OREANDA-NEWS. October 27, 2008. MOSCOW, Russia and TORONTO, Ontario – October 25, 2008: Through its mining division Severstal Resources, OAO Severstal (LSE: SVST; RTS: CHMF, “Severstal”) announced that the offer (the “Offer”) by 7027940 Canada Limited (the “Offeror”), an affiliate of Severstal, to purchase the outstanding common shares of PBS Coals Limited (formerly, Penfold Capital Acquisition Corporation)(TSX: PBS) expired at 11:59 p.m. on October 24, 2008.

In order to resolve outstanding matters between PBS Coals Limited and the Offeror, the principal shareholders of PBS Coals Limited and Mincorp Acquisition Corp’s management shareholders have agreed to an aggregate reduction of the proceeds payable to them of USD 300 million. The offer price of CD8.30 per share offered to shareholders other than the principal shareholders remains unchanged. The principal shareholders represent approximately 80% of the outstanding shares of PBS Coals Limited and include institutional, individual shareholders, each member of the board of directors of PBS Coals Limited and each member of management who is a shareholder of Mincorp Acquisition Corp.

All of the conditions to the Offer, including the minimum tender condition, which required at least 66 2/3% of the common shares being validly deposited and not withdrawn at the expiry time, have been satisfied or waived. Approximately 140,650,905 common shares of PBS Coals Limited, which represents approximately 95% of the outstanding shares of PBS Coals Limited (calculated on a fully-diluted basis), have been tendered and not withdrawn pursuant to the Offer. The Offeror intends to take-up the shares deposited under the Offer as soon as practicable and in any event has agreed to by the close of business on November 3rd, 2008.

As agreed with PBS Coals Limited, payment to shareholders who deposited their shares to the Offer will be made as soon as practicable and in any event by the close of business on November 5th, 2008 (subject to regulatory approval).

The Offeror intends to acquire all shares not tendered to the Offer pursuant to a compulsory acquisition transaction under the Canada Business Corporations Act. Upon successful completion of such acquisition, the Offeror intends to de-list the shares of PBS Coals Limited from the Toronto Stock Exchange.

PBS is engaged in the mining, processing and sale of metallurgical and thermal coal in Somerset County, Pennsylvania, U.S.  PBS’s operations are located in the Northern Appalachian Coal Fields, situated between Severstal’s North American production centres, and have the capacity to produce over 4 million tonnes of metallurgical coal.

PBS’s portfolio includes six underground and six surface mining operations.  In the fiscal year ended March 31, 2008, PBS produced approximately 2.4 million clean tonnes of coal, including 1.5 million clean tonnes of coking coal. PBS has 133.5 million tonnes of in-place coal reserves and 228.3 million tonnes of in-place coal resources.  In addition to its significant reserves, PBS has an experienced management team and a competitive cost position among international coal producers.

Through its acquisition of PBS, Severstal expects to create value for its shareholders through benefits from the vertical integration of its upstream operations; the increase in self-sufficiency with regard to the supply of primary raw materials available to its North American operations will allow Severstal to control its operating costs.  PBS’s central location will also mitigate transportation costs between Severstal’s facilities.