Highveld Enters into a Black Economic Empowerment Transaction

Evraz Group announced that its South African subsidiary, Highveld Steel and Vanadium Corporation Ltd. (“Highveld”) concluded an agreement to transfer 26% of the ordinary equity interest in Mapochs Mine (Proprietary) Limited (“Mapochs Newco”) to local partners.

This agreement is a part of the Black Economic Empowerment (BEE) government program and was signed in order to comply with South African legislation for the mining industry.

Mapochs Mine, presently an independently managed division of Highveld, will, after fulfilment of the conditions described below, be transferred into Mapochs Newco, a subsidiary of Highveld.The transaction, which is valued at $59.8 mln, comprises of two parts:

- the sale of a 23% equity interest in Mapochs Newco to Umnotho Iron and Vanadium (Proprietary) Limited, a subsidiary of Umnotho weSizwe Group (Proprietary) Limited; and

- the transfer of a 3% equity interest in Mapochs Newco to the Mapochs Mine Community Trust .

The parties have agreed on share disposal restrictions and certain empowerment status undertakings to secure mutual interests in Mapochs Mine, the BEE transaction and the conversion of Highveld’s old order mining rights in respect of the Mapochs Mine.

The BEE transaction is subject to certain conditions, including the conversion of the old order mining rights and the consent of the Minister of Minerals and Energy for the transfer of the converted new order right to Mapochs Newco. The effective date of the BEE transaction will be the later of 1 July 2010 and the last business day of the calendar month in which the conditions above are fulfilled.