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Mechel OAO

Thursday, October 18th, 2007

Mechel OAO, one of the leading Russian mining and metals companies, announces the fulfillment of its financial obligations related to the previously announced winning of the auction to acquire Yakutugol OJSHC comprising 75% of its charter capital less one share, shares of Elgaugol OAO comprising 68.86% of its charter capital, and the real estate complex.
As the result of the auction held on October 5, 2007, Mechel acquired 3,031,488 ordinary registered shares of Yakutugol OJSHC comprising 75% of its charter capital less one share, 586,000 ordinary registered shares of Elgaugol OAO comprising 68.86% of its charter capital, and the real estate complex for a total of RUR58.2 billion (approximately $2.3 billion).
Pursuant to the purchase and sale agreement, the winner is to acquire the ownership of the shares of Yakutugol OJSHC, shares of Elgaugol OAO, and the real estate complex upon 100% payment of the tendered amount.
Mechel has completely performed its financial obligations regarding payment for the price of the stakes in Yakutugol OJSHC and Elgaugol OAO and the real estate complex. Upon completion of the transferring of the ownership and making a respective record in the securities’ register, Mechel will become the fully legitimate owner of the controlling stakes in the companies.
“We are pleased to announce that Mechel fulfilled all its financial obligations under the transaction ahead of schedule. Mechel financed the transaction through a combination of its own cash and borrowed funds, most of which were provided by VTB Bank. The acquisition of Yakutugol OAO, which mines approximately 10.0 million tonnes annually, will enable Mechel to fulfill its strategic objective to mine about 30.0 million tonnes of coal next year. Once mining operations at the Elga project reach the planned capacity of approximately 30.0 million tonnes, Mechel will become one of the world largest coal companies with the annual output of over 60.0 million tonnes,” Mechel’s Chief Operating Officer Alexey Ivanushkin commented.

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