Polymetal started active exploration activities at 6 exploration properties to replace the reserves of producing mines and to expand the company"s reserves and resources by studying new prospective areas in different regions.

In IQ 2006, a newly established specialized exploration subsidiary started to survey Lunnoye"s north-west flank. At present, the company is preparing a program to survey the flanks of the Dukat deposit.

During the reported quarter, the company prepared a detailed program to study newly licensed fields - Katasminskaya and Galkinskaya in the Sverdlovsk region. Newly established in this region, the exploration company will start search works in IIQ 2006.

Polymetal completed advanced operating exploration of reserves at pit #2 and #3 of the Khakanjinskoye deposit (obtaining positive results) and continued to study the deep levels of the deposit.

In the reported period, the company made a decision to increase exploration expenditures in 2006 to 11.5 mln. $US (8.0 mln. $US in 2005). Polymetal may re-examine and increase investments in exploration this year, based on the first results from the newly licensed fields.