16 February 2007 The Modernization of Joint-Stock Company Liepājas Metalurgs, the biggest industrial enterprise in Liepaja and Latvia, is in progress. The first stage of the modernization program has been completed - the new continuous casting machine (CCM) was commissioned last year and is working in the meltshop, which for now is still bearing the name of the Siemens-Martin (Open-Heart Furnace) shop. In accordance with the Contract, it was Siemens/VAI together with its partners which has developed the general layout of the modernization program. During the meeting last November at the Siemans/VAI corporate headquarters in Linz, Austria, the top executives and specialists of Liepājas Metalurgs met with the staff of Siemens/VAI, when it was also decided that the next working meeting will be held in Liepaja. At the end of January a Board Member of Siemens/VAI Mr. Karl Gruber (Vice Chairman of the Board) came to Liepaja together with his colleagues the Project Director Mr. Roland Fabris, Head of the Translation Department Mr. Roland Neubauer, and Executive Vice-President of Sales Mr. Karl Veigl. The goal of the visit was to reach an agreement in respect to the further development of the project - to set the work time schedule and define activities to be performed in order to complete the general layout of the modernization program. On behalf of Liepājas Metalurgs negotiations were held by the Chief Executive of the modernization program, Chairman of the Council of the Joint-Stock Company Mr. Sergey Zakharin, and on behalf of Siemens/VAI by the Board Member of the Company Mr. Karl Gruber. The next working meeting between the modernization project management team of Liepaja's steel plant and Siemens/VAI experts will take place next week with the goal to conduct the last discussions before finalizing the Contract. The representatives from Siemens/VAI will arrive to Liepaja on February 26. According to Mr. Egils Kupshis, the Chief Engineer of Liepājas Metalurgs, along with the before mentioned steps, the last activities related to the coordination of particular technical matters are still in progress. Those matters are to be solved within the framework of the existing Pre-Engineering Contract. Also last week the staff of Siemens/VAI worked at Liepājas Metalurgs. The staff consisted of electricians who worked together with the local experts to thoroughly solve any last uncertainties. In the nearest future JSC Liepājas Metalurgs, Siemens/VAI and other participants in this modernization venture are being prepared to sign the Agreement regarding the further modernization of the metallurgical plant. It envisages the replacement of the existing Siemens-Martin (Open-Heart) furnaces with an electric arc furnace (EAF) and adding a ladle furnace (LF), as well as a construction of a new Rolling Mill. With best regards, Joint-Stock Company Liepājas Metalurgs Chief Economist B. Imbovica