UPDATE 1-Russia's Interros challenges Polyus spin-off plan

(Adds details from letter)

MOSCOW, Feb 28 (Reuters) - Russian billionaire Vladimir Potanin's Interros group has urged fellow shareholders in Polyus Gold (PLZL.MM: Quote, Profile, Research, Stock Buzz) (PLZLq.L: Quote, Profile, Research, Stock Buzz) to challenge a proposal by the mining firm's management to carve off its exploration business.

The recommendation is the latest twist in the division of metals assets belonging to Potanin and his former business partner, Mikhail Prokhorov, and threatens to stall plans by some Polyus executives to create a separate exploration division.

Polyus President Yevgeny Ivanov said last week the company planned to carve off its exploration business through a private share placement in March or April, pending board approval.

Interros, in a letter to shareholders dated Feb. 22, said it demanded Polyus elect a new board comprising at least three independent directors.

It said the company's charter should be amended in order that "all significant transactions" must be passed by six members of a nine-man board compared with potentially as few as three currently.

"As the management plan currently stands, I am very concerned that it may destroy value for Polyus Gold shareholders," Interros Deputy Chief Executive and Polyus board member Sergei Batekhin wrote in the letter.

Potanin and Prokhorov, who each own large stakes in Polyus and Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz), have not previously agreed on how best to split the exploration unit at Polyus, which mines a quarter of Russia's gold.

Board members representing Potanin have repeatedly boycotted meetings.