ALROSA’s Udachny Division Roman Deniskin Presentation 10 March 2020 0
Disclaimer For notes: The below applies to the presentation (the “Presentation”) following this important notice, and you are therefore advised to read this important notice carefully before reading, accessing or making any other use of this Presentation. This Presentation contains statements about future events and expectations that are forward-looking statements. Any statement herein (including, without limitation, a statement regarding our financial position, strategy, management plans and future objectives) that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause ALROSA’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. The information and opinions contained in this document are provided as at the date hereof (unless indicated otherwise) and are subject to change without notice. ALROSA assumes no obligation to update, supplement or revise the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This Presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire any securities in any jurisdiction or an inducement to enter into any investment activity. The contents hereof should not be construed as investment, legal, tax, accounting or other advice, and investors and prospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such issuer and the nature of the securities and consult their own advisers as to legal, financial, tax and other related matters. This Presentation has not been independently verified. No representation or warranty or undertaking, express or implied, is made as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation. None of ALROSA nor any of its shareholders, directors, officers or employees, affiliates, advisors, representatives nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection therewith. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness. This Presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Persons in whose possession this Presentation and/or such information may come are required to inform themselves thereof and to observe such restrictions. Some figures included in this Presentation have been subject to rounding adjustments. By reviewing and/or attending this Presentation you acknowledge and agree to be bound by the foregoing. 1
Udachny: Brief asset description Agenda Recent operational achievements 2
Udachnaya pipe Zarnitsa pipe Verkhne-Munsk ое deposit Udachny division is located in the North-East of Russia 3
Udachnaya pipe 1 (underground) Udachny 118 M ct 4,0 Mtpa 1,3 ct/t division Verkhne-Munsk ое 2 deposit (4 pipes) at a glance 3,0 Mtpa 41 M ct 0,6 ct/t Zarnitsa pipe (open 15% 3 pit, swing capacity) of ALROSA's 5 M ct 3,5 Mtpa 0,3 ct/t 2019 production volume 164 Mct or 26% Processing 4 plant #12 10,5 Mtpa of ALROSA's diamond reserves 4
Udachny: 191 ct 88 ct Large Diamonds 84 ct 74 ct 5
Udachnaya pipe: Key facts One of the largest kimberlite pipes, in operation since 1971 Open pit produced 800 Mct, or 52% of total historical ALROSA volume In 2019 3.2 Mct / 9% of ALROSA annual production, expected LOM until 2069 Remaining resources: 207.6M 1 ct, incl. 118 Mct of reserves 1. In accordance with JORC report of resources 6 and reserves of ALROSA as of 1 July 2018
Udachnaya today is #7 by cash value, may become #2 once underground operations ramped up and stable Biggest diamond mines' remaining lifetime cash contribution, $B 41 Udachnaya ALROSA other +70-90% Other companies 14-16 14 13 11 11 9 8 8 5 3 3 2 2 2 2 Peer mine 1 Udachnaya (potential) Peer mine 2 Jubilee Peer mine 3 Peer mine 4 Peer mine 5 Udachnaya (current) International Peer mine 6 Peer mine 7 Nyurba Alluvial Peer mine 8 Nyurbinskaya Arkhangelskaya Botubinskaya Note: Lifetime cash contribution estimated as resources multiplied by cash margin per ct., Price and cost assumptions are from 2017, for Udachnaya - 2019 Source: ALROSA group of companies summary of the independent expert report 2018; Petra Diamonds Limited Resource Statement 2018, Anglo American ore 7 reserves and mineral resources report 2018.
First wave of operational improvement covered the two biggest cost items of Udachny division Udachny cost base 1 , $M First tangible operational results 2019 2020 Underground mine expecting 13% lower unit cost -13% unit cost in 2020 vs. 2019 due to higher production volume 3.75 Underground 142 176 2.6 • New shaft maintenance schedule, combined with underground shift changeover Transportation 68 48 • Improved shift planning around bottlenecks Open pits 54 60 • Transition to emulsion-based explosives • Tighter equipment maintenance control Concentrator 77 72 Car trains on new schedule delivered +32% Other 45 50 productivity while reducing unit cost by 9% • Shift to shorter shifts (10 hour instead of 12) Total cost base 386 407 • Combined route schedule, covering 2 open pits xx U/g volume Mt 8 1. 2019 actuals and 2020 plan, both assuming USD/RUB rate of 66,4 rubles
New daily shaft maintenance schedule combined with underground changeover delivered +60% of shift volume Avg. volume during 7 8 9 10 11 12 13 14 15 16 17 maintenance shift, Kt Old shaft maintenance schedule Maintenance Prep +63% 2.4 New schedule (shift by 2 hours, Prep Maintenance reversing prep and 1.5 maintenance) Extra ~2hrs production won by combining shaft maintenance with underground shift changeover Underground shift Change Change schedule over over Old schedule New schedule 9
New stand-up shift plan improving coordination & bottleneck planning Ore passes & Primary loading and Drill rig Visual format allows to 1 overhaul hauling plan Blasting positioning easily understand plan of each department and see coordination issues Stand-up planning format 2 ensures meeting pace Repairs, and communication Maintenance, among participants Support operations Standard timing, pace 3 and agenda ensures every participant prepares beforehand 10
New car trains schedule improved efficiency by 36% & reduced unit cost by 9% Previous schedule V. Muna ~70 car trains allocated to V. Muna +16% volume growth through combining (10.5h per trip) car train park for both open pits In case of repairs car m k 5 train relocated to 6 1 New schedule Zarnitsa +20% volume growth due to shift reduction to 10h leading to All car trains higher % of executed V. Muna trips first make a trip to V. Muna, then a trip to Zarnitsa (12h per round trip) Factory 20 km Additionally +2h of daily rest between Zarnitsa shifts for the drivers with same pay 10-12 car trains allocated to Zarnitsa (7 trips x 1.5h) 11
52% of ALROSA’s cumulative diamond output since 1967 Udachny offers unique value Expected lifetime until 2064 creation potential with over 200 Mct of resources for ALROSA and 118 Mct of reserves shareholders #5 Globally in revenue potential with significant investment upside through operational efficiency and potential shift to block caving 12
THANK YOU! RUSSIA, 115184 SERGEY TAKHIEV DMITRY BYALOSHITSKIY MOSCOW HEAD OF CORPORATE FINANCE CORPORATE FINANCE 24 OZERKOVSKAYA EMB. M: +7 985 760 55 74 M: +7 915 113 32 04 E: ST@ALROSA.RU E: DB@ALROSA.RU 13
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