OREANDA-NEWS. On 08 May 2009 was announced, that on 29 December 2008, OJSC Polyus Gold ("Polyus Gold") and KazakhGold Group Limited ("KazakhGold" or the "Company") announced revised terms of the proposed partial offer to be made by Jenington International Inc. ("Jenington"), an indirect wholly-owned subsidiary of Polyus Gold, to acquire 50.1 per cent. of the issued and to be issued share capital of KazakhGold (the "Proposed Partial Offer").

Further to the announcement of 29 December 2008, the Company's production levels and working capital levels have deteriorated substantially more rapidly than previously anticipated and KazakhGold requires a funding commitment, in order to continue to operate as a going concern in its current form.

Due to these wholly exceptional circumstances, the terms of the Proposed Partial Offer as announced on 29 December 2008 are no longer valid, however, KazakhGold and Polyus Gold remain in active negotiations to agree revised terms in respect of the Proposed Partial Offer.

Polyus Gold remains committed to making the Proposed Partial Offer for KazakhGold on revised terms currently being negotiated with the Company and, subject to certain pre-conditions being fulfilled, expects to be in a position to make an announcement in accordance with Rule 2.5 of the Takeover Code (the "2.5 Announcement") by end of May.

The making of the 2.5 Announcement is subject to certain pre-conditions, including:

(i) the approval of the final structure of the Proposed Partial Offer as required by Rule 36 of the Takeover Code by the Takeover Panel;

(ii) the execution of hard irrevocable undertakings to accept and vote in favour of the Proposed Partial Offer in respect of the entire holdings of 22,100,000 shares by Gold Lion and 41,036 KazakhGold GDRs by the directors of KazakhGold, on terms to be agreed between Gold Lion, the directors, Jenington and Polyus Gold;

(iii) the final approval of the Board of Polyus Gold of the Proposed Partial Offer; and

(iv) the unanimous recommendation by the Board of KazakhGold of the terms and conditions of the Proposed Partial Offer in the 2.5 Announcement.

Polyus Gold and Jenington reserve the right to waive, in whole or in part, any of the pre-conditions other than (i) above at its sole discretion.

The Board of KazakhGold believes that a revised Proposed Partial Offer, if made, would allow KazakhGold to continue as an independently listed entity and would also provide the necessary funding so that KazakhGold can execute its investment plan and unlock the inherent value of KazakhGold's assets. The Board further believes that Polyus Gold's partial ownership of KazakhGold Group would provide KazakhGold with the stability of a sizeable parent with proven management experience and expertise and superior access to capital. Accordingly, the Board believes that after completion of a revised Proposed Partial Offer, KazakhGold Shareholders would retain a direct economic interest in a business whose prospects would be significantly enhanced.

This announcement does not constitute an announcement of a firm intention to make an offer under Rule 2.5 of the Takeover Code. Accordingly, there can be no certainty that an offer will ultimately be made, even if the pre-conditions are satisfied or, if capable of waiver, waived.