SIGNIFICANT UPLIFT IN GOLD JORC CODE (2004)-COMPLIANT ORE RESERVES AND MINERAL RESOURCES

22 March 2011

HIGHLIGHTS

Petropavlovsk PLC ("Petropavlovsk" or the "Company" or, together with its subsidiaries, the "Group") today announces a summary of its gold Ore Reserves and Mineral Resources as at 01 January 2011.This summary is based on the annual review prepared by Wardell Armstrong International as part of the Group's annual reporting procedure. The estimates were completed following an extensive exploration programme conducted by the Group during 2010.

?     Proven and Probable Ore Reserves in accordance with the guidelines of the JORC Code (2004), have increased by 36%, from 6.7Moz of gold at an average grade of 1.26g/t Au in 164Mt of ore to 9.1Moz of gold at an average grade of 1.17g/t Au in 242Mt of ore;

?     Increase in Ore Reserves is attributable to the successful exploration programme conducted by the Group during 2010 at its principal assets, predominantly at Malomir and Pioneer, as well as evaluation of Proven and Probable Ore Reserves for Petropavlovskoye in the Yamal (Northern Russia). Both 2010 and 2011 estimates were completed using a long-term gold price of US$1,000/oz;

?     Total Mineral Resources have increased by 96%, from 11.8Moz of gold at an average grade of 1.23g/t Au, in 300Mt of mineralised material to 23.1Moz of gold at an average grade of 0.98g/t Au, in 732Mt of mineralised material;

?     Of the 23.1Moz, 12.8Moz are Measured and Indicated and 10.3Moz are Inferred Mineral Resources; and

?     The reported uplift in Ore Reserves and Mineral Resources has been achieved notwithstanding depletion of c.490koz of gold through production at Pokrovskiy, Pioneer and Malomir mines during 2010.

ANNUAL REVIEW OF ORE RESERVES AND MINERAL RESOURCES

The update has been prepared in conjunction with external experts and independently audited by mining consultants Wardell Armstrong International. A summary of the Group's gold Ore Reserves and Mineral Resources in accordance with the guidelines of the JORC Code (2004) is shown below:

Note: Mineral Resources are inclusive of Ore Reserves

In addition to the Ore Reserves and Mineral Resources estimated in accordance with JORC Code (2004), the Group also holds significant alluvial gold reserves and resources classified following the Russian Classification System. A summary of the alluvial resources and reserves is presented below:

Notes:    (1) Alluvial resources are reported inclusive of alluvial ore reserves;

(2) ore reserves include only on-balance material for open cut and dredge extraction resources include the ore reserves, off-balance material for open pit and dredge extraction as well as on-balance and off-balance material considered for potential underground mining;

   (3) As per the Russian Classification System, ore reserves are reported at in-situ grade and tonnage, however it has been demonstrated that the material remains economically viable after application of the reasonably assumed or estimated modifying factors such as mining dilution and recovery;

(4) In July 2010 the Group increased its total holding in ZAO ZRK Omchak to 90%. Accordingly, Omchak became a subsidiary of the Group and production from the assets held by Omchak from H2 2010 onwards is 100% attributable to the Group. Production from Omchak for H1 2010 and for FY 2009 was 50% attributable to the Group.

Commenting on the announcement, Dr. Pavel Maslovskiy, Chief Executive Officer, said:

"This significant uplift in Ore Reserves and Mineral Resources underlines the effectiveness of the Group's strategy of delivering low-cost organic growth through extensive exploration work based on a deep knowledge of the regional geology and carried out by a highly qualified geological team. The cornerstone of our business to date has been our ability to progress greenfield sites to operational gold producing mines by utilising a phased development approach, supported by our in-house technical teams. The robustness of this model is proven by recent discoveries particularly at the Pioneer, Malomir and Albyn sites. We continue to invest in the future and our on-going exploration activities aim to ensure that we maintain a pipeline of projects to sustain long-term growth."

Enquiries

Forward-looking statements

This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry.  

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, currency fluctuations (including the US Dollar and Russian Rouble), the Group's ability to recover its reserves or develop new reserves, changes in its business strategy, political and economic uncertainty.  Save as required by the Listing and Disclosure and Transparency Rules, the Company is under no obligation to update the information contained in this release.

Basis of reporting reserves and resources

Mineral Resource and Ore Reserve estimates for the Group's hard rock deposits are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as prepared by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, Australian Institute of Geosciences and Minerals Council of Australia ("JORC Code (2004)").

The basis for reporting reserves and resources for the Group's alluvial deposits is in accordance with the Russian Classification System, approved by the State Committee on Reserves ("GKZ") in 1965 (amended in 1981 and 2008).

The Russian Classification System is based principally on the degree of geological knowledge and the technical ability to extract a mineral reserve. Although economic considerations form a part of the justification for A, B, C1, and C2 category reserves, the system does not take into account the economic viability of extraction in the same manner as the JORC Code (2004), or other internationally recognised mineral reserves classification codes. The Russian Classification System also classifies reserves as "on-balance" if they economically viable at the time of the estimate and "off-balance" if the economic viability is yet to be demonstrated. Licence holders must register A, B, C1, and C2 category reserves with the GKZ to be able to extract them (depending upon the structural complexity class of the deposit. Gold deposits are usually in complexity class 2, 3 or 4 which require categories C1 and/or C2 only; categories A and B are rarely recorded for such deposits).

The content of this announcement have been approved for release by Dr. P. Newall, BSc, PhD, CEng, FIMMM, of Wardell Armstrong International. Dr. P. Newall has consented to the inclusion of the material in the form and context in which it appears.