PLZL.L Regulatory News (PLZL)

Moscow 19/07/2011

The Board of directors of Polyus Gold (RTS, MICEX and LSE - PLZL) has reviewed and approved the Company's development strategy through 2020.

The strategy envisages improvements in current operations, effective execution of expansion projects, construction and launch of new deposits. The implementation of the strategy will allow Polyus Gold to become one of the worlds five largest gold mining companies in 2016, keep competitive cost structure, and significantly increase its mineral resource base.

Separately, the board of directors noted the successful launch of a gold mill-4 at the Blagodatnoye deposit and approved construction of a new mill with an annual processing capacity of 2 million tonnes of ore. By 2014, mining and processing capacity of the Russian largest mill will increase to 8 million tonnes of ore, gold production is to increase from 10.4 to 14 tonnes, while investment in the project is to amount to 6.9 billion rubles.

In the frameworks of the strategy, the board of directors has also approved expansion of a gold mill-1, which processes ore mined at the Titimukhta deposit, to 2.4 million tonnes per year from current 2.2 million tonnes. The expansion, worth 620 million rubles, will raise gold production by 1.1 tonnes in 2012, and decrease operating costs as a result of mine plan optimization and lower processing costs. The mill-1 will process sulphide ores from the Olimpiada deposit after 2021, when Titimukhta mine life ends.

By the end of 2011, the Company expects to launch a mining and processing plant at the Verninskoye deposit in the Irkutsk Region. The latest audit of the Verninskoye mineral resource base shows that the mine's capacity can be raised to 3.6 million tonnes of ore per year with a corresponding increase in mill's processing capacity by 2013. The expansion project will be reviewed by the board of directors in the upcoming fall of 2011. If the project will be approved, additional gold output will amount to 4.4 tonnes in 2013, while total gold production will increase to 9 tonnes.

At the Kuranakh mine in the Sakha Republic (Yakutia), the Company plans to complete in 2011 full-scale trial works to separate ore into clay and crystal fractions what will allow subsequent processing of fractions at the reconstructed mill and heap leaching facility, consequently. In case of success, annual ore mining and processing will increase to 8 million tonnes by 2014, while additional gold output from the mill will amount to about 2.2 tonnes and 1.8 tonnes from the heap leach, which will effectively double gold output as compared to 2011.

The successfully completed exploration works at the Olimpiada deposit in 2009-2011 allows to multiple mineable reserves, as well as extend the deposit's mine life from 2023 to at least mid-2030s. The Company is considering two mining options - staged launch of the underground mine or creation of a single super-pit uniting Vostochny and Zapadny pits with optimized mining and stripping operations.

Polyus Gold continues to increase its expertise in BIO-Nord; investments of 2011-2012 will keep throughout recovery at Mill-2,3 at a stable level of over 80%.

The development of the Natalka deposit in the Magadan Region will be carried out in accordance with construction project, approved by the Company's board of directors in December 2010.

Starting from 2016, launch of new projects at the Bamskoye, Nezhdaninskoye, Poputninskoye/Panimba and Chyortovo Koryto deposits will increase annual gold production by 20 tonnes. In particular, the company plans to build a mill with a processing capacity of 1 million tonnes of ore per year at the Bamskoye and Nezhdaninskoye deposits; a mill with a processing capacity of 2.5 million tonnes of ore at the Poputninskoye/Panimba and a heap leach pad with a consecutive launch of a 2.5 m.t.p.a. mill at the Chyortovo Koryto deposit. In 2011-2012, the company plans to proceed with feasibility studies of the new projects and will make construction decision in 2013. Capital expenditures to launch new projects are estimated at 37.5 billion rubles.

The successful execution of the strategy will raise the Company's gold production to 115 tonnes per year in 2016 and to over 137 tonnes in 2020, when Natalka processing plant will reach the designed capacity of 40 million tonnes of ore per year.

"The new production team of Polyus Gold reconsidered the world experience of operating and developing large-scale deposits and applied it to the company's anchor assets", said German Pikhoya, CEO of Polyus Gold. "The renewed strategy with multiple increase in gold production is the next step to our target - to become one of the world's five largest gold producers", German Pikhoya added.

"The expansion of existing production with a simultaneous improvement of ore processing technologies will allow the company to cut operating costs within the next several years and show an example of new projects development", said James Nieuwenhuys, COO of Polyus Gold.

OJSC Polyus Gold is Russia's leading gold producer and one of the world's largest gold mining companies in terms of market capitalization, mineral reserves base and output. The Company's asset portfolio includes hard-rock and alluvial deposits in the Krasnoyarsk, Irkutsk, Magadan and Amur Regions, the Republic of Sakha (Yakutia). The company produced 1.4 m oz of gold in 2010.

For further information please contact: For investors:Alexey V. Chernushkin, Director, CM and IREvguenia V.Buydina, IR manager+7 (495) 641-3377+7 (495) 785-4031 ir@polyusgold.com

For media:Anton A. Arens, PR Director+7 (495) 641-3365+7 (495) 544-5496pr@polyusgold.com