Annual Report 2017 (Hereinafter Federal Contests: According to Expert RA • TOP 100 (Rank 36 Ahead of All • in November 2018

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Annual Report 2017 (Hereinafter Federal Contests: According to Expert RA • TOP 100 (Rank 36 Ahead of All • in November 2018 Table of Contents Adress of the Chairman of the Board of Directors Alexander Lokshin. 2 4 .2 . Financial Capital . 62 APPROVED BY Adress of the Director General Vladimir Verkhovtsev . 3 4 .2 .1 . Financial Management . 62 the resolution of the Board of Directors of JSC Atomredmetzoloto Adress of the President of the Veteran Council Nikolay Petrukhin . 4 4 .2 .2 . Financial Management Performance . 63 10 Years: Sustainable Development Trajectory . 4 4 .2 .3 . Investments . 65 (Minutes No.209 dd. May 25, 2018) 2017 Key Events. 6 4 .3 . Intellectual Capital . 67 2017 Key Indicators . 7 4 .3 .1 . Intellectual Capital Management . 68 4 .3 .2 . Innovative Performance . .. 70 1 . INFORMATION ABOUT JSC ATOMREDMETZOLOTO . 8 4 .3 .3 . Digital Economy Performance. .. 70 This Report has been pre-approved by 1 .1 . About the Company. .. 9 4 .4 . Natural Capital . .71 1 .1 .1 . General Information .. 9 4 .4 .1 . Natural Capital Management Environmental Policy . 71 the Director General, JSC Atomredmetzoloto 1 .1 .2 . Holding Structure . .. 9 4 .4 .2 . Natural Capital Management Performance: . 71 (order No. 003/124-П dd. May 14, 2018) 1 .1 .3 . Mission and Values . 10 4 .4 .2 .1 . Protection of Land Resources and Biodiversity . 71 1 .2 . Market Presence . 10 4 .4 .2 .2 . Protection of Water Resources . 72 1 .3 . Our Role in ROSATOM’s Production Cycle .. 11 4 .4 .2 .3 . Air Protection . 73 1 .4 . Supply Chain . 11 4 .4 .2 .4 . Waste Management . 74 1 .5 . Value Chain and Business Model . .. 13 4 .4 .2 .5 . Environmental Costs . 75 1 .5 .1 . Value Chain . 13 4 .4 .2 .6 . Community Relation in Environmental Protection . 75 1 .5 .2 . Business Model . 13 4 .4 .3 . Occupational Health and Safety . 76 4 .5 . Human Capital . .. 78 2 . STRATEGY AND MARKETS . 16 4 .5 .1 . HR Policy Management System . 78 2 .1 . Strategic Vision and Targets . .. 17 4 .5 .2 . Management Performance . 78 2 .2 . Contribution to Pursuit of ROSATOM’s Strategy . 18 4 .5 .2 .1 . Human Capital Features . 78 2 .3 . Strategic Objectives Achieved in 2017 . 19 4 .5 .2 .2 . Remuneration System . 81 2 .4 . Strategic Targets for 2018 . 20 4 .5 .3 . HR Professional Development . 83 2 .5 . Sustainable Development Agenda . 21 4 .6 . Social Capital . 84 INTEGRATED ANNUAL REPORT 2 .6 . Natural Uranium Market Overview and Outlook . 24 4 .6 .1 . Social Investment Management . 85 JSC Atomredmetzoloto 4 .6 .1 .1 . Work with Youth and Students . 85 3 . GOVERNANCE PERFORMANCE . 28 4 .6 .1 .2 . Implementation of Children Programs . 86 2017 3 .1 . Corporate Governance System . 29 4 .6 .1 .3 . Sporting Events . .. 86 3 .1 .1 . Corporate Governance . 29 4 .6 .1 .4 . Support to Retired Veterans .. 86 3 .1 .2 . Report of the Board of Directors on the Results 4 .6 .1 .5 . Trade Unions and Collective Bargain Agreements . .. 87 of the Company Development by Priority Business Lines . 35 4 .6 .2 . Social Capital Management Performance. .. 88 3 .2 . Risk Management . 35 4 .6 .3 . Contribution to Development of Operation Areas . 89 3 .2 .1 . Risk Management System . 35 3 .2 .2 . Key Risks and Their Management . 36 5 . INTERACTION WITH STAKEHOLDERS . 94 10 YEARS: SUSTAINABLE DEVELOPMENT TRAJECTORY 3 .3 . Internal Control System . Assets Protection . .39 5 .1 . Definition of Stakeholders . .. 95 3 .4 . Procurement Management . 40 5 .2 . Stakeholder Relations . 95 5 .3 . Commitment to Human Rights Protection . 95 4 . CAPITAL MANAGEMENT RESULTS . 42 5 .4 . Public Reporting System . 96 4 .1 . Production Capital. 43 5 .5 . Interaction with Stakeholders when drafting the Report . 96 4 .1 .1 . Mineral Raw Materials Base Development . .. 43 5 .6 . Public Assurance Statement on Report . 97 4 .1 .2 . Production Capital Management . 44 4 .1 .3 . Business Diversification . .. 53 Appendices . 100 4 .1 .3 .1 . Development of New Businesses . 53 List of Abbreviations and Terms . 105 4 .1 .3 .2 . Project for Load-Haul-Dump Machines for Underground Summary Information . 106 Mining Operations . 55 4 .1 .3 .3 . Project «Production of Associated Scandium at JSC Dalur». 56 4 .1 .3 .4 . Project «Processing of Pyrite Cinders at PJSC PIMCU» . .57 4 .1 .3 .5 . Project «Creation of Lithium Carbonate Production based on Zavitinskoye Deposit» . 58 4 .1 .3 .6 . Project «Gold Mining Organization» . 58 4 .1 .3 .7 . Project for Organization of Titanium and Zirconium Concentrate Production at Tuganskoye Deposit . 59 4 .1 .4 . ROSATOM Production System . Compliance with Product Quality Requirements . .59 3 Adress of the Chairman of the board Adress of the Director General G102-14 G102-14 of directors Alexander Lokshin Vladimir Verkhovtsev the share of uranium production at cases of its operation regions . In 2016, enterprises mining uranium using in-situ the Krasnokamensk Priority Social and leaching . Economic Development Area (PSEDA) was founded in the Trans-Baikal Territory We consider organizing output of new and its operations will diversify the city's products for the Russian and international economy . Given ARMZ support, 2017 markets another important task . Last DEAR READERS! DEAR COLLEAGUES, saw the first three businesses included year saw the start of high-purity in the PSEDA's registry of residents, In 2017, JSC Atomredmetzoloto JSC Khiagda in 2015 to 2016 including batch of high-purity scandium oxide In 2017, ARMZ Uranium Holding Co . scandium oxide production . ROSATOM over 20 new jobs created and RUB 5 celebrated its 10th anniversary as the production facility, sulfur acid works was produced during the reporting celebrated its 10th anniversary . I am approved the Holding's initiative for MM transferred to the city's budget . The one of the recognized leaders of and power facility . The rated capacity year . Additionally, 2017 saw attraction proud to present the 10th report of titanium, lithium and other rare metal largest investment project implemented global uranium industry renowned as with production of circa 1,000 tpa is of new customers as well as increase JSC Atomredmetzoloto describing the mining . Within the framework of our most by AtomSpeccement, JSC provides for a reliable, efficient and impeccable expected to be achieved in 2019 . of contractual volumes and periods decade's events and trends as well as large-scale project being construction construction of the grinding facility at the supplier of strategic feedstock for the for sale of sized coal produced by important strategic initiatives that have of the MPC at Pavlovskoye lead-zinc Employees' lives and health remain special cement plant and employment of Russian nuclear industry . For those PJSC PIMCU . determined, in many respects, further field on Novaya Zemlya Archipelago, the highest value for the Holding's 120 local residents . ten years, the company had been development of our Company and the field engineering survey operations have enterprises . The actions aimed at The brightest and, I would even say, on the track of establishment and entire Russian nuclear industry . been completed, design has been started improving safety allowed the Mining historical event of the reporting ARMZ is supporting actions for development, recurrent upgrading and and preliminary agreements have been Division to prevent fatal injuries in year was start of infrastructure Those were no easy times as influence development of its operation regions . overcoming its current challenges . executed with anchor product customers . 2017 . construction at the new uranium mine of external factors made us revise our RUB 7 million was given to charity during Currently, we are a dynamically the reporting year . The implemented No . 6 at PJSC PIMCU, which, in its strategic targets and management The production achievement of developing company with established The Holding's enterprises are initiatives include construction of the turn, defines the development pattern system, change the Holding's structure PJSC PIMCU is high expert appraisal vertical governance and a brilliant responsible especially for preservation school at Uksyanskoye in the Kurgan both of the enterprise and the city of consolidating Russian uranium mining of models of self-propelled mining team of professionals completing of favorable environment in the Region which was proclaimed the best Krasnokamensk . Given the continuing assets since 2013 . machinery developed by the enterprise . ROSATOM's tasks under any, even the operating regions . The positive school in the region . The funds of the surplus of supply in the uranium market, Mine No . 8 saw startup of commercial most complex, conditions . experience of the most efficient Still and despite the uranium market consolidated taxpayer group have been the Priargunsky Works managed to end operations of the integrated automated uranium mining asset, JSC Dalur, has volatility, the Holding's team has used to reconstruct the Krasnokamensk - The company is working on its Y2017 with positive balances . Such access control system being the project been rated highest winning the award managed to show high operation and Matsievskaya motorway and other social operational performance improvement . success, undoubtedly, became possible aimed at improving labor safety and of the prestigious international project financial performance . The flexible infrastructure facilities . In the reporting period, we have only due to the efficient and concerted injury reduction . Environmental Culture . Peace and management system, accumulated managed not only to prevent cost efforts of the entire Holding's team In 2018, the Holding has the following Harmony organized by V .I . Vernadsky experience and focus on innovations JSC Khiagda is systematically increasing growth but also to continue reducing as well as its skillful and efficient critical tasks: continuing construction of Fund and supported by the Federation and use of cutting-edge processes have its production level and started the unit cost of production in uranium management system . key facilities at uranium Mine No . 6 and Council of the Federal Assembly of allowed our Company to remain the development of Vershinnoye Uranium mining . Such high results could not becoming more successful in improving the Russian Federation .
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