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June 29, 2006

METROPOL Group of Companies signed a preliminary agreement with the Swedish Lundin Mining Corporation for creation of a joint venture, in which 51 % of shares will belong to METROPOL Group of Companies, and 49 %, Lundin Mining. The enterprise is being established for development of the Ozerny lead and zinc deposit in the Republic of Buryatia. Lundin Mining estimated its stake at $125 million. According to preliminary arrangements, the transaction is to be concluded in August 2006.

The Ozernoye is located at 300 km to the northeast off Ulan Ude, the capital of the Republic of Buryatia. This deposit is well known and has been extensively explored in the 1970’s / 1980’s but no production was carried out.  In addition to lead and zinc, the deposit contains much silver. The mineral reserves are estimated at 157 million tons. Currently the rights to develop the deposit fully belong to METROPOL Group of Companies. East Siberian Metals Corporation established in 2005 manages the project.  

Mr. Oleg Mikhailenko, Director General of East Siberian Metals Corporation, said: ‘Achievement of profitable output using the cutting edge equipment in the Ozernoye field would become one of the biggest projects created from the ‘scratch’ in post-Soviet Russia. We also review other ambitious projects in the Republic of Buryatia. They would be of extreme significance for economic development and growth in prosperity of this region. The combination of our knowledge and Lundin Mining’s experience in exploration and production creates a solid underpinning for successful operation of the mining company.”

Karl-Axel Waplan, President and General Manager of Lundin Mining, noted: ‘Implementation of the Ozernoye project can double our zinc output, so we are inspired by this project’s potential and entry into the enormous Russian market. The deposit has large ore deposits,  that’s why we are sure that, together with METROPOL Group of Companies, we will be able to pursue highly profitable production there.’

Preliminary estimate of the Ozernoye project was conducted by AMC Consultants Propriety Ltd. (hereinafter, AMC), specifically for METROPOL Group of Companies, in spring 2006. The study includes assessment, preliminary analysis of the project and the cost of the open mine development, and also the necessary infrastructure, which meet the Russian standards and the project owners’ requirements. Preliminary estimate envisages ore production by open-cut mining. A processing plant for ore concentrate production will be built near the field.

According to the agreement, Lundin Mining will become the project’s technical manager. This concerns ore production, including project development, and the facility construction. In addition, the Swedish company will manage the field development and will be responsible for the project financing arrangement. The preliminary amount of investments came to $ 400 million. METROPOL Group of Companies will carry out certain work before entering into the transaction, including road construction planning and a rotational village construction.


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"METROPOL" Investment Financial Company Ltd.
Phone: 8 (495) 933-3310
Address: 13 bld 1 Donskaya str, Moscow, Russia 119049