The new specialized exploration subsidiaries – Northern-Urals Exploration Company (Sverdlovsk region) and Dukat Exploration Company (Magadan region) - were formed in February, 2006. The third specialized exploration company - Georazvedka - carries out geological studies at licensed areas in the Khabarovsk region.

These exploration companies will be fulfilling a strategic task of reserves and resource replacement and expansion in the key regions of the company’s activities. Polymetal has launched an active program of geological surveying operations to replace reserves at the main producing mines as well as to expand mineral resources via both acquisition and the study of new prospective fields.

The Northern-Urals Exploration Company aims to fulfill early exploration works at the Galkinskaya and Katasminskaya areas (licenses obtained in December, 2005) and the Fevralskoe deposit. These areas are located only 14 and 26 kilometers respectively from the Vorontsovskoe deposit. The Vorontsovskoe deposit is an active gold deposit operated by Northern Urals Gold – a Polymetal subsidiary.

The Dukat Exploration Company will act to replace and increase Polymetal’s mineral resource base in the Magadan region. The company has started to study Dukat’s flanks, Lunnoe’s flanks and deep levels as well as prospective fields around the existing producing mines and remote areas of the region.

Georazvedka is currently surveying the Khakanjinskoe flanks and deep levels. The company has also started exploration activities within the licensed area of the Khakarinskaya project (license obtained in December, 2005). Commenting on the announcement Vitaly Nesis, Polymetal CEO, said: “Separation of exploration works in the key regions will allow us to effectively accomplish a strategic task of expanding the company’s reserves and resources. We are concentrating our efforts on conducting an active exploration program to make a decision about the construction of new mines of the second generation of assets in 2008-2009.”