Annual Report 2009

2009 ANNUAL REPORT ANNUAL 2009 ATOMREDMETZOLOTO 2009 ANNUAL REPORT ATOMREDMETZOLOTO APPROVED By the Annual General Shareholders Meeting of JSC Atomredmetzoloto June 30, 2010 (Minutes No. 5)

This report was pre-approved by the resolution of the Board of Directors of JSC Atomredmetzoloto dated May 31, 2010 No 47. ABOUT THIS THIS ABOUT REPORT ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Contents

1. About this Report �� 6 6. Governance System ��45 2. Company’s management statement �� 8 6.1. Goal-Oriented Governance �� 45 3. About the Company ��11 6.2. Corporate Governance System �� 46 3.1. General Information about the Company �� 11 6.3. Board of Directors Report on Key Operations �� 52 3.2. Structure of the Company, Organization 6.4. Key Risks and Risk Management Methods �� 53 DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS of Production and Marketing Processes �� 12 7. Sustainable Development ��57 3.3. Geography of the Company’s Operations �� 14 7.1. Personnel �� 57 3.4. 2009 Key Operating Results 7.2. Social Policy. �� 61 of the Company. �� 16 7.3. Occupational health and Safety �� 62 3.5. Key Events of 2009. �� 17 7.4. Environmental Protection and Safety �� 64 4. Position of the Company in the Uranium Market 7.5. Development of the Regions of Operation �� 67 and its Development Strategy ��19 7.6. Charity and Sponsorship �� 68 4.1. 2009 Natural Uranium Market. �� 19 7.7. Stakeholder Engagement �� 68 4.2. Uranium Market Development Prospects �� 21 8. Financial Performance. ��73 4.3. Key Development Areas 9. Exhibits ��77 and Investment Policy �� 23 9.1. Abbreviations and Terms Used in the Report �� 77 4.4. Competitive Advantages 9.2. Main Deposits of the Company �� 78 MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL and New Challenges �� 26 9.3. Standard Disclosures Table – Sustainability 5. Business ��29 Reporting Guidelines 5.1. Geological Exploration Appraisal of Reserves (Global Reporting Initiative) �� 80 and Resources. Licensing. �� 30 9.4. Nonfinancial Reporting Assurance �� 85 5.2. Uranium Mining �� 31 9.5. Audit Report �� 86 5.3. Construction of New Production Enterprises 9.6. Accounting Statements in Russia �� 35 (RAS, summary version) �� 88 5.4. Service and Other Companies �� 38 9.7. Report of the Audit Commission �� 91 5.5. Non-Nuclear Material Related Projects �� 40 9.8. Details of the Company 5.6. Efficiency Management and Contact Information �� 92 and Innovations �� 41 9.9. Feedback Questionnaire �� 93 EXHIBITS 5 www.armz.ru ABOUT THIS REPORT

1. About this Report

This Report describes the business of the Open Joint Stock substantial changes in the coverage, boundaries or Company Atomredmetzoloto («JSC Atomredmetzoloto», measurement methods applied for the purposes of this «ARMZ Uranium Holding Co.», «Company» or Report occurred as compared to previous periods. «ARMZ») in the Russian Federation, Kazakhstan, The Company publishes its reports annually. The Armenia, Namibia, Mongolia and a number of other previous report was published on July 01, 2009. In 2010 countries in 2009, and contains information on key events the Company prepared its second annual report which of Q1 2010. This report covers the business of all key presents in an integrated form financial and non- subsidiaries and affiliates of the Company. financial performance indicators, including sustainable The performance indicators provided in this Report development aspects. This annual report reflects the belong to the following perimeters: company’s contribution to achieving competitiveness by Operating results are given for the following the State Atomic Energy Corporation Rosatom companies: JSC PIMCU, JSC Dalur, JSC Khiagda, («Rosatom» or «Rosatom State Corporation») in the ZARECHNOYE, JSC JV Akbastau, JSC Elkon global nuclear product and technology market, and MMP, JSC UMC Gornoe, JSC OMCC, ARMZ’s influence over social and economic JSC Lunnoe, UMC, RUSBURMASH INC, LLP development of the regions of its operation and the JV RBM-Kazakhstan, LLC USC ARMZ, Karatau. environment. Environmental indicators – JSC Dalur, The Report was prepared taking into account the JSC Khiagda, JSC PIMCU. priorities designated by the Corporation as the key HR and H&S information – shareholder of the Company and its key stakeholders: JSC Atomredmetzoloto, JSC OMCC, LLC USC consumers of uranium products, business partners, ARMZ, UMC, JSC PIMCU, JSC Dalur, JSC regional and local authorities, local communities. For Khiagda, RUSBURMASH INC, JSC Elkon MMP, the first time this Report describes the strategy and risk JSC Lunnoe, JSC UMC Gornoe. management matters. The Report shows how Rosatom’s There were no substantial changes in the structure of strategy is implemented through the strategy of ARMZ the Company’s assets that could affect the comparability using the opportunities which became available during with previous reports on a consolidated basis. No the crisis. 6 www.armz.ru ABOUT THIS THIS ABOUT REPORT ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

In particular, the Report contains a disclosure on This Report was prepared in accordance with the diversification of the natural uranium resource base requirements of the Russian laws applicable to the through acquisition of highly efficient foreign assets. reporting of open joint stock companies, and the Public These operations, together with the development of 14 Reporting Policy of Rosatom State Corporation. The projects at all stages of the life of deposits, are aimed at financial information is based on the Company’s ensuring firmly guaranteed long-term supplies to the accounting statements prepared under the IFRS. Full customers. The Report shows the interplay of the version of the Company’s IFRS and RAS statements is strategic priorities, corporate policies and standards, provided on its web-site. In the course of preparation of governance system, including target management using this annual report the Company held consultations and the key performance indicators, and the results hearings on the report in accordance with the achieved. international standards series AA 1000 AS. ARMZ used The Report contains a detailed overview of the the recommendations of the Global Reporting Initiative Company’s development prospects which is based on (GRI) Sustainability Reporting Guidelines, and key MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL detailed analysis of the global natural uranium market. performance indicators developed by the Russian Union In connection with this, the Report contains looking of Industrialists and Entrepreneurs (RSPP). The Report forward statements. Such terms as «believes», includes a table showing the level of compliance with the «anticipates», «expects», «intends» and «plans» and GRI G3 indicators and the RSPP key performance similar terms reflect the existing forecasts and opinions indicators. of the Company’s management with respect to the future The level of GRI G3 compliance is rated as С+. results. There is always a risk that preliminary estimates, Accuracy of data contained in this Report was confirmed forecasts, plans and other similar statements will not by the Company's Audit Commission. materialize. It should be taken into account that due to a The annual report (the non-financial information) was whole number of material events the actual results may audited pursuant to the international standards. substantially differ from the planned or target results, PricewaterhouseCoopers acted as independent auditor. expected results, estimates and intentions described in the forward-looking statements. EXHIBITS 7 www.armz.ru ADDRESS OF COMPANY’S TOP MANAGEMENT

Dear readers! Acting in line with the strategy of State Corporation Rosatom, ARMZ Uranium Holding Co. successfully attains its strategic goal which is to secure uranium feedstock supply and competitiveness of the nuclear industry.

A.M. Lokshin Chairman of the Board of Directors JSC Atomredmetzoloto

You are reading the annual report of JSC associated infrastructure. Atomredmetzoloto (ARMZ Uranium Holding Co.), a Following the sustainable development principles is natural uranium mining subsidiary of the State Atomic critical for successful implementation of the Company’s Energy Corporation Rosatom. strategy. In its business ARMZ follows high The Russian nuclear industry has been rapidly environmental and industrial safety standards. The developing in the recent years. Today our country has 32 Company acts responsibly with respect to the needs of operating power units with the aggregate installed capacity people living in the regions where ARMZ conducts of 23,200 MW. 7 more power units are now being business both in and outside of Russia. constructed in Russia. By 2030 the share of atomic energy The ARMZ’s strategy is supported by the Russian of the total balance of energy in Russia is to growth from Government which in 2009 allocated RUR 64.2 bln. in the current 16 % to 25-30 %. The State Atomic Energy the aggregate for the purposes of the Company’s Corporation Rosatom is actively increasing its development. These funds will be applied against international presence. Presently Rosatom ranks first in performance of the investment program in the interests the world by the number of nuclear power plants of the Russian nuclear industry as a whole. simultaneously under construction outside of Russia, Despite the success achieved in 2009 the Company provides 40 % of the global uranium enrichment services still has a lot to do. In 2010-2011 ARMZ plans to and accounts for 17 % of the world’s nuclear fuel significantly enhance its own resource base and to form fabrication capacity. the portfolio of high-yield assets with competitive mining The critical mission of ARMZ Uranium Holding Co. costs in Africa, North America and Asia. Purchase of is to satisfy the growing raw material requirements of the assets abroad will also allow to gain access to the state- Russian nuclear industry. In 2009 of-the-art technologies of uranium mining and JSC Atomredmetzoloto showed once again that it processing. The Company will also actively develop the successfully performs this function. Russian projects. However, the Company’s development ARMZ implements the key strategy objectives of the dynamics shows that JSC Atomredmetzoloto is well Rosatom State Corporation. Last year ARMZ made positioned to achieve the most ambitious goals. critical steps towards transformation into a global company successfully implementing projects worldwide. JSC Atomredmetzoloto was the first Rosatom entity to become a shareholder of an international public company. In the meantime ARMZ was actively developing the existing enterprises and invested in construction of the 8 www.armz.ru ABOUT THIS THIS ABOUT REPORT ABOUT THIS THIS ABOUT REPORT

Dear shareholders, partners and colleagues! Domestic project development and active international expansion are the key to implementation of our MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS strategy. INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

V.L. Zhivov Director General JSC Atomredmetzoloto

2009 became one of the most successful years for ARMZ enterprise with the designed capacity of up to 5,000 tons since the formation of the Company. Last year the of uranium per year in the south of the Republic of natural uranium output grew by more than 25 % from Sakha (Yakutia).

3,687 to 4,624 tons. By the dynamics of mining output As the mining rapidly grows, the Company pays a lot PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS growth the Company became the second worldwide. of attention to geological exploration. In 2009 the total Such excellent results are to a great extent due to scope of drilling amounted to 170,000 running meters, active international expansion. The current portfolio of with investments in uranium exploration at RUR 1.05 ARMZ includes 14 uranium and non-uranium projects bln. These are the record results for the last twenty years. worldwide. In 2009 JSC Atomredmetzoloto purchased The reserve estimation shows that when exploration is Effective Energy N.V. and thus consolidated the Russian completed the Company will add 20,000 tons of uranium stake in a uranium mining JV in Kazakhstan. Upon in Russia and 10,000 tons in Kazakhstan. completion of an asset swap transaction with the In 2009 ARMZ also entered the international natural Canadian Uranium One Inc. JSC Atomredmetzoloto uranium market. The Company signed contracts with its became the owner of 19.95 % of its shares which allowed customers for supply of uranium for the next three years to increase and geographically diversify the resource and entered into contracts for storage of materials and base. Representatives of JSC Atomredmetzoloto received servicing the Company’s accounts at two foreign seats on the Board of Directors Uranium One Inc. and conversion facilities. became senior executives of the company. In the future The Company’s business is based on the sustainable MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Uranium One Inc. will become the platform for global development principles which means, among other growth of Atomredmetzoloto’s international business. things, taking into account social and environmental The Company also actively developed the Russian consequences of business when making any investment projects. In 2009 the Priargunsky Industrial Mining and decisions. A condition to success is the dialogue with key Chemical Union – the biggest Russian uranium mining stakeholders and active participation of the Company in company – finished the construction of a sulfur acid the development of its regions of presence. Our plant. As part of the transportation infrastructure employees play the critical role in practical development program JSC Khiagda opened a bridge over implementation of the sustainable development the Vitim River. Not only it contributed to environmental principles. safety of the production, but also substantially improved A focused development strategy and business growth transport links in the Bauntovsky District of the Republic dynamics of JSC Atomredmetzoloto allow to look in the of Buryatia. In late 2009 the Company started designing future with confidence. the JSC Elkon MMP which includes creation of an EXHIBITS 9 www.armz.ru

ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

3. About the Company INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

3.1. General Information about the Company

ARMZ Uranium Holding Co. is a subsidiary of the Background Information

State Atomic Energy Corporation Rosatom and is part PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS of the vertically integrated nuclear energy industrial 1991 – ARMZ Uranium Holding Co. was formed as a State complex. Concern in the system of the Ministry of Atomic Energy and Industry of the USSR. Today ARMZ Uranium Holding Co. is one of the leaders in the world uranium mining industry. It is among top five 1995 – State Concern Atomredmetzoloto was transformed to uranium mining companies and ranks second by uranium become a joint stock company. resources reserves. The Company’s portfolio includes 14 key projects with deposits at various stages of their life 2007 – A decision is made to consolidate the uranium, rare cycle in 5 countries (Russia, Kazakhstan, Armenia, earth and other minerals mining assets on the basis of Namibia, Mongolia). As the Company develops JSC Atomredmetzoloto. promising projects it will expand its geography of mining operations. 2007-2008 Domestic uranium mining assets and uranium In 2009 the Company sourced the feedstock to procure exploration and mining joint ventures in Kazakhstan were RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL the supplies from the operating enterprises in Russia and transferred to the Company. JSC Atomredmetzoloto also Kazakhstan and from the existing inventory. The received licenses for the right to use subsoil of the reserve Company’s enterprises conduct mining operations using uranium deposits. the state-of-the-art technologies of ore mining and processing. July 2008 – JSC Atomredmetzoloto became the authorized The Company’s finished products fully comply with company to procure for the domestic and international the Russian and international standards. The Company feedstock requirements of the Russian nuclear industry. supplies uranium on the terms standard for the international market and has open materials accounts 2009. The Company launches active international operations: with three international conversion facilities, and acquisition of Effective Energy N.V. allowed it to consolidate the framework agreements with all international Russian stake in three uranium mining joint ventures in transportation and forwarding companies. Kazakhstan, and the Company also became a minority ARMZ together with its affiliates and subsidiaries shareholder of a Canadian public uranium company Uranium One Inc. employ 9,991 people. EXHIBITS 11 www.armz.ru ABOUT THE COMPANY

3.2. Structure of the Company, Organization of Production and Marketing Processes

The shareholders of JSC Atomredmetzoloto are Rosatom Company used its subsidiaries and other intermediaries as State Corporation (80.345%), JSC TVEL (19.653%) and alternative marketing channels. The Company actively JSC Atomenergoprom (0.002%). cooperates with traders, brokers and other market In the domestic market in 2009 the Company supplied players. uranium feedstock to two customers – JSC TVEL and The basic principle of the Company’s pricing policy is JSC Techsnabexport. a well considered client-oriented approach to formation In the international market the priority sales channel of the price for natural uranium using various pricing is the direct sales to foreign utilities (Fig. 2, 3) The mechanisms.

12 www.armz.ru ABOUT THIS THIS ABOUT REPORT

«Only several years ago only few people know what Atomredmetzoloto (ARMZ Uranium Holding Co.) was. Today it is one of the main divisions of Rosatom, the second biggest uranium mining company worldwide, which has assets on three continents. 2009, a crisis year, became truly successful for ARMZ: the company was buying assets MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS abroad and even became the major shareholder of the Canadian uranium mining company Uranium One Inc.» Vedomosti, February 09, 2010 INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 13 www.armz.ru ABOUT THE COMPANY

3.3. Geography of the Company’s Operations

The target markets of the Company’s products are the USA, Asia and Pacific countries and Europe.

Figure 4. Map of the Company’s Operations

Uranium One Inc.

Ukraine In furtherance of the decision made by the third meeting of the Sub-Commission for Nuclear Energy and Nuclear Materials, ARMZ and the Ministry of Fuel and Energy of Ukraine, GP VostGOK in 2007-2009 had a number of meetings, determined the objectives for cooperation in uranium mining and developed a work plan. Pursuant to the agreements reached at the fourth meeting of the Sub-Commission for Nuclear Energy and Nuclear Materials which was held on August 26, 2009, the parties drafted a Memorandum on cooperation in mining and processing of uranium between Rosatom and the Other Countries Ministry of Fuel and Energy of Ukraine. As part of Rosatom’s comprehensive cooperation program in the area of peaceful use of atomic energy in 2009 JSC Atomredmetzoloto had a series of consultations with the governmental authorities of Egypt and Tadjikistan on geological exploration and mining of uranium in those countries. In 2009 the Company continued negotiations with the Japanese, Korean and French companies concerning their Namibia potential involvement in development of uranium deposits of Currently the Company is a party to an operating the Elkon uranium province. joint venture SWA Uranium Mines in Namibia The Company started to consider potential participation in which was set up in 2008 by ARMZ, VTB Capital the precious metal development projects in the CIS Namibia and Arlan investment company. The JV’s countries and Africa. business is to discover and develop uranium deposits of conventional and new commercial types for Namibia. In 2009 the Company had several meetings with companies developing major uranium projects in Namibia and other adjacent countries. Material information beyond the reporting period: On May 20, 2010 in Moscow as part of the visit of the President of the Republic of Namibia Hifikepunye Pohamba to the Russian Federation an inter-governmental Memorandum of Understanding was signed setting forth the key areas of mutually beneficially cooperation between the two countries in geological exploration, mining and processing of uranium ore. Pursuant to the Memorandum ARMZ together with the state Namibian company Epangelo Mining (Pty) Ltd will become a member of the working group that will prepare an action plan to implement joint projects.

14 www.armz.ru The Company conducts business in 5 countries Kazakhstan Mongolia

(Russia, Kazakhstan, Armenia, Namibia and THIS ABOUT REPORT Mongolia), and is actively negotiating potential The Russian-Kazakh partnership in uranium mining The Russian-Mongolian cooperation in the sphere projects in a number of other countries (Ukraine, is implemented as part of the Comprehensive of exploration and mining of uranium ores is China, India etc.). The Company’s production Russia-Kazakhstan Cooperation Program in the conducted pursuant to the Agreement between facilities are based in Russia and Kazakhstan. The Peaceful Use of Nuclear Energy adopted on the Governments of the Russian Federation and Company’s headquarters are located in Moscow. December 7, 2006. In 2009 the total uranium Mongolia on formation of a joint company Dornod production in Kazakhstan amounted to about Uranium dated August 25, 2009 signed during 14,000 tons of uranium which allowed the the visit of the President of the Russian Russia country to become the biggest uranium Federation Dmitry Medvedev to Mongolia, and producers. the Cooperation Agreement between Rosatom The main uranium mining companies of ARMZ, In 2009 in Kazakhstan there were three uranium State Corporation and the Nuclear Energy Office such as JSC PIMCU, JSC Dalur and of Mongolia signed on March 17, 2009 in JSC Khiagda, are located in Russia. In 2009 the mining Russia-Kazakhstan joint ventures: ZARECHNOYE, JSC JV Akbastau and Karatau. Moscow. These agreements provide for a uranium output of the three Russian mines formation by JSC Atomredmetzoloto and the amounted to 3,565 tons of uranium. The main Mongolian state company Monatom of a joint production capacity of ARMZ is concentrated in venture to mine uranium from the deposits of Priargunsky (which accounts for 65 % of the the Dornod uranium province with a capacity of total Company’s output). In Russia the Company up to 2,000 tons of uranium per year. In 2009 is developing potential uranium mining projects JSC Atomredmetzoloto and Monatom negotiated (JSC Elkon MMP, JSC UMC Gornoe, JSC OMCC, the key terms of formation of the joint company

JSC Lunnoe). For details see section 5. and its governance structure. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

Elkon MMP Khiagda Dalur Lunnoe OMCC UMC Gornoe MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

Akbastau PIMCU

Zarechnoye

China On May 28, 2009 JSC Atomredmetzoloto and China Uranium Corporation Limited signed a Memorandum of Understanding in which they set out their mutual interest in joint development of a number of uranium deposits in Russia and their willingness to expand cooperation outside the PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Russian Federation. India Representatives of ARMZ and Uranium Corporation of India Ltd. (UCIL) in 2009 had a number of meetings where they discussed the terms of potential participation of the Indian company in the Russian uranium projects. The parties plan to exchange information on uranium assets and identify potential areas of cooperation in joint development of uranium deposits in the Russian Federation and internationally.

Armenia

Closed joint stock company ARMENIAN-RUSSIAN MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL MINING COMPANY («ARMC») was incorporated on September 9, 2008 on a parity basis with the Republic of Armenia represented by the Ministry of Energy and Natural Resources of the Republic of Armenia. On August 5, 2009 ARMC received a license to perform geological exploration for uranium in Armenia. On September 8, 2009 the joint venture set to field operations in Siunik District of Armenia. The work has identified promising sites which may potentially contain uranium and gold occurrences. Currently the company is developing an exploration program for 2010. JSC Atomredmetzoloto is also considering participation in gold deposit development projects in Armenia. EXHIBITS 15 www.armz.ru ABOUT THE COMPANY

3.4. 2009 Key Operating Results of the Company

Key Achievements in 2009 Table 1. Key Performance Indicators

Item 2009 2008

Uranium output grows by 25% Sales revenues*, RUR '000 29 233 932 15 197 372

Net profit,* RUR '000 6 727 942 289 200 Acquisition of 19.95% of shares of a Canadian uranium mining company Uranium output, tons 4 624 3 687 Uranium One Inc. as a result of an Net asset value,* RUR '000 82 038 896 12 834 049 asset swap transaction. Uranium mineral base (the sum of reserves and projected resources), '000 tons 632** 558*** *On the basis of the IFRS consolidated statements. ARMZ acquires 100% of shares in **Including the prognosticated resources of P1 category (reasonably assured resources), geological exploration and scheduled write-off of reserves Effective Energy N.V. (Netherlands) ***As of January 1, 2009 which holds uranium production assets in Kazakhstan. Table 2. Key Performance Indicators of the Company (KPIs) The Company adds 74,000 tons to its resource base due to acquisition of KPI Name Target Value Achievement new assets (subject to schedule write Uranium production program implementation, tons 4 511 Completed off of reserves) Reduction of recurring costs (in comparable prices), % 15 Completed

Enhancement of environmental safety Labor efficiency increase, % 12,5 Completed of JSC PIMCU’s production due to Implementation of reserves Phase I of the commissioning of a new sulfur acid base diversification project project Completed No accidences plant operating on pure sulfur or death rate Safety criteria growth Completed

In 2009 the enterprises of ARMZ in Russia and Kazakhstan produced 4,624 tons of uranium. Company’s mineral base as of January 01, 2010, was 632,000 tons of uranium.

16 www.armz.ru ABOUT THIS THIS ABOUT REPORT

3.5. Key Events of 2009 MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

January 2009 In Stary Olov village of the Chernyshev District in the JSC Atomredmetzoloto’s shareholders made a decision Trans-Baikal Territory public hearings on environmental to increase the charter capital of the company by was impact assessment (EIA) of the proposed enterprise of issuance of additional shares of the Company in which will develop the Olovskoye uranium deposit were favor of Rosatom. The Supervisory Board of Rosatom conducted. The project was approved by the public and made a decision to subscribe for ARMZ’s shares. the administration of the Chernyshev District of the MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Trans-Baikal Territory. March 2009 An inter-governmental agreement between the Russian The acquisition by JSC Atomredmetzoloto of 100% of Federation and Mongolia on formation of a Limited shares in Effective Energy N.V. (Netherlands), owning Liability Company Dornod Uranium to mine uranium in uranium mining assets in Kazakhstan, was approved by Mongolia was signed. the authorized governmental authorities of Kazakhstan and was closed. October 2009 Chairman of the Government of the Russian Federation A the fifth Russian mining forum MINEX 2009 which Vladimir Putin signed an Order dated March 10, was held in Moscow on September 30 to October 2 2009, No. 302-r and approved the passport of a JSC Atomredmetzoloto was recognized as the Investor comprehensive investment project Development of the of the Year for its asset swap transaction with the Project Documentation to Implement the Investment Canadian Uranium One.

Project Comprehensive Development of South Yakutia. ARMZ Uranium Holding Co. published its 2008 PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS consolidated financial statements prepared under the June 2009 IFRS and the Independent Auditor Report prepared by As part of the transportation infrastructure BDO Unicon. development program JSC Khiagda finished construction of a bridge over the Vitim River. November 2009 JSC PIMCU finished construction of the sulfuric acid The asset swap transaction with the Canadian Uranium plant with a capacity of 180,000 tons per year. One Inc. was approved by the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan. July 2009 The Lunnoe deposit development project in the Aldan The Chairman of the Government of the Russian District of the Republic of Sakha (Yakutia) received Federation Vladimir Putin July 11, 2009 signed Order support of the local population. No. 909-r on provision to Rosatom of a subsidy from the federal budget in the form of a property December 2009 RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL contribution of the Russian Federation in the amount of ARMZ and Uranium One Inc. closed the asset swap RUR 50 bln to fund the purchase of transaction whereunder a 50 % stake of ARMZ in JSC Atomredmetzoloto's shares. Karatau was exchanged for a stake in Uranium One As a result of additional share issuance ARMZ received Inc. As a result ARMZ became the owner of a 19.9 % the first tranche of the funds from Rosatom in the stake in Uranium One Inc. amount of RUR 16,898 bln which was transferred in The Chairman of the Government of the Russian furtherance of the order of the Government of the Federation Vladimir Putin signed an order on provision Russian Federation on provision of a subsidy. Rosatom to Rosatom of a subsidy from the federal budget in the became the owner of a controlling stake in amount of RUR 14.2 bln to purchase the JSC Atomredmetzoloto (51.83%). JSC Atomredmetzoloto's shares. Public hearings on development of Berezovoye deposit August 2009 were held in the Trans-Baikal Territory. The local public ARMZ starts development of the Itmanovskaya place of provided constructive proposals concerning mitigation Lukoyanovskoye deposit of titanum and zirconium sands. of environmental impact of the proposed mine. EXHIBITS 17 www.armz.ru

ABOUT THIS THIS ABOUT REPORT 4. Position of the Company in the Uranium Market and its MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Development Strategy

4.1. 2009 Natural Uranium Market.

Impact of the Crisis on the Sector’s MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Development The 2009 global financial crisis sharpened the competition among the key market players for highly profitable uranium deposits and bolstered the activity of producers in the M&A area. JSC Atomredmetzoloto used the opportunities presented by the crisis to diversify its mineral base.

Pursuant to the IAEA reports* the world recoverable Pursuant to the reports of Ux Consulting the world uranium reserves are 6,463,000 tons. The leader by production of natural uranium in 2009 amounted to uranium reserves is Australia, the Russian Federation ranks 50,700 tons, a 15% increase over 2008 figures (see Fig. 7). third (Fig. 5). The corporate leader is BHP Billiton with its PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS world largest combined copper-gold-uranium deposit Olympic Dam in Australia; JSC Atomredmetzoloto ranks Uranium 2007 Resources, Production and Demand OECD, International second (Fig. 6). Atomic Energy Agency. RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 19 www.armz.ru POSITION OF THE COMPANY IN THE URANIUM MARKET AND ITS DEVELOPMENT STRATEGY

Five market leaders accounted for 73 % of all uranium production. The leader by production volume is Kazakhstan (Fig. 8), and the corporate leader is Kazatomprom (Fig. 9) which develops a number of deposits with low cost of production. The second and third positions in 2009 by production volume (including equity interests of the corporations in the producers) were Cameco (Canada) and Areva (France), correspondingly. In 2009 JSC Atomredmetzoloto preserved its fifth position due to high growth level (25 %). Despite certain changes in the positions by uranium production volume, the team of leaders which for a number of years included seven companies, suffered no changes. In addition to the above mentioned Kazatomprom (Kazakhstan), Cameco (Canada) and Areva (France), it includes Rio Tintо (Great Britain), ARMZ Uranium Holding Co. (Russia), BHP Billiton (Australia and Great Britain) and NGMK (Uzbekistan). During the recent 2 years Uranium One Inc. (Canada) and Paladin Energy (Australia) almost reached the team (Fig.9).

Based on the experts’ opinions the natural uranium producers, geography, production technologies, prices, etc. market in 2009 amounted to US$8.5 bln, including raw Judging by 2009 results, the market share of uranium stock deliveries for subsequent nuclear fuel cycle (NFC) producing companies depends not only on the output conversions. This stands for almost 5% of the global volume but the efficiency of marketing and sales system as market of nuclear materials and technologies and 2% of well. For example, Cameco became an industry leader the minerals market (excluding oil and gas). Two thirds of (second by production volume). ARMZ ranked fifth all contracts referred to uranium in form of oxide. which correlates with its share of uranium production. Clients are especially attentive to the stability of The global financial crisis materially affected the deliveries and diversification of procurements in terms of industry situation. As a result, the uranium prices which 20 www.armz.ru ABOUT THIS THIS ABOUT REPORT

«For many crisis is danger, a survival quest… We, however, MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS saw new opportunities not available in the period of stability. We did not set up a defense line, we attacked. Our target were foreign assets which lost their capitalization during crisis. We needed them to considerably improve other mineral resource base. We successfully justified the new strategy and received good financing for it. Please note, that those were not the investments for survival but the

investments for development». MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Tigran Khachaturov, First Deputy Director General, JSC Atomredmetzoloto reached their peak in 2007 dropped by almost four times terminated their projects. Lowering uranium process and settled at $45-50 per pound of uranium oxide by the discouraged investments in geological exploration. end of 2009. Companies started a bitter competition for highly The crisis first hit small uranium production and profitable fields and expanded their M&A activity. geological exploration companies by extremely limiting JSC Atomredmetzoloto used these opportunities to their ability to raise financing in the market. diversify its mineral resource base. Consequently, may companies either suspended or DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS 4.2. Uranium Market Development Prospects

The world nuclear energy development trends indicate that the global uranium demand will increase noticeably by 2030. The leading positions will be occupied by companies which own the deposits with relatively low cost of production, demonstrate high operational efficiency and have profound understanding of the clients’ preferences.

Long-term Prospects MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

The nuclear industry development forecasts and the share in its turn will noticeably reduce to 27% by 2020 current uranium demand give the uranium producers from 37 % in 2009, although in absolute values the ample opportunities to develop till 2030. The global demand will increase. The same dynamics will be true financial crisis had no material effect on the for the United States: the share will go down to 25 % commissioning of new reactors which were planned by 2020 from 30 % in 2009. earlier, and such countries as China and India announced the proactive nuclear energy development Ultimately the global uranium demand will increase programs. noticeably by 2030. Different scenarios of nuclear From the standpoint of demand geography Asia is energy development indicate that the uranium demand the region with the most dynamic development. Its will be in the range of 90,000–150,000 t U by 2030, share of the global demand for reactor capacity will and the price will range from $250 to $500 of one grow from 24 % in 2009 to 37 % by 2020. Europe’s kilogram of natural uranium oxide. EXHIBITS 21 www.armz.ru POSITION OF THE COMPANY IN THE URANIUM MARKET AND ITS DEVELOPMENT STRATEGY

JSC Atomredmetzoloto, a reliable partner of JSC TVEL, supplier of primary feedstock for production of nuclear fuel, always fully performs its obligations and complies with all quality requirements, which allows JSC TVEL to maintain its leadership position in the work nuclear fuel market. V.V. Rozhdestvensky, JSC TVEL Vice-President

Global uranium reserves are sufficient to provide In the meantime, the expected imbalance of uranium stock for operations of all existing and proposed demand and supply opens the door for reallocation of reactors till 2075. However, judging by the uranium shares of various uranium raw stock producers in the deposits development pace and the forecasts relating to global market. It is expected that in light of the described secondary sources of uranium (recycled uranium from trends the companies which not only own the deposits depleted production wastes («tailings»), regenerated with relatively low cost of production and demonstrate high uranium from nuclear fuel waste, MOX fuel , highly operational efficiency but also have profound enriched weapon uranium, federal and private understanding of the preferences of clients for uranium warehouse stock), one may conclude that after 2020 the products and develop marketing and sales systems, may demand may exceed the offer. become the most efficient ones.

Short-Term Prospects

In the short term the demand for uranium will reach 53,890 tons, or 7% over 2009 figures. In 2010 the 66,400 – 70,100 t in 2010 and from 65,300 to 73,000 in largest companies will produce at their enterprises 2011 (information provided by WNA). 47,260 tons of natural uranium, or 88% of the global Pursuant to the preliminary estimates the world production. ARMZ is expected to keep in 2010 its fifth production of natural uranium in 2010 will raise to position in the world by uranium production.

22 www.armz.ru ABOUT THIS THIS ABOUT REPORT

4.3. Key Development Areas and Investment Policy ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS The main strategic coal of ARMZ is to form a global mining company specializing in production of uranium and other minerals for hi-tech industries. In 2009 the key strategy implementation activities included efficiency enhancement and development of facilities and infrastructure at the existing enterprises or those under construction in Russia and Kazakhstan, and the acquisition of assets with highly efficient raw stock base:

ARMZ is one of the most dynamically developing raw stock for clean energy production We work globally entities in the uranium sector. The ability to maintain being backed up by historic leadership of Russia in high speed of development is ensured no only by the nuclear energy, the initiative and professionalism of nuclear industry development dynamics but the vast employees, the efficient technologies and reliable raw potential of the Company itself. We guarantee supply of stock base. INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING MISSION Provide Raw Feedstock for High Technologies Development.

STRATEGIC GOAL To form a global mining company specializing in production of uranium and other minerals for hi-tech industries. DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

In future the company will be a world class efficient and dynamic business generating sustainable revenues in the long-term perspective.

Implementing a client Becoming and leader in the Providing for a long-term oriented approach natural uranium market sustainability and competition ability of the business RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Development of long-term relations Development of efficient resource Procurement of high production with clients to deeply understand their base efficiency of each project. needs and the ability to offer a value Formation of diversified projects Diversification of production by adding decisions to clients. portfolio ensuring acceptable cost of regions, products, production Provision of unquestionable mineral production in the long-term technologies and life span of the reliability of contracts, that is strict perspective and reliability of supplies for deposits with a view to successfully observation of timing and volumes of clients. optimizing country, technology, market deliveries due to efficient management Development and deployment of and other risks. of the entire sales chain state-of-the-art technologies in Development of raw stock Development of sales exploration, production and processing production business for fastest infrastructure and the complete set of of uranium. growing industry sections with a view tools to work in the global natural to ensuring financial performance uranium market. stability and increasing shareholder value. EXHIBITS 23 www.armz.ru POSITION OF THE COMPANY IN THE URANIUM MARKET AND ITS DEVELOPMENT STRATEGY

2009 Key Development Areas

Responding to the global challenges in 2009 strategy was supplemented by a strategic project of JSC Atomredmetzoloto made material contributions JSC Atomredmetzoloto relating to diversifications of towards attainment of strategic priorities of the Rosatom natural uranium resource base. It was due to this project State Corporation associated with improvement of that JSC Atomredmetzoloto became the second global products’ competitive ability ion the international company by reserves and stayed in the top five by market. The implementation plan of Corporation’s production volume.

Implementation Activities in the Framework of Rosatom State Corporation’s Strategy Plan in 2009 (Diversification of Uranium Mineral Resource Base).

Transaction with Effective Energy N.V. US$60 mln due to ARMZ subject to actual and financial In March 2009 as part of uranium assets consolidation performance of Karatau over 3 years. As a result ARMZ program in Kazakhstan JSC Atomredmetzoloto acquired became the owner of a 19.95 % stake in Uranium One Effective Energy N.V. which held 25 % less 1 shares of Inc. Material information beyond the reporting period: JSC JV Akbastau, and 50 % in Karatau. The In March 2010 JSC Atomredmetzoloto announced the consideration received in this transaction coupled with the acquisition of 18,963,600 common shares of Uranium assets of UMC, provide JSC Atomredmetzoloto with One Inc, or about 3.2 % of outstanding common shares control over JSC JV Akbastau at equal terms with of Uranium One. Thus, the share of ARMZ in the capital Kazatomprom, and get 50 % of Karatau which is a of Uranium One Inc. reached 23.1 %. Development of uranium producer with an almost closed production cycle. cooperation with Uranium One to increase its In December 2009 JSC Atomredmetzoloto exchanged its shareholder value is part of ARMZ’s strategy. stake in Karatau for 19.95 % shares of Uranium One Inc. Concurrently with the asset swap agreement ARMZ which served as diversification of its assets. and Uranium One Inc. entered into a framework strategic As a result of this transaction the Company partnership agreement and the offtake contract relating consolidated its interests in three uranium producing joint to acquisition by JSC Atomredmetzoloto of uranium ventures to the same level as of Kazatomprom, and produced by Uranium One Inc. The latter contract increased by 200% its production capacity in Kazakhstan. allows ARMZ to receive on the industry-standard terms In the meantime, the 2009 uranium production exceed the bigger of 50 % of uranium concentrate produced by the level of 2008 by approximately 280 %. Due to this Karatau (1,000 tons from 2011 onwards) or up to 20 % of transaction ARMZ became the second among foreign all uranium concentrate production of Uranium One Inc. companies by reserves and uranium production in the Thus, as the enterprise develop, from 2014 ARMZ will Republic of Kazakhstan. have the right to receive more products than its currently guaranteed stake in Karatau. Transaction with Uranium One Inc. This transaction helped Rosatom State Corporation In 2009 ARMZ and Uranium One Inc. (Canada) closed diversify its resource base and get access to the new high the asset swap transaction whereunder a 50 % stake of quality uranium reserves and facilities with high ARMZ in Karatau was exchanged for new 117 million production potential. All this results in additional common shares of Uranium One Inc. and US$90 mln in competitive strength of Russia including access to new cash. The agreement provided for a further payment of uranium production technologies.

Uranium One Inc. is a public uranium production company organized in Canada and SAR. Uranium One holds 70% stake in Akdala and South Inkai mines, 30% in Kharasan-1 mine in Kazakhstan, 100% stake in the enterprises under construction and mineral assets in the United States, 51% stake in Honeymoon mine which is under construction in Australia and 100% stake in Dominion mine in SAR. A substantial volume of easily recoverable resources of the company are in Kazakhstan. The overall uranium production in 2009 was 3.6 mln pounds of U3O8. http://www.uranium1.com

24 www.armz.ru «From our experience of joint operations with ARMZ we

concluded that the company is a reliable partner strictly THIS ABOUT REPORT sticking to its obligations. During years of cooperation we implemented many projects including of the federal level. The company can handle its most ambitions development plans». A.A. Boguslavsky, Gazprombank’s Vice-President

Investment Program as

Strategy Implementation Tool MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Investment policy of ARMZ is based on the development strategy and the project-based approach to asset management. All investment projects are tools to reach the strategic goals, and they are implemented in the framework of the primary development areas. The investment policy of ARMZ does not only structure the investments but also sets forth the limits per each structure element which form a flexible and transparent investment programs management. In 2009 the main focus of the investment policy was the acquisition of foreign uranium resources with the resource base of better quality than the Russian projects. It was a reaction to the opportunities created by the MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING global financial crisis. Investments in Russian and Kazakhstani uranium production projects did not loose their dynamics from the preceding period. In 2009 the investments in the development of mineral base occupied the primary share among the various areas of the investments structure (see Fig. 11). The 2009 investment program of JSC Atomredmetzoloto (less assets in Kazakhstan) was financed by the shareholders and from Company's equity by 98 %. Over the next few years ARMZ plans to materially increase the production of uranium through a large-scale investment program which provide for expansion and PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS upgrade of existing production facilities, development of new promising deposits, and foreign joint venture partnerships. ARMZ's investment program for 2008 – 2015 is about RUR 184 billion. In the longer term the company will identify and use its full potential subject to the advantages and risks posed by a potential products diversification. RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 25 www.armz.ru POSITION OF THE COMPANY IN THE URANIUM MARKET AND ITS DEVELOPMENT STRATEGY

4.4. Competitive Advantages and New Challenges

Long-term work experience in different geological and weather conditions, access to substantial financial resources, existence of diversified portfolio with production projects at various deposit development stages make ARMZ confident that its declared strategic priorities will be reached.

The competitive advantages of ARMZ are supported by its integration on the world larges vertically-integrated holding in the nuclear industry and include:

Large experience Financial stability Fifty years of experience in developing Access to long-term financing, federal uranium deposits in diverse geographical guarantees and climatic conditions Good credit history Competencies in acquiring major Positive financials production assets abroad Technological and technical competencies, innovations Low debt ratio Knowledge and application of all current uranium production methods (open pit, underground, heap Guaranteed demand leaching, in-situ leaching) Diversified Uranium Mining Projects Portfolio Stable Russian domestic demands Application of the state-of-the-art including demand for the natural methods to design and build uranium Various development stage project uranium for purposes of the export production enterprises pipeline: exploration to full-scale production program of the Russian low-enriched including JSC Elkon MMP with its top Development of efficient uranium and fuel assemblies output being up to 5,000 tons of uranium technologies to produce, treat, refine per year High demand for uranium products and process complex ores including in the international markets due to the methods to intensify and increase the Geographical diversification: 14 uranium growth of nuclear power generation till efficiency of ISL and non-uranium projects in five countries 2030.

Main challenges

High cost of uranium recovery in a Legal restrictions on export of number of projects in Russia Russian natural uranium High competition and volatility of Inadequate sales infrastructure uranium market

26 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

The company is also known for its responsible approach The main goals of Company’s marketing activity are: to project implementation, utmost care about safety and Development of long-term business relations with environment protection. existing and potential clients, study of their needs. With a view to gaining practical benefits from Increase of company’s share in the overall supplies competitive advantages and providing an adequate of the natural uranium to the global market. response to the sustainable development challenges, Positioning the company in the international ARMZ started a marketing and sales system development natural uranium market as a major first-tier program. supplier with a geologically diversified mineral MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING As part of the overall foreign economic policy of base. Rosatom State Corporation the company will continue to Maximization of marginal profit of the Company coordinate is marketing and sales policy with other Group from sales of the natural uranium in the domestic entities. and international markets.

«Involvement in transformation of a Russian company into a global business is a major challenge and big professional luck. Here the financial and market development objectives complement each other. We have DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS not only to make fundamental improvements in the investment attractiveness of the group but also find the solutions matching the market conditions, build ling-term partnerships with clients, local governments and communities, environmental groups and other stakeholders in various countries. With this in mind we all need, and we will, educate ourselves, develop the innovations potential of the company and new competencies. I am sure that contribution of

JSC Atomredmetzoloto in the nation-wide upgrade will MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL not be limited to creation of the fundamentals for high technologies, in other words, the guaranteed mineral supplies. The company has considerable innovations potential involving deployment of promising technologies of reserves prospecting, exploration and development, and the rehabilitation and restoration of land after production has finished». Marina Liborakina, Deputy Director General – Chief of Strategy, JSC Atomredmetzoloto EXHIBITS 27 www.armz.ru

ABOUT THIS THIS ABOUT REPORT

5. Business MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

ARMZ Uranium Holding Co. is a world leader in at various life stages and applies the «gradual» approach uranium production and the principal supplier of to the management thereof. The structure of Company’s uranium raw stock for the Russian nuclear industry. entities and projects depending on their life stage is ARMZ Uranium Holding Co. is engaged in the projects included in Fig.12. INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Tables 3 and 4 demonstrate production dynamics of the JSC PIMCU is still the primary producer (65 percent); operating production enterprises of JSC Atomredmetzoloto however, in 2009 the aggregate share of other production for 2007-2009 and 2010 forecast. In 2009 the enterprises enterprises in the overall production increased to 35%. of JSC Atomredmetzoloto demonstrated a substantial production growth, namely by 25%.

Table 3. Uranium production by the principal production Table 4. Planned 2010 uranium production by the principal enterprises of JSC Atomredemetzoloto, 3 year trends, production enterprises of JSC Atomredemetzoloto, tons* tons*

Share in the MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL overall 2009 Enterprises 2007 2008 2009 production, Enterprises 2010 %

JSC PIMCU 3037 3050 3005 65% JSC PIMCU 2920

JSC Dalur 350 410 463 10% JSC Dalur 460

JSC Khiagda 26 61 97 2% JSC Khiagda 150

ZARECHNOYE 114 166 245 5% ZARECHNOYE 300

JSC JV Akbastau 0 0 195 4% JSC JV Akbastau 300

Karatau** 0 0 619 13% Karatau** 1000

Total production: 3527 3687 4624 100% Total production: 5130 * Including the equity stake of JSC Atomredmetzoloto in the corresponding enterprise. ** Pursuant to the off-take contract with Uranium One Inc. ** Pursuant to the off-take contract with Uranium One Inc. EXHIBITS 29 www.armz.ru BUSINESS

5.1. Geological Exploration Appraisal of Reserves and Resources. Licensing.

In 2009 the Company effectively invested RUR1 bln in the geological exploration and the expected growth of uranium reserves is 20,000 tons in Russia and 10,000 tons in Kazakhstan.

Appraisal of Reserves and Resources. Licensing.

Company’s mineral base (the sum of reserves and tons and 86,000 tons of reasonably assured reserves. In projected resources) as of January 01, 2010, was 632,000 terms of its reserves JSC Atomredmetzoloto ranks second tons of uranium, including explored reserves of 546,000 among all international uranium producers.

Table 5. Company’s Reserves and Resources

Assets Stake Reserves, tons Resources, Р1, tons Mineral base, total, tons

JSC PIMCU 100% 118 341 118 341

JSC Dalur 100% 10 423 11 691 22 114

JSC Khiagda 100% 26 683 14 978 41 661

JSC Elkon MMP 100% 319 186 – 319 186

JSC OMCC 100% 11 726 – 11 726

JSC UMC Gornoe 100% 7 918 – 7 918

JSC Lunnoe 100% 408 – 408

Total for Russia 494 685 26 669 521 354

ZARECHNOYE 50% 9 073 15 051 24 124

JSC JV Akbastau 50% 12 324 27 885 40 209

Total for Kazakhstan 21 397 42 936 64 333

Stake in Uranium One Inc. 30 255 15 932 46 187

ARMZ TOTAL 546 337 85 537 631 874

2009 Activities and Results Geological Exploration to classify the reserves pursuant to the JORC code and Total Company's investments in geological exploration in prepare the preliminary analysis. Russia amounted to approx. RUR1 bln. in 2009. The In 2009 the licenses formerly held in the name of current reserves assessments indicate that following the Atomredmetzoloto were issued in the names of its exploration phase the Company's reserves in Russia and subsidiaries as follows: Kazakhstan will increase by approximately 20,000 tons and JSC Elkon MMP: Elkon, Neprokhodimoe, 10,000 tons, respectively. Kurunge, Elkon Plateau, Druzhnoe, Severnoe, In 2009 the Company filed with the SRC the temporary Interesnaya Zone deposits; conditions FS for Khokhlovskoe, Gornoe, Berezovoe. JSC OMCC: Olovskoe deposit; JSC UMC Gornoe: – Gornoe and Berozovoe Prospecting and appraisal operations were deposits. conducted by subsidiaries of JSC Atomredmetzoloto in Armenia (ARMC) and Namibia (SWA Uranium Mines (Pty) Ltd). Plans and Targets In 2009 JSC Atomredmetzoloto commenced the re- The 2010 plans include geological exploration at 10 evaluation of the Russian deposits in light of SRC fields, protection at the SRC of the temporary conditions requirements and the JORC code. RUSBURMASH INC FS for 3 deposits, and the permanent conditions FS for 6 has set up a special team of geologists and deposits. The Company will prepare a report on mathematicians to carry out the geological and Istochnoye deposit with reserves calculation. mathematical model of Elkon province deposits The Company has plans to obtain geological exploration (Yuzhnaya Zone) and Olovskoye-Streltsovskoe ore field. and production licenses for Khokhlovskoe (JSC Dalur), Validation operations were performed at Olovskoe deposit Vershinnoe and Tetrakhskoe (JSC Khiagda) deposits. 30 www.armz.ru ABOUT THIS THIS ABOUT REPORT 5.2. Uranium Mining

In 2009 ARMZ group companies demonstrated a substantial growth of uranium production, namely, 25 percent, which was enabled primarily by a noticeable growth of mining by Kazakhstan enterprises.

The end products of ARMZ are uranium oxide pursuant to TU 95-1981-89 (JSC PIMCU) and ammonium Table 6. Uranium production methods at ARMZ group companies

polyuranate pursuant to TU 952822-2002 (JSC Dalur MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS and JSC Khiagda) and fully comply with the Russian and Production Method Enterprises international standards and regulations. The end products of Kazakhstan companies are certified under ASTM M/HL (mine)-in-situ/heap leaching JSC PIMCU standards. ISR in-situ recovery JSC Dalur Company quality regulations are based on compliance ISR in-situ recovery JSC Khiagda with ISO 9000 standards. These standards are known for establishing requirements towards business management M (mine)-in-situ JSC Elkon MMP system which shall ensure the stable quality of products, M/HL (mine)-in-situ/heap leaching JSC OMCC rather than the quality of products as such. M/HL (mine)-in-situ/heap leaching JSC UMC Gornoe (open pit)-open air/heap P/HL leaching JSC Lunnoe INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

JSC PIMCU Transbaikalia, city of Krasnokamensk

JSC PIMCU produces uranium by underground mining at four operating mines – mine No.1, mine No.2, Gluboky mine and Mine 6R. DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Uranium produced: 3,005 tons.

2009 Performance Uranium production targets were attained. In 2009 the acid. This allows to materially reduce the hazardous emissions company produced 3,005 tons of uranium, or 65% of the in the air and cut the end product costs. The plant was built to aggregate uranium production by JSC Atomredmetzoloto. replace the existing sulfuric acid facility of JSC PIMCU which is June 17, 2009: an opening ceremony of the largest operational from 1976. sulfuric acid plant in the eastern part of Russia (180,000 tons Certain measures were taken to upgrade the production p.a.). The plant will ensure uninterrupted supplies of sulfuric facilities. As part of the technical upgrade of the mining and

acid to the metal facility which is part of JSC PIMCU. The plant underground equipment the company purchased 26 new MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL has the state-of-the-art equipment and is designed to operate machines for RUR249 mln and set up a service center to for about 40 years. Its construction and commissioning were provide repair and maintenance to the foreign mining and carried out with the involvement of leading specialized underground equipment. The company commenced enterprises in Siberia and the Urals, as well as experts from experimental operations involving deployment of upward mining Europe and the United States. A fundamental difference of the method by horizontal layers. It is active in terms of creating the new plant's technological cycle is the usage of clean gas sulfur digital block and wireframe models of all deposits. free of arsenic and selenium, as raw stock to produce sulfuric

Plans and Targets Increase the production efficiency. One of the development Commence new facilities. If the new facilities are areas of the underground ore production technologies is in-situ commences, the uranium production may be preserved at block leaching. Experimental production involving this 3,000 tons level in the short term. technology is scheduled to commence as early as in 2010. EXHIBITS 31 www.armz.ru BUSINESS

JSC Dalur Kurgan Region, Uksianskoye village JSC Dalur produces commercial quantities of uranium by in-situ recovery method at Dalmatovskoye deposit and continues experimental production at Khokhlovskoye deposit. The output of the main processing facility which handles the pregnant solutions is 1,000 tons of uranium per year.

Uranium produced: 463 tons.

2009 Performance Uranium production targets were exceeded. The 2009 The company commissioned new production facilities. The production was 463 tons of uranium recovered by in-situ company drilled 132 exploration wells and commissioned 224 leaching (ISL). This exceeds the 2008 production level by 13 technological wells. It fully complied with the commissioning percent. schedule of the production facilities.

Plans and Targets JSC Dalur uranium production plan for 2010 is 460 tons.

JSC Khiagda Republic of Buryatia, Bagdarin settlement

JSC Khiagda is engaged in commercial production of uranium at Khiagdinskoye Ore Field using in-situ recovery method. The pregnant solutions are processed at the experimental production unit into natural uranium concentrate (yellow cake) which is the end product.

Uranium produced: 97 tons.

2009 Performance Production increased substantially. Uranium production at The company commissioned the sulfuric acid warehouse at the Khiagdinskoye ore field experienced material growth from 60 railroad base, rebuilt the rail track, crane runways and tons in 2008 to 97 tons in 2009. installed the portal crane at the railroad base. The company It was a breakthrough in the development of the required commissioned an automobile access road from Romanovka- production and transportation infrastructure. JSC Khiagda Bagdarin road to JSC Khiagda ISL site. It also installed the commissioned a bridge across the Vitim river to lower the risk shed for bulk items at the plant’s pad, reconstructed the of spilling sulfuric acid and fuel and lubricants into the Vitim building where the processing unit is installed, and built an acid river when the vehicles cross it during ice freeze-up and drift. warehouse at the production pad.

Plans and Targets Ensure the growth of uranium production in 2010 to 150 Continue the production complex construction, namely, the tons. construction of the main building at the primary production pad, completion of Phase 1 of the shift camp, the acid plant with 110,000 tons p.a. capacity, development of deposit No. 6 and construction of power and warehouse facilities. 32 www.armz.ru ABOUT THIS THIS ABOUT REPORT

ZARECHNOYE Republic of Kazakhstan

ZARECHNOYE develops Zarechnoye deposit by in situ recovery method and plans to commence development

of South Zarechnoye deposit. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

Uranium produced: 494 tons.

2009 Performance Uranium production increased. ZARECHNOYE worked to improvements of the transport infrastructure. With a view to increase the uranium output. The 2009 uranium production minimizing the environmental risks the company built a detour was 494 tons which exceeds the previous year figure by road to bypass Koksarai settlement and uses it to transit almost three times. sulfuric acid and the finished products. INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING The company expanded the liquid chemicals warehouses, New technologies deployed. In the reporting year the the pregnant solution processing segment and partially company completed the transition to a pump-based pregnant replaced the power equipment. The company uses equity solutions lifting technology which let to a shorter block financing to carry out the repair and rehabilitation at the treatment time. Based on the 2009 data the company deposit which help it to maintain the high yield of the wells. attained the required uranium reserves increase. The utilization The environmental risks were reduced due to further ratio is about two years.

Plans and Targets Increase uranium production. The company's uranium Measures to develop the production facilities. In 2010 the production plan for 2010 is 772 tons (a 56% increase over company will continue with its action plan towards recovery of 2009 figure). In light of this goal the enterprise will continue to 1,000 tons of uranium p.a. at ZARECHNOYE. With this in set up the operating fields supervision mechanics, upgrade the mind, the company plans to build an additional local sand power equipment and increase the output of the pregnant settler, purchase the electric transformers and commission an PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS solutions processing sector at the mine. additional sorption column and a new pressure filter.

«ZARECHNOYE is working to increase the natural uranium

production. We are happy to report that we exceeded all the MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL target set forth for 2009, primarily due to a consistent technical and financial support by the leading shareholders of the Company, including UMC, a subsidiary of ARMZ. We note the dynamic development and strengthening positions of ARMZ among producers of natural uranium, due to the perfect organizational and high professional level of all personnel of the group, and we are happy that ZARECHNOYE is part of that team». Rustam Medeo, General Director, JV Zarechnoye EXHIBITS 33 www.armz.ru BUSINESS

JSC JV Akbastau Republic of Kazakhstan JSC JV Akbastau develops Sites Nos. 1, 3 and 4 of Budenovskoye deposit by in-situ recovery method. The shareholders of JSC JV Akbastau entered into a Memorandum whereby all uranium recovered at Sites Nos. 1, 3 and 4 of Budenovskoe deposit is to be purchased by JSC Atomredmetzoloto.

Uranium produced: 390 tons.

2009 Performance The company secured commencement of uranium The company implemented a number of HR solutions at the production and the first delivery of raw stock to clients. managerial level which proved to be successful, and this Namely, in 2009 JSC JV Akbastau secured production favorably influenced the development dynamics of the company of 390 tons of uranium due to expedited stripping of and ensures that the objectives set by the shareholders will be reserves and commissioning of production blocks, and shipped attained in due time. the first 113 tons of uranium oxide to the clients. The products sales were secured. The company entered The production pad of the mine was connected to the into uranium supply contracts which guarantee the product external electric power networks. sales and the financing of the project.

Plans and Targets Produce 600 tons of uranium in 2010. producing 3,000 tons of uranium per year. For purpose of Amend the subsoil use contracts relating to Budenovskoe implementing this Program the company and NAK deposit. If the program of development and consolidated Kazatomprom made a joint decision to amend the subsoil use production at Budenovskoe deposit approved by contract for Budenovskoe deposit in 2010 with a view to JSC Atomredmetzoloto, is implemented, the company will be intensifying the production and recovery of uranium in 2010.

Karatau Republic of Kazakhstan

Uranium produced: 1415 tons.

2009 Performance Plans and Targets Involvement of JSC Atomredmetzoloto in the management The present development speed will make Karatau reach of the company made it possible to start the trial production the designated uranium production level (2,000 tons) as early of the refining facility in the middle of 2009 and receive by the as in 2010. The share of JSC Atomredmetzoloto is year end over 150 tons of uranium oxide. Uranium production 1,000 tons of uranium (based on the off-take contract with in form of commodity strippings in 2009 amounted to Uranium One Inc.). 1,415 tons. 34 www.armz.ru ABOUT THIS THIS ABOUT REPORT

5.3. Construction of New Production Enterprises in Russia

The primary goal of expanding the existing and constructing the new enterprises in Russia is to ensure independence of the Russian nuclear industry in terms of raw stock from external sources. In this area the Company focuses on the construction of Elkon Mining and Metallurgical Plant and development of such deposits as Gornoe, Olovskoe and

JSC Lunnoe. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

JSC Elkon MMP Republic of Sakha (Yakutia)

JSC Elkon MMP was established in 2007 to develop the natural uranium demand. Development of Yuzhnaya Southern Group of deposits of Elkon uranium province in Group deposits will allow to produce up to 5,000 tons of the Republic of Sakha (Yakutia) and construct Elkon uranium and recover gold, silver and molybdenum as by- Mining and Metallurgical Plant. products. Further, construction of Elkon Mining and Elkon uranium province located in Aldan district Metallurgical Plant (JSC Elkon MMP) is important for ranks second in the world by reserves (over 340,000 purposes of social and economic development of tons of uranium feedstock). Currently JSC Elkon MMP Southern Yakutia region. This project is included into the MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING holds licenses to explore and produce uranium at investment project of Comprehensive Southern Yakutia Elkon, Neprokhodimoe, Elkon Plateau, Kurung, Development. The Russian Government by its decree Druzhnoe (Yuzhnaya Zone) and Severnoe and included this project in the list of investment projects Interesnaya Zone deposits with the aggregate reserves financed by the Russian Investment Fund. being 319,000 tons. Rosatom State Corporation was put in change of the Development of Yuzhnaya Zone deposits is the most project as its contractor. The lead time for the JSC important objective of Russia’s nuclear industry Elkon MMP design documents included in the Project development. If this objective is successfully completed, Passport are 2009-2010. these deposits will accommodate 30 percent of Russia’s

2009 Performance JSC EGMK-Project was established pursuant to Decree The company developed and the Scientific and Research # 302-r of the Russian Government dated March 10, 2009, Council of Rosatom State Corporation (Section No.7, Raw PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS as a vehicle to design JSC Elkon MMP; the relevant Stock Base of Nuclear Energy) approved at its August 6, operations to be financed in 2009 from the budget by the 2009, meeting the investment feasibility study of the project. Investment Fund of Russia. The processing technologies for the ores of Elkon uranium The scheduled Elkon MMP project financing was received province were developed on the basis of bulk sampling. in full. As part of SYDP project implementation the The company entered into a contract with the general Investment Fund of Russia funded in 2009 the design of JSC design engineer selected through tender which will perform Elkon MMP in the amount of RUR2,391.4 mln. and the research and provide the design documents for the capital design of infrastructure in the amount of RUR2,981 mln, facilities of JSC Elkon MMP, and commenced the contract which is 100% of the scheduled amount. implementation. The company started working on the permanent Negotiations were held over potential involvement of conditions FS and selected the subcontractor to carry out foreign investors in the project. the international audit of reserves on the basis of JORC code. RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL The geological exploration program was developed for Elkon and Neprokhodimoe deposits. Plans and Targets The company will continue the JSC Elkon MMP construction in Complete the permanent conditions FS and the international 2010 and engage in further reserves calculation and approval audit of reserves pursuant to JORC code. activities, as well as design of the enterprise in conformity with Develop the ore processing procedures and conduct pilot Russian and international standards. The following activities are tests. planned: Complete the engineering surveys in connection with design Implement the set of activities aimed at ensuring of Elkon MMP. compliance with the license agreement. Obtain funding from the Investment Fund of Russia for the Carry out the geological exploration program at Elkon, SYDP project required to finance the design of JSC Elkon MMP. Neprokhodimoe and Severnoe deposits. EXHIBITS 35 www.armz.ru BUSINESS

JSC UMC Gornoe Krasnochikoysky District, Transbaikalia

The enterprise was established to develop the deposits The proposed mode of development is a combination of of Chikoisky uranium province (Gornoe and Berezovoye). block and heap leaching.

2009 Performance The company prepared and submitted to the SRC to review The company completed the research associated with heap the temporary exploration conditions FS, developed the leaching using a sample from Gornoe deposit and developed geological and mathematical model of Gornoe and Berezovoye the ore processing procedures. deposits, generated individual reserves estimates for different The company held public hearings over the Berezovoye optional cutoff grades and prepared the geological and Deposit Development Declaration of Intent. economic feasibility study of deposits' development. It prepared the reports on engineering and environmental The company completed Phase I of geological exploration studies at Gornoe and Berezovoye deposits with a view to involving the open pit contouring at Berezovoye deposit using preparing the environmental baseline study. the internationally-applied methods. The results fully confirmed the reserves of the deposit identified in the 80ies.

Plans and Targets Obtain approval by SRC of the temporary conditions FS and The current proposal is to use JSC UMC Gornoe as the include the reserves of Gornoe and Berezovoye in the federal foundation for a new technological platform based on movable register. units, and deploy an efficiently-operating uranium producer by Carry out the geological and economic appraisal of smaller 2017 engaged in development of smaller uranium deposits back-up uranium deposits in the region. (design capacity – 400 tons of uranium p.a.). The raw stock base of the neighboring deposits in Trans-Baikal Territory, Complete the geological exploration for purposes of the Republic of Buryatia and Khabarovsk Region are proposed to projected open pit at Berezovoye deposit. be used for purposes of the project. Design the experimental production at Berezovoye deposit. Hold the public hearings over the Declaration of Intent relating to development of Gornoe deposit in Krasnochikoisky District of Trans-Baikal Territory.

JSC OMCC Chernyshevsky District, Transbaikalia

The enterprise was established to develop Olovskoye underground mining with delivery of ore to the heap deposit in Chernyshevsky District of Trans-Baikal leaching pad and subsequent processing of the pregnant Territory. The proposed development method involves solution towards recovery of uranium concentrates.

2009 Performance Bulk heap leaching test of ores from the Olovskoe deposit Verification drilling to confirm the mineral resources as was performed with a view to procuring the underlying data for required by the JORC code was performed. The reserves were design of the enterprise. confirmed in full in terms of the quantity and quality, as the The geological mathematic model of Olovskoye deposit was same were identified by 1963 exploration. developed, and the reserves of the deposit were appraised The company worked on preparation of the Pre-Feasibility under the JORС standard together with SRK Consulting. Study including geomechanical tests, quantified rock filtration The Scoping Study was prepared. model of the deposit and the water influx projections for the designed well. The company held public hearings over EIA (the environmental component of the project) and based on the hearings the Olovskoye development project was approved by the public and local administration.

Plans and Targets Carry out the set of pre-design and design operations, Carry out the studies and prepare the Pre-Feasibility Study determine the best production and economic indicators which and Feasibility Study. are required to commence design and construction of the Develop the FS and have it approved. uranium producing enterprise. 36 www.armz.ru ABOUT THIS THIS ABOUT REPORT

JSC Lunnoe Aldansky District, Republic of Sakha (Yakutia)

The enterprise was established in 2006 to develop subsequent gradual leaching of gold and uranium. The uranium and gold deposit of Lunnoe in the Aldan District development Lunnoe deposit is financed by a strategic of Republic of Sakha (Yakutia). investor, JSC Zoloto Seligdara, which holds 49% shares The proposed development method involves open pit of JSC Lunnoe. mining with delivery of ore to the heap leaching pad and ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS 2009 Performance The land allotment in respect of the license area was The company prepared the geologic mathematic model of formally issued. the license area. The ore processing procedures were developed. The company held public hearings over the Declaration of It worked out the open pit design and the mine work plan Originator’s Intent relating to Lunnoe deposit development. as part of the experiment production unit construction project Completed geological exploration: 15,000 linear meters of development. core drilling.

Plans and Targets Complete the development, review by experts and approval Carry out the set of R&D and trial operations in connection of the construction project of the experimental construction with development of the field heap leaching technological MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING unit at Lunnoe deposit, prepare the feasibility study (the procedures. project) relating to construction of a production enterprise. Build and put into operation an experimental production unit Hold public hearings over the new company’s environmental at Lunnoe deposit. impact assessment. Carry out geological exploration with a view to verifying the Commence the construction of experimental production unit. scope of reserves and upgrading the reserves categories. DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

«ARMZ is a reliable and responsible partner. We cooperate with it for several years already. Our corporation being a subsidiary of ARMZ, is working together with the Holding Company on a global project which is construction of Elkon MMP. This is a huge project and the management MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL and employees of ARMZ contribute to it a lot. The plant will crate over 30,000 new jobs and lay the tangible basis for social and economic development of the entire region of the Far East. I see that our joint efforts with ARMZ are fruitful and very efficient. The Holding Company meets all of its obligations in due time, and the contact persons in the company are real professionals». M.L.Brook, General Director, JSC YS Corporation EXHIBITS 37 www.armz.ru BUSINESS

5.4. Service and Other Companies

The service companies are in charge of ensuring the efficient operations of the main production enterprises. Namely, they perform drilling and appraisal, and provide logistics services for the main production enterprises. The service companies contribute substantially to the operational efficiency growth of ARMZ.

RUSBURMASH INC Table 7. 2009 performance results of RUSBURMASH INC

Drilling operations, including: For JSC PIMCU, all types of operations, linear meters 137 409 For JSC Dalur, Khokhlovskoye deposit, linear meters 78 005 For JSC Dalur (technological and exploration drilling), wells 250 For JSC Khiagda, technological drilling, wells 140 For JSC Khiagda, technological drilling, linear meters 25 779 2009 Performance The status of RUSBURMASH INC was finally settled as of a The geography of core operations expanded substantially full fledged geological company capable of performing both the from 2008. The company used its own resources and drilling services and all of the associated geological services performed in full the projects (technological drilling) for JSC including reserves assessment and protection thereof at the PIMCU and JSC Khiagda. It started the projects at the SRC's level. properties of JSC Dalur, JSC Elcon MMP, JSC UMC Gornoe, The scope and types of the offered operations increased JSC OMCC and geological exploration of Khiagda group substantially. deposits, all using its equity resources. The company formed its internal units and started It formed a proprietary geological exploration services operations using its proprietary resources at almost all of the department which enables the company to handle a wide properties of JSC Atomredmetzoloto which are in the range of operations. development phase.

Plans and Targets Ensure timely and good quality drilling operations and geological exploration at the uranium deposits in Russia.

LLP JV RBM-Kazakhstan Table 8. 2009 performance results of LLP JV RBM- Kazakhstan Republic of Kazakhstan

Drilling operations, including: 203,637 linear meters The main goal of RUSBURMASH INC is to carry out drilling operations in Russia. The main objective of Geological exploration drilling 151,344 linear meters LLP JV RBM-Kazakhstan is to provide drilling Hydrogeological drilling 4,885 linear meters services to Russian-Kazakhstani uranium producers. The drilling company was established in May 2007. Technological drilling 47,418 linear meters

2009 Performance The company attained a high level of drilling efficiency. Its commissioned, and the repair facility and a state-of-the-art shit speed of drilling exploration and technological wells reached camp were built. level of JSC Volkovgeologia, one the larges drilling companies The company increased the volume of drilling and started of Kazakhstan. working on the technological wells for JSC JV Akbastau. Nine drilling rigs and the auxiliary equipment were Plans and Targets Expand the park of drilling rigs to 15 units and the volume Offer the new service in the market, namely repair and of geological exploration and technological drilling to 312,170 rehabilitation of technological wells. linear meters (450 wells). 38 www.armz.ru ABOUT THIS THIS ABOUT REPORT

The centralized procurements in 2009 resulted in the 16.7% primary stock price reduction YoY, or RUR370 mln plus in savings.

LLC USC ARMZ

The primary objective of company’s operations is to uranium producing enterprises of ARMZ group which supply raw stock, materials and equipment to the are required for their principal and investment activities. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

2009 Performance Business processes and the management system were It entered into 9 long-term contract with key stock suppliers optimized to increase the efficiency of company's operations. thus avoiding the impact of the projected price growth and The lead time of procurement requests reduced while the ensuring uninterrupted deliveries at fixed prices. overall number of requests increased. The company demonstrated a general 16.7% reduction in The company supplied 545,500 tons of coal from Urtui strategic stock costs against 2008 figures and saved over deposit. RUR370 mln on procurements for JSC PIMCU. The working capital requirements reduced due to the The trading policies were reconciled. lowering share of advances paid to suppliers and the cost of borrowing went down as well. MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

Plans and Targets Create a service center for the foreign equipment. Effect direct sales of 285,000 tons of Urtui coal in the Reach the 1 mln tons level of the annual coal deliveries international market (in particular, to China). from Urtui deposit.

USC SY Corporation Republic of Sakha (Yakutia) DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS The main objective of the company is implementation of Government of the Republic of Sakha (Yakutia). Investors South Yakutia Comprehensive Development Project, an are the Russian Investment Fund, Federal Hydroelectric investment project (the Project). The purpose of the Generating Company JSC HydroOGK (JSC Southern Project is to form a new major industrial district in the Yakutia’s GEK), JSC Alrosa Investment Group, JSC Far East on the basis of the public private partnership Atomredmetzoloto, LLC Kolmar (JSC Yakutia Coals – and involve the water power energy facilities and the New Technologies). Entities in charge at federal agencies cluster of industrial enterprises operating mostly in the Rosavtodor and Roszheldor, Rosenergo and Rosatom area of advanced processing of minerals produced in State Corporation. One of the key projects is the region. The state coordinator of the Project is the construction of Elkon Mining and Metallurgical Plant.

2009 Performance

Project passport was approved. PR, GR and information support of the Project continued, MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL The company drafted the Investment Agreement and as well as coordination of the design work and shaping of the arranged its negotiation and execution by all the 14 Project Project implementation management system. participants. In 2009 the Investment Fund of Russia transferred 100% It coordinated the activities in connection with the new of the scheduled financing, or RUR5,372.4 mln for purposes financing (revisions to the overall budget items, adjustments to of the Project. the limits, tender announcements, etc.)

Plans and Targets Continue Project coordination, and, in particular, arrange reference for the infrastructure and production properties, the tender selection of general design contractors for the draft contracts with the general design contractors, and project properties to be financed by the Investment Fund of monitor the preparation of Project design documents. Russia, develop the tender documents and technical terms of EXHIBITS 39 www.armz.ru BUSINESS

5.5. Non-Nuclear Material Related Projects

ARMZ is engaged in a number of non-nuclear materials related projects in Russia, Central Asia and Africa. The largest of such projects is development of Lukoyanovskoye deposit in Nizhni Novgorod region (zircon concentrate). The other promising deposits are located in Central Asia and Africa.

ARMZ seeks to attain the following strategic goals by Diversify primary operations to expand the implementing its non-nuclear materials related projects: Company’s product range and enter the new Meet current and future demands of the Russian promising markets. nuclear industry for construction materials’ raw Expansion of Company’s activities abroad. stock. New sources of financing of Rosatom’s investment operations.

2009 Activities and Results The current projects (Lukoyanovskoyue The company also started working on the deposit): technological rules of ore processing with zircon The company completed the acquisition of LLC and rutile concentrates as products, and the Agrofirm Itmanovo which owns the land plot with separation of ICH concentrate into commodity Itmanovskaya placer of titanium and zirconium products. sands (Lukoyanovskoye deposit in Nizhni The company appraised the ore sands reserves Novgorod region), and GEOSTAR Ltd which subject to the selected conditions for purposes of holds the relevant exploration and development protection of the figures at the SRC and license. development of the permanent conditions FS. The company conducted pilot field HBM (hydraulic borehole mining) and the results Promising Deposits confirmed the general possibility to use HBM as a The company held a preliminary investment method to materially reduce capital expenditures attractiveness review of a number deposit and raise the project efficiency. development projects relating to gold and A representative sample of 20 tons was taken by polymetallic ores, rare earth, platinum group HBM method. It will be used to work out the metals and other minerals. All reviewed deposits in technological procedures and produce initial Russia, Central Asia and Africa are major ore volumes of rutile, zircon and ilmenite-chromite- properties of the world level by their reserves. hematite (ICH) concentrates.

Plans and Targets The current projects (Lukoyanovskoe Promising Deposits: deposit): Continue looking for the new promising projects Complete all pre-design studies necessary to design involving non-nuclear materials. the enterprise including engineering studies, and Determine the investment attractiveness of the start working in the construction feasibility study most promising projects to enable the decision (the project). making by ARMZ on possible participation in the Prepare the permanent exploration conditions FS same. and protect it in the SRC. Search for and engage the strategic partners from Carry out an independent appraisal of the reserves among Russian and foreign companies specializing pursuant to the international standards of JORС. in production and processing of solid minerals, and The plans include the construction of an ore the financial and investment institutions. processing plant at the deposit by 2014 with the design capacity up to 1,500,000 tons of ore per year which will produce the following products: – zircon concentrate: 35,000 tons p.a. – rutile concentrate: 5,000 tons p.a. – ilmenite concentrate: 35,000 tons p.a. – chromite concentrate: 14,000 tons p.a. 40 www.armz.ru ABOUT THIS THIS ABOUT REPORT

5.6. Efficiency Management and Innovations

Cost of uranium production determines the competitive advantages in the market. Thus, measures towards efficiency

enhancement of the uranium production, energy saving programs and large-scale investments in the R&D and MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS innovation projects focus first on cost reduction and the current technologies’ efficiency improvement.

Fields which are currently being developed in Russia are The uranium production efficiency improvement know for their complex geological and mining and program includes initiatives and projects with the technical specifics, lower uranium content of the ore and following objectives: higher cost of production as compared to many foreign Improve the business processes of the enterprises. enterprises. This is true first of all for the deposits Create the new production culture and engage the developed by mining methods. In this regard one of the production personnel in the process of top objectives for the operating enterprises is to improvements. implement the operational efficiency improvement Develop the efficient motivation system. programs. Build up the innovations potential. Deploy information technologies in the management processes. MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

2009 Activities and Results

Increased labor efficiency at the ore production The enterprises undergo technical upgrade whereby level. As a result, with the decreasing uranium the obsolete equipment is substituted with modern content of the ore its production maintained at the and highly-efficient items. previous year's level with the same headcount The key performance indicators matrix for the top involved. managers has been worked out. The non-core business divestment process is on the way. Comprehensive energy saving and energy efficiency improvement program. PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

As early as in 2008 the Company started a comprehensive the social and economic development of enterprises energy saving and energy efficiency improvement through better energy security, optimized usage of energy program. The main goal of Program’s development and resources and engagement of unutilized energy sources implementation is to reduce the cost of products, ensure and resources.

Table 9. Gross electric energy consumption by main The projected 3-year effect from production enterprises, TJ (tera joules) deployment of energy-saving Enterprises 2007 2008 2009 technologies is RUR430 mln,

JSC PIMCU 3470,04 3598,40844 2920,6044 with the average project pay-off MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

JSC Dalur 7,6194 9,30024 10,52136 period being 2 years.

JSC Khiagda 7,77564 12,7386 25,27128

TOTAL 3485,43504 3620,447208 2956,39704

Plans and Targets JSC PIMCU intends to add an automated system to Increase the sold capacity of the cogeneration plant meter electing energy sold to third parties, to the electric by 8 MW. energy metering systems of the company. Such a system Establish a unified data collection and processing will allow JSC PIMCU to attain the following objectives: center in the company which would keep records of Become a full-fledged member of wholesale commercial energy deliveries and transfer data in

electric energy market. the real time mode. EXHIBITS 41 www.armz.ru BUSINESS

energy audits of the enterprises; conduct the hydraulic and thermal tests of heat and documentation of buildings and facilities water supply networks, produce piezometric which are owned by the enterprises, and graphs of the networks and better identify calculation of their thermal values; The the capacity of main and boost pumps; determination of standard fuel installation of frequency-regulated and energy consumption per unit company drives and soft start systems at of production; engages in the electric motors; installation of meters at the following activities installation of automated fuel and energy inlets and towards implementation process control systems at points of their generation, certain energy-consuming units consumption and transmission of the Comprehensive and facilities and subsequent to third parties (second-tier Energy Saving and connection thereof to the global clients or subsidiaries); automated process control restructure the power complex Energy Efficiency systems of the enterprises; of the company in light of the Improvement federal laws; other fast-payback activities to Program save energy and enhance the energy replacement of the filament lamps efficiency which if implemented can with energy-saving lamps in the internal reduce energy consumption by at least 5 % and external illumination systems; and will be paid back in about three years.

Innovations Management

Consistent improvement of technologies and uranium facilities constitute one of the major areas of Company’s production equipment, reduction of production costs and innovations management policy. enhancement of automation level at the operating

2009 Activities and Results

The engineering center Geologic mathematical models (GMM) In 2009 ARMZ also started an innovation project GMMs are used to optimize operations in the course of involving creation of a corporate engineering reserves assessment, design of mine workings and center. The purpose thereof is to improve the planning of mining footages, and in connection with operational efficiency. This project provides for development of financing and economic models and creation of proprietary expertise and facilities plans of mine workings. In view of this objective through access to the complete range of research RUSBURMASH INC, a subsidiary of ARMZ, formed a and development and design and exploration team to develop 3D block models and provide office operations conducted in connection with mineral assistance for geological exploration. 2009 deposits development. A proprietary engineering accomplishments: center will allow the Company to improve quality Completed wireframe modeling at Antei deposit and reduce the timing of various operations (Glubinny and Zapadny sites). This is the first stage undertaken in the course of investment projects. of building the block model or GMM. The framework structure of the engineering center Initiated search and collection of information for a will be the specialized research and development database on all deposits of JSC PIMCU. This is the and design and exploration assets of Rosatom State second stage of building GMM. Corporation. Initiated compilation of the database on The innovations potential ratio of ARMZ (ratio Khokhlovskoye deposit and Khiagda group between R&D costs and the proceeds from the sale deposits. of products, work, services, less taxes and mandatory payments) amounted to 0.126% in 2009.

Plans and Targets Development of the wire frame and block models In 2010 the innovations potential ratio (Ki) will and the databases on all key deposits. increase to 0.135%. 42 www.armz.ru ABOUT THIS THIS ABOUT REPORT

«During 35 years of my life dedicated to the uranium industry I was a crew member of the geological prospecting team, a research fellow, a geologist at a mine in the Democratic Republic of Germany, an IAEA expert and a manager in various Rosatom’s structures. I learned a lot and I saw a lot. I am happy that this experience is in full demand at ARMZ. Its development dynamics is impressive. This is because our team includes experts of MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS various ages and expertise and qualifications of all kinds. Here we enjoy a proper environment for synergy of the stagers’ experience and zest of the young, the effective cooperation between niche experts and those with broad experience, and for friendly competition. And what’s more, we welcome the challenges.» Alexander Boytsov, Deputy Director General, JSC Atomredmetzoloto INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 43 www.armz.ru

ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING 6. Governance System

Improvement of the governance system is based on the fact that the integration of ARMZ into the largest world vertically integrated nuclear holding is its key competitive advantage. Introduction by Rosatom State Corporation of the goal-oriented governance system helped to improve ARMZ operational efficiency and personnel motivation PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS system. The Company’s basic governance principles are the protection of the shareholder rights and interests and timely provision of complete and true information. The Company focuses on efficient risk management as a precondition to its sustainability.

6.1. Goal-Oriented Governance

2009 was the first year when the goal-oriented governance contents was determined by Rosatom Supervisory Board. MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL principle was implemented. The essence of this approach JSC Atomredmetzoloto Board of Directors worked them is determination of the Corporation’s priority goals and out in detail and approved them for the Company. The conditions of (limitations to) their achievement, KPIs determined by JSC Atomredmetzoloto in 2009 formation of a «goal tree» which allows to decompose provided for implementation of a production program such goals to the level of the Holding’s companies, and (uranium production volume), achievement of encouraging the management to achieve the target KPIs development priorities (implementation of the first stage subject to compliance with the approved corporate of the raw materials base diversification project), standards. The remuneration system is designed so that operational efficiency growth (reduction of fixed costs and achievement of the lower level KPIs ensures the labor efficiency improvement), which became the key achievement of the higher level KPIs, i.e. the KPI system fields of concern during the crisis. Inclusion of the safety allows to reflect the strategic priorities and motivate the indicators into the KPIs (no increase in the number of personnel to achieve them throughout the entire serious injuries and fatalities) encouraged integration of governance system. The Corporation’s KPI concept and the sustainability priorities into the business practices. EXHIBITS 45 www.armz.ru GOVERNANCE SYSTEM

2009 Activities and Results

All 2009 KPIs were fully achieved (Section 3.4). 5.6). Significant emphasis was put on the programs for ARMZ Uranium Holding activities promoted transformation of the financial and economical block, implementation of such Rosatom objectives as ensuring including formation of a consolidated budget, leadership on the world nuclear technologies and services implementation of a single accounts plan and unified market and efficient supply of power produced at the accounting policy, purchasing efficiency and power plants for the country’s economic needs (Sections transparency improvement and IT development. For 4.1, 4.3, 5.2 etc.). Achievement of the production example, Atomredmetzoloto 2010 purchasing program objectives was ensured subject to compliance with the was implemented using electronic trading sites through three conditions set by the Corporation: ensuring an industry purchasing site www.zakupki.rosatom.ru. radiation safety of the companies, personnel, population Safety and personnel management was effected on the and the environment (Sections 7.3, 7.4), new basis of the policies and recommendations approved by technologies development (Section 5.7) and operations Rosatom. Primarily, this applies to the nuclear and efficiency improvement, including governance systems radiation regulatory documents and the Labor Safety development (Sections 5.7, 7.1,7.4, 7.1 etc.). Management System (Section 7.4), Unified Standard ARMZ took an active part in Rosatom’s programs Remuneration System and the Social Policy Guidelines targeted at operational efficiency improvement. One of (Sections 7.1 and 7.2), Rosatom Environmental Policy the examples of such involvement is the implementation Basic Guidelines (Section 7.4), and Local Communities of the energy efficiency improvement program (Section Engagement and Charity Policy (Section 7.5, 7.7).

Plans and Targets It is planned to implement ARMZ’s corporate strategic planning, management of the mining projects, governance improvement program for further promotion marketing and sales, organization of purchases etc., as of Company’s competitiveness and optimization of the well as development of the sustainability management business processes based on the targets and requirements system. The ultimate indicator of the corporate set by the shareholders with account for the corporate governance improvement efficiency will be the increased governance best practices. Special focus will be on contribution of JSC Atomredmetzoloto into higher optimization of the processes which are material to competitiveness and expansion of Rosatom on the global efficiency increase and KPIs achievement, including market. 6.2. Corporate Governance System

ARMZ follows the corporate governance standards set forth in the FCSM Corporate Code of Conduct and OECD Corporate Governance Principles with due consideration of the Company’s shareholders and operations. The Company’s Charter and the bylaws governing the management and supervision bodies activities are published on the Internet at the ARMZ corporate site.

Shareholders In 2009 JSC Atomredmetzoloto shareholders changed: purpose of financing the Company’s investment Rosatom purchased ARMZ Uranium Holding shares program for future development of natural uranium forming part of an additional emission and became its production in Russia and abroad. The total proceeds largest shareholder. The shares were issued for the from the additional emission were RUR64.2 bln.

Table 10. Company Shareholders Table 11. Share Capital

Share in ARMZ charter № Shareholder capital, % No. of outstanding Issue Date Name as of as of ordinary shares, pcs registration No. December 31, 1/1/2009 2009 1 JSC Atomenergoprom 0,011 0,002 01.01.2009 3 956 039 897 1-01-03912-А

2 JSC TVEL 99,989 19,653 3 956 039 897 1-01-03912-А

3 Rosatom 0,000 80,345 31.12.2009 16 171 284 635 1-01-03912-А-002D 46 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Management and Supervision Bodies

General Shareholders Meeting

The General Shareholders Meeting of JSC Meeting, predominantly external directors who are not MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Atomredmetzoloto is its supreme management body. Company employees. All members of the Board of In 2009 two General Shareholder Meetings were held. Directors have an extensive industry experience. at an extraordinary General Meeting on January 20 In 2009 18 meetings of the Board of Directors were decision was made to increase the charter capital held during which decisions regarding the key Company by way of issuance of additional shares of the management issues were adopted. Company in favor of Rosatom. at the Annual General Meeting on June 30 the The General Shareholder Meeting of June 30 elected 2008 annual report and accounting statements, and the following members of the Board of Directors: profit distribution were approved and the Board Alexander Markovich Lokshin, and the Audit Commission elected. Vadim Lvovich Zhivov Vladislav Viktorovich Korogodin JSC Atomredmetzoloto Board of Directors is Yury Alexandrovich Olenin responsible for the general management of the Vladimir Valentinovich Travin. Company’s operations and plays a key role in the 4 out of 5 Board members are independent Directors MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING strategic management. The Board of Directors includes (i.e., they are non-executive Directors of the Company). five members elected by the General Shareholder

Brief Biographies of the Board of Directors Members

Alexander Markovich Lokshin Member of the Board of Directors since June 30, 2009, Elected Chairman of the Board on August 6, 2009. DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Born in the city of Chita in 1957. Graduated from the Leningrad Kalinin Institute of Polytechnics. Honored Power Engineer of the Russian Federation.

April 2006 – First Deputy Director General, Acting Director General June 2008 of RosEnergoAtom Concern.

June 2008 – Deputy Director General, Deputy Director General – Head of present NPC Directorate, Rosatom State Corporation.

Vladislav Viktorovich Korogodin MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Member of the Board of Directors since September 7, 2007 Born in Moscow, Russia, in 1969. Degree from the Moscow Institute of Physics & Technology.

June 2004 – Deputy Chief, Directorate of Nuclear Materials Industry, October 2007 Rosatom, Deputy Chief, Directorate of Nuclear Power and Nuclear Fuel Cycle, Rosatom

October 2007 – Director, Department of Marketing and Markets; Deputy March 2010 Director, Atomenergoprom. March 2007 – Deputy Director of NPC Directorate, Rosatom State Corporation. present EXHIBITS 47 www.armz.ru GOVERNANCE SYSTEM

Vadim Lvovich Zhivov Member of the Board of Directors since September 7, 2007 Born in Moscow, Russia, in 1963. Degree from the Moscow Power Institute.

March 2006 – Vice President, Capitel Inc. 2006 – 2007 Councilor to Director August 2007 General; First Deputy Director General – Resource Management; First Deputy Director General – Feedstock Supply; First Deputy Director General – Director for Feedstock Supply, TENEX June 2007 – First Deputy Director General; Acting Director General; Director present General, Atomredmetzoloto — ARMZ Uranium Holding Co.

Yury Alexandrovich Olenin Member of the Board of Directors since September 7, 2007

Born in Kirovabad, Azerbaijan, in 1953. Degrees from the Erevan Marx Institute of Polytechnics, Penza National Technical University.

January 2004 – Director General, Start Industrial Amalgamation – Zarechny, March 2007 Penza Region.

March 2007 – First Vice President, President JSC, TVEL. present

Vladimir Valentinovich Travin Member of the Board of Directors since September 7, 2007, Chairman of the Board from September 7, 2007 through June 3, 2009 Born in the township of Bolshoe Kozino, Balakhna District, Gorky Region, Russia, in 1960. Degrees from the Moscow Institute of Physics & Technology and Arzamas Technical College.

December 2005 – Councilor to the Head and Deputy Head of Rosatom State July 2007 Corporation

July 2007 – May Director, Atomenergoprom 2010

Members of JSC Atomredmetzoloto Board of Directors Chairman of the Board of Directors is not an executive do not own any shares. The members of the Board of officer of the Company. Directors did not receive remuneration in 2009. The

Director General

The Director General is the sole executive body of JSC elected Vadim Lvovich Zhivov as the Company’s Director Atomredmetzoloto and manages the day-to-day company General. operations. On November 19, 2007 The General Meeting 48 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Management

Tigran Garikovich MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Khachaturov First Deputy Director General Natalia Viktorovna Sedykh Deputy Director General – Head of Administration

Alexander MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Vladimirovich Boitsov Deputy Director General

Yury Anatolievich Tokmachev Deputy Director General – Safety Director

Andrei PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Vasilievich Kudryavtsev Deputy Director General – Chief Engineer Ilya Mikhailovich Yampolsky Deputy Director General RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Marina Ivanovna Liborakina Deputy Director General – Chief of Strategy EXHIBITS 49 www.armz.ru GOVERNANCE SYSTEM

Professional Development and Training Policy The Company implements the policy of continuous senior Company managers took part in the meetings of training, professional development and capacity building the Corporation’s Management Board and the Industry with regard to its managers, including with regard to the Managers Council and other industry events devoted to economic, environmental and social issues. In particular, development and implementation of the Code of Ethics, in 2009 the members of the Board of Directors and environment, safety, labor and sustainability reporting. Remuneration Policy The Company is implementing the goal-oriented senior management was paid based on the results of the management system based on the KPIs (Section 7.2). 2009 performance. Goals sought by implementation of In 2009 KPI maps were determined for all the KPI system: JSC Atomredmetzoloto and subsidiaries and affiliates’ increase the transparency of each manager’s managers. activities; The remuneration system for all managers is linked to add additional incentives to achieve specified tasks the KPI achievement. The Company’s Director General supporting the priorities of each division and the is remunerated pursuant to the labor agreement and the entire holding; decisions of the Board of Directors. In the beginning of constantly improve performance, identify and 2009 the remuneration to the Director General and the implement the best practices. Feedback The Company’s senior management is open for dialog Company develops a feedback system to collect with and recommendations from the employees, information regarding compliance with the internal including via electronic means of communication. As policies and procedures and ethical principles. part of the internal control system development, the

Audit Commission To control JSC Atomredmetzoloto financial and elected the following persons to the audit commission: commercial operations the General Meeting of Oksana Vladimirovna Burel – chief specialist of the Shareholders elects the Audit Commission of at least three analytic unit of the Internal Audit Department of JSC members in accordance with the Charter. Atomenergoprom, The Audit Commission is responsible for control of the Alexander Ivanovich Sergeev – chief expert of the Company’s financial and business operations, including: Department of NFC Markets, Products, Services and auditing financial documents, results of inventory Technologies of the NRC and NFC Coordination checks, compliance with the regulations, lawfulness of Department of JSC Atomenergoprom, the executed documents, Gennady Egorovich Fedichkin – Director of the analyzing Company’s financial standing, liquidity and Internal Control Service of JSC Atomredmetzoloto. financial solvency, Members of the Audit Commission do not own any analyzing the Company’s management bodies Company shares. decisions for their relevance and conformity with the The members of the Audit Commission did not receive Charter. remuneration in 2009. The Annual General Shareholders Meeting of JSC Atomredmetzoloto (Minutes dated June 30, 2009 No. 2)

Compliance with the Corporate Code of Conduct

JSC Atomredmetzoloto complies with the Russian law requirements relating to corporate governance and follows the basic principles of the FCSM Corporate Code of Conduct. 50 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Dividends MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS JSC Atomredmetzoloto management bodies define the Table 12. Payment of dividends by the Company Company’s dividend policy with account for the required investments in accordance with the Company’s strategy. There are no declared and unpaid dividends. Dividends accrual period 2006 2007 2008 According to the net profit distribution plan, no Dividends amount, dividends will be paid in 2009. As of the time of rubles 890 400 87 860 720 0 preparation of this report, the Company management bodies have not decided on the use of the 2009 net profit.

Major Transactions and Interested Party Transactions

The Board and the Extraordinary General Meeting of Law On Joint-Stock Companies. In 2009 the Company MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Shareholders of JSC Atomredmetzoloto approved the did not enter into any interested party transactions which following transactions entered into in 2009 which require require approval pursuant to the Federal Law On Joint- approval as major transactions pursuant to the Federal Stock Companies.

Table 13. Major Transactions

Decision of the Item Agreement Subject of the Amount of the management body Counterparty No. (date/number) Agreement transaction (date/number)

Decision of the No. 2009-02/0042 Effective Energy Company’s Board Acquisition

dated January 23, N.V. US$470,000,000 PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS of shares (minutes No. 21 dated 2009 (Netherlands) 1 2/3/2009) Decision of the No. 42/09В/2009- Provision Gazprombank Company’s Board 02/0003 dated US$470,000,000 of facility (JSC) (minutes No. 23 dated March 05, 2009 2 March 4, 2009) Decision of No. 1552 dated May Extraordinary General 19, 2008 (confirmation of the Depositing Gazprombank Meeting of RUR33,000,000,000 Shareholders (minutes deposit transaction funds (JSC) No. 3 dated March 9, No. 1 dated December 3 2010) 17, 2009)

Company’s Registrar Company's Registrar is the Open Joint Stock Company Registrar R.O.S.T. MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Registrar’s details: MSRN 1027739216757, TIN 7726030449. Registered address: Moscow, ul. Stromynka, 18, block 13. Tel./fax (495) 771 73 36.

Plans and Targets

Company’s corporate management system bodies, committees), and active participation in Rosatom improvement, including development and introduction of projects and programs for improvement of corporate the Corporate Code of Conduct, Code of Ethics, governance efficiency and development of public Information Disclosure Policy and other key policies and reporting. procedures relating to corporate governance (management EXHIBITS 51 www.armz.ru GOVERNANCE SYSTEM

6.3. Board of Directors Report on Key Operations

In 2009 the JSC Atomredmetzoloto Board of Directors performed the strategic management of, and supervision over, the Company’s key operations.

The Company's long and mid-term development priorities determined; Strategic management: ARMZ KPIs approved; Company organizational structure approved;

Investment program financing limit approved; Key investment projects and Major transaction relating to acquisition of Effective Energy NV (Netherlands) potential projects: approved; Company participation in a number of Russian and foreign mining and exploration companies approved;

Company’s internal control system improvement initiated, in particular, creation Internal control and risk of internal control service and improvement of the internal control methods; management: A number of major transactions for provision of credit facilities to the Company approved;

Senior management Company’s senior management system designed; remuneration: Amount of senior management remunerations and compensations approved.

«In my opinion, for the last two years, especially in 2009, JSC Atomredmetzoloto has made a breakthrough in corporate governance development. Being a 100% state owned company, we aim to build a governance system, a corporate one in particular, oriented at the best business practices. I am sure that in the near future our company might become a good example for imitation.» Margarita Turkova, JSC Atomredmetzoloto Corporate Governance Department Director.

52 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

«ARMZ’ achievements for last 3 years demonstrate the professionalism of our finance and management sections. Formerly hardly a company to take risks on, ARMZ has

become a high-class loan subscriber the leading banks MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING compete to cooperate with which demonstrates continuous development growth». A.P. Zhelnin, Alfa-Bank Atom Industry Cooperation Manager

6.4. Key Risks and Risk Management Methods DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

ARMZ Uranium Holding Co. activities are subject to both general economic and specific industry risks.

Development of ARMZ risk management system in 2009 acquisition of foreign assets by the Company. was due to the following factors: world financial crisis which manifested itself, among The Company builds its risk management approach as a other things, in the instability of the Russian financial continuous process applicable to the strategic and market; operational management levels and targeted at development of the internal industry management identification and mitigation of impact from the events system; which may affect Company’s operations.

2009 Activities MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL The following priority risk management areas were (specifically, the regular risk monitoring by defined: UxConsulting). development of internal documents governing Sampling valuation of residual risk (risk level after JSC Atomredmetzoloto risk management; application of the mitigation method) was conducted conducting sampling risk audit in ARMZ Holding which allowed to determine the efficiency of a number of companies; applied risk mitigation methods, adjust them, if required, analysis of efficiency of applied risk management and introduce new identified risks management methods. methods, their adjustment and improvement; To mitigate the consequences of production risks, the standardization and putting into practice ARMZ insurance policy was adopted and implemented by all Uranium Holding exchange and credit risks approach. ARMZ production companies to govern the procedure The traditional decentralized risk management system and timeline for execution of insurance agreements, the was selected; Company risk map was updated with due insurance coverage for each company and the insurance reporting. consideration for the industry experts’ opinion EXHIBITS 53 www.armz.ru GOVERNANCE SYSTEM

ARMZ 2009 operations were subject to a number of key risk factors.

Geopolitical Risks

Risk of political instability, changes Historically, JSC Atomredmetzoloto major assets concentrated in Russia and Kazakhstan. At the in the policy in the regions of beginning of 2009 the Company decided to expand the geography of its raw materials base and start operations which may affect active expansion. In the long run, such approach will ensure decrease in ARMZ exposure to local Company's targets fulfillment geopolitical risks.

Regulatory and Legal Risks

JSC Atomredmetzoloto and its subsidiaries and affiliates constantly monitor the current laws of the 1. Risks relating to changes in Russian Federation and the jurisdictions of its operations with respect to the subsoil use and nuclear Russian and foreign laws energy use and follow all recommendations of the international and national supervision and regulatory bodies with respect to the above matters.

2. Risks relating to industry Industry regulations are a material factor for ARMZ. Given the industry reformation processes, active regulations cooperation with Rosatom significantly decreases such risks.

3. Risks of license termination, Company pays special attention to timely extension, re-registration and obtaining of licenses, compliance withdrawal or invalidation with the legal and regulatory requirements and follow-up of the comments.

Risks relating to Resource Base

Use of the most advanced reserve balance recording and resources estimation methods applied in the Risks relating to failure to best Russian and international practices allows ARMZ Holding companies to obtain the most complete estimate the quality and quantity and high-quality information regarding the existing deposits during exploration. The state-of-the-art of deposits correctly geological exploration methods with the use of geological mathematical models decrease the risk of discrepancy between the geological exploration data and the actual reserves.

Risks relating to deposits The Company is taking steps to diversify its raw materials base by establishing joint ventures for territorial limitations exploration and development of uranium abroad (Kazakhstan, Namibia etc.).

Operational Risks 1. Risk of failure to fulfill obligations due to discontinuation of production As part of the production risk management, a strict production performance monitoring system has as result of any incidents been implemented to ensure constant monitoring of ARMZ companies’ operations and adoption of (loss/damage of property, timely decisions with account for the actual production program fulfillment. unavailability/interruption of supplies, etc.)

Ensuring occupational health and safety is one of the Company’s priorities. Accordingly, each 2. Occupational Health and production facility implements an action plan to improve occupational safety and decrease exposure to Safety Risks contingencies and personnel life and health threats.

The complexity and the large scale of projects implemented by JSC Atomredmetzoloto as the managing 3. Risks relating to large-scale company require engagement and active use of consultants’ experience (including major foreign projects companies, such as the «big four», SRK and Hatch). Projects are supported during all stages of implementations using the most advanced technologies and the best international practices.

ARMZ actively implements personnel management and motivation policy, including:

program for engagement of experienced mining employees from other regions and highly qualified workers from related sectors;

remuneration incentives, benefits and welfare system has been introduced to retain qualified personnel; 4. Personnel and social risks. an integrated training program for all levels of personnel is implemented, including managers talent pool program;

the Holding actively participates in the development of infrastructure, constructs corporate residential facilities (JSC Dalur), a modern shift camp (JSC Khiagda) and reconstructs accommodation (JSC PIMCU).

54 www.armz.ru ABOUT THIS THIS ABOUT REPORT

To decrease dependency of ARMZ on contractors and suppliers specialized companies were created 5. Risks relating to dependence to ensure centralized supplies for the needs of the main production processes. Thus, USC ARMZ on supplier and contractor LLC ensures uninterrupted supplies of raw materials and equipment to the Holding companies, while chain, risk of their default RUSBURMASH INC carries out drilling operations. The said companies guarantee continuity of the relevant production processes and cost control allowing to manage a number of financial risks.

Technological risks relating to natural uranium production and processing, including radiation safety risks, are managed by a number of special means, including: MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

implementation of production equipment program at ARMZ Holding companies; 6. Technological risks, including radiation safety compliance with the regulations applicable to the production process;

supervision by divisions as well as external organizations;

civil third-party/personnel liability.

ARMZ mining and processing companies monitor compliance with all statutory requirements of the 7. Environmental risks countries of their operation relating to environmental impact and actively decrease such impact and increase the environmental safety of production.

Market Risks INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING 1. Risk of dependency on a Being a mining holding, the Company also diversifies the product lineup and searches new products, for single product which purpose it takes part in managing gold and non-nuclear materials mining companies.

2. Decrease in the product To mitigate market risks and ensure stability and continuity of ARMZ operations the uranium products demand sales markets are expanded. For this purpose ARMZ markets the Holding’s products centrally.

Financial Risks

The main purchasers of the products produced at ARMZ facilities are Rosatom companies, which 1. Credit risks (non- significantly decreases the holding’s credit risk. However, given the financial crisis, special emphasis performance of financial was put on the risks of default by the counterparties. To decrease the amount of debt to the Company, obligations by the additional steps were taken to monitor the financial standing of the counterparties and banks with counterparties)

which ARMZ Holding companies' accounts are open. PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

To decrease price risks, specialized companies were set up within ARMZ Holding (RUSBURMASH INC and USC ARMZ LLC) to ensure centralized supplies for the needs of the main production processes. 2. Price Risks The said companies provide production relevant services and ensure control over the companies expenses affecting the product cost.

In 2009 the exchange and interest risks were managed through centralization of risks at JSC Atomredmetzoloto, RUSBURMASH INC and USC ARMZ LLC, which allowed the Holding operators to focus on the main production areas.

Exchange risks were mitigated in the following two major ways:

managing JSC Atomredmetzoloto open currency position and following up with changes to the credit 3. Exchange and interest risks portfolio structure to level up the head company assets and liabilities; RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL hedging forward operations using financial instruments.

Thanks to centralization of financial risk management function and the taken steps the financial performance of ARMZ Holding production companies were virtually independent from currency fluctuations.

Liquidity risks had little effect on JSC Atomredmetzoloto operations, because as early as before the crisis the Company already had a consistent policy for managing this risk, including:

4. Liquidity Risk setting up limits for ARMZ Holding companies in several banks; restructuring credit portfolio to increase the long-term portfolio portion;

regular monitoring of the Group companies liquidity. EXHIBITS 55 www.armz.ru

ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS 7. Sustainable Development

ARMZ Uranium Holding Co. understands sustainable development as the system of consistent economic, environmental and social steps to manage the entire life cycle of the mineral resources development. These matters are covered not only in this section, but also when describing the development and production strategy. Herein below we MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING focus on creation of efficient and safe working places, professional growth and social support of employees, environmental protection, education, culture and sport promotion. All sustainable development actions are implemented based on continuing stakeholders engagement and are targeted at competitiveness increase. In 2010 the Company is planning to accede to the Russian Social Charter.

As compared to 2008, labor efficiency has grown by 12.5%.

7.1. Personnel PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

ARMZ personnel policy objective is forming a The personnel policy priorities are: professional and efficient team able to solve high-level labor efficiency increase, large-scale tasks which the existing and the projected turnover reduction, uranium and other rare earth minerals mining companies increase of ARMZ attractiveness as an employer, face in Russia and abroad. standardization of personnel management approach within the Holding’s companies. 2009 Activities and Results

Headcount has been optimized and non-core KPI-based performance management system has been MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL functions transferred outside JSC PIMCU. During introduced. reorganization over 10 subdivisions providing services in HR divisions at the subsidiaries have been formed. connection with the production activities were Steps have been taken to standardize the Company’s transformed into separate companies able to provide personnel record management. high-quality specialized services. Thus, by the end of 2009 the headcount decreased by over two thousand 2008-2009 Headcount and Staff persons, while the labor efficiency growth at JSC Composition of JSC Atomredmetzoloto PIMCU was 12.5%, as compared to 2008. Almost all released employees were outplaced with the help of the and its Subsidiaries and Affiliates company’s management and the trade union The headcount at the ARMZ Holding’s major Russian organization. An integrated standard remuneration companies decreased by 2,731 employees as compared to system has been implemented. 2008 and currently amounts to 9,991. All Holding

companies employees are fully employed. EXHIBITS 57 www.armz.ru SUSTAINABLE DEVELOPMENT

Table 14. Headcount Dynamics at the ARMZ Major Russian Companies

No. of the No. of the partially Headcount Average headcount fully employed employed Company as of as of as of as of as of as of 2008 2009 12/31/2008 12/31/2009 12/31/2008 12/31/2009 12/31/2008 12/31/2009

JSC Atomredmetzoloto 217 255 2 3 217 257 197 224

JSC PIMCU 11 619 8 449 0 49 11 619 8 452 11 382 9 890

JSC Khiagda 237 267 0 0 237 267 218 260

JSC Dalur 423 383 2 2 423 383 411 411

UMC 35 14 2 2 35 15 17 26

JSC OMCC 4 3 3 8 4 7 4 4

JSC UMC Gornoe 5 2 3 8 6 6 5 5

JSC Lunnoe 29 6 0 0 29 2 22 10

RUSBURMASH INC 93 509 0 0 93 509 43 321

LLC USC ARMZ 54 71 0 0 54 71 26 50

JSC Elkon MMP 5 16 0 4 5 18 5 14

Total 12 721 9975 12 76 12 722 9991 12 329 11 215

In the majority of ARMZ Uranium Holding Co’s At the majority of companies the local residents companies there is an inflow of young specialists. By the prevail among employees (including managers) (average end of 2009 the employees under 35 tended to be the of 90.6% in 2008 and 87% in 2009). largest age group. Implementation of programs for maintaining Men prevail among ARMZ Uranium Holding Co’s personnel stability allowed to decrease or maintain the personnel (68% of total headcount in 2008 and 72% in employee turnover rate in 2009 in the majority of ARMZ 2009), the average age was 41.7 in 2008 and changed little companies. The measures to retain young specialists in 2009. The average age of woman employees in 2009 turned out to be most efficient: in JSC PIMCU and was 37.5 years. JSC Khiagda the turnover rate for employees under 35 decreased by 6.3%.

Table 15. ARMZ Holding’s Major Russian Companies Headcount by Age

Headcount as at 12/31/2008 Headcount as at December 31, 2009 Company under 35 36-50 over 50 under 35 36-50 over 50

JSC Atomredmetzoloto 116 72 29 143 78 36

JSC PIMCU 4515 3918 3186 3430 2779 2243

JSC Khiagda 92 91 54 115 81 71

JSC Dalur 159 172 92 152 140 91

UMC 19 15 1 11 3 1

JSC OMCC 1 1 2 3 1 3

JSC UMC Gornoe 2 2 2 1 3 2

JSC Lunnoe 17 8 4 2 3 1

RUSBURMASH INC 27 46 20 131 242 136

LLC USC ARMZ 43 7 4 55 10 6

JSC Elkon MMP 1 2 2 5 6 7

Total 4992 4 334 3 396 4 048 3 346 2 597 58 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Table 16. Main Age Groups Distribution at ARMZ Table 17. Share of Local Staff and Managers at ARMZ Uranium Holding Co’s Russian Companies Uranium Holding Co’s Russian Companies Age of ARMZ Uranium Holding Co.’s 2008 2009 companies personnel Share of Share of senior Company employees managers who under 35 39% 41% who are local are local residents (%) residents (%)

36-50 34% 33% JSC PIMCU 99,6 85 over 50 27% 26% JSC Khiagda 93 66 JSC Dalur 96,1 40 ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS UMC 80 60 Table 18. Personnel Turnover at the ARMZ Uranium Holding Co.’s Main Companies, by Gender JSC OMCC 100 100

Total JSC UMC Gornoe 100 100 ARMZ company turnover, men, % women, % % of total of total JSC Lunnoe 83 75

JSC PIMCU 13,7 86,9 13,1 RUSBURMASH INC 84 96

JSC Dalur 4,59 84,3 15,7 LLC USC ARMZ 62 67

JSC Khiagda 37,3 92,8 7,2 JSC Elkon MMP 72,2 100 INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Professional Development and Training

2009 Activities and Results The Company started to develop the corporate Talent pool formation and development program was development and training system based on the needs of developed to identify and develop employees who are the ARMZ companies' employees. The major system’s ready to manage divisions efficiently. The program allows objective is to ensure that the employees obtain the the employees to obtain the knowledge and skills knowledge and skills required for achievement of ARMZ required to take part in solving the Company’s tasks. business targets. Employee competences model was In 2009 professional development trainings were held. MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL developed as basis for implementation of employee 5,268 employees involved in the Company's key opportunities management programs. operation areas took part in the program. The total Annual employee evaluation program was launched to length of professional development trainings was 25,300 gather information about each employee, his/her hours per annum, or 4.8 hours per employee. The strengths and development areas. Based on the evaluation percentage of women who took part in training (average results, personal employee development plan, for all companies) was 41%, the percentage of men was redeployment and efficient motivation tools may be 59%. developed. Plans and Targets

Launch the remote learning system which will make new Launch the Coach Academy to select and prepare future knowledge available to each employee. coaches able to conduct on-the-job training of specialists. EXHIBITS 59 www.armz.ru SUSTAINABLE DEVELOPMENT

Strict adherence to the nuclear energy use laws and regulations is the basic principle of Company’s activities.

Employee Search and Adaptation

To standardize and implement the personnel search and pursuance of Article 64 of the Russian Labor Code (no adaptation policy in the subsidiaries in 2009, specialists unmotivated refusal or refusal based on discriminatory responsible for this function were appointed. grounds is allowed). HR specialists are obliged to As the Company is committed to comply with the provide written or verbal feedback to candidates in high standards of social responsibility, the personnel accordance with the Russian Labor Code. In 2009 there search procedure expressly states the responsibility of an were no cases of discrimination when selecting personnel. HR specialist when selecting the candidates in

Personnel Motivation and KPIs

2009 Activities and Results Standard approach to forming the compensation package has been developed. We started to apply the Table 19. Standard Salaries in the Significant Regions of Operations Unified Standard Remuneration System (USRS) to all Atomredmetzoloto’s employees, and JSC PIMCU, JSC Average salary Average salary Khiagda and JSC Dalur managers. Company in the company, Region in the region, RUR RUR Competitive salary level was ensured. Based on 2009 Trans-Baikal results, the average salary level at the main mining JSC PIMCU 19 412 Territory 17 857 companies of ARMZ companies was significantly higher Trans-Baikal than the similar indicator in the relevant regions. Territory/ Performance management system was implemented. In Republic 2009 KPIs were set for all JSC Atomredmetzoloto and JSC Khiagda 26 382 of Buryatia 16 608 subsidiaries and affiliates’ managers. Kurgan JSC Dalur 18 612 Region 12 663 Company KPI targets were achieved. The results of 2009 show that ARMZ KPI targets were achieved and the aggregate KPI achievement index was 110.5%. The 2009 for further expansion of the KPI system to all ARMZ and positive results of KPI implementation have formed basis its subsidiaries’ employees.

Plans and Targets Continue USRS implementation within the entire All steps described above ensure transparency and Company to finalize standardization of the compensation balance of the compensation and benefit system at package policy. ARMZ Uranium Holding Co’s companies.

«Our team has an immense drive. Look at the company three years ago and look at it now! It’s like Formula 1. I would like to quote on of the Mercedes managers: «We have only two competitors – sound speed and light speed.» Obviously, you feel satisfied that some of the screws in this race have been tightened by you.» Maxim Dranov, Director of Financial Department, JSC Atomredmetzoloto

60 www.armz.ru ABOUT THIS THIS ABOUT REPORT

7.2. Social Policy

ARMZ focuses on the Holding’s employees non-material incentives and social support system. JSC PIMCU social policy ensures succession and transfer of the industry-relevant knowledge from retiring employees to the young specialists in critical skill areas. There is a practice of industry and corporate awards for specially important labor achievements. ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Social allowances breakdown for 2009 is as follows: Table 20. Social Benefits Amount and Terms & Conditions

JSC PIMCU, JSC Khiagda, JSC Dalur, Type of social benefit 2009 benefits terms & conditions RUR '000 RUR '000 RUR '000

Voluntary health insurance 35 966 2 500 2 500 Life and accident voluntary All staff employees insurance 5 224 – 300 Depending on length of service with the Pension benefits 9 340 – 8 711 company, over 300 persons All staff employees taking part in Sports and cultural public events 3 041 – 202 competitions and celebrations

Material assistance 3 298 203 578 1,839 employees MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Traveling to and from recreation and treatment facilities 9 841 50 – 1,139 employees

Retirement extra benefit 39 336 – 2 378 One-time benefit stimulating retirement Presents for anniversaries and professional holidays 3 748 44 954 All staff employees Accommodation/dormitory 366 critical-skill workers and young compensation 1 465 1 441 starting 2010 specialists Total 111 259 4 238 15 623

2009 Activities and Results

There are trade union organizations at JSC JSC Dalur. Accordingly, trade union (JSC PIMCU) and PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Atomredmetzoloto, JSC PIMCU and JSC Dalur which Council representatives (JSC Dalur) are members of the participate in solving such issues as labor safety, co- internal commissions for labor safety protection and ordination of employee vacation schedule and allocation of social allowance funds. management of cultural and sports events. Pension accruals financing program was launched. For JSC PIMCU and JSC Dalur have collective bargaining JSC Dalur increasing the share of young personnel is agreements ensuring well-established employee welfare. relevant, that is why in 2009 the pilot pension accruals Collective bargaining agreements cover all employees, project was launched. The agreement by and between including those working part-time. There is a constant JSC Dalur and Non-Commercial Pension Fund First dialogue between the company’s management and the National Pension Fund provides for extra pension for trade union and Labor Council representatives. retiring employees. At JSC Dalur the Labor Council has been organized A large amount of funds was allocated by JSC PIMCU which operates in accordance with the regulation on the for additional payments to retiring employees and Council. provision of accommodation to young specialists. A The Council's and the trade union's responsibilities residential house was commissioned and apartments MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL regarding labor safety and employee rights protection provided for employees moving from other regions and to were determined. The principles and mechanisms of such company’s employees whose length of service exceeds responsibility were set forth in the relevant sections of three years. collective bargaining agreements with JSC PIMCU and

Plans and Targets Implement unified standard social policy at all ARMZ Expand the awards system for labor achievements by companies. implementing unified corporate contests and competitions The key social policy targets will be as follows: rules. The results of such events to be announced during – provision of accommodation; industry holidays. – veterans support; Evaluate social programs cost efficiency and employee – young specialists and critical specialists support. loyalty growth. EXHIBITS 61 www.armz.ru SUSTAINABLE DEVELOPMENT

7.3. Occupational Health and Safety

JSC Atomredmetzoloto understands the significant impact of production upon the environment and acknowledges the absolute priority of employees life and health over economic results.

Ensuring Radiation Safety

ARMZ implements efficient radiation safety At ARMZ companies Group A and B personnel management within the entire Company. The radiation external exposure is controlled using individual safety services at the companies are governed by the thermoluminescent dosimeters. Individual doses are Russian radiation safety laws and regulations. valuated taking into account internal exposure. The key The radiation safety services aim at managing and radiation factors (radon volumetric activity, power of supervising the progress and ensuring radiation safety of equivalent / exposure dose of X-ray and gamma operations relating to production, processing, storage and radiation, radio surface contamination with alpha and transportation of radioactive substances and waste. beta nuclides) are controlled using the advanced certified equipment.

2009 Activities and Results During 2005-2009 no dose limit, as set out in the At the underground workings 53 isolation concrete NRB-99/2009 Radiation Safety Norms (50 mSv), has and wooden strips were installed. been exceeded with regard to any of the ARMZ Holding 35 DV-1000 automatic ventilation doors were put into employees. There were no cases of withdrawal of nuclear operation. energy use licenses. 15 heating elements at air supply shafts were repaired The Company implemented The Program for and replaced. Modernization of Radiation Control and Decrease of JSC PIMCU Personnel Radiation Doses for 2009-2010.

Occupational Safety

ARMZ key occupational and industrial safety target is to To achieve this goal the Company is actively improving ensure protection of the companies employees from technologies, production organization, planning and occupational hazards. The underlying principle of the management systems. Measures to prevent injuries are Company’s policy is acknowledging companies’ personnel based on the industry occupational safety management safety as the key value at all production stages. system approved by S.V. Kirienko on September 21, 2009.

Design and construct new operation facilities with regards to up-to-date safety Technical improvement in requirements to provide high performance, maximum production automation with Company’s affiliates and reduction of hazardous job positions reduction of hazardous Technical upgrade to phase out outdated equipment; operations is being performed in four Internal and external audits to identify and eliminate Health and Safety issues directions: Organizational actions to strengthen discipline, additional training and personnel motivation.

ARMZ companies’ occupational safety and health costs have amounted to RUR213 mln 62 www.armz.ru ABOUT THIS THIS ABOUT REPORT

2009 Activities and Results Table 21. Industrial Injuries Rate ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS The injuries rate has decreased. The accident rate at JSC PIMCU JSC Dalur JSC Khiagda ARMZ companies decreased 1.9-fold (19 in 2008, 10 in 2009), and the fatal accidents rate decreased 5-fold (5 in 2008, 1 in 2009). Underground mining operations at JSC Industrial Injuries PIMCU remain the main source of injuries. Measures to Rate 0,129 0 0 prevent injuries are based on the industry occupational safety management system. Occupational The occupational diseases rate decreased 2.4-fold (58 in Diseases Rate 0,272 0 0 2008, 11 in 2009). Lost days rate* 18,855 0 0 * Loss of working ability for the period of 1 working day or more (working day as per the schedule).

At JSC PIMCU: MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING a new sulfuric acid plant and sulfuric acid storage were a competition between UGRY mines’ areas to promote put into operation. This eliminated dumping of sulfur waste zero-accident environment was held; (waste from burnt pyrites) to the sulfur waste dump; a system of personnel medical checks was implemented; outdated equipment was replaced to eliminate manual discipline promotion communication campaign was labor at the main production processes, decrease radiation organized; and injury rate; the Youth Council and the Community Council were industrial safety was audited at URGU mines; involved in the discipline promotion campaign.

At JSC Khiagda: a bridge across the Vitim river and the first stage of sulfur acid, fuel and lubricants into the Vitim when crossing construction of the sulfur acid storage have been put into during ice drifting and freezing period. PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS operation, which allowed decreasing the risks of spillage of

Site and Information Security

JSC Atomredmetzoloto activities to ensure safety of its JSC Atomredmetzoloto corporate information facilities in 2009 were in compliance with the Russian system set-up conforms to the international safety law, and Rosatom and JSC Atomenergoprom management standards ISO/IEC 27000 and the ISO/ regulations and plans. Pursuant to the unified policy of IEC 27001:2005 key standard entitled «Information Rosatom, Atomredmetzoloto also implements an technology. Security techniques. Information security integrated action plan to comply with the statutory management systems». information safety requirements. RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

There are no cases of loss of secret documents or leakages of state secret information, or claims from the regulatory authorities.

2009 Activities and Results

In pursuance of Rosatom orders, formation of the civil License for performance of work using state secret defense and emergency warning system started at information was obtained. JSC Atomredmetzoloto. A Emergencies Prevention and There are no cases of loss of secret documents or leakages Elimination and Fire Safety Commission was created and the of state secret information, or claims from the regulatory relevant regulations developed. authorities. EXHIBITS 63 www.armz.ru SUSTAINABLE DEVELOPMENT

7.4. Environmental Protection and Safety

ARMZ’s environmental policy is based on the principles of efficient environmental management and maximum conservation. The key environmental policy targets are: develop and implement measures to ensure minimum environmental impact; conserve the environment in the production areas, recultivate land; reduce industrial effluents and emissions discharge; efficient use of energy resources; continuous environmental monitoring.

All ARMZ companies have developed and approved the constant monitoring of emissions and the level of regulations regarding the maximum permissible pollutants in the production area and the sanitary emissions, sewage and emissisons discharge, waste protection zones. production and disposal limits, there are necessary The Company has approved the 2009–2015 emission, discharge and disposal permits, radiation, environmental policy plan to ensure environmental safety environmental and industrial safety control systems and protection at its subsidiaries. have been established and there are all necessary The information in these sections of the annual report licenses for collection and transportation of hazardous is based on 2009 environmental reports prepared by the waste. three Uranium Holding companies – JSC PIMCU, The modern radiation safety and environmental JSC Dalur and JSC Khiagda as the most environmentally protection labs are equipped with devices ensuring important companies.

2009 Activities and Results Table 22. All Hazard Classes Waste Generation (t). 2008-2009 The situation with formation and disposal of waste at JSC PIMCU, the main production facility, has significantly Company/ JSC JSC PIMCU JSC Dalur improved. The volumes of waste disposal on the day surface Hazard class, year Khiagda have significantly decreased as compared to 2008. This 4 – 0 became possible due to disposal of hazard class 5 waste – Hazard class 1 Urtuisky brown-coal strip-mine overburden – inside the pit 2008/2009 2 0 0 (see Fig. 15) and discontinuation of storage of hazard class 3 – 0 4 waste – sulfur waste – as result of launch of the new Hazard class 2 sulfur acid shop working on pure sulfur. Hazard class 1-3 2008/2009 1 0 0 waste is within the permitted norms (see Table 22). There is no overburden at JSC Dalur and JSC Khiagda. 490 – 2 Hazard class 3 JSC Dalur has undergone two environmental audits. In 2008/2009 475 8 2 2009 г. foreign energy companies held 2 environmental audits at JSC Dalur, during which the companies' 90 393 – 2 400 Hazard class 4 reрresentatives noted the high level of company's 2008/2009 28 881 27 3 864 environmental and radiation safety, records-keeping with regard to JSC Dalur business processes and the specialists' 24 721 453 – 204 professionalism. Hazard class 5 2008/2009 22 725 600 15 178 The set water withdrawal limits were complied with. No company exceeded the set water withdrawal norms (see 24 812 343 – 2 606 table 23). Compliance with the water withdrawal limits was Total 22 754 959 50 4 043 achieved through increased use of secondary resources for process water supply, decreasing water pressure to the Waste processed within minimum permissible level during the night time, and the company or located at the company's own remedying leakages at emergency pipelines. facilities, % 99% 40% 99,6% The volume of domestic waste at JSC Khiagda increased due to the increased number of people Waste transferred to employed at the facilities under construction. Out of the specialized contractors for total number of generated waste approximately 4% is processing and processed internally, 0.04% decontaminated and 95.6% decontamination 1% 60% 0,04% located at the company's domestic and industrial waste dump. Meanwhile, hazard class 1-5 waste is within the Exceeding the limits No No No 64 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Table 23. Water Withdrawal by Purpose and Holding’s Companies,’000 cu.m.

Domestic and MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Process water Total water Subsurface Exceeding the Company drinking water Surface sources withdrawal withdrawal sources limits withdrawal

JSC PIMCU – – 24 112 19 112 5 000 None

JSC Dalur 35,5 27,2 62,7 62,7 – None

JSC Khiagda 2,9 11,0 13,9 13,9 – None

Table 24. JSC PIMCU 2009 Emissions* permitted norms. The maximum permissible emissions requirements were observed. The production activities at the three Maximum MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Actual emissions permissible companies did not result in the volume of emissions Pollutant name in 2009, t emissions exceeding the maximum permissible limits. (MPE), t Emissions have decreased. As result of JSC Khiagda production activities in 2009, 138.484 tons of emissions SO2 (sulfur dioxide) 6 211 11 319 were discharged into atmosphere (52% of the permitted emissions volume). The majority of these emissions come Nonorganic dust, ash 5 594 7 069 from the boiler (82%) (see Table 25). Use of dust NOx (nitrogen oxide) 2 550 2 925 arresting equipment resulted in a 46.724 tons emissions reduction during the reporting period. CO (carbon oxide) 1 121 1 608 Total volume of emissions from all JSC Dalur sources Nonorganic dust, in 2009 amounted to 10.648 tons, or 75.6% of the 20-70 % SiO2 182 231 permissible emissions volume. Ammonia 95 126

Sulfur acid 42 200 PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Other 266 96 Total 16 060 23 575 *Here and elsewhere – for all companies: the method for calculating permissible emissions is set forth by the Permissible Emissions Project for each facility separately. Each method describes the company in terms of pollution specifying the pollutants discharged, the quality and quantity of used raw materials, and the key characteristics of used equipment. Emissions are calculated for each type of pollutant based on the source materials.

Table 25. JSC Khiagda 2009 Emissions Table 26. JSC Dalur 2009 Emissions

Pollutant name Tons Pollutant name Tons RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Carbon oxide 76 Carbon oxide 4,3

Sulfur dioxide 24 Manganese oxide 0,3

Nonorganic dust, ash 11 Ammonia 1,4

Nitrogen dioxide 11 Nitrogen dioxide 2,4

Ash 10 Sulfur acid 0,4

Other 7 Nitrogen oxide 0,06 Total 138 Hydrogen chloride 0,04

Other 1,56 Significant resources were allocated to environment protection. The 2009 total costs amounted to RUR135 Total 10,6

mln. EXHIBITS 65 www.armz.ru SUSTAINABLE DEVELOPMENT

At JSC PIMCU: The sulfur acid shop at the metal plant was put into operation. As a result, the sulfur dioxide emissions decreased by 1,383.83 tons, and generation and storage of hazard class 5 waste was 100% eliminated. the 1st thermal power station boiler unit with a more advanced and efficient ash collecting system was constructed and put into operation. Dust trapping devices at all filling complexes was unified, the minimum ensured level of dust trapping efficiency is 85%. Regular cleaning of 20 kilometers of dirty access roads was arranged. During the year 370.4 tons of ore spillages were moved to the Central Ore Yard.

At JSC Dalur: Report on Dalmatovskoye and Khokhlovskoye and the nearby areas radiation environmental monitoring was prepared to confirm that the company complies with all environmental protection and safety rules and requirements.

At JSC Khiagda: Table 27. 2009 Environmental Costs (RUR mln.) Net water consumption per technological process has JSC been decreased (8 cu.m./day, pos. 15) as result of Name of activity JSC PIMCU JSC Dalur reprocessing solutions. Khiagda Floodwater was removed from bore-holes, and outflow Costs to eliminate environmental impact from the bore-hole surface was prevented from discharge into the water. Air protection 33 1 1 Construction of solid domestic waste disposal site is in Not Not progress. Water protection 46 required required Land protection 43 1 2012

Environmental management costs Environmental monitoring 9,9 0 0

Environmental projects 0,1 – –

Total 131 2 2 Plans and Targets Integrated environmental plan developed with account Target Program entitled «Ensuring Nuclear and for results of environmental audits and approved with Radiation Safety for 2008 and until 2015», reconstruction Rosatom will be implemented. The plan includes: of treatment facilities, reclamation of land, conducting Organizational arrangements targeted at environmental monitoring. implementation of ISO 14001:2004 environmental management system at the subsidiaries. The practice of public hearings and consultations with Production and technical arrangements to decrease environmental organizations and local community will environmental impact by the subsidiaries during be expanded and will cover Armenia and other countries. production, including implementation of the Federal 66 www.armz.ru ABOUT THIS THIS ABOUT REPORT

7.5. Development of the Regions of Operation ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

ARMZ focuses on social and economic and infrastructural development of regions of its operations. Currently the Company’s main production operations are located within Russia. However, the principles and policy of responsible development of the regions of operations apply to all ARMZ Uranium Holding Co’s companies.

JSC PIMCU is a backbone company for the single- PIMCU development program, the impact of different profile city of Krasnokamensk, Trans Baikal Territory. Company development scenarios upon the social and This status determines the significant social responsibility economic situation in the city and the region was of ARMZ management, as the possible problems of the assessed. Based on the recommendations of the Russian backbone companies threaten stable single-profile cities’ Ministry of Regional Development, the system of development and are a strategic challenge to the indicators of Company’s impact upon the budget, authorities of various levels. residential facilities and utilities and amenities and other Pursuant to the Rosatom’s Local Communities components of the urban facilities was determined. The MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Engagement and Charity Policy, JSC Atomredmetzoloto assessment results are included into JSC PIMCU not only invests into the social infrastructure, but takes development program for further review by the Board of into account the social and economic impact and risks the methods approved by the order. for the regions of its operations when choosing the strategic development objectives and takes part in the region of operation’s strategic development planning. JSC Dalur’s regional development program focuses on A partnership between JSC PIMCU and the city of sport and local schools support and provides assistance to Krasnokamensk is a good example. When designing JSC school graduates when entering the universities.

2009 Activities and Results The bridge across the Vitim river (JSC Khiagda) was During 2009 RUR10.0 mln was provided to support commissioned on May 16, 2009 in Romanovka village Krasnoznamensk non-working retirees. PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS (Bauntovsky District, Buryatia). It replaced the ferry RUR5.7 mln was allocated to maintain social and service and the winter road previously in operation. The cultural infrastructure facilities (Dauria Cultural Center bridge not only satisfies JSC Atomredmetzoloto needs, and Argun Gym). but is also of significant social and economic importance As part of the program to relocate Oktyabrsky for Buryatia and Chita. It will materially improve traffic settlement residents, two houses were commissioned for in Bauntovsky district of the Republic of Buryatia and the local residents and 273 families were provided with between the two neighboring districts and will partially flats. 480 families remained in the settlement, and two solve the problem of deliveries of goods to the Northern 108-apartment houses are still under construction. There territories. Construction of a bridge 240 m long and over will be five houses all in all. Land will be reclaimed after 7 m wide was financed by Rosatom. Total investments complete relocation of Oktyabrsky residents. into the project amounted to RUR250 mln. Construction of residential quarter for JSC Dalur Charitable and sponsorship support in the amount employees was financed. of RUR3.8 mln was provided to Krasnoznamensk In Dalmatovsky district of the Kurgan Region schools. gasification and road construction were implemented. MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

Plans and Targets We plan to develop the stakeholder engagement policy to restructuring and development programs and improve summarize the Company's experience of participation in single-profile city sustainability. An integrated plan will development of the regions of its operation (see also allow attracting state financing and private/public Sections 7.6 and 7.7). The policy will be put into practice partnership resources to the city's development and by preparation of an integrated JSC PIMCU modernization projects. Krasnoznamensk development plan to implement urban

Vitim Bridge in Buryatia commissioned (costs – RUR250 mln) EXHIBITS 67 www.armz.ru SUSTAINABLE DEVELOPMENT

7.6. Charity and Sponsorship

In its charitable and sponsorship activities JSC Atomredmetzoloto focuses primarily on support of such social areas as culture, sport, education and science.

In 2009 ARMZ took part in financing a number of charitable and sponsorship events.

2009 Activities and Results

Financial support was rendered to the Asian Children The Illustrated Books for Small Blind Children Project International Sport Project in the Republic of Sakha received sponsorship support. Since 2000 JSC (Yakutia). Since 2008 ARMZ has closely cooperated Atomredmetzoloto provides sponsorship support to with Bargaryy National Renaissance Foundation under Illustrated Books for Small Blind Children Charitable the auspices of the President of the Republic of Sakha Public Fund which specializes in publishing books for (Yakutia), the organizer of the Asian Children visually impaired or blind children. During this time International Sport Project – youth summer and all ARMZ financed the publication of color illustrated season competitions. The purpose of the games held once embossed books – The Illustration Sensation Atlas – for every four years under the auspices of the International 146 pre-school children living in the regions of the Olympics Committee is promotion of healthy lifestyle, Company's operations. The books customized to the establishment of new connections in sport and children's needs from the point of view of perception and strengthening of friendship among the children of the psychology give the visually impaired children better Asian-Pacific Region. The sponsorship under this project possibilities to get to know the surrounding world and in 2009 amounted to over RUR200 thousand. improve their social inclusion. The costs under this project in 2009 amounted to over RUR300 thousand.

Plans and Targets

We plan to develop the stakeholder engagement policy to Sections 7.5 and 7.7) and expand the scope and the summarize the Company's experience of participation in methods of cooperation with charitable organizations. development of the regions of its operation (see also 7.7. Stakeholder Engagement

ARMZ is committed to efficient stakeholder engagement based on the following key values: Mutual respect and productive cooperation. Continuous dialog to identify and provide for needs. Fulfillment of undertakings. Provision of timely and complete information regarding the Company's operations to stakeholders. Active engagement of the stakeholders in all regions of operations.

Based on the Company's development strategy and the map» was developed and the following groups identified stakeholders engagement practice the «key stakeholder (see Table 28). 68 www.armz.ru ABOUT THIS THIS ABOUT REPORT

«ARMZ management is very comprehensive with social issues which worry our employees, the management communicate with the employees directly at their working places. We are fully satisfied with ARMZ as a social partner, as it both fulfills obligations per the collective bargaining agreement and is directly involved in its MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS improvement.» P.V. Gnatyuk, JSC PIMCU Primary Trade Union Chairman.

Table 28. Key Stakeholder Map

Stakeholders Area of Interest Company's Actions

Achievement of KPIs (uranium production, investments, operations efficiency etc.). Achievement of KPIs MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Compliance with the safety, occupational Strict adherence to all industry policies and Shareholders: safety and environmental protection industry requirements Rosatom, standards. Commitment to high corporate governance TVEL, Fulfillment of disclosure and transparency standards, including protection of ARMZ Holding JSC Atomenergoprom requirements. minority shareholders rights and interests.

Stable, reliable and uninterrupted supplies. Disclosure of information regarding the Observation of interests and strict Company's operations in the Annual Report in compliance with the obligations to the clients. Customers accordance with the international best practices. Ensuring information transparency.

Attractive employer positioning. Continuous professional development and training Fair remuneration. (over 5,000 employees in 2009). Guaranteed employment. Establishment of Coach Academy Social programs (including pension plans). Implementation of best salary practices. Personnel Job satisfaction. Wide range of social programs. PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Safety and zero environmental impact. Regular meetings, public hearings with Employment protection, responsible employer. participation of regional and local authorities, State and local authorities, Development of the regions of operation residents of the regions of operation, NGO residents and local communities infrastructure. representatives.

Strict adherence to all international and International industry Transparency of operations. Russian radiation safety standards. organizations Compliance with strict safety standards. Active participation in WNA and IAEA activities.

Stakeholder Dialogs and Consultations

2009 Activities and Results MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL The company held public hearings over EIA with The company held public hearings over the respect to Olovskoye deposit in Trans-Baikal Territory, Declaration of Intent relating to Berezovoye Deposit during which all key EIA for the future facility were (Tran Baikal Territory) Development . The local public approved. Olovskoye development project was approved provided constructive proposals concerning mitigation of by the public and the local administration. environmental impact of the proposed mine. Public hearings were held over the Declaration of Consultations with major international energy Intent relating to development of Lunnoe deposit in companies were held. The consultations helped to Aldansky District of the Republic of Sakha (Yakutia). determine the issues relating to the place and the role of The district population approved the construction of a ARMZ within the Rosatom structure, Company’s ramp- production facility at Lunnoe deposit subject to up in Kazakhstan, potential projects and methods of compliance with the set environmental requirements and interaction with potential clients. conducting explanatory work regarding functioning of uranium mining companies. EXHIBITS 69 www.armz.ru SUSTAINABLE DEVELOPMENT

«A powerful state company has come into the region. I would like to see Russia as a country with powerful energy industry. With due regard to the important role Berezovoye deposit development project plays in solving energy issues, I think this project has found support from local government and the suggestions aimed at social and economic development of Uletovskiy region mentioned at these hearings should be considered during its implementation.» Ye.V. Vishnyakov, Transbaikalia Government Chairman Deputy, at Berezovoye Project public hearing.

Consultations with Stakeholders during Annual Report Preparation

When preparing the annual report the Company the information regarding the production development consulted foreign consumers, the investment community, plans, new jobs, social programs and development of the the representatives of regional and local authorities and regions of operations appeared to be most relevant. the trade union organizations. In its 2009 report, the Company tried to cover these Representatives of the investment community and the issues in more detail. To verify the report, the principles foreign consumers noted that the Company’s report set forth in АА 1000 AS standards were used, specifically, should comply with the international standards and the the materiality principle (the report includes best practices applied by the US and European sustainability indicators in accordance with the companies and were interested to obtain information stakeholder demands), completeness principle (the about the impact of the world financial crisis upon the information is provided in accordance with the GRI Company’s situation, its future development plans and standards), and responsiveness principle (the Company risk management. For the representatives of the regional took into account the specific requirements and needs of and local authorities and the trade union organizations the stakeholders when preparing the report). The hearings regarding the Company’s Annual Report which took place on June 16, 210 were the final step in discussing the report with the stakeholders. About the Event The representatives of the shareholder (Rosatom), other managers took part in the hearings. clients, financial institutions and public organizations The participants were asked to evaluate the report took part in the hearings. The event was arranged as a project in general, its relevance and completeness with videoconference, which allowed to engage in the respect to the issues most significant to the stakeholders representatives of the regional and local authorities and and to provide recommendation regarding the local communities from the region of operations, as improvement of reporting. Moreover, the participants well as the local trade union organizations into the could evaluate their previous interaction with the discussions. As for ARMZ, two Deputy Director Company and give more general recommendations Generals, ARMC and UMC General Directors and regarding responsible business practices.

Hearings Follow-Up In general, the report was highly praised by the At the same time, suggestions and recommendations hearings participants. The audience noted the improved were received regarding fuller disclosure of risks information disclosure, as compared to 2008: all issues relating to technological development and personnel relevant for the stakeholders were covered. It is management, and the Company’s participation in important that the document describing the Company’s Rosatom policy and projects implementation. The activities during the crisis addresses in detail the risk comments referred to fuller disclosure of the processes management and sustainability issues. The and mechanisms of stakeholder engagement, especially completeness of information regarding the Company’s the local communities, and disclosure of Company’s key operations also meets the stakeholder demands. plans regarding environmental policy. 70 www.armz.ru ABOUT THIS THIS ABOUT REPORT

About the Report in General About Social Partnership

«Comparing this Report with foreign companies’ reports I «In 2009 JSC PIMCU started a wide-scale personnel

can assure that it is not inferior in quality and information headcount optimization program. The performance MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS disclosure completeness; the Report complies with increased to 12.5% due to optimization and restructuring of investment banking professionals’ demands.» company divisions. At the same time, the management in S.S. Yeremina, Vice President, Societe Generale conjunction with Trade Union succeeded in avoiding social Corporate & Investment Banking. problems caused by staff reduction as all reduced personnel was hired with Company’s active participation. ARMZ About Client Relations Annual Report reflects social partnership principles being actually implemented, though we would like to see social «JSC Atomredmetzoloto Annual Report fully discloses policy priorities set forth more clearly». the issues related to customer services. JSC TVEL and N.G. Pluzhnikova, Deputy Chairman, Krasnokamensk JSC ARMZ have a long-term, reliable and friendly Trade Union Coordinating Council relationship. We not only receive breeder materials for nuclear fuel, but also provide guaranteed supplies of the fuel to our customers as a part of balanced nuclear fuel.» A.Yu. Grigoryiev, Market Development and Analytics About Stakeholders Relations MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Executive Director, JSC TVEL «JSC PIMCU is a township-forming enterprise, it covers over 90% of regional income, all inhabitants’ wealth About Environmental Safety depends on its success. The enterprise is being well developed, and the town is being developed with it. «ARMC has recently started operations in Armenia. Therefore, it is very important to continue assessment of Environmental safety is the first concern of local population, various scenarios in Priargunsky development, their that is why we need a large-scale educational campaign. influence on town-living, to provide tracking of assessment Annual Report containing information on environmental results both in Company’s development programs and town safety will be a good tool in our discussions with the development programs.» stakeholders. Thus, we recommend in the next report to add A.I. Getminskiy, Deputy Head, Krasnokamensk data on public discussions on environmental safety in all Administration company’s operational areas, including Armenia». PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS M.E. Kirakosyan, General Director, СJSC ARMC «Annual Report contains information on actions taken to engage with the stakeholders. But we would also like to see «ARMZ Annual Report pays special attention to information about Company’s policy related to this, what environmental safety. A positive moment in 2009 Report is the priorities of this policy is, whether the key decisions are that the significant amount of indicators is explained. What made solely by Company or there is a system of preliminary is missing is maybe more details on Company’s plans of discussions with the stakeholders». implementation of Environmental Policy in the future.» E. N. Feoktistova, General Manager, V.A. Grachev, Chairman of the Board, GREENLIGHT Center of Corporate Social Responsibility and Non- International Environmental Organization Financial Reporting.

In follow-up of the discussion the Report was expanded relating to technological risks and personnel with additional information regarding Company’s management, radiation safety risks (Section 6.4.), MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL participation in Rosatom policy and projects additional information regarding optimization of implementation (Section 6.1), more detailed information JSC PIMCU headcount in Section 7.1., details of regarding engagement of the local communities (Section Company’s environmental policy implementation plans 7.5 – details of Company’s plans and intentions), clearer (7.4.), additional information on the Company’s plans definition of the Company’s social policy priorities and intentions regarding stakeholder relations (Section 7.1), information regarding specific risks development in Section 7.7.

Plans and Targets

We plan to develop the stakeholder engagement policy, expand cooperation and improve its consistency (see also Sections 7.5 and 7.6). EXHIBITS 71 www.armz.ru

ABOUT THIS THIS ABOUT REPORT 8. Financial Performance*

In 2009 the Company’s revenues and profit grew substantially. The assets significantly increased as a result of issuance

of additional shares of JSC Atomredmetzoloto and growth of sales. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

Table 29. Profit and Loss Statement

Item, '000 RUR 2009 2008 Change %

Sales revenues 29 233 932 15 197 372 14 036 560 92,4%

Primary Cost of Goods Sold –16 595 099 –10 054 453 –6 540 646 –65,1%

Gross revenues 12 638 833 5 142 919 7 495 914 145,8%

Administrative and selling expenses –3 898 666 –2 513 546 –1 385 120 –55,1%

Operating profit 8 740 167 2 629 373 6 110 794 232,4%

Pre-tax profit 10 232 388 294 037 9 938 351 3380,0% MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

Net profit 6 727 942 289 200 6 438 742 2226,4%

Profit attributable to:

shareholders of the Company 6 742 708 278 181 6 464 527 2323,9%

minority interest –14 766 11 019 –25 785 –234,0%

The main driver of the revenue and profit growth in 2009 was the increased sales to customers: increased sales and higher prices at which the products were sold to the domestic customers, supported by the stock of finished products accumulated in the previous years; launch of sales of natural uranium to foreign customers; a one-off major delivery to a foreign customer in late 2009. DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Table 30. Balance Sheet

Item, '000 RUR 31.12.2009 31.12.2008 Change %

Current assets 68 187 488 13 846 136 54 341 352 392,5% cash and cash equivalents 51 685 187 2 434 954 49 250 233 2022,6% accounts receivable 8 924 684 3 151 201 5 773 483 183,2% stock 4 265 348 7 352 527 –3 087 179 –42,0%

Fixed assets 38 264 232 16 621 200 21 643 032 130,2% fixed assets 17 785 904 13 994 233 3 791 671 27,1% financial investments into affiliates and jointly controlled entities 14 141 031 155 395 13 985 636 9000,1% MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

TOTAL ASSETS 106 451 720 30 467 336 75 984 384 249,4%

Short-term liabilities 12 971 719 12 532 187 439 532 3,5% accounts payable 3 512 259 1 811 593 1 700 666 93,9% short-term borrowings 7 468 899 10 455 303 –2 986 404 –28,6%

Long-term liabilities 11 441 105 5 101 100 6 340 005 124,3% long-term borrowings 9 413 165 3 012 902 6 400 263 212,4%

Equity 82 038 896 12 834 049 69 204 847 539,2%

TOTAL LIABILITIES 106 451 720 30 467 336 75 984 384 249,4%

*Information given in this section is derived from the IFRS consolidated statements (www.armz.ru/press/news/?id=225). EXHIBITS 73 www.armz.ru FINANCIAL PERFORMANCE

Table 31. Key Financial Indicators

Indicator 2009 2008 Change %

Financial Stability Ratios

Equity ratio 0,77 0,42 0,35 83,0%

Liquidity Ratios, percent

Current liquidity ratio 5,3 1,1 4,2 375,8%

Quick liquidity ratio 4,7 0,4 4,2 948,2%

Return on sales ratio, %

Return on sales 43,2% 33,8% 9,4% 27,8%

Net profit margin 23,0% 1,9% 21,1% 1109,4%

The balance sheet total in 2009 increased 3.5 times programs for development and support to business, mainly as a result of issuance of additional shares of JSC attracting private strategic partners in the projects. Atomredmetzoloto and growth of sales. In order to implement its key projects, such as In 2009 the Company substantially improved its development and diversification of its international performance ratios, and as a result they reached 0.77 resource base, the company creates and maintains (equity ratio), 5.3 (current liquidity ratio) and 4.7 (quick necessary mobilization financial reserves which allow to liquidity ratio), which is much higher than the 2008 make major investments without worsening its ratios. creditworthiness. ARMZ cooperates with major Russian In 2009 the profit margin demonstrated stable growth and international financial institutions many of which due to an increase of the revenues. have a credit risk limit established for the companies of ARMZ Uranium Holding Co. has moderately the holding. conservative monetary and borrowing policy designated The Company's credit portfolio is diversified by to satisfy the investment needs of the holding with strict maturity dates and borrowers. The holding's credit compliance with the acceptable debt burden and risk portfolio is formed with due control over currency and profile. Such policy is implemented through achieving an interest rate risks. Such approach allows to maintain high appropriate balance between own funds and borrowings financial stability of JSC Atomredmetzoloto and its for development of the projects, active participation of subsidiaries which is demonstrated by invariably high the holding's companies in the existing state and industry credit ratings of the group companies.

«One of the key events in 2009 was the acquisition of Uranium One shares. For the accounting department this meant that we have to ensure payment of taxes to Kazakhstan budget in connection with this transaction. All tax liabilities were performed to the full extent and in due time. Another landmark event was the issue of IFRS consolidated financial statements. January 1, 2007 was accepted as the date of transfer to IFRS, therefore, the 2008 statements became the Holding’s first full audited IFRS statements. Due to the scope and the novelty of the project, this work required mobilization of all our accumulated knowledge and skills. But we understood perfectly well that our efforts had not been wasted. Availability of statements prepared under the international standards allows to actively cooperate with the foreign investors, obtain better financing and feel as an equal in the business community.» Anna Pozdeeva, JSC Atomredmetzoloto Chief Accountant

74 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 75 www.armz.ru

ABOUT THIS THIS ABOUT REPORT

9. Exhibits MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS 9.1. Abbreviations and Terms Used in the Report

Abbreviations Used in the Report

TP AC – automated control system of the technological HBM – hydraulic borehole mining process AS – average salary MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING NPP – nuclear power plant JV – joint venture SRC – State Reserves Committee ISR – in-situ recovery HMP – hydrometallurgical plant FA – fuel assembly GMM – geologic mathematical models INV – inventory and stock GE – geological exploration FS – feasibility study S&A – subsidiaries and affiliates FA – feasibility analysis VMI – voluntary medical insurance CP – cogeneration plant IT – information technologies UGRU – uranium ore mining unit ICH concentrate – ilmenite-chromite-hematite concentrate FCSM – Federal Commission for Securities Market KPI – key performance indicators FEB – financial and economic block IAEA – International Atomic Energy Agency NM – nuclear material MOX fuel – from the English Mixed oxide fuel (MOX): NFC – nuclear fuel cycle mixed fuel based on 239Pu and 238U oxides. NU – nuclear unit IFRS – International Financial Reporting Standard. ASTM – American Society for Testing and Materials – R&D – research and development, experimental design American international voluntary organization that develops PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS and engineering work and publishes NPF – non-governmental pension fund GRI – from the English Global Reporting Initiative – EIA – environmental impact assessment Sustainability Reporting Guidelines EUP – enriched uranium product UXC – Ux Consulting – one of the leading consulting INF – irradiated nuclear fuel companies in the nuclear industry ISL – in-situ leaching WNA – World Nuclear Association NCSP – nuclear materials storage point, JORC – Code for Reporting Exploration Results, Mineral RW – radioactive waste Resources and Ore Reserves RAS – Russian accounting standards

Terms Used in the Report

Atom – the smallest particle of a chemical element which Highly enriched uranium – uranium containing isotope MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL retains its properties. It consists of a nucleus with protons uranium-235 equal to or more than 20% by mass. and neutrons, and electrons in motion around the nucleus. Leaching – a process using a leaching solution to extract The number of electrons and protons (in the nucleus) is certain components from solid materials, including equal. radioactive elements. It is based on the better dissolution Becquerel (Bq) – the unit of nuclide radioactivity within ability of the extracted mineral as compared to other the radioactive source, equal to 1 disintegration of nuclide components. per second. Uranium hexafluoride – a chemical composition of NPP Block – part of NP which performs the NP functions uranium and fluorine (UF6). It is the only highly volatile to the designed extent. uranium composite (uranium hexafluoride vaporizes directly Commissioning – a process whereby the systems and from solid state when heated up to 53°С) and it is used as equipment of a nuclear station are put into operation and material for mass separation of U-238 and U-235 using checked for consistency with the design. This process gas-diffusion or gas centrifuge technologies, and includes initial testing activities, physical and power start- production of enriched uranium. ups, and ends with the nuclear station being put into IAEA – International Atomic Energy Agency, established in commercial operation.

1957 and having its headquarters in Vienna. EXHIBITS 77 www.armz.ru EXHIBITS

MOX-fuel (Mixed Oxide Fuel) – see Mixed Oxide Fuel. clusters where they are aligned along each other and have Enrichment – the process whereby the content of a a specific distance among them ensured by spacing grids. particular isotope in a mixture of isotopes is increased. Depending upon reactor type and the design of the Uranium ore processing – a set of initial uranium minerals reactor core the fuel element clusters may be put into treatment processes with a view to separating uranium casings which form the coolant route inside the core from other minerals in the ore. The composition of the reactor zone, or they may be installed into the reactor minerals is not changed. They are only separated without casings. mechanically and the ore concentrate is produced. Uranium (U) – chemical radioactive element (metal) with Enriched uranium – uranium where U-235 isotope atomic number of 92 and the atomic mass of the most content exceeds the natural uranium level. common and stable isotope 238. The natural uranium is Nuclear Fuel Cycle (NFC) Enterprises – enterprises the comprised of three isotopes – U-238, U-235 and U-234, activities of which involve nuclear fuel. Such enterprises of which the first two have commercial value for purposes require decommissioning after the end of their useful life of nuclear energy. and include, in addition to NPS, the uranium ore Off Take Contract – a contract for purchase of future processing plans, uranium hexafluoride processing and fuel production. elements production plans, and the used fuel processing Pre-Feasibility Study – preliminary analysis of the plants and low active waste disposal units. proposed design solutions. FA (fuel assembly) – a fuel rod assembly. For purposes of Scoping Study – pre-design study. reactor load the rod fuel elements are gathered into

9.2. Main Deposits of the Company

List of Uranium Deposits in Russia

Location №№ Deposit License Type Minerals Name of Legal Entity (country, region, district) Russia, Republic of Buryatia, Exploration and 1 Istochnoye Bauntovsky District mining Uranium JSC Atomredmetzoloto Russia, Republic of Buryatia, Exploration and 2 Kolichikanskoye Bauntovsky District mining Uranium JSC Atomredmetzoloto Russia, Republic of Buryatia, Exploration and 3 Koretkondinskoye Bauntovsky District mining Uranium JSC Atomredmetzoloto Russia, Republic of Buryatia, Exploration and 4 Namarusskoye Bauntovsky District mining Uranium JSC Atomredmetzoloto Russia, Republic of Buryatia, Exploration and 5 Dybrynskoye Bauntovsky District mining Uranium JSC Atomredmetzoloto Russia, Transbaikalia, Uranium, 6 Streltsovskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 7 Antey Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 8 Luchistoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 9 Martovskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 10 Oktyabrskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 11 Tulukuevskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 12 Yubileinoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 13 Novogodnee Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 14 Vesenneye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 15 Shirondukuiskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 16 Malo-Tulukuevskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 17 Argunskoye Krasnokamensk District Mining molybdenum JSC PIMCU Russia, Transbaikalia, Uranium, 18 Zherlovoye Krasnokamensk District Mining molybdenum JSC PIMCU

78 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Location №№ Deposit License Type Minerals Name of Legal Entity (country, region, district) Streltsovskoe Ore Russia, Transbaikalia, 19 Field Krasnokamensk District Geological survey Uranium JSC PIMCU Russia, Kurgan Region, 20 Dalmatovskoe Dalmatovsky District Mining Uranium JSC Dalur Russia, Kurgan Region, 21 Khokhlovskoe Shumikhinsky District Geological survey Uranium JSC Dalur Russia, Republic of Buryatia, Exploration Uranium, 22 Khiagdinskoe Bauntovsky District and mining Scandium JSC Khiagda

Russia, Republic of Sakha Exploration and MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS 23 Elkon (Yakutia), Aldansky District mining Uranium JSC Elkon MMP Russia, Republic of Sakha 24 Elkon Plateau (Yakutia), Aldansky District Mining Uranium JSC Elkon MMP Russia, Republic of Sakha 25 Kurung (Yakutia), Aldansky District Mining Uranium JSC Elkon MMP Russia, Republic of Sakha Exploration and 26 Neprokhodimoe (Yakutia), Aldansky District mining Uranium JSC Elkon MMP Russia, Republic of Sakha 27 Druzhnoe (Yakutia), Aldansky District Mining Uranium JSC Elkon MMP Russia, Republic of Sakha Exploration 28 Severnoe (Yakutia), Aldansky District and mining Uranium JSC Elkon MMP Russia, Republic of Sakha Exploration 29 Interesnaya Zone (Yakutia), Aldansky District and mining Uranium JSC Elkon MMP

Russia, Republic of Sakha Exploration MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING 30 Lunnoe (Yakutia), Aldansky District and mining Uranium JSC Lunnoe Russia, Transbaikalia, Exploration 31 Gornoe Krasnochikoysky District and mining Uranium JSC UMC Gornoe Geological survey, Russia, Transbaikalia, Uletovsky exploration 32 Berezovoe District and mining Uranium JSC UMC Gornoe Russia, Transbaikalia, 33 Olovskoe Chernyshevsky District Mining Uranium JSC OMCC

List of Deposits of Other Mineral Resources in Russia

Location №№ Deposit License Type Minerals Name of Legal Entity (country, region, district) DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Russia, Transbaikalia, Sand and gravel 1 PGS-3 Krasnokamensk District Mining aggregate JSC PIMCU Russia, Transbaikalia, 2 Urutuiskoe Krasnokamensk District Mining Coal JSC PIMCU Russia, Transbaikalia, Geological survey 3 Gromovskoe Priargunsky District and mining Manganese JSC PIMCU Russia, Transbaikalia, 4 Shivyrtuiskoe Zabaikalsky District Mining Zeolitic sinter JSC PIMCU Russia, Transbaikalia, 5 Ust-Borzinskoe Mogoituisky District Mining Limestone JSC PIMCU Itmanovskaya placer of Lukoyanovskoe Russia, Nizhny Novgorod Region, Geological survey Titanium and 6 deposit Gaginsky District and mining zirconium sands GEOSTAR Ltd RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL List of Uranium Deposits in Kazakhstan

Location №№ Deposit License Type Minerals Name of Legal Entity (country, region, district) Kazakhstan, Exploration 1 Zarechnoye South-Kazakhstan Region and mining Uranium ZARECHNOYE Kazakhstan, Exploration 2 Juzhnoe South-Kazakhstan Region and mining Uranium ZARECHNOYE Kazakhstan, Exploration 3 Budenovskoe (site 1) South-Kazakhstan Region and mining Uranium JSC JV Akbastau Kazakhstan, Exploration 4 Budenovskoe (site 3) South-Kazakhstan Region and mining Uranium JSC JV Akbastau Kazakhstan, Exploration 5 Budenovskoe (site 4) South-Kazakhstan Region and mining Uranium JSC JV Akbastau EXHIBITS 79 www.armz.ru EXHIBITS

9.3. Global Reporting Initiative – Sustainability Reporting Guidelines (GRI)

Reflected RUIE KPI Page in the GRI Subsection in the Report Report Section/Subsection No. Report (fully/partially) 1. Strategy and Analysis 1.1 Statement from the most senior decision maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy Fully Page 8–9 2. Company's management statement

Page 53 6.4 Key Risks and Risk Management 1.2 Description of key impacts, risks, and Methods opportunities. Partially Page 68 7.7 Stakehdden Engagement 2. Organization Profile Page 6 1. About this Report Page 92 9.8 Details of the Company 2.1 Name of the organization Fully and Contact Information 2.2 Primary brands, products, and/ or services Fully Page 31 5.2 Uranium Mining 2.3 Operational structure of the organization, including main divisions, Page 12 3.2 Structure of the Company, operating companies, subsidiaries, and joint Organization of Production ventures Fully and Marketing Processes 9.8 Details of the Company 2.4 Location of organization’s headquarters Fully Page 92 and Contact Information 2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the 3.3. Geography of the Company's sustainability issues covered in the report.. Fully Page 14–15 Operations Page 6 1. About this Report Page 92 9.8 Details of the Company 2.6 Nature of ownership and legal form Fully and Contact Information Page 12–13 3.2 Structure of the Company, Organization of Production and Marketing 2.7 Markets served (including geographic Processes breakdown, sectors served, and types of Page 14–15 3.3. Geography of the Company's customers/beneficiaries). Fully Operations Page 14–15 3.3. Geography of the Company's Operations Page 16 3.4 2009 Key Operating Results of the Company 2.8 Scale of the reporting organization Fully Page 57–58 7.1. Personnel Significant changes during the reporting Page 17 3.5 Key Events of 2009 period regarding size, structure, or ownership Fully Page 46 6.2 Corporate Governance System

2.10 Awards received in the reporting period Fully Page 17 3.5 Key Achievements in 2009 3. Report Parameters 3.1 Reporting period for information provided Fully Page 6 1. About this Report 3.2 Date of most recent previous report (if any) Fully Page 6 1. About this Report

3.3 Reporting cycle Fully Page 4 1. About this Report 80 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

Reflected RUIE KPI Page in the GRI Subsection in the Report Report Section/Subsection No. Report (fully/partially) 3.4 Contact point for questions regarding 9.8 Details of the Company the report or its contents Fully Page 92 and Contact Information

3.5 Process for defining report content Fully Page 6–7 1. About this Report

3.6 Boundary of the report Fully Page 6 1. About this Report 3.7 State any specific limitations on the scope or boundary of the report Fully Page 6 1. About this Report

3.8 Basis for reporting on joint ventures, MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING subsidiaries, leased facilities, outsourced operations, and other entities that can Page 12 3.2 Structure of the Company, significantly affect comparability from period Organization of Production and Marketing to period and/or between organizations Fully Processes

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report Fully Page 7 1. About this Report 3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/ acquisitions, change of base years/periods, nature of

business, measurement methods) Fully Page 6 1. About this Report PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report Fully Page 6 1. About this Report 9.3 GRI (Global Reporting Initiative) 3.12 Table identifying the location of the Sustainability Reporting Guidelines Standard Disclosures in the report Fully Page 80 Standard Disclosures Table 3.13 Policy and current practice with regard to seeking external assurance for the report Fully Page 85 9.4 Nonfinancial Reporting Assurance 4. Governance, Commitments, and Engagement 4.1 Governance structure of the organization Fully Page 46–51 6.2 Corporate Governance System 4.2 Indicate whether the Chair of the highest governance body is also an executive MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL officer Fully Page 48 6.2 Corporate Governance System 4.3 For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members Fully Page 47 6.2 Corporate Governance System 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body Fully Page 50 6.2 Corporate Governance System 4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social Page 45 6.1 Goal-Oriented Governance and environmental performance) Fully Page 50–51 6.2 Corporate Governance System EXHIBITS 81 www.armz.ru EXHIBITS

Reflected RUIE KPI Page in the GRI Subsection in the Report Report Section/Subsection No. Report (fully/partially) 4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and Page 23 4.3 Key Company Development Areas the status of their implementation 1.1 Fully Page 50 6.2 Corporate Governance System 4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, Page 61 7.2 Social Policy environmental, and social performance Partially Page 64 7.4 Environmental Protection and Safety 4.10 Processes for evaluating the highest governance body’s own performance, in particular, with respect to the company's economic, environmental, and social performance Fully Page 52 6.3 Board's Report on Key Operations 4.11 Explanation of whether and how the 6.4 Key Risks and Risk Management precautionary approach or principle is Page 53 Methods addressed by the organization Fully Page 62 7.3 Occupational Health and Safety 4.13 Memberships in associations (such as industry associations) and/or national/ international advocacy organizations in which the organization Partially Page 69 7.7 Stakeholder Engagement 4.14 List of stakeholder groups engaged by the organization Fully Page 69 7.7 Stakeholder Engagement

4.15 Basis for identification and selection of stakeholders with whom to engage Fully Page 68 7.7 Stakeholder Engagement 4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group Fully Page 68-69 7.7 Stakeholder Engagement 4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting Fully Page 69 7.7 Stakeholder Engagement 5. Management Methods and KPI Information

5.1 Economic performance indicators 5.1 EC1 (main performance indicators) Created and distributed direct economic value, including revenues, operating costs, employee wages, donations and other community investments, undistributed profit, payments to providers of capital and governments:

sales proceeds 1.2 Page 16 3.4 2009 Key Operating Results of the Company investments in fixed assets during the 1.3 Page 25 4.3 Key Development Areas reporting period , and Investment Policy

NOPAT 1.4 Page 73 8. Financial Performance.

net asset value 1.5 Page 16 3.4 2009 Key Operating Results of the Company charitable expenses 1.6 Page 68 7.6 Charity and Sponsorship

wages and other employee benefits 1.7 Partially Page 61 7.2 Social Policy 82 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS Reflected RUIE KPI Page in the GRI Subsection in the Report Report Section/Subsection No. Report (fully/partially) EC3 (main) Coverage of the organization’s defined benefit plan obligations 1.8 Partially Page 61 7.2 Social Policy Page 8 2. Company's management statement EC4 (main) Significant financial assistance received from government Fully Page 46 6.2. Corporate Governance System

EC5 (additional) Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation Partially Page 60 7.1 Personnel

EC7 (main) Procedures for local hiring and proportion of senior management hired from the local community at locations of MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING significant operation Fully Page 59 7.1 Personnel EC8 (main) Development and impact of infrastructure investments and services provided primarily for public benefit through 7.5 Development of the Regions of commercial, in kind, or pro bono engagement Fully Page 67 Operation

EC9 (additional) Understanding and describing significant indirect economic 7.5 Development of the Regions of impacts, including the extent of impacts Fully Page 67 Operation

5.2 Environmental Performance EN3(main) Direct use of energy sources with indication of primary sources 2.2 2.2 Partially Page 41 5.6 Efficiency Management and Innovations

EN8 (main) Total water withdrawal by source Fully Page 64 7.4 Environmental Protection and Safety DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS 2.6 EN20 (main) NO, SO, and other significant 2.7 air emissions by type and weight 2.7.2 Fully Page 65 7.4 Environmental Protection and Safety

EN22 (main) Total weight of waste by type and disposal method 2.8 Fully Page 64 7.4 Environmental Protection and Safety EN30 (additional) Total environmental protection expenditures and investments by type 2.12 Fully Page 66 7.4 Environmental Protection and Safety

5.3 Labor Practices and Decent Work LA1 (main) Total workforce by employment type, employment contract, and region 3.1.1 Fully Page 58 7.1 Personnel LA2 (main) Total number and rate of employee turnover by age group, gender, and 3.1.2 region 3.1.3 Fully Page 59 7.1 Personnel MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL LA3 (additional) Benefits provided to full- time employees that are not provided to temporary or part-time employees, by major operations Fully Page 61 7.2 Social Policy 3.1.5 LA7 (main) Rates of injury, occupational 3.1.6 diseases, lost days, absenteeism and number 3.1.7 of job-related fatalities by region 3.1.8 Fully Page 63 7.3 Occupational Health and Safety LA8 (main) Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases Partially Page 62 7.3 Occupational Health and Safety LA9 (main) Health and safety topics covered in formal agreements with trade unions Fully Page 70 7.2 Social Policy EXHIBITS 83 www.armz.ru EXHIBITS

Reflected RUIE KPI Page in the GRI Subsection in the Report Report Section/Subsection No. Report (fully/partially) LA10 (main) Average hours of training per year per employee per categorg 3.1.10 Fully Page 59 7.1 Personnel

5.4 Social Performance SO5 (main) Public policy positions and participation in public policy development and lobbying Partially Page 45–46 6.1 Goal-Oriented Governance

5.5 Mining Companies Performance MM3 Total amounts of overburden, rock, tailings, and sludges and their associated risks Fully Page 64, 66 7.4 Environmental Protection and Safety MM9 Sites where resettlements took place, the number of households resettled in each, and how their livelihoods were affected in the 7.5 Development of the Regions process Fully Page 67 of Operation

Reflected in Page in the Indicator Report Section/Subsection the Report Report Section 3: Social indicators: Subsection 3: Social Performance Aspect: Community 3.3.1 Engagement with the authorities regarding socially important tasks (social and economic development of the area of operations) Fully Page 69 7.7 Stakeholder Engagement

3.3.2 Engagement with NGOs regarding socially important tasks Fully Page 70 7.2 Social Policy 3.3.3 Assessment of the company operations' impact upon the 7.5 Development of the Regions social and economic development of local communities Fully Page 67 of Operation

Application Level С С+ B B+ A A+

Self-declared MANDATORY

Third party checked OPTIONAL GRI checked ASSURED EXTERNALLY REPORT ASSURED EXTERNALLY REPORT ASSURED REPORT EXTERNALLY EXTERNALLY REPORT

84 www.armz.ru ABOUT THIS THIS ABOUT REPORT

9.4. Nonfinancial Reporting Assurance INDEPENDENT ASSURANCE REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS To the Management of JSC Atomredmetzoloto (ARMZ): We have performed assurance procedures to provide independent assurance on the below-mentioned aspects of the ARMZ 2009 Annual report. Subject matter Data and figures disclosed in the ARMZ 2009 Annual report on the following aspects: The 2009 environmental, workforce, safety and socio-economic performance indicators and data contained in the Table of Standard GRI Disclosures (hereinafter – Data Table) on pages 80-84 in this Annual report. Our assurance procedures are limited to the 2009 data only. Criteria The defined procedures and internal reporting guidelines, by which the sustainability related information is gathered, processed and aggregated internally by ARMZ; The «Sustainability Reporting Guidelines G3» («GRI G3») published on October 2006 by the Global Reporting MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Initiative (GRI). Responsibility and Methodology The accuracy and completeness of sustainability performance indicators are subject to inherent limitations given their nature and methods for determining, calculating and estimating such data. Our independent assurance report should therefore be read in connection with ARMZ’s internal sustainability reporting guidelines, definitions and procedures on the reporting of its sustainability related performance. The Management of ARMZ is responsible for both the subject matter and the criteria. Our responsibility is to provide a conclusion on the subject matter based on our assurance procedures in accordance with the International Standard on Assurance Engagements (ISAE) 3000 «Assurance Engagements other than Audits or Reviews of Historical Financial Information», approved in December 2003 by the International Auditing and Assurance Standards Board (IAASB). DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Main Assurance Procedures Our assurance procedures included the following work: Site visits: Visiting Priargunsky Industriad Mining and Chemical Union (JSC PIMCU), Khiagdinskoe field (JSC Khiagda) and ARMZ head office in Moscow, Russia; Interviewing personnel responsible for internal sustainability reporting and data collection at the sites we visited and at the Main Office level to determine the understanding and application of ARMZ internal sustainability reporting guidelines. Assessment of the key figures: Performing tests on a sample basis of evidence supporting data in the Data Table on pages 80-84 in the ARMZ 2009 Annual report concerning completeness, accuracy, adequacy and consistency. Review of the documentation and analysis of relevant policies and basic principles: Reviewing the relevant documentation on a sample basis, including ARMZ sustainability internal policies, management and reporting structures. MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL Review of the ARMZ 2009 Annual report: Review of the ARMZ Annual report against the criteria of the GRI G3 Application level requirements. Conclusions Based on our work described in this report and the assessment of the Criteria: Nothing has come to our attention that causes us to believe that the performance indicators and data mentioned in the subject matter and disclosed in the 2009 Annual report of ARMZ (Data Table on pages 80-84) does not give a fair picture of ARMZ’s sustainability related performance; and Nothing has come to our attention that causes us to believe that the ARMZ 2009 Annual report does not meet the requirements of the GRI G3 Application Level of «C+».

Moscow, Russia

ZAO PricewaterhouseCoopers Audit July 2010 EXHIBITS 85 www.armz.ru EXHIBITS

9.5. Audit Report

Nexia Pacioli LLC Audit Report on 2009 Accounting (Financial) Statements of JSC Atomredmetzoloto

Audited entity ...... Open Joint-Stock Company Atomredmetzoloto (JSC Atomredmetzoloto) Registered address...... 109004, Moscow, Bolshoy Drovyanoy per., 22

Mailing address...... 109004, Moscow, Bolshoy Drovyanoy per., 22

Contact information...... Tel.(495) 5088808, fax (495) 5088810 State registration...... |Certificate of state registration series No. 004997 dated February 22, 1995, issued by the Moscow Registration Chamber; Certificate of State Registration series No. dated August 02, 2002 issued by the Moscow Department of the Ministry of Tax and Excise of Russia for Moscow Entered into the Unified State Register of Legal Entities, main state registration number 1027700043645.

Auditor...... Limited Liability Company Nexia Pacioli (Nexia Pacioli LLC)

Registered address...... 119180 Moscow, Ul. Malaya Polyanka, 2

Mailing address...... 119180 Moscow, Ul. Malaya Polyanka, 2

Contact information...... Tel.: (495) 785 94 76, fax (495) 785 94 61, e-mail: [email protected]

State registration...... Certificate of State Registration No. 856.235 dated June 23, 1995, issued by the Moscow Registration Chamber; Certificate of State Registration series 77 No. 005390060 dated October 22, 2002 issued by the Inter-District Inspectorate of the Ministry of Tax and Excise of Russia No. 39 for Moscow; Entered into the Unified State Register of Legal Entities, main state registration number 1027739428716. Membership with self-regulated organization of auditors...... Member of the self-regulated organization of auditors Non-Profit Partnership Institute of Professional Auditors; Entered into the Register of Auditors and Audit Firms of the above self-regulated organization of auditors on October 30, 2009, main state registration number 10202000073

Audit Quality Certificate...... No. 172 issued by Non-Profit Partnership Institute of Professional Auditors, valid from September 16, 2008 to September 16, 2011

We have audited the attached accounting (financial) statements of JSC Atomredmetzoloto for the period from January 1 to December 31, 2009, inclusive. The company’s accounting (financial) statements include: • accounting balance sheet as of December 31, 2009; • 2009 profit and loss statement; • exhibits to the accounting balance sheet and profit and loss statement; • notes. Pursuant to the Charter the executive body, being the Director General of JSC Atomredmetzoloto, is responsible for preparation and filing of the accounting (financial) statements. Our duty is to conduct the audit and express an opinion on whether these statements are accurate in all material respects. 86 www.armz.ru ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

We have conducted our audit in accordance with: 1. Federal Law On Audit Activities; 2. Federal Rules (Standards) of Audit Activities;

The audit was planned and conducted so that to obtain a reasonable assurance that the accounting (financial) statements do not contain any material misstatements. The audit was conducted on a selective basis and included testing of various evidence supporting the numeric values presented in the accounting (financial) statements and disclosures regarding financial and business activities, assessment of the accounting principles and rules applied in preparation of the accounting (financial) statements for compliance, review of key judgments of the management of the audited entity, and assessment of presentation of the accounting (financial) statements. We believe that the audit MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING provides sufficient grounds for us to express our opinion on the accuracy of the accounting (financial) statements.

In our view, the accounting (financial) statements of JSC Atomredmetzoloto fairly represent in all material respects the financial position of the company as of December 31, 2009 and the results of financial and business activities for the period from January 1 to December 31, 2009, inclusive, pursuant to the requirements of the laws of the Russian Federation governing preparation of the financial (accounting) statements.

February 25, 2010

Executive Director Nexia Pacioli LLC O.V. Goryacheva DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Audit Supervisor O.V. Danilova

(General Audit Qualification Certificate No. K 01265 dated January 24, 1995, issued for an indefinite term) Entered into the Register of Auditors and Audit Firms of NP IPAR on October 30, 2009, main registration number 29502000246

SEAL RISK MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL EXHIBITS 87 www.armz.ru EXHIBITS 9.6. RAS Accounting Statements (summary) ACCOUNTING BALANCE SHEET

as of December 31, 2008 Codes Codes

Form No. 1 OKUD Code 0710001

Date (year, month, day) 2009.12.31

Company: Open Joint-Stock Company Atomredmetzoloto OKPO Code 08841779

Taxpayer's Identification Number TIN 7706016076

Type of activity: Wholesale OKVED Code 51.70

Form of legal organization/form of ownership:

Open joint-stock company/private 47/12

Measurement unit: RUR '000 OKEI Code 384

Principal place of business (address): 109004, Moscow, B. Drovyanoy per., 22

Opening value of the Closing Balance of the LIABILITIES Line Code accounting year Accounting Period I. Non-current assets

Intangible assets 110 262 233

Fixed assets 120 48 595 157 038

Construction in progress 130 6 682 847

Income-bearing investments in tangible assets 135 – –

Long-term financial investments 140 28 208 357 54 717 569

Deferred tax assets 145 2 034 55 046

Other fixed assets 150 174 213 560 242

Total, Section I 190 28 440 143 55 490 975 II. Current assets

Inventory 210 5 244 253 1 217 435

including:

stock, materials and other similar assets 211 15 845 2 865

rearers and fatteners 212 – –

work-in-progress costs 213 – 219 053

finished products and goods for resale 214 4 920 590 908 515

shipped goods 215 – –

deferred expenses 216 307 818 86 886

other inventory and costs 217 - 116

Value added tax on acquired assets 220 115 096 522 529 Accounts receivable (due more than 12 months after the accounting date) 230 – –

including:

purchasers and customers. 231 – – Accounts receivable (due within 12 months after the accounting date) 240 4 247 653 5 147 535

including:

purchasers and customers. 241 1 115 585 4 630 214

Short-term financial investments 250 1 474 198 34 121 965

Cash 260 2 031 693 17 991 179

Other working assets 270 – –

Total, Section II 290 13 112 893 59 000 643

BALANCE (sum of lines 190 + 290) 300 41 553 036 114 491 618

88 www.armz.ru ABOUT THIS THIS ABOUT REPORT

Opening value of Closing Balance of the LIABILITIES Line Code the accounting year Accounting Period III. Capital and Reserves

Charter capital 410 3 956 040 3 956 040

Treasury stock redeemed from shareholders 411 – –

Capital surplus 420 24 841 166 24 841 166

Reserve capital 430 90 10 539 including:

statutory reserves 431 90 10 539 MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

reserves formed under foundation documents 432 – –

Retained profit (uncovered loss) 470 611 348 7 939 891

Total, Section III 490 29 408 644 36 747 636 IV. Long-term liabilities

Borrowings 510 2 629 546 9 144 696

Deferred tax liabilities 515 815 1 189

Other long-term liabilities 520 – –

Total, Section IV 590 2 630 361 9 145 885 V. Current Liabilities INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Borrowings 610 8 537 463 2 000 863

Accounts Payable 620 976 568 66 597 234 including:

trade liabilities 621 857 930 2 158 289

payables to the company personnel 622 32 –

amounts due to state off-budgetary funds 623 718 1 781

tax arrears 624 536 202 189

other accounts payable 625 117 352 64 234 975

Distributions due to members (founders) 630 – –

Deferred income 640 – – PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS

Provisions for pending expenses 650 – –

Other current liabilities 660 – –

Total, Section V 690 9 514 031 68 598 097

BALANCE (sum of lines 490 + 590 + 690) 700 41 553 036 114 491 618

Statement of assets recorded on off-balance accounts Line Code

Leased fixed assets 910 35 814 239 670

911 35 794 34 387 MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

Commodity stock and supplies in custody 920 269 6 294

Goods accepted for commission 930 – –

Bad debts written off 940 49 49

Security for obligations and payments received 950 – –

Security for obligations and payments provided 960 6 176 421 4 395 476

Housing stock depreciation 970 – – Depreciation of external development facilities and other similar facilities 980 – –

Intangibles provided for use 990 – – EXHIBITS 89 www.armz.ru EXHIBITS

PROFIT AND LOSS STATEMENT

January-December 2009 Codes

Form No. 2 OKUD Code 0710002

Date (year, month, day) 2009.12.31

Company: Open Joint-Stock Company Atomredmetzoloto OKPO Code 08841779

Taxpayer's Identification Number TIN 7706016076

Type of activity: Wholesale OKVED Code 51.70

Form of legal organization/form of ownership:

Open joint-stock company/private 47/12

Measurement unit: RUR '000 OKEI Code 384

Principal place of business (address): 109004, Moscow, B. Drovyanoy per., 22

For the Accounting Same period of the Indicator Line Code Period previous year Operating revenues and expenses Net proceeds from sale of goods, products, work, services (net of value added tax, excise and similar mandatory charges) 010 25 186 780 13 250 161 Cost of goods, products, work, services sold 020 (14 532 664) (9 461 946) Gross revenues 029 10 654 116 3 788 215 Selling expenses 030 (132 344) (171 499) Administrative expenses 040 (1 019 500) (902 767) Sales profit (loss) 050 9 502 272 2 713 949 Other revenues and expenses Interest Receivable 060 693 324 189 193 Interest Payable 070 (2 159 195) (667 636) Income from participation in other entities 080 – – Other Revenues 090 2 158 706 2 315 925 Other expenses 100 (998 737) (4 167 390) Pre-tax profit (loss) 140 9 196 370 384 041 Deferred tax assets 141 53 013 (11 567) Deferred tax liabilities 142 (375) (794) Current profit tax 150 (1 908 457) (162 692) Tax sanctions in follow up of the on-site tax audit 180 (1 559) – Net profit (loss) of the accounting period 190 7 338 992 208 988 FOR INFORMATION: Recurrent tax liabilities (assets) 200 16 544 82 984 Base profit (loss) per share 201 – – Diluted profit (loss) per share 202 – –

NOTES TO CERTAIN PROFIT AND LOSS ITEMS Same period of the previous For the Accounting Period Indicator Line Code year profit loss profit loss Fines, penalties and charges recognized or for which there is a judgment by the court (arbitration tribunal) ordering their recovery 210 976 050 – – – Profit (loss) of past periods 220 113 566 234 037 34 1 771 Compensation of losses caused by default or improper performance 230 – – – –

Foreign exchange currency differences 240 5 188 637 3 731 574 509 351 2 123 280 Contributions to re-valuation reserves 250 Х 21 059 Х 12 582 Write-off of accounts receivable and payable for which the statute of limitations has expired 260 – – – – 270 – – – –

90 www.armz.ru 9.7. Report of the Audit Commission THIS ABOUT REPORT

Audit Commission Report on the Results of the Audit of Financial and Business Activities and the 2009 Annual Accounting (Financial) Statements of JSC Atomredmetzoloto ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

Moscow, April 09, 2010

Pursuant to the Minutes dated June 30, 2009 No. 2 of the annual general shareholders meeting the following persons were elected to the audit commission of JSC Atomredmetzoloto (the «Company»):

Name Position as of the election date

Senior Specialist of the Nuclear Materials and Spent Fuel Records Management of the Department of Nuclear Units, Nuclear Materials and Nuclear and Radiation Safety of JSC Alexander Ivanovich Sergueev Atomenergoprom

Oksana Vladimirovna Burel Chief Specialist of the analytic unit of the Internal Audit Department of JSC Atomenergoprom INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING

Gennady Egorovich Fedichkin Director of the Internal Control Service of JSC Atomredmetzoloto

The following members of the Audit Commission of the Company: – chairman of the audit commission – Alexander Ivanovich Sergueev, – member of the audit commission – Oksana Vladimirovna Burel; – secretary of the audit commission – Gennady Egorovich Fedichkin, acting within the powers set forth in the Federal Law On Joint-Stock Companies, the Company’s Charter, the Audit Commission Regulations of the Company, have conducted an audit of the financial and business activity of the Company for the period from January 01, 2009 to December 31, 2009. Main Conclusions of the Audit: 1. In 2009 the profit margin demonstrated stable growth from 29% to 42% due to an increase of the revenues.

2. The net asset value of the Company as of December 31, 2009 was RUR 36,747,636,000, the charter capital of the PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Company was RUR 3,956,040,000, which complies with the net asset to charter capital ratio requirements set forth in the Federal Law dated December 26, 1995 No. 208-FZ On Joint Stock Companies, as amended. 3. Property, liabilities and equity of the Company are fairly and fully reflected in the Company’s accounting statements. 4. Pursuant to the auditor report issued by LLC Nexia Pacioli the financial (accounting) statements of the Company fairly reflects in all material respects its financial position as of December 31, 2009 and the results of its financial and business activities for the period from January 01, 2009 to December 31, 2009, inclusive. 5. In the opinion of the audit commission the audit gives sufficient reasons to confirm the accuracy of the annual statements in all material respects and the accuracy of data contained in the annual report of the Company.

Chairman of the Audit Commission

A.I. Sergueev MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL

Members of the Audit Commission:

O.V. Burel

G.E. Fedichkin EXHIBITS 91 www.armz.ru EXHIBITS

9.8. Details of the Company and Contact Information

Full official company name Open Joint-Stock Company Atomredmetzoloto

Abbreviated name JSC Atomredmetzoloto Registered address of the headquarters and mailing address 109004, Moscow, Bolshoy Drovyanoy per., 22

Phone/fax: (495) 508-88-08/508-88-10

Registration authority, number and date of registration Moscow Registration Chamber, No. 004.997, February 22, 1995

MSRN 1027700043645

TIN / KPP 7706016076 / 770901001 Geological exploration and mining of natural resources, including the resources containing nuclear materials and radioactive substances, production of natural Core business uranium concentrates

Web-site http://www.armz.ru

Artem GORBACHEV Margarita TURKOVA Chief, Press Office Director of the Department Department of Information and External for Corporate Governance Communications ARMZ Uranium Holding Co. ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) (JSC Atomredmetzoloto) Bolshoy Drovyanoy per., 22 Bolshoy Drovyanoy per., 22 109004, Moscow, Russia 109004, Moscow, Russia Telephone: +7-495-508-8808 ext.241 Telephone: +7-495-508-8808 ext.166 Fax: +7-495-508-8810 Fax: +7-495-508-8810 E-mail: [email protected] E-mail: [email protected]

92 www.armz.ru ABOUT THIS THIS ABOUT REPORT

9.9. Feedback Questionnaire

Feedback: Your opinion is very important to us You have read the 2009 Annual Report of JSC Atomredmetzoloto. Your opinion regarding the Report is critical to us. We would appreciate your answering several simple questions to help us

improve the quality of the Company’s reporting. MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS

1. Have you found in the Report any meaningful 8. Please identify your expectations with regard to the information that addresses your concerns? next report. Yes No Just looked through the report 9. We would appreciate your recommendations as to Please identify the most important information and what is improvement of operations of the Holding and its missing in this Report. subsidiaries and affiliates

2. Does the information provided in the Report of JSC 10. Other comments INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Atomredmetzoloto contribute to more efficient interaction with the Company?

Yes 11. Please identify which group you represent in your No assessment (please do not tick more than two I don’t need it points). Please identify information which you found particularly useful, and any missing information. Shareholder Investor Contractor/supplier Peer 3. Which sections of the Report have you found Industrial consumer particularly interesting? Small and medium business Representative of federal governmental authorities PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS Representative of regional governmental authorities Representative of local authorities 4. Which sections of the Report were the least Representative of a non-governmental environmental interesting to you? organization Representative of a business association or another public association Representative of mass media 5. Have you found this Report to be accurate and fair? Employee of Uranium Holding ARMZ Employee of a subsidiary or affiliate of ARMZ Other (please specify) 6. Was your assessment of accuracy influenced by the fact that the Report has been certified by an independent auditor? 12. If you would like to receive a response to your MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL comments please specify your contact information (name, mailing address with the postal code, telephone number, e-mail address) and we will be in 7. Will you be looking forward to the next annual touch with you. report of JSC Atomredmetzoloto? Yes No

Thank you. EXHIBITS 93 www.armz.ru Notes

94 www.armz.ru 95 www.armz.ru Notes

96 www.armz.ru 97 www.armz.ru u r . z m r a @ o f n I 10 8 8 - : 8 0 l 5 i - 5 a 9 m 4 E e +7- n a : L x a 109004 F i +7-495-508-8808 o : n a y Russia Phone v o r D Moscow, . B 2 2 URANIUM HOLDING Co.ATOMREDMEDZOLOTO

ATOMREDMETZOLOTO 2009 ANNUAL REPORT