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 . The award I am sure that the upcoming year leader among uranium majors and ensure Deposit in 2017 . As the developing be achieved without streamlining the production performance and increasing for implementation of environmental and the next decade will become not successful development of non-nuclear and most prospective enterprise of the volumes and cutting the underground revenue from its new business projects . protection operation has been given less fruitful and successful for the businesses . holding, JSC Khiagda would become, in uranium mining costs at PJSC PIMCU, to JSC Dalur's representatives during experienced and skillful team of ARMZ 2018, the pilot site for implementation Achieving such large-scale objectives and increasing in-situ leaching The most important outcome of the the reception at the Presidential Uranium Holding Co . of the Smart Mine innovative project is possible only with the team of production volumes at JSC Dalur reporting year and, I daresay, the entire Administration of the Russian that would change the shape of domestic professionals currently existing at ARMZ . and JSC Khiagda (+14% vs . 2016) . decade has become start of financing Federation . uranium mining in the nearest future Experienced, ambitious and responsible These are our key performance the construction of Mine No . 6 at by ensuring its transition to smart specialists are our pride and the indicators . Undoubtedly, they must In 2017, foundations were laid for PJSC PIMCU . The first installment of management of specific processes and cornerstone of further development and not be underestimated like the entire implementation of the innovative RUB 389 MM has been provided for deposit development lifecycle based on prosperity of our Company . project that would change the approach construction of infrastructural facilities . performance of our company proving digital processes . once again that no challenge is to uranium mining radically . The Smart Launching the mines would grant impossible for it . Mine project based on digitalization new opportunities both for the single The most efficient enterprise of of all processes is no longer fantasy . enterprise and the city of Krasnokamensk, the holding, JSC Dalur, has started The holding has been sustainably The project would allow creating high- the uranium capital of Russia . preparing for development of its new supplying the industry with Russian performance production and casting a Profitable operations of PJSC PIMCU in Dobrovolnoye Uranium Deposit in the natural uranium . Here, our Company new glance at uranium mining process Zverinogolovskoye District (Kurgan pays special attention to development 2017 (RUB 7 MM) are another significant economy in the nearest future . I wish achievement emphasizing efficient Region) . Its commissioning will allow of modern processes . We were able our colleagues success in their creative maintaining the current uranium output to make environmentally friendly and operations of the management under work! extremely unfavorable market conditions . in the long term . The project is supported economically efficient in-situ leaching by the regional government as one of I must also note the Holding's (ISL) to account for 44% of the total The reporting year saw continued work the most important for its social and operations in implementation of non- Russian production volume . The for achieving ROSATOM's strategic economic development . development driver was commissioning uranium projects . The Scandium project targets . The Holding's team ensured of key infrastructural assets at has become successful after the pilot reduction of unit production cost of JSC Atomredmetzoloto is working mining by 2% versus 2016 by increasing systemically on improving investment

2 Annual Report JSC Atomredmetzoloto 2017 3 has told, nothing good has come out of reputation of a reliable partner and Adress of the President it (as it should) because everyone must strategic feedstock supplier, but also to do its business . Mining industry is hard to start implementing new projects and of the Veteran Council develop anywhere . developing new deposits underlying further years of stable operations . It In 2007, ROSATOM's Nikolay Petrukhin confirms correctness of the resolution management passed its historical passed by ROSATOM's management in resolution to consolidate, within 2017 . Other details of ARMZ Uranium JSC Atomredmetzoloto, all uranium and Holding Co .'s strategic success for ten other mineral mining enterprises in years are provided in this annual report . Russia . It has become its second birth, the Medium Mechanical Engineering Energy of the Russian Federation and and in 2008, ARMZ Uranium Holding Co . Ministry of the USSR in 1953 and its First Our company highly values uranium given to the Russian Government to (JSC Atomredmetzoloto) was authorized Chief Administration (further renamed mining veterans and we, veterans, are sure export warehouse reserves of natural to supply the nuclear industry of Russia JSC Atomredmetzoloto) . that relying on the glorious traditions and uranium (in the peroxide and oxide with natural uranium . deep experience of its predecessors as After the dissolution of the Soviet Union, form) and use such export proceeds to well as on the team of professionals and Over the 10 years, ARMZ Uranium uranium mining saw a very complicated support uranium mining and exploration soulmates, ARMZ Uranium Holding Co . is Holding Co . in its capacity of the head period as over 80% of reserves including operations has contributed greatly to it . up to any tasks given to it by ROSATOM, entity of ROSATOM for uranium mining, the ones concentrated in the largest no matter how ambitious they are . The positive resolution passed on its has managed not only to preserve its deposits fit for development using in- request has allowed improving the DEAR READERS! situ leaching (ISL) were outside Russia . financial condition and operation In the absence of budget financing, In 2017, ARMZ Uranium Holding Co . performance of PJSC PIMCU, finance Atomredmetzoloto’s team endeavored to celebrated its 10th anniversary . ARMZ required geological exploration preserve good working order of uranium Uranium Holding Co . celebrating its operations and pilot testing of uranium mining enterprises located in Russia . HISTORICAL BACKGROUND 10th anniversary is the successor to the ISL at Dalmatovo Deposit in the largest global uranium mining complex The request initiated by Urals and other deposits . History saw State Concern Atomredmetzoloto was founded in 1991 as the successor to the former First Main Administration of the created in the USSR and having a Atomredmetzoloto Group of Companies JSC Atomredmetzoloto separated from USSR Ministry of Medium Mechanical Engineering and was operating within the structure of the Ministry for Atomic long history starting with creation of supported by the Ministry for Atomic its enterprises for some years . As time Energy of the Russian Federation . The concern was a production conglomerate of mining and processing enterprises located in six countries: Russia, Ukraine, Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan . State Concern Atomredmetzoloto was involved in exploring, mining, and processing of uranium, gold, and rare and disperse element ores . It was also engaged in designing mines, ore processing facilities, and machine engineering plants . In 1995, State Concern Atomredmetzoloto was reorganized to become a PTC (publicly traded company) . In 1999, the Company was transformed into OJSC Atomredmetzoloto due to the re-registration of joint-stock companies . 10 Years: Sustainable Development Trajectory

2007 2009 2011 2013 2015 2017 ROSATOM's management passed its Saw commencement of active 2011 saw acquisition of 100% The Holding made a deal to consolidate JSC Atomredmetzoloto was ranked JSC Atomredmetzoloto, historical resolution to consolidate, within international activity, within which in Mantra Resources Pty 100% of Uranium One Inc . shares . the first among ROSATOM's divisions the Mining Division JSC Atomredmetzoloto (ARMZ), all uranium ARMZ consolidated Russian participation Limited (Australia) developing In accordance with the decision of by the integral rating for achieving of ROSATOM and the and other nuclear mineral mining enterprises . interests in three uranium production JVs the Mkuju River Project in ROSATOM, control over foreign assets key performance indicators . successor to the world’s Russian uranium mining enterprises and uranium in Kazakhstan . The company became the Tanzania . was transferred to Uranium One largest uranium mining exploration and mining joint ventures (JVs) in minority stockholder in Uranium One Inc . Holding N .V . Since December 2013, complex created by the Kazakhstan were transferred to ARMZ . Licenses of Canada . JSC Atomredmetzoloto has been Soviet Union, celebrates its were obtained for the right to use the subsoil of controlling all Russian uranium mining 10th anniversary . reserve uranium deposits . assets .

Restructuring of nuclear industry resulted into consolidation of all uranium mining enterprises of ROSATOM under control of ARMZ . Licenses were reissued for the right to use the subsoil The Holding Company became owner of of the reserve uranium deposits, including 99 .5% in The First Ore Mining Company, those of the world’s largest Elkon uranium ore JSC (FOMC) developing the project of OJSC Atomredmetzoloto was renamed province . JSC Atomredmetzoloto assumed full economically efficient integrated production JSC Atomredmetzoloto (Joint-Stock authority over procurement for the domestic and facility based on silver-containing Company) . The implementation of an The key task of reaching the break- international feedstock requirements of Russia’s Building up of international operations Pavlovskoye lead-zinc field (Bezymyannoye integrated program to reduce the prime cost even level for PJSC PIMCU, the largest nuclear industry and became one of the global and consolidation of the controlling ore cluster, Yuzhny Island of Novaya Zemlya, of products and reach a break-even level of production site of the Holding Company, leaders in uranium production . stake in Uranium One Inc . Arkhangelsk Region) . operation started . was achieved . 2008 2010 2012 2014 2016

4 Annual Report JSC Atomredmetzoloto 2017 5 2017 Key Events 2017 Key Indicators G102-7 2nd G102-8 G201-1 place G403-2 URANIUM PRODUCTION AND MINERAL RESOURCE BASE Figure 1. Uranium production, tonnes Figure 2. Uranium resources (Russian assets), 2015 2016 2017 JULY kt • JSC Dalur's Information Center 3,055 of ROSATOM and JSC Atomredmetzoloto among inaugurated at Zverinogolovskoye 3,005 2,917 the world’s largest uranium- Village in the Kurgan Region; mining companies by mineral resource base* 523.9 • New Director Generals appointed 521.2 517.1 at PJSC PIMCU and JSC Khiagda . -3% +1% AUGUST • Commissioning of level 7D at 2015 2016 2017 2015 2016 2017 4th underground uranium mine No . 8 place of PJSC PIMCU . PERSONNEL

SEPTEMBER Figure 3. Staff number, persons Figure 4. Staff liquidity, % 2015 2016 2017 • Presentation of new domestic LHD of ROSATOM among world’s models produced by PJSC PIMCU 7,725 largest uranium-mining 31.3 companies by production at the Import Substitution volume* Exhibition in Crocus Expo; 6,957 7,347 • Celebration of the 10th anniversary of 21.7 JSC Atomredmetzoloto; +6% 21.8 +1% 6th • The Creation and Development of place the Domestic Nuclear Industry's JANUARY 2015 2016 2017 2015 2016 2017 Mineral Resource Base monograph • Execution of the trilateral published . 2015 2016 2017 agreement on interaction for Figure 5. Average monthly Figure 6. Employee of JSC Atomredmetzoloto actions aimed at environmental OCTOBER wage, RUB engagement (division), % among the world’s largest impact reduction by and between uranium-mining companies by • ARMZ Uranium Holding Co . JSC Dalur, the Government production volume creates the Competence Center of the Kurgan Region and for Geological and Mathematical 61,992 66 Rosprirodnadzor's Administration 62 Modelling of Deposits being 59,447 for the Kurgan Region . 55,770 developed . FEBRUARY % 54 % NOVEMBER +4 +6 • Installation of the electronic • The first instalment is provided for display showing radiation level construction of the new uranium 2015 2016 2017 2015 2016 2017 on the administration building of mine No . 6 at PJSC PIMCU's site in Zverinogolovskoye District of the MAY Krasnokamensk . ENVIRONMENTAL OPERATIONS SOCIAL AND ECONOMIC SPHERE OCCUPATIONAL HEALTH AND SAFETY Kurgan Region . • Production of first designs of the load-haul-dump machine PD-2EE DECEMBER Figure 7. Environmental protection costs, Figure 8. Taxes paid by key enterprises MARCH Million RUB of ARMZ Uranium Holding Co. to regional Figure 9. Occupational Safety at the mechanical repair plant of • The Uranium Geotechnology budgets, Million RUB*** and Health, Process Safety • Arctic Collaboration PJSC PIMCU . (Russian Experience) monograph Agreement by and between 520.0** published . 3,266 JSC Atomredmetzoloto, FSUE JUNE Atomflot and VostokUgol MC LLC; 411.5 • JSC Dalur is granted the right 340.5 -25% -36% 0 • Agreement by and between to use the Dobrovolnoye subsoil 2,159 area of federal importance in ROSATOM and the Arkhangelsk 1,921 Region Government on the Kurgan Region for uranium 4 -21% +12 % 3 cooperation for implementation of exploration and mining; 2 the Pavlovskoye Project . 0.44 • JSC RUSBURMASH is granted 2015 2016 2017 2015 2016 2017 Rospotrebnadzor's license for use 0.23 0 0.28 APRIL 0.02 0 of ionizing radiation sources; 2015 2016 2017 • Physical launch of the first stage • Underground uranium mine No . 8 of the pilot plant for 1 .5 tpa of Accidents of PJSC PIMCU reaches its rated scandium oxide . Lost Time Injury Frequency Rate (LTIFR) capacity . * Including Uranium One Group enterprises . Fatal Injury Frequency Rate (FIFR) ** Data for 2016 recalculated subject to details of primary capital investments aimed at environmental protection and sustainable use of natural resources .

***Subject to profit tax payments within the consolidated taxpayer group (the – CTG) .

6 Annual Report JSC Atomredmetzoloto 2017 7 1.1. About the Company

G102-1 1.1.1. General Information G102-2 G102-4

MAIN AREAS OF OPERATION JSC VNIPIpromtechnologii and LLC United Uranium Plants . JSC Atomredmetzoloto (ARMZ Uranium Holding Co ., Mining Division of KEY LAWS AND REGULATIONS ROSATOM, Company, Holding Company, GOVERNING THE COMPANY'S ARMZ) is the successor to the world's largest uranium mining complex created BUSINESS in the USSR – celebrated its 10th In its business, JSC Atomredmetzoloto • Federal Law No . 135-FZ dd . anniversary in 2017 . relies on provisions of its Articles of 7/26/2006 «On Protection of • It manages Russian uranium mining Association, internal documents and Competition»; assets in the Trans-Baikal Territory applicable laws including the following • Federal Law No . 39-FZ dd . (PJSC PIMCU), Republic of Buryatia regulations: 4/22/1996 «On Securities Market»; (JSC Khiagda) and the Kurgan Region • Civil Code of the Russian (JSC Dalur); Federation (part one) No . 51-FZ • Presidential Decree No . 556 On Restructuring of the Nuclear • It possesses unique competencies dd . 11/30/1994; Power Industry of the Russian and performs integrated • Federal Law No . 208-FZ dd . Federation dd . 27 .04 2007;. operations ranging from 12/26/1995 «On Joint-Stock geological exploration, pilot and Companies»; • «Regulation No . 454-P on design work to recultivation and information disclosure by decommissioning of production • Federal Law No . 317-FZ dd . securities issuers» approved by the facilities; 12/1/2007 «On ROSATOM State Bank of Russia on 30 .12 .2014 . Atomic Energy Corporation»; • It implements a number of non- MEMBERSHIP IN ORGANIZATIONS uranium projects, including • Federal Law No . 13-FZ dd . construction of a lead-zinc works 2/5/2007 «On Features of AND ASSOCIATION G102–13 on Novaya Zemlya Archipelago, Management and Disposal of JSC Atomredmetzoloto is a member of associated scandium mining, pyrite Assets and Stocks of Companies the World Nuclear Association . cinder processing, etc . in Nuclear Power Use and Amendments to Certain Laws of EXTERNAL ARTICLES OF ARMZ Uranium Holding Co . also includes the Russian Federation»; ASSOCIATIONS, PRINCIPLES AND the projected enterprises, namely, JSC The First Ore Mining Company, • Federal Law No . 170-FZ dd . OTHER INITIATIVES G102–12 JSC Elkon MMP, JSC Lunnoye and 11/21/1995 «On Nuclear Power The Company exists in accordance with JSC «UMC Gornoe» . Use»; the Russian Business Social Articles of A significant contribution to the • Federal Law No . 223-FZ dd . Association . Holding Company’s business is 7/18/2011 «On Procurement of Please see section 1 .1 .2 . for more information about the made by subsidiaries being LLC Goods, Work and Services by history of Atomredmetzoloto . Historical Background of ARMZ Service, JSC RUSBURMASH, Certain Types of Companies»; the Report 2014 .

1.1.2. Holding Structure G102-5 Figure 10. Diagram showing JSC Atomredmetzoloto’s Subsidiaries as of 31 December 2017 1. JSC Atomredmetzoloto Mantra Resources PTY Ltd. PJSC PIMCU JSC VNIPIpromtechnology LLC Itmanovo Agriculteral Firm (Australia) General Information about 94.91% 100% 100% 86.09%

JSC Atomredmetzoloto JSC Dalur JSC Lunnoye LLC Firm Geostar Vostok Power Resources Ltd. (UK) 98.89% 50.03% 2.03% 24.19%

JSC The First One Mining JSC Khiagda LLC United Uranium Plants JSC Uranium One Group Company 100% 99.77% 50% 21.57%

JSC Southern Yakutia Development JSC RUSBURMASH JSC «UMC Gornoe» Corporation 100% 100% 25.1%

JSC Elcon MMP JSC EGMK Project 100% 0.004%

9 G102-16 1.1.3. Mission and Values 1.3. Role in ROSATOM’s Production Cycle

The mission of JSC Atomredmetzoloto ARMZ’s business vision relies on Primary competitive edges of the is to provide competitiveness of long- its status of the national producer company are as follows: For more details see section 1 .1 . About the Company and 2 1. . Strategic vision and Targets . term raw material deliveries for the guaranteeing satisfaction of feedstock development of Russian technologies, needs of its primary stockholder, Figure 12. JSC Atomredmetzoloto’s Role in ROSATOM Production Cycle above all in nuclear power engineering . ROSATOM, at a competitive cost and without geopolitical risks . FRONT-END OF THE NUCLEAR FUEL CYCLE

Mining Fuel Electrical and Division Division Power Division Geological exploration Conversion Electric power enrichment Mining generation Fuel fabrication Processing NPP service • feedstock base of unique scale • advanced production assets • full range of competencies capable of profitable extraction of and scientific potential, and for managing the lifecycle of valuable components (uranium and skilled team with many years of development and operation of other strategic metals); experience in the mining industry; deposits, including under severe Mechanical Innovation Back-End Engineering Division natural and climate conditions . Switching to a Division closed nuclear fuel SNF management OF THE Equipment design cycle (fuel return Decommissioning into the cycle) Equipment RAW management

its operations to increase its feedstock manufacturing BACK-END G102-6 1.2. Market Presence product portfolio subject to the needs Equipment supply NUCLEAR FUEL CYCLE of the nuclear industry and its external Installation and partners . In 2017, ROSATOM approved commissioning Engineering Division the division’s strategic initiatives for Service and The primary business line of ARMZ is core businesses and new ones) . POWER ENGINEERING Design and engineering development of rare metal productions modernization the production of natural uranium . The servicing activities feature (titanium, lithium, etc .) . NPP construction production of heat and electric power, Stable positions of ARMZ in the sulfuric acid, mining equipment ARMZ also continues assessing the uranium market are guaranteed by (PJSC PIMCU), drilling and exploration potential of new prospective markets stable demand for its products on services (JSC RUSBURMASH), and developing projects and initiatives part of the Russian nuclear industry, design and engineering related to entering these markets . They G102-11 diversified mineral resource and 1.4. Supply Chain (JSC VNIPIpromtechnologii) . Consumers will be included into disclosures as the production base, and systemic efforts of these products and services are relevant projects and initiatives are to increase its business performance . Mining Division enterprises, other implemented . Additional contributions to their ROSATOM entities and external stability are favorable global prospects partners (Russian and foreign See also Our Strategy and Markets and Production of nuclear power . Its development Capital companies) . would be contributing to mid- and long- ALL CONTRACTUAL OBLIGATIONS FOR THE term growth of demand for uranium . Scandium production (in the form CONSUMER SATISFACTION SUPPLY OF PRODUCTS TO CUSTOMERS WERE of high-purity scandium oxide) was ASSESSMENT The Сompany is actively developing started in 2017 at JSC Dalur’s site PERFORMED IN FULL IN 2017. its non-uranium businesses (those within the new business launch One of JSC Atomredmetzoloto’s associated with servicing both framework . The Company has improved priorities is ensuring satisfaction of the end consumers of uranium raw Figure 11. Map of JSC Atomredmetzoloto’s Assets in Russia materials (JSC TVEL and JSC TENEX), to which Russian raw materials are JSC The First Ore Mining supplied under long-term contracts JSC RUSBURMASH JSC Elcon CUSTOMER SERVICE Company 2nd with LLC United Uranium Plants . on assignment agreement with LLC United Uranium Plants became JSC Atomredmetzoloto continuously The Company maintains long-term JSC VNIPIpromtachnologii place a party to the agreement with monitors long- and short-term contractual relations with its key JSC Siberian Chemical Works allowing JSC Atomredmetzoloto Novaya Zemlya of ROSATOM and JSC Atomredmetzoloto satisfaction of customers’ natural customers being enterprises of Archipelago direct interaction with the works among the world’s largest uranium-mining uranium needs, as well as promptly ROSATOM, based on the principles concerning organization of deliveries, companies by mineral resource base* responds to any of their requests and of mutually beneficial and fruitful Sakha (Yakutia) railcar unloading and warehousing of Republic expectations . cooperation . Moscow uranium feedstock . To improve quality of its uranium Streamlining of finished goods December 2017 saw preparations products supplied to its end warehousing and shipping systems is for assignment of the agreement 4th consumers, JSC Atomredmetzoloto is used to improve product quality . Kurgan to return empty TPCs from Region place considering total product outputs with Krasnokamensk, physical and chemical properties close In December 2017, LLC United Uranium Plants to Republic of Buryatia Trans Baikal Teritory JSC Atomredmetzoloto relying JSC Atomredmetzoloto’s subsidiaries . to ASTM C 967-08 . of ROSATOM among world’s largest uranium-mining companies by production volume* JSC Dalur JSC Khiagda PJSC PIMCU

* Including Uranium One Group enterprises .

10 Annual Report JSC Atomredmetzoloto 2017 11 1.5. Value Chain and Business Model BUSINESS CASE: CUSTOMER SERVICE In November 2017, JSC Atomredmetzoloto supplied its trial batch of uranium oxide concentrate produced by PJSC PIMCU to Uranium One Group, JSC for further supply to the PRC . This delivery allowed JSC Atomredmetzoloto to learn about the PRC’s interest in Russian natural uranium and the prospect of 1.5.1. Value Chain 1.5.2. Business developing further business and investment cooperation . Model G102-9 Due to liquidation of LLC United Uranium Plants in Q4,2017, JSC Atomredmetzoloto started preparation for switching to direct deliveries to JSC TVEL and JSC TENEX without using the agency system . The value chain of the Mining Division The value chain underlies is integrated into ROSATOM’s JSC Atomredmetzoloto’s public harmonized value chain and is built in business model . accordance with lifecycles of fuel and The business model is a system that equipment . ensures creation of value on short-, The Holding Company creates the medium- and long-term horizons and QUALITY MANAGEMENT with TU 95,1981-2009, TU 95,2822- To improve its product quality, value via integrated operations is aimed at achieving strategic goals . 2002 and the Basic Specification . In JSC Atomredmetzoloto, in Q4,2017, ranging from geological exploration, Product quality assurance remains The business model is a layout of 2017, JSC Atomredmetzoloto received started developing the possibility of pilot surveys and design work to one of the key priorities for ARMZ’s business formulated as no quality claims regarding product processing ammonium polyuranate recultivation and decommissioning JSC Atomredmetzoloto . a process of transforming input supplies from its customers (JSC TVEL produced by JSC Khiagda into uranium of production facilities . Given its YEAR 2017 SAW resources (assets) into key results JSC Atomredmetzoloto’s product and JSC TENEX) and its consignee oxide concentrate using PJSC PIMCU’s unique competencies and integrated (uranium production, environmental NO CHANGES quality depending on the form of the (SCW, JSC) . production capacities . operations, ARMZ offers its customers protection costs, social payments natural uranium concentrate complies products compliant with the highest TO SUPPLIERS’ to employees, etc ). . There is also standards . capital change presented, including LOCATION, SUPPLY One must note that value created by transformation/gains of resources CHAIN STRUCTURE OR ARMZ consists not only in obtaining used and the company’s contribution SUPPLIER RELATIONS. G102-9 JSC Atomredmetzoloto Supply Chain the primary finished product being to achieving ROSATOM’s strategic strategic natural feedstock but also objectives and UN sustainable Figure 13. ARMZ Uranium Holding Co.’s Supply Chain in diverse economic, social and development objectives . environmental effects for operation regions . On the one hand, the For details of JSC Atomredmetzoloto’s business model, Subsidiary JV with Uranium Company strives simultaneously to see Annual Report 2016 . One Holding N V. . increase the positive effect of its Marketing and Sales Policy Priorities (since 2013) Consignee Customers operations and, on the other hand, to minimize its environmental impact . Guaranteed long-term satisfaction of the customers’ (JSC TVEL and For value chain details, see Annual Report 2016 . JSC TENEX) needs for natural uranium JSC TVEL LLC United Uranium Plants The single contact point function for sales of Russian and Kazakhstan Ensuring efficient organization natural uranium on a pari- JSC SCW of sales and sales infrastructure passu basis development ARMZ

Long-term contracting of product JSC TENEX output to ensure development and diversification of uranium mining businesses

12 Annual Report JSC Atomredmetzoloto 2017 13 ARMZ Business Model Contribution in achievement of the UN Sustainable Resources* Value chain Key results* Change in capitals Development Goals

Production Production capital capital 3,005 2,917 Uranium production, Activities Products Uranium production, tonnes tonnes % 3.1 2.8 AFFORDABLE AND Prospecting 2 CLEAN ENERGY Labour productivity, works Labour productivity, million RUB per person million RUB per person Reduction of uranium unit production cost Human Human 6,957 7,347 capital capital Number of employees Obtaining subsoil Uranium Number of employees use rights concentrate 59,447 61,992 Average monthly salary, Average monthly salary, 66% RUB Geological Thermal energy RUB exploration Employee engagement rate Nature Nature 520 411.5 capital capital Environmental protection Environmental protection expenses, million RUB expenses, million RUB Pre-design Sulphuric acid engineering 517.1 523.9 Uranium mineral resource base Uranium mineral resource base (Russian assets), ktonnes (Russian assets), ktonnes 77% Coal Design of production Financial Financial (thermal) Reduction of borrowed 4.9 facilities 4.9 capital capital funds Capital expenditures, Capital expenditures, billion RUB billion RUB

22.1 R&D, Electrical power 17.8 innovations Revenue, Revenue, billion RUB billion RUB % Social 57 Social Manufacturing 212.6 Construction of 212.9 capital capital of mine machinery Level of support for nuclear Social payments to employees, production facilities Social payments to employees, energy in the Russian million RUB million RUB Federation

7.7 7.0 LIFE ON LAND Charity spending, Operation of produc- Drilling, geological Charity spending, million RUB tion facilities: uranium exploration, design million RUB mining and processing and engineering services Intellectual Intellectual 345 209 capital 102% capital Innovation projects spending, Innovation projects spending, million RUB million RUB Integrated investment Reclamation and activities efficiency 6.5 decommissioning 6.4 indicator Intangible assets, Intangible assets, billion RUB billion RUB

14 Annual Report JSC Atomredmetzoloto 2017 15 * As of 2016 * As of 2017 2.1. Strategic Vision and Targets

RESULTS FOR TEN YEARS: NEW SUSTAINABLE DEVELOPMENT PROSPECTS The first decade of the Mining base (producing sized coal, nuclear industry with strategic Division’s newest history saw material scandium products, etc .); feedstock . In relation to its new achievements of its team including, business lines, ARMZ’s initiatives without limitation: • launching new business lines in synchronize with projects of other the mining and adjacent industries divisions aimed at development • socially responsible restructuring raising investments and engaging of rapidly growing markets and of PJSC PIMCU (achieving break- external partners’ competencies . retaining global process leadership of even of uranium production and ROSATOM . preserving resources for further In this connection, value of these development of the enterprise and results is determined not only diversification of its business); with their contribution to general performance of ROSATOM or • active development of drill hole in- responses to challenges associated situ leaching assets (JSC Khiagda with unfavorable conditions . The and JSC Dalur); platform has formed for long- term balanced development of the • increasing depth of processing of company in its capacity of the center the proprietary mineral resource responsible for supply of Russian

STRATEGIC OBJECTIVES OF THE COMPANY In pursuing its long-term strategy, ARMZ focuses on complying with ROSATOM’s strategic objectives . Reflection In the reporting year, the Mining Division site, PJSC PIMCU, continued its thereof in the Company’s made its significant contribution to break-even operations in 2017 and business determines its strengthening market positions of the completed implementation of its Mine strategic goals . Russian nuclear industry and reliable No . 6 project implementation program satisfaction of its feedstock needs in full . growing with the increasing long- Active development of new business term order portfolio . Performance lines allowed the Mining Division not improvement operations continued in only to comply with planned targets 2017 with the total production cost of set by ROSATOM but also to initiate uranium at the division’s enterprises its new mining projects . Fruitful and decreasing by 10% versus the planned concentrated work of the team on level . these and other priorities allowed Development of uranium assets was creating conditions for further accompanied with the growing mineral sustainable development of the resource base (at JSC Dalur) and further company’s business . 2. operations to develop new uranium deposits (at JSC Khiagda and JSC Dalur’s For details, see the Business Diversification section . Strategy sites) . The Division’s largest production and Markets

16 Annual Report JSC Atomredmetzoloto 2017 17 2.2. Contribution to Pursuit of ROSATOM’s 2.3. Strategic Objectives Achieved in 2017 Strategy

In developing its uranium uranium whatever the cost with and implementing design and Program for the implementation of Mine No. 6 Project mining, ARMZ relies on ensuring safety and competitive technical solutions, and cost completed in full ROSATOM’s needs and market production cost being the cutting to preserve business conditions . Russian enterprises priorities . This approach is stability regardless of external have no objective to produce supplemented with identifying conditions . Ash dump at Krasnokamensk TPP launched

Physical launch of the mining and processing complex ensured Figure 14. Strategic Goals of ROSATOM at JSC Khiagda’s Vershinnoye Deposit

JSC Khiagda permitted to perform commissioning of its Istochnoye Deposit (Placer No.1)

INCREASING INTERNATIONAL MARKET SHARE REDUCTION OF PRODUCTION COSTS DEVELOPMENT OF NEW AND THE LEAD TIME PRODUCTS FOR THE RUSSIAN AND INTERNATIONAL MARKETS

MINING DIVISION STRATEGIC OBJECTIVES GUARANTEED SATISFACTION OF ROSATOM STATE MAINTAINING COMPETITIVE PRODUCTION COST OF STABLE DEVELOPMENT OF THE DIVISION, ATOMIC ENERGY CORPORATION’S NEED FOR RUSSIAN URANIUM INCLUDING BY BUSINESS DIVERSIFICATION URANIUM

KEY PRIORITIES OF URANIUM MINING DEVELOPMENT IN THE RUSSIAN FEDERATION:

A number of actions was implemented to KEY PRIORITIES OF URANIUM MINING Significant foundations were laid for Other promising uranium projects obtain the status of the RPS enterprise by DEVELOPMENT IN THE RUSSIAN the above priorities: including the Elkon Project are JSC Khiagda FEDERATION ARE AS FOLLOWS: in the strategic reserve until • in 2017, PJSC PIMCU fully external conditions improve • starting construction of completed its work program for The technical design for the development of sustainably . They are scheduled PJSC PIMCU’s mine No . 6 Mine No . 6 project to start its for commissioning by 2030 . Dalmatovskoye Deposit was approved (launching it in 2023 would allow construction in 2018 when the maintaining uranium mining enterprise will be celebrating its In the specified period, volumes after retirement of 50th anniversary; JSC Atomredmetzoloto’s core The subsoil use license was received for and operational mines); business is uranium production . design work started at Dobrovolnoye Deposit JSC Khiagda’s site saw pilot • Work to develop operational maintaining economic efficiency operations at Istochnoye Deposit . • enterprises will be supplemented of uranium mining at JSC Dalur Additionally, physical launch The positive conclusion was received for with implementation of projects and increasing uranium mining at was performed of the mining the Pilot Production Site for Uranium ISL at in mining and adjacent industries JSC Khiagda within the framework complex and auxiliary facilities Khokhlovskoye Deposit to ensure growth of the division’s of achieving full capacity . at Vershinnoye Deposit . These business scales and improvement operations were performed to of its social and financial stability . bring the enterprise to its rated Development of the aluminum-scandium master capacity (1,000 tpa of uranium); alloys production process was completed at JSC Dalur • In 2017, JSC Dalur received the license for Dobrovolnoye Uranium Survey was completed for construction of the Deposit . mining and concentration works at JSC The First Ore Mining Company

Semi-commercial process testing of ores at Pavlovskoye Field was completed

18 Annual Report JSC Atomredmetzoloto 2017 19 2.4. Strategic Targets for 2018 PLANS FOR 2018, LONG-TERM AND MID-TERM PLANS

In 2017, ARMZ’s enterprises the enterprise, but also ensure its production level and developing completed their production program cost-effective operation over a long Dobrovolnoye Uranium Deposit . in full . In the future, natural uranium period of time . Within the framework of developing mining is planned to be supported Moreover, in-situ leaching new business lines, further increase PRIARGUNSKY INDUSTRIAL at around three ktpa (subject to enterprises, JSC Dalur and of the Company’s product portfolio MINING AND CHEMICAL UNION demand trends on part of industrial JSC Khiagda, will continue their is provided for . The Division’s consumers) . (PJSC PIMCU) CREATED IN balanced production growth . service enterprises will continue 1968 STILL REMAINS THE Basic priorities of the Company JSC Khiagda, given its significant promoting their services based on remain ensuring the uranium mining potential for development of their existing competencies at new LARGEST URANIUM MINING efficiency, including through the competitive uranium mining, will markets . Implementation of mining ENTERPRISE IN RUSSIA. IN development of new deposits, and continue developing the new projects on partnership principles and 2018, THE ENTERPRISE WILL active development of new business deposits of the Khiagda ore field — organization of strategic feedstock lines . PJSC PIMCU will construct its Istochnoye, Vershinnoye and others . processing engaging adjacent BE CELEBRATING ITS 50TH new mine based on Argunskoye and The objective of the enterprise divisions and external partners will ANNIVERSARY. Zherlovoye fields accounting for more is to reach the capacity of about allow ARMZ to make a material than 40% of the enterprise’s mineral 1,000 tpa of uranium in 2019 with contribution to increase of new resource base . Commissioning of the possibility of increasing it on business revenues within ROSATOM . Mine No . 6 in 2023 will not only keep a long-term horizon . JSC Dalur’s the infrastructure and potential of priorities are maintaining the current

JSC ATOMREDMETZOLOTO JSC DALUR • taking actions to increase the 2.5. Sustainable Development Agenda performance efficiency and increase 102-16 • maintaining the production cost and • performing engineering surveys the labor productivity, reduce the achieving the break-even point for and developing design documents project implementation costs and the Division . for LSU-2 and the near-rail base at terms by at least 5%; Khokhlovskoye Deposit; ARMZ considers contributing to PJSC PIMCU • within the further sustainable development of the public as • performing engineering surveys and one of its constant strategic priorities . SUSTAINABLE DEVELOPMENT CONCEPT IS • commencing construction of Mine development framework of developing design documents for ARMZ strives to pay material attention to No . 6; JSC VNIPIpromtechnologii as an the model of civilization development based on the the pilot plant (PP) at Dobrovolnoye developing communications with regional engineering company: need to establish the global balance of solving social Deposit; administrations, public and environmental • commissioning the second milestone and environmental problems and environmental • implementing PMS; organizations, and education authorities in of the Sredneye tailings’ pond; • commencing construction of protection . For the first time, the term ‘sustainable its operating regions . ARMZ as a socially • commissioning the plant for the pilot production facility for • creating the chemical analytical development’ was used in the Our Common responsible company admits that its production proprietary granulated aluminum and scandium master laboratory; Future report presented in 1987 by the UN Global sustainable development contributes to explosives; alloys; Environmental and Development Commission under • creating the resin quality welfare of its operating regions and areas . Gro Harlem Brundtland . It denoted such society • developing new businesses including • extending the subsoil use license for assessment laboratory . The Holding Company has a significant development model under which satisfying life sized coal, pyrite cinders, lithium and Dalmatovskoye Deposit . JSC THE FIRST ORE MINING influence on the formation of the revenue necessities of the current generation of people does mining machinery; JSC RUSBURMASH COMPANY part of the budgets of the areas of not endanger future generations’ ability to satisfy • commissioning the water drainage operation . Tax deductions, creation of their needs . • implementing the Ready Polygon duct at the Urtuysky strip mine . • develop project documentation new jobs with decent salaries, charitable Project at JSC Khiagda and for the construction of the mining programs, etc . determine the importance JSC Dalur; JSC KHIAGDA and thickening plant at the of the Holding Company for the regions of Pavlovskoye deposit (Novaya Zemlya • commencing commissioning of • switching to the new well design operation . using non-plasticized PVC (NPPVC) archipelago); Istochnoye Deposit; ARMZ conducts a responsible to replace high density polyethylene • complete the engineering survey environmental policy based on: • commencing development of design (HDPE) at JSC Dalur (100% of wells) for the construction of the sea port KEY APPROACHES TO documents for Kolichikanskoye and JSC Khiagda (25% of wells) . complex . • the principles of priority conservation Deposit; of natural ecological systems; SUSTAINABLE DEVELOPMENT JSC VNIPIPROMTECHNOLOGII • developing competencies and • obligatory use of advanced scientific Sustainable development is implementing new methodologies • completing the internal order of achievements and ensuring inseparably linked with the of repair and restoration operations the Holding Company’s production environmental safety; implementation of corporate social (RROs); enterprises in due time and in due responsibility measures aimed quality, and reducing the share of • transparency and accessibility of at improving the quality of life • commissioning the Dzhilinda 110/10 subcontracting; information on the environmental of employees and their families, kV reducing substation (RSS) . aspects of the Company’s activities to promoting stable development of the general public . regions and increasing the welfare of the population in the areas of the Company’s operation .

20 Annual Report JSC Atomredmetzoloto 2017 21 TRINITY OF SUSTAINABLE DEVELOPMENT OBJECTIVES IS INTEGRATED INTO THE COMPANY’S CONTRIBUTION TO ACHIEVING THE OBJECTIVES THE COMPANY BUSINESS AND IMPLIES

AFFORDABLE AND LIFE CLEAN ENERGY ON LAND

ARMZ is in the very first ARMZ’s key strategic Social capital management One of ARMZ’s business process NFC stage and environmental objectives and establishing priorities is ensuring its natural feedstock are environmental partnerships in operating satisfaction of final production is used for protection and sustainable regions are parts of ARMZ’s consumers of uranium conversion into products of use of natural resources at sustainable development feedstock . The Company Participation in maintenance of the Minimizing environmental Social responsibility for safety, health higher processing stages its subsoil use locations . policy . ARMZ strives promotes integrating the global uranium market stability, impact, reasonable subsoil use, and professional development of staff, and NPP nuclear fuel . The The principles of ARMZ’s towards recognition and fair most sustainable solutions national and regional economy, balance resourcesavings, compliance social and economic welfare of operation share of nuclear power in Environmental Policy include appraisal of its employees’ into its supply chain . of reasonable expectations and with international environmental regions, support to local communities, the country’s total power reducing its environmental achievements . The Company ARMZ is continuously stakeholders’ interests standards charity balance is on the growing impact . is sure that additional social monitoring satisfaction trend . Production cost of protection initiatives for its of its customers’ needs in ARMZ also pays much nuclear power is its material employees allow them to natural uranium for the attention to development competitive edge versus feel comforTable Therefore, short and long term, as of advanced processes . other types of electric the Company provides its well as promptly responds During the newest history of power plants . Its moderate employees with the full to any their requests and AFFORDABLE AND LIFE the feedstock industry, the CLEAN ENERGY ON LAND level depends on the cost set of statutory social expectations . Streamlining nuclear industry has been of natural feedstock among guarantees and allows them of finished goods able to increase the share other things . to use additional social warehousing and shipping of environmentally friendly programs . systems is used to improve and economically efficient product quality . in-situ leaching (ISL) . Infrastructure investments are another important of ARMZ is also supporting the Holding Company’s the need for reducing social responsibility . As consumption and processing the Holding Company’s of natural resources . WITHIN THE FRAMEWORK OF THE APPROACH, THE HOLDING COMPANY enterprises are located in different regions of the Russian Federation (Kurgan Region, Republic of Buryatia and Trans-Baikal Territory), ARMZ considers possible social and economic consequences of its decisions and interacts closely with all stakeholders . Maintains continuous dialog Improves the corporate Develops and implements Complies with business with stakeholder to improve governance system innovative processes ethics rules transparency and reportability based on Russian and of the Company’s business international standards

CONTRIBUTION TO ACHIEVING THE UN SUSTAINABLE DEVELOPMENT OBJECTIVES AT THE UN SUMMIT ON SUSTAINABLE ARMZ supports all UN Sustainable DEVELOPMENT IN SEPTEMBER 2015, HEADS Development Objectives and strives OF STATES AND GOVERNMENTS ADOPTED AN to make a material contribution to the objectives that comply with the AGENDA FOR THE PERIOD UP TO 2030, WHICH Company’s business specifics as much INCLUDES 17 SUSTAINABLE DEVELOPMENT as possible . GOALS (SDGS).

22 Annual Report JSC Atomredmetzoloto 2017 23 USD/kg U USD/lb U3О8 THE MINING DIVISION IS DIRECTLY INFLUENCING ACHIEVEMENT OF OTHER SDGS. 45 110 40 CLEAN WATER INDUSTRY, INNOVATION SUSTAINABLE CITIES MARINE ECOSYSTEM PEACE, JUSTICE 6 AND SANITATION 9 AND INFRASTRUCTURE 11 AND COMMUNITIES 14 PROTECTION 16 AND STRONG 90 35 IMSTITUTIONS 96 30 69 70 25 57 Ensure access to and Build resilient Make cities inclusive, Conserve and Promote peaceful and inclusive 50 20 sustainable use of infrastructure, safe, resilient and sustainably use the societies for sustainable water resources and promote sustainable sustainable oceans, seas and development purposes, 15 sanitation for all industrialization and marine resources ensuring access to justice for foster innovation all and creating efficient and June June June April April April Januаry Januаry Januаry transparent institutions based October October October on wide participation at all levels . 2015 2016 2017

SPOT Other UN objectives are not immediately associated with the Mining Division’s business . The Company adheres to them and contributes to achieving them according to its abilities .

Actual Mean $/kg U $/lb U3О8 For details of the contribution to achievement of UN Sustainable Development Goals, see Annual Report 2016 . For information on key sustainable development 2017 Results, see primary sections hereof . Figure 15. Uranium Spot Price Trends

SUSTAINABLE DEVELOPMENT FUNCTIONAL RESPONSIBILITIES

Different business lines existing, sustainable development matters are resolved individually for each line and are allocated among profile units as follows: Global Uranium Production in 2017

social responsibility: Deputy Director environmental environmental responsibility: At year-end 2017, global uranium production under restricted excessive countries . Significant growth was General for Strategy and Business impact: Chief Safety Deputy Director General for production exceeded 58 kt and was mining was observed in Kazakhstan, recorded only in Namibia (due to start Development, and Chief HR Officer; Inspector; Economics and Finance . 6% lower YoY (over 62 kt) . Decreasing Canada, Niger and some other of pilot operation of the Husab mine) .

kt, U 30 2.6. Natural Uranium Market Overview and Outlook 25

20 NATURAL URANIUM MARKET IN 2017 15 Global Demand for and Supply of Uranium 10 As of 2017, the global uranium market demand . Declarations of restricted is estimated at 73 to 74 kt subject to production by some uranium producers 5 NPP reactor needs, and formation of contributed to improvement of market commercial and strategic reserves . conditions but failed to overcome 0 In this connection, the global natural depressive trends . Kazakhstan Canada Australia Namibia Niger Russia Uzbekistan China US uranium production exceeded 58 kt Mean spot price in 2017 was USD last year . The balance of the supply 57 per kilogram of uranium (Ux was ensured with supplies of uranium Consulting*) . 2015 2016 2017 extracted and processed earlier (secondary sources) . For most of the year, the uranium Figure 16. Uranium Production Countries, 2015-2017, thousand tonnes market was unstable on excessive supply not supported with short-term Sources: estimate of JSC Atomredmetzoloto based on press-release and company report data, US Energy Information Administration (U .S . EIA) .

Sources: input data from Ux Consulting*; mean value calculated by JSC Atomredmetzoloto .

* Ux Consulting (UxC) is an independent international company specializing in the research of market environment and predicting nuclear fuel cycle markets . Founded in 1994 . Website: https://www .uxc .com/

24 Annual Report JSC Atomredmetzoloto 2017 25 Nine key producing countries accounted for JSC NAK Kazatomprom has been the FORECAST FOR YEAR 2018 circa 97% of global uranium production . largest uranium mining company Kazakhstan, Canada and Australia retained globally since 2010 . ROSATOM Moderately optimistic assessments their leading positions . Russia ranks 6th including ARMZ and Uranium One are predominant in relation to the among the leading countries (5% of global (shown separately) produced more uranium market situation in 2018 . At production) . than 8 .0 thousand tonnes of uranium in the same time, whether the will be implemented depends on the scale nuclear hydro 2017, which makes up circa 14% of the power power global production (global rank 4) . and excessive production reduction rates of key producers (their relevant kt, U plans were announced last year and 15 earlier) . Efforts of certain players may be significantly balanced with increasing production of enterprises GLOBAL reaching full capacity . ENERGY 10 BALANCE In this connection, highly volatile prices may continue in 2018 . The situation, like in the previous years, coal gas 5 may be influenced materially by generation generation situational factors such as significant events of key market players and problems solved by them to ensure Figure 18. Global energy balance 0 business stability . Orano/ Uranium CNNC Navoi NAK Cameco ARMZ Rio Tinto BHP AREVA* One and CGN MRW Kazatomprom URANIUM MARKET PROSPECTS Global Natural Uranium Market Global Nuclear Power Development Outlook 2015 2016 2017 Outlook The situation in the global market will In the long run, the demand for As of 2017, nuclear generation remain unstable in the short term . Its uranium is expected to increase on Figure 17. Uranium Production by Major Companies in 2015–2017, remains one of the basic components stable improvement and uranium price intense construction of new NPPs . thousand tonnes of global energy balance satisfying recovery are predicted in the medium To cover the demand and replace term (from early 2020s) driven by the disappearing production volume, Sources: company press release and report data (Orano / AREVA, CNNC and CGN, Navoi MRW – all consumers’ needs in relation to JSC Atomredmetzoloto’s estimate. Production volume is recorded proportionally to ownership interests. safety, reliability, environmental and following: existing deposits will need to launch economic efficiency, etc . new more expensive projects . Growth • increasing demand as NPPs of such trends from the mid-2020s will The most active growth of nuclear are restarted in Japan, and be contributing to further market price power in the future is expected in newly constructed units are growth . According to the forecast of China, India, Middle East (UAE, Iran, commissioned in China, India, the the World Nuclear Association (WNA), Turkey and Egypt) and other world UAE and other countries, most of global demand for uranium may reach which do not have ready uranium MERGERS AND ACQUISITION IN In particular, JSC NAK Kazatomprom regions . Some developed countries, 84 kt by 2030 . ROSATOM INCLUDING ARMZ primarily in Western Europe, are resources; URANIUM INDUSTRY plans additional uranium mining AND URANIUM ONE (SHOWN Natural uranium production will grow reduction in Kazakhstan in 2018 to expected to gradually reduce their • decreasing supply due to intense 2017 saw further decrease in SEPARATELY) PRODUCED MORE in line with the demand Trends . The 2020 . Cameco announced suspending nuclear generation due to their depletion of existing uranium mergers and acquisitions (M&A) . THAN full potential for increasing production operations at McArthur River in focus on large-scale development of deposits, long time (up to 10 Volatile uranium market contributed by 2030 will be at least 87 .000 tonnes Canada for 10 months in 2018 . renewable energy . years) and resource cost of new to decreasing asset values and of uranium . Therefore, no deficit AREVA* announced further production deposit development; insufficient financing for organizing is expected, even with decreasing reduction at its Niger enterprises 8,000 major deals . Key market players • decreasing deliveries from secondary deliveries . (planned as of 2018) . TONNES OF URANIUM IN 2017, secondary sources as their liquid showed no activity in M&A but used WHICH MAKES UP CIRCA their efforts to develop their asset In view of the above, development portion is used; portfolios formed earlier . rates of most existing projects • increasing long-term contracting were low . An exception to this was (in relation to deliveries until DEVELOPMENT OF EXISTING AND Namibian Husab (owned by Chinese 14% 2025) . PROMISING PROJECTS IN 2017 CGN) . In 2017, the enterprise running OF THE GLOBAL PRODUCTION in the pilot operation mode produced In the reporting year, major uranium circa 0 .9 kt of uranium . producers responding to continuing adverse trends supplemented Junior companies continued cost cutting and investments with streamlining key projects (in Canada,

production restrictions . Relevant plans Australia, the US and some other aimed at rebalancing the market were countries) to commission them at announced by JSC NAK Kazatomprom, the uranium market growth stage . Cameco, AREVA* and other companies . Nonetheless, the work rates for most THE FULL POTENTIAL The total reduction of uranium mining, of such projects were also low due to FOR INCREASING provided such plans are implemented, the difficulties in raising financing and may be 7 to 8 kt in annualized terms . ensuring product sales . PRODUCTION BY 2030 87,000 *In January 2018, AREVA announced change of its name to Orano within the restructuring framework . TONNES OF URANIUM

26 Annual Report JSC Atomredmetzoloto 2017 27 3.1. Corporate Governance System 3.1.1. Corporate Governance

INFORMATION ON COMPLIANCE ROSATOM WITH PRINCIPLES AND RECOMMENDATIONS OF THE CORPORATE GOVERNANCE CODE Certain provisions of the Corporate 100% Governance Code recommended by Letter of the Bank of Russia No . 06- 52/2463 dd . 4/10/2014 are applied by JSC Atomredmetzoloto in practice, 1.241% JSC Atomenergoprom 100% taking into account the specifics of the legal status of ROSATOM, established by regulatory legal acts of the Russian Federation which provide for single management of nuclear industry 83.220% entities, and are reflected in a number of local regulations .

AUTHORIZED CAPITAL AND JSC Atomredmetzoloto JSC TVEL STOCKHOLDER OF ARMZ URANIUM 15.539% HOLDING CO. G102–10 As of 31 December 2017: Figure 19. Shareholder Structure as of December 31, 2017 • JSC Atomredmetzoloto’s authorized capital made up RUB 26 .100 .829, 138 • The Company offered Table 1. Shareholder Structure Trends in 2015-2017, % 26 .100 .829 .138 ordinary registered Interest in JSC Atomredmetzoloto, % shares with a par value of RUB 1 00. each (issue registration number JSC TVEL as of as of as of 12/31/2017 1-01-03912-А); 12/31/2015 12/31/2016 • the total number of persons JSC Atomenergoprom 82 .574 82 .574 83 .220 registered with the shareholder registry is three (ROSATOM JSC TVEL 16 .137 16 .137 15 .539 State Atomic Energy Corporation, ROSATOM 1 .289 1 .289 1 .241 JSC Atomenergoprom, JSC TVEL) .

MANAGEMENT SYSTEM G102-18 3. Shareholders Meeting Governance Performance JSC ATOMREDMETZOLOTO’S Board of directors Auditor ANNUAL REPORT 2016 HAS BEEN APPROVED BY THE RESOLUTION OF THE BOARD OF DIRECTORS ON Director General 24 MAY 2017. Figure 20. Structure of Corporate Governance Bodies of JSC Atomredmetzoloto

28 Annual Report JSC Atomredmetzoloto 2017 29 G102-19 G102-20 CONTROL AND MANAGEMENT BODIES G102-21 Vladimir S . Vysotskiy G102-22 G102-23 G102-24 GENERAL SHAREHOLDERS MEETING BOARD OF DIRECTORS From 1/1/2017 until 6/26/2017, Member of the Board of Directors since 12/10/2014 G102-25 G102-26 the Board of Directors elected by Born in 1954 in Komarino village, Gorodoksky district of Lvov region, Ukrainian SSR . Graduate of the Military Academy of the General G102-27 The General Shareholders Meeting The Board of Directors carries the ordinary General Shareholders Staff of the Russian Federation Armed Forces G102-28 (GSM) is the supreme management out general management of the G102-29 Meeting (minutes No . 25 dd . G102-30 body of JSC Atomredmetzoloto . Company . The competence of the G102-31 6/23/2016) was composed of: 2007 – 2012 Supreme Commander of the Russian Federation Navy, Admiral G102-32 GSM’s authority, convocation and Board of Directors is set forth in the organization procedures are defined provisions of the Company’s Articles 1 . Alexander M . Lokshin, Chairman of 2013 – until now Deputy Director General, Deputy Director General for Special Projects, JSC Atomredmetzoloto by the provisions of the Company’s of Associations . the Board of Directors; Vladislav I . Korogodin Articles of Association, as well as No members of the Board of Directors 2 . Vladimir N . Verkhovtsev; the regulatory acts of the Russian Member of the Board of Directors since 9/7/2007 hold JSC Atomredmetzoloto’s shares . Federation . 3 . Vladimir S . Vysotskiy; Born in 1969 in Moscow . Graduate of Moscow Physical and Technical Institute The members of the Board The Company promptly informs its 4 . Vladislav I . Korogodin; of Directors are nominated as set 03 .2010 – until shareholders both about the date Deputy Director of the NPC Directorate, Director for NFC LC and NPP Management, ROSATOM forth in Art . 53 of the Federal Law On now of GM and the results of voting at 5 . Ekaterina V . Lyakhova . Joint-Stock Companies . the meeting . Relevant information is From 6/27/2017 until 12/31/2017, Ekaterina V . Lyakhova posted on the official website of the JSC Atomredmetzoloto’s Board of the Board of Directors elected by Member of the Board of Directors since 6/30/2011 until 6/26/2017 Company . Directors is convened as required the ordinary General Shareholders by the Chairman of the Board of Born in 1975 in Ekaterinburg . Graduate of the Urals State Law Academy and Universiteit Antwerpen Management School In 2017, two GSMs were held Meeting (minutes No . 29 dd . Directors on its own initiative, on passing resolutions on the Company 6/27/2017) was composed of: 04 .2011 – until request of the Board member, Director Deputy Director, JSC Atomenergoprom governance matters including: now General or auditor . 1 . Alexander M . Lokshin, Chairman of the Board of Directors; • approval of the restated Articles 07 .2011 – until Deputy Director of the Directorate for Nuclear Power Complex, Director for Investment and Operation of Association; For details, see section 3 .1 .2 . Report of the Board of 2 . Oleg S . Barabanov; now Management, ROSATOM, Director for Economy and Investments, ROSATOM Directors on the Results of the Company Development by • creation of the Company’s Priority Business Lines 3 . Vladimir N . Verkhovtsev; governing bodies; The Board of Directors consists of five 4 . Vladimir S . Vysotskiy; • distribution of profit for reporting members . The Chairman of the Board period 2016 . of Directors and the Director General 5 . Vladislav I . Korogodin . are different persons . No members of the Board or the Director General executed any deals to acquire or dispose of the Company’s shares in 2017 . DIRECTOR GENERAL The Director General in its capacity of the sole executive body manages current operations of the Company . Table 2. Backgrounds of JSC Atomredmetzoloto’s Board of Directors Members* The Director General of JSC Atomredmetzoloto is Vladimir Alexander M . Lokshin N .Verkhovtsev* elected by the of the Company . The amount of Member of the Board of Directors since 6/30/2014, President since 7/1/2014 resolution of the extraordinary General remuneration is set forth by the Shareholders Meeting (minutes No . 15 General Shareholders Meeting . Born in 1957 in Chita . Graduate of Leningrad Kalinin Technical Institute . Honored Energy Engineer of the Russian Federation of 5/27/2013) . Members of the Board of Directors 06 .2008 – Deputy Director General, Deputy Director General – Head of the NPC Directorate, First Deputy Director General for V .N . Verkhovtsev owns no shares of who are full-time employees of until now Operation Management of ROSATOM JSC Atomredmetzoloto . JSC Atomredmetzoloto receive Oleg S . Barabanov In accordance with requirements of their wages in accordance with the Harmonized Industrial Remuneration Member of the Board of Directors since 6/27/2017 art . 69 of the Federal Law On Joint- Stock Companies, Art . 9 of the ARMZ System established by the ROSATOM Born in 1971 in Moscow . Graduate of Moscow Ordzhonikidze State Geological Exploration Academy, Ph .D . (Economics) Article of Association, the Director for joint-stock companies of the General arranges for implementation Corporation and subsidiaries of 2011 – until now Treasure Director, Development and Restructuring Director, ROSATOM of resolutions of the Company’s JSC Atomenergoprom . Remunerations General Shareholders Meeting and and compensations to the members Vladimir N . Verkhovtsev Board of Directors . of the Board of Directors are paid in accordance with labor contracts and Member of the Board of Directors since 6/30/2014 KEY PROVISIONS OF THE valid local regulations on payroll . Born in 1955 in Lyal Mikar settlement, Jarkurgan district of the Surkhandarya Region, Uzbek SSR . Graduate of F .E . Dzerzhinsky Military REMUNERATION AND/OR The Staff Performance Management Academy, Military Academy of the General Staff of the Russian Federation Armed Forces, Ph .D . (Science) REIMBURSEMENT POLICY, DETAILS System based on key performance indicators (KPI) implemented at 09 .2011 – OF REMUNERATIONS AND/OR Deputy Director General, Director General, JSC Atomredmetzoloto ARMZ plants provides evaluation of until now REIMBURSEMENTS achievements of the Company as a G102–35 G102–36 For their participation in operations whole, as well as individual managers of the Board of Directors, members and employees . The KPI system is a of Board of Directors may be strategic and day to day management *For background details, see the Board of Directors paid remuneration depending on tool that allows to plan performance *Data for 31 12. .2017 section . financial and economic performance at all levels of the company .

30 Annual Report JSC Atomredmetzoloto 2017 31 Table 3. Target Key Performance Indicators of JSC Atomredmetzoloto (KPI) for 2017

KPI Compliance Level KPI Name, KPI Measurement Unit Target Value for 2017 Actual Value for 2017

Adjusted free cash flow (AFCF) of ROSATOM (subject to the Mining Division 285 .0 308 .7 AFCF compliance), RUB bn

Mining Division AFCF, RUB bn 1 .5 2 .1

Integral Investment Performance Indicator, %* 100 .00 102 .3 MANAGEMENT (as of 31 December 2017) Comprehensive Costs, RUB bn 15 .9 15 .6

Labor Productivity, Million RUB / person 3 .1 2 .79

Stock Reduction, RUB bn -30 -45 .7

Incomplete Construction / Equipment Performance, % 100 90 .98

Employee Engagement Rate, % 57 66 VLADIMIR N . VERKHOVTSEV VICTOR S . SVYATETSKIY VLADIMIR S . VYSOTSKIY LTIFR and Injury Severity Reduction at Enterprises’ Production Sites, including 0 .54/30% 0 .28/33% Contractors, % Director General First Deputy Director General – Deputy Director General for Executive Director Special Projects No INES Level 2 and Higher Breaches 0 0

*Exclusive of uncontrolled scenario conditions factors (prices and inflation)

Table 4. Target Key Performance Indicators of JSC Atomredmetzoloto (KPI) for 2018

KPI Compliance Level KPI Name, KPI Measurement Unit Target

ROSATOM AFCF (inclusive of the Mining Division AFCF compliance), RUB bn 298 .0

NFC AFCF, RUB bn 120 .7*

EBITDA Contribution (NFC), RUB bn 116

Integral Investment Performance Indicator, % 100 .0

Comprehensive Costs, RUB bn 15 .4 Labor Productivity, Million RUB / person 2 .35 VLADIMIR D . MORGUN VICTOR M . ZAKHAROV MARINA I . LIBORAKINA ILYA I . KOROLEV NFC Stocks, RUB bn 109 Deputy Director General for Deputy Director General for Deputy Director General Deputy Director General for Security Economy and Finance for Strategy and Business Administration Reduction of Unused Incomplete Construction / Equipment for Installation / ITA, RUB bn 0 .3 Development

Employee Engagement Rate, % 61

LTIFR and Injury Severity Reduction at Enterprises’ Production Sites, including Contractors, % 0 .49/30%

No INES Level 2 and Higher Breaches 0

*Due to the changes to the AFCF calculation perimeter of the divisions, data for 2018 and previous years are not comparable . From 2018, the comprehensive AFCF of JSC Atomredmetzoloto, JSC TVEL and JSC TENEX will be calculated .

In the reporting period, the amount of remunerations, as well as the amount of expenses connected with execution of functions STANISLAV M . ANIKEEV VERA B . SOROKINA ILYA A . YAROSHEVICH VSEVOLOD YU . GALINOV of members of the Board of Directors compensated by JSC Atomredmetzoloto, was RUB 40 .0 million . HR Director Chief Accountant Director of Corporate and Legal Chief Inspector for Safety Affairs Control

(as of 31 December 2017)

32 Annual Report JSC Atomredmetzoloto 2017 33 COMMITTEES OF JSC ATOMREDMETZOLOTO 3.1.2. Report of the Board of Directors on the Results of the

INVESTMENT COMMITTEE Company Development by Priority Business Lines

2017 RESULTS In 2017, 21 meetings of the Board • issuance of recommendations on • approval of the resolution to issue G102–15 Nine meetings of JSC Atomredmetzoloto’s Investment Committee (the Committee) were held to: of Directors were held passing profit distribution at the annual additional securities and approval • approve investment limits of costly projects for 2018; resolutions on critical Company General Shareholders Meeting; of amendments to it; • approve changes to passports of the projects for Integrated Uranium Production Performance Improvement for PJSC PIMCU, governance matters including: • approval of the auditor for 2017 • passing of resolutions to R&D of PJSC PIMCU, Uranium Production Infrastructure Retention of PJSC PIMCU, Reconstruction of Hydro Technical • approval of the Company and and determination of its service purchase shares in JSC Khiagda, Structures of PJSC PIMCU, PJSC RUSBURMASH and JSC VNIPIpromtechnologii; Holding Company’s budget for cost; JSC The First Ore Mining • approve changes to the long-term development plan of JSC Dalur . 2017; Company, JSC UMC Gornoe 18 matters were reviewed in total, 33 investment resolutions were passed . • passing of the resolution to offered within the framework of During the year, membership of the Committee was updated . The Committee included representatives of JSC Atomredmetzoloto, • approval of target key increase the authorized capital by additional securities issuances . ROSATOM and subsidiary companies (PJSC PIMCU, JSC Khiagda, JSC Dalur) . The President of the Committee is the Director performance indicators (KPIs); offering additional shares; General of JSC Atomredmetzoloto, Mr . V .N . Verkhovtsev . All meetings were held in absentia . • determination of remuneration The Board of Directors considered 28 For details, see section 4 2. 3. . Investments . payable to the top management; agenda matters in total .

RISKS COMMITTEE

2017 RESULTS Thirteen remote meetings were held of JSC Atomredmetzoloto’s Risks Committee (the Committee) to: 3.2. Risk Management • approve/adjust intragroup borrowing rates for granting and raising loans by organizations of the Mining Division (interest risk management); • approve/adjust monthly limits of intragroup lending to organizations of the Mining Division (loan risk management); • approve the currency risk management strategy of the Mining Division . 3.2.1. Risk Management System The President of the Committee is the First Deputy Director General, Chief Operating Officer, Mr . V .S . Svyatetskiy . JSC Atomredmetzoloto shares the and obtained the certificate of 2018 will see revision of all project For more details, see section 3 .2 . Risk Management single risk management approach compliance with ISO 9001:2015 and risks in accordance with the new with ROSATOM, taking into account ISO 14001:2015 (the new version methodology . This work will allow risks during business planning . As a focuses largely on risk management focusing on risk management CHARITY COMMITTEE part of risk management activities, procedures) . operations and reducing possible 2017 RESULTS critical risks and their owners have consequences of risk occurrence . been identified, while the measures to PLANS FOR 2018 AND THE FUTURE Three Committee meetings were held (one personal and two remote ones) . Work will continue to implement the manage risks have been developed and • Charity priorities for 2017 were supporting the Company’s operation regions: Given publication of the Harmonized project for Development of Argunskoye implemented . • holding the Social Projects Competition of the City of Krasnokamensk municipality and Industrial Methodological Guidelines and Zherlovoye fields and Construction • program for support of education institutions in the Kurgan Region . In 2017, JSC Atomredmetzoloto for Compliance with Investment of Mine No . 6 in the Trans-Baikal The President of the Committee is the Deputy Director General for Strategy and Business Development, Ms . M . I . Liborakina . successfully passed external audit Project Risk Management Procedures, Territory .

For more details, see section 3 .6 . Social Capital Management

1 16 2

1. Currency Risk 15 3 2. Tax Risk 3. Interest Risk REPORT ON PAYMENT OF DECLARED MAJOR AND RELATED PARTY CORPORATE REGISTRAR DETAILS 4. Loan Risk (ACCRUED) DIVIDENDS ON COMPANY TRANSACTIONS The registrar of 14 4 5. Commodity Risk (uranium) 6. Production asset loss Risk SHARES In 2017, the Company did not execute JSC Atomredmetzoloto is Open Joint- 7. Industrial Safety Risk any major transactions that require Stock Company Registrar R .O .S .T . JSC Atomredmetzoloto’s dividend 8. Environmental Risk approval under the Federal Law On Registrar Details: policy is set by the management 9. Change of Law Risk Joint Stock Companies . 13 5 bodies with an account of the required OGRN 1027739216757, 10. Reputation Risk investment in compliance with the From 1/1/2017 until 2/8/2017, INN 7726030449 11. Staff Risk Company’s strategy . JSC Atomredmetzoloto executed no Location: Moscow, 18/13 Stromynka 12. Labor Safety Risk related party transactions that require From 2014 until 2017, no dividends Street . 13. Social and Political Risk in operation regions were declared or paid . approval of the governance body in 6 Phone/Fax: (495) 771-73-36 . 12 14. Investment project Risk (uranium) There are no declared and unpaid accordance with the Federal Law On 15. New Investment Project Risk dividends . Joint-Stock Companies . 16. Compliance Risks Payment of dividends for 2017 is not As of 2/9/2017, the restated Articles 11 7 planned . of Associations were enacted containing the provision on non- 2015 2016 2017 application of Chapter 11 of Federal 10 8 Law No . 208-FZ dd . 12/19/1995 9 On Joint-Stock Companies to the Company . Figure 21. Radar of Key Risks of JSC Atomredmetzoloto in 2015-2017

34 Annual Report JSC Atomredmetzoloto 2017 35 3.2.2. Key Risks and Their Management Risk, its Radar number Key Risk Management Performance in 2017 Risk Trends and key risk factor

Table 5. Key Risks and Their Management Critical risks ranking 5 and higher are shown

The following actions were taken to manage the risk in the Trans-Baikal Territory: • disclosure of information on plans and deadlines for construction of PJSC PIMCU’s Mine No . 6 in the Trans-Baikal Territory’s mass media, as well as on allocation of funds for RISK TRENDS: increase decrease no material changes construction and installation work, and commencement of competitive procedures, including via the PR function of the Government of the Trans-Baikal Territory, including opinion leaders and regional governor; • organization of discussion of Mine No . 6 construction at the session of the Legislature of the Trans-Baikal Territory resulting into over 300 positive publications in the regional and federal mass media; • informing employees of PJSC PIMCU and residents of Krasnokamensk of the time Risk, its Radar number Key Risk Management Performance in 2017 Risk Trends schedule of Mine No . 6 construction for 2018, including on Informing Days and via social and key risk factor networks; • persuading employees of PJSC PIMCU and residents of Krasnokamensk that some 1. Material ranking of the currency risk in the Holding Company is due to the presence of the production actions (such as increasing floor height between horizons of operational currency component in the Company’s income as well as due to the significant volatility of Currency Risk mines) are taken for further use in construction of Mine No . 6 . the US dollar . Due to lower than planned USD exchange rate, hedging deals were ineffective (unfavorable changes to during the year . Key efforts focused on possible transfer of the currency risk to the buyer . In Result: the balance of positive and negative appraisal of nuclear power industry exchange rates) 2017, negotiations were held on changes to pricing of products sold allowing to minimize development programs by the Russian population was 57% in 2017 . the currency risk impact on JSC Atomredmetzoloto’s financial performance in 2018 . Result: minimized currency risk impact on 2018 performance .

The Holding Company’s primary production enterprise (PJSC PIMCU) is the backbone 13. 5. The risk is due to continuing decrease of uranium market prices in 2017 . Minimization enterprise and all resolution on development / adjustment of its operations influence the of the impact of this type of risk was limited by the methods of natural hedging and was Social and Political Risk regional (Krasnokamensk) social status materially . In 2017, work continued to launch new Commodity Risk achieved due to balancing of raw materials’ sales schedules by various pricing contract in Operation Regions businesses in Krasnokamensk (PSEDA) and actively promote the project for Development of (decreasing uranium mechanisms taking into account the actual and predicted Trends of uranium price indicators Argunskoye and Zherlovoye fields . Construction of Mine No . 6 in the Trans-Baikal Territory . (aggravating prices) due to flexible contract terms by managing available sources of raw materials . In 2017, Commencement of actions for implementation of the project allowed keeping the peace in public tensions in negotiations were also held on changes to pricing of products sold allowing to minimize the the region . Krasnokamensk) commodity risk impact on JSC Atomredmetzoloto’s financial performance in 2018 . Implementation of social actions continued including: Result: due to the management of implementation schedules, the impact of unfavorable • ensuring social protection of employees (voluntary healthcare insurance, accident uranium price Trends on the financial result of the Company business was reduced by more and disease insurance, reimbursement of vacation travel costs, retirement programs, than RUB 100 MM . Minimized commodity risk impact on 2018 performance . financial aid); • operation of official communities in VK and OK social networks (answers of The risk is due to possible dissemination of negative information on ROSATOM and PJSC PIMCU’s top managers and key specialists to questions of employees and local 10. its entities; major accidents in nuclear industry; protests against deposit development residents); Reputation Risk (Dobrovolnoye uranium deposit in the Kurgan Region); massive public concern about the future of the enterprise (construction of PJSC PIMCU’s new Mine No . 6 in Krasnokamensk, • operation of the miners’ wives club (informing employee family members of the state of (changes to stakeholders’ Trans-Baikal Territory) . things at the enterprise, its plans, development prospects and key events); perception of the Division’s reliability and The following actions were taken to manage the risk in the Kurgan Region: • interaction with the public employment service on the matters of assisting to public employment as well as public retraining and vocational guidance operations; attractiveness) • inauguration of JSC Dalur’s Information Center at Zverinogolovskoye Village in the Kurgan Region • holding the conference PIMCU – Path to Development . • installation of an electronic display showing radiation level on the Administration Result: no strikes and protests at the enterprise . Building of Zverinogolovskoye District of the Kurgan Region; Trend: the risk has grown due to insufficiently clear development prospects of • monthly disclosure of information on JSC Dalur’s operation in local mass media, Krasnokamensk . including opinion leaders on environmental monitoring results; • holding round tables, meetings of the regional Public Chamber and independent environmental Council in Kurgan and Zverinogolovskoye engaging experts and scientists 14. The Mining Division’s business is associated with development of deposits and mining of and resulting into resolutions and explanations in mass media on safety of deposit natural uranium in the Russian Federation . To reduce projects risks, actions are taken on a development subject to mining and geological conditions; Investment Project Risk - continuous basis to identify risks affecting financial performance of projects, and actions Uranium to mitigate them are developed and taken . Resolutions on further project development are • issue of the special information publication for residents of Zverinogolovskoye District passed subject to possible risk impact . of the Kurgan Region; (risk of the projects’ failure to achieve the set In 2017, ROSATOM made changes to documents governing project risk management . • regular visits of local community to JSC Dalur’s production sites . targets) Analysis of uranium mining project risks was revised in accordance with new recommendations . Result: The Company’s uranium mining project portfolio efficiency has been confirmed by ROSATOM; it is maintained at a stable positive level or increasing . Trend: risk growth is due to changed deadlines for the project for Development of Argunskoye and Zherlovoye fields . Construction of Mine No . 6 in the Trans-Baikal Territory .

36 Annual Report JSC Atomredmetzoloto 2017 37 Risk, its Radar number Key Risk Management Performance in 2017 Risk Trends and key risk factor 3.3. Internal Control System. Assets Protection

To diversify its business, the Holding Company is implementing projects related to new 15. businesses (mining of associated metals, new products and development of non-uranium New Investment Project deposits) . In 2017, JSC Atomredmetzoloto controlled implementation of four new business Risk investment projects . Since implementation of such projects is associated with high degree INTERNAL CONTROL SYSTEM of uncertainty, the projects are analyzed for risks that may adjust their implementation (risk of projects’ failure progress . The following actions are taken: Key performance indicators of the HR PERFORMANCE OF THE INTERNAL to achieve set targets) internal control system are as follows: • the project team identifies risks and develops actions to manage them; analysis is CONTROL DIRECTORATE: repeated or actions are taken to modify risk management and update it; • no any actual incidents or material comments based on results of • JSC Atomredmetzoloto’s risk management team analyzes completeness of risk THE EXECUTIVE OF THE INTERNAL identification and adequacy of actions developed to mitigate them; inspections performed by external CONTROL SERVICE OF JSC RUSBURMASH, control bodies in relation to • resolutions for further project implementation are passed subject to identified risks and organizational processes (earlier MR. M.A. KOVALENKO WAS INCLUDED INTO their mitigation possibilities . inspected by the Company’s THE TALENT POOL OF ROSATOM; Key risks for projects implemented in 2017 were absence of project financing sources, internal control directorate); decreasing price of products and presence of additional project operations . Operations were EXECUTIVE OF THE INTERNAL CONTROL performed to mitigate such risks, but actions taken were unable to compensate for them in • efficient use of resources during full, which resulted in extension of such projects’ implementation deadlines . control actions . SERVICE OF PJSC PIMCU, MR. BELYKH N.V. BECAME THE FINALIST OF THE ALL-RUSSIAN Result: The Holding Company’s project portfolio efficiency has been confirmed by No comments of state and other ROSATOM; it is maintained at a stable positive level . external monitoring bodies made LEADERS OF RUSSIA COMPETITION. following the results of process audits Trend: risk growth is due to extension of project implementation deadlines . in 2017 were identified . Resource use efficiency in 2017 exceeds its target value .

For details of the internal control system, its tasks and Table 6. Dynamics of Control Events in 2015-2017 operating principles, see Annual Report 2015 .

2017 RESULTS: Indicator 2015 2016 2017 • all scheduled actions were taken to inspect financial and economic Control Activities, including by types, pcs . 22 34 50 operations of subsidiaries and the • Control and Audit Activities 2 6 6 riskiest processes; • Expert and Analytical Activities 17 24 36 • two RPS projects were developed and implemented to increase • Internal Audit 3 4 8 efficiency of controls; Deviations Identified, pcs . 52 73 103 • employees of internal control Employees brought to Disciplinary Liability and audit business unit of ARMZ 13 30 28 Uranium Holding Co . successfully based on Results of Control Activities completed independent attestation in accordance with the Internal Control Specialist (Internal Controller) professional standard .

G102–17 G205–1 PLANS FOR 2018: G205–2 2017 RESULTS: Development and improvement of the risk oriented approach to planning and • actions from the Anti-Corruption implementation of control activities Plan for 2016 and 2017 were aimed at increasing transparency level taken; JSC Atomredmetzoloto’s of the Holding Company enterprises; regulations set forth in the Federal business processes, elimination of Law On Anti-corruption were financial, production and reputation updated and enacted; risks as well as improvement of • the commercial secrecy mode narrow-profile competencies of is being improved . In 2017, control business units’ employees . actions were taken subject to requirements set forth in the SAFETY MANAGEMENT SYSTEM Harmonized Policy for Commercial Secrecy Protection in Nuclear JSC Atomredmetzoloto takes Industry to harmonize the integrated actions to ensure economic restricted document electronic security, asset protection, prevention turnover among the Holding of corruption offences . Company’s enterprises and nuclear industry organizations .

38 Annual Report JSC Atomredmetzoloto 2017 39 PHYSICAL PROTECTION OF Table 7. Holding Company’s Procurement Structure NUCLEAR FACILITIES THERE WAS NO UNAUTHORIZED INGRESS INTO Indicator 2015 2016 2017 The staff of physical protection SECURE ZONES OF THE HOLDING COMPANY’S Share of Procurement using Public Open Competitive Procedures within the Uniform Industry business units of the Holding NUCLEAR FACILITIES. 99 99 99 Company’s enterprises is fully Procurement Standard Framework staffed by employees who completed JSC Atomredmetzoloto’s Procurement Amount, Million RUB 422 317 519 additional training at specialized courses . In 2017, security executives Total Procurement Amount of the Holding Company, Million RUB 22,936 17,242 12,670 completed scheduled knowledge PLANS FOR 2018: checks and obtained Rostechnadzor’s Parallel to improvement of integrated JSC Atomredmetzoloto’s Savings, Million RUB 13 5 6 technical and engineering physical permission to operate in nuclear • implementation of the Plan for Total Savings of the Holding Company from Public Competitive Procurement Procedures, Million protection, 2015-2017 saw operations 1,062 770 896 power use industry . Improvement of Anti-Corruption RUB for security cost cutting at the Holding Operations in ROSATOM State Actions are taken on a scheduled Company’s facilities with preservation Atomic Energy Corporation; basis to improve and upgrade physical of high safety level . protection of nuclear facilities . Over • improvements of actions aimed at RUB 30 MM were provided to perform corruption prevention; Table 8. Procurement Structure by Cost, % such operations . QUANTITY AND RESULTS • building and upgrading physical OF PHYSICAL PROTECTION ARMZ Uranium Holding Co ,. in accordance with ROSATOM’s Within the agency concept of protection systems at the Holding not exceeding RUB 1 MM 2 .4 procurement policy, is not entitled to grant preferences to improving counterterrorism INSPECTION OF FACILITIES Company’s sites and facilities; not exceeding RUB 10 MM 13 .8 suppliers by area . Local suppliers participate in competitive protection of nuclear industry Inspections by control bodies • improving professional training of procedures on a general basis . No particular approaches to facilities and terrorism counteraction, RUB 10-50 MM 26 .8 identified no material breaches security employees . working with local suppliers are applied . The Company does categorization and development of in physical protection of nuclear not account costs of such suppliers specially . RUB 50-100 MM 23 .6 safety data sheets of the Holding materials, nuclear plants and Company’s facilities were performed, nuclear material storage stations or exceeding RUB 100 MM 33 .4 For details of key principles, objectives and control in procurement activities, see Report interactions with territorial incompliances with physical protection 2015 . counterterrorism committees and law- rules and regulations . Identified enforcement agencies on locations of defects were eliminated as soon For details of JSC Atomredmetzoloto’s procurement structure, see Annual the Mining Division’s enterprises were as possible . In 2017, ROSATOM, Report 2016 . tested . Rostechnadzor and Russian MIA All nuclear and restricted facilities of conducted a number of physical the Holding Company were transferred protection inspections at the Holding Company’s facilities . The inspections 2017 RESULTS: results of performed competitive PLANS FOR 2018: to security protection by FSUE G204–1 identified no material breaches . procurement procedures made up ROSATOM Agency Security (FSUE • 1,395 competitive procurement • performing circa 700 competitive RUB 896 MM; Atom Security) . procedures were performed to procurement procedures; satisfy the Holding Company’s • in September of the reporting • continuing generalization needs; period, the ATOMEX REGION 2017 and standardization as well regional forum was organized • the total amount of performed as procured product quality in Ulan-Ude jointly with ANO competitive procedures was RUB improvement . 3.4. Procurement Management ROSATOM Corporate Academy . 7 .5 bn; PROCUREMENT ACTIVITIES • the savings (difference between the initial procurement price and The Company adheres to the principles competitive procurement procedures Center for Economic Development the winning bid cost) based on of openness and transparency are conducted on the electronic which allows saving labor and financial in relation to its procurement platforms of LLC Fabrikant, JSC Unified resources, and makes procurement management . Circa 99% of Electronic Trading Platform and JSC more open .

PERFORMANCE FOR 10 YEARS: data on contracts executed and specifications of procured products performance on the official website; was launched including open • In September 2009, discussions with suppliers; JSC Atomredmetzoloto acceded to • In 2014, the Authorize Body the Uniform Industry Procurement (procurement special-purpose vehicle • Additionally, each year since 2013 Standard of ROSATOM; (SPV)) – LLC ARMZ Service was has been seeing regional ATOMEX created to perform procurement for REGION forums in the operation • Since late 2012, the Holding Company’s enterprises . regions held to develop competitive JSC Atomredmetzoloto has been The category management system environment, engage additional using electronic procurement was also implemented to improve suppliers, ensure information procedures; procurement performance; disclosure and transparency of • Since 2013, Federal Law 223-FZ has procurement activities by ARMZ • In 2017, the Holding Company’s Uranium Holding Co .’s enterprises applied to JSC Atomredmetzoloto . enterprises adopted the concept In this connection, procurement jointly with ANO ROSATOM of implementing and developing Corporate Academy . transparency has increased due to the manufacturer audit system to publication of annual procurement improve quality of supplied products . plans, procurement procedures and The process of generalizing technical

40 Annual Report JSC Atomredmetzoloto 2017 41 4.1. Production Capital

PERFORMANCE FOR 10 YEARS: confirmed reserves at its • In 2016, JSC Khiagda performed Dybrynskoye, Koretkondinskoye, the Physical launch of the mining • In 2007, domestic uranium mining Namaruskoye, Kolichikanskoye and processing complex at its enterprises were consolidated and and Vershinnoye Deposits . Vershinnoye Deposit; JSC RUSBURMASH was integrated JSC Dalur obtained the license for into ARMZ Uranium Holding exploration and development of its • In 2017, JSC Dalur obtained Company; Khokhlovskoye deposit; the subsoil use license for its Dobrovolnoye Deposit . JSC Dalur , trial production operations • In 2008 • In 2015, one of the largest completed construction and were completed at Khiagda deposit industrial innovation projects was installation work in its associated of JSC Khiagda; completed . It was construction, scandium extraction workshop . • In 2009, PJSC PIMCU’s new sulfur under permafrost conditions, of Physical launch of the mining and acid plant was inaugurated with the JSC Khiagda’s advanced uranium processing complex ensured at capacity of 180 ktpa; mining enterprise, commissioning JSC Khiagda’s Vershinnoye Deposit . of all primary construction facilities • In 2012, the first stage of of the central production site and PJSC PIMCU’s mine eight was the sulfur acid production plant . commissioned . JSC Dalur commissioned, for • In 2013, JSC Khiagda completed commercial operation, the drying geological exploration and system for uranium compound suspension (yellow cake);

4.1.1. Mineral Raw Materials Base Development

JSC Atomredmetzoloto’s uranium resources (MRB) as of 1/1/2018 stand at 523 9. kt . By the volume of its MRB, the Holding Company ranks second among global uranium mining majors . Table 9. Reserves and Resources of ARMZ Uranium Holding Co.’s Russian Enterprises as of 12/31/2017, kt

Plant Reserves Resources P1* Total MRB In 2017, the Holding Company increased its mineral PJSC PIMCU 100 .8 - 100 .8 resource base by: JSC Khiagda 37 .1 1 .4 38 .5 • obtaining the subsoil license for the Dobrovolnoye JSC Dalur 14 .8 8 .1 22 .9 Deposit (reserves С1+С2 – 7.1 kt, resources Р1 – Elkon MMP, JSC 357 .1 - 357 .1 5 .1 kt); JSC «UMC Gornoe» 4 .6 - 4 .6 • completing geological exploration at the In total: 514.5 9.4 523.9 Khokhlovskoye deposit and approval of reserves with the gain of 0 .7 kt .

GEOLOGICAL EXPLORATION IN RUSSIA Table 10. Works Exploration Drilling and Financing in 2017

Drilling volume, 4. Financing, Million Types of Activities thousand line RUB Capital Management meters Exploratory scoping FS and reserve calculation report for the Khokhlovskoye deposit - 17 .0 Results (JSC Dalur) Design of exploration operations at the Dobrovolnoye deposit (JSC Dalur) - 5 .9

Operation scoping FS for 2017 to 2020 for development of Streltsovskoye, Antey and Malo- Tulukuyevskoye molybdenum and uranium ore deposits of Streltsovskoye ore field in the - 28 .8 Trans-Baikal Territory (PJSC PIMCU)

Total: - 51.7

In 2017, geological exploration was performed at Khokhlovskoye deposit in the Kurgan Region and deposits of Streltsovskoye ore field (PJSC PIMCU, Trans-Baikal Territory) . Total investments into geological exploration amounted to RUB 51 .7 MM .

42 Annual Report JSC Atomredmetzoloto 2017 43 KEY ACTIVITIES AND RESULTS IN 2017: PLANS FOR 2018: Commencement of Mine No . 6 project implementation within the The program for implementation of Mine No . 6 project was • completion of exploration and pilot operation work for • receipt of the positive conclusion from FBU framework of further site deconservation completed in full in 2017 uranium mining using in-situ leaching at Khokhlovskoye Rosgeologekspertiza for the exploration project for Commencing construction of the Sredneye tailings’ pond second Project implementation started . Dam increase work completed in deposit, receipt of the positive state expert conclusion on Dobrovolnoye Deposit; stage at the expense of the Federal Target Program funds 2017 Tailings’ pond reconstruction operations will continue in 2018 the exploratory scoping FS from Rosnedra GKZ (minutes • commencement of pilot production uranium mining The unit is planned to be designed within the framework of the Commencing design of the pilot operation unit for pyrite cinder No. 442-к dd. 9/6/2017) and reserve calculation report integrated project for pyrite cinder processing to produce gold and operations using in-situ leaching at Dobrovolnoye deposit . processing (minutes No . 5255 dd . 12/15/2017); iron containing products • receipt of the subsoil use license for Dobrovolnoye Deposit; • development and submission of the exploratory operation project for Dobrovolnoye deposit to FBU In 2017, motorcar transportation functions of Alliancetransatom, JSC were returned to PJSC PIMCU’s business unit, United Rosgeologekspertiza; Assets and RU Urtuyskoye . • receipt of the positive state expert conclusion from Hitachi EH1700 dump truck was purchased for performance of stripping operations at Urtuysky Strip Mine . Rosnedra GKZ for Operation scoping FS for 2017 to 2020 for development of Streltsovskoye, Antey and Malo- New models of the domestic load-haul-dump machine produced by PJSC PIMCU presented at the Import Substitution exhibition Tulukuyevskoye molybdenum and uranium ore deposits at Crocus Expo . Diversification of production will allow PJSC PIMCU to enter new markets and increase its profits in the future . of Streltsovskoye ore field in the Trans-Baikal Territory New machinery is planned for use during implementation of PJSC PIMCU’s Mine No . 6 construction strategic project critical for (minutes No. 439-к of 6/9/2017). the entire Krasnokamensk .

For details of participation in the exhibition, see 4 .1 .3 . Business Diversification .

4.1.2. Production Capital Management PLANS FOR 2018: MID-TERM PLANS: PJSC PIMCU • celebration of PJSC PIMCU’s 50th anniversary; • Mine No . 6 construction; • commissioning of the plant for production proprietary • life extension of existing mines until commissioning of granulated explosives; Mine No . 6; PERFORMANCE FOR 10 YEARS: • commissioning of the second stage of the Sredneye • development of new businesses including sized coal, • In 2012, the first stage of • In 2015, the new stowing • In 2017, Mine No . 8 reached its tailings’ pond; pyrite cinders, lithium and mining machinery . new uranium mine eight was complex was commissioned and rated capacity of 705 tpa of uranium commissioned; implementation of the equipment and preparatory work to commence • commissioning the of water drainage duct at the fleet upgrade program started at construction of Mine No . 6 was Urtuysky strip mine . • In 2014, the personnel and Urtuysky strip mine; completed . ASH DUMP AT KRASNOKAMENSK CHP machinery positioning, and mining underground communication system • In 2016, break-even operation was NOW PUT INTO OPERATION was commissioned; achieved;

JSC Dalur

Figure 22. Uranium Production and Reserves in 2015-2017 PERFORMANCE FOR 10 YEARS: 2011–2012 • implementation of the enterprise motorcar fleet upgrade program . 2007–2008 • completed construction and Production, tonnes Uranium Reserves, kt commissioning of the road and 2016–2017 • commissioning of the primary bridge from the central production process facility for processing of • commissioning of the trial site (CPS) to Ust-Uksyanskaya production plant for associated product solution with the capacity local sorption unit (LSU) site; 1,977 1,873 1,631 104.5 102.5 100.8 up to 700 tpa of uranium; scandium extraction at the central • commissioning of the redundant section of Dalmatovskoye deposit; 2015 2016 2017 2015 2016 2017 • commissioning of the Western OHL VL-10 kV at Ust-Uksyansk local sorption unit; • receipt of the license for section; exploration and production of • commissioning of the trial site • completed reconstruction of the minerals at Dobrovolnoye deposit facilities at Khokhlovskoye deposit 2017 RESULTS: sulfur acid warehouse at the near- in the Zverinogolovskoye district . including product and return rail base; solution tanks, oxidizing process Plans declared in Report 2016 Results hub and electric panel room . • completed standardization of the Uranium production program 2017 was implemented in full (1,631 operating process at the finished Production of 1,631 tonnes of uranium (-242 tonnes versus 2016) 2009–2010 tonnes) product shipment section within • implementation of the ISL the RPS framework . Production of 3,500 kt of coal 3,306 kt of coal produced (+9% versus 2016) intensification method using 2013–2015 industrial volumes of oxidizer; Certain HMP business units migrated to the five-day working work • receipt of the license for Taking actions to migrate certain HMP workshops to the five-day from the seven-day working week . It will allow cutting electric • completed construction of the road exploration and development of working work from the seven-day working week power and transportation costs materially as well as avoiding and bridge across the Barneva the Khokhlovskoye deposit; accumulation of ore excesses at the Central Ore Yard river; • commissioning of the uranium Continued upgrading of mine and shaft equipment at underground • commissioning of the Ust- compound suspension drier; uranium mine one and underground Mine No . 8, replacement of Uksyanskaya local sorption unit . Upgrades of mining and shaft equipment performed worn-out imported mining equipment for high-quality domestic peers

44 Annual Report JSC Atomredmetzoloto 2017 45 Figure 23. Uranium Production and JSC Khiagda Reserves in 2015-2017

Production, tonnes Uranium Reserves, kt PERFORMANCE FOR 10 YEARS: 2010–2011 etc .) . completion of the second • field operations at Istochnoye and construction stage facilities (power Within 10 years, the uranium mining Kolichikanskoye deposits; supply facilities, second lifting 590.1 591.7 592 8.4 7.7 14.8* using ISL has increased materially • Dybrynskoye, Koretkondinskoye and station, sodium nitrite storage site, (from 24 tonnes in 2007 to 693 in Namaruskoye Deposits completed etc .); 2015 2016 2017 2015 2016 2017 2017) natural hydrogeological studies and • construction completed of the sulfur * at the cost of licensing of Dobrovolnoye deposit started exploration drilling . acid production workshop; 2007–2008 2012–2013 • development started at Istochnoye • trial production work had been • construction completed of two Deposit . 2017 RESULTS: completed and feasibility of further new production facilities being the 2016 production expansion had been finished product warehouse and the • commissioning of the third Plans declared in Report 2016 Results proven; checkpoint in the production site; construction stage facilities being • startup of Khiagda 110/10 SS . • geological exploration was the sulfur acid production plant, Production of 580 tonnes of uranium (-11 tonnes Completed . Uranium production program 2017 was implemented in full (592 2009 completed and reserves were auxiliary power supply site, water versus 2016) tonnes) • material increase of production was confirmed at Dybrynskoye, turnover cooling station, packaging achieved; Koretkondinskoye, Namaruskoye, warehouse with the painting section, Continued development of ROSATOM Production Completed . Works on the Development of ROSATOM Production System (RPS) • the bridge across the Vitim river Kolichikanskoye and Vershinnoye etc .; system within the subsidiary Continue was built Construction started of the Deposits; • development started at Vershinnoye first stage of the settlement, sulfur • work completed for additional Deposit . Receipt of the positive conclusion from FGU Completed . Receipt of the positive conclusion from FGU Glavgosekspertiza of acid plant, power and warehousing exploration of Khiagda deposit . 2017 Glavgosekspertiza of Russia for the project of pilot Russia for the project of pilot production work at Khokhlovskoye deposit facilities; 2014–2015 • construction and commissioning production work at Khokhlovskoye deposit • the project was developed and • commissioning of the first completed for places I1 at Approval of the exploratory scoping FS and reserve Glavgosekspertiza approved the construction stage facilities (the Istochnoye Deposit; Completed . Approval of exploratory scoping FS and reserves of Khokhlovskoye calculation report for the Khokhlovskoye deposit by technical and economical FS for main building, sulfur acid warehouse, • construction completed of the first deposit by Rosnedra GKZ the State Reserve Commission development of Khiagda deposit . finished product warehouse, local sorption plant at Istochnoye sorbent warehouse, fire depot, Deposit . Receipt of the subsoil use license for Dobrovolnoye deposit and commencement of design work for the Completed . Receipt of the subsoil use license for Dobrovolnoye Deposit deposit

The Central Production Site completed construction and installation work in the associated scandium extraction and started commissioning operation to produce Figure 24. Uranium Production and sample scandium concentrate Reserves

The enterprise migrated to the new electric power supply circuit with gas piston

generation Production, tonnes Uranium Reserves, kt 487.9 540.3 694 38.7 38.0 37.1 2015 2016 2017 2015 2016 2017

PLANS FOR 2018: MID-TERM PLANS: • production of 591 tonnes of uranium; • starting commercial production and obtaining high-purity 2017 RESULTS: • performing engineering surveys and developing scandium oxide, organizing aluminum and scandium design documents for LSU-2 and the near-rail base at master alloy production; Plans declared in Report 2016 Results Khokhlovskoye Deposit; • commercial development of Khokhlovskoye deposit; Production of 663 tonnes of uranium (+123 Completed . Uranium production program 2017 was implemented in full (694 tonnes) • performing engineering surveys and developing design • construction of infrastructural facilities and performing tonnes versus 2016) documents for the PP at Dobrovolnoye deposit; mining refining and mining preparatory operations at Commencement of Vershinnoye Dobrovolnoye deposit . • extending the subsoil use license for Dalmatovskoye Deposit development: construction and Deposit; outfitting of drill holes, commencement Physical launch completed of the mining and processing complex ensured at Vershinnoye • commencing construction of the pilot production facility of the acidification stage as well as Deposit for production of aluminum and scandium master alloys . commencement of commissioning work at the local sorption plant

Completed . Placer 4 with complex hydrogeological conditions was commissioned within Commissioning of placer four at Khiagda the framework of pilot operations for construction of new design process drill holes using deposit . NPPVC and new hydro insulation mixtures

Commissioning of the power supply turbine Pending . A number of actions for power audit is being taken

Uranium mining in the pilot commercial operation mode at Istochnoye Deposit is in

progress

Actions were taken to ensure obtaining the status of the RPS enterprise

46 Annual Report JSC Atomredmetzoloto 2017 47 PLANS FOR 2018: MID-TERM PLANS: Completed . Sections were updated and the Operating Conditions FS Updating sections of the Operating Conditions FS for 2016-2020 for 2016-2020 of Streltsovskoye Ore Field successfully completed its of Streltsovskoye Ore Field for submission to FBU GKZ • Production of 827 tonnes of uranium (+133 tonnes versus • increasing uranium output with subsequently reaching the expert examination at FBU GKZ 2017); rated capacity of 1000 tpa of uranium; • commissioning of Istochnoye Deposit; • completing construction of infrastructural facilities and Implementation of prompt fission neutron well logging performing mining refining and mining preparatory (KND-M) at JSC Khiagda for the purposes of refining uranium Completed in accordance with the scope set forth in the executed • commencing development of design documents for ore radiology and identifying undeveloped rocks and uranium agreement operations to increase production output . Kolichikanskoye Deposit; redistributed in the course of ISL • ensuring competence development and implementation of Continuation of geological and geophysical support of the drilling Completed . Geological and geophysical support of the drilling of new RRO methodologies; of production and exploration wells on uranium deposits of production and exploration wells on uranium deposits of JSC Dalur • commissioning of Dzhilinda 110/10 kV SS; JSC Dalur and JSC Khiagda and JSC Khiagda are being performed in full • implementation of the Smart Mine project . Not completed . In the course of the bidding procedure, another Development of the geological exploration project for contractor was selected to develop the geological exploration project Dobrovolnoye deposit for Dobrovolnoye deposit

Continuing operations for implementation of KND-M (fission Completed partially . Operations for implementation of KND-M are neutron logging) at deposits of the Holding Company’s uranium included into JSC Khiagda’s investment program (IP) for 2018 . The JSC RUSBURMASH mining enterprises as well as for development of the geological geological exploration project for Dobrovolnoye deposit is being exploration project for Dobrovolnoye deposit at different developed by the third party outside ROSATOM development stages throughout the lifecycle

PERFORMANCE FOR 10 YEARS: • since 2014, implementation has • construction competencies were Further implementation of new drill hole designs using NPPVC Completed . 20 drill holes were constructed at JSC Khiagda’s deposits • construction of over 1 .6 thousand been in progress of the full cycle obtained within the business pipes provided the Holding Company’s mining enterprises are and 14 pilot drill holes were constructed at JSC Dalur’s deposits process drill holes for JSC Khiagda’s of geological exploration, design diversification framework; interested . uranium mining using the ISL and survey operations within the • Construction Site Five standalone method; framework of Pavlovskoye Field business unit (SBU) was created to Implementation of construction processes (subsoil reinforcement, Completed . Pilot operations were performed for restoration of the • construction of over 2 thousand development in Novaya Zemlya perform construction and installation vibration floatation and jet grouting) runway in Chkalovsky airfield process drill holes for JSC Dalur’s Archipelago; work for development of mining uranium mining using the ISL • 244 actions were taken within the polygons; Completed . Execution of the profitable agreement for collection, study and review of file and archive materials on development, method; Performance Improvement Program • AMK KND-M (AINK-49) hardware Execution of profitable agreements for traditional types of residual balance reserves and non-balance ore dumps of Zavitinskoye • drilling of over 2 million meters for framework; and methodological suite was geological exploration and drilling services for customers outside deposit for evaluation of dump reserves of Pervomaysky Mining PJSC PIMCU; • the Ready Polygon Engineering developed with unique technical the Holding Company as well as for new construction services and concentration Works (the Customer is NYaU MIFI) . Execution of Center was created; specifications . both inside the Holding Company and for external customers to the agreement for compiling reporting materials on exploration of ensure that the enterprise achieves break-even operation Khokhlovskoye deposit Agreements for construction work executed with JSC Dalur

Completed . 28 streamlining activities were performed with savings JSC RUSBURMASH is a comprehensive geological exploration company with a powerful drilling service . The company is involved Continuing streamlining activities of RUB 236 MM in geological exploration works for the benefit of JSC Atomredmetzoloto and construction of all types of wells in the solid minerals deposits . In 2017, JSC RUSBURMASH performed drilling operations for three operational uranium mining enterprises: JSC Dalur, JSC Khiagda and PJSC PIMCU . PLANS FOR 2018: LONG-TERM PLANS:

• completion of 100% of drilling operations: • completion of the Holding Company’s production program 2017 RESULTS: for drill hole construction within the set deadlines; • PJSC PIMCU 268 816. thousand ML Table 11. JSC RUSBURMASH Completed Drilling Operations, thousand ML: • development of construction competencies for construction • JSC Khiagda 49 158. thousand ML of in-situ leaching polygons for the Holding Company and Customer 2015 2016 2017 • JSC Dalur 127 663. thousand ML third party customers; ‘PREPARED TESTING GROUND’ CONCEPT – PJSC PIMCU 403 .76 310 .64 255 .58 • completion of the program for implementation of new • continuing business diversification including entering IT IS A PROJECT ENVISAGING THE REDUCTION OF process drill hole designs at JSC Khiagda and JSC Dalur; external markets for provision of geological exploration JSC Khiagda 47 .18 47 .26 36 .48 COST OF CONSTRUCTION OF WELLS AND PIPING and drilling services for solid minerals, development of • completion of 100% of geological exploration, drilling and competencies and provision of services for geological JSC Dalur 83 .32 146 .98 93 .80 OF COMPONENTS THROUGH OPTIMISATION OF construction (including LSP) operations at JSC Khiagda and mathematical modeling, geological engineering surveys, JSC Dalur; In total: 534 .26 504 .89 391 .86 PROCESS SOLUTIONS rehabilitation of radiation environmental risk territories, • integration of the Ready Polygon concept into the practice engineering surveys, construction, etc . of deployment and liquidation of mining units of uranium Plans declared in Report 2016 Results deposits using in-situ leaching .

Completion of 100% of drilling operations for JSC Khiagda, Completed . Increasing drilling operations on the Customer’s initiative 30 .391 thousand ML

Completion of 100% of drilling operations for PJSC PIMCU, Not completed due to the Customer’s failure to provide work scopes 268 .75 thousand ML

Completion of 100% of drilling operations for JSC Dalur, 115 .209 Not completed due to prolonged development of drill holes given thousand ML hydrogeological features of the units

Completion of the field stage of geological engineering surveys Completed . Field stage 2017 for the Mining and concentration Works within the framework of the Mining and concentration Works based on Pavlovskoye Lead-Zinc Field project in Novaya Zemlya based on Pavlovskoye Lead-Zinc Field project in Novaya Zemlya Archipelago was completed in full Archipelago

48 Annual Report JSC Atomredmetzoloto 2017 49 JSC VNIPIpromtechnologii PLANS FOR 2018 AND MID-TERM PLANS: In 2018, FOMC plans to complete engineering surveys for In 2018, FOMC plans to obtain the status of the priority JSC VNIPIpromtechnologii is ARMZ Uranium Holding Co .’s PERFORMANCE FOR 10 YEARS: construction of seaport facilities and submit results of such investment project for Arkhangelsk Region to obtain tax engineering center . • The key result of ten years of operations is creation surveys for state expert examination . It is also planned to benefits and other preferences in the course of project of ARMZ Uranium Holding Co . Engineering Center complete design work for MRW and seaport facilities and implementation . Its core business lines are implementation of mineral mining based on JSC VNIPIpromtechnologii as well as also submit the project for state expert examination . Further projects in the EPCM format, environmental consulting and FOMC’s further prospective plans include organizing meetings implementation of scientific and applied solutions of FOMC’s plans after its receipt of the positive conclusion from upgrades of existing production facilities . and negotiations as well as executing relevant protocols and the institute in Holding Company’s uranium mining FAU Glavgosekspertiza of Russian including commencing agreements (memorandums, contracts, etc .) with potential and business diversification projects . construction of the MRW and seaport facilities for the investors and/or product consumers of the MRW being purposes of commercial operation of Pavlovskoye Field . 2017 RESULTS: created .

Plans declared in Report 2016 Results Elkon Mining and JSC Metallurgical Plant (JSC Elkon MMP) In 2017, it is planned to reach break-even operation by orientation to the Pending . In 2017, the enterprises’ financial rehabilitation program external market (outside the Company loop and the industry), as well as was approved to ensure that it achieves the break-even point . Elkon MMP, JSC is engaged in geophysical operations, exploration, mining and processing of uranium ores . through the inventory of the JSC VNIPIpromtechnologii ’s competencies, Current expenses were audited and production costs and employees the optimization of production processes and the increase in labor were cut with the required competencies preserved productivity at the institute 2017 RESULTS:

Plans declared in Report 2016 Results JSC VNIPIpromtechnologii ’s key task for 2017 still remains JSC VNIPIpromtechnologii ’s management underwent material implementing the approved plan for achieving the break- changes as well . In 2017, migration to the new organization Completed . By ROSATOM’s resolution, the sleeping mode is Preserving the «sleeping mode» for Elkon project until December 2017 even point . Although the past year was quite complicated structure was completed, the remuneration system was extended until December 2019 for the uranium mining industry, JSC VNIPIpromtechnologii modified and harmonized, incentive components were Completed . Operations of Elkon MMP, JSC project operators implemented some projects in its capacity of ARMZ Uranium developed for development of projects, quality and client focus Continued operations of Elkon MMP, JSC project operators and EGMK Project, and EGMK-Project, JSC are supported with a view to preserve Holding Co .’s engineering center . standards were implemented . JSC to preserve competences and previously developed project materials . competences and previously developed project materials In 2017, work continued with key customers being JSC Khiagda PLANS FOR 2018: If macroeconomic environment improves, it is planned to consider resuming and JSC Dalur . Work was completed to design Mine No . 6 Expecting improvement of the macroeconomic environment the active phase of pre-design operations (Argunskoye and Zherlovoye fields) for PJSC PIMCU, the project In 2018, JSC VNIPIpromtechnologii ’s key objective is was upheld and approved . This project is strategic both for increasing its order portfolio, decreasing the share of internal PJSC PIMCU and Russian uranium industry in general . The intra-division customers in its revenues as well as developing PLANS FOR 2018: project is to be launched as early as 2018 . the strategy for entering the external market to increase its • preserving the «sleeping mode» for Elkon project until December 2019 . In 2017, JSC VNIPIpromtechnologii was gradually migrating revenues from its external counterparties . In 2018, migration to 3D processes to minimize costs and durations of design . to 3D design will be completed, a number of projects material Migration to development of all designs in 3D format is for the industry will be implemented, designer workplaces LLC United Uranium Plants (LLC UUP) scheduled for 2018 . will be refurbished and new laboratory is scheduled for commissioning . UUP trades in natural uranium in the Russian market and also deals with intermediary, consulting and marketing activities .

JSC The First Ore Mining Company (FOMC) 2017 RESULTS:

FOMC is developing Pavlovskoye lead-zinc field and is the subsoil user in the Bezymyannaya River basin in Novaya Zemlya Plans declared in Report 2016 Results Archipelago in the Arkhangelsk Region . Customers’ approval of the structure and time schedules of material Completed . The amendment agreement for 2018 to the deliveries in 2018 long-term agreement with JSC TENEX was executed 2017 RESULTS: Execution of the mid-term agreement with JSC TENEX for feedstock Completed . The long-term agreement with JSC TENEX deliveries from 2018 was extended until 2030 Plans declared in the Report for 2016 Results Completed . Integrated field engineering survey operations were completed for Completed . The long-term agreement with JSC TVEL was Completion of integrated field engineering construction of the mining and concentration works (the MRW) and engineering Extension of the long-term agreement with JSC TVEL until 2026 extended by execution of the amendment agreement surveys, process testing of semi-industrial surveys were completed for construction of onshore facilities of the marine port until 2026 designs and continuation of design operations complex . Conducting the observation audit of JSC Dalur jointly with representative of Completed . The observation audit of JSC Dalur was Key process solutions were developed, process studies of semi-industrial designs were Fortum energy company (Finland) within the framework of interactions for conducted jointly with Fortum’s representatives completed, the process regulation for lead and zinc ore refining was developed control of JSC TVEL’s supply chain by the nuclear fuel buyer Construction and startup (after completion of engineering surveys, design and other required operations) of the mining and concentration Pending . Prospective plans after completion of the project and receipt of positive works, mining and processing of lead and expert conclusions for it PLANS FOR 2018: zinc ores for further sales of lead and zinc concentrates In accordance with ROSATOM’s resolution, UUP started the voluntary liquidation procedure with formation of JSC Atomredmetzoloto’s Commercial Directorate and UUP’s assignment to ARMZ of agreements with the former’s customers The project is included into the Social and Economic Development of the Arctic Zone being JSC TENEX and JSC TVEL as well as agreements related to sales to uranium feedstock customers . of the Russian Federation state program approved by resolution of the Government of the Russian Federation No . 366 dd . 4/21/2014 (as amended with resolution of the Government of the Russian Federation No . 1064 dd . 8/31/2017)

50 Annual Report JSC Atomredmetzoloto 2017 51 LLC ARMZ Service 4.1.3. Business Diversification 4.1.3.1. . Development of New Businesses LLC ARMZ Service is the authorized body for organization of procurement procedure for ARMZ Uranium Holding Co .’s enterprises .

2017 RESULTS: Development of promising business lines remains one of the priorities of Plans declared in Report 2016 Results ARMZ’s strategy . The Mining Division 1 2 has been proclaimed the center Further consideration of the matter of of responsibility for supplying the INCREASING THE RANGE INCREASING PROCESSING applying the project for transfer of integrated Completed . Consideration of the project resulted into transfer of integrated functions industry and the Russian Federation OF METALS PRODUCED DEPTH OF FEEDSTOCK functions for forming and supporting for forming and supporting competitive procurements procedures to LLC PIMCU with uranium and other strategic INCLUDING RARE, RARE OUTPUT TO PRODUCT competitive procurement procedures for Services metals . Within the framework of the EARTH AND NON-FERROUS METALS AND ALLOYS, PJSC PIMCU’s needs METALS, AND COMPOUNDS AND OTHER ADVANCED set strategic objective to increase THEREOF PRODUCTS IN THE FUTURE the non-uranium businesses’ share Completed . 477 procurement procedures were completed to satisfy the needs of the in revenues to 30% by 2030, the Further provision of procurement procedure Holding Company’s enterprises organizer services to enterprises of the division’s business lines for feedstock Company The savings from competitive procurement procedures amounted to RUB 231 .5 MM production and manufacturing of (5 .05%) of budget prices of ARMZ Uranium Holding Co .’s enterprises different products develop in two directions: Both directions are scheduled for development jointly with Completed. In accordance with ROSATOM’s order No. 1/547-П dd. 6/20/2016 On Continued work on organization of centralized ROSATOM’s adjacent divisions giving new opportunities to the Preparing and Conducting Centralized Procurement of MTR&E, Work and Services, the procurement for the needs of the Holding special clothing centralized procurement procedure was performed for JSC Khiagda, division itself. Company as a part of category management JSC Dalur, JSC RUSBURMASH and JSC VNIPIpromtechnologii

Completed • Processing of Pyrite Cinders into Ferrosilicium Pilot Industrial testing was organized resulting into ferrosilicium output . Examination of PJSC PIMCU’s RMZ was organized resulting into purchase of the furnace for installation in RMZ casting workshop for Continuing project activities as part of further pilot production tests ARMZ Uranium Holding Co .’s new business development program • Manufacturing of molybdenum products at PJSC PIMCU’s idle production capacities . Feedstock Concentrate Metal Alloy Advanced mining production production production products Examination of PJSC PIMCU’s facilities was organized resulting into execution of the molybdenum feedstock processing agreement by and between PJSC PIMCU and MC SHIMKO GROUP, LLC . Under the agreement, the CRL developed the molybdenum product manufacturing process

Operations were also performed for coal sales and expansion of coal sales market . The entire volume of coal produced for Promising business lines requiring extended commercial sales in the amount of 1 .7 MT was sold . Operations for coal sale market expansion resulted into increasing of the Tradition division business lines competencie and engagement of adjacent number of buyers from three in 2016 to ten in 2017 ensuring coal sales growth by 29% . divisions of ROSATOM (TVEL, NFE, etc.)

RARE METALS (RM) AND RARE EARTH METALS (REM) NON-FERROUS PLANS FOR 2018 AND THE FUTURE: FOR ROSATOM AND PRECIOUS METALS

LLC ARMZ Service’s business priority in 2018 is provision services, employee labor provision services and coal sale ROSAТOM’S STRATEGIC of services to the Holding Company’s enterprises including agency services . OBJECTIVE Promising business lines enga­ authorized body services, services for development of ging adjacent division will allow Mid-term, consolidation of procurement procedures and URANIUM the package of documents for conducting competitive COAL ARMZ to contribute materially development of the harmonized procurement approach within AND OTHER procurement procedures as well as services for reviewing to new businesses’ revenue of the framework of the Holding Company’s enterprises is MATERIALS ROSATOM (approving) category strategies, including in ROSATOM; +30% planned focusing on engaging immediate manufacturers to issuance of recommendation aimed at improving economic Revenue Share of New participation in competitive procedure by approving key terms efficiency of procurement of MTR&E, works and services as SERVICES Business by 2030 and conditions of draft agreements to improve economic well as formation of competitive environment for preparation efficiency of procurement procedures and minimizing the risk and performance of procurement procedures, transport of production process interruption .

Figure 25. Mining Division – Center of Responsibility for Supply of Uranium and Other Strategic Metals

52 Annual Report JSC Atomredmetzoloto 2017 53 No product portfolio expansion is the range of its consumers . scandium master alloys in the future possible without expanding the new Processing of manmade wastes in the Kurgan Region in the Urals . ROSATOM’S NEW BUSINESS PRODUCT LINES business development geography . from pyrite cinders allows solving Operations for a number of new DEVELOPMENT PRIORITIES Sc Zn Pb Li Au Ti Zr REE Cu Ag B Fe (ВЧ) Nb Be Currently, JSC Atomredmetzoloto environmental problems . Restoring large-scale projects implemented both independently and jointly with lithium concentrate production at jointly with our partners from non- Additive processes    Sc SCANDIUM its partners is implementing several Zavitinskoye deposit will supply the uranium industries are conducted Robotics   Zn ZINK projects in different parts of Russia . country’s new business lines with in Novaya Zemlya (Pavlovskoye Pb LEAD In its traditional operating region feedstock . Manufacturing of new project for production of lead and Composite materials    Au GOLD being Trans-Baikal Territory, the products started due to increasing zinc concentrates), the Tomsk Region Ti TITANIUM division’s migration from mining processing depth of the mineral (titanium and zirconium sands) as Power accumulators    Zr ZIRCONIUM to production of increased energy resource base of scandium oxide well as gold and silver in the gold and REE REE Integrated power structure Cu COPPER    value (sized) coal allowed increasing and fluoride, and aluminum and uranium deposit in South Yakutia . engineering Ag SILVER B BORON VSTP based power systems     Fe (ВЧ) HIGH PURITY IRON NEW BUSINESS PROJECT GEOGRAPHY Renewable power    Nb NIOBIUM Be BERYLLIUM Nuclear medicine    PAVLOVSKOYE (NOVAYA ZEMLYA) Other ARMZ initiatives   

Current division Promising division Potential division projects projects projects

Figure 27. Mining Division’s Potential for Participation in Supply of Feedstock for GOLD (SEVERNOYE) (Yakutia) ROSATOM Strategic Initiatives

SCANDIUM (JSC Dalur) TITANIUM (Тоmsk Region) 4.1.3.2. Project for Load-Haul-Dump Machines for Underground Mining Operations LITHIUM (Trans Baikal) 2017 RESULTS: Table 12. PD-2E LHD Machine Manufacturing Statistics in 2015-2017 SIZED COAL Plans declared in Report 2016 Results (PJSC PIMCU) 2015 2016 2017 PROJECT LAUNCH ROADMAP Manufacture of ten load-haul-dump (LHD) Completed . 10 LHD machines Pyrite Cinders Machines (PJSC PIMCU) machines at PJSC PIMCU’s RMZ manufactured . 9 11 10 Produced 2016 2017 2020 2023 Completed Reconstruction of foreign machines using 1. INCREASING PROCESSING DEPTH 2. IMPLEEMENTATION OF LARGE One narrow-cut LHD machine was OF PROPRIETARY MRB AND PROCESS SCALE PARTNER GREENFIELD Russian analogue parts WASTES PROJECTS restored/reconstructed . SIZED SCANDIUM PYRITE CINDERS PAVLOVSKOYE SIZED COAL PAVLOVSKOYE COAL • • TITANIUM (NOVAYA ZEMLYA) • SCANDIUM • LITHIUM Replacement of parts for the parts Completed partially . Some hydraulic SEVERNOYE LITHIUM • PYRITE CINDERS • TITANIUM manufactured by RMZ assemblies are imported • GOLD (SEVERNOYE)

PLANS FOR 2018 AND MID-TERM PLANS: Figure 26. Product Portfolio of Existing and Emerging Businesses JSC Atomredmetzoloto • Continued manufacturing of PD-2E (3 pcs ). and PD-1E (3 pcs .) LHD machines PROJECT FOR LOAD-HAUL-DUMP MACHINES FOR UNDERGROUND MINING OPERATIONS (GORTECH) THE PROJECT for Organization and Deployment of Domestic Production Load- Haul-Dump Machines by PJSC PIMCU’s mechanical repair plant (RMZ) Considering its new product types, sectors of modern economy such as competencies, developments concepts PROJECT OBJECTIVES : the Mining Division casts a wider additive processes, robotics, energy are considered and negotiations are glance at possible implementation of accumulation, high temperature and conducted with potential consumers • Creation of domestic production of accumulator and diesel load-haul-dump projects for production of other types renewable power, etc . Some relevant and partners from other industries machines of feedstock to satisfy current and projects are being developed already regarding supplying them with future needs of ROSATOM . Here, the including scandium, lithium, zirconium, feedstock (rare earth metals, boron, Figure 28. Machine PD-2EE primary priority is mining metals used titanium and other metals . To antimony, niobium, other metals and in the most advanced development maximize use of feedstock production compounds thereof) .

54 Annual Report JSC Atomredmetzoloto 2017 55 2017 RESULTS: • manufacturer testing started of the joysticks . The system is combined • electric power drive is used instead electric load-haul-dump machine into the single information channel of hydrostatic transmission; PD-2EE designed for PJSC PIMCU’s with the thrust electric drive • modular assemblies ensure underground mining operations; control system . The visualization accessibility for maintenance • the machine with improved environment was developed and repairs and allow further technical and economic allowing to see more detailed retrofitting the machine using specifications was created: machine parameters; power accumulator energy source • electric power consumption • the machine has the device based on lithium ion cells . decreased to 30%; for remote equipment status monitoring . It allows the service • reducing hydraulic oil operating personnel to receive information temperature will allow replacing it on operation of all PD-2EE once every two years; systems under specific technical • planned reduction of maintenance parameters for the last 20 days . Figure 29. JSC Dalur’s Pilot Commercial Production Unit (Central Section of Dalmatovskoye Deposit) and repair (M&R) costs to 40%; If GSM communications are • use of advanced ergonomics, available in the mine, the data control and measurement may be received online . Based on PLANS FOR 2018: hardware . The machine has the results of operations and analysis • certification of the products with Russian and foreign scandium oxide producers; system for automatic control of its of data received from the recorder hydraulic assemblies by processing using the debugger kit, one may • completing development of design documents for creation of the master alloy pilot commercial production facility; input signals from its controls edit the executive program and its • commencing construction of the master alloy pilot production facility . being electronic pedals and parameters;

For details of scandium use, see Annual Report 2016 .

4.1.3.4. Project «Processing of Pyrite Cinders at PJSC PIMCU» BUSINESS CASE: 2017 IMPORT SUBSTITUTION NATIONAL FORUM THE PROJECT of the pilot hydro metallurgical workshop of PJSC PIMCU’s central research and development laboratory aims In September 2017, the First Import Substitution 2017 National Forum held at at increasing processing depth of the existing manmade feedstock . Pilot production operations continue for processing pyrite Crocus Expo exhibition center saw presentation of prototypes of self-propelled cinders to manufacture finished products in the form of non-ferrous and precious metal concentrates, ferrous alloys and high- mining machinery to be produced at PJSC PIMCU (Gortech Project) Models purity iron, pigments and coagulants . of mining machinery developed within the project framework were appraised highly by specialists and delegation of the Russian Federation Government lead by the Russian PM, Mr . D .A . Medvedev . In the course of the event, it was PROJECT OBJECTIVES : noted that the machinery is planned for production at new uranium mine six • increasing processing depth of the • revenue diversification; • creating new jobs at PJSC PIMCU . construction whereof started in Trans Baikal Territory . Assembly manufacturing proprietary feedstock base; • solving environmental problems; of self-propelled mining machinery will satisfy PJSC PIMCU’s proprietary needs and is scheduled for external market sales as well . 2017 RESULTS: For reference: PD-2EE cargo capacity is 2 6. tonnes, its ladle volume is 1 .16 cu.m., the dimensions are 6315х1500х1990 mm Plans declared in Report 2016 Results

Completed . Semi-commercial testing completed within the fully closed cycle . The commercial Completion of the gold extraction gold extraction process was developed with the end-to-end extraction degree in excess of 70% pilot production operations Production of Dore gold is underway

Commencement of design of the The gold extraction unit is planned to be designed within the framework of the integrated 4.1.3.3. Project «Production of Associated Scandium at JSC Dalur» commercial gold extraction unit project for pyrite cinder processing to produce gold and iron containing products In 2017, JSC Dalur started producing high-purity scandium oxide . Engagement of partners for testing Completed . The agreement was achieved with MC SHIMKO GROUP, LLC to organize the joint processes of additional commercial venture for production of ferrous alloys and molybdenum . The Collaboration Agreement was product manufacturing from pyrite executed Joint ferrosilicium pilot production operations started . 2017 RESULTS: cinders (iron oxide pigments, coagulants for mine water treatment, Negotiations are in progress with four other companies for implementation of different projects involving pyrite cinder processing Plans declared in Report 2016 Results ferrous alloys, etc .)

Completed . In April 2017, the Central Section of JSC Dalur’s Dalmatovskoye deposit saw Laboratory studies were performed for deposition of zinc and copper pyrite cinders from Completion of construction and startup of the commissioning startup of the scandium oxide pilot commercial production unit with leaching solutions pilot commercial production of scandium oxide the capacity of 1 .5 tpa Laboratory studies were completed for production of iron oxide pigments . Proper quality

Completion of R&D operations for Completed . Development of the aluminum-scandium master alloy production process pigment prototypes were obtained development of the process for production was completed . The process ensures product quality at low production cost of aluminum Sample iron coagulant solutions were produced for use at waste treatment facilities of aluminum and scandium master alloys and and scandium master alloys . The process was successfully tested in at the Industrial site commencement of creation of the master of JSC Dalur . The deadlines for commencement of the master alloy production facility alloy pilot commercial production facility construction were adjusted to 2018

For details of the project and market demand for its products, and its prospects, see Report 2016 .

56 Annual Report JSC Atomredmetzoloto 2017 57 PLANS FOR 2018: • launch of the ferrous alloy production plant; PROJECT OBJECTIVES : Within the framework of PJSC PIMCU’s Pyrite Cinder • development of the methodology for semi-commercial • increasing processing depth of the proprietary feedstock base; Processing project, the following key objectives have been set: testing of iron coagulants . • increasing business scales; • design of the commercial gold production unit; • revenue diversification; • development of the program and process regulation • development of Elkon gold and uranium ore hub . for production of ferrous alloys from pyrite treatment processing products after gold extraction; 2017 RESULTS: • organization of experimental production of ferrous alloys at PJSC PIMCU’s production site; Plans declared in Report 2016 Results

• ferrous alloy pilot production operations; Continued operations with the possibility of initiating one or several Completed . In September 2017, ROSATOM passed its positive • creation of the joint venture (PJSC PIMCU and its ferrous gold mining projects and commencing practical implementation thereof resolution to start implementing the project for organization of gold mining at Severnoye deposit alloy production partner); PLANS FOR 2018: • exploratory ditching and trenching; 4.1.3.5. Project «Creation of Lithium Carbonate Production based on Zavitinskoye • exploratory and hydrogeological drilling . Deposit»

THE PROJECT – Creation of Lithium Carbonate Production Project . 2017 RESULTS: PROJECT OBJECTIVES : 4.1.3.7. Project for Organization of Tita- • initiation of the project, start of the due diligence • business diversification; nium and Zirconium Concentrate Pro- procedure . • ensuring import substitution of strategic feed and duction at Tuganskoye Deposit satisfaction of JSC TVEL’s needs for creation of power THE PROJECT for creation of the mining and concentration PLANS FOR 2018: accumulator production facilities; works for production of zirconium and titanium ore • Commencement of design work at the first production • creating new jobs at PJSC PIMCU . concentrates based on Tuganskoye ilmenite and zircon sand stage (0 575. mtpa) . deposit (Tomsk Region) . 2017 RESULTS: PROJECT OBJECTIVES : Plans declared in Report 2016 Results • import substitution of titanium and zirconium concentrates ROSATOM’s approval and commencement of implementation of within the Russian Federation, including for ROSATOM and Completed . In May 2017, ROSATOM passed its positive resolution to the project for creation of the lithium production facility based Rostec’s consumers, and revenue diversification . start implementing the project on feedstock sources of Zavitinskoye deposit

Participation in the Russian Education and Science Ministry’s Completed . In March 2017, PJSC PIMCU won the Russian Education competition for obtaining budget co-financing of R&D operations and Science Ministry’s competition and received the budget subsidy for development of commercial process for production of lithium for development of the Industrial process for lithium carbonate concentrate and lithium carbonate production

Completed . In 2017, process development operations started and Start of design and survey operation for creation of pilot lithium 4.1.4. ROSATOM Production technical audit of sites for placement of pilot and commercial concentrate and lithium carbonate production units production facilities was performed System. Compliance with Product Quality Requirements • Circa 1,300 people were engaged into PLANS FOR 2018: implementation of different RPS programs in 2017 . • completing the preliminary technical economic feasibility IMPLEMENTATION OF RPS PROJECTS • 48 people were proclaimed RPS leaders . study for the project; • 1782 people were trained in RPS tools and • formulation of the corporate model, obtaining In 2017, operations within the RPS framework, aimed at: methodologies . ROSATOM’s approval and creating the project operator • scaling the RPS culture and ideology at the Holding Company’s joint venture . enterprises; • identification and promotion of the production system leaders; • creation of the RPS enterprise at JSC Khiagda . 4.1.3.6. Project «Gold Mining Organization»

THE PROJECT for creation of the gold ore mining and processing facility with production of base gold based on Severnoye deposit . OVER RUB 450 BN RUB 1.3 BN IS THE ACTUAL SAVINGS OF RPS ACTIONS IS THE TOTAL ACTUAL SAVINGS TAKEN IN 2017 FROM OPERATION PERFORMANCE IMPROVEMENT ACTIVITIES

58 Annual Report JSC Atomredmetzoloto 2017 59 2017 RESULTS: PLANS FOR 2018: COMPLIANCE WITH PRODUCT In 2017, JSC Atomredmetzoloto • replacement of light fixtures spent 52,200 l of motor gasoline (the with energy saving ones at the BUSINESS CASE: • implementation of the project • continuing operations within QUALITY REQUIREMENTS mean price per liter is RUB 41 – RUB mechanical repairs plant . IMPLEMENTATION OF THE for improvement of value chain the RPS framework in three key JSC Siberian Chemical Works is 2,140,200 .00) . ENERGY CENTER AT JSC DALUR management performance directions: consumer of ARMZ Uranium Holding JSC Dalur: named Products of the Nuclear Other power resources types (coal, Business Case: Implementation of the • production; Co .’s enterprises (PJSC PIMCU, • partial replacement of low-efficiency Fuel Cycle Initial Stage (NFC IS) fuel oil, natural gas) are not used at Energy Center at JSC Dalur JSC Khiagda and JSC Dalur) . light sources with LED lights; resulted into acceleration of the • business process performance; the Company . The Company rents its For the first time, ROSATOM finished products shipping from Products of uranium mining office premises . Under the office lease • acquisition of control stations for • management performance; State Atomic Energy Corporation JSC Khiagda’s warehouse to the enterprises of PJSC PIMCU, agreement, consumed power is included VFD submersible pumps; has implemented its 4 MW Power customer by 64% (from 30 to • acceleration of processes, JSC Khiagda, JSC Dalur must comply in the common list of municipal services • automation of the central production Center with heat recuperation . At eleven days); reduction of pending reserves and with Technical Specifications TU and is paid for on a monthly basis under site’s street lighting operation; the expense of the external investor, unclaimed valuables at enterprises; 95 1981-2009 for Uranium Oxide a separate bill . In the reporting period, • implementation of process construction of the Energy Center Concentrate and TU 95-2002 for the Company consumed electric power • for the first time, ROSATOM has solutions and streamlining of • acceleration of mining polygon was completed and its operation Ammonium Polyuranate (yellow cake) . for the total amount of RUB 4 .495 MM . implemented its 4 MW power treatment production processes construction; started in 2017 with electric powers center with heat recuperation at the at PJSC PIMCU resulted into In 2017, there were no consumer sales at the price 10 .9% below the 2017 RESULTS: investor’s expense . additional production of • equipment and staff performance claims against finished products of market one . JSC Dalur, in addition to improvement; 3275 tonnes of ore during mining enterprises of PJSC PIMCU, PJSC PIMCU: JSC Khiagda: 10 .9% decrease of the final price of JSC Dalur and JSC Khiagda . All product G416-1 implementation of the project • conducting theoretical and • activities for reduction of electric consumed electric power, reduced G416-2 batches manufactured were compliant • reconstruction of the lighting G417-1 for Application of Selective Ore practical staff training by the power consumption and capacity its boiler gas consumption by 95% . G417-2 with technical specifications . system; G417-3 Extraction during Development of Holding Company’s licensed in the wholesale market during Process communication of the G418-1 Structural Accumulations at Mine investor’s Energy Center ensure heat G419-1 trainers within the framework of In December 2017, maximum hours in the Trans-Baikal • upgrading of the pumping equipment No . 8; personal and electronic courses JSC Atomredmetzoloto, PJSC PIMCU Territory’s power system; control system; recuperation and results into saving without investments in the amount of • labor organization, loss reduction, under programs approved by and JSC Khiagda were given • activities for reduction of capacity • purchase and installation of the RUB 6 .2 MM (in 2017) and RUB 41 .5 operation standardization and ROSATOM’s Corporate Academy certificates of ISO compliance purchase costs; solar water heating system; MM (scheduled for 2018-19) . Under accurate planning of work allowed (over 2000 people); 9001:2015 – quality management conditions of suppliers of last resort PJSC PIMCU to accelerate the system; ISO 14001:2015 – • daily submission of the electric • reconstruction of the primary • recertifying JSC Dalur’s and power sale companies’ monopoly process of manufacturing oil environmental management system . power consumption for the next day, building’s heating system; management systems for ISO on electric power prices, it is the radiators for PD-2E by 42% (from compliance control and equipment compliance: ISO 9001:2015, INTEGRATED ENERGY SAVINGS • acquisition of control stations for precedent of competitive struggle for 111 .22 to 64 .61 hours) during operation balancing; ISO: 14001:2015 and auditing VFD submersible pumps . the major consumer who confirmed implementation of the project AND EFFICIENCY IMPROVEMENT JSC Atomredmetzoloto, • implementation of the regulation the potential of electric power price named Process of Manufacturing PROGRAM PJSC PIMCU and JSC Khiagda on energy resource consumption decrease by locating the Energy Oil Radiators for PD-2E; for compliance with the same planning; Center in its immediate proximity to standards . For implementation details of the Energy Savings and • dissemination of JSC Dalur’s Energy Efficiency Program, see Report 2016 . • commissioning of the automated rule out the grid component and to results under the project for mill management system at the minimize losses . G302–4 Acceleration of Processes during hydro metallurgical plant; Stripping and Preparation of Reserves allowed achieving the RESULTS OF IMPLEMENTING THE effect of RUB 8 .3 MM at two units; INCENTIVE SYSTEM IN 2017: • JSC Dalur’s further operations • staff KPIs (for process engineers, Table 14. Energy Resource Savings versus the Baseline Year under Comparable Condition in 2015-2017, Million RUB, % under the project for Replacement executives, specialists, etc ). include 2015 2016 2016 of Carbon Ammonia Salt for the energy savings and energy Plant % % % (baseline year 2009) (baseline year 2015) (baseline year 2015) Waterless Ammonia in the efficiency indicator . Commercial Desorbate Deposition PJSC PIMCU 68,985 9 .5 210,278 .58 14 .45 201,659 13 .85 Cycle resulted into the savings of RUB 13 .6 MM; JSC Dalur 9,232 14 1,442 .72 0 .82 2,128 1 .20 • the total actual annual savings JSC Khiagda 7,525 24 .9 16,385 .14 10 .63 4,324 2 .80 from implemented activities for operation performance PLANS FOR 2018: For energy savings and energy JSC DALUR: improvement exceeded RUB efficiency: For implementation of the incentive • acquisition of control stations for 450 MM . system: PJSC PIMCU: VFD submersible pumps; Further implementation of the incentive • reduction of electric power • partial replacement of low- system for creation of infrastructure, consumption for heating of efficiency light sources with LED development and maintenance of the firefighting tanks in wintertime; lights . RESULTS OF IMPLEMENTATION OF THE ENERGY SAVINGS AND ENERGY EFFICIENCY PROGRAM IN 2017: energy saving and energy efficiency culture, tasking line executives, • quantitative adjustment of heating JSC KHIAGDA: G302–1 Table 13. Results of Implementation of the Energy Savings and Energy Efficiency Program in 2017 medium in input assemblies; employees, specialists and other service • reconstruction of intake and employees for the long term including: Electric power Motor gasoline* Diesel fuel • replacement of low-efficiency light exhaust ventilation systems of sources; Plant • inclusion of the energy saving JSC Khiagda’s production site; TDZh thousand RUB TDZh thousand RUB TDZh thousand RUB indicator into KPIs of top managers • streamlining or length reduction • reconstruction of heat stations and chief specialists, process of surface trunk pipelines of of the heating system of JSC Atomredmetzoloto 3 .3 4,495 1 .7 2,140 0 0 engineers, mechanics, etc . with compressed air grids . JSC Khiagda’s production site . the share of at least 10% for non- * JSC Atomredmetzoloto procures transport services from LLC ARMZ Service energy employees and 20% for energy employees .

60 Annual Report JSC Atomredmetzoloto 2017 61 G201–1 4.2. Financial Capital 4.2.2. Financial Management Performance 4.2.1. Financial Management Due to the lack of legislative As noted in previous annual reports, As the process of legal transfer of requirements or other needs, ROSATOM’s strategic resolution foreign assets has not been completed JSC Atomredmetzoloto has not been passed in 2013 to spin off the yet, IFRS financial performance preparing any consolidated financial international segment of uranium data set forth in previous annual PERFORMANCE FOR 10 YEARS: of processes for informing the top • implementation of project statements under IFRS since 2016 . mining assets into the separate reports include performance both of • implementation of financial risk management of key indicators of management best practices;: management mechanisms ensuring the Holding Company’s financial and • institutes of collegial investment Consolidated indicators from the holding company (managed by Russian and foreign subsidiaries of high level of working capital economic condition; decision taking bodies (IDTBs) allow financial performance statement and Uranium One Group, JSC) resulted JSC Atomredmetzoloto . financial condition statement set into inclusion of only Russian uranium management performance and • development and implementation comprehensively analyzing projects This is why the financial indicators acceptable liquidity values; of the target tree focusing on and ruling out voluntarist decisions; forth below have been formulated mining and service companies into for the previous reporting periods • development of the productions customized targeting for key business • the system of internal and based on data from individual JSC Atomredmetzoloto’s control presented in this Report may not costs management system to lines, products and processes; general industrial regulatory and RAS accounting statements of the framework . coincide with the similar financial improve financial performance and • proactive investment activities in methodological documents based on Holding Company’s enterprises under preserve liquidity under conditions terms of both corporate mergers ROSATOM’s Investment Policy; indicators presented in the reports for JSC Atomredmetzoloto’s control and For details, see JSC Atomredmetzoloto’s Annual Report the previous years . of restricted working capital of the and acquisitions, and development • elements of the matrix management included into the budget consolidation 2013 . Holding Company, regular cost cutting of proprietary production and structure that allows engaging framework . activities and implementation of the feedstock potential (Apollo project all required functional experts of cost cutting program; for consolidation of foreign the Management Company in the • revision of the inventory management uranium assets, major projects for project; Table 15. Consolidated Financial Performance States of JSC Atomredmetzoloto and Russian Companies under Its Control and to allow reducing them to the diversification of the mining business: • SIRIUS, the industrial automated within Its Consolidation Framework,* Million RUB minimum permissible level for several Pavlovskoye, Lithium, Titanium, system for investment project years continuously; Lunnoye and Severnoye gold; projects management . Indicator 2015 2016 2017 G102–7 • creation of the harmonized system for for large-scale refurbishment and prompt response to deviations from retrofitting of the country’s major Sales Revenue 21,353 22,182 17,759 targets . Development of solutions for existing uranium assets (PJSC PIMCU); key business forks such as production projects for super-long-term Cost of Goods Sold (COGS) -15,703 -15,967 -17,161 or selling, proprietary capacities or development of domestic uranium outsourcing, profitability or liquidity . mining (JSC Khiagda until 2054, Gross profit (loss) 5,650 6,215 598 Implementation of consolidated JSC Dalur until 2036, EGMK, JSC up to annual and mid-term budgets for the 50 years); Management and Commercial Expenses -1,544 -1,493 -1,469 entire Holding Company . Refining Interest receivable 419 426 248

Interest payable -926 -916 -218 2017 RESULTS: capital allowed, for the first time warehouse inventories resulted Other income and expenses -4,340 930 -6,809 in many years, to obtain positive into two-fold reduction thereof • Throughout the year, the Holding balance (profit) for interest income within two years . We focus on the Company’s performance was Profit (Loss) before Profit Tax -742 5,162 -7,650 and expense and reduce the following: influenced by the following external borrowings amount by 77% year factors: • reducing the Holding Company’s Profit Tax -779 -557 -226 on year; finished uranium product • decreasing USD exchange rate; Net profit (loss) -1,521 4,605 -7,876 • given high cost of working capital stockpiles; • decreasing global natural uranium in financial market, operations • reducing the annual program prices . continued to consolidate * The consolidation framework includes JSC Atomredmetzoloto; PJSC PIMCU; JSC Dalur; JSC Khiagda; JSC VNIPIpromtechnologii ; JSC RUSBURMASH; LLC ARMZ Service; JSC Elkon MMP; and for procurement of primary JSC EGMK Project . temporarily free cash of the and auxiliary materials without The combined impact of the above Holding Company’s companies on In 2017, revenue decreased by RUB 4 .4 1 .2 bn from uranium (+4%) and non- 6,115 MM) of financial investments compromising primary production; factors resulted into revenue and profit a daily basis resulting into surplus bn versus 2016 on negative external uranium sales as well as increasing into Mantra Resources Limited (owner decreasing by RUB 5 .6 bn . profit due to accelerated capital • revision towards reduction of factors (decreasing USD exchange rate share of in-situ leaching allowed of Mkuju River mine in Tanzania) due • the unit cash cost of producing 1 turnover; rated insurance provisions of and market prices of natural uranium) . mitigating the negative market from to revision of the asset’s production kg of uranium was reduced by 2% valuables . Decrease could have been greater RUB -5 6. bn to RUB - 4 .4 bn . program and changes to the uranium • reduction of management and (RUB -5 .6 bn) but material contribution price forecast . versus 2016 actual by increasing The bulk of net loss was formed by commercial expenses by 2% was to the revenue in the amount of RUB the share of uranium production ensured; the amount of depreciation (RUB at enterprises producing uranium using in-situ leaching with lower • implementation of the program Table 16. Consolidated Statement of Financial Positon of JSC Atomredmetzoloto and Russian production cost; for reduction of the Holding Companies under Its Control and within Its Consolidation Framework, Million RUB Company’s inventories continued . • the Holding Company’s efficient Use of systemic management of management of working and loan Indicator 2015 2016 2017

In 2017, we were able to limit the growth of costs to the inflation level Fixed Assets 128,361 131,091 127,180 and reduce the unit production cost of uranium mining by 2% versus 77% 2016 actual. Intangible Assets and R&D 6,181 6,468 6,432 REDUCTION OF BORROWINGS Such high results could not be achieved without streamlining the Property, Plant and Equipment (PP&E) 31,244 33,132 32,742 volumes and cutting the underground uranium mining costs ay IN 2017 PJSC PIMCU, and increasing in-situ leaching production volumes at Fixed Financial Investments 86,604 86,812 83,111 JSC Dalur and JSC Khiagda (+14% vs. 2016). Other non-current assets 4,332 4,678 4,895 * Unit production cost of uranium at effective prices (without depreciation, leasing or provisions). Current assets 13,351 10,353 9,400

*Specific production cost of uranium in current prices (without depreciation, leasing, reserves) .

62 Annual Report JSC Atomredmetzoloto 2017 63 Indicator 2015 2016 2017 4.2.3. Investments

Reserves 5,016 4,393 2,787 Repayment of the bulk of The Holding Company’s investment activities aim at achieving strategic objectives borrowings in 2017 was due to of ROSATOM and the Mining Division . Receivables 4,477 2,453 3,255 efficient management of the 3.9 Holding Company’s proprietary Total investments of the Holding RUB 4 .9 bn RUB BN INVESTMENTS INTO Financial investments 1,042 495 0 sources subject to coverage of Company in 2017 expenses aimed at financing of DEVELOPMENT AND UPKEEP Cash 2,648 2,833 2,826 the Mining Division’s investment Development projects of PJSC PIMCU, JSC Khiagda, JSC Dalur, JSC The First Ore OF OPERATIONAL URANIUM program by the shareholder’s Key Investment Targets 169 180 532 Mining Company and investments into Other current assets (JSC Atomenergoprom) MINING ENTERPRISES IN 2017 upkeep of operational production facilities contribution to the authorized 141,712 141,444 136,580 TOTAL ASSETS capital . Capital and Reserves 124,589 135,447 131,187 Investments into development and JSC Dalur (including non-uranium Capital (Authorized, Surplus and Reserve) 84,296 90,532 94,073 upkeep of operational uranium mining projects of the enterprises) . enterprises amounted to RUB 3 .9 bn RUB 40,293 44,915 37,114 In 2017, investments into operations Retained Earnings and were aimed at: bn 6% 4% 4% 3% of uranium enterprises within the 10% 26% 16% 16% Fixed Liabilities 11,002 50 217 • construction and installation Holding Company framework were 9 84% 70% 80% 81% work at production facilities, allocated as follows: Borrowings 10,878 0 0 infrastructural and power facilities; • design of production facilities; JSC Khiagda 5 Other Fixed Liabilities 124 50 217 The following operations have been • capital mining and preparatory performed (39% of the Holding Short-term liabilities 6,121 5,947 5,176 mining operations; Company’s investment program): 1 • upgrades and refurbishment of Borrowings 1,294 2,027 462 production facilities; • acidification of placer four at 2015 2016 2017 2018 Khiagda deposit; • information and technical support; Payables 3,433 2,515 3,291 • physical launch of the mining and • design and R&D; processing complex ensured at Operation enterprises 76 213 219 Income of future periods • safety assurance; Vershinnoye Deposit; • procurement of production and Non-uranium projects Provisions for liabilities and charges 1,093 1,039 967 • receipt of the nuclear site license drilling equipment . for Istochnoye and Vershinnoye Other projects Other liabilities 225 153 237 Year on year, investments in 2017 Deposits; remained at the comparable level . In • receipt of the commissioning TOTAL CAPITAL AND LIABILITIES 141,712 141,444 136,580 2018, we are planning to increase permit for Istochnoye Deposit Figure 30. Investment Performance by the investment program by 54% (Placer No .1); Project Groups in 2015-2017 due to accelerated upgrading and and Plans for 2018* • execution of the agreement replacement of legacy equipment * Percentage changes result from re-grouping of for purchase of primary power for PJSC PIMCU’s uranium and coal projects, but the total investment amount of past years equipment for Dzhilinda remains unchanged . business, construction of Mine No . 6 substation; and development of new deposits at JSC Dalur and JSC Khiagda . • purchase of diesel fuel tanks for the consumption warehouse for The structural changes performance Dzhilinda substation . of the Company’s investment program result from diversification JSC Dalur 4% and development of non-uranium The following operations have been Table 17. Key Financial Performance Indicators of JSC Atomredmetzoloto The main financial indicators are 16% in 2015-2017 within the average regulatory projects . Year 2017 saw further performed (19% of the Holding values, which characterizes the implementation of Pavlovskoye project Company’s investment program): Change Company as a financially stable aimed at creating the economically Indicator 2015 2016 2017 • completion of construction and 2017/2016 entity capable of timely meeting efficient production complex based on Pavlovskoye lead and zinc deposit commissioning of Unit No . 15 its assumed obligations . Improving of Ust-Uksyansky section of Financial Stability Indicators including the mine and refinery, and financial performance resulted from Dalmatovskoye deposit; reduction of fixed assets formed due further work on the non-uranium • physical launch of the first stage Gearing 0 .5 0 .4 0 .4 0 .0 to depreciation of existing financial project for Organization of Associated 80% investments of JSC Atomredmetzoloto Scandium Mining at JSC Dalur . Year of the pilot plant for 1 .5 tpa of scandium oxide; Liquidity Indicators and systemic management of 2018 will see launch of the project for gold mining at Severnoye deposit in • receipt of the positive conclusion inventories that allowed reducing the Uranium projects the Elkon District . Current Ratio 2 .2 1 .7 1 .8 +0 .1 stockpile of the Holding Company’s from FAU Glavgosekspertiza for finished uranium products . In the structure of investment by Russia for the Pilot Production Site Non uranium projects for Uranium ISL at Khokhlovskoye Quick Ratio 1 .3 1 .0 1 .2 +0 .2 key areas of the Company in 2017, Liquidity indicators confirm absence Deposit; of money shortage risks and high level investment in the development Other projects Return on Sales Indicators, % of solvency of the Company . of the existing uranium mining • approval of the exploratory enterprises continues to play the key scoping FS and reserve calculation Return on sales depends directly on report for the Khokhlovskoye Figure 31. Figure Investment Return on Sales 26 .5% 28 .0% 3% - 25% part with 89% thereof accounted decreasing revenue in 2017 . for by JSC Khiagda, PJSC PIMCU and Project Groups in 2017

64 Annual Report JSC Atomredmetzoloto 2017 65 deposit by the State Reserve • commissioning of the automated 4% PLANS FOR 2018 AND MID-TERM PLANS: Commission; access control system suite at 7% 1% Mine No . 8; In accordance with the mid-term ground part of the mine have • completion of construction and 15% commissioning of Unit No . 14 • commissioning of the additional 31% business plan, the investment program developed, construction of the primary of Ust-Uksyansky section of exploration Horizon No . 7 of Mine 19% of JSC Atomredmetzoloto in 2018 reducing substations has started and Dalmatovskoye deposit; No . 8; to 2021 may amount to more than active negotiations with potential RUB 31 .8 bn according to preliminary investors are underway . receipt of the subsoil use license operation startup of the plant for • • estimates . The key trend will be for Dobrovolnoye deposit and production of granulated explosive Additionally, the near future increased efforts for implementation of commencement of design work for substances; will see commissioning of new diversification projects («Pavlovskoye», the deposit; uranium deposits at JSC Khiagda • start of initial operations for 39% «Processing of Pyrite Cinders at (Kolichikanskoye, Dybrynskoye) and • development of design construction of Mine No . 6 . PJSC PIMCU», «Organization of JSC Dalur (Dobrovolny) primary 84% documents for additional Associated Scandium Production at operations for which have already construction of Dalmatovskoye PJSC PIMCU JSC Dalur») and introduction of new deposit and submission thereof JSC THE FIRST ORE MINING begun . optimization solutions to reduce the Ensuring operation performance for ROSATOM’s review and COMPANY (FOMC) (PAVLOVSKOYE JSC Khiagda cost of uranium produced . Year 2018 will see completion of assessment . construction of the drainage duct of PROJECT) JSC Dalur In relation to development of ARMZ’s Business diversification Urtuysky Strip Mine ensuring coal PJSC PIMCU core uranium business, one of the The following operations have Pavlovskoye production in the next decade . Satisfying ROSATOM’S need The following operations have been been performed (7% of the Holding key tasks on the Holding Company’s for Russian uranium at competitive performed (31% of the Holding Company’s investment program: Other projects mid-term agenda is construction price Company’s investment program): PJSC PIMCU’s Mine No . 6 . Within the • completion of the second stage of • completion of the first stage Figure 32. Key Investments of project implementation framework, engineering surveys for the MRW; Figure 33. Mid-Term Investment of reconstruction of Sredneye ARMZ Uranium Holding Co. in 2017 working documents for the above- Structure in 2017 to 2019 tailings’ dump (compliance • completion of semi-commercial conclusion received); testing of the deposit’s ores for refinement process; • receipt of the positive conclusion for the operation scoping FS for • development of the final report on 31.8 RUB bn. deposits of Streltsovskoye ore key technical solutions . THE AMOUNT OF JSC ATOMREDMETZOLOTO’S INVESTMENT field; PROGRAM FOR 2018 TO 2021 EXCEEDS • startup of the ash dump at Krasnokamensk TPP; 4.3. Intellectual Capital 2017 RESULTS: PERFORMANCE FOR 10 YEARS Year 2017 saw further streamlining of participation in implementation of • the RPS project was implemented uranium mining enterprises’ investment new units of the system such as to improve investment project PJSC PIMCU: programs including: Risks, KPIs, etc; management process . RPS project resulted into acceleration of project • creation and implementation of the and software to allow improving generation logging suite for direct • streamlining of upkeep projects • improvement of the Annual data sheet drafting, improvement of integrated process for development development efficiency of identification of uranium in drill resulted into reduction of scheduled Investment Program Management of lean uranium ores using Dalmatovskoye and Khokhlovskoye holes using the instantaneous fission card completion in the Sirius IS due need for investments by 14% in Regulation, more stringent control geotechnological methods; uranium deposits; neutron method . to implementation of the template 2018 to 2019 versus the initial need of annual investment program • development of scientific • development and implementation of presentation for submission to JSC VNIPIpromtechnologii : of the enterprises without reducing planning accuracy and control of methodological recommendations for the acidifier application process for monthly investment payments . In review by the investment decision identification of stability parameters drill hole in-situ leaching . • development of process solutions for scheduled production volumes; development of uranium deposits as this connection, the enterprises taking body (IDTB), follow-up of of the rock mass with filling of the JSC Khiagda: • reduction of the budget for well as mining security solutions; were granted additional powers for the project finance and economy developed space with solidifying filler PJSC PIMCU’s Integrated • development and implementation of • operations for assessment of statuses independent investment decision model (FEM) and streamlining of by not more than 67%; Uranium Production Performance • streamlining of the uranium ore the Khiagdit software suite to allow of underground nuclear explosion taking; the process of expert approval of Improvement project was RUB 110 agitation stripping process allowing improving development performance sites and development of activities materials . of uranium deposits in Khiagda ore MM . (from RUB 134 MM to RUB 24 • further implementation of project to reduce manganese dioxide by more for rehabilitation thereof; Measures taken to improve the field; • development of process solutions for MM) due to application of a more management within the Holding than two times and cut feedstock ore efficiency of investments and optimize • development and implementation burying of solid nuclear wastes and efficient solution (construction of Company . Based on ROSATOM’s treatment costs; the investment process within the • creation of the geodynamical polygon of the new process drill hole design assessment of statuses and operation the explosive substance plant at assessments of maturity and division allowed to improve profitability, of Streltsovskoye ore field; using new materials for casing pipes, prospects of liquid industrial and PJSC PIMCU’s site) . efficiency of the investment and filters and annulus hydro insulation; nuclear waste pumping stations; project management system, reduce the amount of equity and • development of integrated The following actions were taken in geophysical methods for controlling • development of new processes and • integrated operations within the JSC Atomredmetzoloto ranked own sources of funding applied to 2017 to improve economic efficiency the process of uranium ore heap methods for repairs, restorations and framework of activities set forth second . In particular, highly current maintenance of equipment performance recoveries of process and increase investment transparency: leaching . in the Federal Target Program for appraised were template investment and infrastructure, Industrial sites, drill holes . Assurance of Nuclear and Radiation JSC Dalur: • further operations for development programs, Annual Investment increase responsibility of staff of the JSC RUSBURMASH: Safety of Russian in 2016 and division’s entities for implementation of • development and implementation until 2030 aimed at creating the of the Sirius Industrial information Program Management Regulation, • Development and certification of the system for investment project project approach to creation of investment activities and achievement of unique innovative mining and Harmonized National RAW Handling geological computer processes hardware and methodological new management including the project work teams with role of their target financial indicators by System . investment business unit’s active assignment using the matrix control the projects . The integral investment logic; performance indicator was 102% .

66 Annual Report JSC Atomredmetzoloto 2017 67 4.3.1. Intellectual Capital Management KEY PROJECT 1 SCIENTIFIC AND TECHNICAL SUPPORT TO DEVELOPMENT OF URANIUM DEPOSIT USING THE UNDERGROUND MINING DEVELOPMENT METHOD In 2017, the Holding Company’s (UMD) innovative costs amounted to RUB 208 .72 MM of which RUB 135 .9 MM • Purchase and installation of 500 sintering of fine ore feedstock • Year 2017 saw commencement for R&D including RUB 90 .0 MM from hydraulic thrust anchors by Atlas fractions for further processing of operations for total exclusion external sources (under the subsidy of External financing Kopco . The use of this type of using the heap leaching method or replacement of pyrolusite in (FB funds) the Ministry of Education and Science of reinforcement will significantly developed by PJSC PIMCU’s Central the process of hydro metallurgical 34% the Russian Federation) . ROSATOM reduce the cost of fastening of mine R&D Laboratory (CRDL) (uranium processing of ore feedstock for workings and improve the safety of extraction is on the average 10% cheaper acidifiers . Research the production staff; higher than that for leaching of operations imply development non-sintered feedstock) . Purchase of the process for producing the 190 .9 345 .5 208 .72 66% • The use of surfactants significantly 400 of the sintering unit and stacker alternative acidifier the feedstock increased uranium extraction; 350 is scheduled for 2018 for pilot for which would be pyrite cinders . Figure 35. R&D Cost Structure 300 • Laboratory studies confirm production operations; The work is scheduled for in 2017, % 250 efficiency of the process for completion in 2018 after semi- 200 commercial testing . 150 100 50 KEY PROJECT 2 0 SCIENTIFIC AND TECHNICAL SUPPORT TO DEVELOPMENT OF URANIUM DEPOSIT USING THE IN-SITU LEACHING (ISL) 2015 2016 2017 JSC Dalur logging method (KND-M) • April 2017 saw pilot testing of the and impulse neutron-neutron ultrasonic equipment prototype Figure 34. Implementation Costs of the Holding • Further implementation of logging method (INNK) for direct for restoration and performance Company’s Innovative Development Program innovative mining and geological identification of uranium during improvement of process drill holes; in 2015–2017, Million RUB computer processes and software mining preparatory operations developed by the Seversk • In 2017, pilot production operations at Khokhlovskoye deposit were Technological Institute of NRNU were performed to implemented approved by FBU GKZ in 2017 . MEPhI . The implementation of the integrated logging using KND-M Currently, development of Innovative Development Program created program-informational and INNK methods and AMK the project of exploration of complex serves a base for KND-M hardware at JSC Khiagda’s Dobrovolnoye deposit is underway creating the «Smart Mine ISR» facilities Work performed allowed with inclusion of KND-M and INNK ARMZ’s innovative development Table 18. Key Projects of the Holding Company in 2017 system and allows to achieve successfully solving a number of integrated logging methods into program is the integral part of additional accuracy when counting problems for clarification of primary geophysical studies of drill holes . ROSATOM’s Innovative Development the reserves, additional quality radiological specifications of ores Operations at Dobrovolnoye deposit and Process Upgrading Program until when designing producing blocks and performance of process drill Scientific and technical support to development of uranium deposit are scheduled for completion in 2030 . and additional efficiency when holes during mining preparatory using the underground mining development method (UMD). 2019 to 2020; developing the Dalmatovskoye and operations at units B1 .11 and Khokhlovskoye uranium deposits . • Pilot production operations continue B1 .12 of Vershinnoye Deposit as Scientific and technical support to development of uranium deposit for associated scandium extraction well as for assessment of residual Intellectual property rights to the using the in-situ leaching (ISL). from uranium production mother performance of operational unit software suite belong to JSC Dalur Analysis liquors and creation of the advance X3 13. of Khiagda deposit . Year and are protected with Rospatent’s JSC Atomredmetzoloto’s aluminum and scandium master 2018 is planned to see further certificates . scientific and technical The key objectives of ARMZ’s Innovative Development Program until 2030 are alloy production . operations using AMK KND-M Implementation of the software at JSC Khiagda’s facilities for activities in 2012 to 2016 as follows: JSC Khiagda and information suite covering all clarification of radiology of ore conducted in 2017 shows • improving uranium mining performance at operational uranium mining aspects of the enterprise’s business • Pilot production work continued placer section B1 (Vershinnoye that ARMZ’s R&D project enterprises; from geological exploration to for development of new designs Deposit), assessment of residual portfolio in 2012 and 2016 • break-even operation of uranium mining enterprises; decommissioning of units and of process drill holes for operation reserves in placers being developed environmental impact assessment under conditions of ubiquitous and certification of 3D modelling is technologically and • production diversification . allowed qualifying JSC Dalur’s products distribution of permafrost rocks; results in control drill holes . as innovative as of 2016 . Revenue economically efficient . • Work continued to adapt and from innovative product sales in 2017 implement the software suite amounted to at least RUB 2 .3 bn . developed by Seversk Technological • In 2017, pilot production operations Institute of NRNU MEPhI . 11 Table 19. IPR in 2012-2016, pcs., % will continue for development of programs of the Khiagdit suite new process drill hole designs . were granted Rospatent certificates Of which IPR 2012 2013 2014 2015 2016 2017 Total, pcs . Taking into account the results of confirming JSC Khiagda’s intellectual implemented the completed works, a decision to property rights; implement the developed design of Invention patent 2 6 2 3 2 5 20 6 • Work continued to implement new holes commercially which allowed methods of repair and restoration Utility model patent - - - 1 - - 1 1 to significantly reduce their capital of process drill holes . Purchasing construction costs . As of 2018, all PC certificates 1 1 5 9 4 11 31 31 additional equipment to increase newly constructed drill holes will production volumes and improve have improved designs; Database - - - - 1 - 1 1 performance of repair and Know how - - - - 2 - 2 0 • Results of pilot production restoration work is scheduled for operations for implementation 2018; TOTAL: 3 7 7 13 9 16 55 39 (70.9%) of integrated logging using the instantaneous fission neutron 68 Annual Report JSC Atomredmetzoloto 2017 69 4.4. Natural Capital G201–2 4.3.2. Innovative Performance 2017 Results: PERFORMANCE FOR 10 YEARS: • receipt of 16 state security • 15 patent applications were PJSC PIMCU • implementation of the • construction of the solid household documents for intellectual property: submitted for state registration of integrated management system and production waste polygon; intellectual property: • construction of the new sulfur acid (ISO 9001 and ISO 14001); • implementation of the Integrated • five invention patents workshop without pyrite cinder • regular environmental monitoring . Management System (ISO 9001 and (PJSC PIMCU, JSC Dalur and • 11 applications for PC software formation; ISO 14001); JSC VNIPIpromtechnologii ); certificates (JSC Khiagda); • reconstruction of TPP boiler units and JSC Khiagda • regular environmental monitoring . implementation of more advanced • 11 PC software certificates • four invention patent applications dust containment equipment; • construction of waste treatment JSC Dalur facilities of the rotation camp; • implementation of the Integrated (JSC Khiagda); (JSC Dalur) . • construction of the new ash dump at Management System (ISO 9001 and the TPP; • construction and startup of the sulfur acid production facility; ISO 14001); • relocation of residents of Oktyabrsky • regular environmental monitoring . township from the industrial zone to • switch of the coal boiler to standby Knowledge Management System (KMS) Krasnokamensk; (migration to heat production using • reconstruction of the sealing curtain the sulfur acid production facility) to minimize dissemination of reducing air pollution emissions; • Three people participated in • reviews of power sources (annually per 100 • creation of the remote control system ROSATOM’s training seminars JSC VNIPIpromtechnologii ’s researchers and developers): contaminants in Shirondukuy ravine; • reconstruction of Sredneye tailing of continuous operation of pumping (JSC Atomredmetzoloto and scientific and technical reports for equipment; • 2015 – 17 .5; dam . Extension of the main bund wall . JSC VNIPIpromtechnologii); operation performed in 2016; • 2016 – 7 .5; • Within the framework of filling • 5,839 documents from • 2017 – 42 .5 . ROSATOM’s scientific and technical JSC VNIPIpromtechnologii ’s information portal, we placed: scientific and technical information archive were digitized (engineering • full-text copies of the book surveys and construction Russian Experience in Uranium 4.4.1. Natural Capital Management documents) amounting to over Geotechnology and Creation and 700,000 pages; Environmental Policy G303–2 Development of the Domestic Class 6 radioactive waste G304-2 Nuclear Industry’s Mineral • The number of publications in The environmental policy of International ISO 14001 standard and Resource Base; peer-reviewed global nuclear JSC Atomredmetzoloto went into the environmental policy of ROSATOM . were placed into Verkhnee effect in 2013 and has since been For ARMZ’s Environmental Policy, see and Sredneye tailings’ a basis for implementation of the http://www .armz .ru/development/ dumps of PJSC PIMCU . main statutes of the Constitution environmental/ of the Russian Federation and other Radioactive waste laws of the Russian Federation, the For details of the Environmental Policy and its objectives, handling is compliant with see Report 2014 . 4.3.3. Digital Economy Performance requirements of Federal Law No . 190-FZ dd . Year 2017 saw first steps towards Using integrated geological and The system will allow: 7/11/2011 on Radioactive digitalization . JSC Khiagda is developing mathematical methods, advanced • rapidly and precisely localizing 3D models of developed active reserves video surveillance tools and smart 4.4.2. Natural Capital Management Waste Handling and ore within the deposit . identifying of PJSC PIMCU, JSC Khiagda and sensors, the system will be tracking Amendment of Certain Laws ore body parameters and the best Performance JSC Dalur to allow compliance with and adjusting production processes in uranium mining mode, etc .; of the Russian Federation . G301–1 the digital production standard in the real time . 4.4.2.1. Protection of Land Resources and Biodiversity future . • modelling drill hole operations; In 2017, no recultivation work was The technical stage of recultivation of THE SMART MINE PROJECT is an • planning mining priorities, performed by PJSC PIMCU . Construction the water drain trench from the system example of business digitalization at equipment repair time schedules, work for reconstruction of Sredneye of Umykeyskiye Lakes to Khara-Nur JSC Khiagda within the framework etc . whereof smart methods of modelling tailings’ dump resulted into stripping Lake was completed . in-situ leaching processes are being Scheduled for 2018 are pilot of 85,000 cu m. of topsoil (42 5. ha) and developed . These include the IT system production operations to allow fairly respectively the same 42 5. ha of land based on the digital model map of assessing effects of the project . was disturbed . reserves and production operations .

109 96. 5 42 .5 30 .834 55 .8 19 .297 120 60 100 50 80 40 60 30

40 Figure 37. Total 20 Figure 38. Total 20 Number of Lands 10 Number of Lands Figure 36. Flowchart 0 Disturbed at 0 Disturbed at of the Smart Mine PJSC PIMCU in 2015- JSC Khiagda in 2015- 2015 2016 2017 2015 2016 2017 2017, ha 2017, ha

70 Annual Report JSC Atomredmetzoloto 2017 71 In 2017, JSC Khiagda disturbed 19 .297 JSC Dalur performed the following work EFFLUENT WATER DISCHARGE JSC Dalur, JSC Khiagda G306–1.3 ha of land including: associated with disturbing the topsoil: Table 21. Effluent Water Discharge at PJSC PIMCU in 2015–2017, mcm Given the closed process cycle, no effluent • 13 .0 of disturbed land area during • preparation of construction site (in water containing hazardous chemical and radionuclides was discharged . Domestic development of mineral deposits the form of vegetation soil layer Year/Water Volume 2015 2016 2017 effluent water from the sewage system is (construction and development removal with the mean thickness of remove to waste treatment facilities of the SPV of operation units of Vershinnoye 0 .2 m) to perform construction and Effluent Water Discharge Volume 11 .724 11 .375 11 .039 under the agreement . Deposit of Khiagda ore field); installation at the following sites: • 6 .1 ha of disturbed land area during • single-apartment residences; construction; • operation units for ISL uranium 1 .95 3 .68 1 .818 • 0 .197 ha of disturbed land area mining at Khokhlovskoye uranium 4 during placement of Industrial deposit; 3 .5 wastes (including construction ones) • operation unit of Central Placer of 3 and solid domestic wastes . 4.4.2.3. Air Protection In 2017, PJSC PIMCU recorded increase Dalmatovskoye uranium deposit . 2 .5 Table 22. Air Pollution Emissions in 2015–2017 by PJSC PIMCU, tonnes of sulfur acid and sulfur dioxide 2 emissions by 3 234. and 772 .934 tonnes, All work was performed in compliance G305–1 1 .5 Year/Pollutant 2015 2016 2017 respectively, due to increase of sulfur G305–2 with the approved documents . The G305–3 vegetation topsoil was fully used at the 1 acid production by 7% versus 2016 . G305–4 Carbon oxide 796 1,006 .318 894 .113 G305–5 final stage of construction to improve 0 .5 G305–6 Sulfur dioxide 5,059 .0 5,248 .446 6,021 .38 Due to reduction of coal burnt at the G305–7 the area around constructed facilities . 0 TPP in 2017 versus 2016, nitrogen Nitrogen oxides (NO2 equivalent) 1,594 .0 1,796 .751 1,666 .098 2015 2016 2017 oxide and carbon oxide emissions have Specific pollutants (inorganic)* 172 .3 163 .05 164 .719 decreased . The quantity of coal burnt by Figure 39. Total Specific pollutants (organic)* 5,908 .82 7,974 .61 7,861 the TPP in 2016 was 715,395 .91 tonnes Number of Lands of conventional fuel versus 704,392 43. Total* 13,785.2 16 ,427.59 17,270.316 Disturbed at JSC Dalur tonnes of conventional fuel in 2017 . in 2015-2017, ha * added instead of inorganic dust and other coal ash Thermoelectric power plants’ soot and fuel oil ash emissions (vanadium equivalent) have increased by 56% Table 23. Air Pollution Emissions in 2014–2017 by JSC Khiagda, tonnes and 78%, respectively . Increased 4.4.2.2. Water Resource Protection carbon (soot) formation is associated PJSC PIMCU reduced its mine water Year/Pollutant 2015 2016 2017 with changes to physical and chemical WATER INTAKE intake in the past period due to properties of coal supplied to the TPP G303–1 Carbon oxide 190 .865 19 .307 7 .394 such as higher coal ash-content (the Table 20. Water Intake by Purposes and Holding’s Companies, in 2015-2017, mcm temporary conservation of mine two . Due to reduced water inflow to the Sulfur dioxide 49 .825 185 .155 301 .796 maximum ash-content in 2016 was stripping mine field during autumn 17 .1% versus 18 .2% in 2017) and Nitrogen oxides (NO2 equivalent) 14 .827 9 .275 8 .116 combustibles in fly-ash content (3 .32% Plant 2015 2016 2017 and winter floods as well as in summertime, intake of stripping mine Specific pollutants (inorganic)* 1 .035 0 .002 28 .521 in 2016 versus 5 24%. in 2017) . Water intake for production purposes waters decreased and water drainage Specific pollutants (organic)* 18 .911 6 .387 0 .25612 PJSC PIMCU 22 .275 22 .714 19 .503 performance decreased versus 2016 . Other 13 .115 15 .9 2 .645 JSC Dalur 0 .048 0 .051 0 .053 JSC Khiagda’s reduced water Total 288.578 236.026 343.639 JSC Khiagda 0 .156 0 .188 0 .159 consumption is associated with the Water intake for household and drinking purposes following activities: *added instead of inorganic dust and other coal ash PJSC PIMCU 5 .127 4 .94 5 .193 • creation of the system for remote JSC Dalur 0 .058 0 .052 0 .052 control of continuous operation of Table 24. Air Pollution Emissions in 2015–2017 by JSC Dalur, tonnes The reduction of overall emissions pumping equipment for the first versus 2016 is connected with a JSC Khiagda 0 .035 0 .037 0 .047 Year/Pollutant 2015 2016 2017 and second water elevators with change to receiving heat energy due to Total water intake automatic maintenance of the Carbon oxide 8 .104 8 .094 6 .261 a surplus of heat that appears during set level in reserve tanks (ruling PJSC PIMCU 34 .466 34 .174 31 .304 Sulfur dioxide 0 .000416 0 .0071 0 .006 the production of sulfur acid . In this out the possibility of overflow of connection, the coal boiler was switched JSC Dalur 0 .106 0 .103 0 .105 such tanks, non-accountable water Nitrogen oxides (NO2 equivalent) 2 .898 3 .009 2 .247 to standby resulting into emission JSC Khiagda 0 .195 0 .228 0 .215 intake and occurrence of any Specific pollutants (inorganic)* 0 .664 0 .959 0 .664 reduction (including in terms of carbon Underground sources leakages in the water supply area oxide and nitrogen oxides) . from the first to the second water Specific pollutants (organic)* 0 .00032 0 .006 0 .162 PJSC PIMCU 28 .666 28 .374 25 .703 elevators) . Total 13.013 13.142 10.396 Increasing sulfur dioxide and sulfur acid emissions are associated with increase JSC Dalur 0 .106 0 .103 0 .105 At JSC Dalur the change of water *added instead of inorganic dust and other coal ash of sulfur acid production by 38% JSC Khiagda 0 .195 0 .228 0 .215 intake indicators in 2017 versus 2016 Exceeding set limits doesn’t exceed 5% . PJSC PIMCU 0 0 0 Overall, the enterprise’s pollutant emissions show no material increases JSC Dalur 0 0 0 or decreases except for СО (due JSC Khiagda 0 0 0 to reduction of boiler emissions) associated, in its turn, with increase of the mean ambient temperature in the past year .

72 Annual Report JSC Atomredmetzoloto 2017 73 4.4.2.4. Waste Management 4.4.2.5. Environmental Costs G307–1

G306–2 Table 25. Waste Generation of all Hazard Classes in 2015-2017, tonnes Table 26. Holding Company’s Environmental Protection Costs in 2017, RUB’000

Hazard Class Year PJSC PIMCU JSC Dalur JSC Khiagda Measures PJSC PIMCU JSC Dalur JSC Khiagda 2015 2 .158 0 .032 0 .1 Air Protection 46,834 .137 194 1,044 Hazard class I 2016 2 .769 0 .199 0 .039 Protection of Water Resources 58,465 .784 370 961 .873 2017 2 .539 0 .174 0 .143 2015 0 .846 0 .144 0 .286 Subsoil Protection 48,128 - - Hazard class II 2016 0 .031 0 .22 0 .554 Waste Management 46 932 390 .62 1,899 .427

2017 1 .111 1 .006 0 .501 Sustainable Use, Protection and Rehabilitation of Lands 75,323 .89 98 11,259 2015 155 .12 0 .518 7 .646 Total 398,871.497 6,618.182 22,977.529 Hazard class III 2016 104 .79 1 .038 2 .5 The ‘total’ costs of environmental assets aimed at protecting the Data for 2016 have been adjusted 2017 122 .42 1 .604 5 .769 protection comprise the current environment and rational use of subject to investments into fixed 2015 2,001 .6 77 .852 514 .1 expenditure for environmental natural resources, and the costs of the assets for performance of work for Hazard class IV 2016 1,547 .1 39 .452 187 .9 protection, the investments in fixed integrated management system . recultivation of Sredneye tailings’ dump and construction of ash dump 2017 1,453 .1 42 .8 480 .2 at PJSC PIMCU; RUB 288 MM in the 2015 23,508,303 .42 11 .623 1,455 .03 data set forth in Report 2016 do not 340.5 520.0 411.5 include investments into fixed assets . Hazard class V 2016 24,268,198 .8 24 .927 180 .6 2015 2016 2017 Reduction of the amount in 2017 is 2017 22,509,520 .4 17 .049 59 .9 due to reduction of construction costs 2015 23,510,463 .14 90 .169 1,479 .77 Figure 40. Holding Company’s Total Environmental Protection Costs as the bulk of expenses occurred in in 2015-2017, Million RUB Total 2016 24,287,844 .4 65 .809 371 .57 2016 . * Data for 2016 are recalculated taking into account the data related to investments in fixed assets aimed at 2017 22,511,099 .54 62 .670 546 .513 protecting the environment and rational use of natural resources . 2015 26,345,843 .3 0 1,000 .9 Wastes used at the enterprise and located at facilities in 2016 24,286,078 .27 0 249 .522 G304–3 operation, tonnes 4.4.2.6. Community Relations in Environmental Protection 2017 4,537,903 .29 0 41 .883 The Holding Company’s employees and Ulan-Ude who wish to complete of the enterprise, Uksyanskaya 2015 9,883 .321 23 .048 471 .68 Wastes transferred to SPV contractors for disposal and have always been active participants their environmental traineeship . and Peshano-Koledinskaya middle- decontamination, tonnes 2016 8,979 .67 27 .053 0 of environmental protection events, schools, 11 information posters were Environmental matters of the preservation of valuable natural manufactured and installed in littered 2017 17,969,493 .01 21 .198 352 .08 enterprise are reflected in the objects and restoration of forests . areas, several events and activities Khiagda Vestnik newspaper and at the 2015 no no no were performed for improving and In Krasnokamensk, over 600 enterprise’s web site . planting at adjacent settlements, Exceeding set limits 2016 no no no PJSC PIMCU’s employees and their JSC Dalur’s staff participated production and recreation areas 2017 no no no family members participated in spring in the Green Spring All-Russian environmental subbotniks for area Environmental Subbotnik . Jointly * Due to waste removal streamlining, they were transferred to contractor SPVs in 2017 . cleaning and planting . with administration of Uksyanskoye JSC Khiagda is contacted by students village circa 400 pines were of universities and colleges from Chita planted, 265 decorative shrubs were PJSC PIMCU : JSC DALUR : • decreasing generation volumes of ash bought and planted in the areas and slag mixture from coal burning; • reduction of hazard class I waste • increased formation of class II generation (mercury lamps) by and III wastes results from higher • decreasing generation volumes of kitchen foodstuff wastes; 0 .23 tonnes due to replacement of consumption of repair materials for 24 April - 2 May – mercury lamps for LED ones in the the motorcar fleet . • decrease of hazard class V waste the Ecology and Us environmental previous years and reduction of the generation by 120 .7 is due to subbotnik was conducted; number of mercury lamps used at JSC KHIAGDA : decreasing quantity of coal used for operations of the redundant coal boiler . the business units; • increase of hazard class I wastes • occurrence of new hazard class II (mercury lamps) generation by 0 .104 on 17 May – tonnes due to replacement of mercury wastes (Waste Lead Accumulators, the Give Nature a Chance event was lamps with LED ones; Undamaged and Containing conducted; Electrolyte); • increase of hazard class IV wastes generation by 273 .8 is due to vanadium catalyst for sulfur acid • increase of unsorted residential 5 June - 5 August – production, under the new Federal waste (excluding bulky ones), garbage My Village and My City photo exhibitions and sand contaminated with oil and Catalog of Waste Classes is hazard had been conducted to promote national, class IV (former class III); oil products . Increased generation of hazard class IV wastes is due to spiritual and environmental values of the • pyrite cinders, under the new increased production volume and home village and city Federal Catalog of Waste Classes, increased use of relevant chemicals; JSC Dalur is the award-winner of the Environmental Culture: are hazard class V (former class IV); Peace and Harmony Project for Environmental Culture in Industry and Energy .

74 Annual Report JSC Atomredmetzoloto 2017 75 G403-3 G403-4 4.4.3. Occupational Health and Safety The following actions were taken to • work is underway to improve the for management of occupational ensure safe working conditions: system for exchange of safety safety and health . The program for Ensuring Radiation Safety information to ensure maximum analysis of results of completed • improvements of the general safe staff coverage and improve behavior safety audits, Regulation labor culture with key focuses here In the reporting period, the individual effective dose at the Holding Company’s enterprises did not exceed 20 mSv for any single employees’ awareness; on Safety Culture Management aimed at active promotion of safe worker . No individual doses in excess of 100 mSv had been recorded from 2013 until 2017 . System and safety culture self- labor and development of the safety • all operator subsidiaries assessment methodology were culture; implemented the monthly Table 27. Average Effective Dose in 2015–2017, mSv developed . assessment of business units’ • PJSC PIMCU’s Mine No . 8 executives regarding organization Mean Effective Mean Effective Mean Effective commissioned the automated of occupational safety and health Dose in 2015 Dose in 2016 Dose in 2017 system for staff alcohol testing; operations; PJSC PIMCU 3 .42 3 .53 3 .44 • all operator subsidiaries developed • within the framework of migration and enacted regulations on actions JSC Dalur 1 .46 1 .58 1 .50 to international safety management of business units’ executives and standards, PJSC PIMCU implemented specialists for examination of their JSC Khiagda 1 .16 1 .05 1 .08 the project for development of the staff for intoxication; JSC VNIPIpromtechnologii 1 .33 1 .31 1 .20 safety culture, system and practice

Table 29. Fatal Injury Frequency Rate (FIFR)

The level of annualized effective dose The following actions were taken to • current repairs of the packaging 2015 2016 2017 for staff employed at radiation hazard improve the radiation situation at assembly including cleaning of the sites of PJSC PIMCU (underground PJSC PIMCU HMP: hopper, pressurization restoration, 0 .02 0 0 mines, hydro metallurgical plant) repairs of the ventilation system • cleaning and washing for removal remains at the same acceptable level . and repairs of assemblies with Table 30. Lost Days Rate (LDR)* of radioactive dust from intake No INES level 2 and higher events . replacement of elements and and exhaust vent ducts of several bearings . 2015 2016 2017 2017 RESULTS: production buildings; In the past year, no decommissioning 9 .85 17 .67 27 .4 • capital repairs of feedstock PJSC PIMCU performed targeted or liquidation of nuclear or radiation hoppers B and C including operations to improve the radiation hazard facilities were performed by Table 31. Occupational Disease Rate (ODR)** replacement of hopper sheet situation in mining works including: operators . lining, inspection of RC support 2015 2016 2017 • insulating concrete and wood structure, repairs of protective partitions were installed at structures and fences at the LCS 0 .75 0 .93 0 .56 underground mines one and eight feeder transition assembly and re- (20 pcs .); welding of weld joints; * LDR data have been calculated as follows: Number of lost days from accidents and occupational diseases/number of man-hours worked) * 200 000. . • ventilation doors DV-1000 (four) • capital repairs of crusher SMD- ** ODR data have been calculated as follows: The total number of occupational diseases for the year/number of man-hours worked) * 200 .000 . were restored and commissioned; 111 and SMD-111А including • based on results of individual replacement of crusher plates dosimetry control, timely staff (lining), crusher, replacement of 16 average 8 for the year 5 2 4 3 rotation was conducted within units fixtures and adjustment of crusher 16 with uranium content exceeding work openings; 0 .5% . 14 12 10 OCCUPATIONAL SAFETY 8 INJURIES 6 4 In 2017, there were no accidents subject to investigation in accordance with federal norms and regulations at JSC Atomredmetzoloto . 2 Figure 41. Injury occurrence dynamics at the enterprises 0 of JSC Atomredmetzoloto for 2002-2017, no. cases. In the reporting year, there were four Industrial accidents at the plants managed by 2002-2011 2012-2013 2014 2015 2016 2017 JSC Atomredmetzoloto . No fatal injuries occurred

2017 RESULTS: Table 28. Injuries at JSC Atomredmetzoloto’s Enterprises PLANS FOR 2018 AND THE FUTURE: for 2002–2017, cases. • ensuring functioning of the • revising and improving criteria for • assessing PJSC PIMCU’s safety 2015 2016 2017 electronic occupational safety assessing preventative operations status within its business units in and health room for conducting by executives of the Company’s accordance with the Regulation on Target 0 .7 0 .6 0 .54 trainings, briefings and knowledge occupational safety and health, and Internal Audit of Business Units/ on occupational safety and health, fire safety business units within Workshops’ Occupational, Industrial, Result 0 .23 0 .44 0 .28 education and attestation of the framework of the Personal Radiation, Environmental and Fire engineers and technicians; Responsibility Regulation; Safety Activities .

76 Annual Report JSC Atomredmetzoloto 2017 77 4.5. Human Capital REGIONAL STAFF NUMBERS Table 33. Average Headcount Dynamics in Key Operation Regions in 2015-2017, persons PERFORMANCE FOR 10 YEARS: • the ROSATOM Person of the Year participating in the annual industrial • implementation of the single annual industrial recognition program; worker championship Atom Skills Key Operation Regions 2015 2016 2017 In 2018 and the near future, the average staff number is harmonized remuneration system at • the ROSATOM Cares for Your Opinion within the Mining Division’s combined Moscow 637 603 562 the Holding Company’s enterprise; annual engagement survey shows team; planned to grow due to development of new production and business diversification expected at PJSC PIMCU • implementations of the Record increase of the employee engagement • mass cultural and sporting events are Kurgan Region 581 595 619 G405-1 performance management system; from 42% to 66%; held for employees and their children . (due to transfer of 1,109 people from Alliancetransatom, G405-2 • development and implementation of • the team of highly promising young Irkutsk Region 91 39 2 JSC as of 10/1/2017), at JSC Dalur (startup of the the Career and Succession Planning business troubleshooters was formed; territorial remote experimental section of Dobrovolnoye process; • annual professional mastery Trans-Baikal Territory 6,432 5,747 4,996 deposit), at JSC Khiagda (start of development of • migration of all Holding Company competitions are held at the Holding Vershinnoye Deposit) and at JSC RUSBURMASH (growth Republic of Buryatia 442 290 478 enterprises to the information and Company’s enterprises; of drilling and geological exploration) . analysis HR management system • the annual division professional Total: 8,183 7,275 6,657 based on SAP ERP HСM; mastery contest under the World Skills methodology is held with its winners ­

Table 34. Average Staff Number Trends by Classes in 2015-2017, persons G406-1 4.5.1. HR Policy Management System Classes 2015 2016 2017 The HR policy of JSC Atomredmetzoloto Their involvement in implementation of social orientation to its personnel policy, Workers dominate the average staff number with their is aimed at creating effective HR the corporate strategy, qualification and is committed to providing its employees Executives 1,089 997 981 share decreasing for the last three years from 67 6%. management system that would responsibility determine its long-term with favorable conditions for successful (2015) to 65 4%. (2017) due to reduction of worker job Specialists 1,514 1,426 1,283 increase the efficiency of the Holding competitiveness . The company, strictly work and professional growth . positions at PJSC PIMCU from 4,461 (2015) to·3401 Company . Employees of the Company following the requirements of the labor Service Employees 52 31 37 (2017) and creation of advanced jobs at JSC Khiagda and are JSC Atomredmetzoloto’s key asset . Code of the Russian Federation, brings JSC Dalur . Workers 5,529 4,821 4,356 4.5.2. HR Policy Management Performance Total: 8,183 7,275 6,657 4.5.2.1. Human Capital Features Table 35. Personnel Distribution by Employment Type in 2015-2017, persons NUMBER OF EMPLOYEES Table 32. Average Headcount Dynamics of the Company in 2015-2017, persons. Personnel Distribution by Employment Contract and 2015 2016 2017 Personnel Distribution by employment type shows Employment Type JSC JSC increasing share of part-time employees from 3 .8% in LLC ARMZ 2016 to 5 .3% in 2017 with JSC VNIPIpromtechnologii JSC Atomredmetzoloto PJSC PIMCU JSC Dalur JSC Khiagda VNIPIprom- RUSBUR- TOTAL Actual number of staff on the Service 7,725 6,957 7,347 technologii MASH payroll as of Reporting Period End accounting for the bulk whereof where year 2017 saw staff number reduction activity . 2017 151 4,720 448 527 272 440 99 6,657 Employed under indefinite term 7,278 6,690 6,957 2016 149 5,137 443 496 352 597 100 7,275 employment contracts The share of fixed term employment contract employees 2015 151 5,961 446 451 389 685 100 8,183 Employed under fixed term in the total actual number of staff on the payroll as of 447 267 390 employment contracts the end of the reporting period increased from 0 .7% in 2016 to 1 .2% in 2017 due to the growing number Part-time employees 41 51 89 of executed fixed term employment agreements at JSC RUSBURMASH . The trend toward decreasing staff • JSC RUSBURMASH (-157 people) • PJSC PIMCU (-417); number continued in 2017 albeit due to reduction of drilling volumes • JSC RUSBURMASH (-96 people); GENDER AND AGE STAFF STRUCTURE at decreasing rates ensured due to and absence of geological projects; development of the mineral resource • JSC VNIPIpromtechnologii (-33 Table 36. Staff Allocation by Gender in 2015-2017, persons • JSC VNIPIpromtechnologii (-80 base and new businesses . people); people) due to decreasing revenue Year 2017 saw further decrease of the share of young Staff Allocation of Gender 2015 2016 2017 Key changes to average staff number under design contracts requiring, in • JSC Khiagda (+1) . specialists from 42 0%. as of 12/31/2015 to 33 .8% as of in the reporting year occurred at the its turn, organizational actions to Men 12/31/2017 . The main reason for decrease of the young Staff number fluctuations in other following enterprises: streamline staff number; professionals’ share was a preference given to keeping operation regions are primarily due to Number 5,432 4,878 5,472 the more highly qualified and experienced employees • PJSC PIMCU (-417 people) due • JSC Khiagda (+31 people) due to its changes at JSC RUSBURMASH: during layoffs and/or the reduction of number of to reduction of mining volumes, commencement of operations at % of total number 70 .3% 70 .1% 74 .5% employees at PJSC PIMCU and JSC VNIPIpromtechnologii conservation underground mine 2, production facilities of Istochnoye • Moscow (+4); Women as well as transfer of 1,109 employees whose average migration to the five-days working Deposit; • Kurgan Region (+20); age is 47 3. . week and increased duration of the • JSC Dalur (+4 people) due to Number 2,293 2,079 1,875 working week for certain employees • Irkutsk Region (-37); creation of the new associated based on results of the special labor % of total number 29 .7% 29 .9% 25 .5% scandium production facility . • Trans-Baikal Territory (-96); conditions assessment, transfer of dormitories to the municipal Staff number change trends in • Republic of Buryatia (-48) . administration of Krasnokamensk operation regions are characterized and exclusion of the housing with material reduction of staff number and utility department from the in the Trans-Baikal Territory (-545 enterprise; people):

78 Annual Report JSC Atomredmetzoloto 2017 79 AGE ALLOCATION OF STAFF 4.5.2.2. Remuneration System Table 37. Distribution of Company Personnel by Age in 2015-2017, persons Remuneration is paid to employees according to the Unified Standard 25,000 Age Allocation of Staff 2015 2016 2017 Remuneration System of ROSATOM’s organizations (USRS), which allows for a 20,000 33 .3% 30 .4% Year 2017 saw further decrease of unified approach to the formation of wages in the Holding Company and stable under 35 15,000 7,108 6,738 26 .2% the share of young specialists from income of employees . 6,435 Number 3,244 2,615 2,480 42 .0% as of 12/31/2015 to 33 .8% as 10,000 Under conditions of fluctuating product prices and sales on which the revenue 14,245 15,443 11,324 of 12/31/2017 . The main reason for 5,000 % of total number 42 .0% 37 .6% 33 .8% decrease of the young professionals’ depends currently, the share of total payroll costs remains at the level of 30% to share was a preference given to 37% among other things due to the fixed (guaranteed) portion of the employee 1 36 to 50 wage exceeds 75% . keeping the more highly qualified 2015 2016 2017 Number 2,763 2,688 1,970 and experienced employees during layoffs and/or the reduction of number Table 41. Wages and Insurance Contributions in 2015-2017, thousand RUB % of total number 35 .8% 38 .6% 40 .4% of employees at PJSC PIMCU and JSC VNIPIpromtechnologii as well as Payroll costs, Million RUB Over 50 years Indicator 2015 2016 2017 transfer of 1,109 employees whose Other costs in total revenue Number 1,718 1,654 1,897 average age is 47 3. . Payroll, total 5,489 .855 5,204 .010 4,959 312 Million RUB

% of total number 22 .2% 23 .8% 25 .8% including:

Payroll 4,266 .722 4,034 .232 3,865 .782 HR LIQUIDITY Figure 42. Share of Payroll Costs in Table 38. Personnel Liquidity in 2015-2017, persons Vacation Provision Accrual 726 .346 671 .341 638 .767 Revenue in 2015–2017, Million RUB Annual Bonus Provision Accrual 483 .553 483 .894 447 .602 Personnel Liquidity 2015 2016 2017 Payroll of Civil Law Contract 13 .233 14 .542 7,161 JSC Atomredmetzoloto 11 .2 20 .2 8 .6 Deceleration of staff number decrease Employees at PJSC PIMCU allowed keeping the PJSC PIMCU 29 .3 18 .5 18 .1 Taxes (Insurance Contribution) on total Holding Company’s staff liquidity 1,618 .373 1,534 .339 1,475 .251 Payroll JSC Khiagda 16 .2 14 .3 16 .9 at the level not exceeding 22% in 2016 to 2017 . JSC Dalur 15 .7 12 .0 9 .4 The structure of payroll costs did not change despite reduced staff number and In this connection, the total staff remained proportional to 2016 . JSC RUSBURMASH 64 .4 58 .0 63 .7 liquidity level at JSC RUSBURMASH and JSC VNIPIpromtechnologii JSC VNIPIpromtechnologii 47 .5 27 .5 54 .7 The average monthly wage amount for the Holding Company overall increased by increased versus 2016 to 63 .7% and G401–1 4 .3% year on year to RUB 62 0. thousand in 2017 . ARMZ Service, LLC 29 .9 28 .9 25 .2 54 .7%, respectively .

Total: 31 .3 21 .7 21 .8 AVERAGE MONTHLY WAGE PERSONNEL LIQUIDITY BY GENDER Table 42. Average Monthly Wage at Enterprises of the Company in 2015-2017, Table 39. Staff Liquidity by Gender in 2015-2017, persons, %. RUB

Relative share, Personnel by Gender 2015 2016 2017 2015 2016 2017 2017/2016, % Men PJSC PIMCU 43,125 45,316 48,393 106 .8% Men dismissed/resigned due to any reasons, persons 1,959 1,045 1,023 JSC Khiagda 58,513 60,919 63,202 103 .7% % of AVERAGE STAFF NUMBER 25 .4% 15 .0% 13 .9% In accordance with the JSC Dalur 39,105 40,832 43,309 106 .1% Women applicable Russian labor JSC RUSBURMASH 63,591 70,688 65,799 93 .1% Men dismissed/resigned due to any reasons, persons 606 531 428 legislation, employees JSC VNIPIpromtechnologii 10, .924 112,672 118,235 104 .9% % of average of number of employees 7 .8% 7 .6% 5 .8% are notified of a Wages at PJSC PIMCU, PJSC Khiagda and PJSC Dalur grew due to indexation Table 40. Number of Dismissed/Resigned Employees by Operation Regions substantial change of of wages as of 9/1/2017 by setting the monthly indexing payment or changing in 2015-2017, persons their working conditions its amounts and at JSC VNIPIpromtechnologii due to retirement payments on reduction of staff number . 2015 2016 2017 at least 2 months Moscow 238 184 203 before the event . Kurgan Region 103 79 92

Irkutsk Region 64 50 73

Trans-Baikal Territory 1,942 1,172 985

Republic of Buryatia 218 91 98

Total: 2,565 1,576 1,451

80 Annual Report JSC Atomredmetzoloto 2017 81 447 .6 7 .2 MINIMUM WAGE AMOUNT IN OPERATING REGIONS Position salary / tariff 9 % 0 % Table 43. Ratio of the subsistence minimum for capable population in the operating Integrated inventive bonus region and the initial level wage, RUB.*

638 .8 1,201 .0 Monthly indexing payment 13 % 24 % Region 2015 2016 2017 Operation bonus The minimum base wage (subject to regional ratios and northern bonuses) at the Holding Company’s enterprises in the operating regions One-off bonus 149 0. Moscow 592 .4 3 % District adjustment payments JSC RUSBURMASH 50,000 45,000 45,000 12 % Average payment for business trip days JSC VNIPIpromtechnologii 26,890 25,000 35,800 235 1. Kurgan Region 5% 21 .8 Additional compensation payments 0 % JSC Dalur 10 ,499 10,500 10,500 Other payoll payments 95 .7 JSC RUSBURMASH 15,112 11,007 11,007

2 % 404 .7 Accrual of vacation provision Irkutsk Region 8 % Accrual of KPI provison JSC RUSBURMASH 29,700 38,254 38,254 1,135 .4 47 .0 Trans-Baikal Territory 23 % CLC payment 1 % PJSC PIMCU 8,746 12,600 12,600 JSC Khiagda 13,049 13,647 15,312 Figure 43. Structure of Payroll Costs (exclusive of Insurance Contributions) in 2017, JSC RUSBURMASH 16,974 16,974 16,974 million RUB, % JSC VNIPIpromtechnologii 15,150 18,375 64,500 Republic of Buryatia JSC Khiagda 15,129 15,129 16,974 The wage structure showed growth of As of 1/1/2017, there were changes not more than 20% of the IAI JSC RUSBURMASH 18,900 23,510 23,510 the share of one-off bonus payments to the salary structure at JSC Khiagda transferred to the operating bonus; Subsistence Minimum Amount for Capable Population set forth in the Regions from 0 .5% in 2016 to 0 .9% in 2017, and JSC Dalur and operating bonus (as of Q4 2015) • increasing the share of variable monthly indexing payment from 0 .1% to payments were introduced for the Moscow 17,296 17,487 18,453 payment in the wage structure to 0 .4% and payment of business trip days employees of the production divisions . 25% by 2019; Kurgan Region 9,418 9,864 10,371 from 1 .6% to 1 .9% on the average . At Operating bonus payment recipients the same time, the share of operation were 826 employees whom over 7 5. • implementation of project bonuses . Irkutsk Region 10,410 10,450 10,450 bonus payment decreased from 9 .1% thousand bonuses were paid in 2017 for Trans-Baikal Territory 10,633 11,023 11,254 The minimum basic wage (the amount to 8 .1% and the share of compensation the total amount of RUB 30 .2 MM . Republic of Buryatia 9,859 10,005 10,489 payments decreased from 5 .0% to of salary set for the employee, In 2018 to 2019, the following actions integrated additional incentive and 4 .7% . * The operating regions – is the constituent of the Russian Federation where the Holding Company operates: Moscow, Trans-Baikal to improve remuneration system monthly indexing payout) at all the Territory, Kurgan Region, Republic of Buryatia, Irkutsk Region In 2017, all Holding Company’s performance at the Holding Company’s Holding Company’s enterprises enterprises removed restriction on enterprises are planned: exceeded the subsistence minimum grades and positions for bonuses for for capable population set forth in the • harmonizing wage matrices at critical tasks (CTs) as well as bonus operating regions . PJSC PIMCU, JSC RUSBURMASH and payment amount to employees for CTs JSC VNIPIpromtechnologii; G404-2 per one achievement and for the year in 4.5.3. HR Professional Development G404-3 total which resulted into increase of CT • revising target matrices for bonus payment cases from 594 in 2016 operating bonuses and target Personnel training and development Program and 97 persons were trained Management Industrial Project, career to 959 in 2017 and increase of one-off amount of operating bonuses, is one of the Company’s HR policy under the Business Performance roadmaps and requirement profiles bonus payment amounts from RUB 20 .4 including by increasing the priorities . Management Program . Within were developed for positions up to the MM to RUB 28 .5 MM . operating bonus amount by the HR School framework two HR specialist level . Succession plans for key 2017 RESULTS: directors successfully completed their positions in the Holding Company were To ensure timely, continuous and certification under the HR Management drafted resulting into promotions of targeted development of knowledge Program at ANO ROSATOM Corporate five employees in 2017 . Academy . and formation of new skills, actions ARMZSkills were taken to train and upgrade the Based on PJSC PIMCU’s Course Training For the first time in March 2017, the Holding Company’s employees using Complex, course training was organized ARMZSkills divisional professional different forms of education (external, and conducted in the following mastery contest was conducted under internal and remote ones) . jobs: Mining Breakage Face Worker, the World Skills methodology in four Timber Man, Mining Worker for Fire In 2017, the Company continued competencies: Chemical Analysis, Prevention and Firefighting, Elevator developing the remote form of Welding Processes, Dosimetry, Network (Tower) Operator, Pump Unit Operator, education (1,264 man-courses and System Administration where Electrician for Maintenance and Repairs completed) . Twelve employees of 59 participants and experts from of Equipment, Track Builder, Elevator the Holding Company’s enterprises the Holding Company’s enterprises (Tower) Cradle Worker, Shunter, etc . trained under RPS programs were participated . The contest was the 2,411 people were trained in total . successfully certified by ANO ROSATOM selection one for formation of the team Corporate Academy . 484 persons were Within the implementation framework that took part in the second Industrial trained under the Executive School of the Career and Succession professional mastery Atom Skills

82 Annual Report JSC Atomredmetzoloto 2017 83 2017 championship of the ROSATOM • development of mentorship for and Holding Company’s executives, G 3.4.4 State Atomic Energy Corporation in transfer of critical knowledge . were discussing changes at the 4.6.1. Social Investment Management Ekaterinburg . enterprises and plans for the future . Social capital management and Internal social investment programs • provision of pecuniary aid; TALENT POOL Special attention was paid to the establishing partnerships in operating have the following priorities: PLANS FOR 2018: • aid to veterans; In 2017, 67% of employees appointed following problems . In the course regions is the part of the Mining • employee development, job expanding the list of programs for to Top 1000 positions were of brainstorms and master classes, Division strategy . ARMZ strives towards • implementation of children • and qualification upgrading of training localization at the Holding selected from the senior and middle Change Leaders were looking for recognition and fair appraisal of its programs . employees; Company’s enterprises; management talent pool . 63% of solutions and actively developing employees’ achievements . The Company employees included in senior, middle projects within their teams to be used is sure that additional social protection • corporate culture formation; • implementation of training plans and line management talent pool were for solution of critical problems at initiatives for its employees allow and programs aimed at developing • recreation and health rehabilitation promoted to a new position . enterprises . them to feel comfortable Therefore, managerial skills of senior, middle the Company provides its employees of employees and their family and junior managers;; CHANGE LEADERS 2.0 CONFERENCE with the full set of statutory social members; • holding the second divisional One of the most important events guarantees and allows them to use • attracting and supporting the youth professional mastery ARMZSkills aimed at minimizing the risks of additional social programs . including educational programs; contest under the World Skills the employees’ destructive behavior • sporting events; methodology in six competencies: was the second Change Leaders 2 0. Laboratory Chemical Analysis, conference . In Krasnokamensk, the Welding Processes, Dosimetrist, conference was held for more than Special Motorcar Driver, 100 employees of PJSC PIMCU and Engineering Design, Network and JSC RUSBURMASH’s business units . 4.6.1.1. Work with Youth and Students System Administration; During the conference in the form of live communication and dialog, CHANGE SUPPORT TEAM THE 19TH FESTIVAL OF YOUNG • drawing up succession plans for all participants, jointly with PJSC PIMCU critical positions in the division; In 2017, the members of the change PEOPLE AND STUDENTS support team (CST) who are the most The Festival had been held since the active employees of the Holding 15th until the 19 of October in Sochi . Company such as increasing the level Seven people participated in the Future of awareness of values and strategic Industries science and education stream at objectives at the division’s enterprises, the Festival . Participants were analyzing Table 44. Training Hours per Person by the Company’s Enterprises, man-hours introduction of new employees to the current global challenges and trends, and corporate culture and assistance to forecasting how the world, technologies, business and social environment would Category 2015 2016 2017 organization of events dedicated to the 10th anniversary of the Holding change in the near decades . The result JSC Atomredmetzoloto 21 14 .32 22 .8 Company . of this large work were young people’s PJSC PIMCU 18 24 .86 15 .91 initiatives for improvement of social life AFTERBURNER 2017 to become foundations of the Global JSC VNIPIpromtechnologii 31 .22 29 .47 19 .25 Declaration of the World’s Young People . Executives JSC Dalur 68 .8 67 93 .8 The Afterburner 2017 international The document would reflect key values of forum of young power and production the future: longevity and high quality of life, JSC RUSBURMASH 12 95 18 .66 employees had been held from 9 until development of new territories and space JSC Khiagda 82 76 .3 55 .8 15 July 2017 in Kaluga Region . The as well as security and equal rights for everyone . JSC Atomredmetzoloto 26 .3 18 .5 19 .75 Afterburner is a unique project, a consortium of inter-corporate and inter- Afterburner and the Festival have an PJSC PIMCU 36 .19 38 .02 31 .3 industry scale . Development of Hard-to- important objective in common . It is promoting ROSATOM State Atomic Energy JSC VNIPIpromtechnologii Specialists, 39 .8 33 .76 29 .79 Access Areas and Pure Energy Projects where employees of the Mining Division Corporation’s brand as the international JSC Dalur workers 24 .2 40 .1 93 .1 took part ranked the first and second leader in innovations, technologies and JSC RUSBURMASH 28 60 86 .17 within the forum framework . leadership . JSC Khiagda 83 64 .3 39 .6

G404-1 4.6. Social Capital

PERFORMANCE FOR 10 YEARS: motorway, Dauria Culture Club, • Chita to Krasnokamensk flights Literature club What? Where? When? • formation of ROSATOM’s CTG to construction of the Sporting Facility, of Aero service airline from Chita . allow increasing tax proceeds of commerce and entertainment center, Procurement of the new L-410 Since 2017, ARMZ has been hosting its Literary Within the framework of the Holding Company’s tenth anniversary, the regional budget of Trans Baikal reconstruction of the children park, airplane; Club, the platform where anyone can be a the intra-divisional championship for the What? Where? When? Territory; etc .; • reconstruction of the Argun gym in speaker, a place for exchange of knowledge and game was held . Seven teams represented the Holding Company’s • use of increased proceeds of the • kindergarten for 240 places (with Krasnokamensk; development of public speaking skills . Within enterprise . The game included three tours of ten question each . The regional budget to take actions the swimming pool, gym and a • inauguration of the advanced school the Literature Club framework, the Creation and key topic of the question was history of the nuclear industry including aimed at improving quality of life unique playground) opened in for 270 places in Uksyanskoye Village Development of the Mineral Resource Base of creation of its feedstock complex . The players also made good use of in Krasnokamensk, financing of Krasnokamensk; of Dalmatovsky District of Kurgan Domestic Nuclear Industry book and the Uranium their general knowledge of thermodynamics and molecular physics waste treatment facilities of the • commissioning of the apartment block Region . first and second stages, airport, for 60 apartments in Krasnokamensk; Geotechnology were presented . and, of course, there were humorous general logic and intellect Krasnokamensk to Matsievskaya questions . JSC Khiagda’s team became the absolute .

84 Annual Report JSC Atomredmetzoloto 2017 85 4.6.1.2. Implementation of Children Programs EVENTS HOSTED BY THE PUBLIC VETERAN ORGANIZATION OF JSC ATOMREDMETZOLOTO IN 2017: NUCKIDS‑2017 «Pack Your Schoolbag! Year 2017 also saw the following • meetings of representatives of • inclusion of memoirs of veterans, events hosted in Krasnokamensk: The Holding Company supported In May Krasnokamensk hosted the the veteran organization with the Alexander S . Babkin, Vladimir staging of the Just A Summer Rain Pack Your Schoolbag celebration • PJSC PIMCU’s I Am For Healthy Company’s management on the G .Fomenkov, Yuri S . Borozdin, into musical created by participants of in the course of which 240 Living quest game; Victory Day and Nuclear Energy and the ROSATOM’s Living History ROSATOM’s Nuclear Kids International future first-graders were given • the Best Voice City Contest Industry Employee Day (to receive section of ROSATOM’s electronic Creative Children Project . Dauria schoolbags with PJSC PIMCU and dedicated to the People’s Unity pecuniary aid and gratitude for library, www memory. .biblioatom .ru; JSC Atomredmetzoloto’s logos . many years of good faith labor, Culture Club (Krasnokamensk) hosted day; • lecture What Is Atom about large contribution to development of the selection tour in which 50 children Trans Urals Navigator Technological • the first Smart Boys and Smart peaceful uses of nuclear power . nuclear industry and in connection of PJSC PIMCU’s employees and 30 Job Orientation Park Girls game championship; Nikolai P . Petrukhin, the veteran of with the 10th anniversary of children of Krasnokamensk resident Within the implementation framework nuclear industry and representative • completion of tests from the All- incorporation of ARMZ Uranium took part . Five participants entered the of the project senior schoolchildren of the veteran organization of Russian Physical Education and Holding Co ). . Invitations to the final . from Uksyanskaya Comprehensive JSC Atomredmetzoloto, shared his Sporting Complex I Am Ready to celebration concert at the Russian School visit JSC Dalur’s production knowledge, professional experience ROSATOM SCHOOLCHILD Labor and Defense; Army Theater were also issued; sites on an annual basis . and wisdom with students of On the threshold of the jubilee date, • contest of drawings and artworks Moscow school 1317 . the ROSATOM Schoolchild Collect a named Our Glorious Victory in Bag of “Excellent” Scores Industrial which more than 200 children and project with 42 registered participants adults participated; from comprehensive schools of • traditional track and field 4.6.1.5. Trade Unions and Collective Bargaining Moscow and Moscow Region . competition for schoolchildren and Agreements Enterprises’ transfers to trade union In June, the celebration dedicated college students; to the Russia Day was held where Currently, there are three collective by the Staff Board, which takes active organizations’ account for hosting • the theatrical contest It’s Good to sporting and cultural events within 109 schoolchildren, winners of the Live Without the War; bargaining agreements in force within participation in interaction with the ROSATOM Schoolchild contest, were the Holding Company (PJSC PIMCU, employer . the authorized activities framework of given valuable prizes . • Spring and Winter songs soiree JSC VNIPIpromtechnologii and the trade union decreased from RUB The share of trade union organization program; JSC Dalur) and two trade union 11 .3 MM (in 2016) to RUB 8 .7 MM (in members in the total staff number of organization (PJSC PIMCU and 2017) . the Holding Company exceeded 45% as JSC VNIPIpromtechnologii) . At JSC Dalur, of 12/31/2017 . Still, other trade union upkeep costs employee interests are represented (payroll, stationery, office equipment, 4.6.1.3. Sporting Events motorcars, cleaning, communications, Table 46. Number of Employees Covered with Collective Bargaining Agreements etc ). increased by 1 .8 times in 2017 ARMZ SPARTAKIAD and Being Trade Union Members in 2015-2017, persons versus the actual level in 2016 and the share of production planning section 2015 2016 2017 On 23 September 2017, Krasnaya the Holding Company’s enterprises as the first . Combined teams of ARMZ and (PPS) functioning costs within total Presnya Stadium in Moscow hosted well as family members of employees JSC RUSBURMASH ranked the second, Number of Employees covered with Collective transfers to accounts of trade union 6,300 5,651 6,040 ARMZ’s Fifth Anniversary Spartakiad . of organizations from the Moscow the JSC VNIPIpromtechnologii ’s team Bargaining Agreements organization increased from 9 .5% in Participating in it were combined teams Region . For the fourth year in a row, ranked the third . 2015 to 26 .0% in 2017 . Number of Trade Union Organizations within the of the managing company and of all PJSC PIMCU’s combined team ranked 3 3 3 Holding Company 4.6.1.4. Support to Retired Veterans Number of Trade Union Organization Members 4,539 3,748 3,357

G201–3 Table 45. Number of Registered Unemployed Retirees in 2015-2017, persons. Table 47. Upkeep Costs of the Holding Company’s Trade Union Organizations, Million RUB, % Since June 2017, unemployed retirees Number of registered unemployed retirees 2015 2016 2017 2015 2016 2017 registered with JSC Atomredmetzoloto Total 3,172 2,998 2,463 have been entitled to partial (not Transfers to accounts of trade union organization for hosting sporting and cultural events 10,199 .9 11,280 .7 9,358 .0 of which exceeding 90%) reimbursement of the cost of travel vouchers bought PPS Functioning Costs 1,076 .3 1 851 .8 3,281 .0 Nuclear Industry Honorary Retirees 1,169 1,183 1,103 independently . Since 2017, two Share of PPS functioning costs in total transfers to PPS accounts of trade union organizations 9 .5% 14 .1% 26 .0% Nuclear Industry Honorable Retirees 2,003 1,815 1,360 nuclear industry honorary retirees have exercised this right .

Year 2017 saw start of PJSC PIMCU and PIMCU Veteran Council’s new PLANS FOR 2018: the framework of the ROSATOM social project, PJSC PIMCU’s Veteran Schoolchild: Collect a Bag of G102–41 Soiree hosting monthly warm and • hosting the corporate spartakiad “Excellent” Scores Industrial Engagement is emotional friendly meetings of PIMCU’s business among the Holding Company’s program; and intellectual condition units veterans with young employees, enterprises dedicated to the students of sponsored schools and 50th anniversary of the primary • hosting presentation of job- motivating employees creative studios of Dauria Culture Club . uranium mining enterprise related books within the to work as efficiently as Presentation of the Creation and PJSC PIMCU; Literature Club framework and promotion of ROSATOM’s possible . Development of the Domestic Nuclear • hosting contests, the Best ARMZ Industrial library; Industry’s Mineral Resource Base Employee and What? Where? monograph written by veterans and When?; • organization of change support published for the tenth anniversary of teams at the Holding Company’s • hosting the uranium-related ARMZ Uranium Holding Co . enterprises . quest for schoolchildren within

86 Annual Report JSC Atomredmetzoloto 2017 87 G201–1 4.6.2. Social Capital Management Performance 4.6.3. Contribution to Development of Operation Areas G413-1 G413-2 RUB 212 .9 MM were spent on events and the share of gratuitous travel Infrastructural investments are an made and closely cooperates with all the Baikal Territory . In 2017, the Territory’s and social obligations in 2017 . to vacation, medical, etc . locations BUSINESS CASE: PROMOTION OF important aspect of the Holding stakeholders . additional income amounted to RUB decreased from 17 .7% to 16 .5% . Within the structure of social costs RPS PROJECTS AMONG PIMCU’S Company’s social responsibility as 246 MM . Subsidies are preserved the Holding Company’s enterprises TRANS-BAIKAL TERRITORY for air carriage along the Chita to (SCs), the share of private retirement Unit social payment costs excluding EMPLOYEES insurance increased from 22 .7% in the payment of gratuitous travel to the are located in different regions of the Since 2013, ROSATOM has been using Krasnokamensk to Chita route to Year 2017 saw implementation 2016 to 24 .0% in 2017 and the share vacation location increased, for the Russian Federation, Kurgan Region, the Consolidated Taxpayer Group (CTG) . maintain the airline ticket prices at the of the integrated PR project of hot catering costs for rotational Holding Company overall, from RUB Republic of Buryatia and Trans- PJSC PIMCU’s participation in the CTG level accessible to residents of the city . Promotion of Implementation staff increased from 3 .7% to 7 .4% . On 23 .9 thousand per employee in 2016 to Baikal Territory . The Company takes results into material additional profit tax of Performance Improvement the other hand, the share of voluntary RUB 26 .5 thousand in 2017 . into account the possible social and transfers to the budget of the Trans- Projects within the Framework healthcare insurance of employees economic consequences of the decisions of ROSATOM Production System decreased from 19 .6% to 18 .2% among PJSC PIMCU’s Employees . Creating the constantly positive BUSINESS CASE: CO-FINANCING OF FIBER OPTIC LINE CONSTRUCTION internal information field, forming 26 .2 On 2 June 2017, ROSATOM saw laying of 91 kilometers of business units and video surveillance LLC ARMZ Service positive images of RPS leaders, 27 .3 and the Government of Yakutia communication lines at the section will be organized to improve process using hotlines, hosting contests Republic executed the protocol for from Romanovka village to the final safety . Prospects opened for and information meetings implementation of the Collaboration destination, JSC Khiagda’s mine . The implementation of the Smart Mine 6 .6 with employees, etc . allowed JSC VNIP Ipromtechnologii 10 .5 Agreement of 2012, the framework total FOL length was 218 km . The sum Project, the system for automation of increasing employees’ activity whereof provided for co-financing of of joint investments with Rostelecom, all levels of production processes . One for development, submission and 35 .3 the fiber optic line (FOL) construction PJSC was RUB 123 MM . of activities within the Smart Mine JSC RUSBURMASH implementation of RPS projects along the route Sosnovo-Ozerskoye- Project framework was the Smart 17 .2 Implementing the project will allow and SR . Actions taken within Romanovskoye-JSC Khiagda’s Helmet project to allow controlling JSC Khiagda to accelerate information the internal communications Production Site . JSC Khiagda physical condition of the employee, its exchange between its production JSC Dalur 34 .0 domain resulted into increase of contributed RUB 41 MM . location, pulse and body temperature . 36 .3 the number of implemented RPS site in Bauntovsky Evenki District projects from 16 in 2016 to 144 In January 2018, PJSC Rostelecom and its office in Chita . In the near 46 .4 announced completion of the future, videoconferencing will become JSC Khiagda in 2017 (nine-fold increase!) and 48 .1 increase of the number of SRs FOL construction . The last stage possible between the enterprise’s submitted from 207 in 2016 to 826 22 .7 in 2017 (four-fold increase!) . PJSC PIMCU 20 .9

In August 2017, cooperation of the JSC Atomredmetzoloto supports settlements were repaired under the co- 0 10 20 30 40 50 Government of the Trans-Baikal creating new production facilities of financing program . Territory and JSC Atomredmetzoloto the mining and adjacent industries in In December 2017, the provisional resulted into inauguration of the last Krasnokamensk PSEDA . Development 2017 Figure 44. Social Expenses per process bridge across Vitim River Employee in 2017, thousand RUB reconstructed section of the regional thereof will contribute materially constructed by and the expense of 2016 motorway from Krasnokamensk to to creation of substitute jobs for JSC Khiagda in 2009 was officially Matsievskaya with solid asphalt specialists dismissed from PJSC PIMCU, integrated into the regional motorway pavement . It is a reliable way for diversification of economy and social from Romanovka to Bagdarin and Year 2018 is forecast to see increase actual level of 2017 due to material at the very top level of ROSATOM’s delivery of cargo to Krasnokamensk, sphere of Krasnokamensk . granted to Republic of Buryatia . The of social costs to RUB 262 .6 million and increase of employee retirements . management . an alternative to the railway increasing REPUBLIC OF BURYATIA bridge is 233 meters long and over increase of unit social payment costs to attractiveness of the Krasnokamensk PERSONNEL ENGAGEMENT In 2017, JSC Khiagda participated in seven meters wide with two lanes, a RUB 33 .3 thousand per employee p .a . Priority Social and Еconomic Development JSC Khiagda’s participation in the the annual engagement level survey walkway and lighting . Any vehicles may In keeping with the tradition, the Area (PSEDA) . project for construction of the high- PJSC PIMCU is expected to show the ROSATOM Cares About Your Opinion use the bridge as its cargo capacity employees of the Company took part in speed communication line in Bauntovsky largest growth as the share of private for the first time . Based on results In 2017, creation of Krasnokamensk is 62 tonnes . The construction cost the annual industry nomination program District of Republic of Buryatia was the retirement insurance costs there will obtained from the enterprises, action PSEDA accelerated . As of December amounted to RUB 200 MM . important milestone in 2017 . exceed 40% of the enterprise’s SC «ROSATOM’s Person of the Year», plans were developed to increase 2017, the following PSEDA residents which is intended to recognize the structure and the total amount thereof employee engagement level . were registered: In furtherance of the subsoil license for KURGAN REGION best industry employees’ achievements may increase by 1 .7 times versus the deposits of Khiagdinskaya Group as well • ATOMSPECCEMENT; In the Kurgan Region, JSC Dalur relying as for development of its operation area on the principles of business social • Azbuka Zdorovia medical clinic; JSC Khiagda executed the Agreement responsibility is providing support to • Krasnokamenskpromstroy, for Assurance of Sustainable Social and its operation areas within Dalmatovsky Table 48. Personnel Engagement in 2015-2017, % LLC implementing the project Economic Development of Bauntovsky and Shumikhinsky Districts . The legal for Construction of the General Evenki District of Republic of Buryatia framework for the relationship is the 2015 2016 2017 PLANS FOR 2018: Construction Cement 100 kt with the administration of the agreement on social and economic Production; municipality on 24 March 2017 Within JSC Atomredmetzoloto 83 85 83 partnership of the enterprise and Kurgan Implementation of talent pool development programs the framework of the process, financial «ROSATOM Wealth», «ROSATOM Capital» and «ROSATOM • Krasnokamensk Antimony Works, Region administration . PJSC PIMCU 46 54 59 LLC planning creation of the new aid was provided to the district’s social Talents» as well as carrying out new selective measures with programs for the total amount of RUB 5 a view to form the pool of high-potential middle and junior hydro metallurgical production JSC RUSBURMASH 68 69 76 facility for processing of antimony MM . Assistance was provided to repairs managers for preparation to work on key positions and of local roads, the ATV was purchased JSC Khiagda - - 58 projects . floatation concentrate to produce refined metallic antimony with the to deliver food to remote settlements of Division Total: 54 62 66 rated capacity up to 5,000 tpa the district, equipment was procured for preschools, and heating systems of local

88 Annual Report JSC Atomredmetzoloto 2017 89 Table 49. Taxes paid by key enterprises of ARMZ Uranium Holding Co. to regional Table 52. Regional Tax Benefits granted to JSC Dalur in 2015-2017, Million RUB G201–4 and local budgets in 2015-2017, million RUB Type 2015 2016 2017 Regional ARMZ Uranium Holding Co .’s Property tax associated with implementation of the investment project at the territories included into and Local 2015 2016 2017 0 .82 11 .38 19 .74 Enterprises the consolidated registry of investment sites within the Kurgan Region Budgets Property tax on power transmission lines and structures being integrated process parts thereof . 0 .88 0 .61 4 .00 Company CTG Company CTG Company CTG Profit tax for organization making specific investments 1 .07 35 .04 15 .59 Total inclusive of 128 196 145 45 158 81 Transport tax associated with implementation of the investment project at the territories included into 0 0 0 .03 Kurgan the consolidated registry of investment sites within the Kurgan Region JSC Dalur 121 171 136 43 146 67 Region JSC RUSBURMASH 7 25 9 2 11 14 Table 53. Regional Tax Benefits granted to JSC Khiagda in 2015-2017, million RUB

Total inclusive of 151 234 196 115 230 245 Type 2015 2016 2017 Republic JSC Khiagda 139 203 184 112 221 232 of Buryatia Property tax associated with implementation of the investment project in accordance with Law of Republic of Buryatia No . 868-IV of 5/8/2009 On State Support to Investments within Republic of 0 47 .26 200 .28 JSC RUSBURMASH 12 31 12 3 8 13 Buryatia Total inclusive of 847 1,680 785 618 713 728 JSC RUSBURMASH and JSC VNIPIpromtechnologii did not receive financial assistance from the state from the state authorities in PJSC PIMCU 793 1,594 736 580 675 687 2015-2017 . Trans-Baikal JSC RUSBURMASH 25 50 20 6 13 15 Territory JSC Khiagda 29 36 25 30 25 25 INFLUENCE ON LOCAL POPULATION MINIMUM WAGE AMOUNT IN In keeping with the social responsibility JSC VNIPIpromtechnologii - - 4 2 1 1 IN OPERATION REGIONS OPERATING REGIONS principles, the Holding Company G202–1 carries out the primary recruitment Irkutsk Total inclusive of 4 14 5 7 1 0 Development of its operation areas The minimum wage (taking into of employees (including executives) plays an important part in achievement account regional coefficients and Region JSC RUSBURMASH 4 14 5 7 1 0 from among representatives of the of its strategic objectives by ARMZ northern allowances) in all enterprises local population . Over half of senior Total inclusive of 3 5 - 1 - - Uranium Holding Co . The Company, of the Holding Company exceeds managers of ARMZ Uranium Holding Arkhangelsk Region given its business geography, includes the subsistence minimum set forth in regions of operation is hired from JSC RUSBURMASH 3 5 - 1 - - creating stable new jobs, improving its in its operation regions for capable local population . In the reporting period, positive image and reinforcing public population . Total inclusive of 3 1 0 - 0 1 the Holding Company did not exert any Amur Region thrust into its key objectives . influence connected with the necessity JSC RUSBURMASH 3 1 0 - 0 1 of resettlement of residents .

Republic Total inclusive of - - 2 3 0 0 Table 54. Ratio of the subsistence minimum for capable population ECONOMIC INFLUENCE ON in the operating region and the initial level wage, RUB.* of Sakha (Yakutia) JSC RUSBURMASH - - 2 3 0 0 SUPPLIERS AND CONTRACTORS Region 2014 2015 2016 Total: 1,136 2,130 1,133 788 1,102 1,057 ARMZ Uranium Holding is able to affect The minimum base wage (subject to regional ratios and northern bonuses) at the contractor organizations by applying Holding Company’s enterprises in the operating regions sanctions for default stipulated by Moscow contracts as well as by withholding FINANCIAL ASSISTANCE FROM STATE AUTHORITIES JSC RUSBURMASH 45,000 50,000 45,000 payments until complete fulfillment JSC VNIPIpromtechnologii 23,450 26,890 25,000 of their obligations . Sanctions are Kurgan Region contained in a contract forming Table 50. Subsidies to PJSC PIMCU in 2015–2017, million RUB an integral part of procurement JSC Dalur 9,840 10,499 10,500 documentation and are the same for all Type 2015 2016 2017 JSC RUSBURMASH 15,112 15,112 11,007 participants . The subsidy from the Ministry of Education, Science and Youth Policy of the Trans-Baikal Territory Irkutsk Region for partial reimbursement of costs of organizing and ensuring recreation and health rehabilitation of 1 .49* 11 .96** 5 .45 JSC RUSBURMASH 17,940 29,700 38,254 children as per the resolution of the Government of the Trans-Baikal Territory Trans-Baikal Territory Subsidy from the federal budget for reimbursement of radioactive waste handling costs - - 80 .00 PJSC PIMCU 9,088 8,746 12,600 JSC Khiagda 12,116 13,049 13,647 * * As per the Report on Intended Use of Subsidies, 7 .02 million RUB were reimbursable for 2015 . As of 12/31/2015, PJSC PIMCU had outstanding subsidies in the amount of 5 .53 million RUB . JSC RUSBURMASH 16,974 16,974 16,974 ** In 2016, subsidies were received as per the Report on Intended Use of Subsidies for 2016 in the amount of 6 .43 million RUB and the indebtedness on subsidies for 2015 was repaid by the Ministry of Education, Science and Youth Policy of the Trans-Baikal Territory in the amount of 5 .53 million RUB . JSC VNIPIpromtechnologii 12,877 15,150 18,375 Republic of Buryatia Table 51. Regional Tax Benefits granted to PJSC PIMCU in 2015-2017, million RUB JSC Khiagda 14,047 15,129 15,129 JSC RUSBURMASH 16,682 18,900 23,510 Type 2015 2016 2017 Subsistence Minimum Amount for Capable Population set forth in the Regions (as Property tax on power transmission lines and structures being integrated process parts thereof 5 .66 6 .22 6 .06 of Q4 ) Moscow 14,330 17,296 17,487 Kurgan Region 8,146 9,418 9,864 Irkutsk Region 9,178 10,410 10,450 Trans-Baikal Territory 9,053 10,633 11,023 Republic of Buryatia 8,659 9,859 10,005

* The operating region – is the constituent of the Russian Federation where the Holding Company operates .

90 Annual Report JSC Atomredmetzoloto 2017 91 G203–1 INVESTMENTS INTO SOCIAL Key charity priorities are as follows: In 2017, spending of Volunteer Initiatives of JSC Atomredmetzoloto’s Employees JSC Atomredmetzoloto on charitable aid INFRASTRUCTURE AND CHARITY • support to educational programs to companies and individuals amounted 10 GOOD DEEDS TO ARMZ’S 10TH ANNIVERSARY and projects; ARMZ Uranium Holding Co . exerts to RUB 7 million . material influence on social and • cultural and educational initiatives, economic development of its operation and preservation of cultural For the celebration of the Company’s jubilee, employees initiated and implemented G202–2 areas not only by participating in the heritage; the 10 Good Deeds to ARMZ’s 10th Anniversary program at their own cost and CTG and forming the income base of • support to environmental activities; expense . regional and local budgets but also by • promoting massive and amateur implementing integrated social and sports, and healthy way of life; charitable programs . G203–2 • support to patriotic values and patriotic upbringing .

KEY SOCIAL PROJECTS IMPLEMENTED AT THE COMPANY’S EXPENSE Social project contest in Krasnokamensk The Exhibition Window The Concert event for The Batteries event The Light Bulbs event The Clever Decorations • Social Entrepreneur Day; event for procurement visiting the concert for disposal of waste for disposal of waste project for hosting the of the exhibition in the Music Hall batteries . light bulbs . fair and exhibition jointly • contest of charitable and social window for exhibits of proceeds from which with Safe House and projects providing for provision of Privokzalnaya School were transferred to the Maria’s Children Art grants to: Museum in Volokolamsk . Beacon House children Center funds . • social entrepreneurs operating hospice . within the City of Krasnokamensk municipality, up to RUB 150 thousand; • NPO, up to RUB 200,000; • PJSC PIMCU’s volunteers, RUB 50,000 each . The Aleksin Orphanage The Good Things project The Alma event for The Numismatics project Old Age is for Joy Project project for procurement for collection of things collection of things for support to the for collection of New of creative kits for the for the needy . for the Alma animal patriotic and educational Year presents for the orphans . orphanage . Numismatics Club . elderly at retirement homes . Publication of the Illustration Perception Atlas book sets for dissemination among specialized children institutions of Krasnokamensk (Trans-Baikal Territory) and By the beginning of the school year, RESOLUTION OF DISPUTES WITH Dalmatovo (Kurgan Region) employees of JSC VNIPIpromtechnologii LOCAL COMMUNITIES used their own funds to procure school bags and utilities for children from Provision of nuclear power development Elatomsky Orphanage for Retarded public acceptability is one of the Children in Kasimovsky District of priority strategic tasks of ROSATOM . Ryazan Region . JSC Atomredmetzoloto carries out activities in this area guided by the JSC Atomredmetzoloto does not provide information openness principle . assistance to commercial organizations, donations to political parties or takes In case of any issues arising during In 2017, all the Holding Company’s part in state policy development and interaction with the public, the organizations installed Good Deed Company will be guided by RF Program for support to educational lobbying . Boxes for collection of things for legislation and requirements of institutions in the Kurgan Region . orphans . PLANS FOR 2018: ROSATOM . The Dalur profile class was inaugurated Over 100 employees of JSC Khiagda JSC Atomredmetzoloto will continue No complaints about the impact on based on Uksyanskaya Comprehensive responded to the plea to help unwanted to provide charitable assistance local community have been received at School for children of enterprise children . The enterprise used the funds to individuals and legal entities JSC Atomredmetzoloto . employees to commemorate the 10th collected to purchase children clothing, in accordance with the approved anniversary of the Holding Company . educational games and essential things regulations and budget of the Company . for babies . Some presents were sent RUB 3 .0 million were dedicated for to Orphanage 1 in Chita and some of In 2018, the fifth annual social project outfitting specialized classes and them were sent to Territorial Children contest is scheduled in Krasnokamensk . G415-1 purchasing laboratory suites for Hospital in Chita treating orphans . studying and project activities in physics for schools in Uksyanskoye Village of Dalmatovsky District, Trud and Znanie Villages of Zverinogolovskoye District within the framework of the program .

92 Annual Report JSC Atomredmetzoloto 2017 93

5.1. Stakeholder Definition G102-40 G102-42 JSC Atomredmetzoloto is working responsibility principles . Striving to The Company stands for regular open continuously to develop the stakeholder strike a balance between achieving its communications with its stakeholders relation system . The Company studies strategic objectives to supply natural to ensure better understanding of their needs carefully and strives to build feedstock to ROSATOM on the one hand their expectations and use the target mutually beneficial relations based and achieving social objectives on the approach to setting the corporate social on the principle of active, regular and other hand, ARMZ defines the range of responsibility agenda . positive dialog . persons interested in its decisions and actions to understand its influence and For the ranking stakeholder map, see ARMZ strives towards precise possible actions in response to them . JSC Atomredmetzoloto’s Annual Report 2016, page 93 . compliance with corporate social

5.2. Stakeholder Relations JSC Atomredmetzoloto builds its To reinforce its positive image, relations with its stakeholders on the JSC Atomredmetzoloto participates in business social responsibility principle . some major international exhibitions such as: The Company adheres to the systemic approach to resolution of social issues • the Annual Symposium the World and social investment management Nuclear Association; contributing to reduction of social • Saint Petersburg International risks, assurance of long-term beneficial Economic Forum (SPIEF-2017); relations with its operation regions and reinforcing its image of the socially • ATOMEXPO 2017 International Forum; responsible Company . • ATOMEX 2017 International Nuclear Industry Supplier Forum; In its business, JSC Atomredmetzoloto uses different stakeholder • Arctic the Territory of Dialog communications including general International Arctic Forum; Shareholders Meetings, congressional • Import Substitution 2017 National and exhibition events, presentations, Forum; mass media notifications, hotlines for employees, federal communication • Russian Coal and Mining exhibition in Novokuznetsk, etc . projects and regional projects of the Holding Company .

BUSINESS CASE: ATOMREDMETZOLOTO, ATOMFLOT AND VOSTOKUGOL AGREE ON COOPERATION IN THE ARCTIC DURING THE ARCTIC THE TERRITORY OF DIALOG INTERNATIONAL ARCTIC FORUM JSC Atomredmetzoloto, FSUE provides for mutually beneficial as joint development of polymetallic, Atomflot and MC LLC VostokUgol partnership and cooperation in a coal and other deposits including executed the agreement on number of matters including ensuring design and construction of mining and cooperation for integrated failsafe and environmentally friendly concentration enterprises in the Arctic development of the Arctic Zone of the icebreaker escort of ships along the Zone of the Russian Federation . Russian Federation . The agreement Northern Marine Route tracks as well 5. Interaction with 5.3. Commitment to Human Rights Protection

Stakeholders Protection of human rights is one of In relation to upholding human rights, • United Nations Universal key principles of ARMZ’s business . The ARMZ relies on the following: Declaration on Human Rights Company tolerates no infringement of • Constitution of the Russian • Principles of the United Nations human rights in any forms in employee, Federation and Russian laws; Global Compact business partner and other stakeholder • UN Governing principles of relations . • generally acceptable principles and rules of international law set entrepreneurship in relation to In its business, the Holding Company forth in declarations, conventions human rights, etc . strives to protect human rights as much and recommendations of the as possible, demonstrates responsible International Labor Organization attitude to its employees and and other international guarantees that their labor is voluntary organizations: and duly rewarded .

94 Annual Report JSC Atomredmetzoloto 2017 95 5.4. Public Reporting System Table 55. Accounting of the most significant stakeholder proposals put forward in dialogues when drafting 2017 Report Stakeholders’ proposals based on results of dialogs with Proposing stakeholder The Holding is the key organization of Public Annual Reporting Standard of The functional responsibility for Accounting of proposals ROSATOM in terms of reporting . To JSC Atomredmetzoloto for the first drafting the public annual report rests stakeholders class increase its business transparency time . It sets forth general requirements with the public and local authorities Clarifying the priority topic of the report as Performance for Scientific and Expert Taken into account in the Report Details section and and expand interaction with all its to public annual reports and the public relations department . The President Ten Years: New Prospects of Sustainable Development Community during Report drafting stakeholders, the Holding Company reporting system, the Report drafting of the Annual Report Drafting Team Conducting the factor analysis of the Holding Company’s Scientific and Expert has been publishing integrated annual procedure and contents including public is the Deputy Director General for Taken into account in section 4 .2 . Financial Capital reports every year since 2008 . reporting indicators and their data Business Strategy and Development, financial performance Community sheets . Ms . M .I . Liborakina . Provide more details on the Company’s sustainable Taken into account in section 2 .5 . Sustainable In 2017, the Company approved Stakeholders the internal regulatory document, development activities Development Agenda

Detailing information on the Smart Mine digital modelling Taken into account in section 4 .3 .3 . Digital Economy Stakeholders project Performance PLANS FOR 2018: Focusing on disclosure of the qualitative component of • upgrading of the information collection process Taken into account in section 4 .3 .6 . Contribution to JSC Atomredmetzoloto’s contribution to ROSATOM’s Local Communities for public reporting purposes due to adoption of Approval of Development of Operation Areas JSC Atomredmetzoloto’s Public Annual Reporting generation and development of operation regions Standard; JSC Atomredmetzoloto’s Public • review of best practices of integrated report Annual Reporting Standard drafting . 5.6. Public Assurance Statement on Report

G102-42 Background G102-43 The management of For this purpose, the Company provided • 1/24/2018 Dialogs No . 2 and JSC Atomredmetzoloto (hereinafter us and our representatives with a 3 Performance for Ten Years: referred to as the ARMZ Uranium possibility to participate and put New Prospects of Sustainable Holding Co . or Company) has suggested forward our comments in four meetings Development; Our awards and achievements in 2017 in the field of the public reporting (for quality of 2016 report): that we should assess its integrated with stakeholders, which were held: • 4/25/2018 Public consultations to public annual report 2017 (hereinafter Federal Contests: according to Expert RA • TOP 100 (rank 36 ahead of all • in November 2018 . remote survey discuss the draft annual report . referred to as the Report) from the International Rating Agency . nuclear companies) report drafting of stakeholders to discuss the draft • Diploma for Contribution standpoint of completeness and Within the framework of the events we among global majors participating concept of JSC Atomredmetzoloto’s to Promoting Sustainable International Contests: materiality of information disclosed in it were allowed to express our opinion in the LACP contest; annual report 2017 and update Development Principles in Annual and assess efficiency of the Company’s freely . • Golden award for Annual Report essential topics; Accounts of the Fourteenth Annual • Golden award at the international management response to wishes and of Companies with Revenue Contest of Annual Reports hosted marketing communication contest comments of stakeholders . not exceeding USD 100 Million by Expert RA International Rating MarCom Awards 2017 . at the LACP 2017 Spotlight Agency; Awards Global Communications Draft Report Assessment Procedure • Top 5 (best quality) annual Competition hosted by the League reporting among almost 100 of American Communications Our conclusions are based on the we have received no remuneration from • response to stakeholders’ wishes; comparative analysis of two versions of the Company for participation in the major Russian companies Professionals (LACP); • persuasiveness and cohesiveness of the Report (the draft Report for public public endorsement procedure . the data presented . consultations and the final version of Our work results are executed in the the Report) and materials provided form of this Statement of public to us based on results of dialogs endorsement containing judgments, conducted and consultations (minutes, in respect of which we have reached stakeholder comment accounting overall agreement . tables) as well as on comments received from management and employees of During the evaluation, we took the the Holding Company during event following criteria into account: 5.5. Interaction with Stakeholders when drafting conducted for public endorsement of the Report . • the Report’s focus on the requirements of the chosen the Report Verification of the information in accounting standards for the Report as well as compliance of sustainable development Dialogues with Stakeholders when Drafting the Report the Report with both Russian and (AA1000SES and GRI SRS); international reporting systems is not ARMZ strives to ensure compliance of of survey of stakeholders in November In total, 11 proposals for revision of the matter of public endorsement . • application of key reporting its reporting information with requests 2017 . the draft report and improvement of principles; from stakeholders . In accordance with Dialogs No . 2–3 Performance for Ten interaction with stakeholders were We comply with ethical requirements • materiality of the topics set forth in international standards, АА1000SES, Years: New Prospects of Sustainable received from stakeholders during the to independence and fairness of the Report; GRI SRS and IIRS, such interaction has Development of 24 January 2018 . dialogue . They have all been taken into appraisals, and express our personal the form of dialogs with stakeholders . account during follow-up on the Report . expert’s opinion and not the opinion of Public Consultations No . 4 «Discussing • completeness and balance of the the companies whose representatives Dialog No . 1 . «Discussion of the draft the draft 2017 annual report of information including coverage of we are . All participants of public concept of JSC Atomredmetzoloto JSC Atomredmetzoloto» of 25 April three key sustainable development For details of past events, see JSC Atomredmetzoloto’s web consultations were absolutely free to Annual Report 2017, held in the form 2017 . site at www .armz .ru . topics such as economy, express their opinion . We confirm that environment and social relations;

96 Annual Report JSC Atomredmetzoloto 2017 97 Assessments, Comments, and Recommendations Signatures of Endorsers: We evaluate the Report positively in its activities . We can see that the information on the Company’s core Name Organization and Position Signature terms of its structure and contents . Company’s management realizes the business and its performance in terms JSC Atomredmetzoloto prepared importance and prospects of engaging of sustainable development . and informative and well-structured stakeholders . Andrey G . Anosov Deputy Head of the Dalmatovsky District Administration We are not aware of any facts that Report meeting our expectations . It is An obvious advantage of the Report could undermine the accuracy of important that the Company voluntarily Aleksandr S . Babkin Veteran of Labour, Honoured Geologist of the Russian Federation is that it was prepared in compliance the data included in the Report . We committed to prepare the Report and with international standards (Global view the information disclosed in the for the 10th consecutive year, it has Executive Secretary of the Editorial Board of the «Gornyak Reporting Initiative (GRI SRS), Report as sufficient both in terms of Chimita B . Badmadordzhieva been demonstrating that it strives Priargunya» (Priargunye Miner) newspaper АА1000 Institute of Social and compliance with international public to reach public and environmen- tal Ethical Accountability standards, and reporting standards and taking into FSBU of HE «Financial University under the Government of the satisfaction and is prepared to engage International Integrated Reporting account stakeholder comments made at Vladimir I . Barilenko Russian Federation», Professor of the Department of Accounting, in open dialogue with stakeholders Standard (IR 1 .0) . The integrated nature the Report preparation stage . Account Analysis and Audit about various issues concerning of the Report allows fully disclosing Nadezhda A . Bendyuzhik Director, MBGEI «Uksyanskoe Secondary School»

Materiality of the Information First Deputy Director General for Strategic Communications, Valery N . Govorukhin The Report touches on all topics Company to consider opinions of all its years attached to each chapter and Technoexport, JSC that are considered essential by the stakeholders . subsection . We acknowledge that during Consultant in the Communications Department of ROSATOM State stakeholders . dialogues, the Company suggested Sergey S . Golovachev The priority topic of the report, Corporation that stakeholders should generate We note that the Company’s Performance for Ten Years: New recommendations for the priority topic Deputy Head of the Local Administration of Bauntovsky Evenkiysky methodology for assessment Prospects of Sustainable Development Bair D . Dashiev disclosure in the Report . We believe that District Municipality of materiality of topic based on is disclosed throughout the Report with all material information on the priority international standards allows the overview tables of performance for ten topic has been disclosed . Vladislav V . Duba Head of the Lithium Programme of Stans Energy Corp . Balance and Completeness of the Information Director for Science, Technology and Innovation Development of PIMCU, Deputy Chairman of the Krasnokamensk and Aleksandr A . Morozov We believe that the Report discloses economy, social sphere and the documents and additional public Krasnokamensky Municipal District Council of the Trans-Baikal the information in full . Sufficiently environment, and being of interest to information sources including the ones Territory complete information is disclosed on stakeholders . For better compliance in the corporate web site . Deputy Head of Krasnokamensk and Krasnokamensky Municipal a balanced basis . Virtually all aspects with the completeness principle, the Larisa A . Sizykh We are aware of no omissions of District of the Trans-Baikal Territory of the Company’s business influencing Report provides references to governing material information . Natalya Y . Khairova Head of Vitimskoe, JV The Company’s response to stakeholder recommendations When drafting the Report, one Company’s management records all stakeholders’ suggestions and Alan V . Khasiev Chairman of the Coordination Council remote and three live events were stakeholder comments, suggestions and recommendations and deal with the held for stakeholders . We note that recommendations, analyzes them and issues raised . Yulia Y . Shipelova Head of Logistics Support Department at PIMCU the Company involves stakeholders responds to them positively . We note high quality of preparation and regularly in its annual report drafting Vadim F . Yakupov Editor of the «Slava Trudu» (Glory to Labour) newspaper Thus, in the course of drafting the organization of face-to-face dialogues, and responds to all questions Report, the Company demonstrated in which representatives of a wide received during public dialogues . The that it was willing to respond to range of stakeholders took part .

98 Annual Report JSC Atomredmetzoloto 2017 99 Appendices Process of Identifying Materiality of Information Scope: In accordance with the International Survey resulted into adjustment combined with others (Indentured and G102-54 Appendix 1. GRI SRS Core Integrated Reporting Standard and of material topics of the Holding Child Labor, Marketing and Labeling, Sustainable Development Manual GRI Company’s business for further etc );. some topics clarified (Claims – Information about the Report SRS, representatives of the Holding disclosure thereof in the Report with Claims against Infringement of Company’s stakeholders were surveyed some topics proclaimed immaterial Human Rights); and new topics arising Contents of the Report in November 2017 to prioritize material (Suppliers, Labor Remuneration, (Digitalization) . The public annual report of JSC Atomredmetzoloto for 2017 (hereafter referred to as Priority Topic of the topics . Indentured Labor, Local Communities, G102-50 the Report) is the 10th integrated report of the Holding Company . Partner Relations, etc );. some topics G102-51 Report: G102-52 Report Scope Performance for Ten JSC Atomredmetzoloto’s business operations from 1/1/2017 until 12/31/2017 . Years: New Prospects of The report covers all main companies within the Holding Company’s management Sustainable Development structure . JSC Atomredmetzoloto Annual Report 2016 was published at the Company’s web STANDARDS AND REGULATORY site at www .armz .ru (Shareholders and Investors > Information Disclosure > Annual REQUIREMENTS USED IN THE 32 13 15 18 21 Reports) in July 2017 . COURSE OF REPORT DRAFTING 2 19 Table 56. Materiality G102-45 3 5 1 44 14 40 G102-47 Process of Drafting and Identifying 24 42 Matrix G102-48 G102-49 the Contents of the Report 6 43 37 4 38 Federal Regulations: 36 39 • Federal Law No . 208-FZ dd . 12/26/1995 On Joint-Stock Companies; The Report was drafted in close 16 9 41 33 G103-1 • Federal Law No . 402-FZ dd . 12/6/2011 «On Accounting»; cooperation with stakeholders . G103-2 7 8 29 22 G103-3 • CBR Regulation No. 454-П dd. 12/30/2014 «On Information Disclosure Most G102-46 In November 2017, remote dialog was by Issuers of Securities»; material held to discuss the concept of the 17 25 11 12 10 45 • CBR Letter No . 06-52/2463 dd . 4/10/2014 «On the Corporate Report . Sufficiently Governance Code» . material On 24 January 2018, two dialogs were 26 28 4 23 27 20 International Public Reporting Standards: held to discuss the priority topic . Immaterial • International stakeholder relation standards series АА1000 (Institute of On 25 April 2018, public consultations 30 31 34 Social and Ethical Accountability); were held to discuss the draft Report . • Integrated Reporting Standard of the International Integrated Reported 35 For details, see the Dialogs with Stakeholders during Council (IIRC); Report Drafting section . • Sustainable Development Reporting Standard of the Global Reporting Initiative (GRI); • ISO 26000:2010 Social Responsibility Manual, etc .

ROSATOM’s Regulatory Documents: • ROSATOM’s Harmonized Industrial Public Reporting Policy approved by Order of ROSATOM No. 1/1069-П dd. 11/11/2015; • Harmonized Methodological Guidelines on Public Reporting of ROSATOM

and Its Organizations approved by Order of ROSATOM No. 1/671-П dd. Significance for stakeholders 7/18/2017 Significance for Company

JSC Atomredmetzoloto’s Regulatory Documents: • JSC Atomredmetzoloto’s Public Annual Reporting Standard ECONOMY TOPICS SOCIAL TOPICS Society

1 Financial performance Approaches to labor organization and good 32 Influence on operation area 2 Market presence faith labor Product liability 3 Indirect economic effects 19 Employment 33 Consumer health and safety 4 Procurement 20 Employee and management relations 34 Marketing and labeling 5 Business stability 21 Labor health and safety 35 Consumer privacy 6 Innovations 22 Training and education Specific Topics 7 Corporate governance 23 Equal opportunities 8 Diversification 24 Social security 36 NFC Location 9 Investments 25 Claims 37 Global uranium markets 38 Development strategy ENVIRONMENTAL TOPICS Human rights 39 Value chain 10 Materials 26 Non-discrimination 40 Future forecast 11 Power consumption 27 Freedom of association 41 Feedstock base development 12 Water consumption 28 Child and indentures labor 42 Performance management 13 Emissions and wastes 29 Safety 43 Risk management 14 Product safety 30 Right of indigenous peoples 44 Labor and industrial 15 Environmental compliance 31 Claims against human rightinfringement 45 Industry digitalization 16 Environmental investments 17 Biodiversity 18 Emergency readiness

100 Annual Report JSC Atomredmetzoloto 2017 101 There are no material changes to JSC Khiagda, JSC RUSBURMASH JSC VNIPIpromtechnologii and 203-1 92 203-2 92 scopes of material topics compared and JSC VNIPIpromtechnologii; LLC ARMZ Service; GRI 204 . Procurement with previous reports . • environmental performance • financial performance indicator: for 204-1 41 The performance indicators provided indicators: PJSC PIMCU, JSC Dalur, the reporting consolidation scope in GRI 205 . Anticorruption Policy in this Report belong to the following JSC Khiagda; accordance with RAS requirements . 205-1 39 205-2 39 perimeters: • staff and labor safety GRI 301 . Materials • production figures are presented performance indicators 301-1 71 according to the data on JSC Atomredmetzoloto, JSC Dalur, GRI 302 . Energy assets: PJSC PIMCU, JSC Dalur, JSC Khiagda, JSC RUSBURMASH, 302-1 60 302-4 60 GRI 303 . Water 303-1 72 Authentication of Information GRI 304 . Biodiversity VERIFICATION OF THE REPORT The final version of the Report has been approved by the Director General of the 304-2 71 304-3 75 Company and its Board of Directors . • Financial Audit – Nexia Pacioli Group GRI 305 . Emissions of Companies 305-1 73 305-4 73 305-6 73 • Inspection by the Internal Control 305-2 73 305-5 73 305-7 73 Disclaimer Regarding Forecast and Audit Service The Report contains forecast declarations regarding production, finance, • Public Endorsement 305-3 73 economy and social indicators of the Company’s further development . GRI 306 . Effluents and Waste Implementation of our assumptions and intentions depends immediately on 306-1 73 306-2 74 306-3 73 the political, economic, social, and regulatory situation . For this reason, the GRI 307 . Environmental Compliance actual Company’s performance may be different from the forecast . 307-1 75 GRI 401 . Employment 401-1 80 GRI 402 . Labor Management Relations 402-1 GRI 403 . Occupational Health and Safety Appendix 2. Table of GRI Disclosures 403-2 7, 32, 76 403-3 76 403-4 76 GRI 404 . Training and Education G102-55 404-1 84 404-2 83 404-3 83 Element Page in the Report Reporting Element Page in the Report Reporting Element Page in the Report of Reporting GRI 405 Diversity and Equal Opportunities GRI 102 . General Disclosures 405-1 79 405-2 79 102-1 9 102-18 29 102-41 87 GRI 406 . Non-Discrimination 102-2 9 102-19 30 102-42 95 406-1 89 102-3 106 102-20 30 102-43 97 GRI 413 . Local Communities 102-4 9 102-21 30 102-44 97 413-1 93 413-2 89 102-5 9 102-22 30 102-45 101 GRI 415 . Publicity Policy 102-6 10 102-23 30 102-46 100 415-1 - 102-7 7 102-24 30 102-47 101 GRI 416 . Consumer Health and Safety 102-8 7 102-25 30 102-48 101 416-1 60 416-2 60 102-9 13 102-26 30 102-49 101 GRI 417 . Marketing and Labeling 102-10 29 102-27 30 102-50 100 417-1 - 417-2 60 417-3 60 102-11 11 102-28 30 102-51 100 GRI 418 . Customer Privacy 102-12 9 102-29 30 102-52 100 418-1 60 102-13 9 102-30 30 102-53 106 GRI 419 . Socioeconomic Compliance 102-14 3 102-31 30 102-54 100 419-1 60 102-15 35 102-32 30 102-55 102 102-16 21 102-40 95 GRI 102 . Ethics and Good Faith 102-16 21 102-17 39 GRI 102 . Remuneration and Incentives 102-35 31 102-36 31 GRI 103 . Management Approaches 103-1 100 103-2 100 103-3 100 GRI 201 . Economic Performance 201-1 7 201-3 86 201-4 91 201-2 71 GRI 202 . Market Presence 202-1 91 202-2 92 GRI 203 . Indirect Economic Impacts

102 Annual Report JSC Atomredmetzoloto 2017 103 Appendix 3. Conclusion of the Internal Control Directorate List of Abbreviations and Terms

COGS Cost оf Goods Sold CPS Central Production Site CSP Corporate Social Program CSR Corporate Social Responsibility CTs Critical Tasks D&S Design and Survey Conclusion EBITDA Earnings Before Interest and Tax on Results of Internal Non-Financial Audit of Atomredmetzoloto, JSC's Annual EPCM Engineering, Procurement, Construction, Management Report 2017 Data ERP Enterprise Resource Planning FBU GKZ Federal Budget Institution State Commission for Mineral Reserves The internal non- nancial audit of the drafting process of Atomredmetzoloto, JSC's FIFR Fatal Injury Frequency Rate public annual report 2017 (the Report) has been completed in furtherance of clause 9 FS Feasibility Study of Attachment 2 to order of Atomredmetzoloto, JSC's Chief Executive Ocer No. GRI Global Reporting Initiative HMP Hydro Metallurgical Plant 003/316-M of 12/26/2017 On Organization of Work for Drafting Atomredmetzoloto, HPP Heat Power Plant JSC's Annual Report for 2017. IAEA International Atomic Energy Agency The Report drafting process engaged the bulk of Atomredmetzoloto, JSC's core IDTB Investment Decision Taking Body business units and employees of its subsidiaries. Information provided by them was IFRS International Financial Reporting Standards assessed, discussed and further consolidated. Designated persons have conducted the ISL In-Situ Leaching dialog with stakeholders' representative regarding disclosure of the priority topic in IT Information Technology the annual report as well as public consultations regarding the draft annual report. KPI Key Performance Indicator Year 2017 is the jubilee year for ARMZ Uranium Holding celebrating its 10th LDR Lost Days Rate LSP Local Sorption Plant anniversary and the Report has been supplemented with authentic historical M&A Mergers And Acquisitions references. MRB Mineral Resource Base The Report provided reects both general information on key events and 2017 NEC Nuclear Energy Complex Results and detailed information on priorities to which Atomredmetzoloto, JSC's NFC Nuclear Fuel Cycle management and sta pay special attention and which concentrate maximum NPP Nuclear Power Plant resources: NRNU MEPhI National Research Nuclear University Mephi - formulation of the Holding Company's strategy and priorities; ODR Occupational Disease Rate - improvement of management and production performance; OHL Overhead Lines - social investments; PSEDA Priority Social And Еconomic Development Area RAS Russian Account Standards - protection of natural resources and biodiversity. R&D Research And Development The information set forth in the Report reects fully the main facts and REM Rare Earth Metals achievements of the Mining Division in 2017 in all material respects. RPS Rosatom Production System The report allows informing stakeholder users of the existing systems and practices RRO Repair And Restoration Operations of business corporate governance, results achieved, short- and long-term plans. RW Radioactive Wastes Audit ndings allow concluding that the public reporting process is ecient and SAP ERP HCM System Analysis And Program Development Enterprise Resource Planning Human Capital Management that the public reporting procedure of Atomredmetzoloto, JSC is compliant with SBU Standalone Business Unit SCs Subsidiary Companies iretr ntern ntr tni SCs Social Costs SDGs Sustainable Development Goals SVF Screen Vibration Feeder TPO Pilot Production Operations TTO Pilot Technological Operations USRS Unified Harmonized Remuneration System

104 Annual Report JSC Atomredmetzoloto 2017 105 CONTACTS

Full Company Name Atomredmetzoloto, Joint-Stock Company Abridged Name JSC Atomredmetzoloto Headquarters (HQ) Location and Mailing Address 109004, Moscow, 22 Bolshoi Drovyanoi Lane G102-3 Phone / Fax +7 (495) 508-88-08 / 508-88-10 E-mail info@armz .ru Name of the Registering Authority, Registration Moscow Registration Chamber, NO . 004 .997 of 2/22/1995 Number and Date OGRN 1027700043645 INN 7706016076 KPP 997550001/770901001 http://www .armz .ru Registrar R .O .S .T ., Joint-Stock Company Registrar Details: Registrar Details OGRN 1027739216757, INN 7726030449 Location: Moscow, 18/13 Stromynka Street Phone/Fax: +7 (495) 771-73-36 . G102-53

IVAN KRUPYANKO VICTORIA DOLINA Head of Corporate Communications Department, Head of CSR and Non-Financial Reporting, JSC Atomredmetzoloto JSC Atomredmetzoloto 22 Bolshoi Drovyanoi Lane, 109004, 22 Bolshoi Drovyanoi Lane, 109004, Moscow, Russia Moscow, Russia Phone: +7 (495) 508-88-08, ext . 177, Phone: +7 (495) 508-88-08, ext .146, Fax: +7 (495) 508-88-10, Fax: +7 (495) 508-88-10, E-mail: IMKrupyanko@armz .ru E-mail: ViGDolina@armz .ru

106 Annual Report JSC Atomredmetzoloto 2017