POLY.L Regulatory News (POLY)

Polymetal International plc

Polymetal to acquire the Svetlobor platinum exploration project

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to announce that it has acquired a 24.99% stake in the Svetlobor platinum exploration project from Ubergot Investments Limited ("Ubergot") in exchange for 130,053 new ordinary shares in Polymetal. Simultaneously, CJSC VTB Capital ("VTB") has acquired the remaining 75.01% stake in the project from Ubergot in exchange for 390,369 new ordinary shares in Polymetal, and has agreed to sell this stake to Polymetal for US$6.9 million (plus interest) following receipt of regulatory approval (as described below).

Polymetal and VTB have together acquired 100% of the shares in CJSC Nevyansk Group ("NG"), a Russian legal entity whose wholly-owned subsidiary holds a mining and exploration licence for the Svetlobor area valid until 30 November 2031, from Ubergot, a Cypriot entity controlled by several Russian individuals.

Polymetal has purchased a 24.99% stake in NG from Ubergot in exchange for 130,053 new Polymetal ordinary shares. VTB has purchased a 75.01% stake in NG from Ubergot in exchange for 390,369 new Polymetal ordinary shares, which will be subscribed for by a subsidiary of VTB at a total price of US$6.9 million in cash. Polymetal has agreed to acquire this 75.01% stake in NG from VTB for a cash price of US$6.9 million, plus interest from the date of VTB's acquisition to the date of Polymetal's acquisition at the rate of 7.25% p.a.

Based on the closing price of Polymetal's ordinary shares on 17 December 2012 (GBP11.81 per share), the total transaction value is approximately GBP6.1 million (plus interest payable to VTB), or US$10.0 million at an exchange rate of GBP1.00 = US$1.6204. The new ordinary shares to be issued to Ubergot and VTB's subsidiary together represent approximately 0.14% of Polymetal's increased ordinary share capital.

Under Russian law, the PGM (platinum group metals) deposits and occurrences are subsoil areas of federal importance and are deemed strategic for Russian national defence and state security. Therefore, the acquisition by Polymetal of more than a 25% interest in the Svetlobor project is subject to approval by the Government Commission on Monitoring of Foreign Investments. Polymetal intends to apply for such approval in the very near future.

Acquisition of the Svetlobor project was approved by the Board of directors of the Company.

ASSET DESCRIPTION

The Svetlobor licence area (40 km2) is situated in the Sverdlovsk region of Russia (Central Urals), 30 kilometres from the city of Kachkanar (population 42,563 people) and 200 km to the south-west of Polymetal's producing Voro mine. The site is easily accessible year-round by an unpaved road and lies in close proximity to paved roads, grid power, and a railway. Between 1824 and 2003, more than 7Moz of platinum was recovered locally by placer miners in the Is and Tura river valleys, making the area the world's largest historical alluvial platinum producer.

Low-sulfide mineralisation at Svetlobor is associated with olivine and serpentinite rocks of layered ultramafic massifs. The PGM-bearing layers are relatively wide (5-25m) and shallow-dipping, with modest grades (0.5-2.0 g/t platinum). This indicates the potential for open-pit bulk mining. PGM values are found mostly in the form of free platinum and related compounds with relatively large grain size.

TRANSACTION RATIONALE

The strategic considerations behind the acquisition are:

·; Gain meaningful exposure to platinum, a precious metal with limited production outside South Africa and Zimbabwe, countries which face a material risk of significant supply disruptions

·; Acquire a unique early-stage exploration project with the potential to grow into a world-class asset in terms of the size and quality of its mineral resource base

·; Leverage Polymetal's presence and skill base in the Sverdlovsk region

The Company plans to publish a mineral resource estimate for the project under JORC guidelines in Q4 of 2014.

"I am very excited about Polymetal's first acquisition in PGMs. I see great upside in the platinum price and am optimistic about our ability to successfully define the hard-rock source of the largest alluvial platinum deposit in the world", said Vitaly Nesis, the CEO of Polymetal.

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