INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO APPROVED

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2 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO APPROVED by the resolution of the Board of Directors of (minutes No.182 dated 24 May 2017) This report has been preliminarily approved by the Director General of (order No. 003/132-P dated 23 May 2017)

3 4 TABLE OF CONTENTS Key Performance Indicators...6 Address by the Chairman of the Board of Directors...8 Address by the Director General...9 Address by the Best ARMZ Employee...10 Implementation of Strategic Goals Strategic Goals...13 Key Highlights in the History of ROSATOM's Mining Arm over a Decade...14 Key Events...16 CHAPTER 1. GENERAL INFORMATION ABOUT JSC ATOMREDMETZOLOTO 1.1. General Information about General Information Holding Structure ARMZ s Role in ROSATOM Production Cycle Market Presence Value Chain and Business Model Value Chain Business Model...22 CHAPTER 2. STRATEGY AND MANAGEMENT SYSTEM 2.1. Business strategy Mission and values of Sustainable Strategy Natural Uranium Market Overview and Outlook Marketing and Sales Policy Long-Term Strategy and Current Status of the Company Plans for 2017, Long-Term and Mid-Term Plans Business Diversification Import Substitution Project Production of Associated Scandium at JSC Dalur Project Processing of Pyrite Cinders at PJSC PIMCU Project Creation of Lithium Carbonate Production on the Basis of Zavitinskoye Field Project Gold Mining Organization Cooperation with Foreign Partners Governance System Corporate Governance Report of the Board of Directors on the Results of the Company Development by Priority Business Areas Risk Management Internal Monitoring System. Asset Protection Procurement Management...49 CHAPTER 3. STRATEGY IN ACTION: RESULTS OF EFFECTIVE CAPITAL MANAGEMENT 3.1. Capital of Financial Capital Management Financial Operations Management Investment Activities Table of Contents 3.3. Production Capital Management Raw Material Base Development Uranium Mining Companies Other entities of ARMZ Uranium Holding Co ROSATOM Production System. Complying with Product Quality Requirements Human Capital Management Governance System Human Capital Features Remuneration System Social Policy of the Company Work with Youth and Students Support for Retired Veterans Trade Unions and Collective Agreements Employee Professional Training and Development Occupational Health and Safety Intellectual Capital Management Innovative Activities Social Capital Management Stakeholder Definition Stakeholder Engagement Development of the Regions of Operation Natural Capital Management Environmental Policy of Protection of Land Resources and Biodiversity Water Resource Protection Atmospheric Air Protection Waste Treatment Expenses Related to Environment Preservation Environmental Programs of Subsidiaries of ARMZ Uranium Holding Co CHAPTER 4. INTERACTION WITH STAKEHOLDERS WHEN DRAFTING THE REPORT 4.1. Dialogues with Stakeholders when Drafting the Report Taking into Account Stakeholder's Proposals Report's Statement of Public Assurance Appendices List of Abbreviations and Terms Feedback Questionnaire Contact Information...122

4 6 7 G102 8 G201 1 KEY PERFORMANCE INDICATORS Operating performance indicators tons uranium produced tons uranium mineral raw materials base G102 7 Key Performance Indicators Personnel number of employees Number of employees Personnel turnover RUB average monthly salary Average monthly salary Personnel engagement (Holding) Uranium production Uranium mineral raw materials base (Russian assets) # persons persons persons 40% 31.3% 21.7% RUB RUB % 54% 62% 1000 tons U 500 thousand tons U Rating of among the largest uranium mining companies in terms of production volume Social and economic area Environmental protection 3d 4 4 # # Rating of ROSATOM among the largest uranium mining companies* 2 d Rating of ROSATOM and among the largest uranium mining companies by the volume of mineral raw materials base* million RUB taxes *** 288 million RUB environmental protection expenses Taxes paid by ARMZ Uranium Holding Co. key entities to regional budgets *** Environmental protection expenses G403 2 Occupational Health and Safety Fatal injury frequency rate (FIFR) Lost-time injury frequency rates (LTIFR) Number of incidents ** million RUB million RUB million RUB million RUB million RUB million RUB ** 4 * Including Uranium One Group enterprises. **One manufacturing-related accident (with two injured persons) was registered in. *** Including the income tax paid by the consolidated group of taxpayers (hereinafter referred to as the CGT ).

5 8 ADDRESS BY THE CHAIRMAN OF THE BOARD OF DIRECTORS G G Aleksander LOKSHIN 9 Address by the Director General ADDRESS BY THE DIRECTOR GENERAL Vladimir VERKHOVTSEV DEAR READERS, When presenting the ARMZ Uranium Holding Annual Report, I shall note that was certainly the most successful year in the entire 10-year history of the Mining Arm. The conditions the company has been operating in for the last few years feature an unfavorable macroeconomic environment with a long-lasting drop in market quotations for products, therefore, the operational stability shall be highly valued itself. The results of this work confirm the correctness of the 2007 decision to consolidate an ARMZ-based holding company providing the Russian nuclear industry with strategic raw materials. In, the Holding Company managed to achieve a further reduction in the uranium production prime cost (by 2% as compared to ). Moreover, due to the intensive work to increase efficiency, PJSC PIMCU reached a break-even point, which has become the most significant achievement of our team lately. Extensive works to develop the mineral raw materials base, which will determine the shape of the Russian uranium mining throughout the XXI century, have been launched. The project for the construction of Mine No. 6 of PJSC PIMCU has successfully passed the examination. The main construction works have been completed at the site of JSC Khiagda and the infrastructure development has been continued with the purpose of launching new uranium fields and reaching the project capacity. Business diversification projects remaining one of the priorities of ROSATOM Chairman of the Board of, First Deputy Director General, Operations Management of ROSATOM have received large-scale development. Having started active operations in 2013, the Holding Company has been annually increasing its revenue for new products reaching at year-end a level of 1.3 billion RUB. is actively developing projects for the strategic metals production. The Scandium project (JSC Dalur) has become the first thereof: commencement of commercial product supplies is scheduled for Other projects are being developed together with Russian companies in the interests of reliable raw materials supply of Russian high technology. Geological exploration on the Pavlovskoye deposit on Novaya Zemlya has been entirely completed (with the approval of zinc and lead reserves). It is important that sales of products of the future enterprise have already been confirmed by preliminary agreements with consumers. The Pavlovskoye project will undoubtedly become an effective impetus for the development of the Russian Arctic in cooperation with both other industry enterprises and external partners. Success crowned long-lasting, yet crucially important, work to assign the PSEDA status to Krasnokamensk, which would significantly expand the opportunities of the Trans-Baikal Region to attract potential investors and develop new production facilities. Some of them have already declared their readiness to work in the uranium capital of Russia is the anniversary year for the Mining Arm. Herewith, let me remind you of the great way that has been passed in just one decade. An efficient system of managing Russian uranium mining assets has been built up and their development has been continued based on advanced technology. Today, is an open and dynamic company. This is the way it used to be and, I am sure, will be known in the industry, in the uranium market and other markets where it plans to expand its presence. Undoubtedly, the professional team of ARMZ Uranium Holding Co. can adequately face external challenges and use all the opportunities for further development as a competence center responsible for providing ROSATOM and the Russian economy with strategic raw materials. DEAR COLLEAGUES, The ninth integrated annual report of is right in front of you. Its key topic is Ensuring the Competitiveness of Russian Uranium: Results and Prospects. In the report, we summarize the implementation of the large-scale efficiency improvement program launched three years ago. I am proud to say that in, despite the significant deterioration of the global market situation, the tasks assigned to the Holding were met on time and in full. The plan for the extraction of strategic raw materials was implemented at 100% in the amount of tons. The Company efforts to reduce the costs were successful: the uranium production cost has been reduced by 2% (in comparable prices as compared to ). Undoubtedly, the most significant achievement of the Company team at year-end was reaching of a breakeven operation level by PJSC PIMCU. For the first time in 6 years, the enterprise became profitable and the cost of finished products was below the budgeted target by 8%. Moreover, the Trans-Baikal platform successfully implemented the RPS project Increased Production Efficiency by Transferring the Underground Mines Nos. 1 and 8 to a 5-Day Workweek. Following the results thereof, it was possible to substantially increase the performance of stope miners: at Mine No. 1 by 16%, at Mine No. 8 by 37%. The enterprise also received a positive opinion from FAI Glavgosexpertiza of Russia on the project to construct the Mine No. 6, the launch of which will ensure its further Director General, stable development. Negotiations with potential co-investors and partners to ensure the implementation of the next project stages are underway. JSC Khiagda in Buryatia commissioned the main production site and the related infrastructure facilities, which are necessary for the enterprise to reach the project capacity of tons of uranium per year in Within this strategy, the physical launch of the mining complex and infrastructure facilities at the Istochnoye deposit was made in October. As a result of all prime cost reduction measures, JSC Khiagda gained profit for the first time in its history. In 2017, further growth of uranium production is planned. The production plan of JSC Dalur is also 100% complete. The enterprise successfully implemented the RPS project Reduction in Process Timing during the Opening and Preparation of Uranium Reserves. Increase in the volumes of the productive solutions elaborated was 30% and the economic effect amounted to 23 million rubles. In 2017, JSC Dalur will go on developing the mineral raw materials base and increasing the efficiency of production processes. The Scandium project implementation has been continued. ROSATOM approved a new project configuration with the transition to the production of high-purity scandium oxides and aluminum-scandium master alloys. In September, recognition of the scandium reserves of the Dalmatovskoye deposit was ensured, which makes it possible to extract it with the right to commercial sale. I shall note that the Holding Company made significant progress in developing the production of other strategic metals over the past year. The key project of the Company to develop new businesses in the Arctic, namely, the Pavlovskoye deposit development on Novaya Zemlya archipelago in the Arkhangelsk region, received a qualitative continuation. Following the results of the calculation of reserves, their total addition exceeded 20%. In 2017, it is planned to continue the deposit operations according to the approved plans. Today, we have already consented on preliminary agreements on the sale of all products planned for production to Russian and foreign companies. Moreover, the Pavlovskoye deposit has a huge potential for development of cooperation both within the industry and with external partners. Separately, I would like to note the creation of Krasnokamensk Priority Social and Economic Development Area (PSEDA) being the first among all the areas of operation of nuclear industry enterprises! The ROSATOM management provided the necessary support in the establishment of PSEDA to the Trans-Baikal Territory government. We hope that the city will be able to take advantage of the benefits and opportunities received to diversify the economy and improve the investment climate. With the assistance of, an agreement on cooperation in the construction of a special cement plant with a capacity exceeding 1 million tons per year has been signed, which will contribute to the disclosure of social and economic potential, as well as to the most effective use of personnel and infrastructure resources at the existing production sites of the region. The Holding Company is open for business cooperation and considers other development projects, mainly in the Trans-Baikal Territory. An integral part of our contribution to the development of the regions of operation is the implementation of charity and social projects. The social entrepreneurship support program in Krasnokamensk has been going strong for 3 years already, within the framework of which the best projects receive financial support in the form of grants for business development in the city. On September 1, the most modern school in the Kurgan region opened in the village Uksyanskoye with the participation of JSC Dalur and the Company. More than 200 children, including the children of employees of our enterprise, are already studying there. The goals for 2017 set to the Company by ROSATOM are ambitious, as always.

6 10 11 The issues of increasing efficiency and reducing costs will remain relevant. In an unstable situation in the commodity markets, we have intensified our efforts to find new opportunities and new growth points, primarily within the Company. Nevertheless, I am convinced that the progressive advance will continue will be an anniversary year for the Holding Company. I have no doubt that, relying on the glorious traditions and rich experience of our predecessors, we will be able to provide solutions to the tasks strategically important for our country and also to keep the leadership of the Russian nuclear industry. IMPLEMENTATION OF STRATEGIC GOALS PLANS STATED IN THE REPORT RESULTS ADDRESS BY THE BEST ARMZ EMPLOYEE Reach break-even and get positive financial result Fulfill natural uranium concentrate production program with mines working 5 day working week COMPLETED. Positive financial result obtained. COMPLETED. The production program was fulfilled with the mines working a 5 day working week. Svetlana POLONYANKINA Director for Geology and Subsoil Use of PJSC PIMCU Start the construction of Mine No. 6 Shifting of the work completion deadline. The construction start was postponed to June 2017 by the decision of the Investment Committee of ROSATOM. Construction permit obtained. Mineral raw materials base underlies the stable operation of any mining enterprise. Despite the significant amount of uranium reserves in the territory of the Russian Federation, most of the deposits are concentrated in difficult mining and geological conditions requiring underground mining being the most expensive mining method. Herewith, low content of a useful component in ores determines high production cost. Therefore, considering the conditions of a significant decline in the prices for natural uranium, the mining profitability can only be provided by the facilities mined in the least expensive way of downhole in-situ leaching. Thus, the most important task of the geological unit of ARMZ Uranium Holding Co. is expansion and improvement of the uranium RMB quality parameters in Russia and, in particular, activation of works to find new deposits suitable for mining the cheapest way of downhole in-situ leaching, as well as facilities with rich and technological ores. Indeed, all these tasks are being solved jointly by the Russian Ministry of Natural Resources, Rosnedra and ROSATOM. In general, we have lived through a busy year marked by important projects, largescale tasks and no large-scale outcome. In, we managed to create a serious reserve for further Company development: Eleven licenses for the right to use the subsoil of PJSC PIMCU and JSC Khiagda were updated; Technical projects for developing the deposits Istochnoye, Khiagdinskoye, Vershinnoye and Khokhlovskoye were coordinated with the Central Committee for Solid Mineral deposits development of Rosnedra; The licenses for the right to use subsoil were amended by the following deposits: Dalmatovskoye: a technical error in the purpose of the license for the right to use subsoil, as a result of which the subsoil user s right to extract associated useful minerals (scandium and REM) was restricted, was fixed; Istochnoye: the mining enterprise commissioning period and the start of industrial production, as well as the productivity of the enterprise designed were changed in the licensing conditions; Khiagdinskoye and Vershinnoye: the license for the right to use subsoil was extended and the technical error limiting the depth of mining was fixed. The feasibility study of the permanent exploration conditions and the report with the calculation of reserves for the Pavlovskoye deposit were approved. Moreover, the scandium reserves of the Dalmatovo deposit were entered into the State Register of Reserves as a result of their revaluation within the project Organization of Associated Scandium Mining and Production of Aluminum- Scandium Master Alloy at JSC Dalur. The issue of restrictions on the Khokhlovskoye deposit development was solved because of the presence of protective forest categories, where such activities are prohibited, within the licensed area. The order of the Government of the Russian Federation on holding an auction for the right to use the subsoil of the Dobrovolnoye deposit was signed in the reporting year as well. The auction was announced in December. The work in this area will make it possible to fill the cost-effective part of the mineral raw materials base and provide a reserve for stable and sustainable development of the Russian uranium mining industry, as well as implementation of projects for the extraction of other metals strategically important for the country. I am very pleased that our colleagues evaluated the scope of work carried out by our Directorate for Geology and Subsoil Use in and awarded me as the ARMZ Employee of the Year. In 2017, we will continue to solve one of the most important tasks for our Holding Company being the development of the mineral raw materials base. JSC FIRST MINING COMPANY JSC DALUR JSC KHIAGDA Reach break-even and get positive financial result Obtain first products from Istochnoye deposit Reduce production costs Introduce new design of production wells Reach break-even and get positive financial result Develop project documentation for Scandium Production project Get positive conclusion for pilot production project at Khokhlovskoye deposit Enter the Pavlovskoye deposit reserves into the State Register of Reserves Reach plant design stage Arrange field season at Pavlovskoye deposit COMPLETED. Positive financial result obtained. COMPLETED. Physical launch of a local sorption plant at the Istochnoye deposit. COMPLETED. COMPLETED. COMPLETED. Positive financial result obtained. COMPLETED. The pilot work project has been developed (Stage 1). Extension of the work completion deadline in connection with changing the type of permitted use of the forest fund sites within the licensed area of the Khokhlovskoye deposit. COMPLETED. The defense of permanent exploration conditions FS was carried out in the FBU GKZ. The reserves were entered into the State Register of Reserves. COMPLETED. COMPLETED.

7 12 13 JSC RUSBURMASH JSC VNIPIpromtekhnologii PLANS STATED IN THE REPORT Reach break-even and get positive financial result Reduce management costs, timing of processes and production cost for drilling operations, as well as optimize organizational structure Enter new promising markets by acquiring new customers and expanding project geography Implement a program for implementation of the new design of production wells at JSC Khiagda and JSC Dalur Reach break-even and get positive financial result Complete construction of the facility TPP Ash Dumps at PJSC PIMCU Obtain positive conclusion of FAA Glavgosexpertiza Russia (GGER) for PJSC PIMCU s Mine No. 6 Project Finish the design and obtain positive conclusion of GGER for the State Contract for Radioactive Waste Disposal Project RESULTS Extension of work completion deadlines. COMPLETED PARTIALLY. COMPLETED. COMPLETED. Extension of work completion deadlines. for 2017 in accordance with the roadmap on the facility construction completion with a changed contractor. COMPLETED. Positive conclusion of FAA Glavgosexpertiza Russia (GGER) for Mine No. 6 Project obtained. COMPLETED. The design of GGER for the State Contract for Radioactive Waste Disposal Project finished and the positive conclusion obtained. The results of ARMZ in confirm the Company s stable position in the uranium market. Victor Svyatetskiy First Deputy Director General, Executive Director of 2017 STRATEGIC GOALS JSC ATOMREDMETZOLOTO ÆÆ to ensure a positive financial result for the uranium chain. JSC DALUR ÆÆ ÆÆ ÆÆ ÆÆ ÆÆ JSC VNIPIpromtekhnologii ÆÆ ÆÆ ÆÆ to develop a project for the completion of the Dalmatovskoye deposit; to obtain the license for the right to use subsoil to explore and produce uranium at the Dobrovolnoye deposit; to extend the license for the completion of the Dalmatovskoye deposit to 2018; to get the positive opinion of FAA Glavgosexpertiza of Russia on the project documentation Experimental and industrial site of the uranium downhole in-situ leaching at the Khokhlovskoye deposit ; to develop and approve a project for the construction of a pilot plant to produce aluminum-scandium master alloys. to implement the internal order of the Company s production enterprises in a high-quality and timely manner reducing the subcontracting share; to implement the measures to increase the performance efficiency and increase the labor efficiency, reduce the project implementation costs and terms by at least 5%; within the further development of JSC VNIPIpromtekhnologii as an engineering company: to introduce PMS; to establish a chemical and analytical laboratory; PJSC PIMCU ÆÆ start the construction of Mine No. 6; ÆÆ ÆÆ JSC FIRST MINING COMPANY ÆÆ ÆÆ to launch the ash dump at the TPP in Krasnokamensk; to start designing a pilot plant for processing pyrite cinders. JSC KHIAGDA ÆÆ ÆÆ ÆÆ to complete construction and installation at the Istochnoye deposit; to perform commissioning at the Vershinnoye deposit mining and processing complex; to obtain the status of an RPS enterprise at year-end. JSC RUSBURMASH ÆÆ ÆÆ to meet the needs of uranium mining enterprises of ARMZ Uranium Holding Co. in drilling and geological exploration at a competitive prime cost; to implement the measures to improve the performance efficiency and increase the labor efficiency of key personnel. to develop project documentation for the construction of a mining and processing works on the basis of the Pavlovskoye deposit; to complete a complex of engineering surveys for the design and construction of an enterprise on the basis of the Pavlovskoye deposit (Novaya Zemlya archipelago); to establish a laboratory to assess the quality of resins. ÆÆ to complete semi-industrial technological tests of the Pavlovskoye deposit ores.

8 14 15 KEY HIGHLIGHTS IN THE HISTORY OF ROSATOM'S MINING ARM OVER A DECADE State Concern Atomredmetzoloto was founded in 1991 to succeed to the former First Chief Directorate of the USSR Ministry of Medium Machine Building and later operated within the structure of the Ministry for Atomic Energy of the Russian Federation. The concern was a production complex of mining and processing enterprises located in the territory of six states: Russia, Ukraine, Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan. State Concern Atomredmetzoloto was involved in the exploring, mining, and processing of uranium, gold, and rare and disperse element ores. It was also engaged in designing mines, ore processing facilities, and machine engineering plants. In 1995, State Concern Atomredmetzoloto was reorganized to become a PTC (publicly traded company). In 1999, the Company was transformed into O in connection with the re-registration of joint-stock companies. Key hightlights in the History of Rosatom's Mining Arm over a decade The Holding Company purchased 99.5% of JSC First Mining Company shares. The project assumes construction of a cost effective production facility on the basis of silver-containing lead-zinc deposit Pavlovskoye (Bezymyanoye ore cluster, Yuzhniy island of Novaya Zemlya archipelago, Arkhangelsk region) having a vast mineral raw material base. The license for developing this site of subsurface resources is held by JSC First Ore-Mining Company In accordance with amendments entered into force from stipulated by the Federal Law dated No. 99-FZ On introduction of changes in chapter 4 of part one of the Civil Code of the Russian Federation and on invalidation of individual provisions of legislative acts of the Russian Federation, O was renamed into JSC (Joint-Stock Company) Atomredmetzoloto. The implementation of an integrated program to reduce the prime cost of products and reach a break-even level of operation started. PIMCU is a hero... For the first time in many years,... has reached profitability... This is almost a feat, if I might say so. Speech at the 1st Information Day, 15 February 2017 Alexey Likhachev Chief Executive Officer of ROSATOM The decision was taken to consolidate the uranium and other minerals mining assets of the nuclear industry on the basis of. In , Russian uranium mining enterprises and uranium exploration and mining joint ventures (JV) in Kazakhstan were transferred to ARMZ. ARMZ obtained the licenses for the right to use the subsoil of reserve uranium deposits Upon completion of nuclear industry restructuring, all uranium mining enterprises of ROSATOM, were consolidated on the basis of ARMZ: JSC Priargunsky Industrial Mining and Chemical Union (JSC PIMCU), JSC Dalur, and JSC Khiagda, which had been formerly owned by JSC TVEL, a producer of fuel for nuclear power plants. Furthermore, TENEX (JSC Techsnabexport), Russia s exporter of enrichment services and enriched uranium, transferred to ARMZ its stakes in uranium exploration and mining joint ventures outside of Russia. Along with that, received from TENEX licenses for the right to use the subsoil of the reserve uranium deposits, including those of the world s largest Elkon uranium ore province. After completion of all re-organization activities, assumed full authority over procurement for the domestic and international feedstock requirements of Russia s nuclear industry and became one of the global leaders in uranium production Commencement of active international activity, within which ARMZ consolidated Russian participation interests in three uranium production JVs in Kazakhstan. The company became a minority shareholder of the public Canadian company Uranium One Inc Building up of international operations, consolidation of Uranium One Inc. controlling stake The Company acquired 100% of Australian publicly traded company Mantra Resources Pty Limited developing the Mkuju River project in Tanzania was ranked 1st among Holdings of ROSATOM in terms of integral ranking of reaching key performance indicators. The Holding Company made a deal to consolidate 100% of Uranium One Inc. shares. In accordance with the decision of ROSATOM, control over foreign assets was transferred to Uranium One Holding N.V. Since December 2013, has been controlling all Russian uranium mining assets. The key task of reaching the break-even level for PJSC PIMCU, the largest production site of the Holding Company, was met ARMZ Uranium Holding Co. (), Mining Arm of ROSATOM and the successor of the world s largest uranium mining complex created by the Soviet Union, celebrates its 10-year anniversary.

9 16 17 KEY EVENTS Key Events PJSC PIMCU reaches break-even level of operation for the first time in 6 years. January Inspection Audit confirmed compliance of the Khiagda JSC quality and environment management system with requirements of international ISO 900 and standards. Obtaining of positive opinions of FAA Glavgosexpertiza of Russia on the projects for developing deposits of the Khiagdinskoye ore field in the Republic of Buryatia. In, ARMZ continued its work on increasing efficiency: the production cost of uranium was reduced by 2% (as compared to ). Conclusion of an agreement on cooperation and interaction to develop the industrial potential of the Kurgan region between ARMZ, JSC Dalur and the government of the region. October Summing up of the results of the annual grant competition within the social entrepreneurship support program in Krasnokamensk. Commissioning by JSC Dalur of new fields of the Dalmatovskoye and Khokhlovskoye deposits in the Kurgan Region. November April Commencement of designing a pilot plant for the production of rough scandium concentrate (in the form of scandium fluoride) from mother waters at JSC Dalur. June Participation of in the VIII Annual International Forum Atomexpo-. July Nomination Best Presentation of a Business Model in a Non-Public Company Report at the XVIII Annual Competition of annual reports of the Moscow stock exchange was awarded to ARMZ Uranium Holding Co. for the second consecutive year. February Arrangement of a new testing ground for testing load-haul-dump machines at PJSC PIMCU. Entering of the Pavlovskoye deposit reserves explored into the State Register of Reserves by the Minutes of FBU State Commission on Mineral Reserves (FBU GKZ). March Presentation by PJSC PIMCU Repair Mechanical Plant of the new PD-1D mining machine prototype. Provision by the government of the Republic of Buryatia of a property tax benefit for the facilities of JSC Khiagda newly commissioned. Obtaining by JSC VNIPIpromtekhnologii (Engineering Center of ARMZ Uranium Holding) of two positive opinions of FAA Glavgosexpertiza of Russia for project and estimate documentation for allocation and construction of an underground research laboratory in the Krasnoyarsk Territory. Celebration of the 65-year anniversary of JSC VNIPIpromtekhnologii. Obtaining by JSC VNIPIpromtekhnologii of a positive opinion of FAA Glavgosexpertiza of Russia on the project of construction of the PJSC PIMCU Mine No. 6. May Celebration of the 40-year anniversary of the Hydrometallurgical Plant and the 30-year anniversary of the Urtuyskiy coal strip mine of PJSC PIMCU. Presentation to RF Council of Federation of key social projects of the Holding Company in the Trans-Baikal Territory. Celebration of the 45-year anniversary of PJSC PIMCU research laboratory. Conclusion of a cooperation agreement between ARMZ, LLC RT-Global Resources (a subsidiary of LLC RT-Business Development of Rostech State Corporation ) and the Government of the Trans-Baikal Territory. Conclusion of an agreement on ensuring sustainable socioeconomic development of the Bauntovskiy-Evenki District of the Republic of Buryatia between JSC Khiagda and Bauntovskiy- Evenki District municipality. Signing of the decree of the Government of the Russian Federation on the establishment of Krasnokamensk PSEDA in the Trans-Baikal Territory. ROSATOM signed an authorization to commission the facilities of the 3rd stage of Central Production Site (CPS) of JSC Khiagda. August ARMZ Uranium Holding Co., JSC AlyansTransAtom and contractors started implementing a program to replenish the vehicle park for operation at the PJSC PIMCU Urtuyskiy coal strip mine. September ARMZ Uranium Holding Co. delegation took part in the 41st symposium of the Global Nuclear Association in London. Nomination For Adherence to the Transparency and Openness Principles at the XIII Annual Practical Conference Annual Report: Experience of the Leaders and New Standards organized by Expert RA ranking agency was awarded to ARMZ Uranium Holding Co. Commencement of industrial processing of off-balance ore dumps at PJSC PIMCU. Completion of the first field season stage as part of holding an engineering survey at the Pavlovskoye deposit. December Reaching by PJSC PIMCU of the break-even level of operation (following the results of ). A reasonable balance between the development of existing production and the implementation of new prospective projects is the guarantee of reliable and sustainable Company development in the future. Vladimir Vysotskiy Deputy Director General for Special Projects of Acting Trans-Baikal Territory Governor Natalya Zhdanova visited PJSC PIMCU during her business trip.

10 General Information about 1.1. GENERAL INFORMATION ABOUT JSC ATOMREDMETZOLOTO 01 GENERAL INFORMATION ABOUT JSC ATOMREDMETZOLOTO 1.1. General Information about 1.2. Market Presence 1.3. Value Chain and Business Model G102 1 G102 2 G General Information MAIN AREAS OF OPERATION Management company of the Mining Arm of ROSATOM (hereinafter ARMZ Uranium Holding Co., Company, Group, ARMZ). In Russia, the company is developing uranium mining assets at different stages of life cycle: from exploration to intensive industrial production. Russian uranium productions has strategic significance. Availability of own natural uranium production in the Russian Federation allows to solve the following key tasks of : ensuring reliability of deliveries to partners and customers, long-term security of nuclear generation raw materials provision, ensuring competitive production cost of uranium products. has unique competencies in the field of ore mining and adjacent areas: the Company has concentrated over fifty years of experience in the development of deposits in various climatic conditions. MEMBERSHIP IN ORGANIZATIONS AND ASSOCIATIONS is a member of the World Nuclear Association. G EXTERNAL CHARTERS, PRINCIPLES AND OTHER INITIATIVES The Company exists in accordance with the Russian Business Social Charter. G102 5 REGIONS OF OPERATION JSC Khiagda Republic of Buryatia JSC Dalur Kurgan Region Please see section for more information about the history of Atomredmetzoloto. Historical background of the Report Holding Structure the first Russian company to mine uranium with in-situ leaching Fig. 1. Diagram showing subsidiaries as of December 31, Upon restructuring in 2013, is now managing Russian uranium mining assets. Priargunsky Industrial Mining and Chemical Union (PJSC PIMCU) Trans-Baikal Territory The biggest ARMZ Uranium Holding Co. entity ARMZ Uranium Holding Co. also includes the projected enterprises, namely, JSC First Mining Company, JSC Elkon MMP, JSC Lunnoye and JSC UMC Gornoye. A significant contribution to the Holding Company s business is made by subsidiaries being LLC ARMZ- Service, JSC RUSBURMASH, JSC VNIPIpromtekhnologii and LLC United Uranium Plants. KEY LAWS AND REGULATIONS APPLICABLE TO THE COMPANY S ACTIVITIES When performing its activity, is regulated by its Charter, internal documents, and the following regulatory acts: Civil Code of the Russian Federation (first part) dated November 30, 1994, No. 51-FZ; Federal Law No. 208-FZ On Joint Stock Companies dated ; Federal Law No. 317-FZ On ROSATOM State Nuclear Energy Corporation dated ; Federal Law No. 13-FZ On Management and Disposal of Property and Shares of Companies Related to Nuclear Power and on Amending Certain Statutes of the Russian Federation dated ; Federal Law No. 170-FZ on Nuclear Energy Use dated ; Federal Law No. 223-FZ on Goods, Work and Service Procurement by Certain Types of Legal Entities dated ; Federal Law No FZ On Protection of Competition dated ; Federal Law No FZ On Securities Market dated ; Presidential Decree No. 556 On Restructuring of the Nuclear Power Industry of the Russian Federation dated ; Regulation No. 454-P on information disclosure by securities issuers approved by the Bank of Russia on JSC ATOMREDMETZOLOTO 95.77% PJSC PIMCU 100.0% JSC VNIPIpromtekhnologii LLC Agrofirm Itmanovo 100.0% Mantra Resources PTY Ltd. (Australia) 86.09% G % JSC Dalur 50.03% JSC Lunnoye LLC United Uranium Plants 50.0% JSC Uranium One Group 21.57% 100.0% JSC Khiagda 99.74% JSC First Mining Company OJSC SY Corporation 25.1% 100.0% JSC RUSBURMASH 100.0% JSC UMC Gornoye Vostok Power Resources (UK) 24.81% 100.0% JSC Elkon MMP

11 20 21 G ARMZ s Role in ROSATOM Production Cycle ARMZ Uranium Holding Co. is the ROSATOM's Mining Arm, which manages all uranium mining enterprises in the Russian Federation (the first production stage of the nuclear fuel cycle). Along with JSC Uranium One Group, a company consolidating foreign uranium assets, ARMZ provides guaranteed supply of uranium to meet the needs of ROSATOM in raw materials Fig. 2. Atomredmetzoloto Role in ROSATOM s production cycle INITIAL STAGE OF THE NUCLEAR FUEL CYCLE POWER ENGINEERING Mining Arm Fuel Division Mechanical Engineering Division Geological exploration Processing Mining Conversion Division enrichment Fuel fabrication Equipment design Equipment manufacturing Equipment supply Installation and commissioning Service and modernization Power Engineering Division INNOVATION Switching to a closed nuclear fuel cycle (fuel return into the cycle) Engineering Division For more details see sections 1.1. General Information about, 2.1. Business Strategy. MARKET PRESENCE The main area of ARMZ operations is natural uranium mining. In, ROSATOM controlling Russian and foreign uranium assets ( and JSC Uranium One Group respectively), ranked second among the world s biggest companies in terms of its raw materials base and third in terms of uranium production. position in the market is secured through stable demand for the uranium raw materials from the Russian nuclear industry, a Fig. 3. Map of Russian assets of JSC VNIPIpromtekhnologii JSC RUSBURMASH Moscow Globally Ranked 4th ROSATOM ranks fourth among the world s largest companies in terms of uranium mining. JSC Dalur Kurgan Region JSC FMC Globally Ranked 2nd Novaya Zemlya archipelago JSC KHIAGDA ROSATOM ranks second among the world s largest companies in terms of mineral raw materials base. geographically diversified production and raw material base, and the implementation of measures for improving operational efficiency. Favorable outlook on the global nuclear power industry, the development of which will aid the increased demand for uranium in the mid- and long-term horizons, remains an additional factor of stability. In addition to its core business, the Company is developing the related activities actively. In, production of a new product being graded coal Republic of Buryatia OJSC Elkon MMP Republic of Sakha (Yakutia) PJSC PIMCU Krasnokamensk, Trans-Baikal Territory Power generation at NPPs NPP service Back-End Division Design and engineering NPP construction SNF management Decommissioning RW management FINAL STAGE OF THE NUCLEAR FUEL CYCLE demonstrating improved characteristics and sold with a bonus to the price of ordinary brown coal was launched based on the Urtuyskiy coal strip mine of PJSC PIMCU. The related activities feature production of heat and electric power, sulfuric acid, mining equipment (PJSC PIMCU), drilling and exploration services (JSC RUSBURMASH), design and engineering (JSC VNIPIpromtekhnologii). Subsidiaries of ARMZ, organizations in the control loop of ROSATOM and other Russian and foreign companies are consumers of these products and services. An important element of the strategy of is the development of new businesses in mining and related industries. The company is working on the formation of a competitive scandium offer (project Scandium ), products of complex processing of pyrite cinders, zinc and lead concentrates, as well as other raw materials. ARMZ continues to assess the potential of new markets and develop business initiatives related to entering these markets. They are planned to be included in the information disclosure loop as the relevant projects advance. G Value Chain and Business Model 1.3. VALUE CHAIN AND BUSINESS MODEL Value chain Business model of is based on integration into the value chain of ROSATOM, one of the largest companies in the global nuclear industry. This approach allows combining the use of accumulated experience and production and technological competencies with the introduction of advanced principles of production organization, commercial activities and corporate governance. The value is created by the Holding Company due to a full cycle of mining operations: from geological exploration to decommissioning. A tool for creating value is the transformation of capital by the Company Fig. 4. Uranium Holding Value Chain Prospecting works Design of enterprises Construction of enterprises Obtaining subsoil use rights Pre-design engineering Operation of plants: uranium mining and processing considering both tangible and intangible resources used by the Company. For more details see section Capital of. Herewith, a part of these resources is located in the external environment, which is the source of the main risks and opportunities for the Company. This part of the capital is used by the Company in the external environment together with other stakeholders. Another part of the capital is introduced within the Company, providing growth and competitive advantages, as well as increased assets, production capacities, competencies. Transformation of capital by the Company in the course of its activities affects both the Company and its stakeholders. Geological exploration R&D, innovations Reclamation and decommissioning Business Model Business model is a system that ensures creation of value in the short, medium and long term, and is aimed at achieving the strategic goals. The Company s business model is based on its mission and long-term strategy. Strategic vision ensures sustainable development of the Company and efficiency of using capital in the long term taking into account risks and opportunities. The business model includes: resources available in both internal and external environment capital; for more details see Chapter 3. Strategy in Action: Results of Effective Capital Management corporate governance system aimed at the most effective transformation of available capital; (for more details see section 2.2. Governance System). value delivery based on the transformation of available capital (main activity of the Holding Company); Integration of the business model of into the value chain of ROSATOM the largest vertically integrated company of the global nuclear industry, ensures its stability and allows to leverage the accumulated experience and technologies matching the best international and Russian level, at all stages of value chain. In, the location of suppliers, the supply chain structure and the supplier relations remained unchanged.

12 22 Resources (on 1st of January, ) Value chain Results (on 31st of December, ) Natural capital environment Natural ranked2nd capital thousand tons Uranium mineral raw materials base million RUB Environmental protection expenses among the largest uranium mining companies in the world thousand tons Uranium mineral raw materials base million RUB Environmental protection expenses ranked 2nd among the largest uranium mining companies in the world Financial capital Financial * * capital million RUB Revenue billion RUB Investment volume million RUB Annual profit Activity Prospecting works Product million RUB Revenue billion RUB Investment volume million RUB Annual profit Production capital Natural uranium Obtaining subsoil ranked6th concentrate Production use rights capital tons Uranium production million RUB/ person Labor efficiency among the largest uranium mining companies in the world Geological exploration Thermal energy tons Uranium production million RUB/ person Labor efficiency ranked 6th among the largest uranium mining companies in the world Stakeholders Human capital Intellectual capital persons Number of employees Innovation projects spending Intangible assets Number of employees Intellectual * Operation of plants: Drilling, Geological capital million RUB RUB Average salary million RUB Personnel turnover Design of enterprises Pre-design engineering Construction of enterprises uranium mining and processing Reclamation and decommissioning Sulfuric acid Human % Coal (power- capital % generating) Mining equipment production exploration, design and engineering services persons RUB Average salary million RUB Innovation projects spending Personnel turnover R&D, 0.08 engineering Electrical power 0.44 Lost-time injury Lost-time injury frequency frequency rates rates (LTIFR) (LTIFR) million RUB Intangible assets Stakeholders Social capital Social % capital % million RUB Social payments to employees million RUB Charity projects Engagement of staff at the Holding society million RUB Social payments to employees million RUB Charity projects Engagement of staff at the Holding RISKS AND OPPORTUNITIES Fig. 5. Business Model STRATEGY, STRATEGIC OBJECTIVES AND MISSION RISKS AND OPPORTUNITIES * due to and while changing the basics of preparation of the consolidated financial indicators, the data for are not comparable with the data for.

13 Business Strategy G BUSINESS STRATEGY Mission and values of The mission of is to provide competitiveness of long-term raw material deliveries for the development of Russian technologies, above all in nuclear power engineering. Fig. 6. ROSATOM's Priorities and Values ROSATOM's VALUES The mission of is to provide competitiveness of long-term raw material deliveries for the development of Russian technologies, above all in nuclear power engineering. The ARMZ business vision is based on the status of a national producer guaranteeing to meet the requirements of ROSATOM in Russian uranium at a competitive prime cost and without geopolitical risks. THE BASIC COMPETITIVE ADVANTAGES OF THE COMPANY INCLUDE: resource base of natural and technogenic origin with the possibility of cost-effective extraction of valuable components; high-tech manufacturing assets, modern scientific potential and qualified team with many years of experience in the mining industry; 02 full range of competencies for managing the lifecycle of exploration and operation of deposits, including in climatic conditions. Fig. 7. Relation Between the Strategic Targets of ROSATOM and STRATEGY AND MANAGEMENT SYSTEM 2.1. Business Strategy 2.2. Governance System STRATEGIC GOAL OF ROSATOM INCREASING THE SHARE IN INTERNATIONAL MARKETS NEW PRODUCTS FOR THE RUSSIAN AND INTERNATIONAL MARKETS REFLECTION IN THE ARMZ STRATEGY ACHIEVED INDIRECTLY Through improvement of the competitiveness of the market supply of ROSATOM in the nuclear fuel cycle Ensured meeting of needs in the Russian market Retention of the competitive uranium production cost ACHIEVED DIRECTLY Ensuring stable profitability, including through business diversification REDUCTION OF PRODUCTION COST AND TIMING OF PROCESSES ACHIEVED DIRECTLY Retention of the competitive uranium production cost Ensuring stable profitability, including through business diversification For more details see section 3.1. Capital of

14 26 MAIN STRATEGY DIRECTIONS AND THEIR IMPLEMENTATION AT THE ENTERPRISES OF THE HOLDING COMPANY MAIN STRATEGY DIRECTIONS ENTERPRISES IMPLEMENTATION TERMS Balanced increase in uranium production by downhole in-situ leaching JSC Dalur and JSC Khiagda Maintaining of uranium mining volumes by underground method (upon conservation of the existing mines due to mining of the active reserves) PJSC PIMCU: construction of a new Mine No Business Strategy KEY ELEMENTS OF A SUSTAINABLE STRATEGY Sustainable development is inseparably linked with the implementation of corporate social responsibility measures aimed at improving the quality of life of employees and their families, promoting stable development of regions and increasing the welfare of the population in the areas of the Company s operation. The triunity of sustainable development strategy targets is integrated into the Company s activities and includes: Provision of a portfolio of orders from ARMZ enterprises and external customers JSC RUSBURMASH: drilling and geological survey JSC VNIPIpromtekhnologii: integrated engineering services Constantly Ensuring of competitive production cost of products and services All enterprises of the Holding Company: increased efficiency of processes and labor efficiency, cost optimization Constantly Development of new business areas through the implementation of projects in the mining and related industries providing an increase in the depth of development of the mineral raw materials base and entry with a competitive offer to the Russian and international markets PJSC PIMCU Processing of Pyrite Cinders project; JSC Dalur Scandium project; JSC FMC Pavlovskoye project participation in maintaining the stability of the global uranium market, the national and regional economy, the balance of reasonable expectations and interests of stakeholders; minimization of negative industrial impact on the environment, rational subsoil use, resource saving, compliance with international standards in the field of ecology and environmental protection; social responsibility for safety, health and professional development of personnel, social and economic well-being of the population in the regions of operation, support to local communities, charity. G Sustainable Development Strategy THE TRINITY OF SUSTAINABLE STRATEGY is the Mining Arm of ROSATOM, which provides over 18% of electricity generation in Russia and is the leader of the green, carbon-free economy in the country and globally. The leading position of ROSATOM resulted from active interaction with the regions of operation, targeted work to reduce the impact on the environment and improved quality of corporate public reporting in recent years. The Company has a significant influence on the formation of the revenue part of the budgets of the areas of operation. Tax deductions, creation of jobs with decent labor compensation, charitable programs etc. determine the importance of the Company for the regions of operation. In, the creation of Priority Social and Economic Development Areas (PSEDA) was started, which will allow launching new production facilities and attracting external investors. TARGETS IS INTEGRATED INTO THE COMPANY'S ACTIVITIES As a part of this approach, the Holding Company: ARMZ is conducting its activities as a socially responsible company, the sustainable development of which contributes to the well-being of the regions and areas of its operations. Much attention is paid to developing working relationships with regional authorities, public and environmental organizations, education authorities in the regions of operation. ARMZ conducts a responsible environmental policy based on the principles of priority conservation of natural ecological systems; obligatory use of advanced scientific achievements and ensuring environmental safety; transparency and accessibility of information on the environmental aspects of the Company s activities to the general public. Corporate social responsibility and sustainable development are integral parts of the strategy of ARMZ Uranium Holding. maintains an ongoing dialogue with stakeholders; Business ethics and the fight against corruption: openness and transparency to customers, partners and shareholders. improves the corporate governance system based on Russian and international standards; PRIORITY AREAS OF ACTIVITY IN THE FIELD OF SUSTAINABLE DEVELOPMENT develops and implements innovative technology; complies with ethical norms of business practice. Environment: reduction of impact on the environment, energy efficiency improvement and development of environmental culture in the society. Marina Liborakina Deputy Director General for Business Strategy and Development of Personnel: provision of attractive working conditions, professional development of employees, care for their safety and health. Society: social, volunteer and charitable programs contributing to improving the quality of life of Russians and the sustainable development of society.

15 28 29 CONTRIBUTION TO THE ACHIEVEMENT OF THE UN SUSTAINABLE DEVELOPMENT GOALS At the UN Summit on Sustainable Development in September, Heads of States and Governments adopted an Agenda for the period up to 2030, which includes 17 sustainable development goals (SDG). ARMZ helps maintain the high quality of life of its employees and their families by paying a competitive salary and implementing charitable programs in the regions of operation. For more details see section 3.6. of the Social Capital Management Report and the Company s website ARMZ assists agricultural producers by holding grant competitions among small business representatives.. For more details see section 3.6. of the Social Capital Management Report and the Company s website One of the priority activities of ARMZ in the field of sustainable development is provision of safe working conditions for employees, as well as ensuring of product safety for the Company s customers. The Company has social programs for employees aimed at promoting healthy lifestyle ideas and values. For more details see section 3.6. of the Social Capital Management Report and the Company s website The goals are targeted at unifying the efforts of all countries to provide a more convenient, healthy, safe and harmonious life for their citizens. SDG implementation at the national and international levels requires active involvement and partnership of all stakeholders: representatives of government bodies, business, international and public organizations, as well as the public itself. ARMZ implements programs for employee training and professional development. For more details see section 3.4. of the Human Capital Management Report and the Company s website In its activity, ARMZ takes into account the principles of gender equality, ensuring of safe working conditions, fair remuneration, as well as other important aspects of human rights. For more details see section 3.4. of the Human Capital Management Report ARMZ shares the UN Sustainable Development Goals and is already doing much to achieve them. The principles of the Company s Environmental Policy include the reduction of the negative impact on the environment and the rational use of natural resources in the course of the Company s operations. For more details see section 3.7. of the Natural Capital Management Report and the Company s website ARMZ has a program on energy saving and energy efficiency. For more details see section 3.3. of the Production Capital Management Report and the Company s website ARMZ creates attractive working conditions for its employees. ARMZ provides decent remuneration to its employees. For more details see section 3.4. of the Human Capital Management Report and the Company s website Business Strategy ARMZ develops and implements innovative projects allowing creating the infrastructure necessary for sustainable industrialization. For more details see section 3.5. of the Intellectual Capital Management Report and the Company s website Implementation of the social programs of the Holding Company contributes to the reduction of social inequality in the country. For more details see section 3.6. of the Social Capital Management Report and the Company s website ARMZ contributes to the development of regions of operation. ARMZ provided the necessary support to the government of the Trans-Baikal Territory in the creation of Krasnokamensk Priority Social and Economic Development Area (PSEDA) being the first among all the areas of operation of nuclear industry enterprises. For more details see section 3.6. of the Social Capital Management Report and the Company s website ARMZ develops more sustainable products and solutions and promotes the integration of more sustainable solutions into its supply chain. ARMZ supports the need to reduce the consumption of natural resources and the processing of valuable natural resources. For more details see section 3.7. of the Natural Capital Management Report and the Company s website ARMZ seeks to reduce energy resource consumption and greenhouse gas emissions. ARMZ seeks to reduce the use of vehicles, thus reducing greenhouse gas emissions. The Company has an energy efficiency program providing for the energy-intensive equipment renewal and the transition to automated lighting and heat supply management system at the enterprises of the Company. Inside the Company, the system of electronic document circulation is used actively allowing not only to reduce the resources consumed, but also to make information exchange more simple and effective. For more details see section 3.7. of the Natural Capital Management Report and the Company s website The principles of the Company s Environmental Policy include the reduction of the negative impact on the environment and the rational use of natural resources in the course of the Company s operations. For more details see section 3.7. of the Natural Capital Management Report and the Company s website The principles of the Company s Environmental Policy include the reduction of the negative impact on the environment and the rational use of natural resources in the course of the Company s operations. For more details see section 3.7. of the Natural Capital Management Report and the Company s website ARMZ carries out its activities in accordance with the requirements of the current legislation. For more details see section 3.6. of the Social Capital Management Report and the Company s website ARMZ cooperates for sustainable development with professional associations at the national and international levels. For more details see section 3.6. of the Social Capital Management Report and the Company s website

16 Natural Uranium Market Overview and Outlook OVERVIEW OF NATURAL URANIUM MARKET IN GLOBAL URANIUM DEMAND AND SUPPLY As of, the volume of the world uranium market is estimated at thousand tons taking into account the reactor needs of nuclear power plants and the formation of commercial and strategic reserves not intended for current consumption. Herewith, the extraction of natural uranium in the world in exceeded 62 thousand tons. The rest of the supply volume was provided by the uranium extracted and processed earlier (secondary sources). The price environment in the uranium market remained unstable. During most of, spot prices demonstrated negative dynamics caused by the demand volatility. The average annual level of spot prices fell to USD 69/kg of uranium (as per Ux Consulting*) 2.1.Business Strategy The nine largest producing countries (with production volume exceeding 1 thousand tons of uranium per year) account for 95% of its production. Kazakhstan kept its leading position by increasing uranium production to 24.0 thousand tones (39% of global production) in. Canada and Australia took the second and third places with production volumes of 14 thousand Fig. 10. Uranium Production by Major Companies, -, thousand tons and 6.3 thousand tons, respectively (22% and 10% of world production, respectively). Russia was ranked 6th in the Top Producers ranking (global production share of about 5%). Fig. 8. Uranium Spot Quotation Dynamics USD. /kg U USD. /f. U 3 O GLOBAL URANIUM PRODUCTION IN At year-end, global uranium production was more than 62 thousand tons being 0.5% higher than the previous year (more than 61 thousand tons). The main contribution to the dynamics of the global indicator was made by Kazakhstan, Canada, Australia and Namibia, although the increase in production was small in each of these countries. The most notable production decline was documented in Niger and the USA (more than 10% in both cases). Fig. 9. Uranium Production by World Countries,, thousand tons Thousand tons U 0 January April July 87 October January April Sources: basic data of Ux Consulting *; calculation of average values. July 96 October January 62 thousand tons of uranium globally produced in Kazakhstan Canada Australia Niger Namibia Russia Uzbekistan China USA April July 69 October Spot Actual Average $/kg U $/f. U3O8 5 Thousand tons U 0 NAK Kazatomprom Sources: press releases and corporate reports. Data for CNNC and Navoi MMC according to estimates. Production volume recorded in accordance with the ownership interests. The nine major uranium mining companies (with production volume exceeding tons) comprised about 81% of the global output. Since 2010, NAK Kazatomprom has remained the largest produces (in, its production was about 13.4 thousand tons with the market share of 22%). ROSATOM controlling ARMZ and Uranium One (shown separately) produced more than 7.9 thousand tons of uranium in, which corresponds to 13% of the global production (4th in the world). MERGERS AND ACQUISITIONS IN THE URANIUM INDUSTRY At year-end, the total volume of mergers and acquisitions was significantly reduced (compared to ) and amounted to about USD 70 million. Decline in M&A activity is due to the deterioration of the global uranium market situation, which led to a drop in the value of assets and the lack of financial resources for organizing large-scale transactions. The largest number of transactions, as in, was concluded with the junior companies. Among the key players, Paladin Energy was the only company to demonstrate any activity regarding M&A, which decided to sell its shares in a number of exploration projects in Australia and Namibia as a part of financial restructuring. Cameco AREVA Uranium One BHP Billiton АРМЗ CNNC и CGN Rio Tinto DEVELOPMENT OF EXISTING AND FUTURE PROJECTS Considering the market situation deterioration, key uranium producers continued optimizing the costs and investment in the development of existing enterprises, as well as revised their plans for promising projects. In April, Cameco announced conservation of the Eagle Point mine in Canada (the uranium production was discontinued in August) and suspension of drilling at the in-situ leaching facilities in the USA. Additional measures to increase the efficiency of assets were reported by NAK Kazatomprom, Rio Tinto, Paladin Energy and other companies. In the reporting year, problems at large enterprises did not impact the market situation significantly (unlike ). An accident in the power supply system in South Australia led to the production suspension at the Olympic Dam (BHP Billiton) mine for two weeks in September October. The development speed rate of most of the current projects remained low. The exception was the Cigar Lake mine in Canada (the main owners Cameco and AREVA), where the uranium production increased by 1.5 times (to 6.7 thousand tons). At the end of December, the Husab mine in Namibia owned by the Chinese company CGN was put into pilot operation. The junior companies focused on optimizing their key projects (in Canada, the USA, Australia and some other countries) with a view to commissioning them in the long term. Nevertheless, the work speed rates for most of these projects was low due to the difficulties in attracting funding. FORECAST FOR 2017 Since the end of, there has been a price restoration trend in the spot market associated with the efforts of key players to reduce excess uranium mining (at the enterprises in Kazakhstan, Canada and the USA). Stability and scale of the price changes will depend on whether these efforts will be further developed. The effect of limiting the uranium extraction at individual assets can be neutralized by its growth at the enterprises at the stage of reaching full capacity. In this regard, in 2017, the high volatility of uranium prices is expected to stay. Situational factors being separate significant events happening to large uranium producers and consumers, as well as short-term tasks that they solve will continue to impact the market situation significantly. Sources: estimate of based on press-release and company report data, US Energy Information Administration (U.S. EIA). * Ux Consulting (UxC) is an international analytics firm specializing in the research of market environment and predicting nuclear fuel cycle markets. Founded in Website:

17 32 33 G G102 9 URANIUM MARKET OUTLOOK GLOBAL NUCLEAR POWER INDUSTRY DEVELOPMENT OUTLOOK nuclear generation gas generation GLOBAL POWER INDUSTRY Consequences of the accident at Fukushima-1 NPP continue to affect the nuclear energy development on a global scale and the formation of attitude towards it in many countries. For example, in , Japan suspended the operation of all its nuclear power plants. At year-end, only three units were re-launched being two units at Sendai NPP and one unit at Ikata NPP. At the same time, nuclear generation remains one of the basic industries meeting all the requirements in the field of power supply safety, reliability and efficiency. Its contribution to improving the environmental situation and preventing climate change also deserves high Marketing and Sales Policy Fig. 11. Interaction Between and Its Customers MARKETING AND SALES POLICY AREAS Guaranteed supply of the customers (JSC TVEL, JSC Techsnabexport) needs in natural uranium in a long term hydropower coal generation Maintaining efficient sales organization and sales infrastructure development ARMZ evaluation. The greatest activity in the development of nuclear power is shown by China (5 out of 10 new NPP units commissioned in ). Commissioning of one new NPP unit in the USA for the first time in 20 years shall also be noted. The most active growth of nuclear generation is expected in China, India, the Republic of Korea, the Middle East (UAE, Iran, Turkey, etc.), Africa (Egypt, South Africa) and other regions of the world. At the same time, gradual reduction in the set NPP capacity is forecast in some developed countries, primarily in Western Europe, including due to the reorientation to the broad development of renewable energy. GLOBAL NATURAL URANIUM MARKET OUTLOOK In the upcoming years, the global market situation will remain unstable and mostly unfavorable for the uranium producers. Its improvement and restoration of the uranium prices are forecast for the midterm ( ) under the influence of the following fundamental factors: increase in demand as the NPPs in Japan are restarted and NPP under construction in China, India, the Republic of Korea and other countries, most of which do not have a prepared uranium raw materials base, are commissioned; JOINT SUBSIDIARY WITH URANIUM ONE HOLDING N.V. SINCE 2013 LCC UNITED URANIUM PLANTS The one-stop shop function for the sale of natural uranium of Russian and Kazakhstan origin on a parity basis CONSIGNEE JSC SCC reduction in the uranium supply associated with intensive development of the raw materials base of the existing deposits, duration (up to 10 years) and cost of developing new deposits; reduction of involvement of any secondary sources as they use their liquidity part; activation of long-term contracting (regarding uranium supplies planned by 2025). Accelerated growth in uranium demand due to the continued active construction of new nuclear power plants is expected in the long run. The launch of prospective projects with a high prime cost will be necessary to cover such growth and replace the outflowing production volumes at the existing deposits. In combination with the increased costs at the operating enterprises, this will create the prerequisites for a steady increase in market prices since the mid-2020s. By 2030, global demand for uranium can reach 85 thousand tons. Natural uranium production will grow in line with the demand dynamics. The full potential for increasing production by 2030 is 89 thousand tons of uranium. Thus, its deficit is not expected even with a decrease in supplies from secondary sources. CUSTOMERS JSC TVEL JSC Techsnabexport 2.1.Business Strategy Reliability and security of material supply to the Russian customers are provided by contracts entered into by Atomredmetzoloto JSC, manufacturing companies and suppliers, long-term contracts of LLC United Uranium Plants with the customers, as well as by the availability at the consignee s warehouse (JSC SCC) of the operational material reserves. CUSTOMER SATISFACTION ASSESSMENT One of the work priorities of is to ensure satisfaction of the end consumers of uranium raw materials (JSC TVEL and JSC Techsnabexport), the supply of Russian raw materials to which is provided under long-term contracts with LLC United Uranium Plants. continuously monitors provision of customer needs in natural uranium for the short and long term, as well as promptly responds to any their requests and expectations. Thus, in order to improve the quality of uranium products supplied to end users in July, the Company produced a pilot supply of dried material produced by JSC Khiagda, the quality indicators of which are close to those of the ASTM C specification. In the future, plans to direct the production of JSC Khiagda to dried uranium products. All contractual obligations to supply products to customers were performed in full in. CUSTOMER SERVICE The Company maintains long-term contractual relations with its key customers enterprises of ROSATOM, based on the principles of mutually beneficial and fruitful cooperation. The Company is working on improvement of product quality through the construction of new drying systems at the entities of the Company, optimization of storing and shipping of finished products. QUALITY MANAGEMENT Product quality assurance remains one of key priorities of. In order to improve the quality of the products produced by JSC Khiagda, tests for dehydrating of the finished products were carried out with the delivery of a pilot sample of dehydrated material in July to JSC SCC. Dehydrated products of JSC Dalur and JSC Khiagda are close in physical and chemical characteristics to those of ASTM C specification, compliance with which is necessary when delivering natural uranium to foreign consumers. In 4Q, in order to ensure the competitiveness of all products manufactured by enterprises in the Russian Federation, work on the design of new unified Technical Conditions for the natural uranium concentrate in the form of ammonium polyuranate of improved quality produced by JSC Dalur and JSC Khiagda was started. CASE QUALITY MANAGEMENT In November, a modern drying complex for finished products was put into operation at JSC Dalur. The new equipment significantly increased the qualitative characteristics of the end product being the yellow cake and reduced the moisture content of the finished product from 30 to 1.5 2%. In order to maintain the moisture content at the achieved level, the finished products were packed in plastic bags before being placed in returnable containers (TUK). In, the consignee of JSC Siberian Chemical Combine (JSC SCC) received a proposal to work out the possibility of storing finished products without using the plastic bags. This will not only reduce the costs of JSC Dalur for their acquisition, but also simplify the process of unloading finished products to the address of the consignee (JSC SCC), reduce its labor costs for unloading and avoid the formation of waste. In October, JSC Dalur made a trial delivery of natural uranium concentrate in a new package maintaining the target moisture content level. JSC SCC confirmed the readiness and convenience of using this material in production. Long-term contracting of manufactured products to support development and business diversification of uranium producing companies

18 Long-Term Strategy and Current Status of the Company In the reporting year, ARMZ enterprises made a significant contribution to strengthening the competitiveness of the Russian nuclear industry and reliable raw materials supply for the portfolio of orders formed. The work on increasing efficiency continued: in, the specific single cost of uranium was reduced by 2% (throughout the Holding Company in general, in comparable prices). PJSC PIMCU, the largest Russian enterprise, reached the break-even level for the first time in 6 years (net profit of 14 million rubles). The financial result of ARMZ in general was significantly improved. Successful use of new business opportunities is confirmed by the overachievement of the indicators planned for new products. These results are achieved due to the effective use of production and technological competencies formed in the Company loop and the dedication of its team. STRATEGIC OBJECTIVES OF THE COMPANY When implementing a long-term strategy, the Company relies not on the scale, but on the quality of uranium assets. This approach is complemented by the system work on cost optimization, as well as on search and implementation of new design and technical solutions, In, ARMZ enterprises implemented the production program in full. In the future, the volume of production is planned to be maintained at the level of about 3 thousand tons per year (depending on the dynamics of the industry needs in uranium raw materials). Unconditional priorities of the Company remain ensuring the uranium business efficiency, including through the development of new deposits, and active implementation of diversification projects. PJSC PIMCU will complete the restructuring of the uranium chain with the transition to the construction of a new mine based on Argunskoye and Zherlovoye deposits, which account for about 40% of the mineral raw materials base of the enterprise. Commissioning of Mine No. 6 is scheduled for Its operation will not only keep the infrastructure and potential of the enterprise, but also ensure its cost-effective operation over a long period of time. Increase of production is planned to be continued at ISL plants of JSC Dalur which ensures the uranium business development under any market conditions. The main strategic objectives in the field of uranium mining development in Russia are as follows: Plans for 2017, Long-Term and Mid-Term Plans continuation of the restructuring of uranium production at PJSC PIMCU (with the transition to the construction of new facilities of Mine No. 6, the launch of which will support the uranium production volumes upon decommissioning of the existing mines); balanced increase of cost-effective uranium production at JSC Dalur and JSC Khiagda within the reaching of their full capacity. Necessary reserves for solving these issues have already been formed. In, the principal scope of works on designing Mine No. 6 on the basis of Argunskoye and Zherlovoye deposits (PJSC PIMCU) was completed, the design documentation passed the state expert review successfully. Formation of the production and technological infrastructure was completed at the site of JSC Khiagda in. Moreover, physical launch of the production complex and auxiliary facilities at the Istochnoye deposit and JSC Khiagda. JSC Khiagda, while having a significant potential for the development of effective uranium mining, plans to keep up the high rates of development of the new deposits of the Khiagdinskoye ore field Istochnoye, Vershinnoye and others. The objective of the enterprise is to reach the designed capacity (1.000 tons of uranium per year) in 2019 with the possibility of increasing it in the long term. The development of a promising uranium deposit Dobrovolnoye was determined as priority of JSC Dalur development. Within the framework of the diversification program, further expansion of the Company s product portfolio is provided. was carried out. These activities are implemented with the aim of bringing the enterprise to its designed capacity (1.000 tons of uranium per year). New large-scale projects, including Elkon strategic project, are planned to be introduced in the long term (approximately in 2030), at the active market growth stage. In the specified period, an increase in demand and prices for uranium is expected, which will ensure the cost-effective implementation of such projects. Until 2030, the main activity of will remain uranium production. Development of uranium assets will be combined with the implementation of diversification projects in the mining and related industries aimed at expanding the scope of the Company s business, as well as at the dynamic social and economic development of the areas of its operation. It is planned to maintain the uranium mining at the level of 3 thousand tons per year volume in the future In 2017, it is planned to start the production of scandium products (at the site of JSC Dalur), in the future the production of products of processing pyrite cinders, as well as other products demanded in the Russian and international markets. Service assets of ARMZ are aimed at promoting services based on the existing competencies in the new markets. 2.1.Business Strategy Business Diversification The development of new business areas remains one of the priorities of the ARMZ strategy. Key diversification objectives are as follows: expansion of the product portfolio in order to minimize market risks; development of existing enterprises through the implementation of projects ensuring integrated use of their competencies, infrastructure and raw materials base; growth in business scale and profitability. The basic directions of the ARMZ business diversification are determined on the basis of the approach approved by ROSATOM. In accordance with this approach, a portfolio of projects diversified by product, scale and geography has been formed. Project portfolio management is carried out according to the logic of maximizing economic results and synergies for the core business while minimizing project risks. Development of projects in mining and related industries is carried out as part of the comprehensive program in three areas: increasing the depth of processing of the existing mineral resource base and industrial waste ( Scandium, Recycling of pyrite cinders, projects); development of areas with a special regional status (Pavlovskoye project); business initiatives to develop the production of strategic metals and innovative products based thereon (under elaboration). The interest toward the development of these areas is related to the fact that ARMZ applies modern technology for extracting useful components from the existing sources of raw materials or opportunities for their development, as well as to the necessary admittance and permits for working in restricted (regime) special status territories. In, the development of technology for the associated scandium extraction was completed and the construction of a pilot plant was launched in terms of the Scandium project. In September, recognition of the scandium reserves of the Dalmatovskoye deposit was ensured, Fig. 12. Product Portfolio of Existing and Emerging Businesses Engineering (JSC VNIPIPT) Drilling and geological survey (JSC RUSBURMASH) Production of zinc and lead concentrates Production of scandium products (JSC DALUR) which makes it possible to extract it with the right to commercial sale. In 2017, it is planned to start the production of high-purity scandium oxides with the subsequent creation of the production of aluminum-scandium master alloys. In,economic evaluation of the technology for processing man-made waste of sulfuric acid production accumulated at the site of PJSC PIMCU was carried out within the project Processing of Pyrite Cinders. Based on the evaluation results, the profitability of their non-waste processing was confirmed (with the extraction of gold, non-ferrous metals and leaching cakes for the cement industry). In 2017, it is planned to proceed with the design and subsequent construction of a pilot plant with its launch in The largest of the diversification projects implemented by ARMZ is the development project for the Pavlovskoye deposit in the Arctic zone of Russia (Novaya Zemlya archipelago) received qualitative continuation in. Based on the results of the examination of the permanent exploration conditions FS and the calculation of reserves, recognition of reserves of B+C1+C2 categories in the amount of 2.49 million tons of zinc, 0.55 million tons of lead and 1195 tons of silver was ensured. The total increase in reserves exceeded 20%. Within the first stage of engineering surveys (field season ), a series of surveys (engineering, geological, geodetic, etc.) was carried out and a large-tonnage sample was sampled for technological ore testing. In 2017, it is planned to continue the deposit operations according to the approved plans. Search and implementation of promising projects involving the use of (JSC FIRST MINING COMPANY) Processing of pyrite cinders with gold release (PJSC PIMCU) by 20% the Pavlovskoe deposit reserves increased based on the results of geological exploration performed infrastructure and material and technical base of the operating enterprises in the format of industrial partnership remain an important direction of the diversification program. Their elaboration is carried out at the site of PJSC PIMCU in Krasnokamensk, which is provided with transport and energy infrastructure and has the necessary personnel and production potential. These projects provide for the development of basic industries ensuring deep processing of raw materials, as well as production of products with high added value. Implementation thereof is planned as a Priority Social and Economic Development Area (PSEDA) created in. In the future, this will provide PJSC PIMCU and ARMZ with additional revenue and efficient use of infrastructure. In, ARMZ continued its search for potentially interesting projects and business initiatives in Russia. Such initiatives feature the development of production of strategic metals and innovative products based thereon. Currently, this business initiative is under elaboration; its target parameters will be determined taking into account the results of the evaluation of prospective assets, as well as the availability of current and forecast demands for the respective products from the Russian nuclear enterprises.

19 Import Substitution Since, has had a program of import substitution. For more details on import substitution and key objectives of the technical policy see Report. RESULTS Table. 1. Implementation of Plans Plans stated in the report Production of 13 load-haul-dump machines (LHDs) at RMZ PJSC PIMCU Reconstruction of four foreign machines using Russian analogue parts Replacement of imported parts for the parts manufactured at RMZ Abandonment of imported submersible pumps at JSC Khiagda in favor of Russian analogues PLANS FOR 2017 AND THE MIDTERM The project of RMZ GORTECH will be the priority project in the field of import substitution: in 2017, it is planned to start the production of power-driven mining equipment on the basis of the repair and mechanical plant of PJSC PIMCU. The annual design capacity is up to 50 LHD units Results COMPLETED taking into account the plan adjustment. 11 LHDs manufactured. COMPLETED PARTIALLY. 2 narrow-cut LHDs restored/reconstructed. COMPLETED PARTIALLY. Some nodes for hydraulics are still imported. COMPLETED. Domestic analogues of pumps are purchased. Fig. 14. Designed Load- Haul-Dump Machine Fig. 15. Opportunities for Cooperation within the Project (Key Nodes) Power supply system of the battery type Exhaust neutralizers Hydraulic system (incl. with electrically proportional slide-valves) Electric motors Fig. 13. PDM PD-2E Production Statistics Number of machines produced PD-2E LHDs were manufactured and 2 narrowcut LHDs were updated, which made it possible to reduce the cost of purchasing imported machines for more than 100 million rubles. AIM OF THE PROJECT: The project is aimed at manufacturing power-driven mining equipment, incl. loadhaul-dump machines with an electric power drive powered by lithium-ion storage units. PRODUCTS OF THE PROJECT : The products of the project are load-haul-dump machines; in the future, it is planned to produce a mining equipment product range. Within equipping the PD-2E loadhaul-dump machine with diagnostic and remote control functions, the following improvements are proposed: introduction of basic functions: transition of the main components (steering, engine, braking system, ladle control) to digital control; installation of sensors to monitor the state of the main parameters of machines, its components and units, information output to the operator s display; introduction of optional functions: materials weight sensors in the ladle, video cameras for blind areas, sensors of distance to obstacles; equipping with a remote control system allowing to control the equipment remotely both in sight and distantly from the operator s workplace; ensuring the possibility of cooperation within the framework of the project (main nodes). 2.1.Business Strategy Project Production of Associated Scandium at JSC Dalur Project implementation will increase the depth of processing of the available raw materials and manufacture marketable products with high added value at moderate capital expenditures. JSC Dalur plans to produce two types of scandium products: high-purity scandium oxide and aluminum-scandium master alloy. These product types will be a stepping stone for the output of higher value-added products on the Table. 2. Implementation of Plans Plans stated in the report R&D has been performed for the development of aluminum-scandium master alloy production technology using downhole in-situ leaching uranium products Exploration activities have been completed and design documentation developed to create a pilot scandium production plant Start of the pilot plant construction 2017 PLANS Results basis of scandium at ROSATOM State Nuclear Energy Corporation, including: production of aluminum-scandium powders for 3D-printing; production of ceramics for electrochemical generators using current solid oxide fuel cell (SOFC) technology; production of special alloys and ceramics. COMPLETED. Development of the technology for producing scandium oxide has been completed. The technology provides for obtaining scandium concentrate as an intermediate product and the commodity product of scandium oxide with a purity of 99.9% (TU ) at the output. The technology was successfully tested in at the industrial site of JSC Dalur. COMPLETED. Research work has been carried out and design documentation has been developed for setting scandium oxide pilot production with a capacity of 1.5 tons per year. COMPLETED. The pilot plant construction was started. completion of construction and commissioning of pilot scandium oxide production; completion of R&D on the development of a technology for obtaining aluminum-scandium master alloys and commencement of the development of pilot production of master alloys Project Processing of Pyrite Cinders at PJSC PIMCU ince October, semi-industrial tests for chloride leaching of pyrite cinders and production of finished products in the form of precious and non-ferrous metal concentrates and leaching cakes suitable for use in the cement industry have been carried out in the experimental hydrometallurgical workshop of the Central Research Laboratory of PJSC PIMCU. As a result of the project implementation, the existing man-made raw materials (pyrite cinders) accumulated over the previous years of PJSC PIMCU activity in the amount of 4.5 million tons will be processed, which will solve environmental problems related to its storage, as well as diversify the revenue of the Mining Arm at the expense of increasing the depth of processing of the existing raw materials. CASE WHAT DO WE NEED SCANDIUM FOR? The wide use of scandium is restrained by small volumes of its extraction. The current key area of the industrial scandium use is the aerospace industry. Also, the use of scandium alloys is possible in the production of sporting goods (for example, frames for bicycles and motorcycles, baseball and softball bats); in microelectronics, production of laser materials, light sources, etc. in small amounts of about several tens of kilograms per year. In case of increased production volumes, scandium can be used in the manufacturing of materials for the automotive industry and railway engineering, as well as in other areas where lightweight and durable materials are required. Currently, a number of industrial technologies are being developed, which in the future, provided they are widely used, will provide additional demand for scandium, is under development. As one of them, the technology of solid oxide fuel cell production (SOFC) is considered, which assumes direct conversion of fuel chemical energy into electrical energy. Another promising technology is 3D printing. Interest in scandium in this field is related to its ability to modify the properties of aluminum alloys and powders so that they can be sintered and alloyed. The use of 3D-printing will expand the possibilities of applying these materials in industry and in everyday life.

20 38 39 Table. 3. Implementation of Plans Plans stated in the report Registration of patents for the technology for complex processing of pyrite cinders and selective recovery of precious metals from pyrite cinders R&D for the development of technology for selective extraction of copper, zinc and precious metals from pyrite cinders Production of laboratory samples of iron oxide pigments and their certification. Testing samples for potential customers Results COMPLETED. Two patent applications were filed: Complex pyrite cinder processing; Selective extraction of nonferrous and precious metals. COMPLETED PARTIALLY. Work continues and will be completed in COMPLETED. Fig. 16. Dumps of Pyrite Cinders Fig. 17.Pyrite Cinder under the Microscope 2.1.Business Strategy Project Gold Mining Organization In, the Company worked out various options for business initiatives and analyzed a number of projects to organize gold mining both in the Trans-Baikal Territory and in the neighboring regions (Republic of Buryatia, the Republic of Sakha-Yakutia). Herewith, options for self-implementation and cooperation with a gold mining company with extensive experience in this field have been evaluated. Priority targets of all the projects were the tasks of increasing the efficiency of operations and diversifying the sources of revenue of the Mining Arm by creating a production complex for the extraction and processing of gold-bearing ores to produce highly liquid products in the form of gold and silver alloy, by reducing social tension in the Trans-Baikal Territory by creating new workplaces for personnel of PJSC PIMCU, as well as by developing competencies in the new field of mining of solid minerals. RESULTS The approval of ROSATOM for the development of the project implementation concept was obtained; 2017 PLANS Continuation of work in this area with the possibility of initiating one or several gold mining projects and transition to their practical implementation. Development of pilot projects to produce iron oxide pigments 2017 PLANS Within the project Processing of Pyrite Cinders, PJSC PIMCU set the following key objectives: COMPLETED. a pilot plant was set up to confirm technological solutions for gold extraction. the extent of gold extraction from raw materials was reached at the level of 63% and the possibility of its increase to the level of 70-73% was demonstrated. completion of pilot works on gold extraction technology; commencement of the design of an industrial plant for gold extraction; engagement of partners to developing the technology for releasing additional types of commodity products from pyrite cinder (iron oxide pigments, coagulants for the purification of mine waters, ferroalloys, etc.). CASE WHY IS IT NECESSARY TO PROCESS PYRITE CINDERS? Currently, is developing a technology that will allow extracting gold from pyrite cinders. This metal is in constant demand in electronics, as well as in the jewelry market (both domestic and foreign) Cooperation with Foreign Partners Considering the existing mining and geological conditions during the last 15 years, the average uranium content in the ore of the operating mines of PJSC PIMCU has significantly decreased. In order to ensure the supply of natural uranium for the Russian nuclear industry in the long run, is implementing a project to construct a mine based on the Argunskoye and Zherlovoye uranium deposits (Mine No. 6 project). The project implementation will allow to fully fill the depletion of the raw materials base of PJSC PIMCU and save jobs in the single-industry town of Krasnokamensk upon the mine commissioning in As a priority form to organize funding of the construction of Mine No. 6, the engagement of external investors to the project is considered. To this end, consults with foreign partners on the possibility of their participation in the project as investors. The consultations are at the initial stage Project Creation of Lithium Carbonate Production on the Basis of Zavitinskoye Field Within the framework of the project initiated in, production of lithium carbonate with a capacity of up to tons per year is planned in the Trans- Baikal Territory. The ore and dumps of the Zavitinskoye deposit (Pervomaisky village, Trans-Baikal Territory) are considered as the raw materials base of the project. The possibility of implementing the project in the format of industrial partnership is under consideration. It is planned to produce lithium (spodumene) concentrate, which is planned to be transported to PJSCPIMCU for further processing into lithium carbonate, at the production site. The project will allow diversifying the business and increase the revenue of the Mining Arm, engage free industrial and human resources in Krasnokamensk and create a base for providing raw materials to other ROSATOM facilities producing lithium products of upstream operations. RESULTS A product strategy for obtaining lithium compounds from domestic sources of raw materials was developed and secured at ROSATOM PLANS The following is planned within the project: approval with ROSATOM and commencement of implementing a project to create a lithium production facility based on the sources of raw materials of Zavitinskoye deposit; participation in the contest of the Ministry of Education and Science of the Russian Federation for obtaining budgetary co-financing of R&D to develop industrial technology for obtaining lithium concentrate and lithium carbonate; commencement of design and survey works for the development of pilot plants for the production of lithium concentrate and lithium carbonate.

21 40 41 G GOVERNANCE SYSTEM Corporate Governance CORPORATE GOVERNANCE STANDARDS In its business, complies with the requirements of the legislation of the Russian Federation. The corporate governance system is improved with the use of best Russian and global practices. The Charter and bylaws regulating the functioning of the management bodies, as well as other important information on the business of ARMZ Uranium Holding Co. are posted on the corporate Internet website of ARMZ Uranium Holding Co ( ARMZ URANIUM HOLDING CO. AUTHORIZED CAPITAL AND SHAREHOLDERS AS OF DECEMBER 31, : CAPITAL RUB The authorized capital of 3 SHAREHOLDERS The total number of the shareholders registered in the Register of Shareholders was three ( ROSATOM, JSC Atomenergoprom, and JSC TVEL) SHARES Fig. 18. Shareholder Structure as of December 31, ROSATOM 100% Information on compliance with the principles and recommendations of the Corporate Governance Code Individual provisions of the Corporate Governance Code recommended by Letter of the Bank of Russia No /2463 dated are applied by in practice, taking into account the specifics of the legal status of ROSATOM, established by normative legal acts of the Russian Federation which provide for single management of nuclear industry entities, and are reflected in a number of local regulations. The Company placed ordinary registered shares in the amount of 25,133,296,670 shares with a par value of 1.00 ruble each (issue registration numbers A, A-006D) CORPORATE GOVERNANCE GOALS Maintenance of a high corporate governance level and operational transparency is one of the most important areas of implementation of the strategy of ARMZ, the overall purpose of which is to maximize the mining business value for shareholders. PRIORITY OBJECTIVES: Compliance with the legislation of the Russian Federation; Improvement of efficiency of governing bodies; Increasing transparency for investors, industry peers, business partners, employees, and other stakeholders. Fig. 19. Shareholder Structure Dynamics in, % JSC Atomenergoprom JSC TVEL ROSATOM % % % % % % 1.293% 1.289% G G G G G G G G G G G G G G G Governance System GOVERNANCE SYSTEM The corporate governance system serves as the basis for ARMZ's activities and has several layers. Fig. 20. Structure of ARMZ Uranium Holding Co. Corporate Governance and Supervising Bodies MEETING OF SHAREHOLDERS BOARD OF DIRECTORS DIRECTOR GENERAL AUDITOR MANAGEMENT AND CONTROL BODIES GENERAL MEETING OF SHAREHOLDERS The General Meeting of Shareholders (GMS) of is its supreme management body. Its authority, convocation and organization procedures are defined by the provisions of the Company s Charter, as well as the regulatory acts of the Russian Federation. The Company promptly informs its shareholders both about the date of GM and on the results of voting at the meeting. Relevant information is posted on the official website of the Company. In, three GM took place, where the resolutions on Company management issues were adopted, including: approval of the Company s Charter in a new wording; establishment of the Company s management bodies; approval of the annual report, annual financial statements for and profit distribution. BOARD OF DIRECTORS The Board of Directors carries out general management of the Company. Competence of the Board of Directors is defined by provisions of the Charter and internal documents of the Company as well as regulatory acts of the Russian Federation. The Board of Directors of shall be convened by the Chairman of the Board of Directors at his own initiative, upon a request of a member of the Board of Directors, Director General and auditor. For more details see section Report of the Board of Directors on the Results of Company Development by Priority Business Areas. The Board of Directors consists of five persons. The Chairman of the Board of Directors and the Director General shall be different persons. In, the composition of the Board of Directors was as follows: Aleksandr M. Lokshin Chairman of the Board of Directors; Vladimir N. Verkhovtsev; Vladimir S. Vysotskiy; Vladislav I. Korogodin; Yekaterina V. Lyakhova. DIRECTOR GENERAL In accordance with requirements of art. 69 of the Federal Law On Joint-Stock Companies, Art of the Charter, the Director General arranges for implementation of resolutions of the General Shareholders Meeting and the Company s Board of Directors. The competence of the Director General includes all operations management issues of the Company, except for matters within the competence of the General Meeting of Shareholders and the Board of Directors. The Director General takes direct participation in drafting the Company s development strategy both at the mission and values level and at the level of functional strategies. Corresponding documents are approved by the Director General who subsequently ensures their approval at ROSATOM level. Vladimir N. Verkhovtsev, Director General of the Company, was elected to the position by the resolution of the Extraordinary General Meeting of Shareholders (minutes No.15 dated ). V.N. Verkhovtsev does not own any shares of. We are working to improve the corporate governance of subsidiaries. Highly professional management and skilled personnel of the Company help us implement the long-term strategy. The interaction between the Board of Directors and management is well established, due to which it is possible to make the necessary decisions in the shortest time possible % JSC ATOMENERGOPROM % 100% 0,0 0,3 0,6 0,9 1,2 1,5 Changes that took place in the control loop of ARMZ in In October, Uranium One Holding N.V. was sold % Members of the Board of Directors do not own Company s shares. Candidates to members of the Board of Directors are nominated in accordance with requirements of art. 53 of the Federal Law On Joint-Stock Companies. Yulia Semina Head of Corporate Division of JSC ATOMREDMETZOLOTO % JSC TVEL

22 42 43 G G Governance System BASIC PROVISIONS OF THE REMUNERATION AND/ OR COST COMPENSATION POLICY, INFORMATION ABOUT REMUNERATIONS AND/OR COST COMPENSATION Members of the Board of Directors may receive a compensation for participation in the work of the Board of Directors (depending on financial and economic performance of the Company). The amount of remuneration is determined by the General Meeting of Shareholders. Members of the Board of Directors being full-time employees of receive salary in accordance with the Unified Industrial Payroll System established by ROSATOM for joint-stock companies of ROSATOM and subsidiaries of JSC Atomenergoprom. Remunerations and compensations to the members of the Board of Directors are paid in accordance with labor contracts and valid local regulations on payroll. Staff performance management system based on key performance indicators (KPI) implemented at ARMZ plants provides evaluation of achievements of the Company as a whole, as well as individual managers and employees. KPI system is a strategic and operational management tool that allows to plan performance at all levels of the company. In the reporting period, the amount of remunerations, as well as the amount of expenses connected with execution of functions of members of the Board of Directors compensated by, was 40.0 million RUB. Aleksander LOKSHIN Vladimir VERKHOVTSEV Vladimir VYSOTSKIY Member of the Board of Directors since , Chairman since Born in 1957, place of birth Chita, graduated from the Leningrad Kalinin Institute of Polytechnics. Honoured Power Engineer of the Russian Federation to present Deputy Director General, Deputy Director General, Head of NPC Directorate, first deputy Director General for operational management of ROSATOM Member of the Board of Directors since Born in 1955, place of birth Lyal Mikar settlement, Jarkurgan district of the Surkhandarya Region, Uzbek SSR, graduated from the Felix Dzerzhinsky Military Academy, Military Academy of the Russian Central Command of Armed Forces, PhD in Engineering to present Deputy Director General, Director General of Member of the Board of Directors since Born in 1954, place of birth Komarino village, Gorodokskiy district of Lvov region, Ukrainian SSR, graduated from the Military Academy of the General Staff of the Armed Forces of the Russian Federation Commander in Chief of the Russian Federation Navy, Admiral 2013 to present Deputy Director General, Deputy Director General for Special Projects of Table. 4. Target Key Performance Indicators (KPI) for KPI, KPI UoM Adjusted fee cash flow (AFCF) of ROSATOM (including achievement of the Mining Arm AFCF), billion RUB KPI achievement levels Target value Mining Arm AFCF, billion RUB Integrated investment performance indicator, % * Total cost, billion RUB Labor efficiency, million RUB/pers Integral component for new products, % Revenue from new products outside the loop and within the loop on a competitive basis, billion RUB Actual value ROSATOM s 10-year order portfolio for new products, billion rubles Engagement rate,% LTIFR,% No level 2 or higher violations on INES scale. 0 0 Table. 5. Target Key Performance Indicators (KPI) for 2017 KPI, KPI UoM KPI achievement levels Yekaterina LYAKHOVA Member of the Board of Directors since Born in 1975, place of birth Ekaterinburg, graduated from Ural State Law Academy, Universiteit Antwerpen Management School to present Deputy Director of JSC Atomenergoprom to present Deputy Director of the NPC Directorate, Director for Investment Management and Operating Efficiency of ROSATOM Vladislav KOROGODIN Member of the Board of Directors since Born in 1969, place of birth Moscow, graduated from the Moscow Institute of Physics and Technology to present Deputy Director of NPC Directorate, Director for NFC and NPP Life Cycle Management AFCF of ROSATOM (including achievement of the Mining Arm AFCF), billion RUB Mining Arm AFCF, billion RUB 1.50 Integrated investment performance indicator, % Total cost, billion RUB 15.9 Labor efficiency, million RUB/pers. 3.1 Reduction of reserves, billion RUB 30 Achievement of the results of measures for the unfinished construction facilities/equipment,% 100 Engagement rate,% 57 LTIFR and reduction in the severity of injuries on production sites of enterprises, including contractors,% No level 2 or higher violations on INES scale. 0 Target value 0.54/30% *without taking into account the uncontrolled scenario.conditions factor (prices and inflation)

23 44 45 MANAGEMENT (as of December 31, ) Vladimir N. VERKHOVTSEV Director General Victor S. SVYATETSKIY First Deputy Director General Executive Director Vladimir S. VYSOTSKIY Deputy Director General for Special Projects COMMITTEES OF JSC ATOMREDMETZOLOTO INVESTMENT COMMITTEE Seven meetings of the Investment Committee of (hereinafter the Committee) were held, within which: the investment limits of costly projects for 2017 were approved; the changes in the data sheets of the PJSC PIMCU projects Coal, Uranium PFF and Reconstruction of Hydraulic Structures at PJSC PIMCU were approved; TPR under SUOF projects were passed; the changes in the longterm development plan of JSC Dalur were approved Governance System Ilya A. YAROSHEVITCH Chief Legal and Corporate Relations Officer Vera B. SOROKINA Chief Accountant Vsevolod Yu. GALINOV Chief Security Inspector CHARITY COMMITTEE Seven Committee meetings were held (three intramural, four in absentia). Chairman of the Committee deputy Director General for Business Strategy and Development M.I. Liborakina. Priority areas of charitable activities for : support of the regions where the Company operates and conducting of competitive selection for providing financial support (grant) to socially-oriented small and medium-sized businesses. For more details see section 3.6. Social Capital Management Victor M. ZAKHAROV Deputy Director General for Economics and Finance Vladimir D. MORGUN Ilya I. KOROLEV Deputy Director General for Administrative Issues Marina I. LIBORAKINA Vladislav I. MATUS Deputy Director General Stanislav M. ANIKEEV 9 issues were considered in total, 29 investment decisions were made. During the year, membership of the Committee was updated. The Committee included representatives of, ROSATOM and subsidiary companies (PJSC PIMCU, JSC Khiagda, JSC Dalur). Committee Chairman Director General of V.N. Verkhovtsev. For more details see section Investment Activities RISK COMMITTEE Seven absentee meetings of the Risk Committee of (hereinafter the Committee) were held, within which: key risk owners of the Mining Arm were appointed; intragroup loan rates were approved/ adjusted, applicable to loans granted and received by entities of the Mining Arm (interest rate risk management); intragroup lending monthly limits for Mining Arm entities were approved/ adjusted (loan risk management). Chairman of the Committee First Deputy Director General, Executive Director V.S. Svyatetskiy. For more details see section Risk Management REPORT ON PAYMENT OF DECLARED (ACCRUED) DIVIDENDS ON THE COMPANY SHARES The dividend policy is set by the management bodies with an account of the required investment in compliance with the Company s strategy. During the period from to, no dividends were declared or paid. There are no declared and unpaid dividends. Payment of dividends for is not planned. MAJOR TRANSACTIONS AND RELATED PARTY TRANSACTIONS In, the Company did not enter into any major transactions and related party transactions which require approval pursuant to the Federal Law On Joint Stock Companies. COMPANY S REGISTRAR The registrar of is Open Joint Stock Company Registrar R.O.S.T. Registrar s details: OGRN (Primary State Registration Number) , INN (Taxpayer Identification Number) Registered address: 18 Stromynka Str., Bldg. 13., Moscow Phone/fax (495) Report of the Board of Directors on the Results of the Company Development by Priority Business Areas In, 23 meetings of the Board of Directors of the Company were held during which decisions regarding the key Company management issues were adopted, including: approval of the budget of the management company of the Mining Arm and the entire Company for ; approval of ARMZ Uranium Holding Co. target key performance indicators (KPI); amount of senior management remunerations and compensations determined; recommendations on distribution of profits of the Company at the Annual General Meeting of Shareholders given; the report on the results of the additional issue of the Company s securities was approved; a decision was made to terminate the Company s participation in Uranium One Holding N. V.; a decision on the Company s participation in a Non-Profit Partnership was made; decisions were made on the acquisition of shares of PJSC PIMCU, JSC Khiagda, JSC First Mining Company, JSC UMC Gornoye, placed as a part of additional securities issues. Deputy Director General for Security Deputy General Director for Business Strategy and Development HR Director

24 46 47 G Risk Management RISK MANAGEMENT SYSTEM employees single risk management approach with ROSATOM, taking into account risks during business planning. As a part of risk management activities, critical risks and their owners have been identified, while the measures to manage them have been developed and implemented. Fig. 21. Radar of Key Risks of for Currency risk 2. Tax risk 3. Interest risk 4. Liquidity risk 5. Loan risk 6. Commodity risk 7. Risk of loss of productive assets 8. Industrial safety risk 9. Environmental risk 10. Risk of changes in legislation 11. Reputation risk 12. Personnel risk 13. Occupational safety 14. Social and political risk in the regions where the Company operates 15. Risk of incorrect assessment of deposits 16. Investment project risk 2.2. Governance System 12 Personnel risks (reduced quality of personnel, personnel shortage) 14 Social and political risk in the regions where the Company operates (aggravation of social tension in Krasnokamensk) In order to keep the personnel risk at a sufficiently low level, the following activities were carried out in : remuneration incentives, benefits and welfare system were used to retain qualified personnel; an integrated training program for all levels of personnel was implemented, including managers talent pool program; training of the output personnel in related and second professions, which makes it possible to increase the possibility of timely redistribution of personnel within enterprises when developing new production facilities and capacities; engagement in infrastructure development of the regions of operation; development of career maps and profile requirements for the senior positions at ARMZ within the implementation of the industry project Career and Succession Management. approval of succession plans for the positions of general directors of subsidiaries. Result: the employee turnover rate at the Company was reduced to 21.7%. Dynamics: the risk reduction is due to the improvement of the financial and economic state of the Company enterprises and the increase in their stability. For more details see section 3.4. Human Capital Management The major asset of the Company (PJSC PIMCU) is a backbone enterprise of the city where it operates, all decisions on the development/adjustment of operations of the enterprise have a significant impact on the social situation in the region (the city of Krasnokamensk, Trans-Baikal Territory). In order to manage and reduce this risk, the following activities were carried out in : providing social protection for workers (voluntary medical insurance, insurance against accidents and diseases, travel costs to the place of vacation, retirement plans, financial assistance); organization of official groups in social networks VKontakte, and Odnoklassniki (answers to the questions of employees, city residents and key experts given by senior management of PJSC PIMCU); establishment of a Miners Wives Club (informing employee family members about the state of affairs at the backbone enterprise, its plans, prospects, key events); coordination with employment service to promote employment; retraining and career counseling for the population; the conference PIMCU Path to Development was held MINIMUM RISK MAXIMUM RISK 10 KEY RISKS AND RISK MANAGEMENT METHODS Table. 6. Key Risks and Risk Management Methods in Risk, its number on the Radar and main risk factor 1 Currency risk (unfavorable changes in currency exchange rates) 9 8 Critical risks ranked 5 and higher are set out. Risk dynamics: increase, decrease, without major changes Risk mitigation methods For more details see section Marketing and Sales Policy. High ranking of the currency risk in the Company is due to the presence of the currency component in the Company s income, as well as due to the significant volatility of the US dollar. Due to the high US dollar rate, it was decided in 1H to monitor the currency risk impact on the key indicators of the Company monthly; subject to strengthening of the ruble exchange rate below the level of 63.5 RUB/ USD, the possibility and necessity of hedging transactions was analyzed. Result: according to the results of, due to the higher US dollar exchange rate, an additional financial result of more than 1.3 billion rubles was received as compared to the planned one Dynamics: risk reduction is due to the high US dollar rate in. For more details see section 3.2. Financial Capital Management Risk dynamics 16 Investment project risk (risk of failure to achieve the goals set by the projects) For more details see section 3.6. Social Capital Management The Company s operations are connected with acquisition of uranium-containing fields and development of uranium product plants on their basis as well as with business diversification projects. In, 20 investment projects were implemented under the management of. In order to reduce the investment risk for the Company in general, the following activities are carried out: development and implementation of risk management activities in the formation of the project, its annual update or change; audit of the analysis group of on the completeness of the risks identified and the sufficiency of the developed measures to reduce them; accounting for identified risks when making decisions on the implementation of projects. Within the implementation of projects in, ambitious goals were set to expand the activities of the Company s service entities. The goals were achieved only partially due to the reduction in financing of related external projects. The measures to reduce this risk implemented by the service entities could not fully compensate for it. Result: the Company s project portfolio efficiency has been confirmed by ROSATOM; it is maintained at a stable positive level or increasing. Dynamics: the risk increase is due to a decrease in demand for the services of the Company s service entities, which, in turn, is caused by a reduction in project financing. For more details see section 3.2. Financial Capital Management 6 Commodity risk (reduction of quotations for uranium) 11 Reputation risk (change of perceived reliability and attractiveness of the Holding among stakeholders) The risk due to stable low prices for uranium in. Minimization of the negative impact of this type of risk was limited by the methods of natural hedging and was achieved due to balancing of raw materials sales schedules by various pricing contract mechanisms taking into account the actual and predicted dynamics of uranium price indicators due to flexible contract terms by managing available sources of raw materials. Result: due to the management of implementation schedules, the impact of unfavorable uranium price dynamics on the financial result of the Company business was reduced by more than 150 million rubles. For more details see section 3.2. Financial Capital Management Risk management is provided by implementing a set of measures aimed at creating a positive public attitude to the Company and the nuclear industry as a whole by further enhancing information transparency and open interaction with all stakeholders (publication of press releases in federal, general corporate, divisional media, issue of a public annual report, participation in exhibitions, conferences, etc.). Result: the balance of neutrally positive and negative publications in the media about the Company business amounted to 99.8%. For more details see section 3.6. Social Capital Management PLANS FOR 2017 AND THE FUTURE In the future, it is planned to continue the practical application of the accumulated experience in the field of risk management, while paying special attention to investment management and detailed risk analysis of projects. The planned systematic activity on proactive identification of risks, their evaluation and development of measures to control and reduce their negative impact will consolidate the role of risk management procedures as an integral part of planning and decision-making business processes. In 2017, it is planned to pass an external audit to obtain a certificate of compliance with international standards ISO 9001: and ISO 14001: (the new version focuses on risk management procedures).

25 Internal Monitoring System. Asset Protection INTERNAL MONITORING SYSTEM The internal monitoring and audit function is carried out in the Company by the Internal Monitoring Directorate directly subordinate to the Director General. The Directorate performs its activities taking into account the International Professional Standards of Internal Audit and is guided by the following principles: independence/objectivity; adequacy; professional work attitude. In order to implement the activities, a Plan for Monitoring Arrangements for the year is formed, which includes information on the verification period and the number of scheduled hours for each monitoring arrangement. Please see the Report for more details on the internal monitoring system, its tasks and principles of operation. Table. 7. Dynamics of Control Events in The key indicator of the internal monitoring and audit efficiency is the absence of any actual incidents or significant comments on the audit results made by the external bodies monitoring the organizational processes that were previously audited by the Company s internal audit. No comments of state and other external monitoring bodies made following the results of process audits in were identified. Results : All measures planned to verify the financial and economic activities of subsidiaries and most risky processes were taken. Employees of internal control and audit units of the Uranium Holding ARMZ successfully passed independent certification in accordance with the professional standard Internal Monitoring Specialist (Internal Controller). Indicator Number of monitoring arrangements, including by type, units Control and audit activity Expert and analytical event Internal audit Number of deviations detected, units Number of employees brought to disciplinary liability following the results of monitoring arrangements N.V. Belykh, Head of the Internal Monitoring Unit of PJSC PIMCU won in the special nomination ROSATOM Man of the Year 2017 PLANS: The priority is a risk-oriented approach in planning and implementation of monitoring arrangements aimed at improving the transparency of processes and activities of the Company s enterprises, elimination of financial, production, reputation risks, as well as implementation of adjusting, preventive and compensatory measures for the deviations identified Governance System 2017 PLANS: works aimed at improving the safety of the Company facilities; improvement of physical protection of nuclear facilities, Procurement Management PROCUREMENT The Company adheres to the principles of openness and transparency in the management of procurement. About 99% of competitive procurement procedures are conducted on the electronic platforms of LLC Fabrikant, JSC Unified Electronic Trading Platform and JSC Center for Economic Development, which allows saving labor and financial resources. The largest groups of products/services in terms of procurement volume are: products and services purchased from the nuclear industry enterprises; power supply. They are also the largest categories when conducting procurement from a single supplier. Major groups among competitive procedures: materials and equipment; construction and installation works; maintenance and repair of equipment. technical protection of information in the local networks of enterprises of the Mining Arm; implementation of the Anti- Corruption Plan at the Company s enterprises; In accordance with the procurement policy of ROSATOM, ARMZ Uranium Holding Co.is not entitled to establish any supplier preferences by area. Local suppliers participate in competitive procedures on a general basis. No particular approaches to working with local suppliers are applied. The Company does not keep a special accounting for the costs of such suppliers. Please see the Report for more details on key principles, basic goals and control in procurement. 770 million RUB is the total savings of the Company s subsidiaries following the results of due to conducting procurement procedures on an open competitive basis increase in the efficiency of the management system and the implementation of single corporate rules regarding the exchange of limited distribution documents among industry enterprises. 7.5 billion RUB is the total amount of competitive procurement procedures Results : competitive procurement procedures were held for the needs of the enterprises of the Company; 7.5 billion RUB is the total amount of competitive procedures conducted; the economic effect (difference between the initial procurement price and successful tenderer s bid value) based on the results of competitive procedures was 770 billion RUB. in October of the reporting period, a regional forum ATOMEX REGION- was organized in the city of Chita together with ANO ROSATOM Corporate Academy PLANS 0.9 thousand competitive procurement procedures are planned. G204 1 G G205 1 G205 2 SAFETY MANAGEMENT SYSTEM Results : compliance with the Regulations for Physical Protection of Nuclear Materials, Nuclear Plants and Nuclear Storage approved by Russian Government Decree No. 456 dated July 19, 2007 is performed at the Company s enterprises to the maximum extent, as evidenced by the inspections of Rostechnadzor and FSTEK in ; in order to improve the security of the Company s enterprises, measures aimed at strengthening the anti-terrorist stability of the Mining Arm facilities are taken: the Monitoring project is being implemented; the physical protection system is being updated at JSC Dalur, JSC Khiagda and PJSC PIMCU. in accordance with the decision of the Director General of ROSATOM, as well as in order to improve the level of information security, the Company s enterprises have strengthened organizational and technical measures aimed at increasing the level of protection of the automated systems; implementation of economic safety, asset protection prevention and fight against corruption-related violations; the Company s enterprises participate in the sectoral program to combat theft and fraud actively. Particular attention is paid to verifying information about possible abuses and violations coming through the specialized Hotline communication channels; measures were taken to improve the regime of commercial and official secrets. In, the Company s enterprises joined the Unified Policy for Trade Secret Protection in the Nuclear Industry; measures aimed at increasing efficiency and preventing corruption violations were taken (local anti-corruption regulations have been brought into line with the legislation of the Russian Federation, the Anti-Corruption Plan for 2017 is implemented); procurement monitoring to diminish economic damage risks to the Company s enterprises was enhanced; anti-corruption contract reviews and counterparty checks are held. Close attention is paid to the purchases conducted in a non-competitive way. Table. 8. Company s Procurement Structure Table. 9. Procurement Structure by Cost, % Indicator Share of procurement made through the organization of public open competitive procedures within the UIPS, % Procurement amount of, million RUB Overall amount of the Holding Company s procurement, million RUB Savings of, million RUB Total savings of the Company following the conduct of procurement procedures on an open competitive basis, million RUB Cost % Up to RUB 1 million 2 Up to RUB 10 million 12 RUB million 19 RUB million 14 More than RUB 100 million 53

26 Capital of 3.1. CAPITAL OF JSC ATOMREDMETZOLOTO Financial Human capital capital MAIN CAPITAL OF JSC ATOMREDMETZOLOTO certain resources (stocks) of tangible and intangible assets which the Company used in its operations. A part of assets is jointly owned with other stakeholders. Social and reputational capital 03 Capital of Financial Capital Management Production Capital Management Human Capital Management Intellectual Capital Management Social Capital Management Natural Capital Management capital Intellectual Production capital capital 3.2. FINANCIAL CAPITAL MANAGEMENT STRATEGY IN ACTION: RESULTS OF EFFECTIVE CAPITAL MANAGEMENT Natural G201-1 ISSUES OUR MEASURES RESULTS ACHIEVED High production cost Excessive number of employees Unprofitable Holding High inflation rate in the Russian Federation Debts to banks for hedging until Reduced the costs and optimized the number of employees Got exempt from hedging payments earlier, thus saving 1 billion RUB The Company became profitable Tripled the AFCF earned Financial Operations Management continued to systematically implement the corporate-wide financial and investment policy of ROSATOM in in order to achieve the strategic objectives of the Mining Arm. THE MAIN RESULT OF THE YEAR IS THE PRODUCTION COST RETENTION (15.70 billion rubles in, billion rubles in ) WITH REVENUE GROWTH (21.35 billion rubles in ; billion rubles in )

27 52 53 RESULTS : A set of transactions was implemented within the plan for allocation of the international business segment, which resulted in the complete closure of the transaction for the sale of a 100% stake in Uranium One Holding N.V., including the repayment of the debt for the part of the company s shares sold in 2013; implementation of measures for financial assistance to PJSC PIMCU in terms of setting preferential interest rates on the funds borrowed from ; subject to high floating capital cost in financial markets, the activities to daily consolidate temporarily idle funds of the Holding Company s companies were organized, which allowed obtaining additional profit in excess of the industry-wide corporate interest; the procedure for final capitalization of JSC Khiagda was completed, which allowed to free the company from the historical project debt and to create a reserve for the profitable work of this extracting asset in subsequent years; weekly monitoring of the level of accounts receivable and accounts payable of the Company entities with breakdown by external and industrial counterparties was arranged, which aims to increase the efficiency of floating capital management; quarterly meetings of the Committee for Receivables and Payables were held; the level of overdue receivables of the Company s enterprises was reduced by 25%. OPERATIONAL ACTIVITIES AND PRODUCTION COST MANAGEMENT RESULTS : the measures to optimize managerial and commercial expenses initiated in were continued to be taken (the terms of the office lease agreement for were revised, the costs for office cars and personnel were optimized, the agent s fee for the sale of uranium was reduced); the projects aimed at reducing all types of losses were implemented within the ROSATOM Production System: Increase in labor intensity when issuing task assignments for brigades, Reduction in mining equipment downtime, Reduction in the terms of purchasing the necessary materials and equipment, Increase in the actual loading of wagons by 20% when shipping rock mass ; metal extraction was increased due to a change in the scheme for ore recrushing and commissioning of a new workshop at the Hydrometallurgical Plant of PJSC PIMCU; a new stowing complex was commissioned at PJSC PIMCU, which allowed optimizing the mining and laying operations; a new scheme of opening up reserves and terminating off-balance dumps using the heap leaching method was applied, which made a significant contribution to the production economy of PJSC PIMCU; a competition was held among the subdivisions of PJSC PIMCU (aimed at monthly reduction of costs related to the planned standards); measures were taken to save energy and reduce energy consumption during peak hours, meeting the energy consumption schedule (the day ahead market), which allowed reducing energy costs; a tax privilege on the property tax by JSC Dalur operational units was applied; a tax privilege on the property tax for JSC Khiagda was received within the framework of the investment agreement with the Republic of Buryatia. By reducing the debt burden and increasing the efficiency of the placement of idle funds, the balance of interest to receive and pay was improved. FINANCIAL PERFORMANCE INDICATORS OF THE COMPANY Due to the lack of legislative requirements or other needs, has not been preparing any consolidated financial statements under IFRS since. Consolidated indicators of the income statement and the statement of financial position presented below are formed on the basis of the data of separate accounting statements under the RAS of the Company s enterprises located within the control loop of and included in the budget consolidation perimeter. As noted in previous annual reports, due to the fact that ROSATOM made a strategic decision in 2013 to spin-off the international uranium mining asset segment to an individual group (currently controlled by JSC Uranium One Group), since 2013 the management structure of includes only Russian uranium mining and service companies. Please see the 2013 Annual Report of for more details. Since the process of legal transfer of foreign assets is still not completed, the IFRS reporting financial indicators given in the previous annual reports include performance of both Russian and foreign subsidiaries of. We do not stop at what we have achieved so far. One of the Company s priorities for 2017 is a steady decrease in costs in all business areas. Vera Sorokina Chief Accountant of A number of measures were taken to optimize the management of the Company s current assets through the inventory system management: the annual program of procurement of basic and auxiliary materials was reduced; the standards of insurance reserves were revised towards lowering; the rhythm of supply of the main standardized materials was improved through the introduction of a reserves assessment system; ambitious targets in KPI cards of senior and line managers of subsidiaries were set. These measures helped reduce the level of reserves by 12% (as compared to ). G Financial Capital Management Table. 10. Consolidated Income Statement of and the Russian Companies within Its Control Loop and Consolidation, million RUB Item Sales revenue Cost of goods sold Gross profit/(loss) Administration and selling expenses Interest Receivable Interest Payable Other income/(expenses) Profit/(loss) before income tax Income tax Net profit / (loss) Table. 11. Consolidated Statement of Financial Position of and the Russian Companies within Its Control Loop and Consolidation, million RUB Item Non-Current Assets Intangible assets and R&D Fixed assets Long-term financial investments Other non-current assets Current assets Reserves Receivables Financial investment Cash Other current assets ASSETS Equity Charter capital Capital surplus Contributions to the authorized capital received from shareholders before registering changes in the Charter Reserve capital Retained profit Long-term liabilities Loan funds Other long-term liabilities Short-term liabilities Loan funds Payables Deferred income Provisions for pending expenses Other liabilities EQUITY AND LIABILITIES This is why the financial indicators for the previous reporting periods presented in this Report may not coincide with the similar financial indicators presented in the reports for the previous years. ПThe receipt of profit by ARMZ Uranium Holding Co. in is due to: keeping operating costs at the level of with revenue growth of 829 million RUB absence of payments to banks on historical hedging transactions, which in amounted to million RUB (transactions closed in ) receipt of income from the sale of shares of the subsidiary Uranium One Holding N.V. Repayment of all long-term loan obligations at year-end was mainly due to the completion of the purchase and sale transaction of a 100% stake in Uranium One Holding N.V. in the reporting year. The main financial indicators are within the average regulatory values, which characterizes the Company as a financially stable entity capable of timely meeting its obligations. A slight decrease in the financial stability indicator is due to the growth of non-current assets formed as a result of the implementation of investment programs at the Company s enterprises with the sources unchanged.

28 54 Table. 12. Dynamics of the Main Financial Indicators of,, million RUB Item Financial Stability Ratios Equity ratio Liquidity Ratios, percent Current liquidity ratio Quick liquidity ratio Return on sales ratio, % Return on sales 8.3% 26.5% 28.0% +1.5 / variation Liquidity indicators confirm absence of risks of shortage of money resources and high level of solvency of the Holding. Financial performance dynamics in - was mainly affected by: the reserves reduction program implemented at the enterprises of the Mining Arm in ; systematic work with receivables. 4.6 billion RUB is the net profit in, which almost completely covered the losses in and. (- 3.4 billion rubles and 1.5 billion rubles, respectively) Financial Capital Management Fig. 23. Investment project groups in Operating enterprises (uranium) 33% 29% 1% Other projects, including non-uranium Enterprises under construction (uranium) PJSC PIMCU Fig. 24. Key investments of ARMZ Uranium Holding Co. in 6% 9% 70% 33% 23% PJSC PIMCU JSC Khiagda JSC Dalur 29% 23% JSC KHIAGDA 29% JSC First Mining Company Other projects by 35% Investment was increased due to an increase in the modernization pace and replacement of obsolete equipment for the uranium and coal business of PJSC PIMCU, as well as due to the development of prospective JSC Dalur deposits. JSC DALUR Investment Activities The Company s investment activities are aimed at achieving strategic goals related to the development of uranium mining and the implementation of business diversification projects. PJSC PIMCU JSC Khiagda JSC Dalur JSC First Mining Company 5bln RUB DEVELOPMENT PROJECTS TOTAL INVESTMENT OF THE COMPANY IN MAIN INVESTMENT OBJECTS Fig. 22. Investment Dynamics by Project Groups in - and plans for % 11% 1% 88% Operating enterprises Non-uranium projects 4% 12% 10% 74% 2% 3% 90% PRODUCTION FACILITY MAINTENANCE Other Russian projects New enterprises under construction 3% 5% 20% 5% 72% 4.4 billion RUB investments in development and maintenance of operating uraniummining plants made up Investments in development and maintenance of operating uranium-mining plants made up 4.4 bln. RUB. and were allocated for: construction and installation works at production facilities, infrastructural and power facilities; production facility design; capital mining and mining and development operations; upgrade and reequipment of production facilities; IT support; design works, R&D; organization of safety; acquisition of production and drilling equipment. Construction of a pressure water drainage pipeline at the Urtuyskiy coal strip mine was completed; positive conclusion of GGER for Mine No. 6 Project was obtained; permission for construction of facilities at Mine No. 6 was received; development of working documentation for the construction of a ground complex was started. a power-driven two-deck sorting plant was commissioned on the ore classification site of the central research laboratory; implementation of a global program for the modernization of the heavy-duty dump truck fleet at the Urtuyskiy coal strip mine was launched. Positive conclusions of GGER on the design documentation for Istochnoe and Vershinnoye deposits were obtained; a permission to commission the facilities of the third stage of the Khiagdinskoye deposit was obtained; complex testing of the sulfuric acid preparation workshop equipment was completed (the facility was commissioned); physical launch of a local sorption plant and first products at the Istochnoye deposit. The operational unit 2-1 of Khokhlovskoye deposit was commissioned; design documentation for pilot works under the project Associated Scandium Production at JSC Dalur Production Site (stage 1) was completed. In, the work on non-uranium projects Organization of Associated Scandium Production at JSC Dalur and Processing of Pyrite Cinders continued The dynamics of structural changes in the investment program of the Company are related to diversification and development of non-uranium projects. In particular, there was an increase in investment into the implementation of the Pavlovskoye project, aimed at creation of a cost-effective production complex on the basis of Pavlovskoye lead-zinc deposit that includes a mine and processing plant. In, the work on non-uranium projects Organization of Associated Scandium Production at JSC Dalur and Processing of Pyrite Cinders continued. However, in the structure of investment by key areas of the Company in, investment in the development of the existing uranium mining enterprises continues to take the leading position, 85% whereof is held by JSC Khiagda, PJSC PIMCU and JSC Dalur. 85% of investment in the development of operating uranium mining enterprises in the investment structure by key areas in

29 56 57 RESULTS In, optimization of the investment programs of uranium mining enterprises was performed. As a result of optimization of the projects of PJSC PIMCU, JSC Dalur, JSC Khiagda, the investment program for could be reduced by 17% (as compared to the fact initially stated by enterprises) without cutting the planned production facilities. In order to improve the efficiency and transparency of investment activities, the following measures were taken in : A new Sirius information management system for projects and programs was introduced allowing to automate most of the planning, control, modification of projects, etc. In the long term, it is planned to integrate the Sirius program with other accounting systems at the Company s enterprises, including the accounting ones, which will significantly reduce the labor costs and the time of reporting processes for the implementation of key project parameters. Work to improve the Regulation on the management of the annual investment program in terms of PLANS FOR 2017 AND THE MIDTERM In accordance with the mid-term business plan, the volume of the investment program of for 2019 according to a preliminary estimate may be over 22 billion RUB. A key trend will be increased efforts for implementation of diversification projects ( Pavlovskoye, Processing of Pyrite Cinders at PJSC PIMCU, Organization of Associated Scandium Production at JSC Dalur ), as well as introduction of new optimization solutions to reduce the cost of uranium produced. One of the key tasks on the mediumterm agenda of the Company is the start of construction of the Mine No.6 of PJSC PIMCU; working documents are already being developed and active negotiations with potential investors are conducted. strengthening the control over the accuracy of planning the annual investment program and monitoring monthly investment payments was carried out; the process for preparing reports on investment and project activities with a view to reducing time and labor costs was optimized, in particular, the volume of reports was reduced, the templates of technical-economical and technical justification were amended. In order to improve the efficiency of investment project management, active measures with ROSATOM were taken on RPS project. The time of the process of preparing reports on investment activities was reduced. Measures taken to improve the efficiency of investments and optimize the investment process within the Company allowed to improve profitability, reduce the amount of equity and own sources of funding applied to current maintenance of equipment and infrastructure, industrial sites, increase responsibility of staff of the Company s entities for implementation of investment activities and achievement of target financial indicators of the projects. Fig. 25. Investment structure in the mid-term period for Ensuring operational efficiency Business diversification 91% 8% 1% Meeting demands of ROSATOM in Russian uranium at a competitive production cost more than 22 billion RUB is the volume of the investment program of for The current challenging economic and market conditions make the management pay special attention to the investment program of the Holding Company. In order to maximize the project implementation impact, we optimize the funding structure by balancing internal and external sources, as well as by using government support measures. Marina Chebanenko Head of Financial Department, 3.3. Production Capital Management 3.3. PRODUCTION CAPITAL MANAGEMENT Raw Materials Base Development GEOLOGICAL EXPLORATION WORKS IN RUSSIA In, geological exploration was carried out at the Khokhlovskoye deposit (Kurgan Region), the Pavlovskoye deposit (Novaya Zemlya archipelago) and also within the limits of the mining allotments of the uranium deposits of the Streltsovskoye ore field. Implementation of Caldera project aimed at uranium deposit prospecting with rich ores within the Streltsovskoye ore field continued. The total volume of investments in geological exploration was 48.1 million RUB. MAIN MEASURES AND RESULTS: cameral works on the development of permanent exploration conditions FS and pilot works on uranium mining by in-situ leaching were carried out at the Khokhlovskoye deposit; within the Caldera project, a positive expert opinion was received by FSUE RosgeolExpertiza on the project Conducting prospecting and evaluation at the Streltsovkoye ore field ; a positive conclusion of the GKZ FBU on the permanent exploration conditions FS and the report with the calculation of the reserves of polymetallic ores (zinc and lead) of Pavlovskoye deposit was received PLANS: completion of exploration and development at the Khokhlovskoye deposit, approval of a permanent exploration conditions FS and a report with the calculation of reserves with FBU GKZ; obtaining of a license for the right to use subsoil and development of project documentation for exploration at Dobrovolnoye uranium deposit. Table. 13. Reserves and Resources of Russian Enterprises of ARMZ Uranium Holding Co. as of , thousand tons Company Reserves Resources Р1* Total MRB PJSC PIMCU JSC Dalur JSC Khiagda JSC Elkon MMP JSC UMC Gornoye Total Table. 14. Exploration Drilling and Financing in Types of activities PJSC PIMCU (the Caldera project, exploration within the mining allotments of the PS deposits) Drilling volume, thousand line meters JSC Dalur (Khokhlovskoye deposit) 16.3 JSC First Ore-Mining Company (Pavlovskoye deposit) thousand tons is the ranium mineral raw materials base (MRMB) of as of Total ranked 2-nd among the largest uraniummining companies of the world Amount of funding, million RUB

30 58 59 At PJSC PIMCU, mining is carried out by underground mining. Also, the introduction of a new method of extraction being block in-situ leaching is underway. Fig. 26. Underground Uranium Mining Scheme Ore mining Ore-receiving complex 3.3. Production Capital Management Fig. 27. Uranium Mining by Downhole In-Situ Leaching Drilling Construction and connection of production wells WELL DRILLING PATTERN: Injected Pumped out DOWNHOLE IN-SITU LEACHING METHOD IS THE MOST ECO FRIENDLY AND SAFE URANIUM MINING METHOD 1. Mining operations 2. Drilling and blasting 3. Longwall face extraction 4. Ore delivery to surface 1. Transportation 2. Rock mass sorting GANGUE/ CUT-OFF GRADE ORE Acidification of ore bodies, leaching 1. Feed of the reagent solution through the injected wells 2. Fluid saturation with uranium as a result of chemical reactions HIGH-GRADE ORE LOW-GRADE ORE Tailings dump Hydrometallurgy Ore concentration plant Dump Delivering productive fluids to sorption, sorption Uranium is precipitated on resins in sorption columns RETURN FLUIDS HIGH-GRADE ORE LOW-GRADE ORE GANGUE/ CUT-OFF GRADE ORE Processing in ovens Heap leaching Processing of solutions, desorption Uranium recovery Uranium oxide concentrate Extraction from productive fluids Precipitation Filtering Drying 1. Thickening 2. Decontamination 3. Dehydration 4. Obtaining uranium as yellow powder (yellow cake)

31 60 61 G Uranium Mining Companies Uranium production of PJSC PIMCU By Regulation of the Government of the Russian Federation No.675, the Krasnokamensk Priority Social and Economic Development Area was created. Favorable conditions for the organization of new industries and additional jobs are created in the PSEDA territory Production Capital Management Special nomination of the Director General of ROSATOM EFFICIENCY TEAM OF PJSC PIMCU S.V. Shurygin Director General D.E. Mikhailov Deputy Director General for Economics and Finance Heritage reserve TEAM OF JSC ATOMREDMETZOLOTO A.A. Drachev Deputy Executive Director Capital reserve I.A. Kiselev Deputy Chief Engineer for Mining S.V. Dunaev Head of the Department Capital reserve O.A. Isyanov Head of the Department Capital reserve A.N. Rabolt Director of PS No. 8 A.B. Beketov Director of PS No. 1 Heritage reserve MID-TERM PLANS: commencement of construction of Mine No. 6. PRODUCTION VOLUME, TONS URANIUM RESERVES, THOUSAND TONS IMPLEMENTATION OF PLANS PJSC PIMCU: CREATION OF PRIORITY DEVELOPMENT AREA 2017 PLANS: PLANS STATED IN THE REPORT RESULTS RESULTS Output of tons of uranium (-127 tons as compared to ) Continued measures to improve the efficiency of the enterprise and reach break-even operation, including through the following: commencement of construction of Mine No.6; resuming operations at Mine No.8; suspension of operations at Mine No.2 at the end of ; switching mines to five-day work week; optimization of excessive production capacities and infrastructure: stowing complexes, electric and thermal networks and other infrastructure COMPLETED. The production program for the uranium output was fully implemented. COMPLETED. At year-end, break-even reached and positive financial result obtained. The operating mode of underground mines No. 1 and No. 8 was changed for a five-day working week. Earlier, the operation of mines was carried out round the clock seven days a week. Two weekend days for the main face labor group allowed for timely and high-quality repairs of mining equipment in order to ensure uninterrupted operation for five days and reduce emergency repairs. An EM warehouse on the horizon 6 of Mine No. 8 was commissioned. Pit-bottom working yard of the pit 14 of the RESh and the wagons exchange complex of the horizon 7 of the Mine No. 8 were commissioned. At year-end, PIMCU reached the break-even level with a positive financial result. The decision to prepare for building Mine No. 6 was taken. output of tons of uranium (-242 tons as compared to ); production of 3500 thousand tons of coal; implementation of measures for the transition of individual HMP workshops from seven-day to a five-day working week; continuation of modernization at the underground uranium mine No. 1 and the underground mine No. 8 IMPLEMENTATION OF PLANS of the mining equipment park, replacement of obsolete imported mining equipment with high-quality domestic analogues; launch of the project Mine No. 6 implementation as a part of the continuation of the site deconservation; beginning of construction of the second stage of the Srednee tailings pond at the expense of the funds from the Federal Target Program. Industrial tests of the new PD-1D (narrow-clamp) load-haul-dump machine developed and produced by RMZ within the program of import substitution and technical re-equipment of underground mines have been started. Mining operations at Mines No. 2 and No. 4 were stopped because of the negative profitability of cleaning-up of the remaining reserves. A mobile sorting plant KLEEMANN was put into operation (within the framework of the program for sorting off-balance dumps and forming a stack of heap leaching). Annually, it will process up to 375 thousand tons of off-balance ore thousand tons of coal were produced. Six 90-ton dump trucks were purchased and commissioned at the Urtuyskoye surface mine office. The launch of high-performance dump trucks allowed to fulfill the annual program for the extraction of coal. The production efficiency enhancement program and rationalization are designed, first of all, to achieve maximum return from each workplace. Those standing at the beginning of any process: a worker, a master, a site manager, a workshop manager, these are the people that have to come up with practical solutions for process tasks every day. Without their help, we would not be able not only to identify all the losses and eliminate them at all stages of the production chain, but to begin this largescale work in general. Sergey Shurygin Director General of PJSC PIMCU

32 Production Capital Management Uranium production at JSC Dalur The technology for the associated scandium extraction was completed on the basis of the pilot plant. Construction of a pilot plant intended for the production of high-purity scandium oxides and aluminum-scandium master alloys was started. 62 MID-TERM PLANS: reaching industrial extraction and obtaining of a rough concentrate of scandium oxide, organization of the aluminum-scandium master alloy production; commencement of experimental work at the Dobrovolnoye deposit; opening of all the reserves of the Dalmatovskoye deposit PLANS: production of 580 tons of uranium (-11 tons as compared to ); continued work on the development of ROSATOM Production System; obtaining of the positive opinion of FAA Glavgosexpertiza of Russia on the project of pilot operation at the Khokhlovskoye deposit. Approval of feasibility studies for permanent exploration conditions and a report with calculation of the field stock Khokhlovskoe in the State Commission of Reserves; obtaining of a license for the right to use the subsoil of the Dobrovolnoye deposit and commencement of the project work in the deposit. CASE URANIUM RESERVES, THOUSAND TONS IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT RESULTS Output of tons of uranium COMPLETED. The production program for the uranium output was fully implemented. Continue pilot uranium mining and reconstruction (expansion) of the existing pilot plant at Khokhlovskoye deposit COMPLETED. Pilot works were continued. (-1.6 tons as compared to ) Continue work on the development of ROSATOM Production System COMPLETED. Continued work on the development of ROSATOM Production System. The project of pilot operation in terms of the Scandium project was developed and approved. INCREASE IN PUBLIC ACCEPTABILITY JSC DALUR: IMPROVEMENT OF QUALITY AND DEPTH OF RAW MATERIALS PROCESSING PRODUCTION VOLUME, TONS Currently, JSC Dalur develops two fields in Kurgan region Dalmatovskoye field in the same district and Khokhlovskoye field in Shumikhinskiy district. In April 2017, an auction for the right to use the Dobrovolnoye subsoil area of federal importance in Zverinogolovsky District of Kurgan Region for exploration and uranium extraction will be held in accordance with the decree No.2692-r issued by Dmitry Medvedev, Prime Minister of the Russian Federation. JSC Dalur plans to take part in the auction and get a license. The implementation of the Dobrovolnoye deposit development project means territory development for Zverinogolovsky district, i.e. cessation of population churn and unemployment by creating about 350 additional jobs for the local population, infrastructure development (construction and repair of roads, gas pipeline, etc.). In November, a round table was held in the village of Zverinogolovka, at which JSC Dalur presented a project for the development of the Dobrovolnoye deposit. In January 2017, a trip to the village of Uksyanskoye and to JSC Dalur enterprise was made specifically for the villagers and the leaders of the Zverinogolovsky district of the Kurgan region. First, the guests were introduced to the social projects implemented in Uksyanskoye. Residents of the Zverinogolovskoye district were welcomed in the new school built at the initiative and with the financial participation of the uranium mining enterprise. Afterwards the guests visited an in-situ leaching landfill, a local sorption plant and, of course, the main production building of the enterprise. The specialists explained the uranium production process in detail and told about the new jobs required. The guests were convinced of the reliability and safety of all stages of the production chain and said that they would support the implementation of the Dobrovolnoye deposit development project. The low, as compared to other producers, final product cost is not only the result of implementation of the most environmentally friendly, cost-effective and safe in-situ leaching technology, advanced machinery and equipment and innovative software, but also the merit of all personnel permanently working on performance and resource usage efficiency enhancement. Nikolay Poponin Director General of JSC Dalur

33 64 65 Uranium production at JSC Khiagda The main production site and the related infrastructure facilities, which are necessary for the enterprise to reach the project capacity of tons of uranium per year in 2019, were commissioned Production Capital Management Honorable Diploma FOR GROWTH POINT REACHING TEAM OF JSC KHIAGDA A.B. Glotov Director General E. O. Epova Head of the Department for Efficiency Increase A. V. Filippov Deputy Director General for Economics and Finance A. V. Gladyshev Production Director A local sorption plant and auxiliary infrastructure facilities of the mining complex at the Istochnoye deposit were launched. TEAM OF JSC ATOMREDMETZOLOTO A. A. Shipilov Line manager PRODUCTION VOLUME, TONS URANIUM RESERVES, THOUSAND TONS IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT The commencement of industrial operation of sulfuric acid plan and continuation of development of mining and processing infrastructure of JSC Khiagda will continue Output of 540 tons of uranium (-52.4 tons as compared to ) Commissioning of new blocks and fields of Khiagdinskoye deposit JSC KHIAGDA: COMMISSIONING OF THE MAIN PRODUCTION SITE FACILITIES 2017 PLANS: production of 663 tons of uranium (-123 tons as compared to ); commencement of the Vershinnoye deposit development: construction and binding of wells, beginning of the acidification stage, start of commissioning at the local sorption plant; commissioning of deposit No. 4 of the Khiagdinskoye field; commissioning of the power complex turbine. MID-TERM PLANS Increase in uranium production volumes and reaching design capacity of tu/year in the future. IMPLEMENTATION OF PLANS PLANS STATED IN RESULTS THE REPORT RESULTS COMPLETED COMPLETED. the production program for the uranium output was fully implemented. COMPLETED. Obtaining two positive opinions of FAA Glavgosexpertiza of Russia on the projects for developing deposits of the Khiagdinskoye ore field. Commencement of the Istochnoye deposit development. Construction and binding of wells, beginning of the acidification stage, start of commissioning at the local sorption plant Start of construction on Vershinnoye deposit Drafting of Dybrynskoe deposit project commenced COMPLETED. A new design of technological wells was introduced. Physical launch of a local sorption plant at the Istochnoye deposit. The objective execution is extended for the medium term. The objective execution is extended for the medium term. Due to our cohesive and efficient workforce only, we completed the construction of the industrial site facilities in the hardest natural and climatic conditions. I am sure that knowledge, experience and responsible approach will allow us to continue solving all problems with the maximum result. Aleksandr Glotov Director General of JSC Khiagda

34 Other entities of ARMZ Uranium Holding Co JSC RUSBURMASH JSC RUSBURMASH is a comprehensive geological exploration company with a powerful drilling service. The company is involved in geological exploration works for the benefit of and construction of all types of wells in the solid minerals deposits. In, JSC RUSBURMASH carried out its drilling operations by the structural production divisions of the Holding Company for three operating uranium mining companies: JSC Dalur, JSC Khiagda and PJSC PIMCU. PJSC PIMCU JSC KHIAGDA JSC DALUR DRILLING OPERATIONS PERFORMED, THOUSAND LINE METERS IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT Passing of the state expert review at FBU GKZ Rosnedra with the approval of permanent exploration conditions FS and subsequent calculation of lead and zinc ore reserves of Pavlovskoye deposit Conclusion of the agreement with JSC VNIPIpromtekhnologii to conduct geological engineering survey for the construction of mining and processing plant on Pavlovskoye lead and zinc ore deposit Conclusion of the agreement with JSC FMC for bulk sampling of Pavlovskoye deposit ores for semi-industrial testing Completion of the third phase of the state expert review of the project "Development of design and estimate documentation for survey and evaluation operations on Streltsovskoye ore field in -2020" Preparation of materials and support to the preliminary examination at FBU GKZ with adjustment of information materials for Operating Conditions FS for Drawing up of a long-term work program: Assessment, analysis of development of the current hydrodynamic and hydrochemical regimes of water-bearing systems of Streltsovskoye ore field and monitoring of hydrogeological conditions in the context of intensification of mining and production operations and execution of works under the program PLANS: Completion of 100% of drilling operations: PJSC PIMCU thousand ML; JSC Khiagda thousand ML; JSC Dalur thousand ML; completion of the field stage of engineering and geological surveys within the project Mining and Processing Plant based on the Pavlovskoye lead-zinc ore deposit (Novaya Zemlya archipelago); finalization of the sections Feasibility study of the operational conditions of the Streltsovskoye ore field for for expert review at FBU GKZ; introduction of the prompt fission neutron well logging (KND-M) in JSC Khiagda in IMPLEMENTATION OF PLANS RESULTS PLANS STATED IN THE REPORT RESULTS COMPLETED. The state expert review at FBU GKZ was passed. The lead and zinc reserves were entered into the State Register of Reserves. COMPLETED. A contract was concluded. A geological survey was carried out in order to draft a justification of investment (OBIN stage) of the partly design documentation for the Mining and Processing Plant based on the Pavlovskoye leadzinc ore deposit (Yuzhny island, Novaya Zemlya archipelago). COMPLETED. A contract was concluded. Samples were taken and transferred to the laboratory. The work was performed. COMPLETED. Materials were provided to the customer for passing the state expert review. COMPLETED. Materials were provided to the customer for passing the state expert review. Not implemented due to the fact that the Customer revised plans and excluded this type of work Production Capital Management Development of permanent conditions FS and reserve estimation report for Khokhlovskoye deposit Development of geological exploration project for Dobrovolnoye deposit Continuation of geological and geophysical support of the drilling of production and exploration wells on uranium deposits of JSC Dalur and JSC Khiagda Continuation of work on implementation of KND-M (prompt fission neutron logging) on Khokhlovsoye uranium deposit (Kurgan Region) Introduction of KND-M at JSC Khiagda when developing field No.6 according to pre-agreed program and methodology Exploration drilling on Pavlovskoye deposit (Novaya Zemlya archipelago) Prospecting drilling for diamonds under the contract with JSC ALROSA (PJSC) order to refine the uranium ore radiology, identify undeveloped rock pillars and redistributed uranium in the course of ISR; continuation of geological and geophysical support of the drilling of production and exploration wells on uranium deposits of JSC Dalur and JSC Khiagda; continued introduction of KND-M (prompt fission neutron well logging) in the deposits of the Company s uranium mining enterprises, as well as during the Dobrovolnoye deposit geological exploration project development at different development stages for the entire lifecycle; further introduction of new well designs using an NPVC pipe Not implemented due to the fact that the customer chose another contractor. The objective was postponed to The license is expected to be received in COMPLETED. In accordance with the production program of JSC Dalur, geological and geophysical support of drilling at the uranium deposits of JSC Dalur and JSC Khiagda was organized. COMPLETED. The pilot introduction of the prompt fission neutron well logging (KND-M) was successfully carried out during construction of technological wells at the Khokhlovskoye deposit (JSC Dalur). COMPLETED. The action program 2017 was prepared. COMPLETED. Geological exploration at the Pavlovskoye deposit was fully completed. The contract with JSC Alrosa was terminated due to being unprofitable. provided that the Company s mining enterprises are interested; introduction of construction technology (technology of soil strengthening, vibroflotation, jet grouting). conclusion of income agreements on traditional types of geological exploration and drilling services for customers outside the Company loop, as well as on the new types of services being construction works both inside the Company and for external customers aimed at making the enterprise reach break-even operation level; continuation of optimization measures. LONG-TERM PLANS: implementation of the production program of the Company for the construction of wells on time; development of construction competencies to equip the Company s testing sites for downhole in-situ leaching; continued diversification of business: entry to foreign markets for the provision of solid mineral exploration and drilling services, development of competences and providing services in the field of geological and mathematical modeling, geological engineering surveys, rehabilitation of areas with increased radioecological risk, engineering research, construction etc.; justification of increased efficiency of developing the deposits of the Khiagdinsky ore field at the expense of augmentation of uranium reserves on the developed landfills, flanks of deposits and fields, taking into account the experience of 2017 in terms of identifying the undeveloped rock pillars at the Khiagdinskoye deposit.

35 68 69 JSC VNIPIpromtekhnologii is the engineering center of ARMZ Uranium Holding Co. JSC VNIPIpromtekhnologii has extensive experience in designing mining enterprises and facilities for the disposal of radioactive materials, as well as environmental, energy and civilian facilities. JSC VNIPIpromtekhnologii provides its services in three sectors of the engineering market: MINING SECTOR RW TREATING SECTOR SECTOR OF ENVIRONMENTAL SERVICES 2017 PLANS: In 2017, it is planned to reach breakeven operation by orientation to the external market (outside the Company loop and the industry), as well as through the inventory of the Institute s competencies, the optimization of production processes and the increase in labor productivity at the Institute Production Capital Management JSC First Mining Company (FMC) Preparations for the construction of the northernmost MPP in the Russian Federation based on the Pavlovskoye lead-zinc deposit (Novaya Zemlya Archipelago) are underway. According to the results of exploration works completed in, the increase in the deposit reserves was 20%. Design and exploration work was launched in. MPP commissioning is planned for FMC is engaged in the development of the Pavlovskoye lead-zinc deposit and is a user of subsoil plots in the basin of the river Bezymyannaya, Novaya Zemlya Archipelago, Arkhangelsk Region. In March, the Pavlovskoye deposit reserves explored were entered into the State Register of Reserves. In, the first stage of complex engineering surveys in the licensed area was terminated. IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT Continued work on the preparation of technology for paste filling of underground cavities using uranium ore tailings study of hardening paste parameters and development of measures to reduce radium exhalation Works carried out under the state contracts with the Ministry of Industry and Trade of the Russian Federation to develop technology for extraction of associated rare-earth metals and scandium during downhole in-situ leaching of uranium, obtaining a marketable product RESULTS COMPLETED. In order to optimize the technology, the work will continue in COMPLETED. All state contracts were executed in full. PLANS FOR 2017 AND THE MIDTERM: termination of a set of field engineering surveys, technological tests of a semi-industrial sample, continuation of design work; implementation (after the completion of engineering, survey, design and other necessary works) of construction and commissioning of the mining and processing plant, extraction and processing of lead-zinc ores followed by the sale of lead and zinc concentrates. Preservation and development of R&D and engineering competences in terms of design of new and modernization of existing industrial capacities for uranium mining, radioactive waste management and decommissioning of nuclear and radiation hazardous facilities, as well as other facilities for the benefit of ROSATOM and outside customers (generating additional revenue) COMPLETED. Research and engineering competencies were acquired; there was an increase in competencies in the field of construction. A competence center for geological and mathematical modeling of mineral deposits was created in order to optimize the development of deposits at the existing and projected mining enterprises, which will allow creating an additional portfolio of orders both within the Holding and outside the ROSATOM loop. COMPLETED EXTRA. Six positive opinions of FAA Glavgosexpertiza of Russia were obtained for the projects developed. The project of constructing Mine No. 6 of PJSC PIMCU deserves particular attention. It was carried out with the participation of the Institute of launch-and-processing complex at the Istochnoye deposit (JSC Khiagda). The construction and assembly works at the Reconstruction of Srednee tailings pond (PJSC PIMCU) facility were completed in full and at the required time by the construction division of the Institute. The design and survey on the Pavlovskoye deposit was carried out as part of the engineering development. Further improvement of the system of project management, transition to a new system of personnel remuneration, the competencies to perform the functions of a technical customer by the Institute were developed. As a part of the project management system implementation, the CAD system was introduced (Stage 1) and the employees were trained thereon. IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT There are plans to obtain approval of permanent exploration conditions FS and final geological report with reserves calculation from FBU GKZ, conduct geological engineering surveys for the construction of the mining enterprise, carry out design works. The estimated amount of funding is 329 million rubles RESULTS COMPLETED. Permanent exploration conditions FS was developed with the calculation of reserves as of The state expert review at FBU GKZ was passed. The explored reserves of the Pavlovskoye lead-zinc deposit within Bezymyanskiy ore node in the basin of the river Bezymyannaya, Novaya Zemlya Archipelago, were entered into the State Register of Reserves. The first stage of a complex of field engineering and geological surveys for the design and construction of a mining enterprise and a seaport was completed, preliminary works were started, declarations of intentions were made for the construction of an MPP and a seaport, the main technical solutions for the Pavlovskoye project were put to elaboration. Technological ore samples for carrying out semi-industrial deposit ore studies were selected. JSC FMC: PAVLOVSKOYE DEPOSIT DEVELOPMENT

36 70 JSC Elkon mining-metallurgical plant (JSC Elkon MMP) The company is engaged in geophysical operations, exploration, mining and processing of uranium ores Production Capital Management LLC United Uranium Plants (LLC UUP) LLC UUP trades in natural uranium in the Russian market and also deals with intermediary, consulting and marketing activities. IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT RESULTS Undertaking work to obtain a license to transport nuclear materials COMPLETED. Receiving a license to transport nuclear materials (NM). Certification of quality management system and environmental management systems in compliance with the international ISO standards, in line with the terms of the supply contracts concluded with the customers COMPLETED. Certification of LLC UUP management systems for compliance with international standards ISO 9001:, ISO 14001: and ISO 28000:2007 was carried out. Conclusion of mid-term contract with JSC Techsnabexport on the supply of raw materials after 2017 Extension of the long-term contract with JSC TVEL until 2022 inclusive COMPLETED. Holding negotiations on deliveries and their parameters with customers. The structure and schedules of supplies and sales of the material for 2017 have been agreed. All natural uranium supplies planned for from both enterprises in Russia and in the Republic of Kazakhstan for the needs of the industry on a parity basis were carried out. IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT The preservation of sleeping mode for Elkon project until December 2017, as approved by the Investment Committee of ROSATOM on 2017 (Minutes of No. 1-IC/46-Pr) Continue operations of JSC Elkon MMP project operators and JSC EGMK-Project with a view to preserve competences and previously developed project materials RESULTS COMPLETED. The sleeping mode was preserved. COMPLETED. Operations of JSC Elkon MMP project operators and JSC EGMK-Project are supported with a view to preserve competences and previously developed project materials PLANS: preservation of the sleeping mode for Elkon project until December 2017; continue operations of JSC Elkon MMP project operators and JSC EGMK-Project with a view to preserve competences and previously developed project materials; if macroeconomic conditions improve, it is planned to consider resumption of the active phase of pre-design operations PLANS: coordination with customers of the material supply structure and schedules for 2018; conclusion of mid-term contract with JSC Techsnabexport on the supply of raw materials since 2018; extension of the long-term contract with JSC TVEL until 2026; supervisory audit conducted by JSC Dalur together with the representatives of Fortum energy company (Finland) within the framework of cooperation in the field of supply chain control of JSC TVEL by the buyer of nuclear fuel. I am truly pleased to note that we have executed the annual uranium supply program in full; we have also been certified according to the updated international standarts and have obtained a license for the right to handle nuclear materials during transportation. Nikolai Krailin CEO LLC United Uranium Plants

37 72 73 LLC ARMZ Service LLC ARMZ Service is authorized for organization of procurement procedures for ARMZ Uranium Holding Co. enterprises and provides transport services and personnel provision services. IMPLEMENTATION OF PLANS PLANS STATED IN THE REPORT Study of the possibility to apply the project of transferring a number of functions related to preparation and support of competitive procurement procedures for the needs of PJSC PIMCU Provision of procurement procedure organizer services to enterprises of the Company Development of category strategies for procurement (developed approach to organization of procurement of certain categories of products) Continued work on organization of centralized procurement for the needs of the Company as a part of category management. Basic standardized materials used by several subsidiaries and purchased on a regular basis were selected for pilot strategies in Project activities as part of ARMZ Uranium Holding new business development program PLANS FOR 2017 AND THE FUTURE: RESULTS COMPLETED. The issue of the transfer of powers (within certain limits) for the formation and support of competitive procurement procedures for the needs of PJSC PIMCU was studied. COMPLETED. Provision of procurement procedure organizer services to enterprises of the Company. 401 competitive procurement procedures for needs of the Holding's plants were organized for the total amount of million RUB. Reduction from the initial maximum purchase price million RUB (for procedures where at least one bidder was admitted) was achieved. COMPLETED. Procurement category strategies were developed. Basic standardized materials used by several affiliates and purchased on a regular basis were selected for pilot strategies in. COMPLETED. Project activities as part of ARMZ Uranium Holding Co. new business development program were carried out in the following directions: Creation of a timber processing complex, Processing of pyrite cinders. Moreover, attracting of external sources of funding the priority project Mine No. 6 was intensified. further study of applying the project of transferring a number of functions related to preparation and support of competitive procurement procedures for the needs of PJSC PIMCU; further provision of procurement procedure organizer services to enterprises of the Company; continued work on organization of centralized procurement for the needs of the Company as a part of category management; further implementation of design. 401 competitive procurement procedures for needs of the Holding plants were organized for the total amount of million RUB. CASE PROJECT DEVELOPMENT OF A CATEGORY MANAGEMENT SYSTEM IN THE MINING ARM This project has been implemented by the Company since. Category management is an integrated approach to the procurement of certain categories of products, which provides cost reduction, while meeting the required quality and terms for the purchased products/ services, including determining the optimal way of procuring, supplying, paying, and forming the Terms of Reference. RESULTS : Formulation of strategies for the Company s consolidated purchases was carried out. Consolidated purchases are homogeneous by the class of needs of the Company s affiliates, which are carried out annually on a regular basis. The plan to cover the procurement procedures carried out in accordance with the approved category strategies in APP was executed. The coverage was 83.57% (planned 80%) for MTRiO and 70.32% (planned 50%) for the services from the APP amount in. As compared to last year s prices of similar supply contracts, economic efficiency resulting from the procurement procedures using the category management methods in was 8.57% for MTRiO and 6.81% for the services Production Capital Management ROSATOM Production System. Complying with Product Quality Requirements IMPLEMENTING RPS PROJECTS The introduction of the ROSATOM Production System at the Holding entities started in October In, the work was focused on: scaling culture and ideology of RPS across ARMZ entities; defining and promotion of production system leaders; preparation for creating an RPS-entity at JSC Khiagda; breakeven of PJSC PIMCU. RESULTS : due to better organizing of labor, minimizing losses, standardizing of operations and accurate planning of works the productivity of breakage face miners at underground mines of PJSC PIMCU was improved by 10% (from to kg/ person in one shift). This is due to the project Increasing the productivity of underground mines by shifting to a 5-day working week ; due to implementation of technological solutions and optimizing the processes of longwall face extraction and reduction in lost time, the costs of stowing operations were reduced by 19.4%, drilling operations by 16.4% and materials by 6.4% (project Reducing costs at UUM No. 1 by PJSC PIMCU ); due to the parallel construction and keeping with the network schedule of construction, the process time decreased by 30% (project Reducing process time when winning and preparing uranium reserves at JSC Khiagda ); standardization of work of JSC RUSBURMASH rig operators during construction of wells, clear work planning and implementation of new technical procedures the process time was reduced from 180 hours to 144 hours (project "Reducing process time in the construction of production wells at JSC Dalur"); due to optimization of works, the time required for reworking materials that are to be kept in the operational archive was decreased by 33% (the industry office project Operational storage of non-secret management documentation that is being implemented in, JSC Khigada, JSC Dalur and LLC UUP ) PLANS: continuation of work under RPS according to three key areas: operational activity; business process efficiency; administrative efficiency; the decrease of the time for processes in longwall face extraction and trenching mine openings (rock mass production, delivery of materials, over 850 million RUB The total actual effect on implemented measures made up descent and hoisting of personnel); inclusion of JSC Khiagda into the perimeter of deployment of ROSATOM Production System and opening 38 RPS-projects within the scope of this work, including: Reducing process time when delivering rock mass, Reducing process time when preparing for and winning the reserves of Vershinnoye deposit, Optimization of mining operations at Vershinnoye deposit, Optimization of the reserve electric power manual introduction when main power is turned off due to an emergency, Optimization of using main chemicals at the ISL workshop Optimization of the terms of all processes in the financial calendar when preparing SSP and the annual budget, Optimization of the operation control of financing and investments, Increase in the economic effect when procurement is carried out by the specialists themselves ; Carrying out of the practical and theoretical resident and remote training of the Holding Company s personnel of more than 500 people by the licensed coaches of the Holding Company using the approved programs of the ROSATOM Corporate Academy ; recertification of, PJSC PIMCU and JSC Khigoda management systems in order to make them compliant with international ISO standards: 9001:, ISO: 14001:. Due to a decision made by the ROSATOM JSC Khiagda was included in the perimeter of the systematic deployment of the ROSATOM Production Systems in COMPLYING WITH PRODUCT QUALITY REQUIREMENTS Products of uranium mining enterprises of PJSC PIMCU, JSC Khiagda, JSC Dalur must comply with Technical Specifications TU for Uranium Oxide Concentrate and TU 2009 for Ammonium Polyuranate (yellow cake). In, all products manufactured by the above enterprises were in compliance with technical specifications and there were no claims from the consumers. In December, LLC UUP received certificates that proved compliance with international standards: ISO 9001: quality management system; ISO 14001: ecological management system; ISO 28000:2007-supply chain safety management system. In, there were no claims about the finished products of the mining companies PJSC PIMCU, JSC Dalur and JSC Khiagda. G417 1 G417 2 G417 3 G418 1 G419 1 G416 1 G416 2 G416 1 G416 2

38 74 75 G302 4 G302 1 COMPREHENSIVE ENERGY SAVING AND EFFICIENCY IMPROVEMENT PROGRAM The energy saving and efficiency program in has been implemented at since 2010 in accordance with orders of ROSATOM. In, PJSC PIMCU, JSC Dalur and JSC Khiagda implemented a motivation system with implementation in including measures for the development of infrastructure, maintaining energy THE RESULTS OF IMPLEMENTING THE MOTIVATION SYSTEM IN PJSC PIMCU: KPIs of all managers and head specialists now include energy efficiency parameter; a system for reducing the electric power consumption during the peak hours is introduced; there were measures taken to lower the capacities for purchases at the whole-sale market. Electrical power RESULTS Motor gasoline JSC Dalur and JSC Khiagda: KPIs of all managers and head specialists now include energy efficiency parameter; in the management buildings and administration and accommodation buildings the Rules of energy saving and energy efficiency were explained with further explanatory work carried out. Fig. 28. Power Resources Consumption in in 9.2 TDL PJSC PIMCU thousand RUB 7 TDL There were 19 low-cost or free events carried out, including: conservation of the Martovskiy stowing complex; switching turbocompressor station cooling water circuits to the less powerful pump; changing the work regime of main fan installation in mines during the weekends; removing the 12th level of the Gluboky mine from the drainage work schedule; transferring the oxygen station at RMZ from the 24/7 working mode to 12-hours a day; adding light relay to the lighting circuit; disabling lighting at a few objects (station Promyshlennaya of train depot); disabling the electric radiators at the 5th stowing complex; disabling the pumps and installing lower power pumps at a few objects; disabling the building for mazut-handling at the HMP; reducing the electric power required for the lowering and hoisting of the drilling assembly; thousand RUB JSC Khiagda 0 TDL 0 thousand RUB Diesel fuel There were 4 low-cost or free events carried out. There were also 3 paid events with a pay-off period of more than 5 years, including: the energy efficiency of utilization of transformer equipment was improved by reducing no-load losses on transformers; elimination of current loads unbalance; reducing the electric power consumption by the main building of the ISL workshop; creating a lighting system for the administration and accommodation premises of CLB with a change to energy saving lighting; applying heat-insulating coating on heating unit pipes in the main building on Khiagdinskoye deposit; reconstruction of the central road lighting system, administrative, living and industrial premises of in-situ leaching plant and installation of motion sensors with light relay on lighting systems in industrial and administrative buildings of in-situ leaching plant. saving and efficiency culture, setting targets to line managers, workers, experts and other employees in the long term. 1.3 billion RUB of economic effect from implementation of operational efficiency improvement measures During, used more than liters of car gasoline. Other power resources types (coal, fuel oil, natural gas) are not used at the Company. The Company rents its office premises. Under the office rent agreement, consumed power is included in the common list of municipal services and is paid for on a monthly basis under a separate bill. Within the reporting period, the Company used the electric power to the total amount of million RUB. JSC Dalur There were 5 low-cost or free events carried out. There were also paid events with a pay-off period of more than 5 years, including: installing motion sensors in the living quarters; switching company vehicles to another type of fuel (from petrol to liquefied petroleum gas LPG); partial replacement of inefficient light source to LED lamps; change of temperature regime in local sorption unit building and other locations; 3.3. Production Capital Management 2017 PLANS further implementation of the motivation system for the development of infrastructure, creating and maintaining energy saving and efficiency culture, setting targets to line managers, workers, experts and other employees in the long term, including: PJSC PIMCU: including energy saving into KPIs of managers and head specialists (product engineers, mechanics, power engineers) with a share of not less than 20%; introducing a statute on planning of energy resources consumption; reducing the consumption in peak hours, used to calculate buying capacity at the whole-sale market. JSC Dalur and JSC Khiagda: including energy saving into KPIs of managers and head specialists (product engineers, mechanics, power engineers) with a share of not less than 10% for personnel that doesn t work with energy and 20% for those that work with energy. implementing the following measures for power saving and efficiency: There were 13 low-cost or free events carried out at PJSC PIMCU: disabling the fans for cooling generators and engines on the hoisting unit on the weekends; decommissioning several objects of the main fan unit (MFU) and the mine; changing the working schedule of the MFU when blowingover mine openings; reducing the productivity of MFU on weekends; decommissioning one of the conditioners at workshop No. 2 at the HMP; changing the working regime at workshop No. 4 at the HMP; continuing the decrease in costs for purchasing power (transferring the working day at the mountain complex from Saturday to Monday). At JSC Khiaga there were 7 paid events with a pay-off period of fewer than five years, including: the launch of the steam turbine; the energy efficiency of utilization of transformer equipment was improved by reducing no-load losses on transformers; elimination of current loads unbalance; reconstruction of the lighting system of administration, accommodation and production premises of the ISL shop with energy saving lighting introduced; reconstruction of the lighting system of the administration, accommodation and production premises of the ISL shop with energy saving lighting introduced Main building (if financing allows) and others. At JSC Dalur there were paid and low-cost events held, including purchase and installation of movement sensors with light relays for production, administration and accommodation facilities; partial replacement of inefficient light source to LED lamps; partial replacement of inefficient light source to LED lamps; purchase of submersible pump control stations with variable frequency drives. Fig. 29. Indicator of Energy Resources Economy in in comparison with in money terms, million RUB, % million rub. Fact 228, ,71 Recognition letter from the first Deputy Director General of ROSATOM A.M. Lokshin 5 % In the prices of base () year Due to successful exceeding of expectations of tasks on energy saving and energy efficiency in (12.71% with the task being 3%), timely forming the assigned part of the consolidated annual report of the ROSATOM on energy saving by using a new IT-instrument, the Automated system of energy efficiency management, I express my profound gratitude to the Director General of V.N. Verkhovtsev, as well all employees of, PJSC PIMCU and JSC Khiagda who took part in this work, for their responsible approach to solving tasks at hand.

39 HUMAN CAPITAL MANAGEMENT 3.4. Human Capital Management Fig. 30. Average Headcount Dynamics in Main Regions of Operation in, persons Moscow Irkutsk Oblast Republic of Buryatia Governance System The personnel policy of is aimed at creating effective HR management system that would increase the efficiency of the Company. The key asset of is the people working at the Company. Their involvement in implementation of the corporate strategy, qualification and responsibility determine its long-term competitiveness. The company, strictly following the requirements of the labor Code of the Russian Federation, brings social orientation to its personnel policy, is committed to providing its employees with favorable conditions for successful work and professional growth. Kurgan Region Trans-Baikal Territory G Human Capital Features NUMBER OF EMPLOYEES Table. 15. Average Headcount Dynamics of the Company in, persons PJSC PIMCU JSC Dalur JSC Khiagda JSC VNIPIpromtekhnologii Average number of employees, as compared to, was reduced by 11.1% (-908 pers.) and made up persons. 11.1% JSC Rusburmash LLC ARMZ Service TOTAL NUMBER OF EMPLOYEES BY REGION In 2017, further reduction of staff size is expected at PJSC PIMCU (-319 persons), JSC RUSBURMASH (-162 persons) and at JSC VNIPIpromtechnologii (-42 persons) due to lower natural uranium mining and drilling volumes, as well as due to downsizing at JSC VNIPIpromtechnologii. At the same time, at JSC Dalur there are plans to increase the average number of employees by 16 people due to a launch of highly technological The main reason for the reduction of the average number of employees: organizational arrangements at PJSC PIMCU at the end of ; the preservation of Mine No. 2 and a reduction in production of natural uranium at other mines of PJSC PIMCU; transfer of all PJSC PIMCU mine personnel to a five-day working week and increasing the length of the working week based on the results of a special evaluation of working conditions; production resources for associated production of scandium and increasing the production of natural uranium at the Khokhlovskoe deposit. At JSC Khiagda, due to a change in deadlines for commissioning new production facilities in and commissioning a local sorption unit at the Vershinnoye deposit, there are expectations for the average number of employees to increase by 55 people. Share of workers in the total number of employees decrease in volume of drilling operations at JSC RUSBURMASH; decrease of the number of management personnel and optimisation of the headcount in scientific divisions of JSC VNIPIpromtekhnologii. The same trend is traced in headcount dynamics in the regions where the Company operates. Headcount reduction is observed in Trans-Baikal Territory and Republic of Buryatia regions where PJSC PIMCU and JSC RUSMURMASH operate. has gone down from 69.1% () to 66.3% () due to a lay off at PJSC PIMCU, with the number of workers going down from people () to people (). The share of employees working under a fixed-term labour contract in the total number of employees has by the end of reporting period decreased from 5.8% () to 3.8%. The number of such employees is 267. More than 75% of employees (201 people) were employed at PJSC PIMCU, JSC RUSBURMASH and JSC VNIPIpromtekhnologii. G405 1 G405 2 Fig. 31. Average Number of Employees by Categories in workers specialists managers GENDER-AGE PERSONNEL COMPOSITION The share of female in the total number of employees at the end of the reporting period when compared to has significantly increased to 30%. PERSONNEL DISTRIBUTION BY AGE In, the share of employees from 36 to 50 kept growing and has exceeded the share of young professionals. The share of employees over 50 has increased insignificantly. The main reason for the reduction of the young professionals share was a preference given to keeping the more highly qualified and experienced employees during layoffs and/or the reduction of number of employees at JSC RUSBURMASH and JSC VNIPIpromtekhnologii. Table. 16. Personnel Distribution by Employment Type in, persons Personnel distribution by labour contract and employment type Number of employees at the end of the reporting period Employees working under a labor contract concluded for an indefinite term Employees working under a fixed-term labour contract Employees working on part-time conditions Fig. 32. Distribution of Company Personnel by Gender in, persons % % % % % % Substantial portion of the organization s work performed by workers who are legally recognized as self-employed, or by individuals other than fulltime or freelance employees, including full-time or freelance employees of contractors not registered. No major seasonal changes in the number of personnel.

40 78 Fig. 33. Distribution of Company Personnel by Age in, persons Table. 17. Staff Turnover Dynamics of the Company in, persons PJSC PIMCU JSC Khiagda JSC Dalur JSC RUSBURMASH JSC VNIPIpromtekhnologii LLC ARMZ Service Total Fig. 34. Staff Turnover Breakdown by Gender in, persons, % % 35% 29.3% of average of number of employees 10.7% of average of number of employees 42% 35.8% % of average of number of employees 7.8% of average of number of employees 38.6% 37.6% 22.9% 22.2% 23.8% Under 35 years From 36 to 50 years Over 50 years 15% of average of number of employees 7.6% of average of number of employees Fig. 35. Number of Dismissed Employees broken down by Regions of Operation in, persons Moscow Kurgan Region Irkutsk Oblast STAFF TURNOVER G401 1 In, the overall staff turnover has significantly decreased when compared to to 21.7%. This is a testament to the overall improvement of financial and economic conditions at the Companies entities and an increase in their stability. The number of employees leaving their positions (due to any reason) has decreased 1.6 times when compared to and 2.5 times when compared to. At the same time, overall staff turnover at JSC RUSBURMASH is still very high due to regular changes in drilling operations volumes which directly define the number of production and service personnel needed. In accordance with the applicable RF labour legislation, employees are notified of a substantial change of their working conditions at least 2 months before the event. 40.0% 31.3% 21.7% Republic of Buryatia Trans-Baikal Territory G Human Capital Management Remuneration System Remuneration is paid to employees according to the Unified Standard Remuneration System of ROSATOM organizations (USRS), which allows for a unified approach to the formation of wages in the Company. Table. 18. Remuneration and Insurance Contributions, thousand RUB Indicator Payroll fund, total including: payroll fund allowance for holidays allowance for payment of annual bonuses salaries of persons working under civil contracts Fig. 36. Share of Labor Costs in Revenue, million RUB Revenue, million RUB Labor costs, million RUB In, the average monthly salary at the Company has increased by 6.3% (when compared to the previous year) to 59.3 thousand RUB. The biggest salary growth was seen at the entities of PJSC PIMCU, JSC RUSBURMASH and JSC VNIPIpromtekhnologii where in special organizational arrangement to reduce the number of employees took place. AVERAGE MONTHLY SALARY The wage structure saw some insignificant changes which were connected with the introduction of the monthly index payment (MIP). The terms and conditions for defining MIP size were reflected in the collective bargaining agreements of PJSC PIMCU, JSC Dalur and JSC VNIPIpromtekhnologuu and Statutes on remuneration which all the entities of the Holding Company adhere to. In MIP was introduced in JSC Khiagda and JSC Dalur. At JSC Khiagda the index payment for The share of the base salary (position salary/wage rates and integrated incentive allowance) in the total volume of labour costs is 35%. Labour costs still constitute a significant share of the revenue, however this share progressively decreases (from 54.5% in to 30.4% in ) due to an increase in labour productivity and a slight growth of wages. employees of grade 10 and below was set at 666 to 992 RUB per month. At JSC Dalur, the index payment from 690 to RUB per month was set for all employees except the Director General. A wider reach and an increased size of the index payment in comparison to JSC Khiagda was due to basic salary at JSC Dalur being lower than at JSC Khiagda. As such, setting a differentiated MIP has allowed to reduce the differences of base salaries at entities that are equal when it comes to their operating results. There is a plan to take measures to develop the industry remuneration system in 2017 (the plan was approved by the Director General of the ROSATOM on ), according to which: removing limits due to grades and positions when making decisions on awarding bonuses for performing high-profile tasks (HPT) and on the sizes of bonuses for one HPT and overall for the year; the possibility for increasing the variable part (30%) of the salary while receiving approval or input from the We are trying to create opportunities to further the professional development of all our employees and to allow everyone bring high-profile projects to life and achieve the most ambitious goals together with the Company. Stanislav Anikeev HR Director, JSC Atompredmetzoloto primary trade union and introducing changes into Company regulations and the collective bargaining agreement; the possibility for increasing the operating bonus by no more than 20% from the share of the IMB transferred to the operating bonus. Moreover, since there were changes to the salary structure at JSC Khiagda and JSC Dalur and operating bonus payments were introduced for the employees of the production divisions.

41 80 81 The monthly indexing payment is used in the industry as a tool for indexing the employees wages due to higher consumer prices of goods and services. Introducing MIP allows for an additional economic benefit and allows to differentiate wages. Base salary/rate Integrated motivating bonus Monthly index payment Operating bonus One-time bonus Payments due to district regulations Payment for days spent on business trips on average Compensatory additional payments Other payments in the payroll fund Allowance for holidays Table. 19. Average Monthly Salary at the Enterprises of the Company in, RUB PJSC PIMCU JSC Khiagda JSC Dalur JSC RUSBURMASH JSC VNIPIpromtekhnologii Fig. 37. Structure of Labor Costs (minus the insurance contributions) in, million RUB, % 9,3% 483,9 12,9% 671,3 3% 155,5 5% 260,9 1,6% 82,8 0,3% 14,5 24% 1 250,9 11,6% 605,5 0,1% 2, Human Capital Management Table. 20. Dynamics of Social Expenses in, thousand RUB, % Type of SE/CSP Amount, thousand RUB Relative share, % Amount, thousand RUB Relative share, % Amount, thousand RUB Relative share, % Employee VMI Employee voluntary insurance from accidents and diseases Health resort treatment and children s recreation Non-working pensioner support Rendering assistance in dwelling conditions improvement Non-state pension support Costs for sports and cultural public events Catering Material assistance to employees Traveling to and from recreation and treatment facilities Other social expenses Overall amount of social expenses excluding taxes and maintenance costs of social infrastructure objects Expenses for social infrastructure object maintenance THE KEY SOCIAL POLICY DIRECTIONS ARE AS FOLLOWS: promoting the healthy lifestyle increasing the social security of employees and non-working retirees creating comfortable conditions for the employees to work and rest strengthening the corporate culture increasing the patriotism of the young people Allowance for ODR reserve Payment due to civil contracts 22,6% 1 176,1 9,1% 473,9 0,5% 25,6 Taxes (contributions) for social expenses Overall amount of social expenses G Social Policy of the Company Fig. 39. Structure of Social Expenses in, million RUB, % The social support for the employees and their family members as well as for the non-working retirees is based on the Unified industry social policy of the ROSATOM and its entities by implementing corporate social programs. The payments for transporting the employees of entities located in the regions equated to the far north regions (PJSC PIMCU, JSC Khiagda) and their luggage to their vacation places amounted to around 37 million RUB. CORPORATE SOCIAL PROGRAM (CSP) A SET PROCEDURE FOR GRANTING VARIOUS SOCIAL BENEFITS OF EMPLOYEES OF THE ROSATOM AND ITS ENTITIES. The social policy is implemented via the following CSPs: CSP of employee VMI; CSP of employee voluntary insurance from accidents and diseases; CSP of sanatorium-and-health resort based health improvement for the employees and their children as well as children s holidays; CSP of assistance to employees to improve housing; CSP of material assistance to employees undergoing specific situations; CSP of support for non-working retirees; CSP of organization of sporting and cultural activities; CSP of catering for employees; CSP of non-government pension provision. In, the overall volume of social expenses (SE) exceeded 175 million RUB. Fig. 38.Expenses for Providing Low-Cost Transportation to Employees Vacation Places thousand RUB thousand RUB PJSC PIMCU (including the travel tax) JSC Khiagda 1% 1 823,1 6% 9 959,4 4% 7 785,0 10% ,6 27% ,8 3% 4 940,8 26% ,4 2% 2 635,4 10% ,7 11% ,2 Employee MI Employee voluntary insurance from accidents and diseases Health resort treatment and health improvement Non-working pensioner support Rendering assistance in dwelling conditions improvement Non-state pension support Costs for sports and cultural public events Catering Material assistance to employees Taxes for social expences Other social expences

42 82 83 Fig. 40. Social Expenses per Employee in LLC ARMZ Service JSC VNIPIpromtekhnologii JSC RUSBURMASH JSC Dalur JSC Khiagda JSC PIMCU SPORTING AND CULTURAL EVENTS ARMZ SPARTAKIAD The ARMZ Spartakiad is organized annually, with the teams from the managing company and all organizations belonging to the Holding Company, as well as family members of employees of Moscow region organizations taking part. In September, events in futsal, volleyball, darts, chess, table tennis, arm-wrestling, kettlebell lifting and relay running were held. Moreover, the participants were given an opportunity to test their preparedness for the norms of the Russian-wide physical culture and sport complex GTO. The first place was won by the team of PJSC PIMCU. Overall, the event attracted more than 500 participants. QUESTS There is a growing popularity, especially among the younger employees, of quests where the participants must go through various obstacles by using only their wits. 10,5 17,2 20,9 27,3 36,3 48, In August, the Holding Company held a quest called The Mystery of the Unknown Material which attracted over 70 employees. WHAT? WHERE? WHEN? In two teams, Argun (PJSC PIMCU) and Stars (JSC VNIPIpromtekhnologii) made their first appearances in the regional industry championship of a popular Russian quiz game called What? Where? When? KVN In December, in the town of Krasnokamensk (Trans-Baikal Territory), there was a KVN tournament held among 9 teams from PJSC PIMCU. The Dauria Cultural Centre held 4 games which were attended by spectators from around the town. The final is to be held in May In, the social expenses per employee excluding low-cost transportation to vacation places amounted to 23.9 thousand RUB. The military-patriotic Zarnitza club was founded under the patronage of the primary trade union of PJSC PIMCU in The club s membership includes more than 70 children of the entity s employees. voluntary clean-ups and planting of trees and bushes in Krasnokamensk. An active participation in various public events, supporting children with disabilities and children living in orphanages, patriotic and creative upbringing of children and teenagers, promoting sports and the healthy lifestyle is now a good tradition of the Holding Company. In December the employees of PJSC PIMCU took part in organizing festivities and providing material support for children living in orphanages in Krasnokamensk and Kalga village, while the staff of the Dauria Cultural Centre together with the management of PJSC PIMCU held a special Gifts from Santa event for children with disabilities living in Krasnokamensk. The ROSATOM Schoolkid event attracted more than 600 children of the Holding Company s entities employees, many of which received prizes and awards. On June 12, there was a celebratory event held in Krasnokamensk (PJSC PIMCU) on the Russia Day which saw 113 winners of the ROSATOM Schoolkid receive their awards Human Capital Management There was also a big celebration held for the people of Krasnokamensk by PJSC PIMCU on the Children s Day. The central square held the traditional dance marathon called Make the Summer Brighter. There was also a competition of asphalt drawings and other events, in which more than 600 children and teenagers took part. 7 children (PJSC PIMCU 5, JSC RUSBURMASH 2) took part in the international creative project Nuclear Kids which is held by the ROSATOM annually and unites talented children of employees from various nuclear industry companies in Russia and partnering countries. The young members of the military-patriotic Zarnitza club (PJS PIMCU) took part in the 3rd Russian-wide military-patriotic Zarnitza game, held in August in Chita with the support of the Government of Trans-Baikal Territory, The Russian Youth Union and the Ministry of Science and Education of the Russian Federation Work with Youth and Students Search, support and retention of talented young people having required theoretical knowledge and practical skills is one of the priority areas of HR policy of the Company. In, the basis for the highly qualified personnel of the Company s entities was formed by the specialists who received high quality professional education. The key objectives of working with the youth were staffing support of research and production potential development and provision of succession within ARMZ. The following youth work measures are implemented in the Company: training of employees and their family members in higher educational establishments (targeted training); engagement of students from higher educational establishments and specialized secondary schools in production and pre-graduation internship; In December, the military-patriotic Zarnitza club for the first time took part in the Children are the Future of the Trans-Baikal Territory civil forum which was held in Chita. The experiences of the Zarnitza club were presented at the School of the Russian citizen stand which unified the best practices for patriotic upbringing of the younger generation. Of 24 organizations originally registered in this nomination only 8 were chosen, Zarnitza among them. organization of mentorship; organization of training and advanced training work etc.; holding competitions of professional mastery The best young worker. WORLDSKILLS ATOMSKILLS The Mining Arm team, consisting of experts and employees of the Holding Company s entities, took part in the 1st industry championship of the working professions under the WorldSkills AtomSkills rules in the following nominations: Welding Technology, Chemical Analysis, System and Network Administration. More information about the Forsage Youth Innovation Forum can be found in the Federal Communiction Projects section. In, JSC VNIPIpromtekhnologii held more than 6 sporting events and 5 mass cultural events devoted to the International Women s Day, Victory Day, the anniversary of the Chernobyl disaster, the Day of the Nuclear Industry Worker and the 65th anniversary of JSC VNIPIpromtekhnologii. The institute employees were very active in their participation in the singer-songwriter and poetry festival of the ROSATOM called Gamayun25. In, JSC RUSBURMASH held creative competitions of child artists devoted to the Miner s Day, the Day of the Nuclear Industry Worker and New Year s Day. More than 250 children took part. THE CHANGE SUPPORT TEAM also saw the introduction of the Change Support Team which includes the members of the reserve and the most active employees of the Holding Company. CST is required to promote the introduction of changes and develop the corporate culture of the whole industry in order to ensure ROSATOM s State Corporation global leadership. In, CST began work on a project intended to increase the awareness about values of the Holding Company in its entities and further the understanding of procedures used to apply these values by distributing the experience gained through various channels of internal communication. PLANS: The priority direction for the staffing of the Holding Company will still be actively working with the youth. In June, there was a quest game for the young employees of PJSC PIMCU devoted to the Youth Day. More than 50 young professionals took place. PUBLIC EVENTS PJSC PIMCU now traditionally holds events promoting a healthy lifestyle. In May more than 700 people took part in the spring ecological G Support for Retired Veterans Since 1992, the Holding Company, in keeping with the traditions of the Ministry of Medium Machine Building, Ministry of the Nuclear Energy and the ROSATOM, provides the social guarantees to the workers and the non-working retirees of the nuclear industry. At the moment, there are around working retirees accounted for in the Holding Company and its various entities. Support of non-working retirees is carried out in accordance with the Corporate Social Non-working Retiree Support Program. The amount of money allotted towards

43 84 85 G Fig. 41. Number of Registered Non-working Retirees in, persons MERITED nuclear industry PENSIONERS HONORARY nuclear industry PENSIONERS the implementation of CSP, was around 18.3 million RUB in (more than 10% of the overall SE). As part of the general means of support for the non-working retirees, the Holding Company regularly holds various celebratory and festive events in connection with state holidays and anniversaries. In April, there was a celebration of the 45-year anniversary of the Hydrometallurgic Plant, where 10 veterans received decorations from the ROSATOM. Currently, the Holding Company recognizes the collective agreements of PJSC PIMCU, JSC VNIPIpromtekhnologii and JSC Dalur. In JSC Dalur employee interests are represented by the Staff Board, which takes active participation in interaction with the employer. At PJSC PIMCU and JSC VNIPIpromtekhnologii, the trade unions include more employees. MERITED nuclear industry PENSIONERS Trade unions and collective agreements THE EVENTS HELD BY THE VETERAN SOCIETY OF JSC ATOMREDMETZOLOTO IN A meeting with the management of the Company on the Victory Day with the presentation of welfare assistance, as well as a meeting on the Day of the Nuclear Power Industry Worker with welfare assistance and invitations to a celebratory concert at the Russian Army Theater being presented. Participation of veterans and their family members in the ARMZ Spartakiad. Participation in the Parade of Creators at the Tretyakovskaya Gallery in November as initiated by the Community Council of ROSATOM (the goals of the competition: to save the living history of creation and development of the Russian nuclear industry for future generations, transferring of vital knowledge and experience from the elder generation to the young). Inclusion of veterans memories in the electronic library of ROSATOM in the ROSATOM s Living History sectionmemory.biblioatom.ru Inclusion of the Raw material base of the nuclear industry. Events. People. Achievements. in the electronic library of ROSATOM. Participation in the events devoted to the 30-year anniversary of the Chernobyl disaster; presentation of the Radiation Disasters Liquidator award pin to Vladimir G. Fomenkov, who in 1986 worked in Chernobyl for over a month. Fig. 42. Share of Employees Covered by Collective Agreements and Included in Trade union Organizations Number of employees covered by collective agreements Number of trade union organizations at the Company Number of trade union organization members HONORARY nuclear industry PENSIONERS MERITED nuclear industry PENSIONERS One of the most vibrant annual events is the celebration of the Miners Day which is considered the main professional celebration at PJSC PIMCU. In August, PJSC PIMCU organized and held a celebratory meeting of the entity s veterans where 33 veterans received state decorations of the Russian Federation, awards from the Government of the Trans-Baikal Territory and the ROSATOM. The main event was the induction of a memorial to Efim P. Slavskiy, the Minister of Medium Machine Building of the USSR. A stone with a memorial tablet was erected on the Alley of labour glory of PJSC PIMCU. HONORARY nuclear industry PENSIONERS Human Capital Management Employee Professional Training and Development RESULTS Internal communications Professional development and training Talent pool 3 Employee Awareness Days were held. On average, each Awareness Day covered more than people. One of the most important events aimed at minimizing the risks of the employees destructive behavior was holding the second conference for leaders of change called A Unified Team is our Key to Success. The conference was held in Krasnokamensk, with more than 100 employees of PJSC PIMCU and In order to timely, systematically and pointedly develop all personnel, there were events held in to train the employees of the Holding Company and improve their skills. All forms of learning (internal, external and remote) were used. In, there was extra attention paid to remote training of personnel (1.590 employees underwent such training). At JSC RUSBURMASH, there was mandatory training for managers under programs Radiation Safety and Labor Safety. In order to implement the departmental target program Additional measures in the employment sector aimed at lowering the pressure on the labor market in Trans-Baikal Territory in, a collaboration with the State Public Institution The Employment Center for the Population of Krasnokamensk District was held to carry out advanced professional training for the employees of PJSC PIMCU under the risk of termination. Based on the tools of Complex of Learning Courses, there was advanced professional training held for the following occupations: fork lift driver, elevator operator, compression unit operator, pump unit operator, mine front end loader operator, electric locomotive operator, elevator electromechanician, hydrometallurgical equipment operator, operator of loading and transporting machines and self-propelled drills, car-based lift driver, hoisting machine operator, lidman, maintenance and repair technician, slingsman, mining breakage face worker, Talent pool programs of ROSATOM were implemented. In, 78% of employees appointed to Top-1000 positions were selected from senior and middle management JSC RUSBURMASH taking part. During the conference, which had an open and informal vibe, the leaders of the labor collective and managers of PJSC PIMCU and discussed the problems at hand and looked for ways to solve them. The participants underwent training as set out in programs Change Management and Effective Communication based on the tools of the Complex of Learning Courses. crusher operator, operator of crushing, grinding and sorting machines, electrical/gas welder. Additionally, the employees of the Company underwent professional training in third-party organizations and gained knowledge in the following professions: operator of track measurements, battery technician. Overall, training under this program was undergone by 375 employees of the Company. According to the agreement on collaboration, the Employment Center reimbursed the costs of PJSC PIMCU of RUB overall. The Holding Company continued implementation of "Engagement Management" program, intended for training of middle and line management. As part of implementation of the industrial project Career and succession management, career maps were developed for all leadership positions of the Holding Company, along with succession plans for key positions of the Company. During the implementation of the Project in, 28 employees received promotions. talent pool. 71% of employees included in senior, middle and line management talent pool were promoted to a new position in. G404-2 G404-3

44 86 87 G404-1 Fig Number of training hours per a person broken down by entities of the Holding Company, hour/people PJSC PIMCU JSC VNIPIpromtekhnologii JSC Dalur JSC RUSBURMASH JSC Khiagda Managers 3.4. Human Capital Management In keeping with the tradition, the employees of the Holding Company took part in the annual industry nomination program ROSATOM s Man of the Year, which is intended to recognize the best industry employees achievements at the very top level of the State Corporation s management. Fig. 44. Employees of the Holding Company who won the ROSATOM s Man of the Year competition 1-st PLACE ROSATOM S MAN OF THE YEAR CONTEST PJSC PIMCU JSC VNIPIpromtekhnologii JSC Dalur JSC RUSBURMASH JSC Khiagda Subsidiaries Marzun Aleksandr P. Wellsite operator, 6th grade DIVISION: GTD and RRO Candidate s supervisor: I.N. Molkov JSC DALUR Kirin Timofey S. Hydrometallurgic equipment technician, 4th grade DIVISION: PSR Candidate s supervisor: A.N. Rodionov JSC KHIAGDA Goryunov Evgeniy Y. Mining breakage face worker, 7th grade DIVISION: PS No.1 Candidate s supervisor: A.B. Beketov PJSC PIMCU Cherenzov Oleg P. Drilling rig operator DIVISION: OSP DRILLING SITE No.3 Candidate s supervisor: A.N. Andreev JSC RUSBURMASH 2-nd PLACE 2017 PLANS Value of an employee Continue sports events at the Company, carry out corporate Spartakiad among the enterprises of the Company and team building events for employees of the management company. The Best ARMZ employee competition. Kolchin Sergey A. Wellsite operator, 6th grade DIVISION: GTD and RRO Gerasimov Vladimir V. Hydrometallurgic equipment technician, 6th grade DIVISION: HMP/GMZ Dmitriev Aleksandr S. Drilling rig operator, 7th grade DIVISION: LF Chepizubov Sergey A. Mining breakage face worker, 6th grade DIVISION: PS No.8 Internal communications 3 Employee Information Days. Continuation of the "PIMCU Change Leaders" program. Candidate s supervisor: I.N. Molkov JSC DALUR Candidate s supervisor: V.A. Gorvunov PJSC PIMCU Candidate s supervisor: A.V. Ryazanov PJSC PIMCU Candidate s supervisor: A.N. Rabolt PJSC PIMCU Professional development and training Implementation of mentorship program and job rotation at plants. Implementation of programs aimed at developing managerial skills of senior, middle and junior managers. Cascading project "Career and succession management" to all positions up to the specialists. Drawing up succession plans for all critical positions of the Company. 3-rd PLACE Husnetdinov Rinat R. Danilov Sergey I. Sofronov Aleksandr S. Ponomarev Andrei N. Talent pool Implementation of talent pool development programs ROSATOM Wealth, ROSATOM Capital and ROSATOM Talents as well as carrying out new selective measures with a view to form the pool of highly-potential middle and junior managers for preparation to work on key positions and projects. Hydrometallurgic equipment technician, 6th grade DIVISION: PICO Mining breakage face worker, 6th grade DIVISION: PS No.1 Drilling rig operator, 7th grade DIVISION: LF Wellsite operator, 6th grade DIVISION: UDPR Candidate s supervisor: Y.S. Lygalov Candidate s supervisor: A.B. Beketov Candidate s supervisor: A.V. Ryazanov Candidate s supervisor: O.A. Makarov JSC DALUR PJSC PIMCU PJSC PIMCU JSC KHIAGDA

45 Occupational Health and Safety ENSURING RADIATION SAFETY Within the reporting period, the individual effective dose at companies was not more than 20 msv. Individual dose of 100 msv was not exceeded for the period from 2011 to. An insignificant increase of the year-average effective dose of the PJSC PIMCU personnel was due to an increase in the volume of repair works at the radiation hazardous sections of the HMP. RESULTS PJSC PIMCU carried out planned measures to improve radiation situation in the mines, as described below: at the underground mines 1 and 8 34 isolation concrete and wooden strips were installed; 4 ventilation doors DV-1000 were restored and put into operation; according to the results of individual dosimetric control (IDC), timely rotation of staff was performed in units with uranium content of more than 0.5%. At the PJSC PIMCU HMP the following measures to improve the radiation situation were taken: supply and exhaust ventilation ducts of production were cleaned of dust; capital repairs of the bunkers where raw materials are held: changing the sheeted coating, checks of the reinforced concrete construction, repairs of protective constructions and guards at the node connecting it to feeders of LCS, further welding of weld seams; capital repairs of the grinder changing the crushing plate (the coating) and the fastening elements, regulating the throat. Table. 21. Average Effective Dose in, msv PJSC PIMCU JSC Dalur JSC Khiagda JSC VNIPIpromtekhnologii Fig. 45. Injury rate Dynamics at plants 2002-, units OCCUPATIONAL SAFETY Injury rate In, continued to work in order to prevent injuries and ensure safe working conditions. In at there were no accidents subject to investigation in accordance with federal norms and regulations. During the reporting year there were four work-related accidents at the plants managed by. No lethal accidents happened during the underground works. The following measures were implemented in order to ensure labor safety: all operating organizations developed and implemented Key safety rules, breaking of which will lead to the employee being punished in accordance with the Labor Code; G403 3 G403 4 all operating organizations created the position of the head safety inspector and implemented the Statute on the head inspector; the responsibility of the labor safety and industrial safety division heads was significantly increased (monthly evaluation and control); at the Mine No.8 of PJSC PIMCU an automated system of alcohol testing of all staff was implemented into pilot operation; all operating subsidiaries created Regulations for managers and specialists of divisions in order to properly carry out testing of personnel for alcohol, drug or toxic intoxication; PJSC PIMCU developed and implemented a system for advanced soil nailing at the locations where narrow mining works are held; special training were held for managers and specialists responsible for labor safety in order to introduce them to the requirements of training and education based on the Specialist of labor safety professional standard. G Human Capital Management The results we achieved in by reducing the injury rate of underground mining works were a testament to great work of the whole Holding Company team to improve the culture of safety during the last five years. Vsevolod Galinov Chief safety inspector at PLANS FOR 2017 AND THE FUTURE: Developing the project of the safety culture: creation of systems for control of the access of personnel in the state of alcohol intoxication to the production objects and health monitoring of personnel at admission to work; reviewing the criteria for evaluation of the work by division managers to prevent injury, development and implementation of the system for evaluating the work of divisions and shops in the safety areas in order to further motivate the staff; ensuring the proper function of an electronic labor safety presence for training, instructions, knowledge evaluation, preparing and certification of employees in various aspects of labor safety (PJSC PIMCU); development and implementation of the project called The norms of free distribution of protective clothing, special footwear and other protective gear to employees of PJSC PIMCU ; intensive work on an outsourcing project aimed at providing special gear, footwork and protective equipment to the employees. Fig. 46. Lost-time Injury Frequency Rates (LTIFR) at plants in Target value Fact Lost time injury frequency rate (LTIFR) Fig. 47.Fatal Injury Frequency Rate (FIFR) Fig. 48. Lost Days Rate (LDR) * FIFR LDR * Fig. 49. Occupational Diseases Rate (ODR) ** ODR ** G403 2 * LDR was calculated using the formula: Number of lost days from accidents and occupational diseases/number of man-hours worked) * ** ODR data were calculated using the formula: The total number of occupational diseases for the year/number of man-hours worked) *

46 INTELLECTUAL CAPITAL MANAGEMENT GEOTECHNOLOGY IS THE MAIN VECTOR FOR DEVELOPMENT OF THE ARMZ URANIUM HOLDING 3.5 Intellectual Capital Management Key objectives of ARMZ s Innovative Development Programs till 2030 are: uranium production efficiency enhancement at existing uranium mining plants; breakeven of current uranium mining plants; diversification of production. Fig. 53. The EBIT Effect at Various Entities of the Holding Company in, million RUB PJSC PIMCU JSC Khiagda JSC Dalur million RUB million RUB million RUB milliom RUB Innovative Activities In, the expenses for innovations of the Holding Company amounted to million RUB., with million RUB going to R&D, including 70.0 million of external financing (received from subsidies of the Ministry of Education and Science of the Russian Federation). INNOVATIVE DEVELOPMENT PROGRAM Within the Program s framework, the plans that has to develop revolutionary, necessary (nature-preserving and beneficial for labor safety) and supportive technologies belong to the direction called Moving to technologies of complex geological and mining modeling Fig. 50. Expenses for the Company s Development Investment Program in, million RUB TRANSFORMATION OF THE HOLDING COMPANY S KEY PROJECTS Fig. 52. Transformation of the Holding Company s key projects in NUMERATION OF PROJECTS IN THE REPORT FOR 1. Creation of a new uranium mining process platform based on geotechnological methods 2. Development of refractory uranium ore enrichment and processing of Elkon and Streltsovsky uranium ore region deposits 5. Improvement of in-situ and heap uranium leaching methods from ores of Streltsovskoye ore field deposits 6. Improvement of underground uranium deposit mining 3. Implementation of mine geological simulation systems and mining planning. Generation of a unified geological database 4. Development of a new generation hardwaremethodical logging complex for direct uranium estimations in boreholes by the instantaneous fission neutron method million RUB million RUB million RUB and technological support of uranium deposit development and are grouped into two main projects: The technological support of uranium deposit development using underground mining techniques (UMT). The technological support of uranium deposit development using in-situ recovery (ISR). 1 2 Fig. 51. Structure of R&D Expenses in, % NUMERATION OF PROJECTS IN THE REPORT FOR THE TECHNOLOGICAL SUPPORT OF URANIUM DEPOSIT DEVELOPMENT USING UNDERGROUND MINING TECHNIQUES (UMT) THE TECHNOLOGICAL SUPPORT OF URANIUM DEPOSIT DEVELOPMENT USING IN-SITU RECOVERY (ISR) ROSATOM KIR 70,7% External financing (Ministry of Education and Science of the Russian Federation) 29,3% UMT ISR KEY PROJECT No. 1 The technological support of uranium deposit development using underground mining techniques (UMT) At PJSC PIMCU there was research carried out to understand the parameters of the consolidating and paste filling based on the mill tailings that appeared after uranium ore was treated using the hydrometallurgy method, as a result of which a formulation and technology for preparing the paste filling were developed, and factors that influence the emanation of radon from the paste filling were defined. Methods for lowering the emission of radon into the mine s atmosphere were proposed. Introduction of the technology will reduce the amount of hydrometallurgical plant tailings sent to the tailings dump, improve radiation situation in workplaces, as well as reduce the cost of filling operations at the mines of PJSC PIMCU. For 2017, there are plans to carry out pilot tests of using paste filling underground. Industrial tests of using the SWELLEX hydraulic thrust fixing were finished at PJSC PIMCU. The use of this type of reinforcement will significantly reduce the cost of fastening of mine workings and improve the safety of the production staff. There are plans for 2017 to acquire and implement this type of fixing for mine opening. The implementation of technology for processing of off-balance waste dumps developed by Central Research laboratory of PJSC PIMCU and TBSU was finished. The resulting R&D ACTIVITIES IN MADE A SIGNIFICANT CONTRIBUTION TO MANY OF THE URANIUM-PRODUCING ENTITIES OF ARMZ ACHIEVING BREAK-EVEN POINTS ore concentrate are sent for treatment by heap leaching. The gangue which is left after the sorting is finished, is sent to the shear node in order to produce crushed stone to use it for filling the mine openings. In 2017, extension and doubling of the capacity of off-balance waste dump sorting area is planned by commissioning of the second ore sorting complex. Pilot works for intensification of heap leaching process using surfactants were finished. The use of surfactants significantly increased uranium extraction. Research on agglomeration of thin assays of raw ore for further treatment by heap leaching (HL). The effectiveness of the developed technology was confirmed. The uranium recovery is on average 10% higher than when leaching unagglomerated raw materials. KEY PROJECT No.2 The technological support of uranium deposit development using in-situ recovery (ISR). JSC Dalur Implementation of innovative mining and geological computer technologies and software developed by Seversk technological institute of NRNU MEPhl continued. The implementation of the created program-informational complex serves a base for creating the Smart Mine ISR system and allows to achieve additional accuracy when counting the reserves, additional quality when designing producing blocks and additional efficiency when developing the Dalmatovskoye and Khokhlovskoe uranium deposits. The program complex is protected by PC certificates, while the production of JSC Dalur is widely considered to be innovative. The revenue from selling innovative goods in amounted to 2.3 billion RUB. Development of a method for production of uranium from ore bunches of complicated form and small size based on the results of computer modeling carried out by the Seversk technological institute of NRNU MEPhl. The analysis of the modeling results showed that it was possible to effectively produce uranium from ore bunches of complicated form and small size by using the ISR method. Implementation of the developed method is expected to be carried out in , and, as a result, will allow to increase the effectiveness of ISR at the Dalmatovskoye

47 92 93 deposit which is currently at the finishing stage of development. Experimental production allowed to develop new designs of technological holes. Taking into account the results of the completed works, a decision to implement the developed design of holes which allowed to significantly lower capital expenses on building holes. In 2017, the works on improving the design of holes will be continued. Experimental production to implement the logging by neutron-induced fission KND-M to discover uranium at the final resting place of uranium ores during development operations. The results of using KND-M allow to implement it to solve various geological and geotechnical problems at the stages of searching for, discovering, operational exploring and developing uranium deposits using the ISR method in difficult radiation conditions. In order to achieve these goals, there are plans to use KND-M for different works at objects belonging to JSC Khiagda. JSC Khiagda Experimental production was carried out to develop new designs of technological boreholes to use in the conditions of widespread permafrost rock mass. There are works being carried out to adapt and implement a software complex developed by the Seversk Technological Institute of NRNU MEPhl. Works to implement the method of decolmatation of in-situ leaching boreholes were continued. The implementation of technological regulations for borehole decolmatation developed by JSC VNIIHT and JSC VNIPIpromtekhnologii has allowed to significantly increase the productivity of technological boreholes and the grade of uranium in productive solution of the Khiagdinskoe ore field. Works for using the ultrasound technology to restore and increase the productivity of technological boreholes were started by the Alexandra Pro company. SCIENTIFIC AND TECHNICAL ACTIVITIES IN THE FIELD OF BUSINESS DIVERSIFICATION Results As a continuation of previously started works on creating a complex technology for utilization of pyritic cinders in, there were one-shot pilot tests of process for leaching non-ferrous and noble metals from pyritic cinders by hydrochlorination: there were simple examples of production developed: pigments, rough copper concentrates, zinc and noble metals; a question of widening the technological scheme of the practice plot to the node of additional production of coagulants and pigments; there are plans for the beginning of 2017 to carry out pilot plant tests at the full cycle and develop technological regulations and source data to project a production unit; The project will enable to effectively recycle pyrite cinders, carry out reclamation of the cinder storage, significantly reduce environmental risks and improve the environmental situation around the plant. In, a project to develop a technology for associated extraction of rare earth metals and scandium from mother liquors during in-situ uranium leaching at JSC Dalur was started, subsidized by the Ministry of Industry and Trade of Russia. A project for development of high-tech aluminum-scandium master alloy production using downhole in-situ leaching uranium products began at JSC Dalur. The project will continue in MANAGEMENT OF INTELLECTUAL PROPERTY Results : seven state security documents for the results of intellectual activity were obtained: two patents for invention (JSC Dalur and JSC VNIPIpromtekhnologii); PC certificates (JSC Dalur); one Database certificate (JSC Dalur); two intellectual activity results were executed as know-how (JSC VNIPIpromtekhnologii); 15 applications for the state registration of results of intellectual activity were submitted: 11 applications for PC certificates (JSC Khiagda); four patent applications for inventions (JSC Dalur, JSC VNIPIpromtekhnologii, PJSC PIMCU). Our research shows that developing low-grade ores by geotechnological methods is much more profitable than developing regularor high-grade ores by mining methods. Igor Solodov Director of innovative and technological development programs G G Social Capital Management 3.6. SOCIAL CAPITAL MANAGEMENT Stakeholder definition seeks to making relations with all stakeholders public, trustful, open, transparent and based on a regular and constructive dialogue. The basis for identification and selection of stakeholders for subsequent interaction is the assessment of their impact on the current operations and strategic development of, as well as the established practice of the Company's interaction with external stakeholders and their dependence on the results of the Company s operations. Assessment of the impact of stakeholders of is shown in the ranking map. In, the ranking map was updated according to the results of the survey of internal and external stakeholders. In, due to the absence of significant changes in the Company s operating environment, the ranking map was not updated. See the Report for more details on the interests of stakeholders and mechanisms of interaction therewith. Fig. 54. Stakeholder Rank Map of in ,0 1,5 1,0 0, List of stakeholder groups Shareholders Investment community Local communities State (federal authorities, authorities of constituent entities of the Russian Federation), local government authorities, supervisory authorities Business partners, suppliers Holding s personnel, trade unions, including restructured personnel of the Company Product consumers (JSC TVEL, JSC Tekhnabexport) Mass media Environmental organizations Scientific and expert community Influence of stakeholders on the Company Influence of the Company on its stakeholders 1. Local communities 2. Media, NGOs 3. Investment community 4. Consumers of products and agencies (JSC TVEL, JSC Techsnabexport) 5. State, regulatory bodies 6. Business partners, suppliers 7. Company staff, trade union 8. Shareholders High degree of influence Average degree of influence Low degree of influence G102 42

48 Stakeholder Engagement understands that the consideration of opinions and interests of all stakeholders in the Company s activities is an essential condition for sustainable development. Communication Forms: general meetings of shareholders conventions and exhibitions presentations information through the media hotlines for employees federal communication projects regional projects of the Holding Please see the Report for more details on the role of stakeholder engagement. 3.6 Social Capital Management PRESENTATION IN THE FEDERATION COUNCIL ARMZ Uranium Holding Co. attaches the utmost importance to social responsibility of its business. The company is implementing a number of projects aimed at developing social environment in the regions of its operation. Within the framework of a session of the Council for the Development of Social Innovations of the Constituent Entities of the Russian Federation under the Federation Council of the Russian Federation, held on May 31,, Marina Liborakina, Deputy Director General for Business Strategy and Development,, took part in the discussion of social and innovation projects involving contribution of businesses towards regions development. Participants in the discussion noted a particular importance of social responsibility of businesses under existing economic environment, as well as the necessity to further interaction between state authorities and commercial organizations, to support best practices and to disseminate successful experience in implementing innovative social programs based on the principles of partnership. Social and innovation projects of large businesses serve as one of the most important means to efficiently solve social problems that regions face and to ensure companies sustainable development. GENERAL MEETINGS OF SHAREHOLDERS Transparency implies balancing of public interests and commercial secrets of the Company. In accordance with RF legislation, Regulation on Information Disclosure by Equity Securities Issuers approved by the Central Bank of the Russian Federation on No. 454-P, ARMZ entities disclose information in the form of publication of resolutions adopted by the Company s Board of Directors, disclosure of securities issue procedure stages, Annual Report, Annual accounting (financial) reporting and other documents. These disclosures can be found on websites of ( armz.ru/shareholders_and_investors/ information_disclosure/) and affiliates. CONVENTIONS AND EXHIBITIONS pays close attention to the creation of a communication environment favorable for business development, promotion of the ARMZ brand and creation of a positive image of the Company in the international nuclear community and the media. Key focus areas in this regard are communication support for implementation of the Company's strategy, interaction with target audiences and stakeholders, as well as information support of the ongoing work. In order to implement effective external communications, seeks to promptly inform stakeholders about all relevant aspects of its activities, and to respond quickly to media requests. The Company is a permanent participant of specialized exhibitions held both in Russia and abroad, using the venues for active promotion of ARMZ brand. Partnership Agreement signed at SPIEF On June 16,,, LLC RT-Global Resources and the Government of the Trans-Baikal Territory concluded a cooperation agreement, which is significant in terms of the importance of developing promising fields in Eastern Siberia and is aimed at securing the state approach and system development of the mining sector of the Trans-Baikal Territory, within the framework of the XX St. Petersburg International Economic Forum. We are glad that all the new partners see their future and prospects in the region and we welcome their intentions to work together on the comprehensive development of the Trans-Baikal Territory. Ivan Krupianko Head of RR and Regional Authorities Relations Department of In, took part in 15 events within the framework of marketing activities, among which there were such major industry events as: ATOMEXPO International Forum, ATOMEX International Forum of Nuclear Suppliers, World Nuclear Association symposium, St. Petersburg International Economic Forum SPIEF-, Meeting of the Council for the Development of Social Innovations of the Constituent Entities of the Russian Federation under the Federation Council of the Russian Federation, All-Russian meeting of social entrepreneurs at the Skolkovo site, etc. Table. 22. Contribution of to the promotion of the strategic goals of ROSATOM in the media space in, units General corporate media Divisional and intracorporate media Field of publications ROSATOM Country newspaper ROSATOM Country radio ROSATOM.ru portal (news and releases posted) Instagram (operating since 08.) Vkontakte (operating since 08. ) Facebook Gornyak Priargunya (Priargunye Miner) newspaper Krasnokamensk TV (CJSC TV Center Knowledge Corporation, science, technological leadership, new products Efficiency of management, economic success Global expansion of technology and business, international leadership Safety and eco-friendliness of nuclear technology The Nuclear Shield as the country pride Anti-corruption, efficiency of procurement procedures Promotion of the values of ROSATOM STRS Krasnokamensk (radio) Social responsibility is an undisputed priority for the Company, despite the fact that the uranium industry is in a complicated economic environment. Management of the Company supports key and the most significant projects for promoting smalland medium-size business entities and furthering self-employment among residents of Krasnokamensk, where PJSC PIMCU, the Holding Company's oldest production site, is located. Marina Liborakina Deputy Director General for Strategy and Business Development of

49 96 97 Field of publications TV Federal media Printed media Radio Information agencies and Internet media TV Regional media Printed media Radio Information agencies and Internet media Knowledge Corporation, science, technological leadership, new products Efficiency of management, economic success Global expansion of technology and business, international leadership Safety and eco-friendliness of nuclear technology The Nuclear Shield, the country pride Anti-corruption, efficiency of procurement procedures PSEDA establishment, investment) Social responsibility of business Sports, personnel, education 7 79 INFORMATION THROUGH THE MEDIA As a part of its open information policy, ARMZ Uranium Holding is widely represented on all information resources of ROSATOM: on the website in ROSATOM Country newspaper, in ROSATOM s video blog and ROSATOM Country radio program. Relevant information about all aspects of ARMZ Uranium Holding operations is published by federal, regional and foreign mass media. Mass media representatives may send inquiries and requests via the website of ( ru/press/contacts_for_mass_media) and relevant sections of S&A websites. The Press Service of Uranium Holding ARMZ was included in the TOP-10 departments of corporate communications in Russia and recognized as the best in the Trans-Baikal Territory. CASE Corporate newspapers are published for employees of the Company and residents of regions of operation. Issue of the Gornyak Priargunya (Priargunye Miner) newspaper in PJSC PIMCU Khiagda Herald in JSC Khiagda, in JSC Dalur Dalur News. Besides, PJSC PIMCU is the main shareholder of CJSC TV-centre (Krasnokamensk), a local TV-company broadcasting its own programs on TNT channel frequency under federal licenses and a corresponding contract. The Gornyak Priargunya (Priargunye Miner) newspaper is included in TOP-10 Rating of corporate publications of industrial companies, annually conducted by Production Management portal. The official group of PJSC PIMCU on ok.ru entered the TOP-10 rating of the presence of ROSATOM enterprises in social networks. In, we paid considerable attention to the promotion of new channels of communication by expanding our presence in social networks. The company used the opportunity to talk about the ARMZ presence territory under a slightly different angle, less formally and more colorfully. Zoya Mischenko Press Secretary of 3.6 Social Capital Management HOTLINES AND FEEDBACK A permanent hotline with V.N.Verkhovtsev, director general of, is organized at Visitors can leave your comments and suggestions regarding the operation of ARMZ Uranium Holding Co. and its affiliates or ask a question. Time for reply does not exceed one working day. A permanent hotline Ask the Union is organized at ru/personnel_policy/union/. Appeals of employees at this address are primarily related to the provision of social benefits. News of the union are posted, important topics are discussed and there is a possibility of feedback from the management of PJSC PIMCU in the official groups of PJSC PIMCU on the popular social networks Odnoklassniki ( and Vkontakte ( vk.com/club ). Time for reply during the working hours does not exceed three hours. At PJSC PIMCU, JSC Dalur and JSC Khiagda feedback is possible via corporate newspapers and HR departments of the companies. Official websites of and all its subsidiaries have feedback form for stakeholder comments, questions and requests. FEDERAL COMMUNICATION PROJECTS NUCKIDS The Company supported the production of the musical XXI Century Dreamers prepared by the participants of the Nuclear Kids international children s creative project of ROSATOM. The qualifying round was held in the Dauria recreation center (Krasnokamensk) with 57 children of the employees of PJSC PIMCU and 27 children of Krasnokamensk residents participating. 5 participants came to the finals. Based on the results of the III All-Russian Rating of Directors and Departments of Corporate Communications and Relations of Russia for compiled by the Association of Directors for Communications and Corporate Media of Russia (AKMR, the press service of ARMZ entered the TOP-10 in the following positions: The best organization in the field of corporate communications and relations in Russia ; The best department for corporate communications and relations in Russia ; The most efficient work in the field of interaction of the corporation with the government authorities in Russia. TOP 10 Forsazch For the sixth consecutive year, the Holding Company participates in Boost, youth innovation forum aimed at stimulating the innovative activity of young nuclear industry workers and creating career opportunities for them. 5 employees represented the Company within the Talent Pool area. We believe that one of the most important tasks to provide truthful and honest information about our activities to all stakeholders, alongside with the explanations about technology and methods of work, population and environmental safety. Yuri Murashko Head of the PR Service for the Enterprises of ARMZ Uranium Holding Co. Industrial Cluster REGIONAL PROJECTS OF THE HOLDING COMPANY: II Regional Dance Mix Festival ( April 14-15, ) Best Voice of Krasnokamensk contest (November 3-4, ) Krasnokamensk League of KVN (held for the fourth consecutive year). Without any financial investments, a comprehensive PR-project Raising the awareness of PIMCU employees in order to involve them in the solution of the tasks assigned, was implemented in. By creating official groups of the enterprise on social networks, setting up hotlines, reaching to families of employees and opinion leaders, informational meetings in work teams, reformatting of urban and corporate media, creating a positive external information field, etc., the Company managed to ensure the growth of the overall employee involvement level by 9% (to 46%). In the course of project implementation, a positive internal and external information field was formed (in total, there were publications in the media in ). An average of up to 11 thousand users of social networks are involved in the discussion of improvements at PJSC PIMCU every month.

50 98 99 G201 1 G413 1 G Development of the Regions of Operation OPERATION IN REGIONS Investment in infrastructure is an important aspect of the social responsibility of the Holding. As the Holding Company enterprises are located in the regions of the Russian Federation: the Kurgan Region, the Republic of Buryatia, the Trans-Baikal Territory. The Company takes into account the possible social and economic consequences of the decisions made and closely cooperates with all the stakeholders. ENVIRONMENTAL IMPACT OF AREAS OF OPERATION TRANS-BAIKAL TERRITORY In the past year, air transportation subsidies on the Chita-Krasnokamensk route continued, which significantly increased the transport availability of the city of operation. Design for the creation of an industrial park in Krasnokamensk was implemented with the territory prepared, the buildings of the regional hospital No. 4 in Krasnokamensk were repaired, new medical equipment was purchased, a number of social facilities of the municipality were renovated. The most significant project implemented was the termination of the main reconstruction stage of the regional road Krasnokamensk Matsievskaya with the laying of a solid asphalt pavement. REPUBLIC OF BURYATIA АJSC Khiagda developing deposits in the Republic of Buryatia received significant regional support as a property tax benefit. In accordance with the Law of the Republic of Buryatia No. 868-IV On State Support of Investment Activities in the Territory of the Republic of Buryatia dated May 8, 2009, the government of the region provided the investor (JSC Khiagda) with state support in the form of exemption from paying the property tax within the amounts credited to the regional budget. The agreement is intended for 5 years; the total amount of support is almost 1 billion rubles with the entire amount of the saved taxes being reinvested in the development of the Khiagda Group deposits. In the conditions of the current economic reality, this support is particularly valuable. In compliance with the requirements of the license for the right to use the subsoil of deposits, as well as in order to develop the area of operation, JSC Khiagda concluded an agreement on ensuring sustainable socio-economic development of Bauntovskiy-Evenki District of the Republic of Buryatia with the administration of the municipality. Within the framework of the document, financial support was provided to the social programs of the district, including assistance in training specialists in the Bauntovskiy branch of the Ulan-Ude Engineering and Pedagogical College. 3.6 Social Capital Management KURGAN REGION In the Kurgan Region, guided by the principles of social responsibility of business, JSC Dalur provides support to the areas of operation within the Dalmatovskiy and Shumikhinskiy districts. The legal basis for these relations is the agreement on social and economic partnership of the enterprise and the Administration of the Kurgan Region. Regional and local budgets In order to maintain good relations with local communities, as well as social undertakings meant to improve the working and living conditions of the population of the Kurgan Region, JSC Dalur provided free financial assistance to educational, preschool and other social institutions. Table. 23. Taxes paid by ARMZ Uranium Holding Co. key entities to regional budgets in, million RUB ARMZ Uranium Holding entities Company CTG Company CTG Company CTG Kurgan Region Total JSC Dalur JSC RUSBURMASH Republic of Buryatia Total JSC Khiagda Not accidentally do we single out the socioeconomic development of the Baikal Region as a separate issue. There have been certain difficulties here, which, unfortunately, remain, therefore our main task is to bring the economic indicators and the quality of life of people here to the average Russian level... On November 10 of this year, I approved a list of investment projects in the Baikal region featuring two major projects for the extraction of tungsten and uranium. I hope for the coordinated work of federal agencies and regional authorities to ensure their successful implementation and development of new investment initiatives. Meeting of the Government Commission for Socio-Economic Development of the Far East and the Baikal region, November 23, Dmitry Medvedev Chairman of the Government of the Russian Federation JSC RUSBURMASH Trans-Baikal Territory Total PJSC PIMCU JSC RUSBURMASH JSC Khiagda VNIPIpromtekhnologii 4 2 Irkutsk Oblast Total JSC RUSBURMASH Amur Oblast Total JSC RUSBURMASH Arkhangelsk Oblast Total Republic of Sakha (Yakutia) JSC RUSBURMASH Total 2 3 JSC RUSBURMASH 2 3 Total Reduction in tax payments within CTG in (as compared to ) is due to a decrease in product prices that results from a significant drop in world uranium quotations and a negative impact of exchange rate differences.

51 G201 4 FINANCIAL ASSISTANCE RECEIVED FROM STATE AUTHORITIES In -, subsidies of the Ministry of Education, Science and Youth Policy of the Trans-Baikal Territory were received by PJSC PIMCU to reimburse a part of expenses for children s recreation and health improvement, according to the decree of the Government of Trans-Baikal Territory. PJSC PIMCU did not receive financial assistance from the state in the form of tax benefits. JSC Dalur received financial assistance in the form of regional tax incentives in : property tax incentives in the amount of thousand rubles in connection with implementation of the investment projects in the area Table. 24. Ratio of the subsistence minimum for able-bodied population in the region where the company operates to the entry level salary, RUB ** Region Minimum basic salary (considering RC and SN) at enterprises of the Company in the regions of operation Moscow JSC RUSBURMASH JSC VNIPIpromtekhnologii Kurgan Region JSC Dalur JSC RUSBURMASH Irkutsk Oblast included in the consolidated list of investment areas in Kurgan Oblast. property tax incentives in respect of power transmission lines and structures being integral part of these facilities in the amount of 611 thousand rubles. income tax incentives established for companies carrying out certain amount of capital investments in the amount of thousand rubles. In, JSC Khiagda received financial assistance from the state in the form of a property tax benefit in the amount of thousand rubles in connection with the implementation of the investment project (in accordance with the Law of the Republic of Buryatia No. 868-IV Fig. 55. Financial assistance received by PJSC PIMCU from the government in, million RUB * million RUB million RUB * million RUB On State Support of Investment Activities in the Territory of the Republic of Buryatia dated ). JSC RUSBURMASH and JSC VNIPIpromtekhnologii did not receive financial assistance from the state in -. IMPACT ON THE LOCAL POPULATION IN THE REGIONS WHERE THE COMPANY OPERATES Development of the areas of operation is an important part of the implementation of the strategic goals of ARMZ Uranium Holding Co. The Company, considering the geography of its activities, sees one of its main tasks in maintaining stable jobs and strengthening a positive image and public trust. For more details see subsection 3.6.Investment in Social Infrastructure and Charity. G203 2 G Social Capital Management ECONOMIC IMPACT ON SUPPLIERS AND CONTRACTORS ARMZ Uranium Holding is able to affect contractor organizations by applying sanctions for default stipulated by contracts as well as by withholding payments until complete fulfillment of their obligations. Sanctions are contained in a contract forming an integral part of procurement documentation and are the same for all participants. INVESTMENTS IN SOCIAL INFRASTRUCTURE AND CHARITY УARMZ Uranium Holding has a major impact on the social and economic development of areas of operation by not only participating in the CTG and generating an income basis of regional and local budgets, but also by implementing a range of social and charitable programs. PRINCIPAL SOCIAL PROJECTS IMPLEMENTED AT THE EXPENSE OF THE COMPANY S FUNDS Development of Social Entrepreneurship In July August, a competition for the provision of financial support (grants) to socially-oriented small and medium businesses for the development of current operations and (or) launching and maintenance of a new type of activity on the terms of 30% co-financing was held; The main directions of charity activities are: support of educational programs and projects; cultural and educational initiatives and cultural heritage preservation; support of environmental activities; popularization of grassroots and amateur sports and healthy lifestyle; support of patriotic values and patriotic education. In, spending of for charitable assistance to businesses and individuals amounted to RUB 7.68 million. Publication of book sets "Illustration Perception Atlas" for distribution in children s specialized institutions of Krasnokamensk (Trans-Baikal Territory), town of Dolmatovo (Kurgan Region) We hope that this gift will help the children to study the world around them, fill them with positive emotions and impressions, and assist the pedagogical staff in the aesthetic and moral development of the kids. Victor Svyatetskiy First Deputy Director General, Executive Director of JSC RUSBURMASH Trans-Baikal Territory PJSC PIMCU JSC Khiagda JSC RUSBURMASH JSC VNIPIpromtekhnologii Republic of Buryatia JSC Khiagda JSC RUSBURMASH Subsistence minimum for able-bodied population, established in the regions (Q4) Moscow Kurgan Region Irkutsk Oblast Trans-Baikal Territory MINIMUM SALARY IN THE REGION OF OPERATION Minimum salary (taking into account regional coefficients and northern allowances) in all enterprises of the Company is above the subsistence minimum established in the regions of its presence for able-bodied population. Adhering to the social responsibility principles, the Holding Company carries out the primary recruitment of employees (including managers) from among the representatives of the local population. Over half of senior managers of ARMZ Uranium Holding in regions of operation is hired from local population. In the reporting period, the Company did not exert any influence connected with the necessity of resettlement of residents. G202 1 G small businesses representatives submitted their applications with 10 thereof receiving grants totaling from 95 to 200 thousand rubles. Republic of Buryatia * According to the Report on the Targeted Use of Subsidies, 7.02 thousand rubles were to be reimbursed. As of December 31,, PJSC PIMCU received a shortage of subsidies in the amount of 5.53 thousand rubles. Repayment of debts by the Ministry of Education, Science and Youth Policy of the Trans-Baikal Territory was carried out in. Also, according to the Report on the Targeted Use of Subsidies, subsidies in the amount of 6.43 million rubles were received in. ** Region of operation RF constituent entity where the Company carries out its operations.

52 This year there will be more than children attending school in Kurgan Region but we are especially pleased to be present here today, at the opening of a new school in Uksyanskoe. This is one of successful examples of a publicprivate partnership with participation of ARMZ Uranium Holding and AO Dalur, who were the first investors in this project. I want to hope that this school, with some 270 students, will give a worthy share of attention to subjects that will make children interested in nuclear and power industry, natural resources of our country. Acquisition of sports and gaming equipment for sports grounds of the secondary school in the village Uksyanskoye, Dalmatovskiy district of the Kurgan Region. VOLUNTEER INITIATIVES PROPOSED BY THE COMPANY S EMPLOYEES Aging with Joy Project The employees of the Holding Company conducted a campaign to collect New Year gifts for the elderly people for the second consecutive year. Good Things Project Twice within a year, the collection of items for the charitable project Good Things sending profit to help the socially vulnerable population layer took place. Collecting books for the school library A corporate campaign held to collect books for the school library of a boarding school and an orphanage in the town of Aleksin, Tula Region, was timed to coincide with the beginning of the academic year. does not provide assistance to commercial organizations, donate to political parties or take part in state policy development and lobbying PLANS: will continue to provide charitable assistance to individuals and legal entities in accordance with the approved regulations and budget of the Company. In 2017, a contest for further entrepreneurial initiative support will be held in Krasnokamensk. SETTLEMENT OF DISPUTES FOR INTERACTION WITH LOCAL COMMUNITIES Provision of nuclear power development public acceptability is one of the priority strategic tasks of ROSATOM. carries out activities in this area guided by the information openness principle. For more details see section Stakeholder Engagement To raise operational transparency and expand interaction with all stakeholders, since 2008 ARMZ has been a key company (in terms of reporting) of ROSATOM publishing integrated annual reports every year. In case of any issues arising during interaction with the public, the Company will be guided by RF legislation and requirements of ROSATOM. No complaints about the impact on local community have been received at. G415 1 G201 2 G Управление природным капиталом 3.7. NATURAL CAPITAL MANAGEMENT Environmental policy of THE MAIN STRATEGIC GOALS OF JSC ATOMREDMETZOLOTO, WHEN IT COMES TO THE ECOLOGICAL SPHERE, ARE: ENVIRONMENTAL PROTECTION Fig. 56. The main types of negative implications PRODUCTION AND CONSUMPTION WASTE HANDLING During the production activities there is waste formed, with hazard class from I to IV. This waste is passed on to specialized organizations for recycling, utilization, neutralization, use and final confinement in polygons.. EFFECT ON LAND RESOURCES The creation of openings underground. The destruction of the upper layers of the soil. RATIONAL USE OF NATURAL RESOURCES IN THE PLACES OF MINING NEGATIVE EFFECT ON THE ENVIRONMENT AS A RESULT OF ACTIONS OF A MINING COMPANY The main purpose the environmental policy of ARMZ Uranium Holding is to ensure the required safety level of uranium mining that minimizes the impact on the environment, personnel and population, thus preserving the natural environment in production areas and reducing the level of contamination. In, all enterprises of the Company which previously passed ISO compliance certification received a decision on confirmation of validity of certificates. EMISSIONS OF POLLUTANTS IN THE ATAMOSPHERE During production, there are emission of pollutants into the atmosphere by stationary and mobile emission sources. WATER CONSUMPTION AND WATER DISPOSAL Water for production and accommodation is taken from surface and underground sources. G304 2 Sergey Ilyin Councilor to Director General of The environmental activity of is based on a belief that the complex of production processes which allow for mining of uranium should not lead to any negative implications for the environment and should not harm anyone s health. Programs of developing effective uranium mining methods include an improvement of environmental goals which, on one hand, increase the quality of people s lives, and on the other hand, increase the Company s competitiveness. purposefully develops programs to reduce the environmental footprint, involving all employees in this work. The environmental policy of went into effect in 2013 and has since been a basis for implementation of the main statutes of the Constitution and other laws of the Russian Federation, the International ISO standard and the environmental policy of the ROSATOM. The environmental policy defines the main principles and duties in the sphere of environmental protection, provides for environmental safety and a sustainable environmentally oriented development of the entity. ARMZ s environmental policy is available on the website environmental/ For more information on the Environmental Policy and its goals see the Report for.

53 G301 1 G Protection of Land Resources and Biodiversity Fig. 57. Total number of disturbed lands at JSC Khiagda in, ha Fig. 58. Total number of disturbed lands in PJSC PIMCU in, ha* ,834 30,834-44, Water Resource Protection WATER INTAKE 55,8 109,96 Fig. 59. Total number of disturbed lands at JSC Dalur in, ha 4 3,5 3 3,5 2 1,5 1 0, ,95 3, Reduction of water intake in PJSC PIMCU for domestic and drinking needs is explained by population s and entrepreneurs installing water meters for a more accurate water consumption metering and optimization of water consumption by the households. JSC Khiagda As of , disturbed land area is ha. As the company develops, disturbed land area is increasing. Development of the company suggests putting new deposits and Khiagdinskoye ore field deposits into operation. Currently there are no areas subject to reclamation. PJSC PIMCU In connection with cost optimization in, ha was reclaimed, and 0 ha in. JSC Dalur As of , disturbed land area is ha. The breach of the fertile layer of the land happened in during preparations of the building sites for performing construction and assembly operations on the following objects: one-flat residential houses; operating blocks No. 2-1, 2-2, 2-3 at OPU of Khokhlovskoye uranium deposit; operating block No. 6 at the central body of the Dalmatovskoye uranium deposit. Table. 25. Water Intake by Purposes and Holding s Companies, in, thousand m³ Company Water intake for production needs PJSC PIMCU JSC Dalur JSC Khiagda Water intake for domestic and drinking needs 3.7 Natural Capital Management G306 1 EFFLUENT WATER DISCHARGE G306 3 JSC Dalur Due to a closed process cycle, effluent waters containing harmful chemicals and radionuclides were not discharged. G305 1 G305 2 G305 3 G305 4 G305 5 G305 6 G305 7 Fig. 60. Effluent water discharge of PJSC PIMCU in, thousand m³ Atmospheric Air Protection The reduction in overall mass of emission at JSC Khiagda when compared to is connected with a change to receiving heat energy due to a surplus of heat that appears during the production of sulfuric acid. The decommissioning of the coal boiler room allowed to decrease the emissions by 200 tons/year (including carbon oxide, nitrogen oxides, coal ash and non-organic dust). The increase in emission of sulfuric dioxide and sulfuric acid is connected with an increase of the sulfuric acid shop s capacity (launched in October ). An increase of ash emissions is cause by an increase in coal s ash content in. In general, contaminants emissions at the enterprise have no significant augmentation of reduction. Domestic effluent water from the sewerage system are removed to treatment facilities of a specialized plant. JSC Khiagda No effluent water discharge in surface water bodies. Water is discharge onto local terrain after treatment. This discharge is not regulated. CH4 (methane) greenhouse gas emissions 0.03 tons at JSC Khiagda. No greenhouse gas emissions were carried out at other plants of the Company. No emissions of ozone-depleting gases were carried out at other plants of the Company. Table. 26. Emissions of pollutants into the atmosphere in, JSC Khiagda, tons Pollutant Carbon oxide Sulfur dioxide Nitrogen oxides (NO2 equivalent) Nonorganic dust Other coal ash Other Total Table. 27. Emissions of pollutants into the atmosphere in, PJSC PIMCU, tons Pollutant Carbon oxide Sulfur dioxide Nitrogen oxides (NO2 equivalent) Nonorganic dust Other coal ash Total* The increase in water consumption for the production needs of JSC Khigada happened due to the increase in capacity of the sulfuric acid shop and an overall increase in production. At JSC Dalur the change of water withdrawal indicators as compared to doesn t exceed 5%. PJSC PIMCU JSC Dalur JSC Khiagda Total water intake PJSC PIMCU JSC Dalur JSC Khiagda Subsurface sources PJSC PIMCU Table. 28. Emissions of pollutants into the atmosphere in, JSC Dalur, tons Pollutant Carbon oxide Sulfur dioxide Nitrogen oxides (NO2 equivalent) Nonorganic dust JSC Dalur JSC Khiagda Exceeding the limits Other coal ash Total PJSC PIMCU 0 JSC Dalur 0 JSC Khiagda 0 * negative values are explained by reduced number of disturbed lands (more lands reclaimed than disturbed). * Table contains data on the most significant discharges. Overall there are 53 different types of pollutants present at PJSC PIMCU. The Total line shows the overall volume of all polluting emissions to the atmosphere, including those not present in the table.

54 G Waste Treatment Reduction of hazard class IV waste At JSC Khiagda the overall mass of waste G307 1 generation in is determined by produced was less in than in, as At PJSC PIMCU, the increase in waste of hazard class I happened due to a big number of changes of lamps in various divisions. development of a new Norms for Waste Generation and Disposal Limits Project and obtaining the limits since December 28th, therefore: well as the share of waste used was due to a reduction in bottom ash waste due to decommissioning of the coal boiler-room. The set limits for waste generation The reduction of waste of hazard classes II, III and IV happened because of a large amount of technical equipment being transferred to JSC AllyansTransAtom. and allocation for the in-situ leaching (Republic of Buryatia) are not present. Norms for Waste Generation and Disposal Limits Project for the ISL shop is being developed. At JSC Dalur the increase in waste of hazard class I happened due to lamps being changed in various divisions. Increase of hazard class III waste generation in is associated with the increase of motor transport waste generation, due to high consumption of repair materials. Table. 29. Waste Generation of all Hazard Classes in, tons limits of waste called unsorted waste from office and utility premises of organizations are reduced; waste called contaminated waste of package and packing materials made of polymers and plastic is transferred from hazard class IV to waste of hazard class V called non-contaminated waste of polypropylene film and its products, which influenced the increase of hazard class V waste generation in in comparison with Natural Capital Management Expenses Related to Environment Preservation Fig. 61. Total environmental Expenses of the Holding Company in, thousand RUB In, an overall increase in expenses for environmental protection (EP) was due to an increase in costs of capital repairs, current operation costs and salaries as well as due to rates of specialized environmental service entities going up. The reduction of the sum in is due to an optimization of costs, a reduction in capital repairs expenses and current operational costs. Table. 30. Environmental Expenses of Holding Company s entities in, thousand RUB PJSC PIMCU JSC Dalur JSC Khiagda Protection of Atmospheric Air Water Resource Protection Mineral resources protection Waste Handling Rational use, protection and rehabilitation of lands Fee for negative impact, including penalties Total Hazard Class Year PJSC PIMCU JSC Dalur JSC Khiagda 1st Hazard Class 2nd Hazard Class 3rd Hazard Class 4th Hazard Class 5th Hazard Class Total Waste used at the plant, located on operated facilities, tons (%) Waste transferred to specialized contractors for utilization and decontamination, tons (%) Exceeding the limits * Including household sewage * * none none none none none none present none present G Environmental Programs of Subsidiaries of ARMZ Uranium Holding Co. PJSC PIMCU Each year in spring and autumn, employees of all divisions of PJSC PIMCU together with the residents of Krasnokamensk took part in volunteer Saturday clean-up of the city and company departments. In, young coniferous trees were planted on the HMP territory (shops No.1 and No.2). The territory of various divisions of PJSC PIMCU is planted with various trees and bushes annually during the warm months. The annual PJSC PIMCU Report on environmental safety is sent out to: to the Trans-Baikal Territory office of the Federal service for technological, ecological and nuclear supervision; to the Office of Rosprirodnadzor of Trans-Baikal Territory; to the head of the Trans- Baikal Territory interdistrict environmental center; to the Administration of Krasnokamensk and Krasnokamensk district; to the technical library for public use. JSC DALUR In May, the employees of JSC Dalur held a traditional annual clean-up of the plant s housing community. In August, there was an agreement signed between the Department for natural resources, Rosprirodnadzor in Kurgan oblast and JSC Dalur regarding measures to decrease the negative implications for the environment. In order to increase the information of the population, JSC Dalur published a few articles, one of which ( Ensuring environmental safety of uranium production via in-situ leaching ) was published in the Mountain magazine in October. JSC KHIAGDA The information of the plant s effect on the environment was presented in the annual Environmental Safety Reports. These Reports are sent to: regional executive offices and compliance monitoring authorities in Buryatia: the Ministry for Natural Resources of the Russian Federation, the regional Rosprirodnadzor office, the Office for Water Resources of Baikal Lake, the Trans-Baikal Territory Office of Rostekhnadzor in the Republic of Buryatia, the Department of Geology and Licensing Centrsibnedra in the Republic of Buryatia; local administration offices of the settlements located the closest to the region where the works are held (Romanovka, Bagdarin); to the ISL shop for the personnel to increase their awareness; to the interested public (The Baikal Center for Public Ecological Expertise and other Public Organizations). Environmental Safety Reports are also published on the entity s website. For more details see armz.ru/social_responsibility/environmental_ safety/

55 Dialogues with Stakeholders when Drafting the Report 4.1. DIALOGUES WITH STAKEHOLDERS WHEN DRAFTING THE REPORT Cooperation with all interested parties is one of the fundamental factors of sustainable development. together with the Holding Company s entities consistently develops productive cooperation in this area. We are trying to build a constructive dialogue with all interested parties and believe that they are our trusted partners in bringing all valuable projects that contribute to the social and economic development of their regions to life. 04 INTERACTION WITH STAKEHOLDERS WHEN DRAFTING THE REPORT To improve the transparency, involves representatives of the main stakeholders in drafting the report through their participation in the dialogue to discuss socially significant aspects of the Company s activity, and reflecting this activity in the upcoming report, as well as participation in public endorsement of the report. The procedures mentioned are regulated by the international standard АА1000SES Institute of Social and Ethical Accountability, according to which the preparation of the report consists of holding four dialogues to discuss the concept, the main topic and the draft of the annual report. Moreover, the stakeholders participate in the procedures for determining significant aspects and public endorsement of the Report. DIALOGUE No. 1. Discussion of the draft concept of Annual Report, held in the form of survey of stakeholders in November. There were further recommendations to formulate the priority topic, finishing the Report structure etc. While working on the previous report, the Company took on duties, most of which are mentioned in the report for year. Some of the duties are due in DIALOGUE No Ensuring the Competitiveness of Russian Uranium: Results and Prospects. was held on February 8th, PUBLIC CONSULTATIONS No. 4 Discussing the draft annual report of were held on April 19, The draft annual report of prepared with due account of stakeholder comments expressed during dialogues was presented on public consultations. According to the results of the event, stakeholders put forward proposals for improving the text of the Report. In total, 14 proposals for the revision of the draft report and improvement of interaction with stakeholders were received from stakeholders during the dialogue. For more details about past events refer to the website of While paying more attention to the economic efficiency, the Company also clearly sees a necessity for being responsible when it comes to the social sphere and building and maintaining an effective dialogue with all types of stakeholders. Victoria Dolina Head of CSR and non-financial reporting at 4.1. Dialogues with Stakeholders when Drafting the Report 4.2. Taking into Account Stakeholder's Proposals 4.3. Report's Statement of Public Assurance