Investor Day April 2015 Disclaimer The information contained herein - - PowerPoint PPT Presentation

Investor Day

April 2015

2

Disclaimer

The information contained herein has been prepared for the use in this Presentation (the “Presentation”) and has not been independently verified. Such information is confidential and is being provided to you solely for your information and may not be reproduced, retransmitted, further distributed to any other person or published, in whole or in part, for any purpose. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. Certain industry, market and competitive position data contained in this Prospectus come from official or third party sources believed to be reliable but ALROSA does not guarantee its accuracy or completeness. This Presentation contains statements about future events and expectations that are forward-looking statements. Any statement in this Presentation 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 the ALROSA’s actual results, performance

• r 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. ALROSA assumes no obligation to update, supplement or revise forward-looking or any other statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. ALROSA does not intend or have any duty or obligation to update or to keep current any information contained in this Presentation. The diamond resources and reserves estimates provided in this Presentation have been prepared and presented in accordance with the standards and classifications of the JORC Code (the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as promulgated by the Australasian Joint Ore Reserves Committee), which differ in significant respects from the standards and classifications applicable to the disclosure of mineral resources and reserves under the laws and regulations of certain other jurisdictions, including the regulations of the U.S. Securities Exchange Commission (the “SEC”) with respect to registration statements and other documents filed with the SEC. Among other things, in accordance with the JORC Code, this Presentation provides certain mineral resources estimates classified as “inferred”, “indicated” or “measured”, which differ in significant respects from “probable” and “proven” mineral reserves estimates and are not disclosed in certain jurisdictions, including in SEC filings. There can be significant uncertainty as to whether mineral resources can ever be feasibly and commercially mined. For further explanation of the JORC Code, see the JORC website at www.jorc.org. This Presentation does not constitute an offer to sell, or any solicitation of any offer to subscribe for or purchase, any securities. No part of this Presentation, nor the fact of its distribution, should form any basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information in this Presentation is subject to verification, completion and change. No representation or warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the accuracy or completeness of the information or opinions contained in this Presentation. None of ALROSA nor any of its shareholders, directors,

• fficers or employees, affiliates, advisors, representatives nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this Presentation
• r its contents or otherwise arising in connection therewith.

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. This Presentation is not for distribution, directly or indirectly, to the public in the United States (including its territories and possessions, any State of the United States and the District of Columbia). These materials are not an offer or solicitation to purchase or subscribe for securities in the United States or any other jurisdiction. Securities may not be

• ffered or sold in the United States absent registration with the U.S. Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of

1933, as amended. ALROSA does not intend to register any part of any offering in the United States or to conduct a public offering of any of its securities in the United States. By attending a meeting where this Presentation is made or reviewing this Presentation you acknowledge and agree to be bound by the foregoing.

3

Presenting team

Ilya Ryashchin Igor Kulichik Sergei Mezhokh

Acting CEO, First Vice President CFO, Vice President Head of IR

4

Content

ALROSA at a glance 1 5 Diamond Industry 2 7 Production 3 14 Marketing 4 20 Financial Performance 5 25 ALROSA Tomorrow 6 32 Appendix 7 40

5

ALROSA at a glance

6

Global leader in rough diamond production with the largest reserve base globally and strong financial profile

44% The Russian Federation 25% The Republic of Sakha

(Yakutia)

8% Yakutian municipal districts 23% Free float

ALROSA’s shareholder structure

151 169 207 62 69 94 12 17 45 50 100 150 200 2012 2013 2014

Revenue, RUB bn EBITDA, RUB bn Free Cash Flow

Financial summary Global diamond production (2014E)

• ALROSA is a public diamond mining company

with 23% free-float on the Moscow Exchange

• ALROSA’ production totaled 36.2 mln cts in 2014

representing 28% in global diamond output

• Strong financial performance resulting in 23% y-o-y

revenue growth to RUB 207 bn, free cash flow of RUB 45 bn and solid EBITDA margin of 45% in 2014

• Resources are sufficient to support production for at

least 26 years

ALROSA at a glance

28% ALROSA 25% De Beers 11% Rio Tinto 36% Others 131

mln cts

41% 41% 45% EBITDA margin, %

1.9x 1.9x 1.9x

Net debt/EBITDA

7

Diamond Industry

8

Major global diamond deposits are located in Russia, Canada, Botswana, South Africa and Australia

Australia: 9.3 ALROSA Other companies Yakutia (ALROSA) 5 open-pit mines 4 underground mines 14 alluvial placers Botswana: 23.8 Angola: 9.4 ALROSA owns 32.8% in Catoca Canada: 12.1 Democratic Republic of the Congo: 15.7 Arkhangelsk region Lomonosov deposit (ALROSA) 2 open-pit mines Grib (LUKOIL) Zimbabwe: 10.4 Namibia: 1.9

mln cts

ALROSA: 36.2

Global diamond production by main countries in 2014

Diamond Industry South Africa: 8.1

Source: Kimberly process, Companies’ reports

Diamond jewelry manufacturing

Nearly half of all diamonds are produced in Russia and Botswana, USA and Asian countries are the key diamond jewelry markets

Source: Kimberly process, Ministry of Finance of the Russian Federation, Companies’ reports, Foreign trade operations statistics; Euromonitor Note: * includes China, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand

Diamond production

9

Cutting and polishing Diamond jewelry retail sales

72% India 12% Others 7% China 5% Israel 4% Russia 27% USA 16% Others 11% Europe 40% Asia* 6% Japan 37% China 12% Others 14% Europe 6% USA 31% India 29% Russia 18% Botswana 8% Zimbabwe 8% Canada 12% DRC 12% Others 7% Angola 6% Republic of South Africa

9 Diamond Industry

Luxury goods and diamond jewelry markets showed a sustainable growth over the last 3 years while the diamond supply stayed almost flat

Source: Bain & Company “Diamonds: Timeless Gems in a Changing World”, 2014, Companies’ reports, Euromonitor International

Diamond jewelry sales, y-o-y Global luxury goods market, y-o-y 10% 3% 7% 12% 8% 2%

2012 2013 2014E 2012 2013 2014E

Global rough diamond supply, y-o-y 4% 2% 1%

2012 2013 2014E

Demand Supply

10

CAGR +7% CAGR +7% CAGR +2%

Diamond Industry

11

Global diamond production is expected to stay almost flat in next decade

• In the medium term, global diamond production is expected to grow with 3% CAGR due to rebound of production at mines in

Russia, Australia and Canada

• After 2019, global diamond production is expected to decline with -2% CAGR mainly because of depletions of mines in

Australia and Canada

Source: Companies’ reports & forecasts, Kimberley Process, ALROSA’s forecast

127 129 128 139 140 143 145 149 145 146 146 145 137 128 130 131 142 146 152 156 162 159 159 159 157 149

2012 2013 2014E 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F

Existing mines New mines

Global diamond production forecast (2015-2024F)

CAGR 15-19F 3% CAGR 19-24F (2%) CAGR 15-24F ~1% mln cts

Diamond Industry

35 77 133 0,00 50,00 100,00 150,00 2006 2010 2014 9.8 10.2 11.2 9,09 9,10 9,10 9,10 9,11 9,11 9,11 9,11 9,12 9,12 9,12 9,13 9,13 9,13 9,14 9,14 9,14 9,14 9,15 9,15 9,15 9,16 9,16 9,16 9,17 9,17 9,17 9,17 9,18 9,18 9,18 9,19 9,19 9,19 9,20 9,20 9,20 9,20 9,21 9,21 9,21 9,22 9,22 9,22 9,23 9,23 9,23 9,23 9,24 9,24 9,24 9,25 9,25 9,25 9,26 9,26 9,26 9,27 9,27 9,27 9,27 9,28 9,28 9,28 9,29 9,29 9,29 9,30 9,30 9,30 9,30 9,31 9,31 9,31 9,32 9,32 9,32 9,33 9,33 9,33 9,33 9,34 9,34 9,34 9,35 9,35 9,35 9,36 9,36 9,36 9,36 9,37 9,37 9,37 9,38 9,38 9,38 9,39 9,39 9,39 9,39 9,40 9,40 9,40 9,41 9,41 9,41 9,42 9,42 9,42 9,42 9,43 9,43 9,43 9,44 9,44 9,44 9,45 9,45 9,45 9,45 9,46 9,46 9,46 9,47 9,47 9,47 9,48 9,48 9,48 9,49 9,49 9,49 9,49 9,50 9,50 9,50 9,51 9,51 9,51 9,52 9,52 9,52 9,52 9,53 9,53 9,53 9,54 9,54 9,54 9,55 9,55 9,55 9,55 9,56 9,56 9,56 9,57 9,57 9,57 9,58 9,58 9,58 9,58 9,59 9,59 9,59 9,60 9,60 9,60 9,61 9,61 9,61 9,61 9,62 9,62 9,62 9,63 9,63 9,63 9,64 9,64 9,64 9,64 9,65 9,65 9,65 9,66 9,66 9,66 9,67 9,67 9,67 9,67 9,68 9,68 9,68 9,69 9,69 9,69 9,70 9,70 9,70 9,71 9,71 9,71 9,71 9,72 9,72 9,72 9,73 9,73 9,73 9,74 9,74 9,74 9,74 9,75 9,75 9,75 9,76 9,76 9,76 9,77 9,77 9,77 9,77 9,78 9,78 9,78 9,79 9,79 9,79 9,80 9,80 9,80 9,80 9,81 9,81 9,81 9,82 9,82 9,82 9,83 9,83 9,83 9,83 9,84 9,84 9,84 9,85 9,85 9,85 9,86 9,86 9,86 9,86 9,87 9,87 9,87 9,88 9,88 9,88 9,89 9,89 9,89 9,89 9,90 9,90 9,90 9,91 9,91 9,91 9,92 9,92 9,92 9,93 9,93 9,93 9,93 9,94 9,94 9,94 9,95 9,95 9,95 9,96 9,96 9,96 9,96 9,97 9,97 9,97 9,98 9,98 9,98 9,99 9,99 9,99 9,99 10,00 10,00 10,00 10,01 10,01 10,01 10,02 10,02 10,02 10,02 10,03 10,03 10,03 10,04 10,04 10,04 10,05 10,05 10,05 10,05 10,06 10,06 10,06 10,07 10,07 10,07 10,08 10,08 10,08 10,08 10,09 10,09 10,09 10,10 10,10 10,10 10,11 10,11 10,11 10,11 10,12 10,12 10,12 10,13 10,13 10,13 10,14 10,14 10,14 10,15 10,15 10,15 10,15 10,16 10,16 10,16 10,17 10,17 10,17 10,18 10,18 10,18 10,18 10,19 10,19 10,19 10,20 10,20 10,20 10,21 10,21 10,21 10,21 10,22 10,22 10,22 10,23 10,23 10,23 10,24 10,24 10,24 10,24 10,25 10,25 10,25 10,26 10,26 10,26 10,27 10,27 10,27 10,27 10,28 10,28 10,28 10,29 10,29 10,29 10,30 10,30 10,30 10,30 10,31 10,31 10,31 10,32 10,32 10,32 10,33 10,33 10,33 10,34 10,34 10,34 10,34 10,35 10,35 10,35 10,36 10,36 10,36 10,37 10,37 10,37 10,37 10,38 10,38 10,38 10,39 10,39 10,39 10,40 10,40 10,40 10,40 10,41 10,41 10,41 10,42 10,42 10,42 10,43 10,43 10,43 10,43 10,44 10,44 10,44 10,45 10,45 10,45 10,46 10,46 10,46 10,46 10,47 10,47 10,47 10,48 10,48 10,48 10,49 10,49 10,49 10,49 10,50 10,50 10,50 10,51 10,51 10,51 10,52 10,52 10,52 10,52 10,53 10,53 10,53 10,54 10,54 10,54 10,55 10,55 10,55 10,56 10,56 10,56 10,56 10,57 10,57 10,57 10,58 10,58 10,58 10,59 10,59 10,59 10,59 10,60 10,60 10,60 10,61 10,61 10,61 10,62 10,62 10,62 10,62 10,63 10,63 10,63 10,64 10,64 10,64 10,65 10,65 10,65 10,65 10,66 10,66 10,66 10,67 10,67 10,67 10,68 10,68 10,68 10,68 10,69 10,69 10,69 10,70 10,70 10,70 10,71 10,71 10,71 10,71 10,72 10,72 10,72 10,73 10,73 10,73 10,74 10,74 10,74 10,74 10,75 10,75 10,75 10,76 10,76 10,76 10,77 10,77 10,77 10,78 10,78 10,78 10,78 10,79 10,79 10,79 10,80 10,80 10,80 10,81 10,81 10,81 10,81 10,82 10,82 10,82 10,83 10,83 10,83 10,84 10,84 10,84 10,84 10,85 10,85 10,85 10,86 10,86 10,86 10,87 10,87 10,87 10,87 10,88 10,88 10,88 10,89 10,89 10,89 10,90 10,90 10,90 10,90 10,91 10,91 10,91 10,92 10,92 10,92 10,93 10,93 10,93 10,93 10,94 10,94 10,94 10,95 10,95 10,95 10,96 10,96 10,96 10,96 10,97 10,97 10,97 10,98 10,98 10,98 10,99 10,99 10,99 11,00 11,00 11,00 11,00 11,01 11,01 11,01 11,02 11,02 11,02 11,03 11,03 11,03 11,03 11,04 11,04 11,04 11,05 11,05 11,05 11,06 11,06 11,06 11,06 11,07 11,07 11,07 11,08 11,08 11,08 11,09 11,09 11,09 11,09 11,10 11,10 11,10 11,11 11,11 11,11 11,12 11,12 11,12 11,12 11,13 11,13 11,13 11,14 11,14 11,14 11,15 11,15 11,15 11,15 11,16 11,16 11,16 11,17 11,17 11,17 11,18 11,18 11,18 11,18 11,19 11,19 11,19 11,20 11,20 11,20 11,21 11,21 11,21 11,22 11,22 11,22 11,22 11,23 11,23 11,23 11,24 11,24 11,24 11,25 11,25 11,25 11,25 2006 2010 2014

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Diamond demand in USA is driven by personal disposable income, in China and India it depends on the number of middle class households

US real personal disposable income India middle class households

(annual PDI exceeds $10,000 per household)

mln

China middle class households

(annual PDI exceeds $15,000 per household)

mln

26 36 43 0,00 10,00 20,00 30,00 40,00 50,00 2006 2010 2014

Source: EIU, Euromonitor

$ trln CAGR 06-14 +2% CAGR 06-14 +18% CAGR 06-14 +7%

Diamond Industry

As USA is a well developed diamond market with high penetration of diamond jewelry, future dynamics of the market is expected to stay in line with personal disposable income As China and India are emerging markets, growth potential in these regions will be determined by future penetration of diamond jewelry, which depends

• n

middle class households growth

1,000 1,070 1,783 1,812

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 15 25 35 2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F Demand Supply

Diamond supply and demand are expected to be balanced in the medium term with growing disparity in the long term. This means the historically observed price trend may continue

Source: Bain & Company “Diamonds: Timeless Gems in a Changing World”, 2014; Company’s data

Global rough diamond price index

2004 = 1

Supply and demand balance

$ bn CAGR 2004-2014

+6%

Diamond Industry 13

CAGR 15-24F

~5%

CAGR 15-24F

~2%

14

Production

15

Source: Company data, JORC as of 01 July 2013 (Micon)

ALROSA’ diamond production is well-diversified between divisions and types of mining

Severalmaz 1.6

mln cts

Note: Percentage and absolute figures indicate the share of division in 2014 ALROSA diamond production

ALROSA Total

Production

Aikhal Division 17% 10% 8% 5% Nyurba Division Mirny Division Udachny Division Almazy Anabara Nizhne-Lenskoe 12.6

mln cts

7.4

mln cts

6.1

mln cts

3.7

mln cts

3.1

mln cts

1.8

mln cts Aikhal pipe Jubilee pipe Komsomolskaya pipe Nyurbinskaya pipe Botuobinskaya pipe Alluvial deposits (1) Mir pipe International pipe Alluvial deposits (3) Udachny pipe Zarnitsa pipe Alluvial deposits (7) Alluvial deposits (3) Arkhangelskaya pipe Karpinskogo-1 pipe

973 mln cts

Total resources,

• incl. reserves

608 mln cts

Total reserves Share of open-pit mining from 7 mines in 2014 production Share of underground mining from 4 mines in 2014 production Share of alluvial mining from 14 alluvial placers in 2014 production

35% 20% 5%

58% 24% 18%

Geography of ALROSA’ production assets

Republic of Sakha (Yakutia) Arkhangelsk region Russian Federation

16

ALROSA intends to increase diamond production to over 41 mln cts by 2019 Severalmaz and Udachny are the key production growth drivers

ALROSA production forecast

mln cts CAGR 14–21F 18% 7% (0.3%) 31.1 32.4 33.5 31.8 31.5 31.7 31.0 30.4 3.5 3.9 3.4 4.9 4.7 5.4 5.5 5.7 1.6 1.9 2.1 2.4 3.7 4.3 4.6 5.1 2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F

38.2 36.2 39.0 39.1 41.3 41.2 41.5 39.9

2%

Source: Company data Note: (1) Others include Mirny division, Nyurba division, Aikhal division, Almazy Anabara, Nizhne-Lenskoye and Udachny division excluding Udachny pipe production

(1)

1.01 1.03 1.05 1.00 0.97 0.94 0.91 0.90

Grade (ct/t)

Severalmaz Udachny pipe Others Production

17

Capex will be decreasing as Severalmaz and Udachny underground mine reach their designed capacity

Planned Capex by mining complex

Source: Company data

Production

11.0 7.5 5.5 5.3 6.9 7.2 11.1 2.5 2.3 1.6 1.3 2.8 2.2 1.4 9.9 8.0 8.8 10.9 11.9 7.8 6.7 10.2 10.9 8.6 3.7 3.0 4.6 2.1 2.0 1.0 1.2 2.4 1.5 2015F 2016F 2017F 2018F 2019F 2020F 2021F 22.7 RUB bn 24.1 25.8 29.0 35.6 25.4 21.8 0.4 0.5

Severalmaz Udachny division Mining projects in the Republic of Sakha (Yakutia) Alluvial deposits Industrial infrastructure and other

1.0

18

Udachny underground mine

On June 27, 2014 ALROSA started to mine ore from Udachny underground mine

Severalmaz

On March 14, 2014 processing plant with annual capacity

• f 3 mln tons of ore was put into operation, having increased

total capacity up to 4 mln tons of ore a year 2015F 2019 target capacity Ore processed, mln t 0.5 4.0 Diamond production, mln cts 0.8 5.4 Cost of the project, RUB bn 55.6 NPV, RUB bn 1.8 IRR 11% 2015F 2018 target capacity Ore processed, mln t 4.0 4.0 Diamond production, mln cts 1.9 3.7 Cost of the project, RUB bn 50.4 NPV, RUB bn 23.4 IRR 33%

In 2014, ALROSA launched two key investment projects to meet production plan of 41 mln cts

Production

19

ALROSA investment projects return is not less than current profitability

Underground mines

• Resources: 456 mln cts
• LOM: 40+ years

Nakynskoye

• re field
• Resources: 152 mln cts
• LOM: 25 years

Verkhne- Munskoye

• Resources: 25 mln cts
• LOM: 20 years

Severalmaz

• Resources: 185 mln cts
• LOM: 30 years

Other pipes and alluvials

• Resources: 150+ mln cts;
• LOM: more than 20 years

NPV IRR

RUB 167 bn 26%

Production

ROIC

22%

20 20

Marketing

21

ALROSA sales strategy is based on long-term contracts, supported by tenders and spot sales

2014 ALROSA rough diamond sales by channel

• ALROSA implements a three-channel distribution strategy focused on long-term contracts, tenders

and spot sales

• Currently ALROSA has 47 clients under long-term contracts with committed volumes and

assortment

• Spot and long-term clients are selected based on their financial position, reputation and track

record

Geography of ALROSA sales in 2014

64% Long-term contracts 15% Tenders 56% Belgium 14% India 11% Israel 3% United Arab Emirates 5% Others 21% Spot sales 11% Russia

Marketing

30% 3% 45% 22% 15% 16% 5% 14% 5% 34% 11%

by sales volume by sales value

22

Gem-quality diamond sales account for 70% of total sales volume and 97% of sales value

Source: Company data

2014 rough diamond sales structure

• Sales of industrial diamonds account for 30% of total carat sales

but only 3% of revenue

• Sales of +10.8 ct gem-quality diamonds represent less then 1% of carat sales

(around 0.15 mln carats), but contribute 11% of total sales value

• ALROSA sells annually around 120 rough diamonds of exceptional special

size (more than 50 carats)

>10.8 ct <1% 1.8-10.8 ct 0.9-1.8 ct 0.3-0.9 ct 0.03-0.3 ct Industrial (less than 0.03 ct or less than 1.5 mm) 39.6 mln cts $ 4,901 mln Weight

Marketing

23

1,006 1,000 1,078 1,045 0,983 1,020 1,012 1,002

2013/1 2013/22013/3 2013/42013/5 2013/62013/7 2013/8 2013/9 2013/10 2013/11 2013/122014/1 2014/22014/3 2014/42014/5 2014/62014/7 2014/8 2014/9 2014/10 2014/11 2014/122015/1 2015/22015/3

Index of price under long-term agreements and sales on spot Market price index based on results of auction sales

Rough diamond prices

ALROSA rough diamond price index by sales channels

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

ALROSA pricing policy is based on a number of factors including macroeconomics, diamond market statistics, polished margin statistics and rough diamond auction analysis

Macroeconomic indicators Global rough diamond production Diamond trade statistics Polished margin statistics Rough diamond auctions

2013 2014 2015 Marketing

• ALROSA currently has 15 mln cts of diamonds in inventory

and plans to reduce inventory turnover from 6 to 4 months

• ALROSA intends to optimise inventory turnover

by developing automated sorting machines

• ALROSA is on track to sell around 2 mln cts from inventory

in 2015 and the same amount in 2016

24

Sales strategy under lack of significant price growth in mid-term is based on additional sales volumes from inventory

ALROSA diamond stockpile

mln cts

Current diamond inventory turnover is around 6 months

As of Jan 1, 2014 As of Mar 1, 2015 Gem-quality rough diamonds

12 9

Industrial rough diamonds

6 6

Total

18 15

Mining and processing 2-5 weeks Sorting and valuation 9 weeks Aggregation and sale 4-7 weeks

Marketing

25

Financial Performance

26

Latest financial results

RUB mln 2014 2013 2012 2014 vs. 2013 Operating performance Production, mln cts 36.2 36.9 34.4 (2%) Sales, mln cts 39.6 38.0 33.2 4% IFRS Income Statement Revenue 207,159 168,505 150,880 23% Cost of sales (98,936) (82,232) (68,467) 20% EBITDA(1) 93,857 69,100 61,950 36% EBITDA margin 45% 41% 41%

• Net profit / (loss)

(16,832) 31,837 33,634

• Net profit margin
• 19%

22%

• EPS, RUB

(2.44) 4.26 4.52

• IFRS statement of financial position

Cash and cash equivalents 21,693 9,270 6,242 2.3x Total debt 197,160 138,591 122,701 42% Net debt 175,467 129,321 116,459 36% Net debt / EBITDA 1.9x 1.9x 1.9x

• Equity attributable to owners of OJSC ALROSA

137,051 159,800 131,013 (14%) IFRS statement of cash flows Cash inflow from operating activities before changes in working capital 94,840 69,745 61,830 36% Income tax paid (12,379) (10,715) (10,951) 16% Changes in working capital (4,346) (3,391) (8,872) (28%) Net cash inflow from operating activities 78,115 55,639 42,007 40% Purchase of property, plant and equipment (33,291) (38,165) (30,050) (13%) Free cash flow (2) 44,824 17,474 11,957 2.6x

(1) as used in this presentation, EBITDA is defined as operating profit adjusted for depreciation and amortisation, profit/loss on disposal of subsidiaries, loss on disposal and write-off of property, plant and equipment, foreign exchange differences attributable to operating activity (2) as used in this presentation, free cash flow is defined as net cash inflow from operating activities less purchase of property plant and equipment Note:

Financial Performance

27

Growth of cost of production was triggered by depreciation, extraction tax, fuel and energy costs as well as wages, salaries and other staff costs

2014 2013 2014 vs. 2013 Wages, salaries and other staff costs 34,279 32,764 5% Depreciation 18,452 13,815 34% Extraction tax 14,697 10,509 40% Fuel and energy 13,686 11,016 24% Materials 9,569 8,845 8% Services 4,740 3,865 23% Transport 2,474 2,559 (3%) Other 1,058 282 3.8x Cost of production 98,955 83,655 18% Movement in inventory of diamonds, ores and concentrates (898) (2,020) (56%) Cost of diamonds for resale 879 597 47% Cost of sales 98,936 82,232 20%

• Cost of sales growth in 2014 by +20% y-o-y was driven by increased diamond sales volume, higher depreciation, extraction tax, fuel and energy,

services, wages, salaries and other staff costs as well as sales in other business areas, including gas sales

• Depreciation growth in 2014 by 34% was triggered by amortization charges on production licenses, increased gas production, new equipment

commissioning at Severalmaz and Almazy Anabara

• Extraction tax (MET) payments increase in 2014 by +40% resulted from the ruble depreciation against the US dollar and the new Ministry of

Finance’s diamond pricelist for MET calculation having come into force on 15 March 2014

• Fuel and energy costs in 2014 increased by +24% as a result of higher regulated tariffs and increased production volumes at Severalmaz and Almazy

Anabara

• Wages, salaries and other staff costs rose by +5% as a result of indexation at the inflation rate

Production costs in 2014 Cost of sales

RUB mln

15% Extraction tax 35% Wages, salaries and other

staff costs

14% Fuel and energy 18% Depreciation 2% Transport 10% Materials 5% Services 1% Other

Financial Performance

Net loss in 2014 was due to lower financial results as a consequence of revaluation of US dollar denominated debt associated with the ruble depreciation against the US dollar

Net profit in 2013 EBITDA growth Decrease in income tax expense Increase in FX loss Increase in depreciation Other(1) Net loss in 2014

28

Net profit analysis

RUB mln

(1)

• ther includes increase in loss on disposal and write-off of property, plant and equipment, higher income from associates, increase in interest expenses and decrease in other

income Note:

31,837 24,757 629 (63,989) (4,579) (5,487) (16,832) Financial Performance

29

Free cash flow increased in 2014 due to growth in operating profit and Capex reduction

Free cash flow in 2013 Increase in

• perating profit

Decrease in Capex Increase of investments in working capital Increase in income tax Free cash flow in 2014

Free cash flow analysis

RUB mln

17,474 25,095 4,874 (955) (1,664) 44,824 2.6х

Financial Performance

30

Following a number of steps to increase liquidity in December 2014, share of long-term debt reached 90%

334(1) 435 1,090 600 1,000 2015 2016 2017 2018 2020 Bank loans Ruble-denominated bonds Eurobonds 3,834 2,595 3,732 $ mln 3,951 39% Public debt instruments 61% Bank loans 29% Eurobonds 10% Ruble-denominated bonds 10% Ruble-denominated debt 90% US dollar-denominated debt 90% Long-term debt 10% Short-term debt 3,496 3,130 2,866 3,871 4,127 3,505 3,459 2009 2010 2011 2012 2013 2014 17.03.2015 3,210 3,119 23.03.2015 Total debt/ EBITDA 6.1x 2.9x 1.5x 2.0x 2.0x 2.1x 2.2x

Dynamics of loans and borrowings Loans and borrowings breakdown

$ mln As at 23 March 2015 For reference: ALROSA net debt

Maturity profile of loans and borrowings

$ mln

Note: (1) converted at 60.0341 RUB/USD exchange rate

Refinancing of bank loans worth $ 600 mln

Financial Performance

31

ALROSA’s current dividend policy implies minimum 35% payout ratio of IFRS net profit

Dividends, Dividends per share(1) and Payout ratio(2)

2,240 250 1,833 7,439 8,175 10,826 14% 7% 16% 28% 24% 35% 0,05 0,1 0,15 0,2 0,25 0,3 0,35 0,4 2007 2008 2009 2010 2011 2012 2013 Dividends, RUB mln Payout ratio, % Dividends per share, RUB 0.30 0.03 0.25 1.01 1.11 1.47

Note: (1) Rebased to account for the share split, which occurred in 2011 (2) Payout ratio was calculated as approved dividends for the respective year divided by IFRS profit attributable to owners of ALROSA

Financial Performance

32

ALROSA Tomorrow

Strategic directions for development

33 ALROSA Tomorrow

Focus on most profitable segment in the industry Geological exploration Operational efficiency Marketing and brand Non-core assets divestment

ALROSA IS ABOUT

33

1-3% 3-4% 2-3% 3-5% 4-18%

Exploration and production Rough diamond sales Cutting and polishing Polished diamond sales Diamond jewelry manufacturing Diamond jewelry retail sales

ALROSA focuses on the rough diamond production – the most profitable segment

• f the diamond pipeline

Source: Bain & Company “Diamonds: Timeless Gems in a Changing World”, 2014

34

Rough Diamonds Polished Diamonds Diamond Jewelry

Operating margin by segments, %

21-25%

ALROSA Tomorrow

ALROSA’s strategy for geological exploration is to maintain full reserves replenishment

ALROSA aims to sustain its level of reserves consistent with its level of production over time

mln cts

ALROSA implements innovative methods of exploring new deposits

35 176 362 180 373 2010 - 2014 2015 - 2023 Diamond production Growth of reserves 7,727 8,735 8,876 2012 2013 2014

Investments in geological exploration

RUB mln +2% +3%

ALROSA Tomorrow

Supply and marketing strategy

The structure of supply and marketing in ALROSA implies the following:

• Speedier inventories turnover for rough diamonds, reduced from 6 to 4 months due to automation of sorting

process

• Improved sorting quality in accordance with the requirements asserted by the producers of polished

diamonds

• Promotion of “ALROSA ALLIANCE” brand in order to improve reputation and recognition of ALROSA in all

sectors of the diamond market

• Development of trade and marketing relationships with leading jewelry retailers through direct sales of

diamonds and joint ventures for selling polished diamonds

36 ALROSA Tomorrow

70 62 53 47 39 31 20

2010 2011 2012 2013 2014 2015E 2020E

ALROSA is to focus on diamond mining

Number of subsidiaries

• In 2012, social assets in monocities in Yakutia, occupied mostly by

ALROSA workers, were transferred to the Republic of Sakha (Yakutia) and ALROSA committed to cover the maintenance costs in Udachny (until 2014), Aikhal (until 2015) and Mirny (until 2016)

• 6 airports, located nearby ALROSA production area in Yakutia, are in the

process of transferring to the federal authorities

• ALROSA receives annually around RUB 2 bn of subsidies from the

Republic of Sakha (Yakutia) to compensate partially from current social costs, including housing maintenance and utilities infrastructure

37 ALROSA Tomorrow

ALROSA continues transferring its social facilities and infrastructure to the Republic of Sakha (Yakutia)

38

Management guidelines and key targets for 2015 are aimed at implementing the strategic development program

Diamond production of 38 mln cts, maintaining global leadership. Development of Severalmaz and Udachny underground mine with production in 2015 of 1.9 and 0.8 mln cts respectively Rough diamond sales of about 40 mln cts, including 2 mln cts from inventories Total debt of $2.3 bn by the end of 2015, having repaid bank loans of around $1 bn from cash of operations ahead of schedule Reserve replenishment by 32 mln cts Further corporate governance improvement through the sale of 7 non-core subsidiaries and restructuring of housing maintenance

ALROSA IN 2015

ALROSA Tomorrow

39 39

Thank you!

40 40

Appendix

41

Overview of corporate governance

Appendix

Shareholders Supervisory Board

15 members

Management Board

13 members

HR & remuneration committee

5 members

Audit committee

5 members

Strategic planning committee

6 members

42

Management team overview

Operational Team

Mikhail Lopatinsky Director, Mirny Mining and Processing Division

• Joined the Company in 1992
• Over 20 years of industry experience

Mirny Udachny

Alexander Makhrachev Director, Udachny Mining and Processing Division

• Joined the Company in 1979
• Over 33 years of industry experience

Ravil Sanatulov Director, Aikhal Mining and Processing Division

• Joined the Company in 1986
• Over 28 years of industry experience

Aikhal

Igor Uvarov Director, Nyurba Mining and Processing Division

• Joined the Company in 1989
• Over 24 years of industry experience

Nyurba

Matvey Yevseev CEO OJSC Almazy Anabara

• Joined the Company in 1997
• Over 16 years of industry experience

Almazy Anabara

Sergey Gerasimov CEO Severalmaz

• Joined the Company in 1977
• Over 36 years of industry experience

Severalmaz

Executive Team Appendix

Finance and economy

Ilya Ryashchin First Vice-President for Finance and Economy, acting CEO

• Joined the Company in 2012
• Head of Planning and Budgeting Department at OJSC Russian

Railways (since 2006)

• Deputy Head of Finance Department, Ministry of Railways of

Russia (since 2001)

COO

Igor Sobolev First Vice-President – Chief Operating Officer

• Joined the Company in 2007
• Head of Capital Construction Division, Mining & Metallurgical

directorate, OJSC MMC Norilsk Nickel (2000-2007)

CFO

Igor Kulichik Vice-President - Chief Financial Officer

• Joined the Company in 2002
• Vice-president and CFO of ALROSA since August 2009

Sales

Yuri Okoyomov Vice-President for Sales

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

2009

43 Ilya Yuzhanov Chairman of the Board of directors, Polyus Gold International Limited Sergey Mestnikov First Deputy Minister of Property and Land Relations

• f Republic of Sakha (Yakutia)

Sergey Barsukov Director, Financial Policy Department, Ministry of Finance

• f the Russian Federation

Andrey Sharonov Dean, Moscow School of Management SKOLKOVO Nominated by: Russian Federation Nominated by: Republic of Sakha (Yakutia) Nominated by: Russian Federation Nominated by: Russian Federation Previously held positions include 2008–2012 – Chairman of the Board of Directors, OJSC Polymetal 2012–2014 – Board Member, Board of Directors, OTKRITIE Financial Corporation JSC 2009–2011 – Member of the Supervisory Board, OJSC ALROSA Since 2013 – Chairman of the Board of Directors, Polyus Gold International Limited. Previously held positions include 2010–2012 – Deputy Head, Head, Secretariat of Chairman of the Government of the Republic of Sakha (Yakutia) Since 2012 – Republic of Sakha (Yakutia) First Deputy Minister of Property and Land Relations Previously held positions include 2007–2008 – First Deputy General Director, Agency for Housing Mortgage Lending (OJSC “AHML”) 2008–2010 – Assistant to Vice Chairman of the Russian Federation Government – Russian Federation Minister of Finance Since 2010 – Director, Financial Policy Department, Ministry of Finance of the Russian Federation Previously held positions include: 2007-2010 – Managing Director, CJSC Investment Company Troika Dialog 2010-2013 – Deputy Mayor of Moscow for Economic Policy, Government of Moscow Since 2013 – Dean, Moscow School of Management SKOLKOVO Igor Lozhevsky Vice-Chairman for Eastern Europe, Deutsche Bank AG Sergey Dubinin Chairman of the Supervisory Council, VTB Bank, Member of the Board of Directors, CJSC VTB Capital Oleg Fedorov Adviser to the Head of the Federal Agency for State Property Management Denis Morozov Representative of the Russian Federation in the Board of Directors of the European Bank for Reconstruction and Development, Executive Director for Russian Federation, Belarus and Tajikistan Nominated as an independent director Independent Nominated by: Russian Federation Nominated by: Russian Federation Nominated as an independent director Independent Previously held positions include 2007–2008 – Chairman of Global Banking and Capital Markets for Russia and CIS, Dresdner Bank, Moscow 2008–2012 – Chief Executive Officer, Deutsche Bank for Russia and CIS, Moscow Previously held positions include 2005–2008 – member of the Board of Directors, Financial Director, Corporate Centre, RAO UESR (Unified Energy System of Russia) Since 2008 – member of the Board of Directors, CJSC VTB Capital Since 2011 – Chairman of the Supervisory Council, VTB Bank Previously held positions include: 2009–2012 – Head, Department for cooperation with Governmental authorities and companies with government participation, Department

• f Investment and Banking on Global

Markets, CJSC VTB Capital Since 2012 – Adviser to the Head of the Federal Agency for State Property Management Previously held positions include 2010 – CEO, General Director, Chairman of the Management Board, Board of Directors member, OJSC Uralkali Since 2011 – Representative of the Russian Federation in the Board of Directors of the European Bank for Reconstruction and Development, Executive Director for Russian Federation, Belarus and Tajikistan

1 3 6 7 8 2 5 4

Supervisory board overview (1/2)

Appendix

Spartak Illarionov First Deputy Head, Municipal district ‘Olenyok Evenki National District’ Valentina Kondratyeva Head, State Autonomous Agency Center for Strategic Research of the Republic of Sakha (Yakutia) Nadezhda Kononova Deputy General Director, OJSC Republican Investment Company Nina Osipova Deputy Finance Minister of the Republic of Sakha (Yakutia) Nominated as an independent director Independent Nominated by: Republic of Sakha (Yakutia) Nominated by: Republic of Sakha (Yakutia) Independent Nominated by: Republic of Sakha (Yakutia) Previously held positions include: 2003–2012 – Procurement Foreman, Udachny Mining and Processing Division, ALROSA 2001–2003 – First Deputy Head, Olenyok district Previously held positions include 2003–2011 – First Deputy Minister for Economic Development of the Republic

• f Sakha (Yakutia)

Since 2013 – Head, State Autonomous Agency Center for Strategic Research

• f the Republic of Sakha (Yakutia)

Previously held positions include 2002–2008 – Head of the Labor and Remunerations Department, ALROSA

• Co. Ltd.;

2008–2012 – Advisor to the President

• f the Republic of Sakha (Yakutia)

Since 2012 – Deputy General Director, OJSC Republican Investment Company Previously held positions include Since 2007 – Deputy Finance Minister

• f the Republic of Sakha (Yakutia)

Dmitry Zakharov General Director, LLC RIC-Finance Ivan Demyanov Vice President, OJSC "ALROSA" Nominated as an independent director Independent Nominated by: minority shareholders Previously held positions include 2007–2008 – Deputy General Director, LLC RIC Since 2008 – General Director, LLC RIC–Finance Previously held positions include 1991–1993 – Deputy Head, Social Issues & Consumer Services, PNO Yakutalmaz 1993–1995 – Director, Almazy Rossii Sakha, HR & Social Policies Since 1995 – Vice President, OJSC "ALROSA" 44

10 11 12 14 13 9

Supervisory board overview (2/2)

Appendix

45

2014 cash costs and production

Type of mining Ore and sands processing (‘000 t) Diamond production (‘000 cts) Grade (ct/t) Cash costs per ton of ore, (RUB) Cash costs per carat, (RUB) Aikhal Division 9,478 12,565 1.33 1,962 1,480 Jubilee pipe

• pen-pit

8,506 9,122 1.07 1,445 1,347 Aikhal underground mine underground 589 3,292 5.59 8,556 1,531 Komsomolskaya pipe

• pen-pit

383 152 0.40 3,312 8,360 Mirny Division 4,904 6,088 1.24 2,857 2,301 International underground mine underground 449 3,862 8.61 14,047 1,632 Mir underground mine underground 481 1,463 3.04 12,180 4,002 Alluvial and technogenic deposits alluvial 3,974 764 0.19 466 2,422 Udachny Division 4,814 3,679 0.76 2,163 2,831 Udachnaya pipe

• pen-pit

3,710 3,390 0.91 1,802 1,972 Udachnaya underground mine underground 89 114 1.28 21,687 16,970 Zarnitsa pipe

• pen-pit

1,015 176 0.17 1,771 10,241 Nyurba Division 2,000 7,363 3.68 4,776 1,297 Nyurbinskaya pipe

• pen-pit

1,255 6,542 5.21 4,776 916 Alluvial deposits alluvial 745 821 1.10 4,776 4,334 Severalmaz

• pen-pit

3,309 1,639 0.50 547 1,105 Almazy Anabara alluvial 5,604 3,059 0.55 936 1,715 Nizhne-Lenskoye alluvial 5,814 1,818 0.31 537 1,718 ALROSA 35,923 36,212 1.01 1,747 1,733 underground 1,607 8,730 5.43 11,900 2,191

• pen-pit

18,178 21,020 1.16 1,642 1,420 alluvial 16,137 6,463 0.40 854 2,132

Appendix