ALROSAs Udachny Division Roman Deniskin Presentation 10 March 2020 - - PowerPoint PPT Presentation

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ALROSAs Udachny Division Roman Deniskin Presentation 10 March 2020 - - PowerPoint PPT Presentation

ALROSAs 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


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ALROSA’s Udachny Division

Roman Deniskin Presentation 10 March 2020

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Disclaimer

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.

For notes:

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Agenda

Udachny: Brief asset description Recent operational achievements

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Udachnaya pipe Verkhne-Munskое deposit Zarnitsa pipe

Udachny division is located in the North-East of Russia

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Udachny division at a glance

3,0 Mtpa 3,5 Mtpa 4,0 Mtpa 10,5 Mtpa

Udachnaya pipe (underground) Verkhne-Munskое deposit (4 pipes) Zarnitsa pipe (open pit, swing capacity) Processing plant #12

1 2 3 4

118 M ct 1,3 ct/t 0,6 ct/t 0,3 ct/t 41 M ct 5 M ct

15%

  • f ALROSA's

2019 production volume

164 Mct or 26%

  • f ALROSA's diamond reserves
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Udachny: Large Diamonds

191 ct 88 ct 74 ct 84 ct

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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: 207.6M1 ct, incl. 118 Mct of reserves

1. In accordance with JORC report of resources and reserves of ALROSA as of 1 July 2018

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Udachnaya today is #7 by cash value, may become #2

  • nce underground operations ramped up and stable

Biggest diamond mines' remaining lifetime cash contribution, $B

International Udachnaya (potential) Peer mine 4 Peer mine 3 Peer mine 2

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Jubilee Nyurbinskaya Peer mine 5 Botubinskaya Peer mine 6

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Peer mine 7 Nyurba Alluvial Peer mine 1 Peer mine 8 Arkhangelskaya

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Udachnaya (current)

41 14-16 14 11 11 9 8 5 3 2 2 2 13

+70-90%

Udachnaya ALROSA other Other companies

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 reserves and mineral resources report 2018.

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First wave of operational improvement covered the two biggest cost items of Udachny division

176 407 48 60 72 50

First tangible operational results

Underground mine expecting 13% lower unit cost in 2020 vs. 2019 due to higher production volume

  • New shaft maintenance schedule, combined

with underground shift changeover

  • Improved shift planning around bottlenecks
  • Transition to emulsion-based explosives
  • Tighter equipment maintenance control

Car trains on new schedule delivered +32% productivity while reducing unit cost by 9%

  • Shift to shorter shifts (10 hour instead of 12)
  • Combined route schedule, covering 2 open pits

Udachny cost base1 , $M

  • 1. 2019 actuals and 2020 plan, both assuming USD/RUB rate of 66,4 rubles

2020

142 386 68 54 77 45 Open pits Underground Transportation Other Concentrator Total cost base

2019

2.6 3.75

U/g volume Mt xx

  • 13% unit cost
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New daily shaft maintenance schedule combined with underground changeover delivered +60% of shift volume

New schedule (shift by 2 hours, reversing prep and maintenance) Underground shift schedule Old shaft maintenance schedule

Change

  • ver

Change

  • ver

Prep Maintenance Maintenance Prep 7 8 9 10 11 12 13 14 15 16 17

  • Avg. volume during

maintenance shift, Kt

Extra ~2hrs production won by combining shaft maintenance with underground shift changeover

Old schedule New schedule

1.5 2.4 +63%

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New stand-up shift plan improving coordination & bottleneck planning

Drill rig positioning Repairs, Maintenance, Support operations Ore passes &

  • verhaul

Primary loading and hauling plan Blasting

Visual format allows to easily understand plan of each department and see coordination issues Stand-up planning format ensures meeting pace and communication among participants

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Standard timing, pace and agenda ensures every participant prepares beforehand

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  • V. Muna

Factory

New car trains schedule improved efficiency by 36% & reduced unit cost by 9%

~70 car trains

allocated to V. Muna (10.5h per trip) In case of repairs car train relocated to Zarnitsa

10-12 car trains

allocated to Zarnitsa (7 trips x 1.5h)

Previous schedule

1 6 5 k m

New schedule All car trains

first make a trip to V. Muna, then a trip to Zarnitsa (12h per round trip)

+16% volume growth through combining car train park for both open pits +20% volume growth due to shift reduction to 10h leading to higher % of executed V. Muna trips

Zarnitsa

20 km

Additionally +2h of daily rest between shifts for the drivers with same pay

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Udachny offers unique value creation potential for ALROSA shareholders

52% of ALROSA’s cumulative diamond output since 1967 Expected lifetime until 2064 with over 200 Mct of resources and 118 Mct of reserves #5 Globally in revenue potential with significant investment upside through operational efficiency and potential shift to block caving

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THANK YOU!

SERGEY TAKHIEV HEAD OF CORPORATE FINANCE M: +7 985 760 55 74 E: ST@ALROSA.RU RUSSIA, 115184 MOSCOW 24 OZERKOVSKAYA EMB. DMITRY BYALOSHITSKIY CORPORATE FINANCE M: +7 915 113 32 04 E: DB@ALROSA.RU