Russia's Polymetal announced on Thursday the start-up of mining operations at its Arylakh deposit in the Magadan region in Russia's Far East.

Polymetal subsidiary, Silver Territory, has started to operate the open-pit silver and gold Arylakh mine. In February Polymetal carried out its first stripping work at the deposit and in March began producing and processing Arylakh ore.

Arylakh, which is Lunnoye's satellite deposit, is located in the Srednekansky area of the Magadan region, 20 km from Silver Territory's processing plant. The Arylakh deposit was discovered in 1986.

In 1999 Silver Territory obtained a license for exploration and production of silver and gold at the Arylakh deposit and its flanks, valid until the end of 2016.

Under the JORC Code, as of September 30, 2006, proved and probable ore reserves at the Arylakh deposit were 1.66 million mt with 40,000 oz of contained gold and 25.2 million oz of contained silver.

Measured, indicated and inferred resources were estimated at 1.773 million mt of ore with 58,000 oz of contained gold and 32.5 million oz of contained silver.

Polymetal plans to process Arylakh ore at Silver Territory's processing plant, which has a designed production capacity of 300,000 mt/year. The designed production capacity of the deposit is 150,000 mt/year.

The plan for the deposit's operation currently provides for open-pit production at the Arylakh deposit to last until 2016.

"Operations at Arylakh will help ensure that Silver Territory's processing plant will be able to operate at its full designed production capacity," Polymetal CEO Vitaly Nesis said in the company's statement.