ARMZ Uranium Holding Co. booklet-2011

Page 1

ARMZ

Uranium Holding Co.

Rosatom State Corporation’s Mining Arm


ARMZ Uranium Holding Co.: Drive for Leadership and Guaranteed Supplies for Decades to Come Vadim L. Zhivov Director General, ARMZ Uranium Holding Co.

than US$20 per pound of U3O8 – has become an important step along this strategic avenue. On December 15, 2010, ARMZ Uranium Holding Co. and Mantra Resources Limited signed an agreement whereby ARMZ shall purchase 100% of outstanding shares of this publicly-traded Australian corporation with valuable uranium assets in Tanzania and Mozambique. In 2009, ARMZ Uranium Holding Co. boosted uranium output a staggering 25% to 4624 metric tons at its mines in Russia and overseas. Last year, ARMZ hiked its production up another 12% and the output reached 5162 metric tons of uranium. Today, ARMZ possesses unique competencies in uranium mining: with 50 years of experience in developing and mining uranium deposits in various geographies, under most diverse geological and climatic conditions, guided by highest health and environmental safety standards, ARMZ Uranium Holding Co. has over 20 uranium and non-uranium projects all over the world in its portfolio spanning all stages of industrial development – from geological exploration to intensive mining. All of these factors combined will make sure ARMZ Uranium Holding Co. is in a position to make it to the top three best and largest uranium miners in the world, as well as to guarantee sustainability of supplies for decades to come.

ARMZ Uranium Holding Co. (ARMZ), also known as Atomredmetzoloto, is the mining arm of Rosatom State Corporation and one of the global leaders in uranium mining. It is currently ranked as the world’s second largest uranium mining corporation by resource base and is the fifth biggest global producer. Our parent company, Rosatom State Corporation, has embarked on an ambitious development program. The share of nuclear power in Russia’s energy mix is expected to grow from the present 16 to 25% by 2025. Rosatom has been consistently and energetically strengthening its positions in the global markets of nuclear power plant construction and supply of fuel for nuclear power stations. Presently, ARMZ Uranium Holding Co.’s key task is to meet the ever growing needs of the national nuclear industry for reactor feedstock. In the move to ensure sustainability of supplies, ARMZ has been paying considerable attention to diversifying its project portfolio. While growing the business domestically, ARMZ Uranium Holding Co. is planning on building – through partnerships, mergers, and acquisitions – an impressive international portfolio of highly liquid assets with competitive production costs. Consolidation of a controlling stake in the Canadian publicly-traded Uranium One Inc. – a large uranium miner with a low average operational production cost of less

Rosatom: Civilian Nuclear Activities and ARMZ Uranium Holding Co.’s Role

Enrichment

ARMZ Ore Processing

Conversion Fuel Fabrication

Exploration MOX Fuel Fabrication

Mining

Used Nuclear Fuel Reprocessing

Spent Nuclear Fuel Burial

Nuclear Power Stations

Spent Nuclear Fuel Storage


Rosatom Strategy for New Nuclear Build Overseas

Rosatom State Corporation:   32 nuclear power units of 24.2 GWe aggregate installed capacity in Russia   37 nuclear power units built overseas

Belorussia Czech Republic Hungary

Ukraine Slovakia

Bulgaria Turkey Tunisia Morocco Libya

16% in electricity generation mix in Russia

Kazakhstan

Over 275 thousand employees at more than 270 production facilities, scientific centers, research and development organizations

Armenia China

Jordan Egypt

Iran India

World’s only nuclearpropelled icebreaker fleet

Vietnam

Rosatom: Building New Nuclear Plants Abroad

Nuclear industry’s full technological cycle from uranium mining to electricity generation, used fuel reprocessing and storage

Project Under Construction Project Planned Negotiations/Bidding Contest Proposed

45% of world’s uranium enrichment services’ market

Number of NPPs Built (by Company) DOOSAN

Source: Company Information, ARMZ Estimations

NPCIL Mitsubishi Heavy Industries AECL

Source: Rosatom State Corporation, WNA

Rosatom AREVA Toshiba/Westinghouse 0

20

40

60

80

100

120

140

160

140

Nuclear New Build (NPPs by Country) China India Russia

Under Construction Planned Proposed

USA Ukraine Japan

Source: WNA

UAE South Korea 20

40

17% of world’s nuclear fuel market   9% of world’s natural uranium mining

GE-Hitachi

0

23% of world’s NPP construction market

60

80

100

120

180


ARMZ Uranium Holding Co. Project Geography

Uranium One

Canada ARMZ Uranium Holding Co. owns a controlling equity stake in Canada’s uranium miner Uranium One.

United States Uranium One develops projects to build uranium mines in Wyoming, Arizona, and Utah.

ARMZ Mines and Projects Operational and Under Construction Planning and Design Stage Prospective Projects

Namibia

Controlled Through Alliance with Uranium One

SWA Uranium Mines is an exploration joint venture.

Uranium-Producing Countries Over 3 thou tU/annum From 1 to 3 thou tU/annum From 0.1 to 1 thou tU/annum No Production


Russia

Kazakhstan

ARMZ Uranium Holding Co.’s major operating – the Priargunsky, Dalur, Khiagda – and planned uranium mines are located in the Russian Federation.

Through its shareholding in Uranium One, ARMZ Uranium Holding Co. controls shares in Kazakhstanbased ZARECHNOE, Akbastau, Karatau, Betpak Dala, and Kyzylkum uranium-mining joint ventures.

Elkon Khiagda

Dalur

Lunnoe Gornoe

Olovskoe Priargunsky

Mongolia Central Asia Uranium Company (CAUC) develops the Dornod uranium deposit.

Australia Uranium One develops the Honeymoon Project to build an ISR uranium mine.

Armenia The Armenian-Russian Mining Co. conducts geological exploration works in Sunik District of the Republic of Armenia.

Tanzania Late in 2010, ARMZ Uranium Holding Co. agreed to purchase 100% of outstanding common shares of Mantra Resources Limited.


ARMZ Uranium Holding Co. Mines and Projects Priargunsky Industrial Mining and Chemical Union (PIMCU)

Olovskoe Mining Chemical Company

Dalur

Lunnoe

Krasnokamensk, Trans-Baikal Territory, Russia Uranium deposit ����������������Streltsov Uranium Field ARMZ shareholding ���������������������������������� 79,33% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 1968 Nameplate capacity, tU/annum ���������������������� 3500 Production in 2010, tU (forecast) ��������������� 2920,0 Total resources, tU ����������������������������������� 118341

Chernyshev District, Trans-Baikal Territory, Russia Uranium deposit ���������������������������������������Olovskoe ARMZ shareholding ��������������������������������������100% Status ����������������������������������� Planning and Design Nameplate capacity, tU/annum �������������������������600 Total resources, tU ������������������������������������� 11726

Dalmatov District, Kurgan Region, Russia Uranium deposits ��������������������Dalmatov, Khokhlov ARMZ shareholding ���������������������������������� 98,89% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 1998 Nameplate capacity, tU/annum �������������������������800 Production in 2010, tU (forecast) ����������������� 507,0 Total resources, tU ������������������������������������� 22114

Tommot, Sakha Republic (Yakutia), Russia Uranium deposit ����������������������������������������� Lunnoe ARMZ shareholding ���������������������������������� 50,03% Status ����������������������������������� Planning and Design Nameplate capacity, tU/annum �������������������������100 Total resources, tU ������������������������������������������408

Khiagda

ARMENIANRUSSIAN MINING COMPANY

Bauntov District, Republic of Buryatia, Russia Uranium deposit ����������������� Khiagda Uranium Field ARMZ shareholding �������������������������������������100% Status.....................................Under Construction Start of production (including pilot production) �������������������������������������������� 1999 Nameplate capacity, tU/annum ���������������������� 1800 Production in 2010, tU (forecast) ����������������� 135,0 Total resources, tU ������������������������������������� 41661

Elkon Mining Metallurgical Plant

Tommot, Sakha Republic (Yakutia), Russia Uranium deposit ����������������������Elkon Uranium Field ARMZ shareholding ��������������������������������������100% Status ����������������������������������� Planning and Design Nameplate capacity, tU/annum ���������������������� 5000 Total resources, tU ����������������������������������� 319184

Gornoe Uranium Mining Company

Krasnochikoy District, Trans-Baikal Territory, Russia Deposits ���������������������������������� Gornoe, Berezovoe ARMZ shareholding ��������������������������������������100% Status ����������������������������������� Planning and Design Nameplate capacity, tU/annum �������������������������400 Total resources, tU ��������������������������������������� 7918

Sunik area West, Armenia Uranium deposit ���������������a number of mineralized properties in Armenia ARMZ shareholding ���������������������������������������� 50% Status ������������������������������������������������� Exploration

SWA Uranium Mines Joint Venture Namibia

Uranium deposit ���������������������������Klein Spitzkoppe ARMZ shareholding ���������������������������������������� 13% Status ������������������������������������������������� Exploration Total resources, tU** ��������������������������������������660

Central Asia Uranium Company (CAUC)

Mongolia Deposit ������������������������������������������������������ Dornod ARMZ shareholding ���������������������������������������� 21% Status ������������������������������������������������ Prospective Nameplate capacity, tU/annum** ��������������������252 Total resources, tU** ����������������������������������� 3117


ARMZ through its controlling shareholding in Uranium One Inc. Karatau Joint Venture

ZARECHNOE Joint Venture

Uranium deposit ����������������������������� Budenovskoe-2 Uranium One shareholding ������������������������������� 50% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 2007 Nameplate capacity, tU/annum* ** �������������� 1000 Total resources, tU** ��������������������������������� 23894

Uranium deposits ����� Zarechnoe, South Zarechnoe Uranium One shareholding ����������������������������49,7% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 2007 Nameplate capacity, tU/annum* ** �����������������800 Total resources, tU** ��������������������������������� 23976

Akbastau Joint Venture

Kyzylkum Joint Venture

Uranium deposit ���������������������� Budenovskoe-1,3,4 Uranium One shareholding ������������������������������� 50% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 2009 Nameplate capacity, tU/annum* ** �������������� 1500 Total resources, tU** ��������������������������������� 39983

Uranium deposit ���������������������������North Kharasan Uranium One shareholding ������������������������������� 30% Status ������������������������������������Under Construction Start of production (including pilot production) �������������������������������������������� 2008 Nameplate capacity, tU/annum** ��������������������900 Total resources, tU** ��������������������������������� 26524

Betpak Dala Joint Venture

Honeymoon Joint Venture

Uranium deposit ������������������������������������������Akdala Uranium One shareholding ������������������������������� 70% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 2001 Nameplate capacity, tU/annum** ��������������������700 Total resources, tU** ����������������������������������� 7921

Uranium deposits ������� Honeymoon, East Kalkaroo, Gould’s Dam, Billeroo Uranium One shareholding ������������������������������� 51% Status ������������������������������������Under Construction Start of production (including pilot production) �������������������������������������������� 2011 Nameplate capacity, tU/annum** ��������������������172 Total resources, tU** ����������������������������������� 4090

Betpak Dala Joint Venture

US Assets

Uranium deposit �����������������������������������South Inkai Uranium One shareholding ������������������������������� 70% Status �������������������������������������������������Operational Start of production (including pilot production) �������������������������������������������� 2007 Nameplate capacity, tU/annum** ����������������� 1400 Total resources, tU** ��������������������������������� 63757

A number of uranium deposits in the US Total resources, Irigaray, tU** ��������������������� 10208 Total resources, other assets in the US, tU** ���������������������� 18910

Kazakhstan

Kazakhstan

Kazakhstan

Kazakhstan

Kazakhstan

Kazakhstan

South Australia, Australia

Utah, Arizona, Wyoming

* - Uranium One-ARMZ alliance’s aggregate share in attributable uranium production of Karatau, Akbastau, and ZARECHNOE joint ventures in 2010 (forecast) – 1601,0 tU ** - Total resources and nameplate capacities comply with ARMZ and Uranium One shareholdings in mines/projects


ARMZ – Uranium One Transaction In 2010, ARMZ Uranium Holding Co. consolidated a controlling share in Canada’s Uranium One Inc. The ARMZ-Uranium One alliance ranked world’s fourth largest uranium miner in terms of production volume. The alliance is slated to become the world’s second biggest player by 2015.

ARMZ Uranium Holding Co. Structure Khiagda

Priargunsky

Dalur

Elkon Armenian-Russian Mining Co.

Olovskoe

Central Asia Uranium Co.

ARMZ Uranium Holding Co.

Gornoe

SWA Uranium Mines (Pty) Ltd.

Lunnoe Akbastau Joint Venture

Uranium One Australia Pty Ltd

Uranium One Inc.

Uranium One U.S.A. Inc.

Karatau Joint Venture ZARECHNOE Joint Venture

Betpak Dala Joint Venture

World’s seventh by measured and indicated uranium resources Leader in low-cost uranium resources (Kazakhstan)

High corporate governance standards

World’s eighth by uranium production volume in 2009 Twofold increase in uranium production in 2010 as compared to 2009

Significant growth potential

Uranium One offers the best opportunity to fulfill uranium asset diversification strategy and is viewed as ARMZ’s global growth platform

Highly professional management team

Have brought projects to production Large M&A experience

Asset diversification

Operational mines in Kazakhstan Mines under construction and exploration projects in Australia and the US

A publicly-traded company with significant experience and a good reputation among market players

Best uranium assets with low production costs

Kyzylkum Joint Venture


ARMZ Strategy: Through Diversification to World Leadership Exploration Mongolia

Armenia

Namibia

ARMZ Uranium Holding Co. indirectly (through Priargunsky) owns 21% of Central Asia Uranium Co. (CAUC) which develops the Dornod uranium deposit

The parity-based joint venture with the Republic of Armenia (ArmenianRussian Mining Co.) started field exploration works in Sunik District of Armenia in 2009. ARMZ Uranium holding Co. is considering participation in gold deposit development in the territory of Armenia

SWA Uranium Mines was jointly established by ARMZ, VTB Capital Namibia, and Arlan Investment Company in 2008 to explore for and mine uranium in Namibia

Planning and Design Stage Elkon Mining Metallurgical Plant

Gornoe Uranium Mining Company

Olovskoe Mining Chemical Company

Lunnoe

Construction Stage Kyzylkum Joint Venture

Khiagda

Irigaray

Honeymoon Joint Venture

Operational Stage Priargunsky

Dalur

Karatau Betpak Dala

Akbastau ZARECHNOE


World’s Nuclear Power Development

New NPP Construction

Planned New Nuclear Build In the World

Number of units

Source: WNA

900

823

800 700

607

600

% 88

Others

440

France

400

Korea

300

India

100

China 2009

2020

Planned

500

Under Construction

400 327 300

2030

345

266 222

200

Japan

200

0

Proposed

US Russia

500

Source: WNA

Number of nuclear reactors, units

600

158

100 64

0

93

106

141

151

55 53 43 34 28 January January January January June 2007 2008 2009 2010 2010

2010:

2030:

There are 440 operating nuclear power units with 376 GWe of aggregate installed capacity

Number of operating nuclear power units to grow 88%

55 new nuclear power units are currently under construction with 60 GWe of aggregate installed capacity

Nuclear generation capacity to grow 119%

Over the last 3.5 years, the world’s overall number of nuclear power units under construction, as well as those planned and proposed, has increased from 250 to 551

China and India to be most active in new nuclear build   Russia is planning to increase nuclear generation capacity by 150% Источник: WNA


Uranium Requirements and Production Forecast: 100000

tU Uranium production forecast Uranium Requirements

90000 80000 70000 60000 50000 40000 30000 20000

2028

2029

2030

2028

2029

2030

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

0

2009

10000

Stages of uranium mining development:    2010-2020 – production covers requirements;   Post-2020 – uranium production capacity shortage   Post- 2025 – decline in production volume and capacity shortage

Uranium Resource Cost Category in 2008-2030 90

thou tU

80 70 60 50 40 30 20

Over $130 per kgU $80 to $130 per kgU Less than $80 per kgU

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

0

2008

10

48%

12% 49%

52%   Significant decrease in the number of large uranium deposits at less than $80 per kgU

39%

Depletion of a few large deposits (McArthur River, Cigar Lake, Rossing, Ranger, Akdala, Inkai, etc.) by 2030    Putting on line uranium deposits at the cost exceeding $130 per kgU

2008

2030

Source: company information, ARMZ estimations


ARMZ Uranium Holding Co. 22 B. Drovyanoi Lane Moscow, Russia 109004

Phone: +7-495-508-8808 Fax: +7-495-508-8810 E-mail: info@ armz.ru


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