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JSC Polymetal to acquire 100% interest in a company holding the mining and exploration license for Kutyn gold deposit

JSC Polymetal announced it has signed an agreement with Olsen Business Limited for which it is to acquire a 100% interest in a company holding the mining and exploration license for Kutyn gold deposit. The investment is for a consideration of 3.5 million of the Company's ordinary shares.

The acquisition is inclusive of the assumption of approximately US$2 million of debt. As such, the enterprise value of the Transaction is approximately US$67 million, as of Wednesday’s closing price.

The license area covers 120 square kilometers in the Tuguro-Chumikan district of the Khabarovsk Territory (the Far East of Russia) and is located 113 kilometers north-west from Albazino, one of the Company's existing deposits in the region, and 10 kilometers from the Sea of Okhotsk.

Polymetal is keen to consolidate land positions in the Khabarovsk Territory, leveraging existing presence in the region. The investment will enable the firm acquire substantial oxidized mineral resources with easy open-pit mining, high heap leach recoveries, and proximity to the sea.

In addition, it enables Polymetal gain access to exploration upside based on the facts that only 25% of the property is covered by exploration works and most of the identified geophysical and geochemical anomalies have not been tested.

Commenting on the investment, Vitaly Nesis, CEO of Polymetal said Kutyn, with its proximity to Albazino and right next to the sea of Okhotsk, is a natural extension of the firm’s portfolio of advanced exploration properties in Khabarovsk. Nesis said he was confident the transaction represents good value for Polymetal’s shareholders as near-surface oxidized mineralization can be brought into production relatively quickly and at a low capital cost.

The Transaction has been approved by the Company's Board of Directors and is subject to approval by the Federal Antimonopoly Service of the Russian Federation.

Polymetal is a Russian gold and silver miner with operations and development projects in Russia and Kazakhstan. The Company produced 0.75 million of gold equivalent ounces in 2010 and is targeting to take its total production to 1.2 Moz in 2012 mostly as a result of commissioning of the new projects, all of which are now under construction.

A key element of Polymetal's strategy is creation of processing hubs with the goal to ensure the most efficient and responsible utilization of financial and human capital by treating ores and concentrates from various sources at centralized locations.

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