OREANDA-NEWS. November 25, 2008. JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced that it has made a proposal to purchase 100% of CJSC “Artel of prospectors “Ayax” (“Ayax”) from Ovoca Gold Plc. for US11 million in cash, 7.5 million of Polymetal’s common shares and a cash payment for such assets of Ayax as Polymetal agrees to acquire based on their book value in addition to the exploration and mining license for Goltsovoye silver deposit located in the Magadan region of Russia (“Goltsovoye”), approximately 81 km from Polymetal’s Dukat processing plant, reported the press-centre of Polymetal.

The transaction is subject to agreeing detailed terms with Ovoca Gold Plc. and approval from the shareholders of Ovoca Gold Plc. and the Russian Federal Antimonopoly Service.
Measured and indicated silver resources at Goltsovoye, as estimated by Wardell Armstrong International in February 2007, amount to 1.5Mt of ore at an average grade of 993g/t for 47.2Moz of contained silver.

Inferred resources, according to the same estimate, amount to 0.9Mt at 738g/t silver for 21.8Moz contained silver. Average ore body width is approximately 2.5 meters which the Company believes will allow for significant mechanization of the mine.

The conceptual mining plan prepared by Polymetal in the course of due diligence of Goltsovoye envisions a 120-170Ktpa mechanized underground mine with crushed ore being trucked to the Dukat processing plant for blending with Dukat ore and flotation followed by cyanidation at the Lunnoye processing plant.

Ore metallurgy has been extensively tested indicating recoveries to Dore in the order of 83-87%. Goltsovoe-type ore from one of Dukat’s satellite deposits has been successfully processed at Dukat in 2007 confirming test results. The expanded gravity circuit at Dukat plant will provide for the presence of coarse-grained sulfides in the feed.

The Company believes that substantial exploration potential exists on the 5.6 square kilometre property which is the subject of the Goltsovoye exploration and mining license with only two out of five identified ore zones drilled on a regular grid.

Polymetal’s strategic rationale for the proposed transaction is as follows:
to expand its silver resource base (Goltsovoye resources represent 10% of Polymetal’s M&I and 13% of MI&I resources as of January 1, 2008) in the vicinity of operating processing facilities with the ability to leverage existing infrastructure

to provide high-grade long-term feed to the expanded Dukat processing plant

to improve the cost position of Dukat/Lunnoye operations by adding higher-grade ore to the feed

to consolidate land position around Dukat and ensure maximum exposure to exploration upside in highly prospective silver belt

The goals the Company has set for Goltsovoye (assuming the proposed acquisition of Goltsovoye closes in Q1 2009) are to:
produce a JORC-compliant reserve statement with detailed development plan and capital/operating expenditures estimates in 3Q 2009

start capital development and infrastructure construction in 4Q 2009

start stoping in 2Q 2010

“Goltsovoye represents a unique opportunity to add high-grade silver resources literally in Dukat’s backyard and thus leverage 90%-complete expansion of Dukat processing plant in the nearest future,” said Vitaly Nesis, CEO of Polymetal.

“We are particularly pleased that this transaction has a great potential to become strongly accretive on resource-per-share and, in the future, reserve-per-share and cash flow-per-share basis. It demonstrates Polymetal’s continued focus on M&A opportunities that create substantial value for shareholders through easy-to-understand synergies”.

Polymetal’s Board of Directors is supportive of the potential transaction.