OREANDA-NEWS. December 31, 2010. The Boards of Directors of OJSC Uralkali (“Uralkali”) and OJSC Silvinit (“Silvinit”) announce the proposed combination of Uralkali with Silvinit, creating a leader in the global potash market.

The proposed combination (the “Proposed Combination”) will be effected through the acquisition of 1,565,151 Silvinit ordinary shares, representing approximately 20 per cent. of its ordinary share capital, for USD  894.5 per ordinary Silvinit share, or a total cash consideration of USD  1.4 billion (the “Proposed Acquisition”), and implementation of a statutory merger of Uralkali and Silvinit, through the issuance of Uralkali ordinary shares for the remaining ordinary and preferred share capital of Silvinit (the “Proposed Merger”). In the Proposed Merger, Silvinit will cease to exist and Silvinit shareholders, other than Uralkali, will receive 133.4 Uralkali ordinary shares for each 1 ordinary share in Silvinit and 51.8 Uralkali ordinary shares for each 1 preferred share in Silvinit.

Uralkali will be the surviving entity following the Proposed Combination, with its ordinary shares traded on the RTS and MICEX exchanges in Moscow and its global depositary receipts (with each depositary receipt representing five ordinary shares) (“GDRs”) traded on the London Stock Exchange.

The Boards of Uralkali and Silvinit have recommended the Proposed Combination by means of a nil premium merger and determined the exchange ratio taking into account independent appraisals. The ordinary share and preferred share exchange ratio for Silvinit shareholders ensures that the Proposed Combination is in the interests of the shareholders of both companies. The Proposed Combination, if completed, is expected to be accretive to Uralkali shareholders in the first full year of consolidation of the two companies.1

The market capitalisation of the Combined Group, based on the closing prices on 17 December 2010 of the ordinary shares of Uralkali and the ordinary and preferred shares of Silvinit, was USD  23.9 billion.

The Proposed Combination will create one of the world’s leading potash companies, a leading global fertilizer producer and one of Russia’s leading mineral resource companies. The Proposed Combination of Uralkali and Silvinit (the “Combined Group”) will:

create one of the largest potash companies worldwide, with leading levels of production and production capacity;

have a cost structure that is amongst the lowest in the potash industry;

have a global sales reach, with 84 per cent. of its combined 1H 2010 sales going to export markets, including such fast developing economies as Brazil, India, China and Southeast Asia; and

have a cost and capital structure that will enable it to compete vigorously and take advantage of the expected growth in demand from the positive underlying dynamics of the potash market.

In addition, the Combined Group will own an attractive portfolio of development opportunities, including existing brownfield and greenfield development projects, to sustain its organic long-term growth. The Combined Group will have a sound capital structure to support its growth strategy, continue to be a strong reliable partner for its customers and provide a stable environment for its employees and other stakeholders.

The Uralkali and Silvinit Boards expect that the Proposed Combination will lead to significant synergies, including, among other things, operational and transportation efficiencies, reductions in SG&A, and integrated development of the asset base.

At a meeting, the Uralkali Board called an Extraordinary General Meeting of its shareholders, scheduled for 4 February 2011, to consider the Proposed Acquisition, the Proposed Merger and related matters. The Uralkali Board has recommended that Uralkali Shareholders vote in favour of the Proposed Acquisition and the Proposed Merger. The Proposed Merger also requires the approval of Silvinit’s shareholders, and an Extraordinary General Meeting of Silvinit’s shareholders is scheduled for 4 February 2011 to consider the Proposed Merger. At a meeting, the Board of Directors of Silvinit recommended that Silvinit’s shareholders vote in favour of the Proposed Merger.

VTB Capital plc rendered its opinion to the Board of Directors of Uralkali that, as of the date of the opinion, and based upon and subject to the factors and assumptions set forth in the opinion, the cash consideration paid in the Proposed Acquisition, and the ordinary share exchange ratio and preferred share exchange ratio used in the Proposed Merger, were fair from a financial point of view to Uralkali and its shareholders.

Commenting on the Proposed Combination, Pavel Grachev, Chief Executive Officer and member of the Board of Directors of Uralkali, said:

“In announcing this transaction today, the Uralkali Board believes that it has taken a critical step towards the creation of a leader in the global potash sector and that the Combined Group will benefit from the opportunities that will arise in this highly dynamic industry. By combining the assets of two leading regional businesses which have a natural strategic fit, the Uralkali Board believes that the long term benefits for shareholders and customers will be considerable and that Uralkali shareholders should vote in favour of the Proposed Combination.”

Commenting on the Proposed Combination, Vladislav Baumgertner, Chief Executive Officer and member of the Board of Directors of Silvinit, said:

“The Board of Silvinit recognizes the strong rationale for the merger of these two complementary businesses, and believes that the combined entity, positioned as one of the world’s leading potash companies, will provide a platform for long term growth, which will be beneficial for shareholders, customers, employees and other stakeholders. The Board recommends that Silvinit shareholders vote in favour of the Proposed Merger”.

The Proposed Acquisition is subject to Uralkali shareholder approval of the Proposed Acquisition and receipt of any required financing to pay for the Proposed Acquisition. The Proposed Merger is subject to Uralkali and Silvinit shareholder approval of the Proposed Merger and receipt of government and regulatory approvals.

Completion of the Proposed Combination is expected by the end of the second quarter 2011.