Exploration

In 2010, the Group‘s exploration team worked at 28 hard-rock gold deposits and at 25 placer sites in five regions of the Russian Federation, namely in the Krasnoyarsk, Magadan, Irkutsk and Amur Regions and in the Republic of Sakha (Yakutia). Geological exploration work continued in Kazakhstan at the Aksu, Bestobe, Zholymbet and other deposits.

In 2010, licenses for the Vangash and Verkhnekadrinskaya areas (Krasnoyarsk Region); for the Smezhny site and six licenses for placer gold (Irkutsk Region); for the Burgakhchan, Gus and Erguneisky sites (Chukotka Autonomous District) were acquired through auctions.

In 2010, the Group's overall geological exploration costs across the Russian Federation amounted to USD 32.3 million, compared to USD 32.5 million in 2009. The total drilling amounted to 155.6 thousand meters. The completion of the exploration work in 2010 resulted in an increase in reserves under categories В+С₁+С₂ by 12.0 tonnes. This included:

• Zapadnoye deposit - 8.9 tonnes;
• Alluvial deposits - 3.1 tonnnes.

The low growth is due to the fact that the submission to and approval by the GKZ of the reports for the Verninskoye, Kuranakh, Panimba, Poputninskoye, Degdekan deposits has been transferred into 2011.

The 2010 geological exploration costs for the Republic of Kazakhstan amounted to USD 11.9 million. The total drilling in 2010 amounted to 31.8 thousand meters. The reserves will be added to the state reserve balance and the growth estimation is expected by the end of 2011. Estimates in accordance with JORC standards, will be reflected in Wardell Armstrong report in the 1st quarter 2011.

The completion of operational exploration in 2010 resulted in the increase of the В+С₁+C₂ reserves by 5.4 tonnes.