The Mechel OAO (Mechel) ADR appreciated significantly on 24 February 2009, following news that the Russian government is planning to impose a higher import duty on coking coal to support domestic coal producers. However, we remain concerned over the company’s high debt levels. As a result, although the ADR target price does not support a HOLD rating at current price levels, we maintain our HOLD rating and will reassess our target price and rating in our next update report, once the company issues its FY 2008 results. As the Russian stock trades in US dollars, we do not anticipate any currency impact over our investment horizon. Therefore, although the Russian stock target price does not support a HOLD rating at current price levels, we maintain our HOLD rating based on our fundamental outlook for the company. We will reassess our target price and rating in our next update report, once the company issues its FY 2008 results.

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