New Acquisition

LSR Group acquires crushed granite plant

OJSC Granit-Kuznechnoye (a subsidiary of LSR Group) has signed a preliminary contract to acquire OOO 436 KNI. After the transaction, LSR Group is becoming No. 1 company in Russia in gneiss granite reserves and No. 2 company in Russia in crushed granite production capacities (according to the company's estimates). The total value of the contract is RUB 961 million.

Together with OOO 436 KNI, LSR Group is also obtaining a license to use subsurface resources of Prudy-Mokhovoye-Yasninskoye gneiss granite deposit with reserves for more than 80 years (around 84 million cub.m of proven reserves), located in the Viborgsky district of the Leningrad region. The deposit has two quarries. Characteristics of the rock mass make it suitable for processing crushed granite used in all types of construction.

OOO 436 KNI is located in the Vybogrsky district of the Leningrad region, 190 km away from St. Petersburg and around 40 km north from Vyborg, close to Prudy railway station. The plant, founded more than 50 years ago, produces crushed granite of 5-20 mm, 20-40 mm and 20-60 mm grades, the most sought-after in the market.

The annual production capacity of OOO 436 KNI is 1.1 million cub. m per year. Therefore, as soon as OJSC Granit-Kuznechnoye obtains the plant, its production facilities will include 9 plants processing more than 7 million cub. m of crushed granite per year, and 6 deposits in the Viborgsky and Priozyorsky districts of the Leningrad region.

The plant has the all necessary facilities: crushing and screening production, loading equipment, stationary crushing blocks and drill-rigs and drilling and blasting technology is implemented. In addition, there is a block of secondary crushing (not yet put into operation) allowing the plant to increase its production capacity. OOO 436 KNI has also a technological line processing crushed granite of 5-10 mm grade from stone screening dust.

The plant has all the necessary infrastructure: access to both roads and railways provides for smooth production delivery. Moreover, there is an electrical substation of 35kW with power capacity of 1.5MW and a telephone exchange for 200 numbers. The plant employs 258 people.

 Alexandr Vakhmistrov, Chief Executive Officer, Chairman of the Executive Committee of LSR Group, comments:"Acquisition of OOO 436 KNI is a part of the strategy to strengthen our positions in the market of both St. Petersburg and the Leningrad region and Russia, and also to expand our supply geography. I'm certain the increase in our crushed granite production capacities will allow the company to cut expenses and benefit from the scale of operations. In addition, the plant's closeness to one of our quarries, Petrovsky Quarry, will accelerate its integration into our crushed granite business unit".

Note to Editors:

OJSC LSR Group is a real estate development and building materials company founded in 1993 and operating in a number of complementary market segments. Its core business areas are production of building materials, real estate development and panel construction.LSR Group's main operations are located in St. Petersburg, Moscow, Yekaterinburg and Ukraine.In 2009, the sales revenues of LSR Group were RUB 51,024 million (IFRS).LSR Group is a public company, with its GDRs traded on the London Stock Exchange and its ordinary shares traded on MICEX and RTS.

 OJSC Granit-Kuznechnoye - is the largest crushed granite producer in the North-West region of Russia. Before acquisition of OOO 436 KNI, the company had five deposits in the Priozyorsky and Vyborgsky districts of the Leningrad region. Eight plants produce crushed granite, six of them are foreign-made. Its production capacities amount to more than 6 million cub. m per year.

For more details please contact:LSR Group Press ServiceTel.: +7 812 314 10 44Fax: +7 812 458 83 72E-mail: [email protected]www.lsrgroup.ru