ALROSA: Investor...
Transcript of ALROSA: Investor...
July 2014
Investor Presentation
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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
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. 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,
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.
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
offered 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.
44% The Russian
Federation
25% The Republic of Sakha
(Yakutia)
8% Yakutian municipal districts
23% Free float
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ALROSA at a Glance
ALROSA is a public diamond mining company with 23%
free-float on the Moscow Exchange
Strong financial performance resulting in 12% y-o-y
revenue growth to $5.3 bn and solid EBITDA(1) margin of
41% in 2013
Robust cash flow performance with $500 mln in 2013
ALROSA’s shareholder structure
4,868 5,287
1,999 2,170
41% 41%
2012 2013
Revenue, $ mln EBITDA, $ mln
EBITDA margin, %
Financial summary
1,357
1,681
(967) (1,192)
390 489
2012 2013
Net Operating Cash Flow Capex Free Cash Flow
Strong adjusted cash flow generation $ mln
Note: (1) As used in this presentation, EBITDA is adjusted for loss on disposal of property plant and equipment, impairment / (reversal of impairment) of property, plant and equipment, net (gain) / loss from cross currency interest rate swap contracts, (gain) / loss from change of fair value of put options granted by the Group to the buyers of ZAO Geotransgaz and OOO Urengoyskaya Gazovaya Company, net (gain) / loss from foreign exchange forward contracts
(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
(2)
Обновить
Source: Company data, public sources
Note: (1) ALROSA’s subsidiary Severalmaz
(2) Largest mine in Angola Catoca is 32.8% owned by ALROSA
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Global diamond market footprint Largest global diamond assets
Australia
Argyle (Rio Tinto)
Diamond assets of ALROSA
Diamond assets of other companies
Tanzania
Williamson (Petra Diamonds)
Yakutia (ALROSA) (5 mining divisions)
5 open pit mines
4 underground mines
13 alluvial placers
Botswana
Jwaneng (De Beers)
Orapa (De Beers) Gope (Gem Diamonds)
Karowe (Lucara Diamonds)
Angola (ALROSA)
Catoca (32.8%)(2)
Canada
Ekati (Dominion Diamond Corp.)
Diavik (Rio Tinto / Dominion Diamond Corp.)
Victor (De Beers)
Gahcho Kue (De Beers / Mountain Province)
Snap Lake (De Beers)
Renard (Stornoway)
Star (Shore Gold / Newmont)
Democratic Republic of Congo
Mbuyi-Mayi
Arkhangelsk diamond province (1 mining division)
Lomonosov deposit (ALROSA) (1)
Arkhangelsk diamond province
Grib (LUKOIL)
Zimbabwe
Marange (ZMDC)
Namibia
Debmarine (De Beers)
South Africa and Lesotho
Venetia (De Beers)
Finsch (Petra Diamonds)
Cullinan (Petra Diamonds)
Lace (DiamondCorp)
Kao (Namakwa Diamonds)
Lighobong (Firestone)
Letseng (Gem Diamonds)
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Diamond supply In next decade global diamond production is expected to grow with 1.6% CAGR
During the crisis, in 2009, world diamond production dropped by 26% mainly due to De Beers production cut
In the medium term global diamond production is expected to grow with 4.7% CAGR due to rebound of production mainly at
Grib and Karpinskogo-1 (Russia), Argyle (Australia) and Gahcho Kue (Canada)
After 2018, global diamond production is expected to decline with -2.0% CAGR mainly because of Argyle (Rio Tinto), Diavik
(60% Rio Tinto and 40% Dominion Diamond Corp.) and Ekati (80% Dominion Diamond Corp.) depletion
Source: AWDC’s and Bain & Company’s 2013 report – “Journey through the Value Chain”
127 130
141 143
147 155 155 153
151 143 144 141
168 163
120 128
123 128
133
146
152
159
168 169 166 165
156 155 153
2007 2008 2009 2010 2011 2012 2013E 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F
Existing mines New mines
Global diamond production forecast
CAGR 12-18F
4.7% CAGR 18F-23F
-2.0%
CAGR 12-23F
1.6%
mln cts
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Other Gulf Europe Japan
India China USA
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Diamond demand Diamond jewelry sales is expected to grow at 6.4% CAGR in the long-term
World demand for rough diamonds is driven by diamond jewelry sales
Today, USA accounts for 37% of the global diamond jewelry market, China – for 15% and India – for 11%
Overall diamond jewelry sales growth would be driven by China and India
USA 45 41 29 27 25 27 28 30 31 32 33 34 35 35 36 37 38
China 5 7 6 8 9 11 12 14 16 17 19 20 22 23 25 27 28
India 8 9 7 7 8 8 10 12 13 15 16 17 19 21 22 24 26
Total 100 95 74 73 67 72 80 87 94 98 103 108 113 118 124 129 136
CAGR 12-23F
USA 3.2%
China 9.1%
Diamond jewelry sales forecast (2012-2023F)
India 11.4%
Source: AWDC’s and Bain & Company’s 2013 report – “Journey through the Value Chain”; Company’s forecast
$ bn
Japan 1.9%
CAGR 12-23F
6.4%
Europe 2.3%
Gulf 7.5%
Other 6.0%
100 95
74 73 72 67
80 87
94 98
103 108
113 118
124 136
129
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Source: Company data, JORC as of 01 July 2013 (Micon) Note: (1) Resources are inclusive of reserves. Reserves and resources data in this presentation do not include reserves or resources of Catoca, which is a 32.8% investment and is not consolidated in
ALROSA’s financial statements (2) GKZ (the Russian State Commission for Mineral Reserves) as of 01 July 2013. Includes GKZ off-balance reserves of 27.2 mln cts (3) JORC as of 01 July 2013 (Micon). The Micon report as of 01 July 2013 covered all major deposits of ALROSA, excluding certain alluvial deposits and undeveloped resources
Republic of
Sakha
(Yakutia)
Russian Federation Yakutsk
Moscow
6 open pit mines
4 underground mines
13 alluvial placers
Total resources(1)
GKZ: 1,181 mln cts(2)
JORC: 973 mln cts(3)
Angola
Angola Investment
Open Underground Alluvial
Catoca Mining (32.8%) 8
Arkhangelsk
Severalmaz
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Nyurba Division 2
Mirny Division 1
Aikhal Division 4
Nizhne-Lenskoe 6
Almazy Anabara 5
Udachny Division 3
ALROSA diamond assets overview Well-balanced portfolio of the mining assets in one of the resource richest regions of Russia
Подземный
рудник Удачный
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Notes: (1) Proven and probable reserves (2) Measured, indicated and inferred resources. Resources are inclusive of reserves (3) Only pipes/placers currently in operations are shown (4) Includes reserves and resources for Udachny ore stockpile and Udachny underground mine (5) Reserves and resources for Nizhne-Lenskoe, which was acquired by ALROSA in 2013, are based on GKZ classification and have not been verified according to JORC standards (6) Not consolidated, ALROSA owns a 32.8% interest
Diversified portfolio of high grade diamond mining assets
cts/t
Grade per type of mining in 2013
Source: Company data, JORC as of 01 July 2013 (Micon)
Source: Company data
Production Method
Reserves (mct)(1)
Resources (mct)(2)
2012 Production
(mct)
% of 2012 Pro-forma
Production
Number of Pipes/
Placers
Mirny Division 133.8 186.8 8.7 24% 2/3
Nyurba Division 123.2 175.9 8.0 22% 1/1
Udachny Division(4) 132.4 239.8 5.8 16% 2/0
Aikhal Division 121.6 218.7 8.9 25% 3/0
Almazy Anabara 26.7 29.6 2.4 7% 0/5
Severalmaz 64.1 115.5 0.6 2% 1/0
Solur-Vostochnaya Placer
5.7 6.8 NA NA 0/0
Consolidated Total (JORC, excl. Nizhne-Lenskoe)
607.5 973.0 34.4 96% 9/9
Nizhne-Lenskoe(5) NA NA 1.5 4% 0/4
Consolidated Total (Pro-forma Nizhne-Lenskoe)
NA NA 35.9 100% 9/13
Catoca Limited(6) NA NA 6.7 NA 1/0
Open Underground Alluvial
Production by type of operations
mln cts
Source: Company data
(3)
Large diversified resource base
74% 57%
47%
18%
26% 34%
8% 17% 19%
34.3
2010A 2013A 2021 Target
Open pit mining Underground mining Alluvial mining
36.9 41.3
1,0 1,2
5,7
0,4
Total Open-pit Underground Alluvial
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Marketing strategy overview ALROSA is constantly improving and developing geographic and contract structure of its revenue
Geography of ALROSA marketing operations
Trading offices
Rep offices
Source: Company data
ALROSA Rough Diamonds Sales Structure
Sales of rough diamonds
Source: AWDC’s and Bain & Company’s 2013 report – “Journey through the Value Chain”;
сompanies’ reports
After ceasing rough diamond sales to De Beers in 2008, ALROSA has fully switched to direct sales to its customers and has been implementing a distribution strategy focusing on long-term contracts to improve stability of cash flows
Currently ALROSA conducts rough diamond sales through 3 main channels:
long-term contracts, which stipulate for the supply of rough diamonds consisting of the pre-agreed assortment and volume on a monthly basis – 64%
auctions – 21%
spot sales – 16%
The number of long-term clients increased to 44 as of today from 15 in 2009
78% 70%
22% 30%
2008 2012
ALROSA
Others
New York
Antwerp London
Geneva
Moscow
Ramat-Gan Dubai Hong Kong
Luanda
%
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2013 Financial Results
$ mln 2013 2012
2013
vs
2012
Operational Figures
Production, mln cts 36.9 34.4 7%
Sales, mln cts 38.0 33.2 15%
IFRS Income Statement
Revenue 5,287 4,868 9%
Cost of sales (2,567) (2,208) 16%
EBITDA 2,170 1,999 9%
EBITDA margin 41% 41% -
Net profit 989 1,086 (9%)
Net profit margin 19% 22% -
EPS, RUB 0.13 0.15 (14%)
IFRS Balance Sheet
Cash and cash equivalents 283 206 37%
Total debt 4,234 4,040 5%
Total debt / EBITDA 2.0x 2.0x -
Equity attributable to owners of OJSC ALROSA 4,910 4,344 13%
IFRS Cash Flow Statement
Cash inflow from operating activities before changes in working capital 2,113 1,996 6%
Income tax paid (337) (356) (5%)
Changes in working capital (95) (283) (66%)
Net cash inflow from operating activities 1,681 1,357 24%
Purchase of property, plant and equipment (1,192) (967) 23%
Free cash flow 489 390 25%
Примечание: (1) Показатель EBITDA, используемый в данной презентации, определяется как прибыль за данный период, скорректированная на величину налога на прибыль, долю чистой
прибыли от инвестиций в зависимые общества и совместные предприятия, чистые финансовые затраты (сумму финансового дохода и финансовых затрат), амортизацию,
потери от выбытия основных средств, чистую (прибыль)/убыток от реализации дочерних компаний
(2) Чистый денежный поток, используемый в данной презентации, определяется как чистый приток денежных средств от производственной деятельности, минус
приобретение основных средств
11
Q1 2014 Financial Results
RUB mln Q1 2014 Q4 2013 Q1 2013 Q1 2014
vs
Q4 2013
Q1 2014
vs
Q1 2013
Operational Figures
Production, mln cts 7.9 9.9 7.5 (20%) 5%
Sales, mln cts 12.7 10.8 10.3 18% 23%
IFRS Income Statement
Revenue 56,291 47,127 39,459 19% 43%
Cost of sales (27,881) (22,072) (19,935) 27% 40%
EBITDA(1) 26,098 17,831 15,825 46% 1.6х
EBITDA margin 46% 38% 40% - -
Net profit 6,059 8,802 6,258 (31%) (3%)
Net profit margin 11% 19% 16% - -
EPS, RUB 0.77 1.18 0.79 (35%) (3%)
IFRS Balance Sheet
Cash and cash equivalents 16,143 9,270 12,387 1.7х 30%
Total debt 136,931 138,591 132,298 (1%) 4%
Net debt 120,788 129,321 119,911 (7%) 1%
Net debt / EBITDA 1.5x 1.9x 1.9х - -
Equity attributable to owners of OJSC ALROSA 167,606 159,800 137 486 5% 22%
IFRS Cash Flow Statement
Cash inflow from operating activities before changes in working capital 25,783 17,952 15,022 44% 1.7x
Income tax paid (3,456) (2,030) (2,903) 1.7х 19%
Changes in working capital 6,098 9,839 2,427 (38%) 2.5х
Net cash inflow from operating activities 28,425 25,761 14,546 10% 2.0х
Purchase of property, plant and equipment (8,338) (14,414) (6,579) (42%) 27%
Free cash flow(2) 20,087 11,347 7,967 1.8х 2.5х
(1) As used in this presentation, EBITDA is defined as operating profit adjusted for depreciation, loss on disposal of property, plant and equipment
(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:
12
Q1 2014 revenue increase was mainly driven by increased diamond sales
Revenue in Q1 2013 Increase in revenue from
diamond sales
Increase in revenue from
sales of gas Increase in other revenue (1) Revenue in Q1 2014
39,459
15,271 1,123 438
56,291
+43%
Revenue dynamics RUB mln
+42% 2,7х +17%
Revenue in Q4 2013 Increase in revenue from
diamond sales
Decrease in revenue from
sales of gas Decrease in other revenue (1) Revenue in Q1 2014
47,127
9,357
(30) (163)
56,291 +19%
+22% (5%) (2%)
Note: (1) Other revenue includes: transportation, social infrastructure, trading, construction activity, other activities
13
Higher diamond sales volume and ruble depreciation caused an increase in gem-quality rough diamond revenue in Q1 2014 compared to the same period of the previous year
Gem-quality
rough diamond sales
in Q1 2013
Sales volume
growth
Gem-quality average diamond
price decrease Ruble depreciation
Gem-quality
rough diamond sales
in Q1 2014
34,136
8,868
(1,051)
6,743
48,696
+43%
Gem-quality rough diamond revenue dynamics RUB mln
Gem-quality rough diamond average price dynamics $/carat
Average price of sold gem-quality
rough diamonds
in Q1 2013
Average price decrease due to
change in product mix
Average price growth due to
increased demand
Average price of sold gem-quality
rough diamonds
in Q1 2014
158
(3)
0.3
155 (2%)
(2%) 0%
14
Higher diamond sales volume and ruble depreciation caused an increase in gem-quality rough diamond revenue in Q1 2014 compared to Q4 2013. Average price decrease was driven by changes in sales product mix
Gem-quality
rough diamond sales
in Q4 2013
Sales volume
growth
Gem-quality average diamond
price decrease Ruble depreciation
Gem-quality
rough diamond sales
in Q1 2014
39,905
16,350
(11,026)
3,467
48,696
+22%
Gem-quality rough diamond revenue dynamics RUB mln
$/carat
Average price of sold gem-quality
rough diamonds
in Q4 2013
Average price decrease due to
change in product mix
Average price growth due to
increased demand
Average price of sold gem-quality
rough diamonds
in Q1 2014
192
(43)
6
155 (19%)
Gem-quality rough diamond average price dynamics
(22%) +3%
15
Cost of production growth was mainly influenced by extraction tax, transportation costs and depreciation
Q1
2014
Q4
2014
Q1
2013
Q1 2014
vs
Q4 2013
Q1 2014
vs
Q1 2013
Wages, salaries and other staff
costs 7,876 8,475 7,642 (7%) 3%
Depreciation 3,806 3,322 3,211 15% 19%
Extraction tax 3,411 2,823 2,431 21% 40%
Fuel and energy 2,879 2,153 3,175 34% (9%)
Transport 1,368 979 460 40% 3,0х
Materials 1,157 2,019 1,035 (43%) 12%
Services 686 1,223 650 (44%) 6%
Other 178 33 109 5,4х 63%
Cost of production 21,361 21,027 18,713 2% 14%
Movement in inventory of
diamonds, ores and concentrates 6,163 909 955 6,8х 6,5х
Cost of diamonds for resale 357 136 267 2,6х 34%
Cost of sales 27,881 22,072 19,935 26% 40%
Q1 2014 cost of sales growth of +26% and +40% compared to Q4 2013 and Q1 2013 was driven by increased diamond sales
volume by +18% and +23% respectively, as well as increased sales volumes in other operations, including sales of gas
Extraction tax costs increase in Q1 2014 was due to increased volume of diamonds evaluated for MET calculation, as well as
its value growth as a result of ruble weakening. Extraction tax costs increase was also influenced by increased sales volumes
in other operations, including gas assets
Q1 2014 transportation costs increased by +40% compared to Q4 2013 and 3 times compared to Q1 2013 as a result of
additional expenses of goods transportation by trucks in winter due to reduced period of navigation on the Lena River in 2013
Depreciation growth in Q1 2014 occurred mainly due to increased gas production volumes, acquiring of Nizhne-Lenskoye,
new equipment commissioning at Severalmaz and increased charges at other diamond mining facilities
Production costs in Q1 2014 Cost of sales RUB mln
16% Extraction tax
37% Wages, salaries and other
staff costs
13% Fuel and energy
18% Depreciation
3% Services
6% Transport
5% Materials
less than 1 % Other
Other operating expenses decreased in Q1 2014 due to reduced exploration costs and social costs
Other operating expense
in Q1 2013 Decrease in exploration costs
Increase in
social costs
Increase in
other operating expenses(1) Other operating expense
in Q1 2014
RUB mln
Analysis of other operating expenses
(1) Other operating expenses include taxes other than income tax, extraction tax and payments to social funds, loss on disposal of property, plant and equipment, other operating expenses Note:
(14%)
16
Other operating expense results
in Q1 2013
Other operating expense
in Q4 2013 Decrease in exploration costs
Decrease in
social costs
Increase in
other operating expenses(1) Other operating expense
in Q1 2014
6,706
(1,102)
(1,414)
104
4,294 (36%)
4,977
(527)
11
(167)
4,294
EBITDA in Q1 2014 increased due to a growth in gross profit from diamond sales
EBITDA
in Q1 2013
Increase in
gross profit (1)
Decrease in exploration
costs Other income Increase in SG&A
Increase in
social costs
EBITDA
in Q1 2014
15,825
9,558 527 263
(64) (11)
26,098
1,6х
46%
40%
EBITDA margin
EBITDA factor analysis
17
EBITDA
in Q4 2013
Increase in
gross profit (1) Decrease in SG&A
Reduction of
social costs
Decrease
in exploration costs Other income
EBITDA
in Q1 2014
17,831
3,748
1,936 1,414 1,102 67
26,098
46%
38%
+46%
RUB mln
Note: (1) Gross profit excluding depreciation
Net profit decreased in Q1 2014 vs Q1 2013 due to increased exchange loss
Net profit
in Q1 2013 EBITDA growth Other (1) Increase
in exchange loss
Increase in income tax
expense
Increase
in depreciation
Net profit
in Q1 2014
6,258
10,273 272
(8,862)
(1,210) (672)
6,059
(3%)
Net profit factor analysis
18 (1) Other include decrease in loss on disposal of property, plant and equipment, higher income from associates, increase in interest expenses
RUB mln
Note:
Total Capex grew y-o-y mainly due to increase in maintenance expenses
Capex
in Q1 2013 Maintenance Expansion Gas assets
Non-mining
operations Social infrastructure
Capex
in Q1 2014
Q1 2014 4,732 2,744 190 588 84 8,338
Q1 2013 2,960 2,596 403 535 85 6,579
6,579
1,772 148
(213)
53
(1)
8,338
+27%
Capital expenditure dynamics
+6% +60% (53%) (1%) +10%
Capital expenditure
19
RUB mln
Expansion Capex grew mainly due to continued construction of the Udachny underground mine
Expansion Capex
in Q1 2013
Udachny underground mine 1,299 806
Aikhal underground mine 405 350
Mir underground mine 261 321
Open-pit mines at
Severalmaz 634 951
Botuobinskaya open pit 145 168
Expansion Capex
in Q1 2014
+6%
2,596
493
55
(60)
(317)
(23)
2,744
Expansion Capex dynamics
Q1
2014
Q1
2013
Capital expenditure
2,744 2,596
20
RUB mln
Cash inflow from changes
in working capital
In Q1 2013
Decrease in
inventories
Decrease in trade and
other receivables
Decrease in changes in trade
and other payables
Decrease in changes in
taxes payable
Cash inflow from changes in
working capital
In Q1 2014
21
Cash inflow from changes in working capital was driven by decrease in inventories
2,427
4,125
925
(969)
(410)
6,098
Changes in working capital
2,5х
RUB mln
22
Free cash flow increased due to a growth in operating profit and reduction in investments in working capital
Free cash flow
in Q1 2013
Increase in
operating profit
Reduction of investments in
working capital Increase in Capex
Increase in
income tax expense Free cash flow
in Q1 2014
7,967
10,761
3,671
(1,759) (553)
20,087
Free cash flow
2,5х
RUB mln
3,871
4,130
3,767
4,210
31.12.2012 31.12.2013 31.03.2014 today
23
The share of long-term debt is 88%, debt increased to create a liquidity source for upcoming in 2014 Eurobond repayment
Dynamics of bank loans and public debt instruments
585
600
500
1,185
435
1,090 1,000
Q4 2014 2015 2016 2017 2020
Bank loans Rouble bonds Eurobonds
Structure of bank loans and public debt instruments As of 24 June 2014
50% public debt instruments
50% Bank loans 36% Eurobonds
14% Rouble bonds
14% Ruble-denominated debt 86% US dollar-denominated debt
88% long-term debt 12% short-term debt
Debt maturity profile of bank loans and public debt instruments
$ mln
As of 24 June 2014, $ mln
24.06.2014
24
New dividend policy The minimum payout was increased to 35% of net profit under IFRS
Dividends, Dividends per share(1) and Payout ratio(2)
2,240
0 250
1,833
7,439 8,175
10,826
14%
7%
16%
28%
24%
35%
0
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 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 profit attributable to owners of ALROSA (based on IFRS)
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Appendix
26
Board of directors and corporate governance overview
According to ALROSA’s Charter Supervisory
Board (Board of Directors) consists of 15
members, including:
2 executive directors (CEO(1) and Vice-
President(2))
5 independent non-executive directors
under Russian standards of
independence
8 non-executive directors representing
the shareholders (5 directors from the
Russian Federation and 3 directors from
the Republic of Sakha (Yakutia))
3 Supervisory Board committees:
Strategic planning committee
(6 members, none independent)
HR & Remuneration committee
(5 members, all independent)
Audit committee
(5 members, all independent)
Shareholders
Supervisory Board (Board of Directors)
Management Board
Strategic planning committee (6 members, none independent)
HR & Remuneration committee (5 members, all independent)
Audit committee (5 members, all independent)
2 executive directors (CEO (1) and Vice-President(2))
3 non-executive directors representing the Republic of
Sakha (Yakutia)
CEO / Chairman of Executive Board
(F. Andreev)
First Vice President – Executive Director
(I. Sobolev)
First Vice President (I. Ryashchin)
Vice President – Finance Director
(I. Kulichik)
9 other directors
To
tal:
15 m
em
be
rs T
ota
l: 13 m
em
be
rs
Note : (1) Representing the Russian Federation
(2) Representing the minority shareholders
5 independent non-executive directors
5 non-executive directors representing the Russian
Federation
27
Detailed reserves and resources statement
Deposit JORC
Category
Tonnage
(kt)
Reserve
Grade
(ct/t)
Reserve
Carats
(kct)
Udachny Division
Udachnaya Pipe, underground mining Probable 83,017 1.31 108,627
Udachnaya Pipe, open pit mining Probable 4,267 1.03 4,407
Udachnaya Pipe, ore stockpile Proven 4,820 1.52 7,329
Zarnitsa Pipe Probable 58,538 0.20 11,995
Aikhal Division
Jubilee Pipe Probable 107,163 0.90 96,982
Aikhal Pipe Probable 5,217 4.37 22,789
Komsomolskaya Pipe Probable 4,847 0.37 1,807
Mirny Division
Mir Pipe Probable 29,586 3.29 97,230
International Pipe Probable 4,555 8.09 36,585
Solur-Vostochnaya
Solur-Vostochnaya Placer Probable 9,348 0.61 5,722
Nyurba Division
Nyurbinskaya Pipe Probable 9,875 4.09 40,394
Botuobinskaya Pipe Probable 13,839 5.13 70,971
Nyurbinskaya Placer Probable 6,373 1.85 11,813
Lomonosov Division (OJSC Severalmaz)
Archangelsky Pipe Probable 57,087 0.76 43,189
Karpinsky-1 Pipe Probable 18,438 1.13 20,918
Almazy Anabara
Ebelyakh and Gusinyy Ruchey Placer Probable 36,319 0.74 26,749
Total OJSC ALROSA
JORC Reserves
Proven 4,820 1.52 7,329
Probable 448,469 1.34 600,178
Total (1) 453,289 1.34 607,507
Reserves Resources inclusive of Reserves
Deposit JORC Category Tonnage
(kt)
Resource
Grade
(ct/t)
Resource
Carats
(kct)
Udachny Division
Udachnaya Pipe, ore stockpile Measured 4,820 1.52 7,329
Udachnaya Pipe, underground mining Indicated 75,265 1.50 112,782
Inferred 78,305 1.25 98,157
Udachnaya Pipe, open pit mining Indicated 3,785 1.19 4,501
Udachnaya Remnants above -280 m Indicated 3,247 1.54 4,995
Zarnitsa Pipe Indicated 58,554 0.21 12,007
Aikhal Division
Jubilee Pipe
Indicated 129,017 0.84 108,166
Inferred 65,977 0.62 40,594
Potential 8,431 0.32 2,734
Aikhal Pipe Indicated 7,729 4.68 36,159
Inferred 8,269 3.87 31,967
Komsomolskaya Pipe Indicated 4,812 0.38 1,808
Mirny Division
Mir Pipe Indicated 29,211 3.55 103,782
Inferred 10,913 3.11 33,940
International Pipe Indicated 4,208 8.73 36,739
Inferred 1,542 7.98 12,304
Solur-Vostochnaya
Solur-Vostochnaya Placer Indicated 7,527 0.78 5,903
Inferred 1,198 0.72 865
Nyurba Division
Nyurbinskaya Pipe Indicated 12,264 4.13 50,661
Inferred 1,192 5.42 6,465
Botuobinskaya Pipe Indicated 13,679 5.19 71,044
Inferred 2,685 5.14 13,790
Nyurbinskaya Placer Indicated 6,176 1.91 11,814
Inferred 6,407 1.66 10,638
Botuobinskaya Placer Inferred 1,085 0.49 537
Maiyskoe Kimberlite Body Inferred 3,841 2.86 10,996
Lomonosov Division (OJSC Severalmaz)
Arkhangelskaya Pipe Indicated 56,226 0.77 43,406
Inferred 39,408 0.98 38,623
Karpinsky-1 Pipe Indicated 24,988 1.08 26,960
Inferred 5,168 1.26 6,512
Almazy Anabara
Ebelyakh and Gusinyy Ruchey Placer Indicated 30,508 0.88 26,749
Inferred 6,308 0.45 2,848
Total for OJSC ALROSA
JORC Resources inclusive of
Reserves
Measured 4,820 1.52 7,329
Indicated 467,197 1,41 657,477
Inferred 232,298 1.33 308,235
Total (1) 704,315 1.38 973,041
Source: Micon report as at 01 July 2013 Note: (1) Does not include assets outside of JORC perimeter, with total GKZ reserves of 230 mln cts as at 01/01/2013
28
Diamond production
‘000 cts 2011 2012 2013 Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Aikhal Division 5,262 8,945 12,088 1,984 3,669 2,456 3,978 3,000
Jubilee pipe 3,589 6,272 8,975 1,940 2,232 2,456 2,347 2,325
Aikhal underground mine 1,306 2,520 3,062 0 1,435 0 1,627 639
Komsomolskaya pipe 367 153 50 44 2 0 4 36
Mirny Division 8,138 8,707 7,361 1,792 1,778 1,885 1,907 1,477
International underground mine 5,912 5,915 4,378 1,082 1,047 1,099 1,150 1,312
Mir underground mine 1,321 1,855 2,151 471 597 518 565 52
Alluvial and technogenic deposits 905 936 833 239 134 268 192 113
Udachny Division 10,583 5,845 4,892 1,598 1,383 480 1,430 1,117
Udachnaya pipe 10,374 5,642 4,735 1,557 1,330 466 1,382 1,055
Zarnitsa pipe 209 203 157 42 53 14 48 62
Nyurba Division 7,478 7,956 7,407 1,978 1,076 2,022 2,331 2,067
Nyurbinskaya pipe 6,950 7,276 6,591 1,978 801 1,509 2,303 2,067
Alluvial deposits 528 680 816 0 275 513 28 0
Severalmaz 557 559 636 126 142 155 213 233
Arkhangelskaya pipe 557 559 636 126 142 155 213 233
Almazy Anabara 2,534 2,408 2,521 0 967 1,554 0 0
Nizhne-Lenskoye (1)
1,506 1,521 2,010 0 612 1,398 0 0
Total 34,552 34,420 36,914 7,478 9,627 9,949 9,860 7,894
Note: (1) In 2012 and earlier Nizhne-Lenskoye results are not included into ALROSA operational results
29
Ore and sands processing
‘000 t 2011 2012 2013 Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Aikhal Division 11,165 10,526 9,817 2,605 2,644 2,040 2,528 2,436
Jubilee pipe 9,833 9,627 9,041 2,405 2,375 2,040 2,221 2,225
Aikhal underground mine 231 432 560 0 263 0 297 116
Komsomolskaya pipe 1,101 467 216 200 6 0 10 95
Mirny Division 3,184 5,354 5,079 516 1,120 2,135 1,308 469
International underground mine 747 711 484 130 118 113 123 151
Mir underground mine 339 508 638 144 184 154 156 20
Alluvial and technogenic deposits 2,098 4,136 3,957 242 818 1,868 1,029 298
Udachny Division 6,350 4,619 5,825 1,650 1,858 597 1,720 1,570
Udachnaya pipe 5,350 3,619 4,825 1,400 1,563 447 1,415 1,180
Zarnitsa pipe 1,000 1,000 1,000 250 295 150 305 390
Nyurba Division 2,100 2,105 2,040 400 375 805 460 410
Nyurbinskaya pipe 1,350 1,426 1,247 400 124 285 438 410
Alluvial deposits 750 679 793 0 251 520 22 0
Severalmaz 1,066 1,100 1,113 272 279 281 281 481
Arkhangelskaya pipe 1,066 1,100 1,113 272 279 281 281 481
Almazy Anabara 5,961 5,768 6,750 0 1,874 4,876 0 0
Nizhne-Lenskoye (1)
3,604 3,739 5,338 0 1,786 3,552 0 0
Total 29,826 29,472 35,962 5,443 9,936 14,286 6,297 5,366
Note: (1) In 2012 and earlier Nizhne-Lenskoye results are not included into ALROSA operational results
Thank you!
Corporate Finance and Analytics Investor Relations
1-st Kazachy Per., 10-12 Moscow 119017 Russia
Tel.: +7 495 745 58 72 [email protected]
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