News

OJSC Polyus Gold announced today that the Company’s Board of Directors approved the Company’s new development strategy, which provides OJSC Polyus Gold with a plan to increase its gold output more than 3 times by 2015. The Board of Directors meeting took place on September 14th, 2006.

New Strategy

The strategy approved by OJSC Polyus Gold Board of Directors provides a plan for OJSC Polyus Gold to boost its gold production, to increase its reserves, its net income and its market cap in 2006-2015, which will elevate OJSC Polyus Gold to the Top 5 of the global gold producers.

The key 2015 targets include:

• JORC proven and probable reserves	- at least 68 million oz;
• Annual gold production	- at least 3.9 million oz;
• EBITDA	- US$710…900 million;
• Net cash flow	- US$600…710 mln;
• Net debt	- no more than US$100 mln.

To reach these targets, the strategy envisages total capex of US$3.4 billion for 2006-2015. This covers investments both to boost production and to acquire new assets and licenses in Russia and internationally, WHERE suitable opportunities arise.

ADR Listing on the LSE

The Board of Directors of OJSC Polyus Gold approved the plan to list the existing American Depositary Receipts (“ADRs”) representing common shares of Polyus Gold on the London Stock Exchange plc (the "LSE") and authorized the Company’s management to proceed with an application to the U.K. Financial Services Authority (the “U.K. Listing Authority”) for the ADRs to be admitted to the official list of the U.K. Listing Authority (the "Official List") and to the LSE for such ADRs to be admitted to trading on the LSE's EEA Regulated Market.

Admission of the ADRs to the Official List and to trading on the LSE's EEA Regulated Market is expected to take place in the final quarter of 2006 or first quarter of 2007 and will be subject to the approval of the U.K. Listing Authority and the LSE, as well as further corporate approvals of the company. No additional shares of Polyus Gold or ADRs will be issued or offered in connection with these applications for admission to listing and trading.

In connection with the listing application, OJSC Polyus Gold is expected to become the first Russian mining company to publish a valuation of its business in the form of a Competent Person’s Report (CPR) prepared by the international auditors, Micon International Co Ltd.

Changes to the consolidated budget
(Shares buy-back program)

OJSC Polyus Gold’s Board of Directors has also approved changes to the company’s consolidated budget that will allow the launch of a share buy-back program for the amount of US$1 billion. It is expected that an investment bank will be engaged to provide advice in connection with the share buy-back, including the purchase price to be offered to shareholders. The buy-back, which is expected to occur in the final quarter of 2006, subject to market conditions and other factors, will be funded by existing cash-flow and is expected to be carried out by a subsidiary of OJSC Polyus Gold.

Other decisions passed by the Board of Directors included approval of two new corporate policies: “Public and Investor Relations” and “Financial Risk Management”.

Commenting on the announcement, the CEO of OJSC Polyus Gold, Evgueni Ivanov, said: “Decisions passed by the Board at this meeting are vital for the company and its shareholders. We are close to reaching the US$ 8 billion market capitalization target set in the previous version of the strategy significantly ahead of the stated timetable. This revised strategy sets new goals and provides the funds to reach them. We continue delivering on our promises. Projects such as the ADR listing and the share buy-back are aimed at raising our stock’s appeal to investors”.

Conference call with Polyus Gold management on 2015 Strategy announcement
Monday 18 September, CET 14:15 / Moscow 16:15.
Listen to webcast >>>

Polyus Gold Fact Sheet
Download in PDF, 1400 kb.

DISCLAIMER

The preceding communication is not an offer to buy or the solicitation of an offer to sell any securities of OJSC Polyus Gold. The buy-back offer that is described in the preceding communication has not yet commenced.  Once a buy-back commences, if at all, the company’s shareholders will be provided, free of charge, with the documents relating to the offer to purchase (including information memorandum, letter of transmittal and related documents). Shareholders should read the information memorandum describing the offer to purchase and other related documents if and when they become available because they will contain important information about the offer.  The information memorandum on the offer to purchase and related documents will be made available on a designated website as well as through the company’s agent for the buy-back.

This communication is only addressed to and is only directed at persons in member states of the European Economic Area (the “EEA”) who are “qualified investors” within the meaning of Article 2.1(e) of the Prospectus Directive (Directive 2003/71/EC) (“Qualified Investors”).  In addition, in the United Kingdom, this document is only addressed to and is only directed at Qualified Investors who (i) also have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) fall within Article 49(2)(a) to (d) of the Order, or (iii) are persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”).  Any investment activity in connection with the ADRs will be engaged in only with, (i) in the United Kingdom, relevant persons, and (ii) in any member state of the EEA (other than the United Kingdom), Qualified Investors. Persons other than relevant persons and other Qualified Investors should not act or rely on this document or any of its contents.

Certain statements in this communication are not historical facts and are forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. Achieving the targets set forth above will depend on many factors and contingencies, many of which are outside of the company’s control. OJSC Polyus Gold does not undertake any obligation to update or revise any of the forward-looking statements contained in this statement.