OREANDA-NEWS. On May 14, 2009 JSC “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced that the Company’s Board of Directors (the “Board”) has made a decision to hold an Extraordinary General Meeting of Polymetal’s shareholders (the “EGM”) in the form of absentee voting on June 19, 2009, reported the press-centre of Polymetal.

The Board has approved the following agenda of the EGM:

1. To withdraw the resolutions approved by the Extraordinary General Meeting of Polymetal’s shareholders on March 17, 2009;

2 To increase the share capital of the Company by a placement of new ordinary shares.

RATIONALE FOR WITHDRAWAL OF MARCH 17, 2009 RESOLUTIONS
On March 17, 2009 the Company’s shareholders approved the placement of 30 million new ordinary shares of Polymetal by way of a closed subscription (the “Original Issuance”). The Company planned to place 7.5 million of those shares in exchange for the acquisition by the Company of 35,934 shares in CJSC “Artel of prospectors “Ayax”, a company holding the mining license for the Goltsovoye silver deposit (“Ayax”), thus resulting in the Company becoming the 100% owner of Ayax (the “Goltsovoye Transaction”). The remaining 22.5 million shares were to be made available to satisfy the pre-emptive rights to acquire shares of those Polymetal shareholders who voted ‘against’ or did not vote on the relevant resolutions at that Extraordinary General Meeting.

Because of the requirements of Russian legislation, the Original Issuance would not have been completed by earlier than August 2009.

On April 8, 2009 Polymetal announced that it had entered into a Memorandum of Understanding with a group of Russian companies, under which it had agreed to acquire, subject to certain conditions, 100% of OOO “Rudnik Kvartsevyi”, a Russian company holding the mining license for the Sopka Kvartsevaya and Dalniy gold-silver deposits (“RK”) in exchange for 10 million Polymetal shares (the " Sopka Transaction").

On April 29, 2009 Polymetal announced that it had acquired a 9% equity stake in OOO “Zolotorudnaya Kompaniya Mayskoye”, a Russian company holding the mining license for the Mayskoye gold deposit (“Mayskoye”), and had agreed to acquire, subject to certain conditions, including receipt of approval from the State Commission for Supervision over Foreign Investments in the Russian Federation, the remaining 91% of the equity of Mayskoye (which was simultaneously acquired by four Russian private companies (the “Equity Buyers”)) in exchange for 15,925,000 ordinary shares of Polymetal or the payment of US95,550,000.20 in cash, plus a recapitalization adjustment paid in cash (the “Mayskoye Transaction”).

As the Company does not own any treasury shares, it can only close the Goltsovoye Transaction, the Sopka Transaction and the Mayskoye Transaction (if the Equity Buyers elect to receive Polymetal shares rather than cash as consideration) by issuing new Polymetal shares.

Since the existing Russian regulations do not allow a company to place ordinary shares pursuant to two separate share issuances simultaneously, Polymetal would have to wait for the completion of the Original Issuance before initiating the process of issuing the new shares to be used as consideration for the Sopka Transaction and the Mayskoye Transaction.

The Board has therefore decided to seek shareholders’ approval to modify the parameters of the Original Issuance by withdrawing the relevant resolutions passed at the Extraordinary General Meeting on March 17, 2009 and to new terms for the placement of additional ordinary shares.

PROPOSED NEW SHARE ISSUANCE PARAMETERS AND TIMETABLE
The Board proposes to increase the share capital of Polymetal by placing 84,375,000 new ordinary shares (the “New Shares”) by way of a closed subscription in the following way (the price of placement of the New Shares and the value of the property that can comprise the consideration for the New Shares will be determined by the Board after the New Share issuance is registered in accordance with Russian law):

No more than 7,500,000 New Shares – in exchange for 35,934 shares in Ayax (which equates to 89.6% of the issued share capital of Ayax; the remaining 10.4% stake in Ayax is already owned by Polymetal);

No more than 10,000,000 New Shares – in exchange for 100% of RK;

No more than 66,875,000 New Shares – to JSC “Polymetal Management”, a 100% subsidiary of Polymetal, and to Polymetal shareholders who elect to exercise their pre-emptive rights to acquire shares (see below).

Under Russian law, shareholders who vote ‘against’ or do not vote in relation to resolution 2 at the proposed EGM will have pre-emptive rights to acquire New Shares of Polymetal in proportion to their respective equity stakes in the Company as at the record date (see below) at a price that will be determined by the Board. Polymetal is investigating with its depositary the opportunity to extend to holders of its Global Depositary Receipts (“GDRs”) corresponding pre-emptive rights. 66,875,000 of the New Shares minus the number of New Shares in respect of which Polymetal shareholders elect to exercise their pre-emptive rights will be available to be acquired by JSC “Polymetal Management”.

It is planned that the New Shares acquired by JSC “Polymetal Management” will (i) be used as consideration for the Mayskoye Transaction (if the Equity Buyers elect to receive Polymetal shares rather than cash) and, (ii) to the extent not used for that purpose, will be available to be used as acquisition currency for future potential transactions, and/or to be placed in the market for cash if market conditions are favorable and there is sufficient interest from investors.

The Company is planning to file the documents necessary for registration of the above share issuance, including a prospectus, with the Federal Financial Markets Services (“FSFR”) before the end of June 2009. It will take a minimum of 30 days from the date of filing of the documents to register the issuance.

Once the issuance is registered, the Board will determine the placement price for the New Shares, and eligible shareholders will be notified of their pre-emptive rights to acquire New Shares and will have 45 days from the date of notification to exercise such rights.

When this period expires, the process of placing New Shares among the participants of the closed subscription will commence. This process will take up to 30 working days to complete.

A further period of approximately 20 days will be needed to file a share issuance report with the FSFR and have it registered.

Therefore, the Company expects to complete the new share issuance in November 2009.
 
IMPORTANT INFORMATION FOR SHAREHOLDERS
The Board has fixed May 14, 2009 as the record date for determining the shareholders eligible for participating in the EGM.

The Board has approved the form and text of the voting bulletins and has set June 19, 2009 as the last date when voting bulletins shall be accepted. Completed and signed voting bulletins should be sent to the following address: OAO “Registrator R.O.S.T.”, P.O. Box 9, Stromynka Street 18/13, Moscow, 107996, Russia.

The Board has also approved the written information (including information about CJSC “Artel of prospectors “Ayax”, whose shares can comprise the consideration for the New Shares of Polymetal to be placed, and information about OOO “Rudnik Kvartsevyi”, whose equity stakes can comprise the consideration for the New Shares of Polymetal to be placed) that will be provided to eligible EGM participants at the Company’s headquarters at prospect Narodnogo Opolcheniya 2, St. Petersburg, 198216, Russia (room 1112) from 10am till 5pm Moscow time on any working day, except weekends, from May 29, 2009 until the date of the EGM.

All shareholders eligible to participate in the EGM will be sent a written notice of the EGM and the voting bulletins, and GDR holders will be sent voting materials enabling them to instruct the depositary as how to vote on the resolutions to be proposed at the EGM, not later than 20 days before the date of the EGM.

Polymetal will provide updates on the progress of the new share issuance process and details about how pre-emptive rights to acquire New Shares may be exercised by eligible shareholders in due course.