OREANDA-NEWS. On June 07, 2007 OJSC Polyus Gold (hereinafter the Group) (RTS, MICEX and LSE - PLZL), Russia’s leading gold producer, released its consolidated annual financial statements for the year ended 31 December 2006, prepared in accordance with the International Financial Reporting Standards (IFRS). The consolidated annual financial statements has been audited in accordance with International Standards on Auditing by Deloitte & Touche, reported the press-centre of  OJSC Polyus Gold.

In the year ended 31 December 2006 the Group demonstrated positive development with all the key financial indicators:

Refined gold produced amounted to 1 215 k oz which is a 17% increase compared to 1 038 k oz produced in 2005.

Sales in physical volumes showed a 16% increase to 1 216 k oz compared to 1 049 k oz in the previous year.

Revenues grew to US$735 million demonstrating a 55% year-on-year increase. The major factors that influenced the growth in the Group’s revenues were:
the 34% year-on-year increase in the average gold sales price achieved of US$604 per ounce;
the increase in physical volumes of gold sold, which resulted from the consolidation of OJSC Aldanzoloto GRK and OJSC SVMC acquired in 2005, as well as from the increase in gold production at Olympiada mine.

Gross profit amounted to US$312 million showing a 53% increase comparing to US$204 million in 2005.

Operating profit demonstrated a 78% increase to US$212 million as compared to US$119 million in 2005.

Profit for the year increased to US$1157 million comparing to US$112 million last year due to the income from the Group’s investment activities.

Adjusted EBITDA demonstrated a 57% growth to US$299 million as compared to US$191 million in 2005.

Total cash costs in 2006 amounted to US$278 per ounce as compared to US$209 last year.

Cash operating costs increased by 50% and equaled US$348 million, compared to US$232 million in 2005. Consumables and spares, as well as labour remained the most significant components of the Group’s cash operating costs.

The key factors affecting the Group’s costs in 2006 were as follows:
consolidation of the subsidiaries acquired in 2005, OJSC Aldanzoloto GRK and OJSC SVMC, with higher production costs;
increase in cost of fuel, consumables and spares due to the increase in purchase prices and increase in usage of these items at Olimpiada mine, which results from the increased mining of  refractory sulfide ores;
4% strengthening of Russian Rouble in relation to the US Dollar.

The complete version of the audited consolidated financial statements of the Group for the year ended 31 December 2006, prepared in accordance with IFRS is available on the Company’s web-site under Investor Relations / Reports / Financials.