Albazino

The licenced area (82 sq.km) is part of the Polina Osipenko administrative district in the east of the Khabarovsk territory. The distance to Khabarovsk is 500 km. The ore body here is represented by flat-dipping deposits in two main zones (Anfisinskaya and Olginskaya), which belong to a single ore controlling structure aligned along the north-eastern axis. The length of the ore-bearing zone is 1,700 meters.

In 2008, the Albazino deposit was estimated in the official government records as containing 2.15 Moz of gold, with an average ore grade of 6 g/t. In late 2008, a JORC compliant audit estimated the Albazino resources at 2.94 Moz of gold, with an average grade of 4.3 g/t.

In 2009, the Company drilled 28,135 metres of exploratory boreholes at Albazino and mined 121,692 cu.m. of sub-surface shafts. The objective was to increase the resource base of the deposit and locate promising new ore zones at the edges of the ore field. Thanks to exploratory drilling, the mineral resources of the Olginskaya zone have almost doubled in just one year, reaching 858.4 Koz as of late 2009.

In 2010 the Company will continue exploration in a number of areas where industrial-grade cross-sections were found in some shafts in 2009. It will continue validation at the promising geochemical and geophysical anomalies found at the edges of the licenced territories.

Rogovik area

The licenced area of 397 sq.km is part of the Srednekanskiy administrative district in the Magadan region. It is situated on the left bank of the river Kolyma, some 200 km northnorth- west of the Dukat deposit.

The known ore occurrence at Rogovik is a near-surface gold and silver formation or the vein-disseminated type. Government experts have estimated the resource potential of the Rogovik ore field at 3.2-4.5 Moz of gold, with an average grade of 3-5 g/t and more.

In 2009 the Company conducted initial-stage exploration in the licenced area, including observations along the prospecting traverse, geochemical prospecting and some mining (2,660 cu.m) to confirm the previous exploration findings. As a result, the area of the productive geochemical gold anomaly at the Rogovik ore occurrence increased substantially, and new potentially gold bearing structures were found. Most of the samples collected during the prospecting season are now being processed.

In 2010 the Company intends to explore the orebearing structures of the Rogovik area by drilling 100-200 metres deep and digging exploration trenches at other already identified geochemical anomalies and structures. It will also continue surface exploration of the licenced area.

Arylakh area

Polymetal has launched an independent geological exploration programme aimed at securing its own resource base of power-generation coal. That coal will be used to supply the needs of Russia's Far Eastern regions, Polymetal's own operations in the Magadan region and foreign buyers.

The licence to explore and develop coal deposits in the Arylakh area was obtained in 2008. The area is situated 10 km north-east of the Lunnoye deposit. It is part of the Bulursk coalfield. That coalfield is part of the large Omsukchan coal basin, which lies in the direct vicinity of the Company’s existing precious metals exploration and production operations.

In 2009 the Company explored the coal deposits at the Arylakh area by drilling 42 boreholes with a total length of 4,448.5 meters. The preliminary estimate of coal reserves in the three main coal beds is 24 mln tonnes.

The reserves are rated as Category C1 in terms of their exploration maturity. All of them are situated in a continuous permafrost zone and are suitable for open-pit production. Tests suggest that most of the Arylakh coal is rank AB (anthracite).

A test pit was dug in late 2009 to reach the Moschniy coal bed and take large-volume technological samples. The pit is now in production.

In 2010 Polymetal expects to complete coal exploration at Arylakh to register the reserves at the site with the State Reserves Committee and conduct a JORC-compliant audit.The Company will also work to secure mining licences for adjacent areas of the Omsukchan coal basin.

Galka deposit

The area is situated in the Karpinskiy District of the Svedlovsk region, some 40 km west of Polymetal's existing Voro operation. Working under an exploration licence issued in 2006, the Company conducted an extensive exploration programme in the area in 2006-2008. It found a medium-size copper and zinc deposit, with gold and silver as by-products.

In May 2007 Snowden Mining Industry Consultants estimated the Galka mineral resources under the JORC guidelines at 588.4 Koz of gold, 15.4 Moz of silver and 175,000 tonnes of zinc, all contained in 14.2 mln tonnes of ore with the respective average grades of 1.3 g/t, 33.7 g/t and 1.24 g/t.

In 2009 the Company completed a technical and economic feasibility study for the deposit. A government audit of this feasibility study and the results of the assessment of the deposit's resources by the State Resources Committee is expected in the third quarter of 2010.