OREANDA-NEWS. March 04, 2011. JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company") announces that it has entered into a binding Letter of Intent with Olsen Business Limited, under which it has agreed to acquire a 100% interest in a company holding the mining and exploration license for Kutyn gold deposit ("Kutyn"), for a consideration of 3.5 million of the Company's ordinary shares (the "Transaction"), reported the press-centre of Polymetal.

Taking into account the assumption of approximately USD2 million of debt, the enterprise value of the Transaction, based on сlosing price of Polymetal Global Depositary Receipts ("GDRs") on LSE on Wednesday, February 23, 2011 (which was USD18.7 per GDR), is approximately USD67 million.

The license area covers 120 square kilometers in the Tuguro-Chumikan district of the Khabarovsk Territory (the Far East of Russia) and is located 113 kilometers north-west from Albazino, one of the Company's existing deposits in the region, and 10 kilometers from the Sea of Okhotsk.

Gold mineralization in the area was first discovered in 1979. It is associated with carbonate-sericite-quartz metasomatic bodies with sulphide-quartz veins. Approximately 210 thousand cubic meters of trenching and 7.5 kilometers of drilling have been completed at the property during 2003-2007, as a result of which seven ore zones were identified extending 2-3 kilometers along strike. All of these zones are open at depth and along strike. Near-surface material is oxidized to the depth of 50-60 meters.

Unaudited internal mineral resource estimate prepared by Polymetal in accordance with the JORC Code (2004) guidelines is approximately 1.2 Moz of gold in 12.7 Mt of mineralized material at an average grade 3.0 g/t.

Oxidized material was tested by Polymetal Engineering with heap leach gold recoveries exceeding 90%, whereas primary material requires further testwork.

Polymetal's strategic rationale for the proposed Transaction is as follows:

to consolidate land positions in the Khabarovsk Territory leveraging existing presence in the region;

to acquire substantial oxidized mineral resources with easy open-pit mining, high heap leach recoveries, and proximity to the sea; and

to gain access to exploration upside based on the facts that only 25% of the property is covered by exploration works and most of the identified geophysical and geochemical anomalies have not been tested.

"Kutyn, with its proximity to Albazino and right next to the sea of Okhotsk, is a natural extension of our portfolio of advanced exploration properties in Khabarovsk," said Vitaly Nesis, CEO of Polymetal.

"I am confident that the transaction represents good value for our shareholders as near-surface oxidized mineralization can be brought into production relatively quickly and at a low capital cost."

The Transaction has been approved by the Company's Board of Directors and is subject to approval by the Federal Antimonopoly Service of the Russian Federation.