Georazvedka – a subsidiary of Polymetal - was declared the winner of an auction for the license at the Khakarinskaya area in the Khabarovsk Region on December 23rd, 2005. Bidding began at 3 million rubles and the final auction price was 3.3 million rubles. The government granted the Company a 20-year license - valid until December 31st, 2025 - to explore and mine the area. Georazvedka is a specialized geological survey and exploration company that performs work in the Khabarovsk Region.

The Khakarinskaya licensed area is located in the Okhotsk Region (near Polymetal’s active Khakandjinskoye deposit). The gold area is 64 square kilometers. And based on Russian classification standards, it is estimated that the area contains approximately 450,000 ounces (14 tons) of gold.

The area was discovered in the mid-1980s. In 1995, geological exploration of the area was carried out by Dalgeofizika and the Okhotsk expedition. The last geological surveys of the area occurred in 2000.

The Company believes that this area has not been sufficiently well-explored. To address this concern, during 2006, Polymetal plans to develop a detailed program for active geological exploration in the Khakarinskaya area; and the Company plans to begin to implement the initial steps of this program. In 2006-2007, the Company will conduct detailed geological exploration studies. Based on the results of these studies, in 2008, Polymetal will produce estimates of the mineral reserve base of the area and prepare technical-economic models to estimate the cost-effectiveness of constructing an independent production plant at Khakarinskaya.

Polymetal’s experts forecast that the mineralization of the Khakarinskaya area is similar to the mineralization that exists at the Khakandjinskaya deposit. As a result, Polymetal’s experts believe that the area will be developed using open-pit mining and that the ore will be processed using sorption-cyanic technology.

Obtaining the license for the Khakarinskaya area is an important step in Polymetal’s continued strategic development - ensuring that the Company will continue to increase its mineral reserve base and lengthen the life span of its existing projects. Acquiring newly licensed areas is necessary for Polymetal’s next generation of projects. In addition to participating in tenders to obtain new licenses, the Company also plans to actively boost its geological surveying work at its existing deposits.

Commenting on today’s announcement Vitaly Nesis, Polymetal CEO, said: “The Khabarovsk Region is one of the key bases for the Company’s development. We intend to not only realize our existing projects in the area and to expand our mineral reserve base, but also to take the necessary steps to develop new, successful, independent projects in the Region.”