Pokrovskiy Rudnik will remain the main source of cash flow for the Group in 2007 although it is expected that the first contributions from Pioneer are also expected this year.  Pioneer's entry into production will be the first step in the Group's conversion from a one-mine operation into a developed world class leader, producing gold from a portfolio of mines in Russia. 

Open pit optimisation studies and associated open pit design works were started at Pokrovskiy in 2006.  The anticipated reduction in the cut-off grade due to the increased gold price should enable an increase of the projected depth of the current Pokrovskiy pit and re-definition of reserves resulting in a c.200,000 ounce increase.  It is intended that the 2007 mining plan will concentrate on achieving planned production of budgeted amounts of high quality ore using the Micromine pit optimisation programme.

A third high-speed thickener is currently being installed at the Pokrovskiy deposit to cope with the slower thickening of primary ore and this is expected to be commissioned in 2007. 

In order to sustain stable production at the Pokrovskiy mine, the team intends to continue to implement improvements in the areas of safety, supervision, maintenance and logistics.  The main objectives in 2007 are to maintain 2006 gold production levels from Pokrovskiy Rudnik and other operations in the Amur Region while continuing production cost control.  Simultaneously, the objective is to bring Pioneer into production for the first time as the next major advance in the Group's production profile.  The 2007 budget forecasts production of 220,000 ounces of gold from Pokrovskiy Rudnik and Pioneer.