liability 29 6828 3616
change in allowance for doubtful debts 12 1171 2333
loss from equity method investments 19 1952 1170
change in fair value of derivative financial instruments 29 1855 909
foreign exchange losses 13634 337
gain on disposal of subsidiary 4 4931 3580
other noncash expenses 1388 1840
movements in working capital
increase in inventories 222889 86424
increase in vat receivable 22766 10491
increase in trade and other receivables 19556 32023
increase in prepayments to suppliers 11437 13296
increase in trade and other payables 6394 19899
increase in other taxes payable 8676 4821
cash generated from operations 370830 312462
interest paid 32414 16991
income tax paid 126317  80256
net cash generated by operating activities 212099 215215
additions to property plant and equipment of us169 million and us48 million during the year ended 31 december 2011 and 
31 december 2010 respectively were acquired on deferred payment terms other noncash transactions during the year ended 
31 december 2011 included the issuance of us670 million of treasury shares for the acquisition of assets in 2011
35 subsequent events
on 7 february 2012 the company completed the acquisition from anglogold ashanti holdings plc anglogold of anglogold’s 
50 interest in various companies the companies held in joint venture with polymetal comprising the anglogold ashanti – 
polymetal strategic alliance the alliance the companies include amikan holding limited which owns the veduga gold  
deposit in the krasnoyarsk region of the russian federation the consideration for the acquisition including the repayment  
of all shareholder loans made by anglogold to the companies was us20 million paid in cash the group’s existing 50 
investment had a carrying value of us124 million along with a loan asset of us63 million the group intends to introduce  
a new joint venture partner in 2012 and as such the asset acquired is considered held for sale under the definitions within ifrs 5
on 17 february 2012 the company executed the mandatory tender offer made on 23 november 2011 the mto at a cost  
of us538 million as a result the company’s holding in jsc polymetal has increased to 397 287 592 ordinary shares 
representing approximately 9948 of the total share capital of jsc polymetal the company intends to exercise its right  
to proceed with a statutory squeeze out ie purchase of the remaining jsc polymetal shares on terms and within the  
period as provided under applicable russian law 
as set out in note 24 on 31 august 2012 the repurchase date polymetal esop limited would have been obligated to 
repurchase all of the jsc polymetal shares transferred under the general master repurchase agreement the gmra for  
the repurchase price which is calculated as the sum of i the price received for the relevant polymetal shares and ii the 
aggregate amount obtained by daily application of libor  275 to the relevant price for the number of days during the  
period commencing on the relevant transfer date and ending on the repurchase date on 16 february 2012 polymetal esop 
limited accelerated the repurchase date under the gmra and settled its obligations under the gmra in full for us250 million
a final dividend has been proposed in relation to the year of 20 cents per share 2010 nil giving a total expected dividend  
of us765 million 2010 nil this is subject to approval by shareholders at the annual general meeting and has therefore  
not been included as a liability in these financial statements
notes to the consolidated financial statements  
continued polymetal international plc  annual report 201 1 137
financial statements appendices governance business review overview
reserves and resources
mineral resources and ore reserves as at 1 january 2012
1
mineral resources
tonnage
kt
content
au koz ag koz cu kt
aueqv 
koz
measured 17347 1067 62426 145 2179
indicated 43360 1762 88016 326 3392
measured  indicated 60708 2829 150442 471 5572
inferred 48927 7615 30657 269 8260
measured  indicated  inferred 109635 10444 181099 740 13832
mineral resources and ore reserves as at 1 january 2012
1
ore reserves
tonnage
kt
 content 
 au koz ag koz cu kt
 aueqv 
  koz
proved 56449 5057 189507 95 8263
probable 49333 4101 107518 339 6063
proved  probable 105782 9159 297025 434 14326
1  mineral resources and ore reserves are estimated in accordance with the jorc code 2004 mineral resources are in addition to ore reserves discrepancies  
in calculations are due to rounding
this estimate was prepared by employees of jsc polymetal management company and cjsc polymetal engineering 
subsidiaries of the company led by valeri tsyplakov who assumes overall responsibility for the mineral resources and 
ore reserves report mr tsyplakov is the managing director of cjsc polymetal engineering and has 11 years’ experience 
in gold and silver mining he is a member of the institute of materials minerals  mining mimmm london and a competent 
person under the jorc code 
other competent persons employed by the company are responsible for relevant research on which the mineral resources  
and ore reserves estimate is based they include 
 geology and mineral resources – vladimir ryabukhin adviser to director general of jsc polymetal 
management company mimmm with 38 years’ relevant experience
 geology and mineral resources – mikhail fomkin head of geologic modelling mimmm with 26 years’  
relevant experience 
 mining and ore reserves – igor epstein head of mining process department mimmm with 30 years’  
relevant experience
 concentration and metals – igor agapov deputy director of science and technology mimmm with  
14 years’ relevant experience
 environmental issues – tatiana kuleshova director for ecology mimmm with 21 years’ relevant experience
all competent persons have given consent for their material to be included in the report based on the information provided  
by them and in the form and the context in which the material is hereby presented 
metals prices used in estimating mineral resources and ore reserves are listed below unless otherwise indicated in the 
footnotes
ore reserves
au1200 usoz
ag20 usoz
cu6063 ust
mineral resources
au1350 usoz
ag24 usoz
cu7 165 ust appendices
138 polymetal international plc  annual report 201 1
reserves and resources
continued
ore reserves precious metals deposits as at 1 january 2012
1
ore reserves
tonnage 
kt
grade 
au gt
content 
ag gt
aueqv 
gt
au 
koz
ag 
koz
aueqv 
koz
proved
dukat
2
8170 10 546 101 265 143406 2655
voro
3
14630 27 4 28 1286 1900 1318
lunnoye 1480 19 313 71 91 14885 339
arylakh 210 08 367 70 6 2466 47
khakanja 1660 31 230 70 167 12306 372
yurievskoye 90 86 13 85 24 40 25
mayskoye
4
2699 97 – 97 839 – 839
albazino 11790 40 – 40 1499 – 1499
sopka kvartsevaya 2730 41 151 66 361 13201 581
birkachan
5
6620 18 6 19 377 1303 399
subtotal 50079 31 118 50 4915 189507 8074
probable
dukat
2
4045 15 557 108 193 72501 1402
voro
3
500 44 4 44 70 55 71
lunnoye 1230 17 443 91 66 17538 358
arylakh 460 06 498 89 9 7371 132
khakanja 420 59 288 107 80 3881 145
yurievskoye 20 57 11 64 4 7 4
mayskoye
4
5178 95 – 95 1587 – 1587
albazino 6530 31 – 31 656 – 656
sopka kvartsevaya 560 52 175 81 94 3164 147
birkachan
5
5980 33 16 36 642 3001 692
subtotal 24923 42 134 65 3401 107518 5193
proved  probable
dukat
2
12215 12 550 103 458 215907 4057
voro
3
15130 28 4 29 1356 1955 1389
lunnoye 2710 18 372 80 157 32421 697
arylakh 670 07 457 83 15 9837 179
khakanja 2080 37 242 77 247 16187 517
yurievskoye 110 81 11 81 28 47 29
mayskoye4 7877 96 – 96 2426 – 2426
albazino 18320 37 – 37 2155 – 2155
sopka kvartsevaya 3290 43 155 69 455 16365 728
birkachan
5
12600 25 11 27 1019 4304 1091
total 75002 34 123 55 8317 297025 13267
1 ore reserves are estimated in accordance with the jorc code 2004 discrepancies in calculations are due to rounding 
2 including nachalny2
3 including vorontsovskoye south 
4 estimate prepared by snowden as at 01072011 price au900 usoz 
5 ore reserves for underground mining were not reestimated previous estimation as at 01072011 by srk consulting is used price au900 usoz and ag145 usoz polymetal international plc  annual report 201 1 139
financial statements appendices governance business review overview
ore reserves polymetallic ore deposits as at 1 january 2012
1
ore reserves
 
tonnage kt
content
au gt cu au eqvgt
metal
au koz cu kt
aueqv 
koz
proved
varvara
2
6370 07 050 09 142 95 190
subtotal 6370 07 050 09 142 95 190
probable
varvara
2
24410 09 043 11 700 339 870
subtotal 24410 09 043 11 700 339 870
provedprobable
varvara
2
30780 09 044 11 842 434 1059
total 30780 09 044 11 842 434 1059
1 ore reserves are estimated in accordance with the jorc code 2004 discrepancies in calculations are due to rounding 
2 cu grade only represents average grade of float feed ore reserves of float feed 19 mt proved and 78 mt probable appendices
140 polymetal international plc  annual report 201 1
reserves and resources
continued
mineral resources precious metals as at 1 january 2012
1
mineral resources
tonnage
kt au gt
grade
ag gt aueqv gt au koz
content
ag koz aueqv koz
measured
dukat
2
3550 06 294 55 70 33524 629
voro
3
1190 15 3 16 59 125 61
lunnoye 690 17 267 62 38 5913 137
arylakh 60 09 333 61 1 646 12
khakanja 1260 34 272 79 138 11020 322
yurievskoye 40 65 13 64 8 15 8
mayskoye
4
463 63 – 63 93 – 93
albazino 1170 29 – 29 108 – 108
sopka kvartsevaya 240 42 158 68 32 1227 52
birkachan
5
900 13 6 14 37 176 40
dalneye 1730 40 95 56 221 5305 309
tsokol kubaka
7
454 96 15 98 140 226 144
subtotal 11747 25 154 51 945 58177 1914
indicated
dukat
2
2350 06 290 55 47 21909 412
voro
3
90 26 3 28 8 8 8
lunnoye 680 12 301 62 26 6594 136
arylakh 125 08 640 114 3 2559 46
khakanja 330 28 148 52 29 1597 56
yurievskoye 10 91 20 96 3 5 3
mayskoye
4
1642 61 – 61 324 – 324
albazino 3440 29 – 29 326 – 326
sopka kvartsevaya 110 45 164 73 16 589 26
birkachan
5
1530 15 8 16 74 413 81
oroch
6
1365 33 143 56 143 6284 247
tsokol kubaka
7
592 64 11 66 122 207 126
subtotal 12264 28 102 45 1121 40166 1791 polymetal international plc  annual report 201 1 141
financial statements appendices governance business review overview
mineral resources precious metals as at 1 january 2012
1 
continued
measured  indicated
tonnage
kt au gt
grade
ag gt aueqv gt au koz
content
ag koz aueqv koz
dukat
2
5900 06 292 55 117 55433 1041
voro
3
1280 16 3 17 67 133 69
lunnoye 1370 14 284 62 64 12507 272
arylakh 185 08 541 97 4 3205 57
khakanja 1590 33 247 74 167 12617 377
yurievskoye 50 70 14 71 11 20 11
mayskoye
4
2105 62 – 62 417 – 417
albazino 4610 29 – 29 434 – 434
sopka kvartsevaya 350 43 160 70 48 1816 78
birkachan
5
2430 14 7 15 111 589 121
dalneye 1730 40 95 56 221 5305 309
oroch
6
1365 33 143 56 143 6284 247
tsokol kubaka
7
1047 78 13 80 262 434 269
subtotal 24012 27 127 48 2066 98343 3705
inferred
dukat
2
30 07 367 73 1 364 7
lunnoye 1050 18 435 90 60 14689 305
arylakh 70 10 357 68 2 797 15
khakanja 120 30 167 56 11 646 22
mayskoye
4
16016 86 – 86 4428 – 4428
albazino 1870 34 – 34 202 – 202
sopka kvartsevaya 10 70 300 107 2 86 3
birkachan
5
410 147 68 158 193 888 208
oroch
6
561 33 225 70 59 4056 126
tsokol kubaka
7
249 93 15 96 75 118 77
avlayakan 1394 59 72 71 263 3227 317
kirankan
8
142 65 8 67 30 39 30
svetloye
9
4083 58 4 59 767 544 776
ozerny
10
1910 55 24 59 337 1474 361
kutyn
11
5505 41 41 717 717
subtotal 33420 67 25 71 7146 26929 7595
1  mineral resources are estimated in accordance with the jorc code 2004 mineral resources are in addition to ore reserves  
discrepancies in calculations are due to rounding
2 including nachalny2
3 including vorontsovskoye south
4 estimate prepared by snowden as at 01072011 price au1150 usoz 
5 mineral resources for underground mining were not reestimated previous estimation as at 0107 2011 by srk consulting is used price au1150 usoz and ag185 usoz
6 estimate prepared by srk consulting as at 01072011 price au900 usoz and ag13 usoz
7 estimate prepared by srk consulting as at 01072011 price au1000 usoz and ag16 usoz
8 estimate prepared by snowden as at 01072011 cog15 gt
9 estimate prepared by snowden as at 01072011 cog30 gt
10 estimate prepared by snowden as at 01072011 cog10 gt
11 estimate prepared by snowden as at 01072011 cog20 gt appendices
142 polymetal international plc  annual report 201 1
reserves and resources
continued
mineral resources precious metals as at 1 january 2012
1 
continued
measured  indicated  inferred
tonnage
kt au gt
grade
ag gt aueqv gt au koz
content
ag koz aueqv koz
dukat
2
5930 06 293 55 118 55797 1048
voro
3
1280 16 3 17 67 133 69
lunnoye 2420 16 350 74 124 27196 577
arylakh 255 09 490 89 6 4002 73
khakanja 1710 32 241 73 178 13263 399
yurievskoye 50 70 14 71 11 20 11
mayskoye
4
18121 83 – 83 4845 – 4845
albazino 6480 31 – 31 636 – 636
sopka kvartsevaya 360 44 164 71 50 1902 82
birkachan
5
2840 33 16 36 304 1477 329
dalneye 1730 40 95 56 221 5305 309
oroch
6
1926 33 167 60 201 10341 374
tsokol kubaka
7
1296 81 13 83 337 552 346
avlayakan 1394 59 72 71 263 3227 317
kirankan
8
142 65 8 67 30 39 30
svetloye
9
4083 58 4 59 767 544 776
ozerny
10
1910 55 24 59 337 1474 361
kutyn
11
5505 41 41 717 717
total 57431 50 68 61 9212 125272 11300
1  mineral resources are estimated in accordance with the jorc code 2004 mineral resources are in addition to ore reserves  
discrepancies in calculations are due to rounding
2 including nachalny2
3 including vorontsovskoye south
4 estimate prepared by snowden as at 01072011 price au1150 usoz 
5 mineral resources for underground mining were not reestimated previous estimation as at 0107 2011 by srk consulting is used price au1150 usoz and ag185 usoz
6 estimate prepared by srk consulting as at 01072011 price au900 usoz and ag13 usoz
7 estimate prepared by srk consulting as at 01072011 price au1000 usoz and ag16 usoz
8 estimate prepared by snowden as at 01072011 cog15 gt
9 estimate prepared by snowden as at 01072011 cog30 gt
10 estimate prepared by snowden as at 01072011 cog10 gt
11 estimate prepared by snowden as at 01072011 cog20 gt polymetal international plc  annual report 201 1 143
financial statements appendices governance business review overview
mineral resources polymetallic ore deposits as at 1 january 2012
1
mineral 
resources
tonnage 
kt
grade
ag gt ag gt cu 
aueqv
gt au koz ag koz
content
cu kt
 aueqv
  koz
measured
goltsovoye 110 – 1200 – 200 – 4249 – 71
varvara 5490 07 – 040 11 122 – 145 195
subtotal 5600 07 24 040 15 122 4249 145 265
indicated
goltsovoye 1270 – 848 – 141 – 34621 – 577
varvara 28730 07 – 041 09 641 – 326 804
perevalnoye
2
1096 – 375 – 63 – 13229 – 220
subtotal 31096 06 48 041 16 641 47850 326 1601
measured  
indicated
goltsovoye 1380 – 876 – 146 – 38870 – 648
varvara 34220 07 – 041 09 763 – 471 999
perevalnoye
2
1096 – 375 – 63 – 13229 – 220
subtotal 36696 06 44 041 16 763 52099 471 1867
inferred
goltsovoye 160 – 625 – 104 – 3215 – 54
varvara 15270 10 – 052 12 469 – 269 604
perevalnoye
2
78 – 206 – 34 – 513 – 9
subtotal 15508 09 7 052 13 469 3728 269 666
measured  
indicated  
inferred
goltsovoye 1540 – 850 – 142 – 42085 – 701
varvara 49490 08 – 044 10 1232 – 740 1602
perevalnoye
2
1174 – 362 – 61 – 13742 – 229
total 52204 07 33 044 15 1232 55827 740 2532
1  mineral resources are estimated in accordance with the jorc code 2004 mineral resources are in addition to ore reserves discrepancies in calculations are  
due to rounding
2 estimate prepared by srk consulting as at 01072011 price ag13 oz
3 cu grade only represents average grade of float feed 109 mt high grade copper fresh and 78 mt high grade copper powder appendices
144 polymetal international plc  annual report 201 1
glossary
abbreviations
agm annual general meeting
ak project avlayakankirankan project
cis commonwealth of independent states
gdrs global depositary receipts
imn indigenous minorities of the north
issf institutional share swap facility
jorc australasian joint ore reserves 
committee
jsc joint stock company
lbma the london bullion market association
micex micex stock exchange
mto mandatory tender offer
ngo nongovernmental organisation
pox pressure oxidation
rts ‘russian trading system’ stock exchange
units of measurements
gt gram per tonne
km kilometres
koz thousand ounces
kt thousand tonnes
ktpa a thousand tonnes per annum
m metres
moz million ounces
mt million tonnes
mtpa million tonnes per annum
mw megawatts
t tonne 1000 kg
oz or oz troy ounce 311035 g
glossary of technical terms
assay  a chemical test performed on a sample of 
any material to determine the amount of 
valuable metals contained in the sample
ag silver
au gold
aueqoz  gold equivalent ounce and ‘aueq’  
means gold equivalent
autoclave a lined stainlesssteel vessel in which  
a technological operation of pressure 
oxidation takes place
biological 
oxidation
 a technological operation in which slurry  
is subjected to the activity of bacteria with 
the goal to destroy sulphide particles 
enveloping gold particles and make  
slurry amenable to cyanide leaching
byproduct a secondary metal or mineral that is 
produced or recovered during mining and 
processing at a deposit a byproduct 
offers additional economic benefits to the 
project but it is not necessary in order for 
the project to be economically efficient
carboninleach 
or cil
 a technological operation in which slurry 
containing gold and silveris leached by 
cyanide in the presence of activated 
carbon gold is absorbed onto activated 
carbon in parallel with leaching
carboninpulp or 
cip
 means a technological operation in  
which slurry containing gold and silver is 
leached by cyanide initially without and 
subsequently in the presence of activated 
carbon gold absorption onto carbon 
starts only after preliminary leaching
concentrate a semifinished product of mineral 
processing flotation or gravity separation 
containing significantly more value per unit 
of weight than ore and subject to further 
processing for the production of metals  
or other substances in final useful form
countercurrent 
decantation
 a technological operation in which 
goldandsilver bearing clear liquid is 
separated from the slurry through several 
stages of water addition washing and 
solidliquid separation thickening 
employed in the merrillcrowe process
cu copper
cutandfill a method of underground mining which 
requires purposeful backfilling of space 
emptied of ore it is used where ore 
contains relatively high mineral values and 
ground conditions are less competent
cutoff grade the minimum grade at which mineralized 
material can be economically mined and 
processed used in the calculation of  
ore reserves
cyanide leaching leaching with cyanide as the leaching 
agent
decline a permanent inclined underground tunnel 
leading from the surface to an ore body
diamond core 
drilling
a method of exploration in which rock 
samples from undergroundare retrieved 
as core whole rock cylinders for further 
examination and assaying
dilution the share percentage of material below 
the cutoff grade that is extracted together 
and irretrievably mixed with ore during 
mining all other things being equal higher 
dilution leads to lower grade in ore mined
doré one of the traditional endproducts of  
a goldsilver mine an alloy containing  
90 per cent in sum of gold and silver  
as well as 10 of impurities polymetal international plc  annual report 201 1 145
financial statements appendices governance business review overview
exploration activity ultimately aimed at discovery  
of ore reserves for exploitation consists  
of sample collection and analysis 
including reconnaissance geophysical 
and geochemical surveys trenching 
drilling etc
flotation a technological operation in which 
orebearing minerals are separated from 
gangue minerals in the slurry based on 
variance in the interaction of different 
minerals with water particles of valuable 
concentrate are carried upwards with  
froth and collected for further processing
gossan rustcoloured oxide and hydroxide 
minerals of iron and manganese that cap 
an ore deposit gossans form by the 
oxidation of the sulfide minerals in an ore 
deposit and they thus may be used as 
clues to the existence of subsurface ore 
deposits in addition to hydrous oxides  
of iron and manganese gold and silver  
in the native state can occur in gossans
grade means the relative amount of metal in  
ore expressed as grams per tonne for 
precious metals and as a percentage  
for most other metals
head grade the grade of ore coming into  
a processing plant
heap leach a technological operation in which 
crushed material is laid on a sloping 
impervious pad where it is leached by 
cyanide solution to dissolve gold andor 
silver metals are subsequently recovered 
from pregnant leach solution by cic  
or the merrillcrowe process
indicated 
resource 
means that part of a resource for which 
tonnage grade and content can be 
estimated with a reasonable level of 
confidence it is based on exploration 
sampling and testing information gathered 
through appropriate techniques from 
locations such as outcrops trenches  
pits workings and drill holes the 
locations are too widely or inappropriately 
spaced to confirm geological andor 
grade continuity but are spaced closely 
enough forcontinuity to be assumed
inferred resource means that part of a resource for which 
tonnage grade and content can be 
estimated with a low level of confidence  
it is inferred from geological evidence  
and assumed but not verified geological 
andor grade continuity it is based on 
information gathered through appropriate 
techniques from locations such as 
outcrops trenches pits workings  
and drill holes which may be limited  
or of uncertain quality and reliability
infill drilling a conventional method of detailed 
exploration on already defined resource of 
reserve consisting of drilling on a denser 
grid to allow more precise estimation of 
ore body parameters and location
leaching the process of dissolving mineral values 
from solid into liquid phase of slurry
measured 
resource 
means that part of a resource for which 
tonnage densities shape physical 
characteristics grade and mineral content 
can be estimated with a high level of 
confidence it is based on detailed and 
reliable exploration sampling and testing 
information gathered through appropriate 
techniques from locations such as 
outcrops trenches pits workings and  
drill holes the locations are spaced 
closely enough to confirm geological  
and grade continuity
merrillcrowe 
process
a technological operation for extraction of 
gold andor silver after cyanide leaching 
in the first step slurry containing gold and
or silver is separated into liquid and solid 
phases by washing the solids off in 
countercurrent decantation thickeners in 
the second step pregnant leach solution 
liquid phase of slurry is filtered to remove 
impurities and deaerated finally gold and 
silver are deposited onto the solid bed of 
claylike material where they replace zinc 
particles which pass into a solution 
merrillcrowe is preferentially used for 
silverrich ores
mill a mineral processing plant
mineralisation a rock containing valuable components 
not necessarily in the quantities sufficient 
for economically justifiable extraction 
consists of ore minerals and gangue
openpittable amenable for economically feasible mining 
by openpit methods
openpit mine a mine that is entirely on surface also 
referred to as opencut or opencast mine
open stoping a method of underground mining in  
which underground voids left after ore  
is extracted are left behind unfilled and 
unsupported
ore the part of mineralisation that can be 
mined and processed profitably
ore body a spatially compact and geometrically 
connected location of ore
ore mined ore extracted from the ground for further 
processing
ore processed ore subjected to treatment in a mineral 
processing plant
ore stacked the ore stacked for heap leach operations
oxidised ore ore in which both ore minerals and 
gangue are fully or partially oxidised thus 
impacting its physical and chemical 
properties and influencing the choice  
of a processing technology appendices
146 polymetal international plc  annual report 201 1
precipitate the semifinished product of mineral 
processing by merrillcrowe process 
normally containing very high 
concentrations of silver andor gold
pox or pressure 
oxidation
a technological operation in which slurry  
is subjected to high pressure and high 
temperature in an autoclave with the goal 
to destroy sulphide particles enveloping 
gold particles and make slurry amenable 
to cyanide leaching
primary ore unoxidised ore
probable reserves the economically mineable part of an 
indicated and in some cases measured 
resource which has a lower level of 
confidence than proved reserves but  
is of sufficient quality to serve as the  
basis for a decision on the development  
of the deposit
production the amount of pure precious metals 
measured in thousands of ounces  
for gold millions of ounces for silver  
and tonnes for copper produced  
following processing
proved reserves the economically mineable part of a 
measured resource which represents the 
highest confidence category of reserve 
estimate the style of mineralisation or 
other factors could mean that proved 
reserves are not achievable in some 
deposits
reclamation the restoration of a site after mining  
or exploration activity is completed
recovery or 
recovery rate
the percentage of valuable metal in  
the ore that is recovered by metallurgical 
treatment in the final or semifinished 
product
refractory a characteristic of goldbearing ore 
denoting impossibility of recovering gold 
from it by conventional cyanide leaching
reserves the economically mineable part of a 
measured andor indicated mineral 
resource it takes into account mining 
dilution and losses appropriate 
assessments and studies have been 
carried out and include consideration of 
and modification by realistically assumed 
mining metallurgical economic 
marketing legal environmental social and 
governmental factors these assessments 
demonstrate at the time of reporting that 
extraction could reasonably be justified 
reserves are subdivided in order of 
increasing confidence into probable 
reserves and proved reserves
resources a concentration or occurrence of material 
of intrinsic economic interest in or on  
the earth’s crust in such form quality  
and quantity that there are reasonable 
prospects for eventual economic 
extraction the location quantity grade 
geological characteristics and continuity  
of resources are known estimated or 
interpreted from specific geological 
evidence and knowledge resources  
are subdivided in order of increasing 
geological confidence into inferred 
indicated and measured categories
roasting a technological operation in which slurry  
is subjected to high temperature in the 
presence of oxygen with the goal to  
burn sulphide particles enveloping gold 
particles and make slurry amenable  
to cyanide leaching
runofmine ore ore as mined in terms of grade size 
moisture etc
stockwork one of the types of mineralisation a 
complex system of structurally controlled 
or randomly oeirnted veins stockworks 
are common in many ore deposit types
stope a large underground excavation entirely 
within an ore body a unit of ore extraction
strike a horizontal extension of an ore body  
or mineralisation
stripping the mining of waste in an open pit mine
tailings part of the original feed of a mineral 
processing plant that is considered  
devoid of value after processing
underground 
development
excavation which is carried out to access 
ore and prepare it for extraction mining
vein a relatively narrow ore body with 
significant dip and strike dimensions  
and sharply defined boundaries
waste barren rock that must be mined and 
removed to access ore in a mine
glossary
continued polymetal international plc  annual report 201 1 147
shareholder information
as at 31 december 2011 the company’s issued share capital consisted of 382685782 ordinary shares of no par value  
each carrying one vote the company does not hold any ordinary shares in treasury the ordinary shares reflect 100  
of the total issued share capital of the company
substantial shareholdings as at 24 april 2012
shareholder beneficial owner
number of
shares
nature 
of holding
percentage 
of issued 
share capital

pearlmoon limited mr petr kellner 79840437 indirect 2086
powerboom investments limited mr alexander nesis 68497758 indirect 1790
vitalbond limited  
ann capital management fund limited mr alexander mamut 38740784 indirect 1012
mbc development limited mr alexander mosionzhik 17000000 indirect 444
staroak limited mr oleg shuliakovskii 16335275 indirect 427
registrar
computershare investor services jersey limited
queensway house
hilgrove street
st helier jersey je1 1es
channel islands
auditors
deloitte llp
2 new street square
london ec4a 3bx
united kingdom 
brokers
morgan stanley  co international plc
25 cabot square
london e14 4qa
united kingdom
canaccord genuity limited
88 wood street
london 
ec2v 7qr
united kingdom
legal counsel
jersey legal advisors to the company
carey olsen
47 esplanade
st helier
jersey je1 0bd
channel islands
english us and russian legal advisers to the company
freshfields bruckhaus deringer llp
65 fleet street
london ec4y 1hs
united kingdom
freshfields bruckhaus deringer llp
kadashevskaya nab 142
moscow 119017
russian federation
cypriot legal advisors to the company
mouaimis  mouaimis
1618 zinas kanther street
3035 limassol
cyprus 
advisers as to kazakh law to the company
grata law firm
104 mospanov str
registered office of the company
ogier house
the esplanade
st helier
jersey je4 9wg
channel islands
tel 44 1534 504000
registered no 106196
company secretary
tatiana tchedaeva
media contacts   
college hill
leonid fink
tony friend
44 020 7457 2020
investor relations
polymetal international
pavel danilin
7 812 313 5964 148 polymetal international plc  annual report 201 1
notes   polymetal international plc
ogier house
the esplanade
st helier
jersey je4 9wg
channel islands
registered no 106196


Summary:
 10 polymetal international plc annual report 201 1
business review
chief executive’s review
2011 was a year to remember 
for polymetal our listing on  
the london stock exchange  
in november and achieving 
record production volumes 
represent milestones of which 
we are particularly proud
record production levels
in 2011 we produced a record  
810 koz of gold equivalent ounces
1
 
this was achieved despite some 
grade decline at mature operations 
which was more than offset by 
production from new operations  
and the successful expansion  
of existing mines 
annual gold production was essentially 
flat at 443 koz with a further 28 koz  
of payable gold contained in albazino 
concentrate prepared for processing  
at the amursk pox plant silver 
production increased by 15 to  
199 moz a record for polymetal 
copper production was 69 kt 
up 73 on 2010 
the early months of the year were 
particularly challenging with various 
issues relating to grade quality and 
production processes resulting in an 
initial operational underperformance 
however as these issues were 
resolved the business subsequently 
performed well and we achieved our 
revised targets – reaching a runrate 
of 1 moz annual production in the last 
quarter of 201 1 this was supported  
in particular by the full rampup of the 
albazino plant and stabilisation of 
grades at our dukat hub
as a result we are now firmly on 
track to deliver on our target of  
14 moz gold equivalent production 
per annum by the end of 2014 
strong financial performance
201 1 was a very successful year for 
the company the increase in gold 
equivalent production and the growth 
in metal prices during the year 
pushed the revenues up 43 to a 
record us1326 million while cost 
pressures in russia and in the mining 
industry in general remained high  
we nevertheless believe we have  
been successful in managing our 
cash costs our cash costs were  
at us701 per gold equivalent  
ounce up 26 as a result of some 
operational challenges and low 
volumes due to the rampup of 
significant new operations at albazino 
and further influenced by russia’s 
domestic inflation and the rouble 
strengthening against the us dollar
adjusted ebitda which is a key 
metric of our core cash earnings 
increased by 47 to us624 million 
in line with revenue growth and the 
adjusted ebitda margin increased  
to 47 bottomline net earnings 
were up 21 driven by ebitda 
growth growth in noncash 
expenses and change in the 
effective tax rate
as a result of the cash raised at ipo 
and robust growth in operating cash 
1  based on 160 agau and 51 cuau conversion ratios
in shape for  
longterm growth polymetal international plc annual report 201 1 11
financial statements appendices governance business review overview
flows we have significantly reduced 
leverage to 141 net debtadjusted 
ebitda with the majority of debt 
65 being longterm both these 
factors give us and our investors 
comfort as to the company’s liquidity 
and funding 
robust project delivery 
i am very pleased to report that all our 
key projects are now progressing to 
plan and schedule the amursk pox 
facility was completed in december 
and has entered the commissioning 
stage in 2012 it will start processing 
refractory concentrates from albazino 
and in 201314 will reach design 
capacity with the inclusion of 
concentrate from the mayskoye mine 
much development and construction 
work has been completed at 
mayskoye our most remote mine  
with mills installed and the power 
substation nearing completion 
underground development has 
reached a steady rate of 1100 m  
per month 
the merrillcrowe circuit was 
successfully commissioned at the 
kubaka plant omolon hub and  
is ready to commence full scale 
processing of high grade sopka ore 
commitment to safety and 
responsible development
during the year we continued to 
demonstrate a strong commitment  
to responsible corporate citizenship 
we have maintained high 
environmental standards both at 
existing and new operations we 
have also continued to provide 
meaningful support to local 
communities wherever we operate
i would also like to highlight a marked 
improvement in safety at work last 
year we had no fatalities and our 
lost time injury frequency rate was 
63 lower than in 2010 this very 
successful outcome was achieved  
as a result of great efforts throughout 
our operations to improve safety 
policies and working practices 
these new policies have been  
strictly implemented to ensure full 
compliance across all locations and 
are supported by extensive training 
and relevant incentive arrangements
looking ahead
our teams are firmly focused on 
delivering further growth in 2012  
this will be driven by the startup  
of the amursk pox facility and the 
achievement of full production 
capacity at omolon 
in the year ahead we expect to 
produce 590640 koz of gold 2123 
moz of silver and 67 kt of copper 
we aim to increase our total annual 
gold equivalent production to over  
1 moz in the coming year and to  
14 moz by 2014
we continue to focus on operational 
excellence commitment to our 
strategic objectives and proven 
business model with our talented  
and dedicated workforce i am 
confident that we will continue to 
deliver sustainable value as we 
continue to grow
vitaly nesis 
chief executive 
24 april 2012
a secure demand
the global demand for gold  
is secure and dynamic 
 
key categories include
investment
gold will always play a vital role in  
any longterm savings or investment 
portfolios it is a foundation asset 
offering a hedge against currency 
and asset price volatility
jewellery
jewellery accounts for over 50  
of the market for gold growing 
affluence in the major markets of 
india and china will continue to 
drive demand for gold jewellery  
not just a decorative item but  
also as a key component of 
household savings
central banks and  
government agencies
gold reserves held by central banks 
have increased over the past two 
years the factors that motivated 
these purchases will remain relevant 
for the foreseeable future
industry and technology
gold is used in an increasingly 
wide range of consumer and 
industrial technologies it has 
unique technical properties of  
high conductivity resistance to 
corrosion malleability and ductility