ALRO ALROSA SA In Investor stor Present sentation ation 13 - - PowerPoint PPT Presentation

ALRO ALROSA SA

In Investor stor Present sentation ation

13 December mber 2018 8

DISCLAIMER

• ther use of this Presentation.

• statements. Any statement herein (including, without limitation, a statement regarding our financial

• statements. Past performance should not be taken as an indication or guarantee of future results, and

• r issue or the solicitation of an offer to buy or acquire any securities in any jurisdiction or an

• f any issuer mentioned herein are required to make their own independent investigation and

• bserve such restrictions.

For notes: es:

DIAMOND INDUSTRY – KEY DEMAND DRIVERS

• Luxury market valued at c. €1,200 bn is steadily growing
• Jewelry demand comprises 7% of global luxury market, and 31% of the

personal luxury (annual growth 5%)

• Most dynamic growth is concentrated in Asia incl. Japan and China
• Diamond jewelry consumption is correlated with USA GDP and disposable

income Personal luxury market growth by region 2018E

Global luxury market breakdown in 2018E € bn

Diamond jewelry sales are highly correlated with US’ GDP

Indexed diamond jewelry sales vs indexed US’ GDP (2011 = 100)

Market size 32% 31% 8% 15% 9% 5%

GLOBAL DIAMOND JEWELLERY MARKET GROWS BY 4%

• Since 2010 diamond jewellery demand increased on average by 4%
• … reaching a 10-year high level in 2017 at +5% yoy driven by steady

demand in DM, and dynamic growth in EMs

• H1’18 diamond jewelry in key markets (N.America and Asia-Pacific)

enjoyed even stronger demand amid better consumer sentiment and a favorable macro environment World diamond jewellery sales grew by 4% annually

Diamond jewelry market, $ bn

Outlook for world diamond jewellery demand

CAGR 2016-2030F

• N. America, Asia-Pacific

• US, India and China key drivers for diamond jewellery demand in the

long-term are:

• USA (50% total market): continued real disposable income growth
• China: economic growth and expansion of the Chinese middle class, early

stage of adoption of bridal rings gifts tradition

• India: the ongoing expansion of bridal diamond jewellery and the middle

class

MARKETING SPENDING OF THE INDUSTRY

• Diamond Producers Association (DPA) formed by 7 major diamond

producers in 2015 supports the development of the diamond sector through promotion of reputation of diamonds

• Marketing campaigns with a tagline “Real is Rare. Real is a Diamond”

launched in the US (2016) and in India (2017)

• DPA’s activities include:
• paid advertisement on TV, internet, cinema, social networks
• promotion in social media by social influencers
• participation in industry events
• work with industry and non-industry organizations
• market surveys and research
• In 2018 DPA’s activities expanded into China (while continued in the US

and India)

• New marketing campaign addressed to women who purchase diamonds

for themselves is called “From Me, To Me”, launched in mid-September 2018

Marketing budget of the industry association growth

$ m

• N. America (USA from 2016)

India (from 2017) Asia Pacific ex. Japan (China from 2018) RoW

DPA marketing campaigns by region

% represents share of a region in global jewelry consumption

ROUGH DIAMOND PRICES*

• 2018 recovery in average realized prices driven by better sales mix

(high share of large stones in mix), and price index (like-for-like mix) growth of 5.2% YTD

• 9M 2018 prices of $167/ct a recovery to its 5Y average, as negative

price drivers (demonetization reform in India, Chinese policies) were accommodated by the market

Average realized price for ALROSA’s gem-quality rough diamonds

$/ct

Rough diamond price index is 5.2% in 9M’18 on lower stocks and continued demand growth

ALROSA’s gem-quality rough diamond prices are correlated with US’ GDP

Indexed ALROSA’s LFL diamond prices vs indexed US’ GDP (end of 2012 = 100)

• f 2012

GLOBAL ROUGH DIAMOND OUTPUT AND SALES

• Global output reached its peak levels in 2017, with a 3% decrease in

9M 2018 on lower production from ALROSA (~3 m cts down y-o-y)

• Rough diamond sales follow trend of demand for diamond jewellery
• 9M global diamond sales in USD increased 4% on demand recovery and

stronger prices Rough diamond sales demonstrates moderate recovery

$ bn

Output volumes

m ct

MIDSTREAM STOCKS ARE BELOW 5Y AVERAGE

• Q3 midstream inventories dropped to a multi-year lows mainly on

destocking of small stones

• Indian imports of rough were seasonally down; no excessive buying of

rough in the midstream suggests no inventory overhang in the system Midstream rough and polished diamond inventories

$ bn

India polished diamond exports value (monthly)

$ m

LONG TERM SUPPLY TURNS NEGATIVE BY 2020

• Supply is well consolidated with BIG-3 controlling 2/3 of global supply
• Supply is quickly reacting to the demand deterioration
• Lack of new “quick-to-develop” deposits and mines depletion
• Significant decrease in supply is expected by 2020,
• … with limited impact on the market due to sub-par quality of the

products (brown diamonds with 80% price discount to standard gem- quality) ~70% of global rough diamond output controlled by BIG-3

m cts

Exploration periods of deposits

World diamond production forecast

m cts

ABOUT ALROSA

• ~30% of rough diamond production globally
• Largest reserves sufficient to support production for ~30 years
• Competitive position on the global cost curve
• Sustainably high profitability margins ~2x exceeding industry average
• Strong FCF generation and balance sheet capability offer solid

foundation for shareholder returns Financial results summary

$ bn

Loans and borrowings

$ m

Dividend payments

$ m

ALROSA: ASSETS GEOGRAPHY

Share of division in 2017 diamond production Geography of production assets

1,030 m ct

653 m ct

53% 27% 20% Severalmaz

7% 2.6

Aikhal Division

13.0

Nyurba Division

7.7

18% Mirny Division

7.2

Udachny Division

3.8

Almazy Anabara & Nizhne-Lenskoye

5.2

33% 19% 10% 13%

HIGHEST QUALITY ASSETS

• ALROSA develops world’s largest reserves with the industry best

cost/quality balance

• One of the lowest cost production at 44 $/ct while company’s average

realized price of gem-quality rough diamond is 160 $/ct

• Cost of underground production per carat is close to open-pit mining

while grades at underground are higher by over 3x ALROSA operates largest reserves with long life of mine

m cts

ALROSA sustainably tops the ranks as one of the most profitable miner

EBIT margin, %

High profitability margin maintained even at the bottom of the cycle

$/ct

LOW COST PRODUCTION PLATFORM WITH MODERATE GROWTH

• Company operates high quality assets with underground operations

delivering strong diamonds yields

• Output to stabilize at ~38 m ct, which is slightly above 2013-2016

volumes

• New projects to drive production from 2018 and on:
• Ramp up of Verkhne-Munskoye deposit with a design capacity of 1.8 m cts

pa (by 2019)

• Increase in production of Severalmaz to 5.1 m cts per year by 2021

Range of average mined diamond grade (2017)

ct/t

ALROSA’s diamond production to stabilize at 37-38 m carats

m ct

36.9 36.2 38.3 37.4 39.6 36.6 ~37.5 – 38 Total

IMPROVED QUALITY OF SALES WITH 70% OF LONG TERM CLIENT BASE

ALROSA’s rough diamond sales channel breakdown

• Diverse product mix (total 204 boxes) with different segment exposure

and price dynamic, e.g.:

• small stones – for mass market bridal rings
• Mid-size and large stones – luxury segment offering resilient prices
• Sales channels based on long-term agreements which provides stable

sales and predictable prices during volatility on diamond market

• Diversified geography of sales:
• presence in all key diamond hubs
• growing focus on Asia

Sorting of rough diamonds

26 sizes 16 shapes 5 clarity categories 8,013 classification positions

ALROSA’s geography of sales based on clients legal residences

• 10

34 colors

DIAMOND SALES STRUCTURE

• Gem-quality diamonds sales account for c. 70% of total sales and 98%

pf sales value

• The bulk of the sold diamonds in 2017 is less than 3 GR (~0.75 carat)
• Diamonds over 1 carat make c. 11% of total diamonds sold in volume

terms and c. 60% in value terms 2017 rough diamond sales structure by size and weight group

Allocation of rough diamond by quality

~30% ~2% ~70% ~98%

Q3 Q3 & 9M RES & 9M RESULTS ULTS

Q3 SALES

Q3 2018 Sales

• In Q3 2018, diamond sales decreased by 2.3 m carats (26% q-o-q) to 6.7

m carats due to a drop in sales of small-size diamonds

• Sales were down 11% y-o-y also due to weaker small-size diamond

sales 9M 2018 Sales

• In 9M 2018, sales in carats reduced by 9%, while
• … diamond sales in value terms rose by 9% to USD 3.6 bn on the back
• f stronger prices and improved mix of gem-quality diamonds as sales
• f +10.2 and +2 carats stones grew

Diamond sales

m cts

Increase in diamond sales by value, 9M 2018

$ m

ALROSA's diamond inventories

m cts

Q3 OUTPUT

• In Q3 2018, the volume of processed ore and gravels grew by 70% q-o-

q (up 10% y-o-y) to 17.2 m tonnes, due to a seasonal return to production at alluvial deposits (up 7.9 m tonnes)

• Average grade dropped by 28% q-o-q (down 7% y-o-y) to 0.61 carat per

tonne due to a seasonal return to production at alluvial deposits and a lower diamond grade at Nyurbinskaya pipe

• Diamond production was up 23% q-o-q (2% y-o-y) to 10.5 m carats due

to seasonal growth of production at alluvial deposits by 3.5 m carats. On top of that, the Nyurba Division’s deposits increased ore processing, and recently launched Udachny underground mine and Severalmaz gradually ramped up their production to design capacity Ore and sands processing

m tonnes

Diamond production

m cts

KEY FINANCIALS IN Q3 & 9M

Q3 2018:

• Revenue came in at USD1,046 m (down 8% q-o-q) as sales in carats

decreased (down 26% q-o-q)

• 8% y-o-y growth was driven by stronger pricing and a better sales mix
• EBITDA stood at USD611 m (down 10% q-o-q), rising by 33% y-o-y on

better mix and cost control

• EBITDA margin slightly decreased q-o-q by 1 p.p. to 58%
• Net income stood at USD317 m (down 10% q-o-q, up 71% y-o-y)
• FCF increased by 6% q-o-q to USD363 m (+89% y-o-y)

9M 2018:

• Revenue grew by 7% to USD3,9 bn on stronger pricing and a better

sales mix, offsetting a 9% drop in sales (incl. 12% of gem-quality)

• EBITDA hiked by 24% to USD2,1 bn supported by a stronger revenue

and lower production costs

• EBITDA margin climbed 8 p.p. to 55%
• Leverage slimmed down with Net debt / EBITDA standing at 0.5х
• Net income increased by 28% to USD1.4 bn
• FCF grew by 35% to USD1.4 bn

Superior profitability

$ bn

Strong Free Cash Flow generation

$ m

1.34 1.17 1.33 1.23 1.18 1.39 1.28 1.26

COSTS DYNAMICS & STRUCTURE

• Q3 unit costs increased by 18% to RUB1,390 per cu m mainly due to

decreased volume of run-of-mine ore

• In 9M 2018, the Company’s costs* went down by 5%, to RUB109 bn

Key drivers:

• reduction of sales in carats by 9%
• down RUB2.1 bn: reduced staff costs largely due to a streamlined

headcount

• down RUB1.8 bn: lower MET due to a decline in diamond production

and prices and mix changes (RUB1.1 bn of impact) and sale of gas assets (RUB1.2 bn of impact)

• down

RUB1.4 bn: reduced exploration costs due to exploration restructuring (RUB0.6 bn of impact) and sale of gas assets

• down RUB1.0 bn: lower materials costs due to reduction of Mirny

Division’ expenses and transfer of Almazy Anabara’ expenses to Q4 2018

• down RUB0.5 bn: lower SG&A expenses reflecting a reduced

administrative payroll

Per unit costs

RUB '000 / cu m

Total operating costs

RUB bn

114.5 109.2

Q3 PROFITABILITY

Q3 2018 EBITDA declined to RUB40.0 bn (down 3% q-o-q) driven by:

• (-) carat sales down 26% q-o-q due to a drop in sales of small-size

diamonds

• (+) improved sales mix and prices
• (+) FX rate impact
• (+) changes in diamond and ore inventories

9M EBITDA was up by 29% to RUB129.1 bn driven by:

• (-) 9% reduction in carat sales, including lower sales of gem-quality

diamonds (down 12%)

• (+) changes in the sales mix and stronger prices
• (+) FX rate impact
• (+) lower costs

Q3 EBITDA – key drivers

RUB bn

9M EBITDA – key drivers

RUB bn

41.3 40.0 9.1 1.5 (17.5) 3.7 0.3 1.5

100.0 129.1 34.7 4.9 (21.8) 8.9 1.3 1.2

CAPEX TO STABILIZE AT BELOW RUB30 bn

• In Q3 2018, capex was up 22% q-o-q to RUB8.8 bn driven by larger

expansion capex (up RUB1.6 bn):

• the Verkhne-Munskoye deposit (up RUB2.2 bn)
• the Udachny underground mine (down RUB0.6 bn)
• the Zarya pipe (down RUB0.4 bn)
• In Q3, capex was up RUB1.8 bn y-o-y due to the mining capex cycle
• 9M: Capex was up 13% to RUB21 bn as the Verkhne-Munskoye deposit

capex cycle peaked in 2018 Capex

RUB bn

Capex to stabilize

RUB bn

85.7 106.4 129.1 (20.8) (3.3) (25.0) 5.7

• Q3 FCF increased by 13% q-o-q (up 2.0x y-o-y) to RUB23.6 bn driven by:
• Resilient profitability on price growth, mix improvement and FX
• Net working capital build-up on seasonality offset by insurance proceeds
• Seasonal growth in capex
• 9M FCF grew 38% y-o-y to RUB85.7 bn driven by
• Growth in profitability
• Working capital release of RUB5.7 bn on sales on destocking
• Limited growth in capex

Free cash flow bridge

RUB bn EBITDA Changes in net working capital* Income tax Other Operating cash flow Capex Free cash flow

Operating cash flow and capex

RUB bn 23.6 32.4 40.0 (8.8) (0.8) (5.8) (1.0)

9M 2018 Q3 2018

Q3 FREE CASH FLOW DRIVERS

• Total debt amounted to $1.3 bn, down $310 m year-to-date
• Liquidity decreased by 18% q-o-q to $0.75 bn mainly due to 2017

dividends of RUB38.6 bn payment

• Net debt / EBITDA reduced to 0.2x vs 0.7x earlier this year on the back
• f robust FCF
• Active debt management drove interest payment 50% down (year-on-

year)

• S&P upgraded ALROSA credit rating to investment grade in July 2018
• Targeted leverage at between 0.5x to 1.0x of Net Debt/EBITDA

Debt is down on deleveraging efforts and strong FCF generation

$ m

Strong liquidity position

$ m

Debt repayment schedule

$ m

753 3,121 3,874

9.8 10.6 13.1 12.5 10.4 4.2

Changes in interest on loans and borrowings

RUB bn

LEVERAGE REMAINS BELOW TARGETED RANGE OF 0.5X TO 1.0X

1.0x 0.5x

NEW DIVIDEND POLICY

• In August 2018, ALROSA’s Board of Directors approved an updated

dividend policy:

• free cash flow as the basis
• payments twice a year
• minimum payout at 50% of IFRS net income
• Dividend pay-out estimate under the new policy:

❶ Net debt / EBITDA < 0.0 – over 100% FCF ❷ Net debt / EBITDA: 0.0–1.0 – 70–100% FCF ❸ Net debt / EBITDA: 1.0–1.5 – 50–70% FCF

• Based on the Company’s performance in 6M 2018 the General Meeting
• f Shareholders approved dividends of RUB 5.93 per share (70% of free

cash flow) Dividend pay-out ratios Dividend payment

$ m

OUTLOOK

Market outlook

• Diamond jewellery demand remains healthy, while softer currencies will start being a drag
• Mid-stream stocks are expected to remain low due to FX volatility and rising financing costs for polishers

Operating performance

• 2018 full-year sales outlook is revised downwards to 37-38 m cts on lower demand for small stones
• 2018 production outlook remains unchanged at 36.6 m cts
• In Q4 2018, output is expected to grow on ramp-up at the Udachny underground mine and Severalmaz

AP APPE PENDIX NDIX

37 (24) 6 86 (0.3) 13 38 4 2 10 (30) (62)

Net debt bridge

RUB bn

• In Q3, net debt increased from RUB6.0 bn to RUB36.6 bn q-o-q

Drivers:

• Dividend payment – RUB38 bn
• Purchase of shares of ALROSA-Nyurba
• 9M: Net debt was down 59% due to strong FCF and use of cash

proceeds from disposals (RUB30 bn) to pay-down debt

• To set up its stock option plan, ALROSA bought back 156.1 m shares year-

to-date (2.1% of the authorised capital)

Net debt as at 31 December 2017 Free cash flow in H1 2018 Sale of gas assets Acquisition of quasi- treasury shares Other Net debt as at 30 June 2018 Free cash flow in Q3 2018 Acquisition of quasi- treasury shares Dividends paid Purchase of shares of ALROSA-Nyurba Other Net debt as at 30 September 2018

NET DEBT CHANGE

• ALROSA is an exporter with 93% of revenue denominated in USD
• Major portion (84%) of costs and capex is denominated in RUB
• 94% of the Company’s debt portfolio is denominated in USD to create a

natural hedge against FX risks

• ALROSA's financial sensitivity analysis shows that a change in the USD

exchange rate by +/- 1 RUB/USD leads to the following change in metrics:

• revenue – +/-1.51%
• cost of sales – +/-0.24%
• EBITDA – +/-2.61%
• capex – +/-0.22%

Financial metrics breakdown by currency (9M 2018)

% of metric's total

FX RATE

LAB-GROWN ROUGH DIAMONDS / SYNTHETICS

Global production

m ct

~7K-10K ~2-4

~14 ~0.2-0.5

• Lab-grown diamonds history (key events):
• 1953 – first HPHT diamond synthesized
• 1960s – first CVD diamond synthesized
• 1970 – first lab-grown gem quality diamond crystals produced
• 1970s – volumes of synthetic diamonds exceeded those for natural
• 2000s – commercialization of CVD technology
• 2018 – De Beers launched “Lightbox”
• Two types of technologies:
• HPHT1 (~99% – share of lab-grown diamond market) – the process of

growing crystals of diamond at high temperature (~1500

pressure (~50-70K atm.), diamonds are largely used in construction industry for abrasive qualities

• CVD2 (~1% – share of lab-grown diamond market) – the process of

depositing diamond from an ionized hydrocarbon gas atmosphere on a substrate heated to 600-700 0C by means of microwave radiation, stones are mostly used in high-tech, medical and jewelry manufacturing industries

• Gem-quality synthetic diamond market accounts for 2-3% of natural rough

diamond production and c. 3% of world rough diamond sales

~$4.0K ~$1.6K-$2.0K ~$0.3-$0.5

Global sales

$ bn

Production cost of lab-grown rough diamond is gradually declining

$/ct G VS polished diamond

• 50-60%
• 70-80%

LAB-GROWN ROUGH DIAMONDS: FIVE FACTS

Price of 1 carat polished diamond: natural VS synthetic

Round, VS clarity, F-H color

1. Lab-grown diamonds have essentially the same physical and chemical characteristics as natural diamonds, but they are not identical – they are easily detected since both HPHT and CVD methods leave growth marks and telltale signs that are distinctive of an artificially produced diamond 2. Lab-grown diamonds are produced in a matter of weeks, primarily in factories situated outside of the US, mostly in China, India and Singapore – the origin of the product is almost never disclosed 3. Retail prices continue to erode as the costs of production decline 4. The carbon emissions for a 1 carat synthetic diamond are similar to, and sometimes greater than, those for an equivalent natural diamond: the carbon emission per 1 polished carat of synthetic diamond produced in Singapore using the CVD is approximately 40% higher than for natural polished diamonds 5. 68% of US consumers believe that a lab-grown diamond is not a “real diamond”

Carbon emission CO2

~40% greater carbon emission

• 16%
• 16%
• 18%
• 42%
• 81%

ALROSA’S PRODUCTION FORECAST

• pen-pit

• pen-pit

• pen-pit

• 13

• Alluvial and technogenic deposits

• pen-pit

• Udachny underground mine

• pen-pit

• pen-pit

• Nyurba Division

• pen-pit

• pen-pit

• pen-pit

• pen-pit

• pen-pit

KEY INVESTMENT PROJECTS

Udachny underground mine Verkhne-Munskoe deposit (open pit mining) Mayskaya pipe (open pit mining) Production start 2014 2018 2025 Expected design capacity 2020 2019 2027 Expected life of mine 2040 2042 2039 Investment start date 2002 2015 2018 Total capex, RUB bn 63.9 63.0 14.4 Total capex invested, RUB bn 52.8 (81%) 16.2 (26%) 0.03 (0.2%) Target ore output, m tonnes pa 4.0 3.0 0.3 Diamond production, m carats pa 4.9 (2019F) 1.8 (2019F) 0.8 (2027F) Average grade, carats per tonne 1.52 (2019F) 0.6 (2019F) 2.87 (2027F) Total resources, m carats 212.6 38.4 13.9 Verkhne-Munskoe deposit Udachnaya pipe

ROUGH DIAMOND PRODUCTION IS DOMINATED BY FEW MINING COMPANIES WITH THE HIGHEST MARGINS ACROSS DIAMOND PIPELINE, WHERE ALROSA BENEFITS FROM LEADING MARKET SHARE OF 26%

Diamond pipeline structure Major global diamond producers

Share in global production

• f the market

• f diamonds

• f diamond jewelry

OUR PEOPLE

• In 2017 the headcount declined by -2% to 36.4 thousand employees
• Woman account for 37% of total staff members and 32% of executive

staff – according to PWC, ALROSA is a leader in this indicator among industry’s companies

• The majority of staff are employees of 30-50 years – 57%
• The average age of workers – 41.4 years
• Most of employees (86.7%) work in the territory of Western Yakutia

where the main production facilities are located

Age groups as of 2017

% of the total headcount

30-50 years > 50 years < 30 years

Total headcount as of the end of the year

000’ people

40.3 40.7 40.2 37.2 36.4

Yakutia Moscow Arkhangelsk Other

Territorial distribution of staff

% of the total headcount

HEALTH AND SAFETY

• Expenses on labor protection and industrial safety per 1 employee are

stable at level RUB 39,000 since 2015 and totals RUB 1.1-1.4 bn per year

• LTIFR1 in 2017 was increased up to 0.94 due to Mir mine accident in

August which injured 13 miners

• In 2017, ALROSA began building an independent management vertical

structure in H&S functions – the safety services were withdrawn from the supervision of divisions’ chief engineers and organized to report to Managing Director.

• Established permanent industrial safety committees:
• Central Industrial Committee under the supervision of CEO (quarterly

meetings to define the strategy)

• Committee under the supervision of Managing Director (quarterly meetings

to strategy implementation)

• Committee under the supervision of the division head (weekly meetings to

review any violations and develop remedial measures)

Independent management structure to insure industrial safety Health and safety costs

000’ RUB per 1 person 29.9 33.3 39.3 38.9 39.1 0.48 0.21 0.45 0.38 0.94

CEO

Deputy CEO for H&S Managing Director H&S Department Central Committee Managing Director’s Committee Division Committee Divisions’ directors H&S Services

ENVIRONMENT AND ESG RATINGS

• 2017 capex related to environmental activities stood at the level of RUB

4.4 bn

• Efficient disclosure are acknowledged by ESG ratings:
• 3rd place (out of 33) in the “First rating of environmental performance of

mining companies in Russia”

• Rated among top-10 Russian companies with transparent corporate

reporting according to Transparency International-Russia research

• 2017 area of disturbed land decreased by 47% y-o-y
• ALROSA plans to reduce CO2 emissions mostly arising from the trucks

use

Are of annually disturbed land

ha

Financing of environmental activities

RUB bn 6.6 5.9 6.0 5.5 4.4

CO2 emissions

000’ t 1,414 1,080 571

530 460 465

ENERGY RESOURCES

• ALROSA’s share of renewable energy consumption is 87%, long-term

target level – 95%

• 2017 unit energy consumption decreased by 7% y-o-y to 0.327 GJ/carat

meanwhile diamond production increased by 6% y-o-y

• 2017 water intake for production purposes decreased by 2.3x mainly due

to excluding of the Heat and power supply company, which was removed from PJSC “ALROSA” structure starting from 01.01.2017 to subsidiary PTWS LLC

Per unit energy consumption

GJ/carat

Share of renewable energy consumption Water intake (production)

m m3 0.323 0.351 0.327

12.5 11.3 4.9

87%

Renewable energy consumption Other

GOVERNANCE

• In 2013, the Supervisory board approved the Corporate Governance Code
• Board has three active committees with independent directors:
• The Strategic Planning Committee
• The Auditing Committee
• The HR and Remunerations Committee
• Continuous progress in corporate governance reflected in positive rating

dynamics

• Regular and transparent disclosure
• New initiatives are under way:
• Corporate Strategy till 2024
• HR Strategy with the overhaul of the organization structure and motivation

schemes (stock option program is one of the initiatives)

Corporate governance rating Supervisory Board composition

Number of members

7+ 7+ 7++ 7++ 8

15 15 15 15 15

MANAGEMENT TEAM IS FULLY COMMITTED TO DELIVER ON ALROSA’S DEVELOPMENT PLANS

Operational Team Executive Team

• Joined the Company in 2017
• Senior Vice President at Sberbank of Russia (2016‒2017)
• Chairman of the Management Board of SOGAZ (2011‒2016)
• Top management positions at Gazprombank (2005‒2011)

• Joined the Company in 2007
• Head of Capital construction division, mining & metallurgical directorate

• Joined the Company in 2017
• CFO of Siberian Generating Company (2015–2017)
• CFO of Sibur (2004–2013)
• Consultant at McKinsey & Co. (2001-2004)

• Joined the Company in 1993
• Vice President of ALROSA for marketing and sales since August 2009

• Joined the Company in 1996
• Over 20 years of industry experience

• Joined the Company in 1979
• Over 38 years of industry experience

• Joined the Company in 2005
• Over 15 years of industry experience

• Joined the Company in 1992
• Over 25 years of industry experience

• Joined the Company in 2016
• First deputy Prime Minister of the Republic of Sakha (Yakutia) (2014‒2016)
• Deputy Prime Minister of the Republic of Sakha (Yakutia) (2010‒2014)

• Joined the Company in 1997
• Over 20 years of industry experience
• Chief engineer of ALROSA in 2010‒2015

• 2005-2011 – Deputy Minister of Finance of the

• Since 2011 – Minister of Finance of the Russian

• Since 2018 – First Deputy Chairman of the

• 2012-2018 – Head of the urban district ”City of

• Since 2018 – Head of the Republic of Sakha

• 2009-2015 – Specialist, Senior Specialist,

• 2015-2016 – General Director of the state-run

• Since 2017 – First Deputy Head of Suntarsky

• 2013-2015 – Head of department in Agency of

• 2015-2018 – Deputy Plenipotentiary

• Since 2018 – Chairman of the Government of

• 2009-2011 – Head of New Nations Capital

• 2011-2013 – Director, member of the board,

• Since 2014 – General Director of the Far East

• 2007-2011 – Development Director, President
• f Icon Private Equity Limited Representative

• Since 2011 – CEO of Russian Direct Investment

• 2009-2012 – Head, Department of Investment

• 2012-2014 – Adviser to the Head of the Federal

• Since 2013 – Independent director of the

• 1998-2010 – Goldman Sachs, investment

• 2010-2014 – PIMCO, investment activity
• Since 2015 – Independent director of the

SUPERVISORY BOARD OVERVIEW (1/2)

• 2010-2012 – Deputy Head, Head, Secretariat of

• 2012-2016 – First Deputy Minister of Property and

• Since 2016 – CEO of Trust Fund for Future

• 2001-2010 – Senior Economist, Deputy Head of

• 2010-2012 – Deputy Head of Department, Head
• f Division at VTB Capital
• Since 2012 – Deputy Minister of Finance of the

• 2010-2012 – Referent of the Department of the

• 2012-2015 – Assistant Chairman of the

• Since 2017 – Assistant Head of the Federal

SUPERVISORY BOARD OVERVIEW (2/2)

• 2007-2011 – First Deputy Minister of Property

• Since 2011 – Minister of Property and Land

• 2011-2016 – Chairman of the Management

• 2016-2017 – Senior Vice President, Head of

• Since 2017 – CEO of ALROSA

• 2011-2016 – CEO of SIBUR
• Since 2007 – Member of the Board of Directors,

• 2003-2007 – Ministry of Property Relations of

• 2007-2015 – Permanent Representative of the

• Since 2018 – Independent director of the

DIAMOND DISCOVERIES

Discovery-to-production periods

Years Discovery and development of new kimberlite pipes are much more challenging now

• Supply of diamonds is constrained by lack and complexity of new diamond

discoveries and significant time required to ramp-up production

• No less than 4 years is required to ramp-up full scale production on a

diamond mine

ECONOMIC EFFICIENCY OF UNDERGROUND MINING IS FOSTERED BY BLOCK CAVING MINING METHOD

Traditional cut-and-fill mining

Block caving method

Cut-and-fill mining method at Udachny underground mine would have required more than 330 thousand tons of cement a year (~ RUB 1 bn in current prices), which is an equivalent of total cement output in the Republic of Sakha (Yakutia)

RESOURCES INCLUSIVE OF RESERVES ACCORDING TO JORC CODE AS OF JULY 1, 2016 (1/2)

RESOURCES INCLUSIVE OF RESERVES ACCORDING TO JORC CODE AS OF JULY 1, 2016 (2/2)

24 Ozerk rkovska vskaya emb. Mosc scow 115184 Ru Russi sia

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• ex. 1178)

st@al @alrosa

• sa.r

.ru

TH THANK ANK YO YOU! U!