Polymetal announces second quarter and halfyear 2006 results (for the period ending June 30th).

According to half-year 2006 results, ore mining decreased 13% to 1,221 th. tons compared to the same period in 2005. The volume of ore mined by underground operations increased 9%; whereas open-pit mining dropped 17% compared to the comparable 2005 period.

The decrease in open-pit-mining was due to a temporary drop in mining work at Vorontsovskoye to prepare pit pumping and also due to the step-by-step completion of open-pit mining and the scheduled start up of underground operations at Lunnoye in 2007. In the near future, Polymetal expects a growth in the share and volume of underground mining (at present, the Company has underground mining only at Dukat) due to the launch of operations at Lunnoye.

The volume of ore processed in the reported six month period increased 12% to 1,169 th. tons.

The positive dynamics were due to an increase in production capacity at Khakanjinskoye (Khabarovsk Territory) and Vorontsovskoye’s stage II (Sverdlovsk region).

Based on the half-year 2006 results, Polymetal’s gold production rose 6% (compared to the same period in 2005) to 116 th. oz., which was primarily due to increased production at stage II of the Vorontsovskoye plant.

Silver production, as forecast, fell to 8,523 th. oz. (a 8% drop compared to the first half of 2005).

The negative dynamics for silver production in this period can be attributed to a lower average head grade of silver in Lunnoye’s ore.

According to 2006 six month results, gold sales rose 9% to 116 th. oz. at an average weighted sales price of 591 $US/oz. compared to 422 $US/oz. for the same period of 2005. The average sales price in the second quarter was 626 $US/oz. (422 $US/oz. in second quarter 2005).

Silver sales dropped 9% to 8,621 th. oz. due to decreased silver production in the reported period. The average weighted sales price for silver in the first half of 2006 was 8.8 $US/oz. compared to 7.1 $US/oz. for the previous half year. The average sales price in the second quarter was 9.3 $US/oz. compared to 7.0 $US/oz. in the second quarter of 2005.