Saint-Petersburg, Russia, July 25, 2011 - JSC "Polymetal" (LSE, MICEX, RTS: PMTL) ("Polymetal" or the "Company") announces its production results for the quarter and six months ended June 30, 2011.

HIGHLIGHTS

3 months ended Jun 30,

% change1

6 months ended Jun 30,

% change

2011

2010

2011

2010

Ore mined, Kt

2,547

1,775

43%

4,439

3,303

34%

Open-pit

2,174

1,513

44%

3,765

2,807

34%

Underground

373

262

42%

674

496

36%

Ore processed, Kt

2,387

1,974

21%

4,070

3,371

21%

Production2,3

Gold, Koz

102

109

-6%

184

209

-12%

Silver, Moz

5.0

4.7

6%

8.2

9.6

-15%

Copper, tonnes

1,768

979

81%

3,512

1,943

81%

Sales4

Gold, Koz

94

113

-16%

187

207

-10%

Silver, Moz

4.3

5.8

-27%

7.2

9.6

-25%

Copper, tonnes

1,490

979

52%

2,569

1,943

32%

Revenue, US$m

315

249

26%

544

424

28%

Notes: (1) % changes can be different from zero even when absolute numbers are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute numbers differ due to the same reason. This note applies to all the tables in this release

(2) Starting from Q2 2011 Polymetal is changing the methodology for accounting for and reporting of metals produced. Previously production of metals contained in dore and zinc precipitate was recorded upon shipment of lots of dore or precipitate from the gold rooms located at the mine sites to third party refineries. Under the new methodology, these metals are considered to be produced upon receipt of dore or precipitate at the gold rooms. Production of metals contained in concentrates was recorded upon shipment of lots of concentrate to third party off-takers, whereas under the new methodology these metals are considered to be produced when concentrate is bagged, sampled, and prepared for shipment. The Company believes that the new methodology is more accurate as it reflects physical production and eliminates variations associated with shipment cycles. It mostly applies to concentrates, where stockpiles buildup accelerated in 2011, and to much lesser extent ? to dore and precipitate, where shipment cycles remain unchanged. Consequently, Q2 2010 and 1H 2010 numbers used for year-on-year comparisons have not been restated as the Company believes that such restatement would not lead to material differences to those numbers. Quarter-on-quarter comparisons are made on the basis of Q1 2011 numbers calculated in accordance with the new methodology

(3) Polymetal reports production of metals contained in concentrates based on percentages payable for these metals by off-takers of concentrates. Moreover, as final assays are typically determined at the receiving smelters several months after shipment of each lot of concentrate from the Company?s mine sites, production reported in relation to the most recent quarter is subject to further reconciliation

(4) Unaudited

  • Second quarter operating performance demonstrated marked improvement over the first quarter as grades picked up at some of the operations and the benefit of recent expansion projects began to be felt
  • Quarterly gold production declined 6% year-on-year but increased 25% quarter-on-quarter - the latter was mostly driven by strong performance at Varvarinskoye and growth at Omolon
  • Silver production increased 6% year-on-year and 54% quarter-on-quarter as Dukat largely overcame throughput and recovery issues at the Omsukchan concentrator due to successful commissioning of the gravity circuit
  • The flotation concentrator at Albazino was successfully launched in April with Omolon and Mayskoye projects advancing according to schedule
  • The Company maintains its 2011 production guidance at 470-500Koz of gold, 18-19Moz of silver, and 6.0-7.0Kt of copper, or 800-850Koz of gold equivalent (based on 1:60 Ag/Au and 5:1 Cu/Au conversion ratios)

"We are satisfied with Polymetal's operational progress in the quarter, particularly at Dukat and Albazino," said Vitaly Nesis, CEO of Polymetal.

"In the second half of 2011 management's attention will remain fully focused on delivering further production growth and advancing the key projects".

DUKAT OPERATIONS

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Dukat

Waste mined, Kt

211

544

-61%

366

1,021

-64%

Underground development, m

3,579

3,757

-5%

6,608

6,290

5%

Ore mined, Kt

276

301

-8%

552

579

-5%

Open-pit

33

81

-59%

79

163

-52%

Underground

243

220

10%

473

416

14%

Goltsovoye

Underground development,m

831

900

-8%

1,715

1,707

-

Ore mined (underground), Kt

61

2

NM1

79

5

NM

Lunnoye + Arylakh

Waste mined, Kt

790

706

12%

1,361

1,283

6%

Underground development, m

688

877

-22%

1,059

1,546

-32%

Ore mined, Kt

90

68

32%

159

143

11%

Open-pit

46

32

42%

84

74

13%

Underground

44

35

24%

75

69

10%

PROCESSING

Dukat

Ore processed, Kt

384

341

13%

665

674

-1%

Head grades

Gold, g/t

0.6

1.0

-34%

0.7

1.1

-33%

Silver, g/t

386

393

-2%

382

405

-6%

Recovery2

Gold

72.3%

70.7%

2%

72.8%

71.5%

2%

Silver

72.7%

70.8%

3%

73.6%

72.3%

2%

Production

Gold, Koz

5.9

8.3

-29%

9.8

17.0

-42%

Silver, Moz

3.4

3.1

10%

5.3

6.5

-19%

Lunnoye

Ore processed, Kt

86

79

9%

153

144

7%

Head grades

Gold, g/t

1.4

1.4

-

1.3

1.4

-9%

Silver, g/t

409

403

2%

401

434

-8%

Recovery2

Gold

92.5%

94.2%

-2%

92.1%

94.2%

-2%

Silver

87.5%

90.3%

-3%

87.4%

90.3%

-3%

Production

Gold, Koz

3.5

3.3

5%

5.8

6.1

-4%

Silver, Moz

1.0

0.9

9%

1.7

1.9

-6%

TOTAL PRODUCTION

Gold, Koz

9.3

11.6

-19%

15.6

23.1

-32%

Silver, Moz

4.4

4.0

10%

7.0

8.4

-16%

Notes: (1) NM = not meaningful

(2) Technological recovery, includes gold and silver within work-in-progress inventory (concentrate, precipitate)

At the Omsukchan concentrator throughput increased 13% year-on-year and 37% quarter-on-quarter as the reconfigured flow sheet achieved design capacity with recovery improvements largely due to the introduction of a gravity circuit. As a result, silver production at Dukat increased 10% year-on-year and 86% quarter-on-quarter.

Silver grade at the Omsukchan concentrator was steady as processing of high-grade ore from Goltsovoye compensated the re-introduction of low-grade stockpile material to the feed.

Goltsovoye is now running at design capacity in terms of ore production and grade. In-fill and down-dip exploration continues with the goal to produce a first reserve estimate in Q2 2012.

Trial cut-and-fill mining at Lunnoye is under way with underground development reduced to address ground stability issues in the permanent haulage tunnel.

KHAKANJA

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Khakanja + Yurievskoye

Waste mined, Kt

2,499

2,341

7%

5,045

4,629

9%

Underground development, m

552

-

-

882

-

-

Ore mined, Kt

86

131

-34%

168

299

-44%

Open-pit

82

131

-37%

163

299

-46%

Underground

4

-

-

5

-

-

Avlayakan

Waste mined, Kt

308

-

-

522

-

-

Ore mined (open pit), Kt

47

-

-

62

-

-

PROCESSING

Ore processed, Kt

153

156

-1%

312

308

1%

Head grades

Gold, g/t

3.5

7.0

-49%

4.1

6.4

-36%

Silver, g/t

120

212

-43%

139

207

-33%

Recovery1

Gold

94.2%

94.3%

-

94.5%

94.5%

-

Silver

76.7%

59.9%

25%

74.7%

57.6%

30%

TOTAL PRODUCTION

Gold, Koz

17.1

32.4

-47%

38.8

59.4

-35%

Silver, Moz

0.47

0.63

-25%

1.07

1.18

-9%

Notes: (1) Technological recovery, includes gold and silver within work-in-progress inventory (precipitate)

Quarterly gold and silver production at Khakanja declined dramatically, by 47% and 25% year-on-year respectively. The reduction was driven by grade declines as no high-grade ore from Yurievskoye was available for processing, whilst mining in pit 3 concentrated on waste removal.

Underground development at Yurievskoye accelerated with first ore mining from stopes expected to commence in Q3 2011.

Open-pit mining at Avlayakan was mostly targeting waste removal. At the same time, a substantial amount of high-grade ore was trucked to the port of Kiran; its shipment to Khakanja is planned for Q3 2011.

VORO

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Voro

Waste mined, Kt

2,510

1,734

45%

5,254

4,049

30%

Ore mined (open pit), Kt

240

276

-13%

439

448

-2%

Oxidized

71

106

-33%

76

114

-34%

Primary

170

170

-

363

334

9%

Degtyarskoye

Waste mined, Kt

442

568

-22%

857

808

6%

Ore mined (open pit), Kt

54

72

-26%

113

140

-19%

Fevralskoye

Waste mined, Kt

60

-

-

132

-

-

Ore mined (open pit), Kt

3

-

-

7

-

-

PROCESSING

Voro Heap Leach

Ore stacked, Kt

399

351

14%

399

351

14%

Gold head grades, g/t

1.5

1.4

1%

1.5

1.4

1%

Gold recovery1

Gold production, Koz

6.5

6.9

-7%

11.6

12.8

-9%

Voro CIP

Ore processed, Kt

229

233

-2%

439

449

-2%

Gold head grades, g/t

6.0

6.4

-6%

5.8

6.6

-13%

Gold recovery

76.6%

80.9%

-5%

77.6%

80.2%

-3%

Gold production, Koz

33.5

38.6

-13%

57.1

76.4

-25%

TOTAL PRODUCTION

Gold, Koz

40.0

45.5

-12%

68.6

89.2

-23%

Silver, Moz

0.044

0.040

9%

0.074

0.069

6%

Notes: (1) Heap leach recoveries are meaningful for full year only due to the influence of seasonality

Quarterly gold production at Voro declined 12% year-on-year, driven mostly by declines in grade and recovery at the CIP plant. This is less than the 34% decline year-on-year recorded in Q1 2011.

Waste stripping increased sharply as development of the South Voro pit continued, contributing to a 14% increase in volumes stacked and a 1% increase in grade at the heap leach operations.

Mining at Degtyarskoye is winding down, with Q2 2011 representing a 22% decline in waste stripping and a 26% decline in ore mining year-on-year.

Waste mining at Fevralskoye, the next satellite source of high-grade ore located approximately 550 kilometers from Voro by paved road, continued with 7 Kt of ore mined during the first half of 2011. Mineralization at Fevralskoye displays significant nugget effect and consequently, reserve grade will be reliably estimated only after trial processing in Q3 2011.

VARVARINSKOYE

At Varvarinskoye, there are two distinct ore types based upon their copper contents: high grade copper feed (HGCF) and low grade copper feed (LGCF).

HGCF is treated by flotation to maximize both copper and gold recovery; the final product of this process is a gold copper concentrate. LGCF is treated by CIL; the final product of this process is gold dore. The tailings from the HGCF flotation circuit were previously thickened and combined with CIL feed, but this practice was discontinued by Polymetal in Q3 2010.

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Waste mined, Kt

7,796

5,398

44%

14,322

10,140

41%

Ore mined (open pit), Kt

939

887

6%

1,707

1,622

5%

PROCESSING

HGCF (Flotation)

Ore processed, Kt

237

167

42%

467

336

39%

Head grades

Gold, g/t

1.3

1.4

-7%

1.3

1.3

-

Copper

0.87%

0.76%

15%

0.88%

0.80%

11%

Recovery1

Gold

64.2%

79.5%

-19%

63.4%

80.4%

-21%

Copper

88.9%

82.6%

8%

89.5%

80.8%

11%

Production

Gold (in concentrate), Koz

5.9

4.0

48%

11.4

7.1

61%

Copper (in concentrate), t

1,768

979

81%

3,512

1,943

81%

Gold (in dore), Koz

-

1.2

-

-

3.2

-

LGCF (CIL)

Ore processed, Kt

619

558

11%

1,220

1,021

20%

Gold head grades, g/t

1.2

1.1

5%

1.1

1.0

6%

Gold recovery1

82.2%

75.8%

8%

80.8%

76.5%

6%

Gold production (in dore), Koz

20.1

14.1

43%

33.2

27.0

23%

TOTAL PRODUCTION

Gold, Koz

26.1

19.2

36%

44.6

37.3

20%

Copper, t

1,768

979

81%

3,512

1,943

81%

Notes: (1) Technological recovery, includes gold and copper within work-in-progress inventory

Quarterly gold production at Varvarinskoye was up 36% year-on-year on the back of better grades, throughputs, and recoveries in the CIL section. Copper production during the quarter increased 81% year-on-year as grades, throughputs, and recoveries in the flotation section improved materially. As a result, production of copper concentrate significantly exceeded plans, but a material portion of concentrate remains unsold. The Company believes that the situation in copper concentrate markets is improving and that there are good prospects of selling the current concentrate stockpile (approximately 7.8 Kt grading 19.5% copper and 19.8 g/t gold as at June 30, 2011) by the end of the year.

OMOLON OPERATIONS

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Sopka

Waste mined, Kt

1,198

506

137%

1,789

853

110%

Ore mined (open pit), Kt

177

-

-

207

25

NM

Birkachan

Waste mined, Kt

2,580

1,023

152%

4,156

1,093

280%

Ore mined (open pit), Kt

302

-

-

501

-

-

PROCESSING

Birkachan Heap Leach

Ore stacked, Kt

-

89

-

-

89

-

Gold head grades, g/t

-

1.8

-

-

1.8

-

Gold recovery1

Gold production, Koz

0.2

0.2

23%

0.2

0.2

23%

Kubaka Mill

Ore processed, Kt

164

-

-

299

-

-

Gold head grades, g/t

1.9

-

-

1.9

-

-

Gold recovery

91.0%

-

-

90.4%

-

-

Gold production, Koz

9.2

-

-

15.7

-

-

TOTAL PRODUCITON

Gold, Koz

9.4

0.2

NM

15.9

0.2

NM

Silver, Moz

0.016

-

-

0.028

-

-

Notes: (1) Heap leach recoveries are meaningful for full year only due to the influence of seasonality

Quarterly gold production at Omolon was up 43% quarter-on-quarter as plant throughput increased and heap leach operations resumed after the winter.

Open-pit mining targeted mostly waste stripping, with volumes quarter-on-quarter more than doubling at Sopka and increasing 64% at Birkachan.

The refurbished Kubaka mill is on track to be commissioned and start processing high-grade Sopka ore in Q4 2011.

ALBAZINO-AMURSK

3 months ended Jun 30,

% change

6 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Waste mined, Kt

3,587

2,447

47%

6,927

3,955

75%

Ore mined (open pit), Kt

253

34

NM

405

37

NM

PROCESSING

Ore processed, Kt

116

-

-

116

-

-

Gold head grades, g/t

3.8

-

-

3.8

-

-

Gold recovery1

65.7%

-

-

65.7%

-

-

Concentrate produced, Kt

7.5

-

-

7.5

-

-

Gold in concentrate, g/t

38.3

-

-

38.3

-

-

Gold in concentrate, Koz2

9.2

-

-

9.2

-

-

Notes: (1) To concentrate

(2) For information only; not considered as gold produced and therefore not reflected in the table representing total production

The first line of the processing plant at Albazino was successfully launched in early April with the second line started up in early July. The plant is expected to ramp up to full capacity by the end of Q3 2011.

During the quarter mostly partially oxidized ore from upper benches was processed, resulting in low recoveries. It is expected that design recoveries will be achieved on a stable basis in Q4 2011.

Waste stripping and ore mining continued to ramp up with the arrival of new haul trucks and an excavator on site.

All remaining construction work on site should be completed by the end of Q3 2011 with the assay lab and the sample preparation shop recently commissioned.

At Amursk, general construction works are approximately 95% completed, with all earthworks and concrete works done. Equipment installation is approximately 65% completed with the focus of activities on site shifting to piping and electrical works. The tailings storage facility and internal water circulation system were successfully commissioned during the quarter.

MAYSKOYE

3 months ended Jun 30,

% change

3 months ended Jun 30,

% change

2011

2010

2011

2010

MINING

Underground development,m

2,527

607

NM

5,592

1,210

NM

Ore mined (underground), Kt

21

4

NM

41

6

NM

At Mayskoye, the structural steel works and roofing of the concentrator were completed on schedule.

The tailings storage facility is approximately 80% completed, and work has started on the construction of the electrical substation linking the site to the regional power grid.

Concrete foundations are in the process of being poured, with equipment installation expected to start after the arrival of the first ship in July 2011.

PERSONNEL

Sergei Antipin, 46, assumed the position of Managing Director of the Omolon Operations.  Mr. Antipin has been MD of Albazino since 2007 and took this project from inception to successful commissioning. He graduated from the Irkutsk Polytechnic Institute and has been with the Company since 2001.

Alexandr Simon, 36, was promoted to the position of MD at Albazino. Alexandr graduated from the St. Petersburg Mining Institute and has been with the Company since 2003, most recently as the Chief Engineer at Albazino since 2007.

Alexandr Zarubin, 48, assumed the position of MD at Mayskoye replacing Alexandr Kiselev, 65, who retired to pursue other interests. Mr. Zarubin graduated from the Chita Polytechnic Institute and has spent 25 years at the Priargunsky Mining and Chemical Works, a flagship of the Russian uranium mining industry in Southern Siberia where he rose to the position of deputy MD -underground mining. Mr. Zarubin joined Polymetal in 2010.

CONFERENCE CALL AND WEBCAST

To participate in the call/webcast, please dial:

8-10-8002-198-4011 (toll-free from Russia), or

0800 358 5263 (toll-free from the UK), or

Please be prepared to introduce yourself to the moderator or register.

Recording of the call will be available on Polymetal's website and at the above link immediately after the call. It will also be available at 0800 358 3474 (toll-free from the UK) or +44 207 154 2833 (from outside the UK), access code 4458835#, from 7:30pm Moscow time Monday, July 25, until 11:59pm Moscow time Monday, August 1, 2011.

Media Contact

Andrey Abashin

Press-secretary

Tel. +7.812.677.4325

abashin@polymetal.ru

Investor Relations Contact

Pavel Danilin

EVP, Strategic Development

Tel. +7.812.313.5964

danilin@polymetal.ru