SOYUZNOYE GRAPHITE PROJECT. SHAPING THE FUTURE TODAY

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1 SOYUZNOYE GRAPHITE PROJECT. SHAPING THE FUTURE TODAY Eastern Economic Forum, 2015 Nikolay Tlekhugov

2 02 PROJECT OVERVIEW Soyuznoye village, Jewish Autonomous Region Russia nd place in the world Soyuznoye deposit China South Korea ORE RESOURCES, MT CONTAINED GRAPHITE, MT Japan USA PROJECT COMPANY: STRATEGIC INVESTOR: Dalgraphite Magnezit Group Birobidzhan, Jewish Autonomous Region Satka, Chelyabinsk Region Leader of refractory industry in Russia SYRAH RESOURCES Mozambique DALGRAPHITE Russian Federation GRAPHITE ONE USA, Alaska MASON GRAPHITE ORE GRADE, % CG ,2% ,5% ,5% ,6% ,3% Canada ENERGIZER RESOURCES Madagaskar с Main consumer of flake graphite in Russia Historical capex totaled over 19 bln RUB

3 03 MAIN OBJECTIVES BY 2020 WORLD GRAPHITE CONSUMPTION WILL INCREASE 2 TIMES TO SECURE GRAPHITE SUPPLY FOR RUSSIAN CUSTOMERS WORLD GRAPHITE CONSUMPTION 70% ASIANPACIFIC REGION GRAPHITE IMPORT IN RUSSIA 82% CONSUMPTION OF GRAPHITE FOR HIGH-TECH APPLICATIONS World 33% Russia 0% TO FOSTER DEVELOPMENT OF HIGH-TECH GRAPHITE CONSUMERS IN RUSSIA TO ESTABLISH ADVANCED PLAYER IN THE GROWING NATURAL FLAKE GRAPHITE MARKET

4 04 PROJECT TEAM AND TECHNOLOGY PARTNERS VITALI MISUTINSKII Project manager Track record: 14+ years of management positions at Zavalievsky Graphite Plant, JCS TEAM CHRISTOPH FREY Uralmekhanobr, JSC Irgiredmet, JSC NII GRAFIT (The Graphite State Research Institute) SGS Technical consultant Hosokawa Alpine Track record: 20+ years in graphite industry at MBE Coal & Minerals Technology AMG Mining AG Qingdao Kropfmuehl Graphite Ltd. Qingdao Kropfmuehl Trading Ltd. AKW Apparate + Verfahren TECHNOLOGY

5 PROJECT SCHEDULE 05 PROJECT START 2011 PRESENT DAY START OF PRODUCTION Exploration R&D (common graphite grades) R&D (high-tech graphite grades and HVA products) Construction Production facilities 400 kt/year Site office and camp accommodation Open pit mine 40 kt/year Flotation and processing plant Infrastructure Road to production site Power plant 10 MW Housing for personnel Logistics facility at railway station

6 06 RISKS AND CONSTRAINTS $ Poor infrastructure Qualified staff shortage on-site Graphite from Russia is unknown outside the country Imported technologies for HVA graphite products SOLUTIONS Government support (Territories of advanced development, Special government support programs, etc) Engagement of qualified labor from other regions and countries Off-take long-term agreements at investment stage Deep cooperation with Russian R&D institutions

7 07 KEY ADVANTAGES 2 с in the world HUGE DEPOSIT HIGH GRADE ORE (CARBON > 12%) PROXIMITY TO KEY MARKETS EXPERIENCED TEAM UP-TO-DATE TECHNOLOGIES RESERVES > 300 YEARS LOW MINING COSTS LOW LOGISTICS COSTS BEST INDUSTRY PRACTICES AND KNOW-HOW WIDE RANGE OF GRADES AND PRODUCTS

8 08 INVESTMENT HIGHLIGHTS YEARS BLN RUB ANNUAL REVENUE PAYBACK PERIOD FORECAST BY 2025 SINCE START OF (IN 2015 PRICES) PRODUCTION IRR 32% NPV INTERNAL RATE NET PRESENT OF RETURN VALUE *All forecasts are based on company s own estimation as of August BLN RUB 5.6 Total investments BLN RUB CAPITAL REQUIREMENTS 5 BLN RUB EQUITY % DEBT INVESTED AS OF AUGUST BLN RUB

9 09 FINDING NEW INVESTORS Long-term off-take agreements STRATEGIC PARTNERS BANKS Debt Funding the project with advances for future shipments Equity-related and structured instruments JV for high-tech graphite products Funding the project with advances for future shipments Main capital sources TECHNOLOGICAL COMPANIES INVESTMENT FUNDS

10 09 FINDING NEW INVESTORS Long-term off-take agreements STRATEGIC PARTNERS BANKS Main capital sources Debt Funding the project with advances for future shipments Equity-related and structured instruments JV for high-tech graphite products Funding the project with advances for future shipments TECHNOLOGICAL COMPANIES INVESTMENT FUNDS Key success factor of fundraising and project development is government support within special programs for the development of Russian Far East

11 THANK YOU Contacts Nikolay Tlekhugov