Updated August 5, 2008

Metalloinvest Holding controlled by Alisher Usmanov has first published the consolidated reporting by international standards.

Financial indices have coincided with analysts' expectations who consider that the reporting publication is the first Metalloinvest step to IPO.

It takes place in

autumn, and judging from the forecasts of the holding management, according to 2008 results Metalloinvest can be estimated at about $34 billion.

On Augusts, 4 Metalloinvest for the first time published its consolidated reporting by IFRS (International Financial Reporting Standards) for 2007. As per the holding data, its net income grew 2,4 times to RUR 29,5 billion (judging by average annual 24,7 dollar rate in 2007 – $1,2 billion), EBITDA tripled to RUR 59,48 billion ($2,4 billion), revenue tripled as well – to RUR 164,7 billion ($6,67 billion). The company net debt totaled $4, 2 billion. In 2007 the volume of iron ore output reached 41 million tons, thus Metalloinvest took 4th place by this index among the world mining companies.

On the whole, Metalloinvest information has coincided with the analysts' expectations. Dmitry Smolin from Uralsib Financial Corporation considers that the reporting is "good", and debt load level (net debt ratio to EBITDA is under one) of Metallo invest is

low. Analysts were surprised to find out that the reporting was published at all.

"The fact Metalloinvest has revealed its financial information confirms the company prepares to enter the capital market. It is the first step to IPO and mergers and acquisitions transactions", as Uralsib analyst Dmitry Smolin says.

At May-end Metalloinvest controlling owner, Alisher Usmanov, confirmed the holding was considering the opportunity of the public offering.

Moreover, Metalloinvest is involved in talks on two mergers transactions at once – with Kazakhmys and MMC Norilsk Nickel. Alisher Usmanov's Gallagher Holding has agreed a deal with Vladimir Potanin's Interros (he owns around 30% Norilsk Nickel stocks) about strategic partnership in mining projects. Metalloinvest needs public assessment for any of these merging. Therefore, the holding prepares to hold IPO at the same time. As it has been already reported, IPO will be held on the Russian stock exchanges and

on London Stock Exchange. It is planned to sell no less than 10% Metalloinvest stocks to investors, and IPO has been preliminary set to October-end – early November.

However, as sources in investment banks say, The terms can be put off because of the market collapse.

Metalloinvest published reporting forms positive background for IPO.

In the me antime,

as analysts say, last year indices are more important for IPO, and moreover, the holding revenue will obviously grow of a boom at the iron ore market.

According to a source close to Metalloinvest, in 2008 the holding plans to receive $11 billion profit, EBITDA – $5,2 billion. Dm itry Smolin says it is quite possible. "In 2008 prices for iron-ore raw materials and steel will grow by 50% at the internal market of Russia", as an analyst explains. As per UBS estimations, if to use EV/EBITDA multiplier of the company VALE (6,6), Metalloinvest is estimated at $34 billion without net debt.

Metalloinvest has to receive high public assessment of one more aspect: on the background of raw material companies growth MMC Norilsk Nickel capitalization falls of nickel prices drop. When Alisher Usmanov and Vladimir Potanin had been signing their memorandum, Norilsk Nickel capitalization totaled around $55,3 billion, and on Augusts, 4 – $41,9 billion. So, in terms of possible merg

ing, Mr.

Usmanov can expect getting larger stake in the amalgamated company (at May-end it has been going about 25%). Moreover, Mr. Potanin, who wanted to purchase 25% Metalloinvest stocks, should pay the partner $8,5 billion, while his stake in Norilsk Nickel is estimated at $12,57 billion now.