Polymetal announces first gold pour at the Kubaka CIP plant and provides updated guidance on the Omolon Hub development plan

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Saint-Petersburg, Russia, August 26, 2010 - JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company") is pleased to announce that the first bar of dore metal has been poured today at the Kubaka plant, a year ahead of the original guidance. The bar weighed 168 kilograms and contained approximately 225 ounces of gold and 315 ounces of silver.

The Kubaka Carbon-in-Pulp ("CIP") processing plant is currently running in the ramp-up mode at a rate of 1,500 metric tonnes per day (equivalent of approximately 550 Ktpa or 65% of design capacity) and is processing historical low-grade (1.9 g/t gold) stockpiles. Fresh high-grade ore is currently trucked to the plant from Birkachan mine; processing of this ore is planned to commence in October 2010.

"We are very happy to give the second life to Kubaka," said Vitaly Nesis, CEO of Polymetal.

"Kubaka was the first property we acquired while assembling the second generation of our assets. It was a strategic acquisition based on a vision, and we are extremely pleased to see this vision coming true."

BACKGROUND

The Kubaka plant was commissioned in 1997 with the design capacity of 850 Ktpa. In 2006 the plant was put on care and maintenance by Kinross Gold Corporation ("Kinross"), the previous owner of the asset, due to depletion of the Kubaka mine.

Polymetal acquired the mothballed plant from Kinross in 2008 as part of the Kubaka package, which also included four mining licenses and full remote site infrastructure. At the time of completion of the acquisition, the Company announced its plan, inter alia, to restart the plant in 2011.

The Kubaka plant is a central element of the Omolon project, which includes also Birkachan, Sopka Kvartsevaya, Oroch, Tsokol, and Dalniy deposits (the "Omolon Hub").

OMOLON HUB DEVELOPMENT PLAN

During 2010 only ore from Birkachan will feed the plant.

In 2011 it is planned to commence processing of ore from the Sopka Kvartsevaya ("Sopka") deposit that was acquired by Polymetal in 2009. In order to be able to effectively process silver-rich ore from Sopka, an upgrade of the processing plant is required, including installation of Merrill-Crowe and counter-current decantation equipment as well as expansion of the leaching section.

The plant upgrade is expected to be completed in Q3 2011 with the goal to reach the run-rate production at the Omolon Hub of 200 Koz of gold equivalent per annum starting from 2012.

Processing of ore from the Tsokol deposit is planned to commence in 2012, from Oroch - in 2013, and from Dalniy - in 2014.

The following table lays out the estimated processing schedule and gold equivalent production (at 1:60 Ag/Au conversion ratio) at the Kubaka plant in 2010-2015:

In addition to processing ore at the Kubaka plant, the Company is planning to heap leach 1.3 Mtpa of low-grade Birkachan ore (1.2 g/t gold) starting from 2011.

Total capital expenditures for the Omolon Hub project, both already incurred and planned, are estimated in the following table:

Average total cash costs are estimated in the range of US$400-450/oz of gold equivalent for the plant and in the range of US$550-600/oz of gold equivalent for heap leach operations.

Polymetal will further update on the progress of the development of the Omolon Hub.

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. 

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED.

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