PLZL.L Regulatory News (PLZL)

5 Feb 2007 08:50

OJSC Polyus Gold05 February 2007 For immediate release Moscow, February 5, 2007 OJSC Polyus Gold 2006 production results: meeting the targets OJSC Polyus Gold (RTS, MICEX, LSE - PLZL), Russia's leading gold producer, todayannounced the production results for the year 2006. The full year gold outputshowed a 17% year-on-year increase up to 37.8 tonnes (1 215 k oz), compared to32.4 tonnes (1 038 k oz) in 2005. Increase in output is largely attributable toorganic growth at Olimipiada mine in Krasnoyarsk region, along the additionalproduction coming from the Kuranakh mine in the Republic of Sakha (Yakutia),acquired at the end of 2005. In 2006 Polyus' production units mined 12.7 m tonnes of ore, as compared to 6.7m tonnes of ore in 2005. The ore processed in 2006 totaled 8.8 m tonnes,compared to 5.7 m tonnes in the previous year. The substantial increase in theore mined and processed is due to the acquisition of Kuranakh mine as well as tothe planed increase in mining of low grade sulfide ores at Olimpiada deposit. In 2006, Polyus Gold made a major step forward in the area of exploration andreserves growth. Extensive exploration programme at Natalka deposit in Magadanregion resulted in the state listing of 1 500 tonnes (48 m oz) of balancereserves (Russian B+C1+C2). That lead to a 70% increase in Polyus Gold's mineralresources base to 3 000 tonnes (B+C1+C2) as at 1 January, 2007, compared to 1758 tonnes as at 1 January, 2006. During 2006 the company also substantiallyincreased its P&P reserves according to the according to the Joint Ore ReservesCommittee (JORC), from 25.1 m oz to 50.8 m oz. In 2006, the Company continued its extensive exploration programme in allregions of operations. The drilling works totaled 163 700 m, compared to 143 000 m in the previous year. Polyus Gold forecasts its gold sales in accordance with IFRS for the year 2006to amount to US$739 million, representing a 56% year on year increase. Commenting on Polyus Gold's 2006 results the Company's CEO Evgueni Ivanov said: "2006 was an excellent year for the Company. We met all our targets set for theyear, and are well-positioned for taking next steps in implementation of PolyusGold ambitious growth strategy". Mine-by-mine performance in 2006 Olimpiada Mine 9% year-on-year growth of Olimpiada output in 2006 was a result of the furtherupgrade of the sulfide ore processing technology, including polishing theproprietary bio-oxidation technology. The launch of Mill-3 in 2007 at Olimpiadamine will add 5 million tonnes of ore to the current sulfide ore processingcapacity. Kuranakh Mine Kuranakh mine was acquired in September 2005 and was consolidated into PolyusGold output starting from 4Q 2005. In 2006 the mine made its substantialcontribution into the Group's increased gold output. Efforts made in 2006 tooptimize the operations of the mine are expected to result in increase of goldoutput in the coming years. Zapadnoye Mine Further upgrades of mining and processing technologies at the mine lead todoubling of the gold output of Zapadnoye mine in Irkutsk region. Alluvials The reduction in output at alluvials in Irkutsk region was mainly caused bydecrease in prepared alluvial reserves and lower grades of the washed sands aswell as worse weather conditions comparing to the previous years. Technologicalimprovements and further exploration at alluvial deposits will provide forstabilization of gold output in the coming years. Table 1. Ore mining and processing Mine Ore mined (k tonnes)* Ore processed (k tonnes)* 2006 2005 2006 2005Olimpiada Mine, 8 035 5 193 4 556.7 4 622.4 including:Oxide ore 1 646 1 631 1 510.8 1 711.2Sulfide ore 6 389 3 561 3 045.9 2 911.2Zapadnoye Mine 789.6 623.4 522.3 374.6Kuranakh Mine 3 847 842 / 3 416** 3 736.9 688 / 3162** Total ore 12 672 6 659 8 815.9 5 685 Alluvials 9 428 10 798 Sand washing, thousandi3 * unless otherwise noted. ** Kuranakh Mine ore mined and processed figures for 2005 are given as of 1) 4Q 2005, when the mine was consolidated by Polyus Gold 2) full year 2005. Table 2. Gold production 2006 2005 tonnes k oz tonnes k oz Olimpiada Mine 26.57 854 24.4 783Zapadnoye Mine 1.00 32 0.5 15Kuranakh Mine 4.85 156 0.9* 27*Alluvials 5.34 172 6.6 212 Total gold 37.8** 1 215** 32.4 1 038 *As consolidated by Polyus Gold in 4Q 2005. **Polyus Gold total output'06 includes some non-material volumes of gold, produced through waists clean-up at the Nezhdaninskoye mine (SVMC), which was shut down in 2005. Note for editors: Polyus Gold is the largest gold producer in Russia. The group's asset portfolioincludes hard rock and placer gold deposits located in Krasnoyarsk, Irkutsk,Magadan, Yakutia and Amur regions of Russia. For further information please contact Denis Davydov Head of Investor and Public Relations Tel.: +7 (495) 641 33 65 E-mail: pr@polyusgold.com This information is provided by RNS The company news service from the London Stock Exchange