Based on the materials from the company’s official web-site.

Silver of Magadan, a subsidiary of Polymetal, obtained a license for geological exploration and precious metals mining (gold and silver) at the Dukat Ore Field (Magadan).

The license - which was granted to Silver of Magadan in a tender - expires in 2031. Estimated mineral resources at this field are 3,200 tons of silver (103 mln. oz.). Gold resources have not been estimated, as of yet.

The 40.6 square km. licensed area is located in the Omsukchan Region, 600 kilometers to the northeast of Magadan. The newly licensed area is located just to the west of the Company"s Dukat deposit (which is developed and operated by Silver of Magadan).

Based on initial geological work carried out at the field from 1960-1980, the Company believes that the field is a promising, prospective silver and gold area. The licensed area contains vein zones and veins of quartz-chloride-adular and quartz-rhodonite composition. Given currently available information, the Company believes that the most promising zones within the area are Start 1, Start 2, Neyag, Torch and Starry, which contain silver, gold and lead mineralizations.

Search and estimation work will be conducted by Dukat Geological Exploration Company, a specialized Polymetal subsidiary that was created in February, 2006. This ambitious new project will expand the Company"s mineral resource base and increase the life of mine at the existing Dukat deposit. The Company plans to conduct both open-pit and underground mining at the prospective field. Ore from the new field will be processed at the Omsukchan Gold Factory (along with Dukat ore) using flotation technology.

By using Silver of Magadan"s existing infrastructure and workforce, the Company will be able to significantly reduce both capital expenditures and timeframe to bring this project on-line. Work on this new project will create jobs throughout the region and will also provide a boost to the local administration"s budget (both in terms of taxes and social payments).

The Company plans to launch extensive geological study of the newly licensed area in 2007. From 2007-2010, the Company will conduct search and exploration operations in the area with plans to have the area's resources and reserves undergo government expertise.

Polymetal plans to develop the area in the following stages: conduct detailed exploration of the area, agree on an engineering design for the project, prepare necessary infrastructure and plan for the start-up of gold and silver mining operations in 2014-2015.