OJSC Polyus Gold (RTS, MICEX, LSE – PLZL), Russia’s leading gold producer, today announced the production results for the year 2006. The full year gold output showed a 17% year-on-year increase up to 37.8 tonnes (1 215 k oz), compared to 32.4 tonnes (1 038 k oz) in 2005. Increase in output is largely attributable to organic growth through the planned increased in mining of low grade sulfide ores at Olimipiada mine in Krasnoyarsk region, along the additional production coming from the Kuranakh mine in the Republic of Sakha (Yakutia), acquired at the end of 2005.

In 2006 Polyus’ production units mined 12.7 m tonnes of ore, as compared to 6.7 m tonnes of ore in 2005. The ore processed in 2006 totaled 8.8 m tonnes, compared to 5.7 m tonnes in the previous year. The substantial increase in the ore mined and processed is due to the acquisition of Kuranakh mine as well as to the planed increase in mining of low grade sulfide ores at Olimpiada deposit.

In 2006, Polyus Gold made a major step forward in the area of exploration and reserves growth. Extensive exploration programme at Natalka deposit in Magadan region resulted in the state listing of 1 500 tonnes (48 m oz) of balance reserves (Russian B+C1+C2). That lead to a 70% increase in Polyus Gold’s mineral resources base to 3 000 tonnes (B+C1+C2) as at 1 January, 2007, compared to 1 758 tonnes as at 1 January, 2006. During 2006 the company also substantially increased its P&P reserves according to the Joint Ore Reserves Committee (JORC), from 25.1 m oz to 50.8 m oz.

In 2006, the Company continued its extensive exploration programme in all regions of operations. The drilling works totaled 163 700 m, compared to 143 000 m in the previous year.

Polyus Gold forecasts its gold sales in accordance with IFRS for the year 2006 to amount to US$739 million, representing a 56% year on year increase.

Commenting on Polyus Gold’s 2006 results the Company’s CEO Evgueni Ivanov said: “2006 was an excellent year for the Company. We met all our targets set for the year, and are well-positioned for taking next steps in implementation of Polyus Gold ambitious growth strategy”.

OJSC Polyus Gold production results in 2006.

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Mine-by-mine performance in 2006

Olimpiada Mine
9% year-on-year growth of Olimpiada output in 2006 was a result of the further upgrade of the sulfide ore processing technology, including polishing the proprietary bio-oxidation technology. The launch of Mill-3 in 2007 at Olimpiada mine will add 5 million tonnes of ore to the current sulfide ore processing capacity.

Kuranakh Mine
Kuranakh mine was acquired in September 2005 and was consolidated into Polyus Gold output starting from 4Q 2005. In 2006 the mine made its substantial contribution into the Group’s increased gold output. Efforts made in 2006 to optimize the operations of the mine are expected to result in increase of gold output in the coming years.

Zapadnoye Mine
Further upgrades of mining and processing technologies at the mine lead to doubling of the gold output of Zapadnoye mine in Irkutsk region.

Alluvials
The reduction in output at alluvials in Irkutsk region was mainly caused by decrease in prepared alluvial reserves and lower grades of the washed sands as well as worse weather conditions comparing to the previous years. Technological improvements and further exploration at alluvial deposits will provide for stabilization of gold output in the coming years.