Varvarinskoye is situated in north-western Kazakhstan, 130 kilometers from the regional center Kostanai and 10km from the border with Russia. Modern processing plant with an ore output of 4.2 Mtpa and an open-pit mine are located in the region with excellent infrastructure and highly prospective geological settings.

The mine commenced production of gold in December 2007 and copper-gold concentrate in March 2008. In the first quarter of 2009 Varvarinskoye produced a total of 13,599 ounces of gold and 1,743 tonnes of copper recovered to concentrate. Strategic benefit of Varvarinskoe is tremendous reserve growth potential after the streamlining and optimization of mining and processing operations. In January 2009, Orsu completed an updated mine plan, including updated mineral reserve and resource estimates calculated at January 1, 2009, and are summarized in the following table:

As the acquisition of the Varvarinskoye was completed on 30 October 2009, Polymetal reports the Varvarinskoye production results on the attributable basis, i.e. only for the months of November and December 2009. Gold production is 12,6 Koz. Copper production is 1,045 t.

Currently the new management team at the mine, together with Polymetal Engineering, is working to develop the new mine plan and update ore reserves estimate. This work should be completed in Q3 2010.

Licenses

• License, series МГ № 666 (gold) dated 28.08.1995 for the right to use mineral resources in the Republic of Kazakhstan for exploration and mining of Varvarinskoye gold deposit located in Taranovskiy district of Kostanai Region for a term of 25 years;
• License, series МГ № 866 (precious and non-ferrous metals) dated 30.05.1996 for the right to use mineral resources in the Republic of Kazakhstan for exploration of the territory in Taranovskiy, Fedorovskiy and Komsomolskiy districts of  Kostanai Region for precious and non-ferrous metals followed by mining of discovered commercial projects for a term of 25 years.

License holder: Varvarinskoe JSC

Personnel (Varvarinskoe JSC, 31.12.2009) 604 persons