South African mining group AngloGold Ashanti said on Thursday it has agreed to enter into a 50:50 strategic alliance with the Russian gold and silver producer, OAO Inter-Regional Research and Production Association Polymetal (Polymetal).

In terms of the agreement, AngloGold Ashanti and Polymetal will cooperate in exploration, acquisition and development of gold mining opportunities within the Russian Federation.

"Russia is already one of the world's leading gold producing nations with significant long term growth potential. AngloGold Ashanti therefore identified Russia as a key target for growth early in 2003 and made an investment in the AIM listed gold company Trans-Siberian Gold plc during 200," AngloGold Ashanti said.

Russia's second largest gold producer

"AngloGold Ashanti believes that a partnership with a well established Russian gold producer provides the best platform for further development of its activities in Russia.

"Polymetal, as Russia's second largest gold producer has considerable, proven operating and management expertise and shares AngloGold Ashanti's ambition of expanding its operating footprint in Russia. This will complement AngloGold Ashanti's investment in TSG."

The South African gold miner also announced that it has submitted an offer to the Board of TSG to acquire all of TSG's interests in OOO GRK Amikan (Amikan) and OOO Artel Staratelei Angarskaya Proizvodstvennaya Kompania (AS APK) for a consideration of approximately $40-million and that this offer has been accepted and recommended by the TSG Board.

Amikan holds the comprehensive licence in respect of the Veduga deposit and an exploration licence surrounding Veduga, while AS APK holds the licence for exploration and development of the Bogunay deposit.

Terminating another alliance

"Should the TSG transaction complete, these assets will be contributed to the Strategic Alliance with Polymetal. AngloGold Ashanti has also agreed to extend the term of its existing technical consultancy agreement with TSG for a further two years to 1 July 2009," AngloGold Ashanti said.

"AngloGold Ashanti also announces that it is in the process of terminating the exploration alliance that it has held since March 2005 with Eurasia Mining plc in respect of the Chita and Buryat regions of Russia in order to avoid any conflict of interest that this may pose to the Strategic Alliance with Polymetal."

Commenting on the Strategic Alliance, Bobby Godsell, CEO of AngloGold Ashanti, said: "We are extremely pleased to have entered into this Strategic Alliance with Polymetal and look forward to working together to help achieve our objective of building a meaningful gold business within Russia."

With regard to the TSG Transaction, he said: "We are also delighted that we have reached an agreement with TSG that will provide it with the focus and resources to develop its gold assets in the Kamchatka region of Russia. I am confident that we can work together with the new management structure in order to make this a success."