OJSC Polyus Gold (RTS, MICEX and LSE - PLZL), Russia’s leading gold producer, today announced the signing of the agreement on intentions with OJSC Federal HydroGeneration Company (RusHydro) regarding power supply from the existing Kolymskaya hydropower plant and Ust-Srednekanakaya hydropower plant currently under construction to future Natalka Mine in Magadan region.

The State Investment Committee of the Russian Federation on a meeting held in October last year reviewed the application for the state support of the Natalka investment project submitted by OJSC Matrosov Mine (a subsidiary of Polyus Gold). The application was recognized as corresponding to the goals and objectives of the Investment Fund.

Taking into account the recommendations of the Investment Committee, Polyus Gold has studied the possibilities of various power companies to participate in the project, basing on the principles of state-private partnership. That resulted in the agreement signed with RusHydro.

The agreement covers the preliminary arrangements regarding the terms of the power supply and specifies the technical solutions of the project.

RusHydro and Polyus Gold agreed to supply power to the facilities of the Natalka mine via the following routes: the high-voltage 220kV line Kolymskaya Powerplant – Substation Omchak; and, when the Ust-Srednekanskaya Powerstation and additional power lines infrastructure are launched - switchgear Ust-Srednekanskaya Powerplant – Substation Orotukan – switchgear Kolymskaya powerplant.

The 570 MW Ust-Srednekansk powerplant with average long-term production of 2.5 billion kW/hour is currently being constructed on the Kolyma river. The plant is to be launched in 2012.

The Natalka hard-rock gold deposit is located in Magadan region in the basin of Omchak river. The balance reserves of the deposit amount to 1449.5 tonnes (46.6 m oz) of the metal. The mine is to be launched in 2013.
    

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RusHydro is the largest electric power generation company in Russia and the second hydrogenation company in the world in terms of installed capacity. RusHydro operates 24 140 MW of installed hydro and renewable capacity in the Russian territory. The Company was established in Y2004 in the process of RAO UES reform. The total electricity production for Y2006 was 80.4 TWh with US$820 mln in revenues (IFRS). Credit Rating - Baa3 (Investment Grade) – Moody’s. Corporate Governance Score – “CGS 5” (Standard & Poors). RusHydro is the key contributor to the development of eco-electricity generation in Russia (hydro, wind, tidal, small-scale hydro). The Investment program envisages 4 013 MW of new capacities to be commissioned by the Y2010. RusHydro is represented by 8 200 employees in Russia. The Company’s headquarter is located in Moscow. According to the Federal Law - more than 50% +1 share in RusHydro are to be held by the Russian Federation after RAO UES reorganization is completed in July 2008. RusHydro plans to become a public company in February 2008 (listing in Russia).
More information is available at: www.gidroogk.ru

Polyus Gold is the largest gold producer in Russia. Headquartered in Moscow, Polyus Gold’s operating mines and development/exploration projects are located in five major gold mining regions of Russia - Krasnoyarsk, Irkutsk, Magadan, Amur regions and the Republic of Sakha (Yakutia). The company produced 1.2 m oz of gold in 2007.

For further information please contact

For investors:
Alexey V. Chernushkin, Director, CM and IR
Evguenia V.Buydina, IR manager
 +7(495) 641-3377
 +7(495) 785-4031
ir@polyusgold.com

For press:
Victoria V. Vergelskaya, PR Director
Elena D. Evstigneeva, Media Relations
 +7 (495) 641-3365
 +7 (495) 544-5496
pr@polyusgold.com