Polymetal signs a letter of intent in relation to acquisition of Svetloye gold deposit

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Saint-Petersburg, Russia, August 5, 2010 – further to the announcement by JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) on June 25, 2010 in relation to Svetloye gold deposit (“Svetloye”), Polymetal announces that it has entered into a letter of intent with Castalian Trading Limited, a non-affiliated company (''Castalian''), in relation to the purchase of a 100% of the participatory interests of PD Rus LLC  (“PD Rus”), a company holding the exploration and mining license for Svetloye, for a total consideration of US$ 3 plus fees and expenses in connection with certain corporate actions as described below (the “Transaction”).

Castalian in turn has entered into a binding share purchase agreement with Fortress Mineral Corp. and some of its subsidiaries (''Fortress'') in relation to the purchase of all of the issued shares of two of the Fortress’ Cypriot subsidiaries (the “Cypriot Companies”), which in turn own a 100% of the participatory interests of PD Rus (the “Intermediate Transaction”).

The Transaction is subject to satisfaction of various conditions, including successful completion of the Intermediate Transaction, execution of certain corporate actions and procedures aimed at enabling Polymetal or any of its subsidiaries to acquire a 100% of the participatory interests of PD Rus directly (and not in or via any of the Cypriot Companies), and approval of the Transaction by the Federal Antimonopoly Service of the Russian Federation.

On the date of completion of the Intermediate Transaction all liabilities owed by PD Rus to Fortress and its affiliates will be assigned to Polymetal ESOP Limited, a 100% subsidiary of Polymetal, for the total consideration of US$ 9,249,997 payable in cash.

The total consideration payable for PD Rus on a debt-free basis will therefore be equal to US$ 9,250,000 plus the fees and expenses in relation to the abovementioned corporate actions.

ABOUT POLYMETAL

Polymetal is a Russian gold and silver miner with operations and development projects in Russia and Kazakhstan. The Company produced 0.6 million of gold equivalent ounces in 2009 and is targeting to double its total production by 2012 mostly as a result of commissioning of the new projects, all of which are now under construction. A key element of Polymetal’s strategy is creation of processing hubs with the goal to ensure the most efficient and responsible utilization of financial and human capital by treating ores and concentrates from various sources at centralized locations.

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