Polyus Group to acquire 50% of SVMC, the holder of Nezhdaninskoe license.

Polyus Gold, Russia’s largest gold producer announces today the decision to acquire a 50% stake (292 493 ordinary shares) in OJSC South Verkhoyansk Mining Company from Interros holding company. The decision was passed by Polyus Gold Board of Directors in the meeting held on November 7, 2006.

The transaction will amount to US$ 300 mln. This acquisition will result in consolidation of 100% of SVMC shares under Polyus Group (OJSC Polyus Gold and its subsidiaries).

Nezhdanisnkoe deposit is currently undergoing extensive exploration, especially in the central and northern areas. These exploration works are expected to provide substantial growth in gold reserves. The results of the exploration will become the basis for developing Nezhdaninskoe scoping study to be compiled in 2007 by VNIPIPromtechnologii engineering company which was chosen general contractor through a recent tender.

Commenting on the decisions of the Board, CEO of Polyus Gold Evgueni Ivanov said: «By consolidating 100% of SVMC shares Polyus Gold will substantially increase its reserve base and establish full control over one of the largest gold deposits in Russia». Mr. Ivanov also noted that, «This transaction became possible through final resolution and settlement of a number of claims regarding ownership of some part of SVMC shares». «Polyus Gold management is confident that the acquired asset has strong potential for value growth, especially due to the geological perspectives of Nezhdaninskoe», – said Mr. Ivanov.

The Board has also approved the Public and investor relations policy of OJSC Polyus Gold and passed the decision to expand the company’s Engineering center in Krasnoyarsk.

Note for editors

Polyus acquired 50% of OJSC SVMC in September 2005, as part of a larger transaction to acquire mining assets located in Sakha Republic (Yakutia) from Alrosa Investment Group.

Interros holding company announced the acquisition of a 20% stake in OJSC SVMC from Celtic Resources in December 2005.

OJSC SVMC holds license to develop Nezhdaninskoye deposit, one of the largest gold deposit in Russia.

Nezhdaninskoye reserves according to Russian classification amount to 220 tonnes (7.1 m oz) of B+C1 categories and 690 tonnes (22.2 m oz) of C2+P1 categories.