Key Investment Highlights
• For the first time in Russian history, private investors are welcome to get exposure to unique Russian uranium market by participation in the proposed projects. • ARMZ presents a compelling investment opportunity based on its solid fundamentals and excellent growth prospects. • The Company’s key strength is its diverse project portfolio ranging from producing to developing and exploration assets. ARMZ operates a majority of these projects which is reflective of the Company’s high technical and managerial track record.
• Amongst its key assets is the Company’s largest development project, the Elkon mine – a world class uranium deposit offering a unique investment opportunity. The project is strategically located to serve key international and domestic markets. • Existing shortage of natural uranium in international markets which is projected to grow further in the foreseeable future guarantees stable demand for ARMZ product. • Importantly, ARMZ’s key competitive advantage is its ownership structure. This results in strong government relations, opportunities for government funding and access to Rosatom’s integrated portfolio of nuclear services.
ARMZ Rosatom’s mining arm Russia’s primary uranium producer
ARMZ as Investor Experience and Expertise
• Fifty years of experience in developing uranium deposits • Operations in diverse geographical and climatic conditions
Responsible Project Developer
• Maximal attention to environmental protection and land use • Social responsibility • Support from Rosatom State Corporation and the government of Russia
Access to Financial Resources
• Access to government funding • Excellent credit history
ARMZ as Investee Solid Financials
•G uaranteed demand for ARMZ products from Rosatom State Corporation complex • Low debt
Diversified Project Portfolio
•V arious development stage project pipeline: exploration to full-scale production • Geographical diversification: 14 uranium and non-uranium projects across the globe
ARMZ Uranium Holding Co.
Fast Growing Market
•G rowing demand for natural uranium from an increasing number of nuclear power plants
22 B. Drovyanoi Lane Moscow, Russia 109004 Tel: +7-495-508-8808 Fax: +7-495-508-8810 E-mail: info@armz.ru www.armz.ru
ARMZ: Breakthrough and path to new horizons ARMZ Uranium Holding Co. (ARMZ), also known as Atomredmetzoloto, today is one of the global leaders in uranium mining and the Russian national uranium producer authorized and appointed by its owner, Rosatom State Corporation, as the nodal supplier of feedstock to the country’s nuclear industry. It is currently ranked as the world’s second largest uranium mining corporation by resource base and is the fifth biggest global producer. Rosatom State Corporation owns an 80.345% interest in ARMZ Uranium Holding Co. Over the last few years, Russia’s nuclear industry has been developing at an ever faster pace. ARMZ’s primary objective therefore is to meet the national nuclear complex’s growing needs in natural uranium. In 2009, ARMZ Uranium Holding Co. boosted uranium output a staggering 25% to 4624 tons at its mines in Russia and abroad. Aggressive international expansion has become one of the key elements of ARMZ strategy: our plan is to build up the resource base and put together – through partnerships, mergers, and acquisitions in 2010-2011 – a high yield and competitive production cost asset portfolio in Africa, North America, Asia, and Australia. First steps towards this ambitious goal were taken in the breakthrough 2009: today’s ARMZ portfolio includes 14 uranium and non-uranium projects all over the world. ARMZ Uranium Holding Co. has opened representative offices in London, UK, and Windhoek, Namibia. In 2009, the corporation acquired Effective Energy N.V. and
thus consolidated the Russian interests in uranium mining joint ventures in Kazakhstan. After the exchange of assets with the Canadian Uranium One, ARMZ became owner of a 19.95% interest in this publicly traded corporation placing two directors on the Uranium One Board and securing a number of management positions in Uranium One’s Kazakhstan operations. In 2009, ARMZ Uranium Holding Co. entered the global uranium market as an independent player. With 1 short-term and 2 mid-term contracts and product deliveries scheduled for the next three years, ARMZ Uranium Holding Co. has now established materials holding accounts with two conversion facilities overseas. ARMZ’s top priority is to further develop uranium mining in Russia: its operating mines are being upgraded and investments are made into planned and prospective facilities. One of the most spectacular projects – the Elkon Uranium Mine and Mill – implies the construction of an industrial complex in South Yakutia with the planned capacity of up to 5 thousand tons of uranium per annum. Design and estimate documentation development for the mine and mill, as well as for the associated infrastructure, is financed by the federal government from the Russian Federation Investment Fund. Russia’s federal authorities, as well as the management of Rosatom State Corporation, have been fairly active in supporting and funding activities and the strategy of ARMZ Uranium Holding Co. ARMZ development budget allocated
by the Mother Company in 2009 reached RUR64.2 billion (US$2.16 billion) while the investment program totaling more than RUR184 billion (over US$6.18 billion) will be backing up Rosatom’s mining division development over the next 5 years until 2015. Fifty years of experience in development of uranium deposits of various types in diverse geographical and climate conditions, as well as innovation employed by current projects and an active international expansion will bring ARMZ to the forefront of global uranium mining industry within the next few years.
Vadim L. Zhivov Director General
ARMZ: Breakthrough and path to new horizons ARMZ Uranium Holding Co. (ARMZ), also known as Atomredmetzoloto, today is one of the global leaders in uranium mining and the Russian national uranium producer authorized and appointed by its owner, Rosatom State Corporation, as the nodal supplier of feedstock to the country’s nuclear industry. It is currently ranked as the world’s second largest uranium mining corporation by resource base and is the fifth biggest global producer. Rosatom State Corporation owns an 80.345% interest in ARMZ Uranium Holding Co. Over the last few years, Russia’s nuclear industry has been developing at an ever faster pace. ARMZ’s primary objective therefore is to meet the national nuclear complex’s growing needs in natural uranium. In 2009, ARMZ Uranium Holding Co. boosted uranium output a staggering 25% to 4624 tons at its mines in Russia and abroad. Aggressive international expansion has become one of the key elements of ARMZ strategy: our plan is to build up the resource base and put together – through partnerships, mergers, and acquisitions in 2010-2011 – a high yield and competitive production cost asset portfolio in Africa, North America, Asia, and Australia. First steps towards this ambitious goal were taken in the breakthrough 2009: today’s ARMZ portfolio includes 14 uranium and non-uranium projects all over the world. ARMZ Uranium Holding Co. has opened representative offices in London, UK, and Windhoek, Namibia. In 2009, the corporation acquired Effective Energy N.V. and
thus consolidated the Russian interests in uranium mining joint ventures in Kazakhstan. After the exchange of assets with the Canadian Uranium One, ARMZ became owner of a 19.95% interest in this publicly traded corporation placing two directors on the Uranium One Board and securing a number of management positions in Uranium One’s Kazakhstan operations. In 2009, ARMZ Uranium Holding Co. entered the global uranium market as an independent player. With 1 short-term and 2 mid-term contracts and product deliveries scheduled for the next three years, ARMZ Uranium Holding Co. has now established materials holding accounts with two conversion facilities overseas. ARMZ’s top priority is to further develop uranium mining in Russia: its operating mines are being upgraded and investments are made into planned and prospective facilities. One of the most spectacular projects – the Elkon Uranium Mine and Mill – implies the construction of an industrial complex in South Yakutia with the planned capacity of up to 5 thousand tons of uranium per annum. Design and estimate documentation development for the mine and mill, as well as for the associated infrastructure, is financed by the federal government from the Russian Federation Investment Fund. Russia’s federal authorities, as well as the management of Rosatom State Corporation, have been fairly active in supporting and funding activities and the strategy of ARMZ Uranium Holding Co. ARMZ development budget allocated
by the Mother Company in 2009 reached RUR64.2 billion (US$2.16 billion) while the investment program totaling more than RUR184 billion (over US$6.18 billion) will be backing up Rosatom’s mining division development over the next 5 years until 2015. Fifty years of experience in development of uranium deposits of various types in diverse geographical and climate conditions, as well as innovation employed by current projects and an active international expansion will bring ARMZ to the forefront of global uranium mining industry within the next few years.
Vadim L. Zhivov Director General
• Combined, ARMZ mining assets represent 11% of global uranium resourses.
ARMZ Assets overview
Assets Production, tU/y Status Mining 2009 2010 F Planned method capacity (tU/y) Russia
3563,9
3530
• The Company currently has three producing mines, two projects under construction and a further four in planning stages.
Resources, Prognosticated Resources, (RAR+Inferred) Resources, tU (RAR+Inferred+ tU Prognosticated) tU As of Jan. 1, 2010
12400
494 685
36 969
531 654
Priargunsky
3004
2920
3500
Operational
UG/HL
118 341
-
118 341
Dalur
462,6
460
800
Operational
ISL
10 423
11 691
22 114
Khiagda
97,3
150
1800
Construction
ISL
26 683
14 978
41 661
Elkon
5000
Planned
UG
319 186
-
319 186
Olovskaya
600
Planned
UG/HL
11 726
-
11 726
Gornoe - Berezovoe
600
Planned
UG/HL
7 918
5 300
13 218
Lunnoe
100
Planned
OP/HL
408
5 000
5 408
Kazakhstan
1059,6
608
2280
21 397
42 936
64 333
JV Zarechnoe
245,4
300
780
Operational
ISL
9 073
15 051
24 124
JV Akbastau
195,2
300
1500
Construction
ISL
12 324
27 885
40 209
JV Karatau*
619
-
-
Operational
ISL
-
-
-
1000
1247
30 249
15 932
46 181
5130
15 927
546 331
95 837
642 168
Uranium One Kazakhstan, USA, Australia, South Africa
Total
4623,5
UG = Underground, ISL = In Situ Leaching HL = Heap Leaching OP = Open Pit Resources, production volume, and planned capacities calculated based on ARMZ factual interest *As of 2010, all Karatau data included in Uranium One
ARMZ Company Structure Operational and under construction uranium mines in Russia
Planned uranium mines in Russia
Joint ventures in Kazakhstan
Joint exploration ventures
Priargunsky
Elkon
Zarechnoe
Dalur
Lunnoe
Akbastau
SWA Uranium (Namibia)
Khiagda
Gornoe
ARGK (Armenia)
Olovskaya
ARMZ Management and Service Companies
UGRK / Effective Energy N.V., ARMZ overseas asset management
ESK, supplies of materials and machinery to ARMZ operational mines and facilities under construction Rusburmash, drilling and exploration works KRUYA, South Yakutia Integrated Development investment project management Industrial Technology & Design Research Center (VNIPIPT), design and planning of uranium mining facilities, ARMZ Engineering Center
Uranium Demand: The Nuclear Renaissance
• Demand for uranium across the globe is driven by 436 operable Nuclear Power Reactors with a combined installed capacity of 372 GWe. • World Nuclear Association reports that there are now 49 new reactors with a combined installed capacity of 44.35 GWe being built in 13 countries; a further 136 reactors with a total net capacity of almost 150 GWe are being planned and about 277 reactors (288.8 GWe) are being proposed. • The international Atomic Energy Agency and the World Nuclear Association have substantially lifted their forecasts for world nuclear generating capacity. They now anticipate 815 GWe in place in 2030, an increase of 119% on the installed capacity today.
USA
• Production capacity is also being re-evaluated and re-licensed to operate at a higher capacity beyond originally designed lifecycles.
ARMZ Mines and Projects
Uranium Producing Countries
Mines in operational and development phase
Over 3 thousand tons per year 1 to 3 thousand tons per year
Mines in planning stage
Less than 1 thousand tons per year
Prospective projects
Non producing countries
Uranium Resources by Country (Recoverable)
Uranium Resources by Company (in Situ) PALADIN ENERGY 3% NAVOI 3% URANIUM ONE 4%
OTHERS 11% UKRAINE 3%
RIO TINTO 8% AUSTRALIA 26%
NIGER 4% BRAZIL 4%
KAZATOMPROM 8%
BHP BILLITON 44%
NAMIBIA 6% CAMECO 9%
SOUTH AFRICA 7% KAZAKHSTAN15% USA 7% CANADA 8% Source: ARMZ
AREVA 10%
RUSSIA 9% – 3rd PLACE
ARMZ 11% – 2nd PLACE
Russian Federation
Armenia
Gornoe
Olovskaya Priargunsky
Mongolia
Zarechnoe
Akbastau
Kazakhstan
Khiagda
Dalur
Elkon
Namibia
Australia
South Africa
2009 Uranium Production by Country KAZAKHSTAN 13900 tU 29%
2009 Uranium Production by Company CAMECO 7770 tU 16%
CANADA 8590 tU 18% RIO TINTO 8055 tU 16%
KAZATOMPROM 7600 tU 16%
OTHERS 5157 tU 11% OTHERS 3100 tU 6% AUSTRALIA 8160 tU 17%
USA 1470 tU 3% UZBEKISTAN 2350 tU 5% NIGER 2930 tU 6%
Source: ARMZ
NAMIBIA 4448 tU 9%
RUSSIA 3564 tU 7% – 5th PLACE
PALADIN ENERGY 1210 tU 2% URANIUM ONE 1369 tU 3% NAVOI 2340 tU 5% BHP BILLITON 2885 tU 6%
AREVA 7500 tU 15%
ARMZ 4624 tU 10% – 5th PLACE
• The government of Russia supported development of the Elkon Mining Works and Khiagda uranium mine through cash injections into the projects’ regional infrastructure.
• The number of nuclear power plants will grow together with a rampup of natural uranium production in Russia. Domestically, Russian uranium miners anticipate output to reach 9,894 tU in 2020 against 4,624 tU in 2009.
• In 2009, the government of the Russian Federation provided subsidies in the amount of 64.2 billion rubles (roughly $2.16 billion) to Rosatom State Corporation which allowed it to purchase ARMZ Uranium Holding Co. new stock subscriptions and increase its interest in ARMZ to 80.345%.
• Power generation by Russia’s NPPs is expected to grow 44.7% to 234.4 billion kWh by 2015. The Russian government fully supports development of the nation’s nuclear industry.
Russian Nuclear Sector and Uranium Mining Development
Uranium Production Growth Rate by Company in 2009
ARMZ Uranium Production • P riargunsky • Dalur
• Z arechnoe • Khiagda
• A kbastau • Karatau
5000
4000
3000
2000 3190
3527
3687
4624
2007
2008
2009
1000
Kazatomprom
ARMZ
Uranium One
Paladin Energy
AREVA
Cameco
Rio Tinto
0 2006
Source: ARMZ
ARMZ Strategic Objectives • Preserve and develop national competences in uranium mining ensuring Russia’s energy security in the long run
• Put together a profitable asset portfolio
• Ensure uranium supply to secure Rosatom’s exports program
• Secure access to world uranium market with a portfolio of mid-term and long-term contacts beyond 2009
• Secure access to natural uranium resources with low production cost
• Secure ARMZ financial health and stability
Key Investment Highlights
• For the first time in Russian history, private investors are welcome to get exposure to unique Russian uranium market by participation in the proposed projects. • ARMZ presents a compelling investment opportunity based on its solid fundamentals and excellent growth prospects. • The Company’s key strength is its diverse project portfolio ranging from producing to developing and exploration assets. ARMZ operates a majority of these projects which is reflective of the Company’s high technical and managerial track record.
• Amongst its key assets is the Company’s largest development project, the Elkon mine – a world class uranium deposit offering a unique investment opportunity. The project is strategically located to serve key international and domestic markets. • Existing shortage of natural uranium in international markets which is projected to grow further in the foreseeable future guarantees stable demand for ARMZ product. • Importantly, ARMZ’s key competitive advantage is its ownership structure. This results in strong government relations, opportunities for government funding and access to Rosatom’s integrated portfolio of nuclear services.
ARMZ as Investor Experience and Expertise
• Fifty years of experience in developing uranium deposits • Operations in diverse geographical and climatic conditions
Responsible Project Developer
• Maximal attention to environmental protection and land use • Social responsibility • Support from Rosatom State Corporation and the government of Russia
Access to Financial Resources
• Access to government funding • Excellent credit history
ARMZ as Investee Solid Financials
•G uaranteed demand for ARMZ products from Rosatom State Corporation complex • Low debt
Diversified Project Portfolio
•V arious development stage project pipeline: exploration to full-scale production • Geographical diversification: 14 uranium and non-uranium projects across the globe
Fast Growing Market
•G rowing demand for natural uranium from an increasing number of nuclear power plants
Key Investment Highlights
• For the first time in Russian history, private investors are welcome to get exposure to unique Russian uranium market by participation in the proposed projects. • ARMZ presents a compelling investment opportunity based on its solid fundamentals and excellent growth prospects. • The Company’s key strength is its diverse project portfolio ranging from producing to developing and exploration assets. ARMZ operates a majority of these projects which is reflective of the Company’s high technical and managerial track record.
• Amongst its key assets is the Company’s largest development project, the Elkon mine – a world class uranium deposit offering a unique investment opportunity. The project is strategically located to serve key international and domestic markets. • Existing shortage of natural uranium in international markets which is projected to grow further in the foreseeable future guarantees stable demand for ARMZ product. • Importantly, ARMZ’s key competitive advantage is its ownership structure. This results in strong government relations, opportunities for government funding and access to Rosatom’s integrated portfolio of nuclear services.
ARMZ Rosatom’s mining arm Russia’s primary uranium producer
ARMZ as Investor Experience and Expertise
• Fifty years of experience in developing uranium deposits • Operations in diverse geographical and climatic conditions
Responsible Project Developer
• Maximal attention to environmental protection and land use • Social responsibility • Support from Rosatom State Corporation and the government of Russia
Access to Financial Resources
• Access to government funding • Excellent credit history
ARMZ as Investee Solid Financials
•G uaranteed demand for ARMZ products from Rosatom State Corporation complex • Low debt
Diversified Project Portfolio
•V arious development stage project pipeline: exploration to full-scale production • Geographical diversification: 14 uranium and non-uranium projects across the globe
ARMZ Uranium Holding Co.
Fast Growing Market
•G rowing demand for natural uranium from an increasing number of nuclear power plants
22 B. Drovyanoi Lane Moscow, Russia 109004 Tel: +7-495-508-8808 Fax: +7-495-508-8810 E-mail: info@armz.ru www.armz.ru
ARMZ: Breakthrough and path to new horizons ARMZ Uranium Holding Co. (ARMZ), also known as Atomredmetzoloto, today is one of the global leaders in uranium mining and the Russian national uranium producer authorized and appointed by its owner, Rosatom State Corporation, as the nodal supplier of feedstock to the country’s nuclear industry. It is currently ranked as the world’s second largest uranium mining corporation by resource base and is the fifth biggest global producer. Rosatom State Corporation owns an 80.345% interest in ARMZ Uranium Holding Co. Over the last few years, Russia’s nuclear industry has been developing at an ever faster pace. ARMZ’s primary objective therefore is to meet the national nuclear complex’s growing needs in natural uranium. In 2009, ARMZ Uranium Holding Co. boosted uranium output a staggering 25% to 4624 tons at its mines in Russia and abroad. Aggressive international expansion has become one of the key elements of ARMZ strategy: our plan is to build up the resource base and put together – through partnerships, mergers, and acquisitions in 2010-2011 – a high yield and competitive production cost asset portfolio in Africa, North America, Asia, and Australia. First steps towards this ambitious goal were taken in the breakthrough 2009: today’s ARMZ portfolio includes 14 uranium and non-uranium projects all over the world. ARMZ Uranium Holding Co. has opened representative offices in London, UK, and Windhoek, Namibia. In 2009, the corporation acquired Effective Energy N.V. and
thus consolidated the Russian interests in uranium mining joint ventures in Kazakhstan. After the exchange of assets with the Canadian Uranium One, ARMZ became owner of a 19.95% interest in this publicly traded corporation placing two directors on the Uranium One Board and securing a number of management positions in Uranium One’s Kazakhstan operations. In 2009, ARMZ Uranium Holding Co. entered the global uranium market as an independent player. With 1 short-term and 2 mid-term contracts and product deliveries scheduled for the next three years, ARMZ Uranium Holding Co. has now established materials holding accounts with two conversion facilities overseas. ARMZ’s top priority is to further develop uranium mining in Russia: its operating mines are being upgraded and investments are made into planned and prospective facilities. One of the most spectacular projects – the Elkon Uranium Mine and Mill – implies the construction of an industrial complex in South Yakutia with the planned capacity of up to 5 thousand tons of uranium per annum. Design and estimate documentation development for the mine and mill, as well as for the associated infrastructure, is financed by the federal government from the Russian Federation Investment Fund. Russia’s federal authorities, as well as the management of Rosatom State Corporation, have been fairly active in supporting and funding activities and the strategy of ARMZ Uranium Holding Co. ARMZ development budget allocated
by the Mother Company in 2009 reached RUR64.2 billion (US$2.16 billion) while the investment program totaling more than RUR184 billion (over US$6.18 billion) will be backing up Rosatom’s mining division development over the next 5 years until 2015. Fifty years of experience in development of uranium deposits of various types in diverse geographical and climate conditions, as well as innovation employed by current projects and an active international expansion will bring ARMZ to the forefront of global uranium mining industry within the next few years.
Vadim L. Zhivov Director General