Untitled - PRIME Gold

962005NORILSK NICKEL • ANNUAL REPORT •NORILSK NICKEL • ANNUAL REPORT •200597••• Review of corporatedevelopments9.7Acquisition of gold mining assetsin the Republic of Sakha (Yakutia)Consolidation of interests in Lenzolotoand Matrosov MineAcquisitions of prospective gold miningassets in Russia in 2005The major events in corporate development were:• acquisition of Jenington International Inc. holding a 20%stake in Gold Fields Limited (South Africa) from MMC NorilskNickel in April 2005;• acquisition of three gold mining assets in the Republic ofSakha – Yakutia in August 2005;• consolidation of interests in Russian gold mining companiesLenzoloto and Matrosov Mine; and• acquisitions of a number of promising gold mining assetsin Russia.Acquisition of a 20% interestin Gold Fields Limited (South Africa)In April 2005, Polus acquired Jennington International Inc.,which owns 98.5 million shares or about 20% of total issuedshare capital of Gold Fields Limited (South Africa).Gold Fields is one of the largest global gold producers and thesecond largest gold producer in South Africa. In 2005, GoldFields produced 4.199 million ounces of gold. Gold Fieldsmines gold in Africa and Australia. Gold Fields' shares are listedon the Johannesburg Stock Exchange, its ADRs are tradedon the New York Stock Exchange and the London StockExchange.This acquisition was financed by the increase of the sharecapital of Polus through the distribution of 126 additionalregistered uncertified shares of Polus with a par value of RUR400 (approximately USD 14.5) each at RUR 290,609,959(approximately USD 10.5 million) per share in a closed subscriptionto its sole shareholder MMC Norilsk Nickel. A significantportion of funds received from the distribution ofshares (USD 946 million) was used for the acquisition by Polusof Jennington International Inc. holding a 20% interest inGold Fields Limited (South Africa).In March 2006, Jenington International Inc. sold the 98.5 millionordinary shares of Gold Fields Limited at USD 20.50 pershare.In September 2005, Polus announced the acquisition of a99.2% interest in LLC Aldanzoloto GRK 2 , 50% of OJSCYuzhno-Verkhoyanskaya Mining Company and 100% in OJSCYakutskaya Mining Company from Investment Group Alrosafor USD 285 million.The acquired companies have mineral rights for three licensedareas located in the Republic of Sakha – Yakutia – the Kuranakhore field and the Nezhdaninskoye and Kyuchus deposits.The mineral resources of the assets acquired by Polus (withaccount of interests) amounted to 28.1 million ounces (morethan 875 tonnes of gold in accordance with the Russian classification).Aldanzoloto GRK is the largest gold producer in the Republicof Sakha – Yakutia. The Nezhdaninskoye deposit is one ofthe largest hard rock gold deposits in the Russian Federation,ranking second in Russia by its mineral resources after SukhoyLog (Irkutsk region).The financial and operating results of the acquired assets havebeen consolidated by Polus from the fourth quarter of 2005.At the end of 2004, Polus held 57.1% of shares in MatrosovMine and 57% of shares in Lenzoloto.Lenzoloto is a holding company, which owns the controllinginterest in eight different gold-mining companies in theBodaibo district, Irkutsk region, developing alluvial golddeposits. The company produced approximately 212,000ounces of gold in 2005.Matrosov Mine holds the license for the development of theNatalka gold deposit in the Magadan region. In 2004–2005,Polus performed an additional geological survey of the Natalkadeposit. According to the JORC Code standards, the indicatedand inferred resources of the Natalka deposit amount tomore than 30 million ounces of gold. Gold production at theNatalka deposit was suspended in summer 2004 for geologicalexploration work.In June 2005, Polus won the tenders for the sale of Lenzolotoshares, which were held by OJSC Atomredmetzoloto. Thecompany acquired 5.61% of Lenzoloto for USD 2.9 million.Subsequently, Polus acquired 83,500 shares of Lenzoloto onthe market for USD 561,000. As a result of these acquisitions,Polus became the owner of 68.2% of Lenzoloto.In May 2005, Polus purchased the full additional issue ofshares of Matrosov Mine distributed through a closed subscriptionof 186,302 shares for USD 67.8 million. As a resultof the acquisition of additional shares in Matrosov Mine,Polus became the owner of 88.44% of the company. Thefunds received were used for the completion of the additionaldeposit exploration as part of the geological explorationprogram implemented in 2004–2005.In January 2005, Polus won a tender for geological researchwork and development of the Mukodek deposit in the Irkutskregion for a consideration of USD 200 thousand.In February 2005, Polus, through its subsidiary LGMC acquired74% of the shares in OJSC Pervenets for USD 25.8 millionwhere the remaining 26% were held by Lenzoloto. In April2005, Polus increased its share in Pervenets to 100% followingthe acquisition of the remaining 26% of Pervenets sharesby LGMC from Lenzoloto. Pervenets holds licenses for thegeological survey and subsequent production of gold at theVerninskoye and Pervenets deposits located in the Bodaibo districtof the Irkutsk region.In February 2005, Polus won a tender for the right to use thesubsurface resources at the Bamsky deposit in the Amur regionfor a consideration of USD 900 thousand.In March 2005, Polus, through its subsidiary Matrosov Mine,won a tender for the right to use the subsurface resources atthe Degdekansky deposit in the Magadan region for a considerationof USD 1,200 thousand.In April 2005, Polus, through its subsidiary Matrosov Mine, wona tender for the right to use the subsurface resources with thepurposes of geological research, exploration and productionof gold at the Eastern site, which is part of the Tokichanskyore field in the Magadan region for a consideration of USD600 thousand. The Eastern site is located near to theDegdekansky deposit, the license for which was obtained byPolus in March 2005.In June 2005, Polus won the tenders for the right to use thesubsurface resources in two license areas in the Krasnoyarskregion: the Zyryanovsky ore cluster for a consideration of USD187.5 thousand and a section of the Razdolinsky ore clusterfor a consideration of USD 750 thousand.In November 2005, Polus won a tender for the right to usethe subsurface resources at the Quartzevaya Gora (QuartzMountain) deposit in the Krasnoyarsk region for a considerationof USD 60 thousand.GOLD MINING ASSETS OF MMC NORILSK NICKEL(Polus)92 In January 2006, LLC Aldanzoloto GRK was transformed into OJSCAldanzoloto GRK.