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Summary Audit Report Accurately Describes the Findings of the Verification Audit

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Summary Audit Report Accurately Describes the Findings of the Verification Audit OPERATIONAL VERIFICATION AUDIT POLYUS VERNINSKOYE MINE, RUSSIA AUGUST 2021 Prepared by WARDELL ARMSTRONG INTERNATIONAL Sir Henry Doulton House, Forge Lane, Etruria Stoke on Trent, Staffordshire, United Kingdom www.wardell-armstrong.com Page 1 SUMMARY AUDIT REPO RT Name of Mine: Verninskoye Mine Name of Mine Owner: Polyus Name of Mine Operator: Joint Stock Сompany “Polyus Verninskoye” Name of Responsible Manager: Igor Tskukurov Address: Bodaybo State/Province: Irkutsk Region Country: Russia E-Mail: [email protected] The Auditor has been provided with all supporting documentation to accompany the audit. During the site visit a photographic record was made. This information remains with the Auditor at WAI and if needed provided to ICMI. Verninskoye Mine Page 2 August 2021 SUMMARY AUDIT REPO RT Summary 1.1 Background and Location Verninskoye mine is located close to Bodaybo in the Irkutsk region, Eastern Siberia, Russia (see Figure 1). Polyus and Polyus Logistics both have offices in Bodaybo. Bodaybo is 1,135km by road (900km by air) away from the city of Irkutsk and c 400km from Tamisko (major rail link). Bodaybo has a wharf (used by Polyus Logistics) on the right bank of the Vitim River and close to where the Bodaybo River flows into the Vitim River. Bodaybo is a major base of the Lena-Vitim gold industry region. Bodaybo traces its history back to 1864 as a location for warehouses for the storage of provisions for the gold industry for the region and steadily grew. Bodaybo was made a city in 1925 and is an established community of approximately 22,000 people. Verninskoye lies 130 km to the north of the Bodaybo city district centre in the northern part of the Bodaybo Administrative District, Irkutsk Region (see Figure 1), Russia. The nearest village, Kropotkin, to the mine is 6 km. Figure 1: Irkutsk Region, Eastern Siberia, Russia Polyus acquired Verninskoye mine in 2005, and the process plant was commissioned in December 2011. The operation currently has an estimated remaining life of 33 years. Polyus Logistics is the logistical supply and transport company for the Polyus group. The ICMI cyanide audit was undertaken on Verninskoye process plant and Polyus Logistics Bodaybo in February 2019 by Lead Cyanide Auditor, Christine Blackmore. Verninskoye Mine Page 3 August 2021 SUMMARY AUDIT REPO RT Overview of Project Polyus purchases its sodium cyanide for Verninskoye mine from Saratovorgsontez JSC, Russia (Saratov). Saratov became a signatory to the ICMI Code in March 2015 and was fully accredited in April 2017. The cyanide is uploaded to rail cars by Saratov and transported by Russian Rail (RZD) through Russia by train (5,200 km) to Taksimo station where it is diverted on to Polyus`s own spur rail line to their good receiving depot. The Auditor visited both Taksimo station and Polyus rail depot in order to fulfil segments of the audit. Polyus Logistics (PL). PL are responsible for the rail spur and off-loading cranes, road haulage and the small roll on roll off (SP-9) used in the summer months to cross the Vitim river at Bodaido. All of the facilities were audited and visited by the Auditor except for SP-9 Ferry. A remote Due Diligence (DD) was undertaken on the ferry. See Figures 2 and 3. Cyanide is delivered to Verninskoye four times a year by these routes. The PL ferry is only used in Summer and Autumn Figure 3 shows the logistical supply chain. There is only one road route to Verninskoye from Taksimo, this is through the mountains, however the road is adequate and has been approved by the Russian Federation Authorities (RFA). Procedures and risk assessments have been undertaken to ensure the safe transportation of Cyanide to site. Figure 2: Winter Working, Figure 3: Summer Working Verninskoye Mine Page 4 August 2021 SUMMARY AUDIT REPO RT Figure 4 shows the route map from Taksimo to Verninskoye. The Auditor travelled the route during the site visit for the audit, in order to visit the Taksimo facilities and confirm segments of the audit. Figure 4: Route Takismo to Verninskoye Verninskoye Mine Page 5 August 2021 SUMMARY AUDIT REPO RT Mining is by conventional shovel-and-truck methods with the process plant utilising gravity concentration, flotation and carbon-in-leach (CIL) method to produce a gold ore. Annual gold production are a result of several ongoing development projects, including various improvements to the crushing, grinding, flotation and hydrometallurgy circuits. Polyus continue to work toward expanding throughput to 3.5Mt/a. The process plant operates as per the illustrative flow sheet (Figure 5). Tailings produced from the gold recovery process are sent to a purpose-built Tailings Storage Facility (TSF). Figure 5: Verninskoye Block Flow Diagram Verninskoye Mine Page 6 August 2021 SUMMARY AUDIT REPO RT Auditor’s Finding This operation is in full compliance ☒ in substantial compliance not in compliance with the International Cyanide Management Code. Audit Company: Wardell Armstrong LLP Audit Team Leader: Christine Blackmore E-mail: [email protected] Names and Signatures of Other Auditors: Date(s) of Audit: Site visit 3-8 February 2019 I attest that I meet the criteria for knowledge, experience and conflict of interest for Code Verification Audit Team Leader, established by the International Cyanide Management Institute and that all members of the audit team meet the applicable criteria established by the International Cyanide Management Institute for Code Verification Auditors. I attest that this Summary Audit Report accurately describes the findings of the verification audit. I further attest that the verification audit was conducted in a professional manner in accordance with the International Cyanide Management Code Verification Protocol for Gold Mine Operations and using standard and accepted practices for health, safety and environmental audits. The Auditor has been provided with all supporting documentation to accompany the audit. During the site visit a photographic record was made. This information remains with the Auditor at WAI and if needed provided to ICMI. Verninskoye Mine Page 7 August 2021 SUMMARY AUDIT REPO RT 1. PRODUCTION: Encourage responsible cyanide manufacturing by purchasing from manufacturers who operate in a safe and environmentally protective manner. Standard of Practice 1.1: Purchase cyanide from manufacturers employing appropriate practices and procedures to limit exposure of their workforce to cyanide, and to prevent releases of cyanide to the environment. ☒ in full compliance with The operation is ☐ in substantial compliance with Practice 1.1 ☐ not in compliance with Summarize the basis for this Finding/Deficiencies Identified: Polyus purchases the sodium cyanide for Verninskoye from Saratovorgsintez, became a signatory in March 2015 and was fully accredited in April 2017 and re-certified in June 2020, as listed on the ICMI website. Verninskoye Mine Page 8 August 2021 SUMMARY AUDIT REPO RT 2. TRANSPORTATION: Protect communities and the environment during cyanide transport. Standard of Practice 2.1: Establish clear lines of responsibility for safety, security, release prevention, training and emergency response in written agreements with producers, distributors and transporters. ☐ in full compliance with The operation is ☒ in substantial compliance with Practice 2.1 ☐ not in compliance with Summarize the basis for this Finding/Deficiencies Identified: The containers used for shipping of cyanide are in accordance with the United Nations (UN) labelling specifications, which are internationally accepted. These included such as the UN DG code 1689 and marine pollutant. Verninskoye only purchases solid form of cyanide. No liquid is transported. Polyus are undertaking research and trials at their Polyus Krasnoyarsk research centre in good faith of including a colourant dye into their process at Verninskoye. It is Polyus' intention to include the selected dye within 12 months of ICMI announcing the operation`s certification in substantial compliance. The Auditor has issued a CAR for this compliance and in good faith Polyus have prepared an action plan in order to comply with this standard. A supply chain (transportation) audit was undertaken on each element of the supply chain, in accordance with the Code. The following companies took part in the DD audit: Polyus Logistics (PL) – responsible for Cyanide documentation. Russian Rail (RZD) – is responsible from Saratovorgsintez to Taksimo railway station. Polyus Logistics – has its own rail spur and goods yard at Taksimo. Polyus Logistics – road transport collects from Taksimo station and delivery to Verninskoye. The delivery of cyanide by train is co-ordinated with PL road haulage so no cyanide is kept at the PL rail depot. Polyus Logistics – summer and autumn deliveries use their own roll on roll off (SP-9) ferry for crossing the River Vitim at Bodaibo (350m). A remote transportation Due Diligence was undertaken on the Ferry as discussed with ICMI e.mail dated 19 May 2020. Verninskoye Mine Page 9 August 2021 SUMMARY AUDIT REPO RT There is only one route to site from Taksimo to Verninskoye, which has been approved by the Russian Federation Authorities (RFA) for the transportation of cyanide. Further details on transportation are contained in the supply chain audits. The Auditor visited RZD Taksimo station for discussions with regard to RZD capabilities, for the transportation of cyanide. See RZD supply chain audit. The cyanide is loaded by the manufacturer on to rail cars and not off loaded until it reaches PL goods yard via the rail spur from Taximo station. PL (road haulage) times their arrival at Polyus goods yard with the train carrying cyanide. Cyanide is not stored at PL Taximo rail depot. The cyanide is lifted by crane from the rail car and loaded on to PL vehicles. The unloading of cyanide at Verninskoye is undertaken by PL and supervised by Verninskoye Storage Security Manager. Both PL and RZD discussed how safety and maintenance of their rolling stock and vehicles were maintained.
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