Announcement of Offer Price



This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by OJSC "PhosAgro" in due course in connection with the admission of global depositary receipts to the Official List of the UK Financial Services Authority and to trading on the London Stock Exchange plc's regulated main market for listed securities. Copies of the Prospectus will, following publication, be available from the registered office of OJSC "PhosAgro" at Leninsky Prospect 55/1, Building 1, Moscow 119333, Russian Federation.

OJSC "PhosAgro"

("PhosAgro" or "the Company")

ANNOUNCEMENT OF OFFER PRICE

PhosAgro, the Russian-based vertically-integrated global leader in the phosphate fertiliser industry, is pleased to announce today the offer price for its initial public offering (the "Offering") of US$420.00 per ordinary share (the "Shares"), corresponding to a price of US$14.00 per global depository receipt ("GDRs").

The Offering was in the form of Shares to investors in Russia and both Shares and GDRs to international institutional investors and certain other eligible investors outside of Russia.

The Offering comprised the sale of existing Shares by Adorabella Limited and Miles Ahead Management Limited (together, the "Selling Shareholders") each of which is a company organised and existing under the laws of Cyprus.

·; The offer price implies a market capitalisation for PhosAgro of US$5.2 billion.

·; Total gross proceeds from the Offering are US$538 million before exercise of the over-allotment option and may increase to up to US$594 million if the over-allotment option is fully exercised.

·; The Offering consists of 397,496 Shares and 26,535,120 GDRs, with thirty GDRs representing an interest in one Share. Assuming the over-allotment option in respect of the GDRs is fully exercised, the Offering will consist of 30,515,370 million GDRs.

·; Adorabella Limited has granted an over-allotment option of an additional 15% of the GDRs offered (the "over-allotment option"). The over-allotment option is exercisable for a period of 30 calendar days from today.

·; The Offering represents 10.3% of PhosAgro's total share capital prior to the exercise of the over-allotment option, and 11.4% assuming full exercise of the over-allotment option.

·; Conditional trading in the GDRs on the London Stock Exchange commences today, 13 July 2011, and admission to the Official List and unconditional trading on the London Stock Exchange is expected to take place on or about 18 July 2011.

·; Citi, Renaissance Capital and Troika Dialog served as Joint Global Coordinators of the Offering. Citi, Renaissance Capital, Troika Dialog, Credit Suisse and BMO Capital Markets acted as Joint Bookrunners of the Offering, and Raiffeisen Bank International acted as Co-lead Manager.

Commenting on the Offering Maxim Volkov, Chief Executive of PhosAgro, said:

"I am delighted at the positive response to our flotation in London and Moscow. This is a key milestone for the Company and will allow us to capitalize on the significant growth opportunities that are present in the fertiliser sector. PhosAgro's vertically-integrated business is built on high quality assets, a strong track record of production and an experienced management team and provides investors with an attractive opportunity to invest in the only focused phosphate-based fertiliser business in Russia and Europe."

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For further information on PhosAgro please visit the company's website - www.PhosAgro.biz

Summary Information on PhosAgro

PhosAgro is a vertically integrated global leader in the phosphate fertiliser industry. The Group focuses on the production of phosphate-based fertilisers, feed phosphate and high-grade phosphate rock, as well as ammonia and nitrogen-based fertilisers. In 2010, the Group was the largest phosphate-based fertiliser producer in Europe, the largest producer of high-grade phosphate rock worldwide and the third largest MAP/DAP producer in the world (excluding China), according to Fertecon.

The Company and its subsidiaries are referred to herein as "the Group".

Overview of the Operational Structure of the Group

The Group's principal operations comprise:

·; Phosphate Rock Division mainly comprised of Apatit, which mines apatite-nepheline ore and produces phosphate rock and nepheline concentrate. Apatit has four operating apatite-nepheline ore mines and two beneficiation plants which process ore from Apatit's mines and produce phosphate rock and nepheline concentrate;

·; Phosphate-Based Fertilisers and Feed Phosphate Division principally comprised of Ammophos and BMF, which produce phosphate-based fertilisers and feed phosphate MCP from the phosphate rock and ammonia produced by the Group;

·; Ammonia and Nitrogen-Based Fertilisers Division primarily comprised of Cherepovetsky Azot, which produces ammonia, ammonium nitrate and ammonium nitrate-based fertilisers, and Agro-Cherepovets, which produces urea from the ammonia produced by Cherepovetsky Azot;

·; Storage and Distribution Network mainly comprised of seven distribution centres and 19 warehouses in Russia, as well as additional leased warehouse space in Russia;

·; Transportation Unit which primarily handles the delivery of the Group's products domestically in Russia, and owns and operates the Group's railcar fleet; and

·; Research and Development Unit, mainly comprised of NIUIF, which is the only research institute in Russia specialising in phosphate-based fertilisers with a focus on environmentally friendly and resource efficient technologies in the fertiliser industry and which provides its services to the Group and to third parties.

Key strengths include:

·; The Group benefits from strong industry fundamentals - PhosAgro is well positioned to benefit from the strong fundamentals of the Russian fertiliser industry as well as the global fertiliser industry which, to a large extent, is driven by the growth of emerging economies.

·; The Group's vertically-integrated business model provides it with significant advantages over its competitors - PhosAgro's phosphate-based fertiliser production is integrated with mining of apatite-nepheline ore, production of high-grade phosphate rock and production of key feedstocks, including phosphoric acid, sulphuric acid and ammonia.

·; The Group has a high-quality reserve base - PhosAgro has significant reserves of high-quality, very low level of radioactivity and hazardous metals content apatite-nepheline ore. Measured as of 1 June 2011 according to the JORC Code, reserves and resources consisted of proved and probable reserves of 771.4 million tonnes and measured and indicated resources (inclusive of reserves) of 2,074 million tonnes. The Group's existing resources base allows it to maintain production of high grade phosphate rock for over 75 years based on current extraction volumes. Rich in different minerals PhosAgro's ore embodies over 280 million tonnes of Al2O3 (Aluminium Oxide) resources, the largest in Russia; as well as over 41% of Russian rare earth resources; and other useful elements such as Titanium Dioxide.

·; The Group benefits from a sustainable, low-cost advantage in raw materials and logistics and transportation - PhosAgro currently benefits from relatively low raw materials and logistics and transportation  costs compared to some of its competitors due to access to low-cost feedstock, in particular phosphate rock, natural gas and sulphur, and cost-efficient logistics and transportation. Approximately 70% of DAP production cash costs are attributed to two major feedstock - phosphate rock and ammonia, both controlled by the Group. Also through PhosAgro's wholly owned subsidiary Fos-Agro Trans LLC the Group operates one of the largest railcar fleets in the Russian fertiliser industry with approximately 6,000 owned and leased railcars. 

·; The Group benefits from a flexible MAP/DAP/NPK/NPS production model combined with a flexible sales strategy - PhosAgro's ability to produce MAP/DAP/NPK/NPS on the same production line combined with flexible sales and marketing strategy enables the Group to optimise netback prices (selling prices less selling costs) and achieve high utilisation rates at its production facilities.

·; The Group benefits from globally-diversified sales and a strong own domestic distribution network - PhosAgro distributes its products globally through large and well-known independent traders and distributors through which the Group has access to major fertiliser markets. Domestically, PhosAgro has its own fertiliser distribution network which is the largest in Russia.

·; The Group is well positioned to benefit from the significant growth potential of the Russian fertiliser market - according to ChemExpert, PhosAgro is the leading Russian fertiliser supplier of MAP and NPK, the most popular phosphate-based fertilisers in Russia, and is well positioned to benefit from the significant growth potential of the Russian fertiliser market.

·; The Group has a strong and experienced management team with a proven track record - with an average of 21 years of service, PhosAgro's senior management team has detailed knowledge of and experience in the fertiliser industry and provides the Group with the skills and expertise required to implement its strategy.

·; The Group has one of the biggest internal power generation capacities among the Russian fertiliser producers - the Group implements a power generation and power saving programme thereby reducing the Group's reliance on third-party energy suppliers. Ammophos and BMF produce electricity using steam-powered turbines utilising also steam power generated from sulphuric acid production. As a result, Ammophos is fully energy self-sufficient and also sells energy to third parties, while BMF produces enough energy to satisfy approx. 70 per cent. of its energy requirements. In total the Group is more than 32 per cent. energy self sufficient.

Board Structure

The Board of Directors is responsible for the general management of PhosAgro and organises and manages the operations of the Group. The structure of the Board includes management representatives, shareholder representatives and three independent directors. The Audit committee and the Remuneration and Human Resources committee are each chaired by an independent director and independent directors comprise the majority of both committees.

The Board of Directors are as follows:

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These materials are not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The Company has not registered and does not intend to register any portion of any offering in the United States or to conduct a public offering of any securities in the United States.

Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.

Neither these materials nor any copy of it may be taken or transmitted, directly or indirectly, into the United States, Australia, Canada, Japan or the Russian Federation. These materials do not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefore. The offer and the distribution of these materials and other information in connection with the listing and offer in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This communication is distributed in any member state of the European Economic Area which applies Directive 2000/71/EC (this Directive together with any implementing measures in any member state, the "Prospectus Directive" and amendments thereto, including Directive 2010/73/EC, to the extent implemented in the relevant member state) only to those persons who are investment professionals for the purposes of the Prospectus Directive in such member state, and such other persons as this document may be addressed on legal grounds, and no person that is not a relevant person may act or rely on this document or any of its contents.

Information contained in this communication does not constitute an advertisement, an offer or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person, and must not be passed on to third parties or otherwise be made publicly available in Russia. The GDRs have not been and will not be admitted to placement or public circulation in Russia and may not be offered to any person in the Russian Federation except as permitted by Russian law.

The Joint Bookrunners are acting exclusively for the Company and no one else in connection with the offering and will not regard any other person (whether or not a recipient of this press release) as their client in relation to the offering and will not be responsible to anyone other than the Company for providing the protections afforded to their client.