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2010 JSC ATOMREDMETZOLOTO ANNUAL REPORT

Annual report 2010 in English

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2010JSC Atomredmetzoloto AnnuAl report

www.armz.ru1

Although uranium mining on an industrial scale only began in the 20th century, uranium was used for centuries in the applied and decorative arts.Uranium oxide was already used by artists to prepare yellow paint in the 1st cen-tury B. C. In the 19th century, Uranium oxide was used to paint glass yellow-green or green, leading to the creation of works of art with so-called Uranium glass.These days, the tradition of using this material to create art is being carried on by artists like Olga and Oleg Tatarintzevs.ARMZ Uranium Holding Co. supports contemporary art as part of its program to develop corporate philanthropy.As such, it seemed appropriate to use Olga Tatarintzeva's works to decorate this annual report.

URANIUM AND CONTEMPORARY ART

2010JSC ATOMREDMETZOLOTOANNUAL REPORT

APPROVED by the Annual General Shareholders' Meeting of JSC Atomredmetzoloto, June 30th, 2011 (record number 8)

This Report by the decision of the Board of Directors of JSC Atomredmetzoloto dated 31.05.2011, number 62.

2JSC ATOMREDMETzOlOTO 2010 Annual Report

CONTENT

MAiN OPERATiON RESULTS iN 2010

Key figures Key facts and events

PRODUCTiON ACTiviTy iN RUSSiA

AND AbROAD

Development of resource base Uranium production. Development of existing JSC Atomredmetzoloto companies Designing of new mining venturesService and other companies Projects with non-nuclear materials

05 ............... 1.0

MESSAgE TO ShAREhOLDERS

Address by the Chairman of the Board of Directors Address by the Director General

AbOUT ThE COMPANy

General information about the Company History Structure of ARMZ Uranium Holding Co., geography of operations Main events of 2010

COMPANy'S POSiTiON

ON ThE URANiUM MARkET.

SALES AND MARkETiNg POLiCy

Natural uranium market Sales and marketing policy

COMPANy DEvELOPMENT STRATEgy

AND iNvESTMENT POLiCy

Company development strategy Implementation of the Company’s strategy under the alliance with Uranium One Inc. Investment activity

06 ...............07 ...............

1.1 1.2

09 ............... 2.0

10 ...............11 ...............

2.12.2

13 ...............

14 ...............14 ...............15 ...............17 ...............

3.0

3.13.23.33.4

21 ...............

22 ...............27 ...............

4.0

4.14.2

31 ...............

32 ...............36 ...............39 ...............

5.0

5.15.1.15.2

43 ...............

44 ...............47 ...............

53 ...............57 ...............61 ...............

6.0

6.16.2

6.36.46.5

MAiN OPERATiON RESULTS iN 2010

www.armz.ru3

iNNOvATiON AND PERfORMANCE MANAgEMENT

Performance managementInnovation

MANAgEMENT SySTEM

Management by objectives. KPI Corporate governance system Key risks and risk management

SUSTAiNAbLE DEvELOPMENT

Personnel Social policy Security Health and safety Environmental protection and ecological safety Development of territories where the Company operates Charity and sponsorship activity Cooperation with interested parties

ANNEx

Abbreviations and terms used in the report Company’s main deposits Stakeholder proposal status chart Use of standard elements of accountability and performance indicators Audit report Financial statements (IFRS) Certification of non-financial reportingAudit committee reportInternal audit report Report on observance of the Corporate Code of Conduct Details, contact information, feedback

REviEw Of fiNANCiAL SiTUATiON

AND RESULTS

AbOUT ThE REPORT

63 ..............

64 ..............66 ..............

7.0

7.17.2

69 ..............

70 ..............71 ..............78 ..............

8.0

8.18.28.3

85 ..............

86 ..............89 ..............92 ..............94 ..............97 ..............102 ...........107 ...........108 ...........

9.0

9.19.29.39.49.59.69.79.8

119 ........... 10.0

125 ........... 11.0

129 ........... 12.0

130 ...........132 ...........135 ...........136 ...........

149 ...........150 ...........155 ...........161 ...........164 ...........165 ...........168 ...........

12.112.212.312.4

12.512.612.712.812.912.1012.11

4JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru5

1

MAIN OPERATION

RESUlTS IN 2010

Key figures

Key facts and events

6JSC ATOMREDMETzOlOTO 2010 Annual Report

MAiN OPERATiON RESULTS iN 2010

> 1.1 <KEY fIgURES

Uranium production, tons

Sales revenue**, RUB mln

Net profit, RUB mln

Net asset value, RUB mln

Uranium resource base, thousand tons

3,687*

15,197

289

13,065

577,8

4,624

29,812

5,789

81,298

661.9

5,173.4*

30,409

12,332

124,317

726,5***

Table 1.

Key indicators

iNDiCATOR 2009**** 20102008****

* Including off-take contract.** According to IFRS consolidated financial statements.*** Including acquisition of a controlling stake in Uranium One Inc.**** JSC Atomredmetzoloto changed its accounting policy with respect to the accounting of joint ventures: starting from 2010, the proportionate consolidation method replaced the previously-applied equity method. This change was prompted by the acquisition in 2010 of a controlling stake in Uranium One Inc., which practices the current accounting method. Changes to the accounting policy were applied retroactively from 1 January 2009, which led to changes in the accounting figures as of 01.01.2009 and for the year end 31.12.2009. Accounting figures for 2008 were not recalculated. In this annual report, the financial indicators listed in the 2008 Profit-and-Loss Statement (Statement of Comprehensive Income) do not reflect accounting policy changes, while the financial indicators of the Balance Sheet (Financial Position Statement) as of 31.12.2008 do reflect these accounting policy changes, in the totals of various Balance Sheet figures as of 01.01.2009.

MESSAgE TO ShAREhOLDERS

www.armz.ru7

■ Growth of 9.76% in the resource base of ARMZ Uranium Holding Company to 726,500 tons of uranium.

■ ARMZ Uranium Holding Company key performance indicators for 2010 are 108% achieved.

■ A deal has been finalized to consolidate a controlling stake in Uranium One Inc.

■ A deal is announced to acquire 100% of Australian public company Mantra Resources Limited.

■ Cost reduction measures (reducing material costs and resource-use operating norms) re-sult in a uranium-production cost reduction of 8% against target figures.

■ JSC Atomredmetzoloto joins leading State Atomic Energy Corporation Rosatom com-panies in establishing a transparent pro-curement system. In 2010, the share of open procedures in total procurements by ARMZ Uranium Holding Co. amounted to 95%, com-pared to an industry average of 56%.

■ At ARMZ’s key companies (JSC PIMCU, JSC Dalur, JSC Khiagda) a single, unified system of remuneration is introduced.

■ A program is continued at JSC PIMCU to modernize radiation controls and reduce staff exposure to radiation in 2009-2010. The aver-age effective dose is reduced to 3.2 mSv.

■ The executive board of State Atomic Energy Corporation Rosatom approves in general the Company’s development strategy.

> 1.2 <KEY fACTS AND EvENTS

AwARDS

As part of the fourth annual Platts Global Energy Outlook Forum – “Clean Energy: Fact or Fiction?” – ARMZ Uranium Holding Co. received an award for outstanding achievements in business development. The award was given for projects implemented in 2010 to create a highly-effective portfolio of uranium deposits.

8JSC ATOMREDMETzOlOTO 2010 Annual Report

Address by the Chairman of the Board of Directors

Address by the Director General

www.armz.ru9

2MESSAgE TO

ShAREhOlDERS

10JSC ATOMREDMETzOlOTO 2010 Annual Report

MESSAgE TO ShAREhOLDERS

DEAR READERS,You are holding in your hands the annual report of JSC Atomredmetzoloto (ARMZ Uranium Holding Co.) – the mining division of the State Atomic Energy Corporation Rosatom.

Chairman of the Board of Directors of JSC Atomredmetzoloto Vadim Zhivov Companies in the Russian nuclear industry are strengthening their position in world markets: last year the total portfolio of Rosatom export contracts exceeded USD 20 billion in value. Our market share in the construction of nuclear reactors and fuel supply is increasing dramatically. New contracts were signed in 2010 to build nuclear power plants using Russian technology in India, Turkey, Vietnam, and a number of other countries.

In this context, the task of ARMZ Uranium Holding Co. is to supply the growing demand for feedstock in the atomic energy sector. The results of work in this area are evidenced by the fact that ARMZ’s uranium production has increased by half from 2007 to 2010.

The Company is continuing to expand internationally. In 2010, we took an important step in this direction by consolidating a control-ling stake in Canadian uranium-mining company Uranium One Inc., which we regard as a platform for global growth in ARMZ Uranium Holding Co. business.

The rights of minority shareholders will be observed during the development and management of Uranium One Inc. We believe that long-term value growth for Uranium One Inc., through the ac-quisition of new assets and the development of existing ones, is our common goal.

An important step taken in 2010 to identify development priorities was the creation of a long-term strategy for the Company. It calls for continued business value growth for the Company’s principal shareholder, Rosatom, by optimizing the portfolio of uranium-produc-tion projects; their diversification in terms of geography, methods of production and life-cycle stages; expanding capacity in non-uranium projects, improving the efficiency of existing ventures, and investment in innovation.

In May 2011, I was elected Chairman of the Board of Directors of JSC Atomredmetzoloto, which will allow me to focus primarily on achieving the Company’s strategic objectives as a reliable and estab-lished participant in the global nuclear market.

The Company's activities on the global market require adher-ence to the principles of transparency, sustainable development. We will pay considerable attention to the application of global best-practice in corporate governance; actively engage with shareholders, including minority shareholders of subsidiaries and affiliates; and develop all aspects of our social activities and relationships with stakeholders in order to ensure the long-term sustainability of our operations.

With all of this, we are setting an ambitious goal for ARMZ Uranium Holding Co. – to become one of the three largest uranium producers in the world. The JSC Atomredmetzoloto development dynamic demonstrated in 2010 has once again confirmed that the Company has the potential to reach this target and that we are already on our way to becoming one of the leaders in the uranium industry.

AbOUT ThE COMPANywww.armz.ru11

Chairman of the Board of Directors of JSC Atomredmetzoloto Vadim Zhivov

DEAR ShAREhOlDERS, PARTNERS AND COllEAgUES,Last year was a time of intensive development for JSC Atomredmetzoloto. Uranium production by companies in ARMZ Uranium Holding Co. increased by 11.9% in 2010 – from 4,624 tons to 5,173.4 tons. The Company’s resource base increased by 9.76% to 726,502 tons by January 1, 2011.

Director General Yakov Polunkin

However, last year’s results are not limited to good production indicators and resource-base growth. More significantly, the Atomredmetzoloto team raised the Company to a qualitatively-new level of development, and took decisive steps towards turning ARMZ Uranium Holding Co. into a truly global participant capable of suc-cessfully competing with industry leaders anywhere in the world.

In the year under review, a number of large international deals were transacted, the latest of which involved the consolidation in 2010 of a controlling stake in Uranium One Inc. – one of the larg-est publicly traded uranium producers in the world, and possessing among the lowest average operating costs of production (less than USD 40 per kilogram of uranium).

I joined the Atomredmetzoloto team in January 2011. Much remains to be done on the road towards leadership, and I hope that my production experience and managerial capabilities will be of use to the Company. Further consistent development is impossible with-out the systematization of our capacities in the field of labor health and safety, as well as industrial and environmental safety. We have serious work to do in improving the operating efficiency of our com-panies, and in implementing a project approach to capital construc-tion. Another important task involves creating an Engineering Center to harness our innovative potential.

We recognize that we can only achieve our ambitious strategic goals by adhering to the principles of sustainable development. The Company is pursuing an active policy in matters of industrial and en-vironmental safety, staff development and regions of operations, and each year we will strive not only to increase our economic efficiency but also our social and environmental achievements. We now devote considerable attention to maintaining a constant active dialogue and engagement with all of our stakeholders – customers, partners, employees, local communities, etc., and will continue to build on this foundation in the future.

A long-term development strategy, many years of experience in the mining industry, a balanced project portfolio, and investment in innovation and human resources will allow us to achieve a leading position in the field of uranium mining and to ensure reliable supplies for our customers for decades to come.

12JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru13

3AbOUT ThE COMPANY

General information about the Company

History

Structure of ARMZ Uranium Holding Co., geography of operations

Main events of 2010

iN 1995, Atomredmetzoloto State Concern was reformed as an open joint stock company.

iN 2007, it was decided to consolidate companies involved in the mining of uranium, rare metals, and other mineral resources into JSC Atomredmetzoloto.

iN 2007–2008, domestic uranium mining assets and uranium exploration and mining joint ventures in Kazakh-stan were transferred to the Company. JSC Atomredmetzoloto also obtained licenses to develop reserve uranium deposits.

iN 2008, JSC Atomredmetzoloto was authorized to supply the internal and external requirements of the Russian atomic industry.

iN 2009, saw the start of the Company’s active international activity. Acquisition of Effective Energy N. V. al-lowed the Company to consolidate Russian stakes in three uranium-mining joint ventures in Kazakh-stan. During that same year, the Company became a minority shareholder in Uranium One Inc. (Cana-da), which is publicly traded and listed on both the Toronto and Johannesburg stock exchanges.

iN 2010, ARMZ Uranium Holding Co. continued to expand its international operations by obtain-ing a 51% stake in Uranium One Inc., which is intended to become a platform for global growth by ARMZ Uranium Holding Co.

14JSC ATOMREDMETzOlOTO 2010 Annual Report

AbOUT ThE COMPANy

> 3.1 <gENERAl INfORMATION AbOUT ThE COMPANYARMZ Uranium Holding Co. (JSC Atomredmetzoloto) is a subsidiary of JSC Atomenergoprom, the mining division of State Atomic Energy Corporation Rosatom.

JSC Atomredmetzoloto is currently one of the leaders in the world uranium industry. In 2010, ARMZ was in second place among ura-nium mining companies in terms of reserves, and was in the top five by output. The Com-pany’s portfolio includes over twenty uranium and non-uranium projects throughout the world, which are at various stages of develop-

ment – from geological exploration to inten-sive industrial development. JSC Atomredmet-zoloto has unique uranium mining capabilities and has over 50 years of mining experience in various geoclimatic conditions.

Through all of our operations and subsidiaries, ARMZ employs over 10,000 people.

> 3.2 <hISTORYARMZ Uranium Holding Co. was founded in 1991 as a State Concern within the framework of the Ministry of Atomic Energy and Industry of the USSR.

»

THE ADVANTAGES OF ATOMIC ENERGY ARE PRIMARILY RELATED TO THE UNIqUE qUALITIES OF THE ENERGY SOURCE – NUCLEAR FUEL. ITS MAIN FEATURE IS ITS ENORMOUS CALORIFIC VALUE COMPARED TO ORGANIC FUELS. fOR ExAMPLE, 1 gRAM Of NUCLEAR fUEL iS EqUivALENT TO 2.8 TONS Of fOSSiL fUEL OR, iN OThER wORDS, A fUEL ASSEMbLy CONTAiNiNg 114 kg Of NUCLEAR fUEL iS ThE EqUivALENT Of 5,320 RAiL CARS LOADED wiTh 60 TONS Of COAL EACh.

CJSC ARMC (Armenia)

50%

»

SWA URANIUM MINES (Pty) Ltd. (Namibia)

12.5%LLC Agrofirm Itmanovo

100%

CAUC LLC (Mongolia)

21%

JSC PIMCU

79.33%JSC Dalur

98.89%JSC Khiagda

100%JSC Elkon MMP

100%

JSC VNIPIPROM-TEChNoLogII

100%RUSBURMASH INC

100%LLP JV RBM-Kazakhstan

51%LLC USC ARMZ

100%JSC OMCC

100%JSC UMC Gornoe

100%JSC Lunnoe

50.03%

» »

JSC SY Corporation

25.1%

MAiN EvENTS Of 2010www.armz.ru15

> 3.3 <STRUCTURE Of ARMz URANIUM hOlDINg CO., gEOgRAPhY Of OPERATIONS

JSC Atomredmetzoloto

Uraium One Inc.»

LLP Betpak Dala (Kazakhstan)

70%ZARECHNOYE (Kazakhstan)

49.67%JSC JV Akbastau (Kazakhstan)

50%Karatau (Kazakhstan)

50%LLP Kyzylkum (Kazakhstan)

30%Honeymoon Uranium Project Joint Venture

51%Uranium One U.S.A. Inc. (USA)

100%

»

Structure of the Holding as of 31.12.2010. Main assets (percentage given represents total ARMZ participation in the venture’s charter capital).

KEY COMPANIES

GEOLOGICAL EXPLORATION

MINING AND PROCESSING

ENGINEERING, SERVICE, AND SUPPLIES

figure 1

51.42% MINING AND PROCESSING

16JSC ATOMREDMETzOlOTO 2010 Annual Report

AbOUT ThE COMPANy

COMPANY’S PlACE IN ThE STATE CORPORATION

ROSATOM NUClEAR fUEl-CYClE PRODUCTION ChAIN

Positioned at the very start of the Rosatom nuclear fuel-cycle produc-tion chain, ARMZ Uranium Holding Co. provides consolidated management of uranium-mining enterprises in Russia and abroad to ensure raw material sup-plies to the Russian and world nuclear industry.

figure 2

ARMZ Uranium Holding Company’s place in the ROSATOM nuclear fuel-cycle production chain

01

02

03

10 08

09 07

0604 05

11

»» » »

»»

»

» »

» »

»AR

MZ

04 CONVERSION

05 ENRICHMENT

06 FUEL PRODUCTION

07 NUCLEAR POWER

PLANTS

08 SPENT NUCLEAR

FUEL STORAGE

09 SPENT NUCLEAR

FUEL PROCESSING

10 SPENT NUCLEAR

FUEL BURIAL

11 MOX FUEL PRODUCTION

01 GEOLOGICAL

EXPLORATION

02 MINING

03 ORE PROCESSING

ARMZ ROSATOM

COMPANy'S POSiTiON ON ThE URANiUM MARkET

www.armz.ru17

> 3.4 <MAIN EvENTS Of 2010

JANUARY 2010

■ Construction of a sulphuric acid plant was launched at JSC Khiagda.

MAY 2010

■ On May 20, as part of a visit to Russia by Na-mibian President hifikepunye Pohamba, an intergovernmental memorandum of mutual understanding was signed, which noted the main areas for mutually-beneficial coopera-tion between the two countries in geological exploration, mining, and processing of ura-nium ore. According to the memorandum, JSC Atomredmetzoloto joined a working group, along with the Namibian state com-pany Epangelo Mining (Pty) Ltd, aimed at preparing a plan of action for the implemen-tation of joint projects.

JUNE 2010

■ A deal was announced to consolidate a controlling stake in Canadian uranium-mining company Uranium One Inc.

JUlY 2010

■ A consolidated financial report in accordance with international standards was published for 2009, along with an Independent Audit Report.

■ An evaluation of reserves in the Yuzhnaya Zone of the Elkon uranium ore district was conducted in accordance with international JORC standards.

AUgUST 2010

■ The transaction to acquire a controlling stake in Uranium One Inc. outstanding stock was approved by that company’s shareholders.

SEPTEMbER 2010

■ A project was launched in ARMZ Uranium Holding Co. to automate the mine design process and the planning of mining work.

OCTObER 2010

■ An evaluation of reserves at the Olovskoye deposit in the Trans-Baikal region was completed in accordance with international JORC standards.

■ The Rosatom executive board approved the development strategy for JSC Atomredmetzoloto.

NOvEMbER 2010

■ ARMZ’s acquisition of controlling stake in Uranium One Inc. received all necessary regulatory approvals in Canada, Australia, the USA, and Kazakhstan.

DECEMbER 2010

■ As part of the fourth annual Platts Global Energy Outlook Forum – “Clean Energy: Fact or Fiction?” – ARMZ Uranium Holding Co. received an award for out-standing achievement in business devel-opment (Platts Global Energy Awards). The award was given for ARMZ’s projects implemented in 2010 to create a highly-effective portfolio of uranium deposits.

■ A deal to acquire 100% of Australian public company Mantra Resources Limited was announced.

■ The transaction consolidating ARMZ’s 51% stake in Uranium One Inc. was completed.

Uranium One Inc.

DalurMoscow

Akbastau

Zarechnoe

PIMCU

Khiagda Elkon MMPLunnoe

OMCC

UMC Gornoe

18JSC ATOMREDMETzOlOTO 2010 Annual Report

AbOUT ThE COMPANy

gEOgRAPhY Of OPERATIONS

Operating facilities and facilities under construction

Projected facilities

Potential projects Including joint project with Uranium One Inc.

CANADAJSC Atomredmetzoloto owns a controlling stake in the Canadian uranium-mining company Uranium One Inc.

USAThrough Uranium One Inc., JSC Atomredmet-zoloto is developing projects for the creation of uranium-producing facilities in Wyoming, Arizona and Utah.

NAMibiAThe SWA Uranium Mines joint venture is conducting geological prospecting and exploration work.

Uranium One Inc.

DalurMoscow

Akbastau

Zarechnoe

PIMCU

Khiagda Elkon MMPLunnoe

OMCC

UMC Gornoe

COMPANy'S POSiTiON ON ThE URANiUM MARkET

www.armz.ru19

RUSSiAThe main ARMZ Uranium Holding Co. production facilities are located in Russia – JSC PIMCU, JSC Dalur, and JSC Khiagda. In addition to these existing operations, prospective companies and facilities under construction are: JSC Elkon MMP, JSC UMC gornoe, JSC oMCC, and JSC Lunnoe.

kAZAkhSTANFollowing completion of the second stage of the transaction with Canada’s Uranium One Inc., JSC Atomredmetzoloto, through Uranium One, owns stakes in five uranium mining companies on Kazakh territory: ZARECHNOYE, JSC JV Akbastau, Karatau, LLP Betpak Dala, and LLP Kyzylkum.

AUSTRALiAUranium One Inc. is developing the Honeymoon project, which will begin to mine uranium using in-situ leaching.

TANZANiAAt the end of 2010, an agreement was reached for ARMZ Uranium Holding Company to buy a 100% stake in Mantra Resources Limited.

MONgOLiA Central Asian Uranium Company (CAUC LLC) is developing the Dornod uranium deposit.

ARMENiA CJSC ARMC is carrying out geological exploration work in Armenia’s Syunik region.

20JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru21

4

COMPANY'S POSITION ON ThE URANIUM MARKET. SAlES AND MARKETINg POlICY

Natural uranium market

Sales and marketing policy

22JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy'S POSiTiON ON ThE URANiUM MARkET. SALES AND MARkETiNg POLiCy

> 4.1 <NATURAl URANIUM MARKET

World uranium production: 2010 results and forecasts for 2011

■ World uranium production in 2010 amounted to 53,400 tons, up 6.1% from 2009.

■ Kazakhstan reinforced its leading position in world uranium production with an out-put of 17,803 tons, or a third of total world production. Uranium production decreased in Canada, Australia and Namibia.

■ Kazakhstan’s National Atomic Company Kazatomprom (NAC Kazatomprom) re-tained its leadership in uranium produc-tion, with output in 2010 of 10,600 tons, or 19.9% of world production. Cameco was in second place, Areva – in third, and ARMZ – in fourth.

■ The group of uranium-production compa-nies with annual production of over 1,000 tons increased to 11, due to the addition of China National Nuclear Corp (CNNC). These 11 companies’ total share in world output amounted to 93%, or 49,500 tons.

■ JSC Atomredmetzoloto consolidated a con-trolling stake in Canadian uranium-mining company Uranium One Inc., which was the most significant M&A event in the world uranium industry in 2010.

■ In 2010 – January 2011, pilot production began at new uranium mines: Azelik (Niger), Trekkopje (Namibia), La Palangana, Arizo-na-1 (USA), Dulaan Uul (Mongolia), and Oban (Australia).

MAIN EvENTS Of 2010

Kazakhstan

Canada

Australia

Namibia

Russia

Niger

Uzbekistan

USA

Total

Other

World total

8,521

9,000

8,430

4,352

3,521

2,923

2,338

1,508

40,593

3,055

43,648

13,900

10,175

7,962

4,681

3,564

3,243

2,338

1,442

47,305

3,000

50,305

17,803*

9,332*

6,203*

4,476*

3,563*

4,200*

2,338*

1,629*

49,543*

3,807*

53,350*

+28

-8

-22

-4

0

+30

0

+13

+5

+28

+6

33

18

12

8

7

8

4

3

93

7

100

Table 2.

Uranium output by main producing countries, tons

2009 2010 % ChANgE 2010/2009

% Of wORLD TOTAL

2008

* AREVA forecast for mines in Niger (2010)SOURCE: JSC ATOMREDMETZOLOTO ESTiMATES

SALES AND MARkETiNg POLiCy

www.armz.ru23

»CANADA, AUSTRAlIA AND NAMIbIA SAw A DEClINE IN PRODUCTION, whICh wAS PROMPTED bY A REDUCTION IN ORE QUAlITY AND INCREASED TEChNICAl AND ENvIRONMENTAl ChAllENgES

■ Following an accident in 2009, BHP Billiton only managed to return production at Australia’s Olympic Dam mine to full capacity in July 2010. A drop in uranium output at Ranger mine was due to ore-quality deterioration and problems caused by flooding of the mine and the tailings dump.

■ Similar problems with ore quality were experi-enced at the Rossing mine (Namibia).

■ The drop in uranium output in Canada was due to the temporary closure of MacLean Lake that was caused by a lack of ore for processing.

■ Uranium production in Russia remained essen-tially unchanged, falling by only 2 tons over the year.

figure 3

Uranium output by country, tons U SOURCE: JSC ATOMREDMETZOLOTO ESTiMATES

ka

za

kh

sTa

n

ca

na

da

au

sTr

aLi

a

na

MiB

ia

ru

ssia

nig

er

uzB

ek

isTa

n

usa

2009

2010

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

24JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy'S POSiTiON ON ThE URANiUM MARkET. SALES AND MARkETiNg POLiCy

lARgEST URANIUM-MININg

COMPANIES

All of these companies, with the exception of Rio-Tinto (Rossing and Ranger mines) and BHP Billiton (Olympic Dam), saw growth in output. The highest percentage growth occurred for Australia’s Paladin Energy, where uranium production was up 73% (fig. 4). The company implemented the second phase of an expansion project at Langer heinrich (Namibia) to 1,420 tons, and significantly increased production at the Kayelekera mine (Malawi), although it failed to reach its project target of 750 tons.

2009 2010

8,000

6,000

4,000

2,000

figure 4

Uranium output by company, tons SOURCE: JSC ATOMREDMETZOLOTO ESTiMATES

10,000

12,000

ka

za

TOM

Pr

OM

ca

Mec

O

ar

eVa

nc

ar

Mz

riO

Tin

TO

nM

Mc

Pa

Lad

in e

ner

gY

ur

an

iuM

On

e

On

ar

eM

cn

nc

Note. Production volumes are calculated based on the companies’ project stakes.

ThE NUMbER Of URANIUM PRODUCINg COMPANIES wITh ANNUAl PRODUCTION ExCEEDINg 1,000 TONS INCREASED TO 11.

»B

hP B

iLLi

TOn

SALES AND MARkETiNg POLiCy

www.armz.ru25

fUTURE URANIUM SECTOR PROJECTS

The first yellowcake was produced at a num-ber of new companies in 2010 – beginning of 2011:

■ China National Nuclear Corp. (CNNC) pro-duced its first yellowcake at the Azelik de-posit in Niger on December 30, 2010.

■ on January 10, 2011, Areva produced its first batch of yellowcake at the Trekkopje mine in Namibia.

■ Pilot production using in-situ leaching began at the Dulaan Uul project in Mongolia’s Dor-nogobi province on December 1, 2010. This work is being conducted by Areva subsidiary Kojegobi LLC.

■ At the start of 2010, Denison Mines began ore production at the previously-operated Arizona-1 mine in the US.

■ Uranium Energy started ore production at the La Palangana (South Texas) mine in the US in Q4 2010.

■ Pilot production of uranium began in Febru-ary 2010 at the Oban deposit in Australia, which is being developed by Curnamona.

Despite the slower growth of uranium mining in 2010 (6% in 2010 compared to 15% in 2009), global development of the uranium mining in-dustry has generally continued, resulting in pilot uranium production at six new mines located in five different countries.

Producers are continuing to implement plans to increase uranium production at existing op-erations and to launch new mines in the coming years.

■ Paladin Energy is completing the third phase of expansion at the Langer heinrich mine – increasing output to 2,000 tons. A further expansion of production to 3,840 tons per year should be completed by the end of 2011. In addition, the company is considering the possibility of building a new facility next to the existing one with an additional annual capacity of about 3,350 tons of uranium.

■ Cameco Corp. is continuing its planned construction of the Cigar Lake mine (annual capacity — 7,000 tons of uranium) and plans to start producing in 2013. The MacLean Lake and Key Lake processing plants are ready to receive ore. Cameco has stated plans to double the production capacity of the Inkai mine (to 4,000 tons) in Kazakhstan. In 2011, Cameco will start designing the work for the Kintyre deposit in Australia. At the beginning of 2011, Cameco also reached an agreement on supplying uranium produced by Talvivaara at the Sotkamo copper-nickel mine in Fin-land, where uranium by-product output is estimated at 900,000 pounds of U3O8 or 350 tons of uranium per year, once production capacity is achieved.

■ Areva is expanding production in Niger, where it planned to increase the capacity of Somair to 2,700 tons in 2010. Construction of the Trekkopje mine (3,400 tons per year) in Namibia is in the final stages. Due to techni-cal problems, production start was deferred to Q1 2013, although the first trial consign-ment of product has already been produced. Areva started to develop infrastructure for the Imouraren mine in Niger, where uranium output of 5,000 tons per year is planned to be reached in 2014.

■ BHP Billiton has started re-evaluating re-serves at the Yeelirrie deposit and is consid-ering starting construction of a mine with a capacity of 3,500 tons per year in 2011 that will start producing in 2014.

26JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy'S POSiTiON ON ThE URANiUM MARkET. SALES AND MARkETiNg POLiCy

■ According to ARMZ’s forecasts, we anticipate a very small increase in world uranium output for 2011. We expect world production in 2011 to total 56,000 tons of uranium, with year-on-year growth not expected to exceed 5%.

■ The production increase will come chiefly from Kazakhstan, which plans to produce 19,600 tons of uranium or just over one-third of world production. These plans are supported by raw materials and production base.

The growth in uranium spot prices that began in July 2010 amounted to 73% and reached its peak of USD 73 per pound of uranium oxide in February 2011.

■ A major event outside the reporting period – the accident at the Fukushima-1 nuclear power plant in Japan – caused a significant drop in the spot price, however the fundamental growth in demand for natural uranium over the medium and long-term perspective has not changed.

fORECAST fOR 2011

URANIUM SECTOR M&A IN 2010

The uranium production industry contin-ued to see increased M&A activity throughout 2010. Some of the more significant transac-tions included:

■ Paladin Energy completed its acquisition of NGM Resources, which owns assets in Niger, Western Australia and on Madagas-car, and has finalized a deal to buy Aurora Energy Resources, which is exploring for uranium in Labrador, Canada. The company also reached an agreement with France’s Areva, under which they became joint shareholders in Summit Resources (Pala-din — 81.8%), and Paladin secured the sales and marketing of uranium received from the Mt.Isa project.

■ Korea Electric Power Corporation (KEPCO) signed an agreement with Areva to ac-quire a 10% stake in the Imouraren project (Niger) for EUR 170 million. Along with the agreement to acquire the stake, they also signed an off-take contract for the corre-sponding share.

■ Japan’s Itochu Corp. announced it had reached a deal to buy 15% of Kalahari Minerals, which is one of the main owners of Australia’s Extract Resources, for USD 92.3 million (JPY 8.5 billion). Later, Itochu Corp. signed an agreement to acquire an additional 10.3% of the shares in Extract Resources.

www.armz.ru27

Organisation of structure for distribution of the products

Objectives of ARMZ Uranium Holding Co.’s sales and marketing policy:

■ developing a coordinated sales systems for natural uranium for all of ARMZ’s Russian and foreign uranium-mining companies;

■ expanding the volume and geography of natural uranium sales in key target markets;

■ providing financing for programs to develop uranium mining in Russia and abroad through long-term contracting.

> 4.2 <SAlES AND MARKETINg POlICY

The main aim of the Company’s sales and marketing policy is to ensure effective and coordinated organization and execution of sales of natural uranium by com-panies within ARMZ’s structure to customers in both Russia as well as other countries in order to increase the value of the group’s mining business.The organization of ARMZ’s sales and marketing system is aimed at creating the most convenient and efficient form of interaction for customers by maintaining a local presence in key overseas sales regions.

Enterprises in Russia

arMz uraniuM

hOLding cO.

»

SOURCES OF RAW MATERIALS

Enterprises abroad

Market purchases of raw materials

Stockpiles

SALES MARKETS

Natural uranium market

internal market (russia)

external market

»

»

»

JSC TVEL

JSC TENEX

»

» Foreign companies

Enrichment market

Fuel assembly market»

»

»figure 5

ThE ARMz URANIUM hOlDINg CO. gROUP OPERATES TO SUPPlY NATURAl URANIUM ORE (PRODUCT) ON ThE DOMESTIC (RUSSIAN) AND fOREIgN MARKETS.

»

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

28JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy'S POSiTiON ON ThE URANiUM MARkET. SALES AND MARkETiNg POLiCy

ThE hOlDINg COMPANY’S glObAl SAlES

AND MARKETINg POlICY

On the external market uranium is sup-plied through Uranium One Inc. as the main sales channel. JSC Atomredmetzoloto will also continue meeting its obligations under earlier contracts with foreign counterparties.

From the perspective of consumer groups on the global uranium market, we can distin-guish the following list of potential customers (fig. 6):

Long-term contracts (80–85%)

spot (15–20%)

energY cOMPanies

cOnVersiOn serVices

enrichMenT serVices

fueL PrOducers

URANIUM MINING ENTERPRISES

STATES (STATE RESERVES)

TRADERS AND HEDGE FUNDS

figure 6

List of potential customers of ARMZ Uranium holding Co.

MA

IN C

ON

SU

ME

RS

COMPANY MARKETINg AND SAlES POlICY

IN RUSSIA. COOPERATION wITh JSC TvEl

AND JSC TENEx

On the domestic market, ARMZ Uranium Holding Co. supplies product to two customers – JSC TVEL and JSC TENEX.

ARMZ markets and sells natural uranium produced in Russia.

The Company’s domestic operations guar-antee that Russia’s nuclear-power and nucle-ar-industry needs are met under long-term contractual relations on market terms. These guaranteed supplies are ensured by uranium produced both in Russia and abroad (primarily in Kazakhstan).

Following the launch of new production facilities in Russia, additional volumes of natural uranium may be sold to Russian customers as well as to foreign customers.

The reliability and security of product supply is supported by long-term contractual relation-ships with Russian clients, suppliers and proces-sors, and also by the existence of an operational inventory reserve.

exTernaL MarkeT

When marketing and selling natural uranium, the Company follows a widely-used approach to price formation, which includes the following mechanisms:

■ Market – the use of spot and long-term market price indicators, either on their own or combined with other conditions (such as a price range, floor, ceiling, and escalation fac-tors).

■ Basic-escalating – in some cases it may be preferable to apply fixed/base-escalating prices, the level of which is set in due con-sideration of current or forecast market price levels.

■ Mixed (combined) – use of a combination of market price indicators (spot and/or long-term) and a basic-escalating price compo-nent.

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

www.armz.ru29

PRICINg POlICY

ThE USE Of ONE OR ThE OThER Of ThE AbOvE APPROAChES, OR A COM-bINATION ThEREOf, wIll IN EACh INDIvIDUAl CASE bE DETERMINED bASED ON ThE ExISTINg MAR-KET CONDITIONS AND TERMS fOR PRODUCT PURChASES, ThE CON-DITIONS fOR DElIvERY TO ThE CONSUMER, AND ThE CONSUMER’S CON-TRACTINg POlICY.

»

An important objective, aimed at support-ing and developing the Company’s operations in foreign markets, is the development of sales infrastructure and the organization and management of a renewable stockpile of natu-ral uranium in Russia and abroad to ensure the unconditional fulfillment of contractual obligations to customers and to optimize sup-ply logistics.

The implementation of a material account-ing system at foreign conversion facilities for companies within the ARMZ Uranium Holding Co. was completed in 2010 with the stockpil-ing of a reserve to ensure the reliability and security of supplies to foreign consumers.

A priority for the Holding Company is direct deliveries to foreign energy companies to guarantee their raw material needs for the production of fuel for nuclear power plants.

Sales through traders, brokers and other market participants may also be used as alter-native sales channels.

From the point of view of sales and mar-keting, a prominent feature is the formation of a complex portfolio of contracts, which consists mainly of medium-and long-term contracts (at least 50%).

The Company has not ruled out transactions on the spot market under short-term contracts in order to take advantage of market conditions in the event of a significant increase/decrease in spot market prices, to balance sales/purchases when there are product surpluses or shortages, and also to optimize supply logistics and receive additional income.

30JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru31

5

COMPANY DEvElOPMENT STRATEgY AND INvESTMENT POlICY

Company development strategy

Implementation of the Company’s strategy under an alliance with Uranium One Inc.

Investment activity

32JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

The Company’s strategy is based on two areas of corporate development:

■ The large-scale development of nuclear power – a low-carbon option, capable of ensuring ecologically-sustainable growth in the world economy.

■ Innovative development – the creation of new technological platforms, including new technology for storing and transport-ing electricity, etc.

> 5.1 <COMPANY DEvElOPMENT STRATEgY

lONg-TERM DEvElOPMENT STRATEgY

Atomredmetzoloto was formed from the former 1st Department of the Ministry of Medium-Weight Machine & Tool Building of the USSR

Venture reformed as joint stock company

1993 1994 2006 2007 2008 2009

SUbORDINATE

ORgANIzATION

REgIONAl

PlAYER

Acquisition of 19.9% of shares in Uranium One

JSC PIMCU, JSC Dalur, JSC Khiagda

License for reserve deposits in Russia (including Elkon)

Russian-Kazakh cooperation program

Acquisition of Effective Energy NV

www.armz.ru33

2010 2011 2015 2020 2030

glObAl

COMPANY

IT IS ThE MISSION Of ARMz URANIUM hOlDINg CO. TO ENSURE SUPPlIES Of RAw MATERIAlS fOR ThE DEvElOPMENT Of NEw TEChNOlOgIES

Acquisition of 51% of shares in Uranium One

Acquisition of 100% of shares in Mantra Resources

Leadership in uranium, Uranium One – a platform for

global growth

Product diversification (strategic and innovative

metals)

iMPLEMENTATiON Of ThE COMPANy’S STRATEgy UNDER AN ALLiANCE wiTh URANiUM ONE iNC.

34JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

ACCORDING TO THE INTERNATIONAL SOCIO-ECOLOGICAL UNION, BY PREVENTING THE COMBUSTION OF GAS, NUCLEAR POWER MADE UP FOR UP TO A qUARTER OF ALL GAS EXPORTS FROM RUSSIA IN 2000. NUCLEAR ENERGY PREVENTS THE BURNING OF UP TO 40 BILLION CUBIC METERS OF NATURAL GAS ANNUALLY, WITH TOTAL EXPORTS OF 176 BILLION CUBIC METERS. THE SHARE OF RUSSIA'S “NUCLEAR” GAS IN EUROPE EXCEEDS 22% PER YEAR. AFTER 2000, THE REPLACEMENT OF GAS BY NUCLEAR PLANT OPERATIONS GREW AT A RATE OF UP TO 3 BILLION CUBIC METERS A YEAR.

»

One strategic Company aim is to maximize the value of its mining business for shareholders by tapping the potential of the growing market and becoming a recognized long-term partner and preferred supplier for the global nuclear power industry.

This business model (creating value for consumers and earnings for shareholders) is based on:

■ integration into the Rosatom value chain;

■ use of Uranium One Inc. as a growth platform for developing the uranium business outside of the Russian Federation, carrying out sales and marketing in key foreign markets, creating sales infrastructure and gaining access to international capital markets.

The mining and processing of natural ura-nium will remain the core business. There will be a moderate diversification into the strategic and innovative metals segment, motivated both by a desire to increase the scale of the Company’s business and by a desire to hedge risks specific to the uranium market.

This strategy aims to achieve a sustainable leading position on the global market (one of the top three companies in terms of production and sales of uranium by 2030). ARMZ Uranium Hold-ing Co. will become a supplier with the lowest-possible cost and will provide consumers with supplies of natural uranium through the entire life cycle of their existing and new nuclear power plants. A key element of ARMZ’s development strategy is to optimize our portfolio of projects which are diversified by geography, production methods, and life-cycle stages:

STRATEgIC COMPANY AIM

■ current highly-profitable production is primarily abroad (with further diversification of business outside the CIS, including Africa, Australia, and other regions with the best mining conditions, apart from Kazakhstan);

■ gradual development of new Russian strategic reserves, which will be needed in the future. In the mid-term, production in the Russian Federation will play a key role in supplying domestic demand, and in retaining and enhancing technical and technological capabilities.

By maintaining a business growth rate above that of the world market (largely due to organic growth, i.e., the development of deposits in the Russian Federation and abroad), JSC Atomred-metzoloto will consistently hold its market posi-tion.

Sales and marketing activities are structured as conveniently as possible for customers through the establishment of a local presence in key for-eign sales regions. A diversified project portfolio will further accommodate clients’ requirements related to risk management.

The Company will develop and use new technology to explore for, mine and process ore, which will allow it not only to reduce capital ex-penditures and improve operational performance, but also to participate in shaping the overall tech-nological profile of the industry in the future.

iMPLEMENTATiON Of ThE COMPANy’S STRATEgy UNDER AN ALLiANCE wiTh URANiUM ONE iNC.

www.armz.ru35

BY 2020, GAS EXPORTS ARE EXPECTED TO GROW TO 280 BILLION CUBIC METERS A YEAR. GIVEN THAT THE COST OF 1,000 CUBIC METERS OF GAS ON THE WORLD MARKET AVERAGES USD 100, NUCLEAR POWER WILL BRING THE COUNTRY (APART FROM THE DIRECT ECONOMIC BENEFIT ASSOCIATED WITH THE DEVELOPMENT OF CHEAP ELECTRICITY AND HEAT) ANOThER USD 10.5 biLLiON iN gAS SAviNgS ANNUALLY. THEREFORE, A CRITICAL ISSUE TODAY IS THE STATE SUPPORT AND THE CREATION OF A FAVORABLE ENVIRONMENT FOR THE DEVELOPMENT OF NUCLEAR ENERGY IN GENERAL AND URANIUM-MINING COMPANIES IN PARTICULAR.

»

For its development, the Company relies on three corporate values – security, customer care, and business initiative, all of which underpin its chosen approach.

CORPORATE VALUES PRINCIPLES OF CONDUCT

Ensuring health and safety at our facilities, compliance with technological standards in the process of extracting and processing natural uranium, including nuclear and radiation safety standards, compliance with environmental regulations in countries where the Company is present, and increasing the environmental safety of production.

Reliably meeting the needs of Russian and foreign consumers under long-term contractual relations and market conditions with products that comply with local and international quality standards.

Maximum use of opportunities in the Company’s markets in order to realize the Company’s potential to ensure sustainable business development, including the use of advanced Russian and world developments in exploration, production and corporate governance, as well as finding new prospects for business development in the uranium sector and related mining sectors in Russia and abroad.

SECURITY

CUSTOMER CARE

BUSINESS INITIATIVE

ARMz URANIUM hOlDINg CO. lONg-TERM

DEvElOPMENT

ARMZ Uranium Holding Co. in 2030:

■ a global mining company, specializing in sup-plying uranium to the global nuclear power sector, moderately diversified into the produc-tion of other minerals for the high-tech sector;

■ a world-class business, high-performing and dynamic, offering customers effective solu-tions and generating stable revenue.

36JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

SUSTAINAblE DEvElOPMENT

STRATEgY

Corporate Social Responsibility and respect for the principles of sustainable development are important priorities for JSC Atomredmetzoloto.

The strategy of sustainable development is related to the implementation of economic, environmental and social measures aimed at managing the complete mining life cycle. Activities in this area are systemic in nature and aimed at creating effective and safe jobs, ensuring social security for workers and their families, the on-going professional develop-ment of staff, and maintaining a favorable social environment in the regions where the Company operates.

Paying great attention to environmental safety, the Company closely monitors the environmental impact of its production facili-

ties, and adheres to the principles all major international agreements (in particular, the Kyoto Protocol). In 2010, companies in the ARMZ Uranium Holding Co. reduced air pol-lutant emission through the use of dust collectors (for more details, see section 10.5).

The Company is continually implementing elements of the best international practice in corporate governance, technological in-novation, customer relations, management systems, and employee and supplier relations. The Company has begun developing a Cor-porate Social Responsibility Memorandum, which will define the Company’s priorities and activities in the field of sustainable devel-opment.

Rosatom State Nuclear Energy Corpora-tion is actively expanding its international presence. At year-end 2010, the value of Rosatom’s export contract portfolio exceeded USD 20 billion.

Today, Russian nuclear industry companies control 45% of the world market for uranium enrichment services, 23% of the world market for nuclear reactor construction, and 17% of the global market for fabricated nuclear fuel. Yet the share of Rosatom companies on the natural uranium market is only about 9%.

ARMZ Uranium Holding Co.’s development strategy aims to eliminate this imbalance. The alliance with Uranium One Inc. and the creation of a global growth platform based on the Canadian company is an important step in this direction.

> 5.1.1 <IMPlEMENTATION Of ThE COMPANY’S STRATEgY UNDER AN AllIANCE wITh URANIUM ONE INC.

ARMZ Uranium Holding Co. intends to become one of the top three uranium producers in the world. Consolidation of a controlling stake in Uranium One Inc. is a significant step on the path to leadership in the industry.

iNvESTMENT ACTiviTywww.armz.ru37

»

■ CREATINg PlATfORMS fOR glObAl gROwTh

■ gEOgRAPhICAl DIvERSIfICATION

■ TEChNICAl, INfRASTRUCTURAl, AND lOgISTIC SYNERgY IN KAzAKhSTAN

■ CO-fINANCINg Of fUTURE M&A ACTIvITIES

ACQUISITION Of A 19.9% STAKE

IN URANIUM ONE INC.

In June 2009, ARMZ Uranium Holding Co. signed an agreement with Uranium One Inc. for the sale of a 50% stake in Karatau in exchange for 117 million ordinary shares from an addi-tional issue by Uranium One Inc. and monetary compensation of USD 90 million.

Along with the asset swap agreement, ARMZ Uranium Holding Co. and Uranium One Inc. signed a framework agreement on strategic

partnership, and an agreement for JSC Atom-redmetzoloto to buy uranium (off-take contract) produced by Uranium One Inc.

As a result of the deal, which was finalized in December 2009, ARMZ Uranium Holding Co. became the owner of 19.9% of Uranium One Inc. and the Canadian company’s largest share-holder.

CONSOlIDATION Of A 51.4% STAKE

IN URANIUM ONE INC.

In June 2010, ARMZ Uranium Holding Co. announced a deal to consolidate a 51.4% stake in Uranium One Inc. According to the terms of the deal, which was finalized in December 2010, JSC Atomredmetzoloto increased its share in Uranium One Inc. capital to 51.4% by buying an additional share issue by Uranium One Inc.

(356 million ordinary shares). As a payment for this stake, ARMZ Uranium Holding Co. contrib-uted 50% of the shares in JSC JV Akbastau, 49.7% ZARECHNOYE, and USD 610 million in cash.

ADvANTAgES Of ThE DEAl

fOR ARMz URANIUM hOlDINg CO.

Uranium One Inc.’s strong position in world financial markets will increase joint opportuni-ties to finance acquisition of uranium assets in the future.

Over the long term, the acquisition of Ura-nium One and the creation of a global growth platform based thereon will put Rosatom in a leading position in the uranium mining indus-

try and consolidate Rosatom’s export potential at higher production stages including uranium enrichment, fabricated fuel production, and, finally, construction of nuclear power plants.

38JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

RESPECT fOR ThE RIghTS Of MINORITY

ShAREhOlDERS

INfORMATION AbOUT URANIUM ONE INC.

The shared aim of ARMZ Uranium Holding Co. as the principal shareholder in Uranium One Inc. and that of U1 minority shareholders is long-term growth in value to be achieved by developing the company’s current assets and acquiring new ones.

JSC Atomredmetzoloto is committed to protecting the rights of Uranium One Inc’s minority shareholders. After the deal, the number of seats on the Uranium One board of directors fell from 13 to 9, 5 of which are independent.

■ Uranium One Inc. is a publicly traded company registered in Canada. Uranium One Inc. and listed on the Toronto (Canada) and Johannesburg (South Africa) stock exchanges.

■ Uranium One Inc. 2010 revenue totaled USD 327 million, with production of 2,800 tons of uranium.

■ Uranium One Inc’s reported reserves exceeded 200,000 tons of uranium.

ACQUISITION Of MANTRA RESOURCES

lIMITED

On December 15, 2010, ARMZ Uranium Holding Co. announced a deal to acquire 100% of the shares in the Australian public com-pany Mantra Resources Limited, with uranium assets in Tanzania and Mozambique. The company’s flagship project is Mkuju River in Tanzania, with reserves of over 39,000 tons of uranium.

Along with the agreement to buy the shares in the Australian company, ARMZ Uranium Holding Co. and Uranium One Inc. signed a Put/Call Agreement for 100% of the shares in Mantra Resources Limited. Upon finalization of the transaction, Uranium One Inc. will become the operator of Mantra’s Mkuju River in Tanzania.

www.armz.ru39

> 5.2 <INvESTMENT ACTIvITY

The Company’s investment priorities are based on its long-term development strategy and aim to implement the key strategic initiatives of ARMZ Uranium Holding Co.:

■ development of the resource base and production of natural uranium in Russia;

■ developing the global resource base and production of natural uranium based on a global growth platform;

■ leadership in uranium mining and processing technology.

Development of the global resource base and

production of natural uranium comprised the bulk of development investments in 2010 (71%) (fig. 7).

Investment in existing Russian uranium mining assets accounted for 19% of the Company’s overall investment program, and was aimed at:

■ construction work at production units, infrastructure and energy facilities;

■ designing production facilities;

■ geological exploration and pre-mining preparatory work;

■ modernization and upgrading of production facilities;

■ project work, R&D;

■ purchasing of production and drilling equipment.

Development of the resource base and natural uranium production in Russia

28%

Leadership in uranium mining and pro-cessing technology development

1%

Development of the global resource base and mining of natural uranium based on

a global growth platform

71%

figure 7

Structure of investments in 2010 by main targets

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

73%

69%

66%

32%

27%21%

73%

22%

40JSC ATOMREDMETzOlOTO 2010 Annual Report

COMPANy DEvELOPMENT STRATEgy AND iNvESTMENT POLiCy

As a part of its investment program in ventures under construction, in 2010, ARMZ Uranium Holding Co. carried out pre-design and design research, geological exploration works, and R&D.

A conservative approach was taken in financing of investment projects. The bulk of projects were financed with the Company’s own funds, Rosatom funds, and external bank financing. The terms of borrowed project funds were coordinated with the receipt of positive cash flows from project implementa-tion, and were diversified among lenders.

ThE JSC ATOMREDMETzOlOTO 2010 INvESTMENT PROgRAM wAS 95% fINANCED wITh fUNDS fROM ShAREhOlDERS AND ThE COMPANY’S OwN fUNDS.

»

figure 9

ARMZ Uranium Holding Co. key projects

figure 8

Progress of investments in Russian projects in 2008–2011

16

12

8

4

exisTing enTerPrises

enTerPrises under cOnsTrucTiOn

MisceLLaneOus PrOjecTs

2011

2010

2008

2009

JSC EGMK-Project

3%

RUSBURMASH INC.

1%

Acquisition of foreign uranium mining assets

71%

JSC Elkon MMP

3%

Miscellaneous projects

2%

JSC PIMCU

4%

JSC Khiagda

12%

JSC Dalur

3%

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

www.armz.ru41

In 2008–2010, the investment program for JSC Atomredmetzoloto’s Russian projects in-creased by 82%. A 48% year-on-year increase in investment in Russian projects is planned

for 2011 primarily in the development of existing companies – JSC PIMCU, JSC Khiagda, and JSC Elkon MMP.

figure 10

Investment project groups

lONg-TERM AND MID-TERM

INvESTMENT PRIORITIES

According to the Company’s mid-term plan, the JSC Atomredmetzoloto investment program for 2011-2015 totals RUB 101.5 bil-lion, which is in line with the guidelines set in Rosatom’s strategic initiatives.

■ The strategic initiative “Development of the Raw Material Base and Production of Natural Urani-um in Russia” – 69.5% of overall investment.

■ The initiative “Development of the Raw Material Base and Production of Natural Uranium Based on a Global Growth Platform (U1)” – 30.3% of overall investment.

figure 11

Investment structure by targets in 2011–2015

Development of a global resource base and mining of natural uranium based

on a global growth platform

30.3%

Leadership in uranium mining and processing technology

0.2%

Development of the resource base and natural uranium production in Russia

69.5%

Miscellaneous projects

1%

Infrastructure projects

1%

Enterprises under construction

8%Existing enterprises

19%

Acquisition of foreign uranium mining assets

71%

42JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru43

6Development of resource base

Uranium production. Development of existing JSC Atomredmetzoloto companies

Designing of new mining ventures

Service and other companies

Projects with non-nuclear materials

PRODUCTION ACTIvITY IN RUSSIA AND AbROAD

44JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

> 6.1 <DEvElOPMENT Of RESOURCE bASE

The main aim of developing the resource base is the long-term maintenance of the base and the creation of industrial stocks for the Company’s production program.

The main methods for achieving growth in the resource base include:

■ Carrying out geological exploration work to increase industrial reserves in preparation for mining;

■ Licensing of new deposits;

■ Acquiring deposits (companies) with low extraction costs (<USD80/kg U);

■ Searching for new uranium deposits with low extraction costs, particularly roll front (sand-stone) deposits.

In 2010, the ARMZ Uranium Holding Co. resource base rose to 726,500 tons of uranium. With resource base of 511,300 tons of uranium in Russia and 182,000 tons in Kazakhstan, the Company is in second place among global ura-nium mining companies in terms of its resource base.

Table 3.

Company reserves and resources*

ASSETS RESERvES, T RESOURCES Р1, T

TOTAL, TShARE

* As of 01.01.2011

JSC PIMCU

JSC Dalur

JSC Khiagda

JSC Elkon MMP

JSC OMCC

JSC UMC Gornoe

JSC Lunnoe

Russia total

ZARECHNOYE

JSC JV Akbastau

Karatau

LLP Betpak Dala

LLP Kyzylkum

kazakhstan total

USA

Australia

arMz, total

100%

100%

100%

100%

100%

100%

100%

49.67%

50%

50%

70%

30%

115,379

11,660

26,514

319,186

11,726

4,613

408

489,486

8,578

17,576

7,147

26,908

10,181

70,390

10,130

2,472

572,478

6,836

14,978

21,814

14,951

21,983

15,800

42,656

16,257

111,647

18,997

1,565

154,024

115,379

18,496

41,492

319,186

11,726

4,613

408

511,300

23,529

39,559

22,947

69,564

26,438

182,037

29,128

4,037

726,502

URANiUM PRODUCTiON. DEvELOPMENT Of ExiSTiNg JSC ATOMREDMETZOLOTO COMPANiES

www.armz.ru45

* Information as of 01.01.2009 and 01.01.2010 adjusted for changes in calculation methodology

Table 4.

Reserves and resources by country/company

01.01.2010* 01.01.201101.01.2009*

Russia

Kazakhstan

Uranium One Inc.

Total

506,543

15,636

522,179

26,669

28,994

55,663

533,212

44,630

577,842

494,685

27,016

42,387

564,088

26,669

36,943

34,152

97,764

521,354

63,959

76,538

661,851

489,486

82,992

572,478

21,814

132,209

154,023

511,300

215,202

726,502

RE

SE

Rv

ES

, T

RE

SO

UR

CE

S Р

1,

T TO

TA

L, T

RE

SE

Rv

ES

, T

RE

SO

UR

CE

S Р

1,

T TO

TA

L, T

RE

SE

Rv

ES

, T

RE

SO

UR

CE

S Р

1,

T TO

TA

L, T

gEOLOgiCAL ExPLORATiON wORk iN ThE RUSSiAN fEDERATiON

In 2010, geological exploration work was conducted at 10 deposits in the Elkon uranium ore district and at the Khiagda ore field. Total

investment amounted to RUB 1.5 billion, with growth in reserves, according to current calcula-tions, of 32,500 tons of uranium. As a result, the effectiveness of geological exploration work was RUB 46/kg of uranium.

Table 5.

Main types of work in 2010

DEPOSiT gROwTh iN С1+С2RESERvES by 2009

vOLUME Of wORkL. M.

GE, Elkon

GE, Neprokhodimoye

GE, Severnoye

Condition Feasibility, Yuzhnaya Zone

Total, JSC Elkon MMP

GE, Istochnoye

GE, Kolichikanskoye

GE, Dybrynskoye

GE, Namarusskoye

GE, Koretkondinskoye

Total, jsc khiagda

GE, Streltsovskoye RP (JSC PIMCU)

GE, Lunnoe (JSC Lunnoe)*

GE, Berezovoe

Approbation of reserves, Khokhlovskoye

Condition Feasibility, Gornoe + Berezovoe

Condition Feasibility, Itmanovsky placer

Condition Feasibility, Olovskoye

Total geological exploration in russia

17,363

22,689

13,500

53,552

7,920

15,800

5,000

5,000

33.72

4,000

18,378

109,650

23.1

23.1

2.5

2.3

1

0.8

6.6

0.5

2.3

32.5

46JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

RESULTS iN 2010

■ A temporary standard feasibility study and reserves at the Gornoe, Berezovoe, and Khokhlovskoye uranium deposits, and the Itmanovsky placer deposit of titanium-zirco-nium sands, were approbated at the Russian State Reserves Commission.

■ Permanent standard feasibility studies were prepared for review by the State Reserves Commission on the olovskoye deposit and five deposits in the Yuzhnaya Zone of the Elkon uranium ore district. A feasibility study of regional standards was started for the Khiagda ore field.

■ Geological mathematical modeling was com-pleted for deposits in the Yuzhnaya Zone of the Elkon uranium ore district, and also at the Argunskoye, Zherlovoye (mine # 6 at JSC PIMCU), Olovskoye, Gornoe, and Berezo-voe deposits.

■ Work continued on preparing databases of pri-mary data and geological models for deposits at existing JSC PIMCU mines, the North Elkon district and the Khiagda ore field.

■ An evaluation to JORC standards was re-ceived for deposits in the Yuzhnaya Zone (229,800 tons of uranium), the olovskoye de-posit (13,800 tons of uranium), and an evalu-ation is being completed for the Argunskoye and Zherlovoye deposits.

■ Automatization process of the holding com-pany as part of a program to transform the IT and financial economic units of Rosatom was started. The computerization program includes the upgrading of the holding com-pany’s IT infrastructure and the introduc-tion of modern software systems, including those unmatched elsewhere in the world (in-situ leaching modeling complex). As a result of the introduction of software systems for enterprises based on three-dimensional geological and mathematical models, contin-gency planning will be conducted and mining operations will be optimized to reduce the cost of uranium production and increase the profitability of businesses wherever possible.

ExPLORATiON iN kAZAkhSTANExploration work continued in 2010

at the Budennovskoye deposit (JSC JV Akbas-tau) and began at Yuzhnoye Zarechnoye (ZARECHNOYE).

New exploration work was also conducted on the South Inkai (LLP Betpak Dala) and Buden-novskoye (Karatau) deposits.

In 2010, an estimate of NI 43-101 resources was received for Budennovskoye, section 1, 3 (36,000 tons of uranium) and Zarechnoye de-posit (16,500 tons of uranium).

ExPLORATiON iN ARMENiAExploration and evaluation work was con-

ducted at the Pkhrut ore field in 2010, including lithogeochemical studies and the drilling of as-sessment wells, revealing signs of uranium and gold mineralization. The completion of work at the Pkhrut site and exploration of prospects at the Kaler deposit are scheduled for 2011.

ExPLORATiON iN AfRiCAIn 2010, an ARMZ Uranium Holding Co.

working group conducted reconnaissance work in Tanzania and Namibia, where it identified promising areas for prospecting and assessment work, both under licenses held by Mantra Re-sources Limited, and at new areas that are yet to receive licenses. This work will continue in 2011 in other countries in Southern Africa. There are also plans to begin prospecting and evaluation work at promising sites.

www.armz.ru47

PlANS fOR 2011

> 6.2 <URANIUM PRODUCTION. DEvElOPMENT Of ExISTINg JSC ATOMREDMETzOlOTO COMPANIES

The key strategic objectives of the long-term (2010-2020) development of Russian uranium mining companies:

» Russian energy security, with respect to ensuring independent production of natural uranium at Russian deposits;

» Maintaining and developing domestic natural uranium production capacity in Russia;

» Ensuring annual uranium production of 6,400 tons by 2020.

■ The completion of geological exploration work at the main deposits of the Khiagda ore field and the Yuzhnaya Zone of the Elkon dis-trict, continuation of work in the North Elkon area and the Dalmatovskoye and Berezovoye fields, and the start of work at the Vershin-noye deposit. Total investment in geological exploration will amount to RUB 1.2 billion.

■ Receipt of licenses to explore and develop the Khokhlovskoye deposit.

■ Geological work at the following deposits: Akdala (LLP Betpak Dala), Budennovskoye (JSC JV Akbastau), Kharasan-1 (LLP Kyzyl-kum), Yuzhnoye Zarechnoye (ZARECHNOYE). Condition feasibility studies will be complet-ed and reports prepared, including reserve estimates based on geological exploration work at the South Inkai (LLP Betpak Dala) and Budennovskoye (Karatau, JSC JV Akbas-tau) deposits.

MAIN RESUlTS Of PRODUCTION ACTIvITY

AT URANIUM MININg COMPANIES

Table 6.

Uranium production volumes by main ARMz Uranium holding Co. companies over a 3 year period, tons*

COMPANy 2009 2010 ShARE iN OvERALL

OUTPUT, 2010, %

2008

JSC PIMCU

JSC Dalur

JSC Khiagda

ZARECHNOYE*

JSC JV Akbastau*

Karatau*

Total output:

3,050

410

61

166**

0

0

3,687

3,005

463

97

245

195

619

4,624

2,920.0

507.8

135.1

386.5

369.8

854.2**

5,173.4

56.4

9.8

2.6

7.5

7.2

16.5

100

* Including the Holding Company’s share in relevant companies.** According to off-take contract.

DESigNiNg Of NEw MiNiNg vENTURES

48JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

MAIN RESUlTS Of COMPANY

ACTIvITY IN RUSSIA

JSC PIMCU (Trans-Baikal Territory, Krasnokamensk)

JSC PIMCU conducts underground mining of uranium based at four underground mines: Mine No. 1, Mine No. 2, Glubokiy mine and the Shaft 6R mine. Ore processing is carried out using heap leaching and at a hydrometallurgical plant. The company’s finished product is uranium oxide - U

3O

8.

TARgETS

» Ensure cost-effective production in conditions of falling uranium content.

» Ensure stable output of uranium.

RESULTS iN 2010

» 2,920 tons of uranium were produced. » Work was conducted on an audit of technical

health and safety standards at a combined heat and power plant, hydro-metallurgical plant and the Urtuiskoye open mine.

» New Level 13 was commissioned at the glubo-kiy mine, which will ensure an increase in opened, prepared reserves.

» Scoping Study has been prepared for the com-pany.

» Construction of Mine No. 8 continued. » A comprehensive technical development

program was launched at JSC PIMCU. A state inspection was conducted, and a positive evaluation received, for the project to build Mine No. 6.

» Capital investments totaling RUB 1,111,600 were made, and a number of projects were implemented within production moderniza-tion program: › As a part of a technical upgrade, 32

mining assets were acquired, and leased equipment purchased, totaling RUB 120 million. A service center was set up to re-pair and service imported mining equip-ment.

› Ore loading complex No. 1K was launched, with a capacity of 250 cars per day.

› A pilot project was launched to introduce a system for developing horizontal beds in ascending order.

› A method was designed to develop bump-hazardous sections and tested at the Glubokiy mine.

› Work commenced on a project to create and install a complex automated planning, design and maintenance system for mining operations.

› A meter system was installed to monitor technical and commercial electricity use.

› Work is underway to create digital block and frame models for all deposits.

PRObLEM

Falling uranium content in ore.

SOLUTiON

Increasing the efficiency of production.

PLANS

» Conduct R&D on in-situ block leaching technology in order to increase production efficiency.

» Continue building Mine No. 8 on schedule. » Continue work to optimize the design solution

for the construction of Mine No. 6. » Maintain uranium output at 2,600-3,000 tons

in the short-term, launch new production capacity (Mines Nos. 6, 8).

2008 2009 2010

Production, tons

Reserves, thousand tons

3,050

129.530

3,005

118.341

2,920

115.379

www.armz.ru49

JSC DAlUR (Kurgan Region, Uksyanskoye)

JSC Dalur produces uranium on an industrial scale using in-situ leachig (isL) at the Dalmatovskoye deposit and is continuing pilot operations at the Khokhlovskoye deposit. The company’s finished product is yellowcake.

RESULTS iN 2010

» Production in 2010 amounted to 507.8 tons of uranium, up 9.7% from 2009.

» A total of 194 production and 3 semi-wildcat wells were drilled.

» Work was carried out to automate the main technological processes at ISL, sorption and regeneration sites.

» A method was introduced to intensify ISL, with industrial-scale use of an oxidant (so-dium nitrate).

» A temporary standards feasibility study at the Khokhlovskoye deposit showed positive results, and the reserves were added to the state register.

» A capital investment plan was implemented in the amount of RUB 594.144 thousands.

PLANS fOR 2011

» To produce 485 tons of uranium in 2011. » To launch fixed assets in 2011 amounting

to RUB 754.4 million » To carry out appraisal and exploration work

to bring the reserves of the Ust-Uksyansky section into production beginning in 2012.

PLANS

» Expand pilot uranium mining at the Khokhlovskoye deposit.

» R&D to increase the quality on pregnant solu-tion processing, to increase finished-product output, and to develop and install informa-tion systems for the mining complex/reserve-movement monitoring.

» Improve technology for outfitting high-pro-ductivity wells.

» R&D to build a permanent model of the geo-technological field, to optimize ISL technol-ogy so as to reduce the use of reagents at all mining stages, and to develop a comparative multi-factor analysis of mining blocks.

2008 2009 2010

Production, tons

Reserves, thousand tons

410

8.056

463

7.509

507.8

11.660

DESigNiNg Of NEw MiNiNg vENTURES

50JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

JSC KhIAgDA (Republic of Buryatia, Bagdarin)

JSC Khiagda produces uranium at the Khiagda ore field using in-situ leachig (isL). Pregnant solutions are processed into the end product – “yellowcake” – at an experimental industrial unit.

RESULTS iN 2010

» Growth in uranium production of 39%: from 97 tons in 2009 to 135.1 tons in 2010.

» 161 production wells built (4 of which were observational wells).

» A geological exploration program was conducted with 33,700 linear meters drilled (Kolichikanskoye – 7,900 l.m, Dybrynskoye – 15,800 l.m, Koretkondinskoye – 5,000 l. m, Namarusskoye – 5,000 l.m). Fieldwork was completed at the Istochnoye and Kolichikan-skoye deposits, and the processing of mate-rials, laboratory work and report develop-ment is underway. Exploration drilling and hydro-geological studies are being carried out at the Dybrynskoye, Koretkondinskoye and Namarusskoye deposits.

» Binding has been completed at five beds at blocks No. 16, 17, and 18 at the Khiagda field and at six beds at blocks No. 1 and 2.

» Design and construction work has been car-ried out at the site of a sulphuric acid plant, and the frame of the building has been erected, with enclosures and foundations for equipment.

» The main building has been outfitted and the main equipment installed.

PLANS fOR 2011

» Ensure growth in uranium production to 175 tons in 2011.

PLANS

» Annually ensure timely growth in operating reserves so as to increase uranium output.

» Continue increasing the effectiveness of pro-duction by introducing cutting-edge technol-ogy, developing new and improving existing technology in line with the company’s R&D plan.

» Complete construction of all production infrastructure to reach planned capacity on schedule.

2008 2009 2010

Production, tons

Reserves, thousand tons

61

26.805

97

26.683

135.1

26.514

DESigNiNg Of NEw MiNiNg vENTURES

www.armz.ru51

zAREChNOYE

The Zarechnoye deposit is located in Southern Kazakhstan on the southern bank of the Syrdarya River. ZARECHNOYE has been producing uranium in-situ leachig (isL) since 2007. In 2010, the company began geological exploration work at the Yuzhnoye Zarechnoye deposit.

RESULTS iN 2010

The uranium-production rate continued to grow:

» Production targets were exceeded, with 778.176 tons of uranium produced (urani-um mining amounted to 783 tons of ura-nium). An additional sorption column was installed in the pregnant solution process-ing unit, along with an automated, high-productivity press filter.

» An additional sand pond was built, the productivity of a pump station for pregnant and leaching solutions was increased.

» To carry out repair work, the company acquired three mobile well-flushing units, which significantly increased the number of repaired wells and, as a result, improved performance of wellfield of in-situ leaching.

» Work was carried out to reconstruct the ventilation system in the pregnant solution processing unit, which improved the micro-climate in the unit and ensured compliance with health and safety standards in condi-tions of increased production capacity. In compliance with environmental protection requirements, design and surveying work was carried out at the ZAREChNoYE ISL mine to build an additional sludge dump. Construction is scheduled for 2011.

» An additional sulphuric acid warehouse was built at the railroad base at Timur sta-tion, linked to rail sidings. This reduced the risk of supply disruptions by supporting required sulphuric acid stock level.

» Work was carried out to build a gravel road to bypass the village of Koksarai.

» ZARECHNOYE began developing the Yuzh-noye Zarechnoye deposit: an annual work program and an environmental impact study were prepared and approved during preliminary development of the Yuzhnoye Zarechnoye deposit and drilling com-menced: 50 exploration wells and 1 hydro-geological well (31,979 l. m) have been drilled.

2008 2009 2010

Production*, tons

Reserves*, thousand tons

166**

9.285

245.386

9.010

386.52

8.578

COMPANIES IN KAzAKhSTAN

* including the ARMZ Uranium Holding Co. share** according to the off-take contract

52JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

JSC Jv AKbASTAU

The Budennovskoye deposit covers the Southwest section of the Mynkuduk ore field, which is part of the Chu-Sarysui uranium ore province. Administratively, the area is part of the Suzak District of Southern Kazakhstan.The Budennovskoye deposit is being developed using ISL: JSC JV Akbastau operates sections No. 1, 3 and 4, while Karatau operates section No. 2. JSC JV Akbastau solutions from section No. 1 are pumped to Karatau for processing.

RESULTS iN 2010

» Stable growth in uranium produc-tion: 739.612 tons of uranium produced (761 tons of uranium mined), which is 349.191 tons more than in 2009;

» 131,896.9 l. m of geological exploration work were carried out; a feasibility study of perma-nent standards was carried out at section No. 1 of the Budennovskoye deposit.

» A feasibility study of permanent stand-ards was carried out at section No. 3 of the Budennovskoye deposit with calculation of reserves.

» Pilot uranium production commenced at sec-tion No. 3 of the Budennovskoye deposit.

» A range of work was conducted to expand production infrastructure at the sections in order to reach capacity production.

PLANS AT kAZAkh URANiUM MiNiNg COMPANiES

» Under 51.4% shares consolidation deal with Canada’s Uranium One Inc. in 2010, ARMZ assets in the Kazakh uranium min-ing companies ZARECHNOYE and JSC JV Akbastau have been transferred to that company.

2008 2009 2010

Production*, tons

Reserves*, thousand tons

0

6.275

195

12.326

369.806

17.576

* Including the ARMZ Uranium Holding Co. share

SERviCE AND OThER COMPANiES

www.armz.ru53

> 6.3 <DESIgNINg Of NEw MININg vENTURES

OlOvSKOYE(JSC OMCC)

The objective of the Olovskoye project is to create a uranium-mining company to develop the Olovskoye deposit with a capacity of 600 tons of uranium per year.The Olovskoye deposit is located in the Chernyshevsky District of the Trans-Baikal Territory of the East Siberian Economic District of the Siberian Federal District, and is a promising deposit on Russian soil. Reserves at the deposit have been approved by the State Reserves Committee and added to the register for industrial exploitation.The Olovskoye project is being carried out by JSC Olovskaya Mining and Chemical Company (JSC OMCC). The company was set up in 2007 to mine the Olovskoye uranium ore deposit and process the ore, using heap leaching, to produce yellowcake.

RESULTS iN 2010

» A Pre-Feasibility Study conforming to international standards was obtained from the appropriate authority.

» Assessment drilling and geomechanical studies have been carried out at the Olovs-koye deposit to JORC standards.

» Block model was updated after assessment drilling to JORC standards.

» An audit of mineral resource estimates at the Olovskoye uranium deposit was con-ducted to international standards and duly certified.

» A check of groundwater was conducted for water supplies to the company.

» A report on a feasibility study of perma-nent exploration standards, with recalcula-tion of reserves, was received and submit-ted to the State Reserves Committee for confirmation of the deposit’s reserves.

» An independent examination of perma-nent exploration standards was conducted, including recalculation of reserves.

PLANS

» Defense of the feasibility study of perma-nent exploration standards and inclusion of reserves at the Olovskoye deposit in the state register at the State Reserves Com-mittee.

» Search for a co-investor to implement the Olovskoye project (being implemented by JSC Atomredmetzoloto).

vALUES

Uranium reserves, (C1+C2), t

Content

11,726.0

0.082%

54JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

bEREzOvOE-gORNOE (JSC UMC Gornoe)

The objective of the Berezovoe-Gornoe project is to create an economically-effective uranium-mining company to develop small deposits based at JSC UMC Gornoe with a capacity of 300 tons of uranium per year, with the possibility of a capacity increase to 1,000 tons by using the raw material base of adjacent deposits in Trans-Baikal Territory, Buryatia and Khabarovsk Territory.The project involves the industrial production of uranium at the Gornoe and Berezovoe deposits to produce yellowcake and uranium oxide (U

3O

8). The Berezovoe deposit

is to be open-mined, with the ore being processed using heap leaching.The Gornoe deposit will be mined using ISL, with partial supply of ore to the heap-leaching unit.

RESULTS iN 2010

» Recommendations have been prepared on documenting core samples and preparing preliminary information on increasing the effectiveness of the Gornoe and Berezovoe deposits.

» Research has been carried out on large rep-resentative samples and a system has been developed for processing ore at the Gornoe deposit.

» A feasibility study of temporary standards at the Gornoe and Berezovoe deposits has been prepared and approved by the State Reserves Committee; reserves have been entered into the state register.

» A declaration of intent has been prepared and public hearings held on the Gornoe deposit.

» A geological-mathematical model has been produced for the Gornoe and Berezovoe de-posits.

» A study has been made of the technological qualities of ore at the Berezovoe deposit in the contours of the planned open pits; initial information has been put together for the preparation of pilot production.

PLANS fOR 2011

» Development of a project for pilot produc-tion at the Berezovoe deposit (including a solution-processing plant, open pit, an in-dustrial zone with housing, internal roads, a road between Arei and Berezovoe, a heap leaching unit and a crushing and screening unit).

» Receipt of a license to handle nuclear ma-terials.

PLANS

» Design and survey work. » Geological exploration work at the Berezo-

voe deposit. » Pilot work on ISL at the Berezovoe deposit.

bEREZOvOE

Uranium reserves (C1+C2), t

Content

716

0.173%

gORNOE

3,897

0.312%

SERviCE AND OThER COMPANiES

www.armz.ru55

ElKON (JSC Elkon MMP)

The objective of the Elkon project is the development of the Southern group of deposits in the Elkon uranium ore district in Sakha Republic (Yakutia) and construction of the Elkon Mining and Metallurgical Plant (Elkon MMP).

The Elkon uranium ore district, which is located in Aldan District, is the second-largest in the world by reserves. JSC Elkon MMP currently has a license to explore and develop the Elkon, Neprokhodimoye, Elkon Plateau, Kurung and Druzhnoye (Yuzhnaya Zone) deposits as well as the Severnoye and Zona Interesnaya deposits with aggregate reserves of 319,000 tons.

The development of deposits in the Yuzhnaya Zone is an important task for the development of the Russian nuclear sector. Achieving this objective will, in the future, supply up to 30% of Russia’s natural uranium requirements. Development of deposits in the Southern group will make it possible to build a company with a capacity of 5,000 tons of uranium, with supplementary production of gold, silver and molybdenum. Moreover, the construction of Elkon MMP will have a major social economic impact on the development of South Yakutia.

This project has been included in a program for the Comprehensive Development of South Yakutia and has been included, by Russian government decree, on a list of investment projects to be financed with funds from the Russian Investment Fund. Rosatom has been appointed as the entity responsible for the project.

RESULTS iN 2010

» A technical report and a report on investment decisions have both been prepared.

» Geological exploration work has been carried out in full at the Elkon and Neprokhodimoye deposits. Geological exploration has commenced at the Severnoye deposit, on schedule. Leases have been formalized for land to be explored.

» An R&D program has been carried out in full, including the development of a technological plan for the processing of ore, research into the physical and mechanical characteristics and Bond index of ores at the Elkon uranium ore

district, and semi-industrial testing of filterless technology for the comprehensive processing of ore.

» Public hearings have been held on the Elkon project in Sakha Republic (Yakutia).

» An archaeological survey has been carried out at the plant site.

» Topographical maps have been drafted for public use, with scales of 1:100,000 and 1:25,000.

» Licensing obligations foreseen for 2010 have been met.

» Funding of 2010 investment programs amounted to RUB 1,125,149 thousand.

PLANS fOR 2011

» Confirmation of a feasibility study for the Yuzhnaya Zone by the State Reserves Committee, along with a report on reserves at the Yuzhnaya Zone.

» Renewal of licenses to handle nuclear materials.

» Planned 2011 financing at JSC Elkon MMP amounts to RUB 1,920.3 thousand.

PLANS

» R&D work to produce project documentation and improve the technical aspects of the project.

» A range of drilling work (hydro-geological research, geo-mechanical surveys at the Elkon Plateau and Kurung deposits) to prepare initial information for a feasibility study.

» Meeting terms of licensing agreements (geological work at the Elkon, Neprokhodimoye, Druzhnoye, and Zona Interesnaya deposits, work to monitor environmental impact).

» Completion of project documentation for Elkon MMP.

vALUES

Uranium reserves (C1+C2), t

Content

319,186

0.147%

56JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

lUNNOE (JSC Lunnoe)

Project objective – developing the Lunnoe uranium-gold ore deposit in the Aldan District of Sakha Republic (Yakutia).This deposit is to be open-mined, with ore being transported to a heap-leaching unit, with subsequent leaching of gold and uranium. The Lunnoe deposit is being developed with funds from a strategic investor – JSC Zoloto Seligdara, which owns 49% of the shares in JSC Lunnoe.

RESULTS iN 2010

» The necessary documentation was drawn up to lease a section of forest, and a plan for development of the forest was drawn up and approved.

» A geological-mathematical model has been prepared for the license zone.

» Plans for the open pit and for mining work have been prepared as part of a project to build a pilot industrial unit.

» A section of the Environmental Im-pact Assessment has been prepared. On 02.07.2010, JSC Lunnoe held a public hear-ing on the Environmental Impact Assess-ment.

» Geological exploration work involving 18,378 linear meters of coring has been carried out.

PLANS fOR 2011

» Complete the development, assessment and approval of a project to build a pi-lot industrial unit at the Lunnoe deposit, preparation of working documents. Receive planning permission.

» Begin construction work on the pilot in-dustrial unit and other infrastructure.

» Bring in processing and mining equipment. » Complete geological exploration work (of

oxidized ores). Prepare a feasibility study for permanent standards, a report with cal-culations of reserves and the subsequent registration of reserves with the State Reserves Committee.

PLANS

» Conducting a range of scientific research and experimental work to develop a tech-nological system for heap leaching in field conditions.

Ag

Reserves (C1+C2), t

Content

36.2

47.5 g/t

AU

3.0

3.9 g/t

U

408

0.054%

PROJECTS wiTh NON-NUCLEAR MATERiALS

www.armz.ru57

> 6.4 <SERvICE AND OThER COMPANIES

The role of service companies is to ensure the effective operation of the main production companies; in particular, in the implementation of drilling operations, reserves assessment, repair work, geophysical support, and supplies to the main industrial enterprises. The service companies contribute significantly to efficiency gains at ARMZ Uranium Holding Co.

RUSbURMASh INCThe main mission of RUSBURMASH INC is to provide drilling services in Russia.

2010

For JSC PIMCU, all types of work, thousand l. m

For JSC Dalur (production drilling and exploration), wells

For JSC Dalur (exploration drilling), thousand l. m

For JSC Khiagda (production drilling and exploration), wells

For JSC Khiagda (exploration drilling), thousand l. m

For JSC Elkon MMP, all types of work, thousand l. m

252.2

207

168

33.7

68.5

2009

137.4

250

78.0

140

25.8

DRiLLiNg wORk, iNCL.:

RESULTS iN 2010

» Work carried out by the company increased significantly.

» A unified technical policy was introduced for drilling work, geological work and work to build production wells for companies in ARMZ Uranium Holding Co.

» The company’s inventory of drilling and other equipment was significantly expanded.

» С1 reserves increased as a result of geological exploration work at the following deposits: Kolichikanskoye – 2,500 tons, Dybrynskoye – 2,300 tons, and Elkon – 23,100 tons.

» The company entered the external financ-ing market: four renewable credits lines were opened for RUB 1.3 billion.

» Using its own resource base, the company carried out work for JSC PIMCU, JSC Khiagda (drilling), and JSC Dalur (drilling).

» Using its own resource base and subcontrac-tors, the company carried out geological exploration work at JSC Khiagda.

» The company continued working at JSC Dalur, JSC Elkon MMP, JSC UMC Gornoe, and JSC OMCC and is carrying out geological explora-tion work at deposits in the Khiagda group.

PLANS fOR 2011

» Ensure timely execution of high-quality drilling and geological exploration work as well as geophysical and repair work at Rus-sian uranium deposits.

PLANS

» Increase production and exploration drill-ing.

» Increase inventory of drilling and auxiliary equipment.

RUSBURMASH INC results in 2009–2010

58JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

llP Jv RbM-KAzAKhSTAN

(REPUblIC Of KAzAKhSTAN)

The main mission of LLP JV RBM-Kazakhstan is to drill exploration and production wells at uranium deposits in Southern Kazakhstan.

2010

For JSC JV Akbastau (production drilling)

For JSC JV Akbastau (exploration drilling)

For JSC JV Akbastau (all types of work)

For ZARECHNOYE (exploration drilling)

TOTaL

127.0

131.9

258.9

31.9

290.8

2009

47.2

156.2

203.4

203.4

DRiLLiNg wORk, ThOUSAND L. M, iNCL.:

RESULTS iN 2010

» Using its own resource base and subcontractors, the company carried out exploration and extraction drilling at JSC JV Akbastau and ZARECHNOYE.

» In 2010, the company drilled 440 wells totaling 290,910 l.m, up 143% from 87,540 l.m in 2009.

» The company’s drilling fleet grew by 6 units to 15 rigs.

PLANS fOR 2011

» Increase exploration and production drilling by 22% year-on-year.

» Increase its drilling fleet to 21 drilling rigs.

PLANS

» Carry out all types of drilling work at uranium deposits in Southern Kazakhstan managed by ARMZ Uranium Holding Co.

» Strengthen the company’s position on the market for drilling services in Kazakhstan.

» Radio-ecological support at industrial and drilling sites.

» Provide a full range of geological support for drilling work, create the company’s own accredited laboratory, and prepare reports with subsequent registration at the State Reserves Committee.

» Development work to increase production capacity and reduce the cost of drilling work with a view to entering potential drilling sites.

LLP JV RBM-Kazakhstan results in 2009–2010

PROJECTS wiTh NON-NUCLEAR MATERiALS

www.armz.ru59

JSC vNIPIPROMTEChNOlOgII

The main mission of JSC VNIPIpromtechnologii is to carry out design and research work for the integrated design of uranium mining and processing facilities.

2010

Revenue from the sale of services (work), excluding VAT 1,264,489

2009

728,558

RESULTS iN 2010

» Developed Rules for Radiation Safety During the Operations of Uranium Mining Compa-nies.

» Developed and delivered a design and work papers for a water treatment facility at mines Nos. 2, 4 and 6 at JSC PIMCU (Krasnoka-mensk), which will significantly improve the ecological situation at the company.

» Adjustments were made to a project to build JSC PIMCU mine No. 6 in Chita Region in line with requirements for project documentation, in compliance with a Russian government resolution from 16.02.2008.

» The company carried out geological, hydro-geological, surveying, hydro-meteorological and ecological engineering work, along with engineering work for seismic exploration, geological surveys for structural wells, and topo-geodesic surveys for JSC Elkon MMP Project.

PLANS

» Create an engineering center based at JSC VNIPIpromtechnologii in accord-ance with an existing concept, which will provide quality engineering solutions for ARMZ Uranium Holding Co. and its sub-sidiaries, subsidiaries of Rosatom, and for other companies in Russia and abroad.

JSC VNIPIpromtechnologii results in 2008–2010 (RUB thousands)

2008

380,194

60JSC ATOMREDMETzOlOTO 2010 Annual Report

PRODUCTiON ACTiviTy iN RUSSiA AND AbROAD

JSC SY CORPORATION

llC USC ARMz

The company’s main objective is to implement an investment project for the comprehensive development of South Yakutia (the Project).

The company’s main area of activity is the supply of materials and equipment to companies in ARMZ Uranium Holding Co. as needed for their core business and investment activity. Logistics became a new business area for the company beginning in September 2010.

The aim of the Project is to provide condi-tions based on state-private partnerships for the creation in the Russian Far East of a new, large industrial district based on hydroelectricity and a cluster of industrial companies involved primarily in processing of the region’s mineral wealth.

The state coordinator of the project is the Government of Sakha (Yakutia). Investors in-

clude the State Investment Fund, the federal hy-dro-generating company Hydro OGK (JSC South Yakutia HEC), JSC Alrosa Investment Group, JSC Atomredmetzoloto, and LLC Kolmar (JSC Yakutia Coal – New Technologies). The main executors are the Federal Road Agency, the Federal Rail-ways Agency, Rosenergo and Rosatom. A key ele-ment of this project is the construction of Elkon Mining and Metallurgical Plant.

A key event in the Company’s development was the decision to change its business focus.

» The function of signing agreements with out-side suppliers of materials and equipment has been transferred to the uranium mining com-panies, and the function of placing orders and selecting suppliers to JSC Atomredmetzoloto.

» Rights and obligations under existing con-tracts have been transferred to the uranium mining companies.

» Organizational structure has been optimized. » Lease agreements have been signed for rolling

stock to carry out logistic activity.

PLANS

» Participate in procurement procedures at JSC Atomredmetzoloto.

» Supply materials and equipment to uranium mining companies in Kazakhstan.

» Organize supplies of materials and equip-ment to consignees using leased rolling stock.

JSC PIMCU

JSC Dalur

JSC Khiagda

Coal sales

Leasing

Sales of goods, services to third parties

TOTaL

1,797,367

200,491

274,910

434,612

101,023

30,712

2,839,115

3,128,204

251,398

234,169

420,271

0

41,037

4,075,079

Supplies to the ARMZ Russian uranium mining companies and third parties in 2009–2010

2010 RUb ThOUS.

2009 RUb ThOUS.

iNNOvATiON AND PERfORMANCE MANAgEMENT

www.armz.ru61

In accordance with a decision by Rosatom, a strategic initiative for Diversification into Strategic and Innovative Metals has been approved as part of the ARMZ Uranium Holding Co. business strategy.

The main aims of the strategic initiative are:

» meeting the current and future needs of the nuclear power sector in Russia for construc-tion materials;

» business growth; » diversifying the JSC Atomredmetzoloto prod-

uct portfolio and entering promising markets,

minimizing risks in the event of a drop in profitability on the uranium market;

» expanding the Company’s activities abroad.

Developing the mining and production of rare and rare-earth metals is considered one of the priorities of the strategic initiative. Plans for 2011 include a pre-project study and selection of as-sets/projects for possible participation in Russia and abroad that are promising in terms of growth in market capitalization and the competitive cost of rare-earth metals production.

> 6.5 <PROJECTS wITh NON-NUClEAR MATERIAlS

zIRCONIUM PROJECT

The project envisages the creation of a cost-effective production complex for the extraction and processing of titanium-zirconium sands based at the Itmanovsky placer deposit at the Lukoyanovskoye field (Nizhny Novgorod Region, Russia).

RESULTS iN 2010

» Development of a production system for the enrichment and separation of ilmenite, chromite and hematite concentrate was completed.

» A feasibility study on exploration conditions and a report with reserve calculations for

the Itmanovsky titanium-zirconium sands deposit were both prepared and submitted for approval.

PLANS fOR 2011

» Confirm the feasibility study on conditions and reserves at the State Reserves Committee.

PROMISINg PROJECTS wITh NON-NUClEAR

MATERIAlS

RESULTS iN 2010

» A preliminary assessment was carried out of the investment attractiveness of a number of investment projects involving the development of deposits of polymetal ore, rare-earth metals and other minerals. The projects considered, which are located in Russia, Canada, Australia and Africa, are among the major mining sites worldwide in terms of mineral reserves.

PLANS fOR 2011

» Continuing work on promising projects with non-nuclear materials in 2011. Priority tasks in this area include:

› establishing the investment attractiveness of projects in order to reach a decision on JSC Atomredmetzoloto participation;

› finding and inviting strategic partners for projects among Russian and foreign companies with experience in mining and processing minerals as well as financial and investment companies.

» Continuing to identify and initiate promising new projects with non-nuclear materials, in which the possible participation of ARMZ Uranium Holding Co. would meet the Company’s strategic objectives.

62JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru63

7

INNOvATION AND PERfORMANCE MANAgEMENT

Performance management

Innovation

64JSC ATOMREDMETzOlOTO 2010 Annual Report

iNNOvATiON AND PERfORMANCE MANAgEMENT

> 7.1 <PERfORMANCE MANAgEMENT

One of the most important strategic objectives at ARMZ Uranium Holding Co. is to increase the efficiency of existing production.

The Company developed a comprehensive Program in 2010 that established the manage-ment parameters for a process to improve Com-pany performance.

Implementation of the Program began at the end of 2010. The core aspect of the Program is a permanent process whereby employees at existing companies can submit proposals, along with a system for resolving production prob-lems (removal of bottlenecks in the production process, or identifying sources of loss, etc.) in-volving small working groups at the companies, based on an evaluation of the economic effect of optimization work.

For companies under construction, the Pro-gram will concentrate on R&D to increase the

effectiveness of deposits development.Use of new technologies and cutting of

production costs at Company facilities: mining complex, ore enrichment and processing, coal production, production of heat and electricity, auxiliary and service work.

The effectiveness of measures to improve efficiency is confirmed by the following indica-tors (see table 7). Growth in EBITDA, a drop in the share of administrative costs and an increase in labor productivity confirm the impact of the Company's efforts to implement a comprehen-sive Program to improve efficiency.

ACTiviTiES UNDERTAkEN AT ExiSTiNg COMPANiES iN 2010:

» optimizing consumption rates of materials and reagents by the rational organization of operations;

» replacement of obsolete equipment with high-performance narrow-web machines; and

» storage of a number of stock items was changed at JSC PIMCU.

RESULTS:

» production time was reduced; » production space was reduced; » a drop in costs; » improved quality; and » response time to queries was reduced.

PLANS:

» The main efforts to increase performance will be aimed at replenishing exhausted reserves at Russian deposits, which have been developed over a long period. The use of new technologies will make it possible to increase production performance while maintaining production levels at existing companies. A pilot project aims to increase production efficiency at JSC PIMCU.

Table 7.

Performance indicators

iNDiCATOR 2008 2009 2010UNiT

EBITDA

Production at enterprises in Russia

RUB mln

tons/ person

3,412

0.29

10,079

0.34

11,578

0.39

iNNOvATiONwww.armz.ru65

A COMPREhENSIvE PROgRAM TO CONSERvE ENERgY

AND INCREASE ENERgY EffICIENCY

A SIgNIfICANT CONTRIbUTION TO ThE OvERAll gROwTh IN COMPANY EffICIENCY wIll bE MADE bY A COMPREhENSIvE PROgRAM TO CONSERvE ENERgY AND INCREASE EffICIENCY

»According to a draft program to

conserve energy and increase energy efficiency at companies managed by JSC Atomredmetzoloto, the following technical work was carried out in 2010:

» At JSC Khiagda, work was completed on a commercial and technical electrical power meter system (ACEMS, ATEMS), a system for exchanging technological information (SETI), and R&D was carried out on the installation of a variable frequency drive (VFD). Work was completed on dedicating a satellite channel to send information from the JSC Khiagda mine to Chita.

» At JSC Dalur, work was completed on a commercial and technical electrical power meter system (ACEMS, ATEMS), a system for exchanging technological information (SETI), and R&D was carried out on the installation of a variable frequency drive (VFD).

» At JSC PIMCU, work planned for 2010 to set up a commercial and technical electrical power meter system (ACEMS, ATEMS) was fully completed.

» Completion of all work on a system for exchanging technological information (SETI) is planned for 01.07.2011.

» Project documentation has been prepared for a commercial and technical electrical power meter system (AERMS), and implementation of the project is planned for 2011–2012.

» An energy audit has been carried out at JSC PIMCU. Based on the results of this audit, an energy conservation program for 2011–2014 was developed and submitted for approval.

» Thermal vision research is underway at companies, and work is expected to be completed on 31.07.2011.

COMPANy fUEL OiL TJ* NATURAL gAS TJ*

ELECTRiCiTy TJ*

COAL TJ*

JSC PIMCU

JSC Dalur

JSC Khiagda

JSC Atomredmetzoloto

Total

JSC PIMCU

JSC Dalur

JSC Khiagda

JSC Atomredmetzoloto

Total

JSC PIMCU

JSC Dalur

JSC Khiagda

JSC Atomredmetzoloto

Total

25,217.1

28.61

25,245.71

24,462.8

44.35

24,507.15

25,220.1

49.88

25,269.98

39.84

39.84

52.4

52.4

141.4

141.4

46.79

46.79

47.89

47.89

52.62

52.62

3,216.7

93.003

13.84

1.343

3,324.886

3,186.02

107.421

31.667

3.439

3,328.457

3,214.7

115.723

41.94

4.001

3,376.364

* Terajoules

yEAR

2008

2009

2010

Table 8.

gross energy consumption at main production companies

66JSC ATOMREDMETzOlOTO 2010 Annual Report

iNNOvATiON AND PERfORMANCE MANAgEMENT

As a result of organizational and technical work carried out by companies in the group in 2010 as part of an energy conservation program, a 7% reduction in consumption of energy resources in monetary terms was achieved under comparative production conditions against 2009 – higher than the target of 5%.

The companies neither receive nor consume any intermediate energy from renewable energy sources (solar power, geothermal energy, hydro-power, biomass energy, or hydrogen-based energy).

PLANS

Based on the energy research conducted, the companies have developed long-term programs to conserve energy and increase energy efficiency, and company energy passports have been prepared. These energy conservation programs will reduce energy consumption at the companies by at least 15% in 2010-2014.

The creation of an automated commercial and technical electrical power meter system will allow JSC PIMCU:

■ to become a fully-fledged participant on the wholesale energy market;

■ to increase the sale of combined heat-and-power plant capacity by 8 MW as a result of technical work to install fast-acting protection and automated systems;

■ to create a unified center at the company to gather and analyze information, making it possible to have commercial metering of electricity and information transfer in real time.

> 7.2 <INNOvATION

Constantly improvement of uranium-producing technology and equipment, re-duction of production costs, and increase of automation level at existing compa-nies – these are the Company’s main innovations.

In 2010, the Company continued to imple-ment an innovation project to create a cor-porate Engineering Center. This center aims to meet growing Company requirements for a full cycle of services to design, build, com-mission and operate new production facili-ties, and also to modernize and increase the efficiency of existing facilities. Development of technology to reduce the cost of yellowcake production is aimed at increasing the overall competitiveness of JSC Atomredmetzoloto on the world market.

In 2010, JSC Atomredmetzoloto acquired a Rosatom core asset for developing projects to create new and modernize existing uranium mining companies – the Design-Prospecting and Scientific-Research Institute of Industrial Technology (JSC VNIPIpromtechnologii). The 2010-approved concept for setting up a JSC Atomredmetzoloto Engineering Center based on JSC VNIPIpromtechnologii and other relevant assets calls for the creation of a leading engineering center for the design of

both mining companies and facilities for the storage of radioactive materials in Russia and the CIS.

The entire capacity chain needed to develop mining company projects will be consolidated at JSC VNIPIpromtechnologii, including prelimi-nary research, scientific work, developing opti-mal technological solutions for infrastructure construction, preparation of design, technical and economic documentation, construction, and the commissioning and safe decommissioning of production facilities.

Consequently, the consolidation of the maxi-mum number of the Company’s own capacities at the Engineering Center will minimize risks arising at the point where the responsibilities of those involved in preparing company documen-tation intersect, reduce critical dependence on resources provided by subcontractors, increase transparency during the development of project documentation, and create a single point for the coordination and management of projects to develop mineral deposits.

MANAgEMENT SySTEM

www.armz.ru67

The implementation of innovative tech-nology projects aims to achieve the following objectives:

» Develop technology for well construction, forming heaps, ore shrinkage, optimal reserve development, acidification and processing of operating blocks, and soil reclamation to reduce the cost of the end product.

» Reducing capital expenditures and operat-ing costs for the processing of uranium ore at the world’s largest Elkon and Streltsovskoye uranium ore districts, ensuring profitability at uranium mining companies at current market prices for natural uranium.

» Installing a system for the geological modeling of mines and planning of mining operations, setting up a single geological database.

» Development of a modern logging complex, to international standards, for the direct determi-nation of uranium right at the deposit.

RESULTS iN 2010

» In 2010, actual funding for R&D at JSC Atom-redmetzoloto amounted to RUB 142.0 million.

» Underground mining was optimized for depos-its in the Yuzhnaya Zone of the Elkon uranium ore district based on a calculation of minimal excavation blocks and the building of opera-tional models.

» Frame and block geological-mathematical models were built for the Argunskoye and Zherlovoye deposits of Streltsovskoye ore field.

» A method was developed for diagnosing and forecasting rock bumps at JSC PIMCU mines, reducing the risk of their occurrence during mining work.

» A conceptual model was proposed for uranium levels in sedimentary rock at the Khiagda ore field, which significantly expands the potential of the raw material base at JSC Khiagda.

» A range of computer programs were developed to support mining and preparatory work and to optimize the development of operational blocks.

» Technological research was carried out on aggregate ore samples from the Elkon ore district.

» New technology was developed for purify-ing leaching and productive solutions in fiber filters.

» Technology for processing ore at the Elkon uranium ore district with extraction of urani-um, gold and silver was developed and tested at the Leading Scientific-Research Institute of Chemical Technology (ECTP VNIIKhT).

» Work was continued on the development of software for geo-technological modeling.

PLANS

» Developing and improving in-situ leaching (ISL) technology.

» Developing modern geophysical equipment for the in-situ determination of uranium using prompt fission neutrons.

» Installation of modern IT systems to design, plan and optimize mining operations.

» Development of software to evaluate the geo-ecological consequences of developing uranium deposits using ISL and planning environmental protection work.

» Development of comprehensive technology for extracting uranium and gold from refractory ore and concentrates at the Elkon uranium ore district.

» The JSC Atomredmetzoloto plan for 2011 calls for a two-fold increase year-on-year in financing for R&D to RUB 282.27 million.

» In the period from 2011 to 2015, in line with its future R&D plans, JSC Atomredmetzoloto fore-casts investment of RUB 1,500 million in scien-tific research and experimental modeling aimed at resolving current problems at its companies.

» The expected economic effect from the R&D plan, according to expert estimates, amounts to over RUB 2,148 million.

68JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru69

8

MANAgEMENT SYSTEM

Management by objectives. KPI

Corporate governance system

Key risks and risk management

70JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

> 8.1 <MANAgEMENT bY ObJECTIvES. KPI

In 2009, ARMZ Uranium Holding Co. Organizations introduced a Management by Objectives (MBO) system (key performance indicators).

This system involved:

■ establishing priority objectives for the Hold-ing Company and conditions (restrictions) for achieving them;

■ creating an “objectives tree” broken down to the level of organizations in the Holding Company; and

■ motivating management to achieve key perfor-mance indicators while complying with approved corporate standards.

The KPI system makes it possible to translate strategic priorities and motivate staff to achieve them throughout the management vertical.

In Q1 2010, KPI results for 2009 were calcu-lated for the Director General of JSC Atomred-metzoloto and his deputies, as well as for the director generals of subsidiaries and associates. Based on KPI results, company management was paid an annual bonus, which reflected the con-tribution of each to achieving key objectives.

The JSC Atomredmetzoloto Board of Direc-tors has confirmed KPI for 2010, calling for:

■ implementation of uranium production pro-grams;

■ control of production costs per 1 kg of uranium for companies in the Russian Federation;

KPI AT ARMz URANIUM hOlDINg CO. REAChED 108% IN 2010

» ■ implementation of priority development (the first

phase of resource base diversification project);

■ growth in production efficiency (reducing con-stant production and administrative costs and increasing labor productivity);

■ no incidents of level 2 or higher on the INES scale. This indicator evaluates emergency situ-ations involving the emission of radioactive materials into the environment at civilian atomic facilities.

KPI at ARMZ Uranium Holding Co. reached 108% in 2010.

Payment of annual bonuses to ARMZ Urani-um Holding Co. managers is carried out in com-pliance with all necessary corporate procedures.

PlANS

■ The further improvement of JSC Atomred-metzoloto management systems, aimed at increasing the competitiveness of the Hold-ing Company, optimizing business processes based on the objectives and requirements set by the shareholders, and considering the best corporate governance practices.

■ The strategic objectives of the Holding Company will be broken down to 4th level of subordination to the Director General of JSC Atomredmetzoloto (with the exception of specialists) and to 3rd level of subordination to the director generals of associates (exclud-ing specialists and workers).

kEy RiSkS AND RiSk MANAgEMENT

www.armz.ru71

> 8.2 <CORPORATE gOvERNANCE SYSTEM

Increasing the quality of corporate governance and the transparency of activity is considered to be one of the most important objectives of the Company’s strat-egy, the main aim of which is to maximize the value of the mining business for shareholders.

Priority objectives are:

■ Complying with Russian and international corporate governance standards.

■ Protecting the rights and interests of minor-ity shareholders.

■ Increasing the efficiency of management bodies.

■ Achieving growth in the level of openness for investment and industry organizations, busi-ness partners, workers and other interested parties.

In its operations, the Company complies with the laws of the Russian Federation and those of other countries where it operates, and the corporate governance system is being im-proved based on the best Russian and global practice, OECD corporate governance princi-ples and the directives of the Russian Corpo-rate Governance Code recommended by the Federal Securities Commission and the Fed-eral Financial Markets Service (FSC/FFMS).

As of 31.12.2010:

■ JSC Atomredmetzoloto charter capital amounted to RUB 20,257,239,961;

■ The Company issued 20,257,239,961 ordinary registered shares with a par value of RUB 1.00 each (registration number — 1-01-03912-А);

■ The total number of registered shareholders was 2 (JSC Atomenergoprom and JSC TVEL).

EQUITY CAPITAl

Table 9.

Ratio of net asset value to charter capital

PERiOD NET ASSET vALUE (NA),RUb ThOUS.

ChARTER CAPiTAL (CC), RUb ThOUS.

RATiO(NA/CC)

31.12.2008

31.12.2009

31.12.2010

29,408,887

36,457,711

109,136,142

3,956,040

3,956,040

20,257,240

7.43

9.52

5.39

»

JSC Atomenergoprom

JSC Atomredmetzoloto

JSC TVEL

Rosatom State Corporation

» »

100%

20.021%79.979%

»100%

* According to Russian Accounting Standards date

72JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

Table 10.

Shareholders

No. NAME Of ShAREhOLDER AS Of 01.01.2010 AS Of 31.12.2010

11

22

33

JSC Atomenergoprom

JSC TVEL

State Atomic Energy Corporation Rosatom

0.002

19.653

80.345

79.979

20.021

-

ShARE iN ARMZ ChARTER CAPiTAL, %

ChANgES IN ThE STRUCTURE Of EQUITY

CAPITAl IN 2010

To finance its investment program in 2010, the Company carried out an additional share issue by closed subscription of 129,915,429 ordi-nary shares in favor of JSC Atomenergoprom and JSC TVEL. The additional issue raised a total of RUB 805.5 million.

To optimize the ownership structure, Ro-satom divested its stake in JSC Atomredmet-zoloto (16,171,284,635 shares) in favor of JSC Atomenergoprom in 2010.

gOvERNANCE AND CONTROl bODIES

gENERAL ShAREhOLDERS' MEETiNg

The highest governance body at JSC Atomredmetzoloto is the general sharehold-ers’ meeting.

In 2010, there were 3 general shareholders' meetings:

■ at an extraordinary meeting on 09.03.2010, shareholders approved major transactions to sign term deposit contracts;

■ at an extraordinary meeting on 16.04.2010, it was decided to increase charter capital by placing an additional share issue;

■ at the annual general meeting on 30.06.2010, shareholders approved the annual report for 2009, the annual financial statements for 2009 and distribution of profits, elected the Board of Directors and Audit Committee, and appointed a company auditor.

bOARD Of DiRECTORS

The Board of Directors is responsible for the running of the Company and plays a key role in its strategic management. The Board of Directors consists of five members, elected at the annual general shareholders' meeting, mainly from among outside directors not employed at the Company. All board members have extensive professional experience in the nuclear industry.

www.armz.ru73

At the JSC Atomredmetzoloto annual general meeting on 30.06.2010, the Board of Directors was elected for a new term with the same members, namely:

lOKShIN, AlExANDER MARKOvIChBoard member since 30.06.2009From 16.07.2010 to 04.05.2011 – Chairman of the Board of Directors

Born in 1957 in Chita, graduated from the Kalinin Polytechnic Institute in Leningrad.Veteran of the energy industry of the Russian Federation.

04.2006 – 06.2008

06.2008 – present

» FIRST DEPUTY DIRECTOR GENERAL, ACTING DIRECTOR GENERAL, FSUE ROSENERGOATOM CONCERN

» DEPUTY DIRECTOR GENERAL; DIRECTOR, NUCLEAR POWER COMPLEX (NPC) DIRECTORATE; FIRST

DEPUTY DIRECTOR GENERAL; DIRECTOR, NPC DIRECTORATE, ROSATOM

zhIvOv, vADIM lvOvIChBoard member since 07.09.2007.Since 04.05.2011 – Chairman of the Board of Directors.

Born in 1963 in Moscow, graduated from Moscow Energy Institute.

03.2006 – 08.2007

06.2007 – 05.2011

12.2010 – present

04.2011 – present

» ADVISOR TO THE DIRECTOR GENERAL; FIRST DEPUTY DIRECTOR GENERAL FOR RAW-MATERIAL

RESOURCE MANAGEMENT; FIRST DEPUTY DIRECTOR GENERAL; FIRST GENERAL DEPUTY DIRECTOR,

DIRECTOR; RAW-MATERIAL PROCUREMENT DIRECTORATE, JSC TENEX

» FIRST DEPUTY DIRECTOR GENERAL, DIRECTOR GENERAL, JSC ATOMREDMETZOLOTO

» PRESIDENT, URANIUM ONE INC.

» ADVISOR TO THE DIRECTOR GENERAL, ROSATOM

KOROgODIN, vlADISlAv IgOREvIChBoard member since 07.09.2007.

Born in 1969 in Moscow, graduated from Moscow Physics-Technical Institute.

06.2004 – 10.2007

10.2007 – 03.2010

03.2010 – present

» DEPUTY HEAD, NUCLEAR-MATERIAL INDUSTRIAL ADMINISTRATION; DEPUTY HEAD, ATOMIC ENERGY

AND NUCLEAR FUEL-CYCLE ADMINISTRATION, FEDERAL ATOMIC ENERGY AGENCY

» DIRECTOR, MARKETING AND SALES MARKETS DEPARTMENT; DEPUTY DIRECTOR,

JSC ATOMENERGOPROM

» DEPUTY DIRECTOR, NPC DIRECTORATE, ROSATOM

kEy RiSkS AND RiSk MANAgEMENT

74JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

OlENIN, YURY AlExANDROvIChBoard member since 07.09.2007.

Born in 1953 in Kirovabad, Azerbaijan SSR, graduated from Marx Polytechnic Institute in Yerevan and Penza State Technical University.

01.2004 – 03.2007

03.2007 – present

» DIRECTOR GENERAL, FSUE PA START, ZARECHNIY, PENZA REGION

» FIRST VICE PRESIDENT, PRESIDENT, JSC TVEL

TRAvIN, vlADIMIR vAlENTINOvIChBoard member since 07.09.2007, acted as Chairman of the Board of Directors from 07.09.2007 to 30.06.2009.

Born in 1960 in Bolshoye Kozino, Balakhnin District of Gorkiy Region, graduated from Moscow Physics-Technical Institute, Arzamas Polytechnic.

12.2005 – 07.2007

07.2007 – 04.2010

» ADVISOR TO THE DIRECTOR, DEPUTY DIRECTOR, FEDERAL ATOMIC ENERGY AGENCY

» DIRECTOR, JSC ATOMENERGOPROM

The members of the Board of Directors do not own shares in JSC Atomredmetzoloto. Remuneration was not paid to board members in 2010. The Chairman of the Board of Directors is not a Company executive.

www.armz.ru75 kEy RiSkS AND RiSk MANAgEMENT

COMPANY MANAgEMENT

(AS Of 31.12.2010)

Zhivov, Vadim Lvovich

Director General of ARMZ Uranium Holding Co. (JSC Atomredmetzoloto)

Khachaturov, Tigran Garikovich

First Deputy Director General

Yampolsky, Ilya Mikhailovich

Deputy Director General

Boytsov, Alexander Vladimirovich

Deputy Director General

Liborakina, Marina Ivanovna

Deputy Director General for Strategy

Tokmachev, Yury Anatolievich

Deputy Director General – Security Director

Pozdeeva, Anna Dmitrievna

Chief Accountant

Zhilkin, Igor Yevgenievich

Director of Finance

Kudoyarova, Olga Anatolievna

Director for Sales and Marketing

Servetnik, Vladimir Alexeevich

Director for Non-Uranium Projects

76JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

DIRECTOR gENERAl

The Director General is the sole executive body at JSC Atomredmetzoloto, responsible for management of the Company’s day-to-day activities.

In 2010, the function of Director General was performed by Vadim Lvovich Zhivov, who was elected to this post on 19.11.2007.

Mr. Zhivov does not own shares in JSC Atom-redmetzoloto.

The wage of the Director General is estab-lished in an employment contract concluded be-tween the Company and the Director General. By decision of the Board of Directors, the Director General is paid a bonus for his work during the year based on JSC Atomredmetzoloto’s achieve-ment of the key performance indicators set by the Board of Directors.

SIgNIfICANT INfORMATION OUTSIDE

ThE REPORTINg PERIOD

At an extraordinary meeting of JSC Atomredmetzoloto shareholders on May 3, 2011, Yakov Mikhailovich Polunkin was elected Director General.

On May 4, 2011, V. L. Zhivov was elected as Chairman of the Board of Directors at a meeting of the Board.

AUDIT COMMITTEE

The functions of the Audit Committee involve control of the Company’s financial and economic activity, including:

» audits of financial records, inventories, regula-tory compliance, legality of contracts;

» analysis of the Company’s financial situation, its liquidity and solvency; and

» analysis of decisions by the Company’s execu-tive bodies to ensure their legality and compli-ance with the Charter.

At the annual general meeting of JSC Atom-redmetzoloto shareholders (Minute # 5 dated 30.06.2010), the Audit Committee was elected with the following members:

» andrienko, Viktoria alexandrovna – Chief Accountant at Rosatom;

» Burel, Oksana Vladimirovna – Chief Spe-cialist at the Monitoring and Analysis Divi-sion of Rosatom’s Internal Control and Audit Department; and

» zakharov, alexei Mikhailovich – Treasury Deputy Director for Corporate Financing at Rosatom.

The members of the Audit Committee do not own Company shares.

Audit Committee members were not remu-nerated in 2010.

DIvIDENDS

The JSC Atomredmetzoloto dividend policy is established by the executive bodies based on investment requirements under the Company’s strategy.

2007 2008PERiOD fOR whiCh DiviDENDS wERE PAiD 2009

Total dividends, RUB thous. 87,861 0 0

All dividends declared were paid in full.

Table 11.

Information on dividend payments by the Company

www.armz.ru77

MAJOR AND INTERESTED-PARTY

TRANSACTIONS

The JSC Atomredmetzoloto Board of Directors and extraordinary shareholders’ meeting approved the following transactions in 2010,

in accordance with the requirements of the RF Federal Law “on Joint Stock Companies.”

Table 12.

Information on major transactions

COUNTERPARTynO. vALUE Of DEAL, RUb

Decision of the extraordinary

shareholders’ meeting

(Minutes No. 3

dated 09.03.2010)

Decision of the extraordinary

shareholders’ meeting

(Minutes No. 3

dated 09.03.2010)

Decision of the extraordinary

shareholders’ meeting

(Minutes No. 3

dated 09.03.2010)

Placement of

funds on deposit

Placement of

funds on deposit

Placement of

funds on deposit

Gazprombank (JSC)

Gazprombank (JSC)

Gazprombank (JSC)

33,000,000,000

28,200,000,000

19,000,000,000

ManageMenT BOdY decisiOn (daTe/nuMBer)

cOnTracT (daTe/nuMBer)

SUbJECT Of CONTRACT

Agreement No. 1552 dated

19.05.2008 on transac-

tion conditions (confirmation of

Deposit Transaction No. 1 dated

07.12.2009)

Term deposit agreements:

20.01.2010 No. 018/2010,

20.01.2010 No. 019/2010,

20.01.2010 No. 020/2010,

20.01.2010 No. 021/2010,

20.01.2010 No. 022/2010,

20.01.2010 No. 023/2010,

20.01.2010 No. 037/2010

Term deposit agreements:

20.01.2010 No. 024/2010,

20.01.2010 No. 025/2010,

20.01.2010 No. 026/2010,

20.01.2010 No. 027/2010,

20.01.2010 No. 028/2010,

20.01.2010 No. 029/2010,

20.01.2010 No. 030/2010,

20.01.2010 No. 031/2010,

20.01.2010 No. 032/2010,

20.01.2010 No. 033/2010,

20.01.2010 No. 034/2010,

20.01.2010 No. 035/2010,

20.01.2010 No. 036/2010

1

2

3

In 2010, the Company concluded no interested-party transactions requiring the approval of its executive bodies under the RF Federal Law “on Joint Stock Companies.”

CONTACT INfORMATION fOR ThE COMPANY

REgISTRAR

The Company’s register is held by Open Joint Stock Company Registrar R.O.S.T.Registrar’s details:OGRN 1027739216757, INN 7726030449.Address: 18, Ul. Stromynka, Building 13, Moscow.Telephone/fax: (495) 771-73-36.

kEy RiSkS AND RiSk MANAgEMENT

78JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

REPORT fROM ThE bOARD Of DIRECTORS

ON PRIORITY ACTIvITIES

In 2010, the Board of Directors held 16 meetings, at which it reached decisions on important management issues.

STRATEgiC MANAgEMENT:

■ The Company’s strategic objective was established.

■ Key performance indicators (KPI) were set for ARMZ Uranium Holding Co.

■ The Company’s organizational structure was adjusted.

kEy iNvESTMENT PROJECTS AND fUTURE PROJECTS:

■ A list of investment projects was approved, along with a financing limit for investment programs.

■ A number of M&A deals were approved, including the acquisition of shares in Mantra Resources Limited.

■ A number of large deals were approved for the Company to open credit lines.

REMUNERATiON Of SENiOR MANAgEMENT:

■ A system was developed for remunerating senior management.

■ The amounts of remuneration and compensation for senior management were approved.

PlANS

Improve the performance of the Company’s management bodies.

> 8.3 <KEY RISKS AND RISK MANAgEMENT

Risk management is an integral part of ARMZ Uranium Holding Co.’s strategy, and involves early risk identification, assessment, ranking, selection of the meth-od to deal with risk as well as monitoring of the effectiveness of measures. The Company develops risk management methods as a continuous process, covering strategic and operational levels of management, aimed at identifying and minimizing the impact of events that could influence the Company's activities.

ACTIvITIES IN 2010

» Implementation of an insurance policy for the Holding Company, which regulates the amount of coverage for each company, the order and timing of insurance contracts, and insurance reporting;

» selective risk audits at companies in ARMZ Uranium Holding Co, which made it possi-ble to identify a number of risks in a timely fashion and take preventative measures to manage operational risks;

SUSTAiNAbLE DEvELOPMENT

www.armz.ru79

» effectiveness analysis of risk management methods, correction and improvement of these methods (review of existing insurance contracts in response to changing external conditions);

» an evaluation was carried out of ARMZ Uranium Holding Co. production companies, based on which property insurance contracts were signed;

» implementation of a consistent, socially-ori-ented policy for staff insurance (guaranteed voluntary health insurance for all personnel, accident insurance).

In 2010, ARMZ Uranium Holding Co. opera-tions were associated with a number of risks that were of major significance to the holding Com-pany. Steps taken to manage these are indicated in the table below.

OPERATIONAL RISKS

To manage production risks, a strict system of control of pro-duction indicators was introduced, ensuring constant moni-toring of activities at ARMZ Uranium Holding Co. companies, as a result of which timely decisions were reached based on the current state of implementation of production programs. Property is being insured at market value, and companies are acquiring third-party civil liability insurance.

Production risk: risk that the company is unable to meet its ob-ligations due to the interruption of production as a result of any event (property damage, including such instances related to the illegal ac-tions of third parties, the absence/disruption of supplies, etc.).

JSC Atomredmetzoloto and its subsidiaries and dependent companies are constantly monitoring changes in the legisla-tion of the Russian Federation and the jurisdictions where it operates related to the mining of mineral resources and the use of nuclear power, marketing, and export control and non-proliferation, and follows all of the recommendations made by regulatory and control bodies concerning these issues at the international and national level. All contracts signed by the Holding Company receive compulsory approval from the respective company’s legal department (and in some cases, independent consultants are used).

Legal risks

Industry regulation is an important factor for ARMZ Uranium Holding Co. Active cooperation between the Company and Rosatom significantly reduced these risks.

Regulatory risks

SOCIAL RISKS

ARMZ Uranium Holding Co implements an active staff incen-tive policy, in particular:

» programs are being implemented to attract workers with experience in the mining industry from other regions, and also to attract highly-qualified workers from related sectors;

» a progressive wage, benefit and social security system has been developed and introduced, aimed at retaining quali-fied personnel;

» a comprehensive program is being implemented to train staff at all levels, including a talent bank for management positions;

Staff and social risks

80JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

» the Holding Company actively participates in developing infrastructure in the regions where it operates and builds staff housing (JSC Dalur). A modern workers settlement is under construction (JSC Khiagda), and old housing is being reconstructed (JSC PIMCU).

Ensuring the health and safety of workers is one of the Com-pany’s main priorities. Therefore, a range of measures is being implemented at each production facility in order to improve labor safety and reduce factors that tend to increase accident frequency and threaten employee health and safety. Companies in the group have third-party liability insurance, with limits sufficient to cover existing risks (higher than the level required by Russian Federation legislation). All workers in the Holding Company have accident and health insurance.

Occupational safety and health

ECOLOGICAL RISKS. NUCLEAR AND RADIATION SAFETY RISKS

The minimization of technological risks in the mining and processing of natural uranium, including the risks of nuclear and radiation safety, is ensured through a number of special activities, both of a preventive nature and in case risk arises, including:

» implementing equipment modernization programs at companies in ARMZ Uranium Holding Co.

» complying with existing technological and operational standards;

» monitoring and control, both by sub-divisions and by out-side organizations; and

» third-party and worker civil liability insurance at companies.

Technological risks, nuclear and radiation safety

ARMZ Uranium Holding Co. companies, both mining and pro-cessing natural uranium, monitor compliance with all stand-ards set by the legislation of the countries where they operate regarding environmental impact, and implement an active policy to reduce this impact and increase the ecological safety of production. The companies insure against environmental risks.

Risks connected with environ-mental impact. Ecological risks.

FINANCIAL RISKS

The Holding Company’s currency risk in 2010 was estimated as insignificant compared with the situation in 2009, which was primarily due to the setting of ruble prices in the companies’ main contracts. Moreover, as in 2009, management of currency risk in 2010 was handled by centralizing risks at JSC Atomred-metzoloto, which allowed production companies in the Hold-ing Company to concentrate on their core activities.The reduction in currency risks was achieved by hedging and managing the currency position of JSC Atomredmetzoloto, as a result of which a policy was introduced to change the structure of the credit portfolio in order to balance the currency assets and liabilities of the parent company.

Currency risks

This risk was minimized during the signing of credit agree-ments by establishing a balance between floating and fixed interest rates. Thus, in early 2010, most borrowing was carried out by ARMZ Uranium holding Co. at a floating rate tied to the

Interest risks

SUSTAiNAbLE DEvELOPMENT

www.armz.ru81

MosPrime rate, which has a downward trend. However, in the second half of 2010, when rates reached “an all-time low,” fixed rates started to predominate in the ARMZ Uranium Holding Co. portfolio.

Liquidity risks did not significantly influence the activities of JSC Atomredmetzoloto due to the implementation of a focused standing policy for the management of this risk, which included:

» regular liquidity monitoring for companies in the group (gathering and analysis of the payment schedules of companies in the group);

» setting limits for the ARMZ Uranium Holding Co. group of companies in several banks;

» restructuring of the credit portfolio to expand the long-term component of the portfolio.

Liquidity risks

The main buyers of products produced at ARMZ Uranium Holding Co. enterprises are Rosatom companies, thereby significantly reducing the credit risk of the Holding Company, which is highly reliable and solvent.

Given that one of the main priorities for JSC Atomredmet-zoloto as a mining division with maximum business value continues to be the global expansion of State Atomic Energy Corporation Rosatom, ARMZ is implementing a number of investment projects, including on foreign markets. This gives rise to the appearance of equity risks, which are currently managed at the level of detection, classification, monitoring and preliminary assessment. The Company is currently look-ing into the possibility, and necessity, of introducing Direc-tors & officers Liability Insurance.

Credit risks (counterparty default on financial obligations)

Equity risks

ARMZ’s stable market position is primarily due to a long-term growth trend in world demand for natural uranium and ARMZ products on the world market, guaranteed by the current and future requirements of the global atomic energy sector.

Commodity risks

SPECIFIC RISKS: URANIUM MINING RISKS

The use of the most modern methods of calculating reserve balances and resources, applied in best international and Rus-sian practice, allows ARMZ Uranium Holding Co. companies to receive the fullest and highest-quality information on its de-posits at the geological exploration stage. The latest geological exploration methods, using geological-mathematical models, significantly reduce the risk of inconsistencies between geo-logical data and actual reserves.

Risk of errors in assessments of the quality and volume of deposits

The Company is taking steps to diversify its uranium raw-material base by creating uranium-exploration and mining joint ventures abroad (Kazakhstan, Namibia, etc.).

Risks associated with the territorial restrictions of deposits

Historically, the main JSC Atomredmetzoloto assets have been concentrated within the Russian Federation and the Republic of Kazakhstan. At the beginning of 2009,

Risk of political instability/ political changes in operational regions capable of influencing

82JSC ATOMREDMETzOlOTO 2010 Annual Report

MANAgEMENT SySTEM

the Company decided to expand the geography of its raw material base and launch an active-expansion phase. This approach will, in the future, ensure a reduction in ARMZ Uranium Holding Co. exposure to potential geopolitical risk, should it arise in any given region.

achievement of the Company’s objectives

To reduce ARMZ Uranium Holding Co. reliance on suppli-ers and subcontractors, special companies have been set up, the aim of which is to centralize supply of the main auxiliary processes for mining companies (engineering, drilling). These companies ensure continuity of produc-tion processes and cost control, making it possible to manage a number of financial risks.Additionally, a procedure was introduced at the Holding Company – as at all companies within the Rosatom system – of selecting suppliers based on a single industry pro-curement standard, which allowed for the introduction of a number of additional measures to ensure contracts were honored (advance payments, guarantees).

Risk of dependency on the chain of suppliers and subcontractors, risk of their default

As a mining division, the Holding Company also has a policy of product-line diversification and searching for new products, in connection with which it is involved in the management of enterprises engaged in mining gold and non-nuclear materials.

Risk of dependence on a single product

To minimize the impact of market risks and to ensure the stability and continuity of ARMZ Uranium Holding Co. activity, sales markets for uranium products are being expanded, for which JSC Atomredmetzoloto provides centralized marketing of Holding Company products, including:

» developing natural uranium sales systems; » expanding the volume and geography of natural uranium

sales; and » ensuring sources of financing for programs to develop

uranium production in Russia and abroad based on long-term contracts for produced product.

Risk of a drop in product demand

SUSTAiNAbLE DEvELOPMENT

www.armz.ru83

PRiORiTy AREAS fOR DEvELOPiNg RiSk MANAgEMENT SySTEMS iN 2011:

» Harmonization in ARMZ Uranium Holding Co. of documents, approved by Rosatom as part of the formation of a corporate risk management system (hereinafter, CRMS).

» The systematization and practical implemen-tation of an approach to the management of monetary, credit and commodity risk at ARMZ Uranium Holding Co. based on the CRMS.

» Introduction of risk-reporting systems. » Improving insurance systems at companies,

including insuring assets at replacement value.

» Carrying out selective risk audits at ARMZ production companies.

» Development of sales and marketing systems for Holding Company products (long-term contracts with consumers) to ensure sales of produced product.

ThE fURThER DEvELOPMENT Of ARMZ RiSk MANAgEMENT SySTEMS iS PLANNED iN ThE fOLLOwiNg AREAS:

» Management of individual risks (credit, currency, commodity, equity, etc.) as part of the established practice of a “traditional” decentralized system of risk management, the regulation of business processes for the management of individual risks in the Hold-ing Company.

» Integration of ARMZ Uranium Holding Co. into the Rosatom CRMS, in the context of Rosatom’s strategic objective of developing the organizational structure of risk manage-ment and the subsequent consolidation of the CRMS organizational structure at the Holding Company.

» The development and improvement of CRMS as part of its transition to quantitative indicators and linking to specific key perfor-mance indicators, namely, the fullest-possi-ble use of quantitative methods in determin-ing risk-readiness.

» Integrating CRMS processes into all of the Holding Company’s key processes.

» Use of software to automate processes and reduce costs as part of the CRMS process.

84JSC ATOMREDMETzOlOTO 2010 Annual Report

www.armz.ru85

9SUSTAINAblE DEvElOPMENT

Personnel

Social policy

Security

Health and safety

Environmental protection and ecological safety

Development of territories where the Company operates

Charity and sponsorship activity

Cooperation with interested parties

86JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

> 9.1 <PERSONNEl

The current stage of development at JSC Atomredmetzoloto, aimed at increasing the effectiveness of existing production and expanding the Company’s global presence, requires the creation of conditions for high-performance and proactive work, high staff motivation to achieve ambitious goals, continuous development and the improvement of their skills and knowledge. That is why an effective human resource policy is one of the Company’s highest priorities.

Priority human resource policies include:

■ ensuring that personnel have the required qualifications to perform current and future tasks;

■ developing worker potential in line with the requirements of employees of world-class companies;

■ use of modern social technology, based on principles of partnership and cooperation; and

■ creating platforms for effective generation change.

■ ThE ARMz URANIUM hOlDINg CO. PAYROll AMOUNTED TO 10,700 PEOPlE.

■ A SINglE UNIfIED wAgE SYSTEM wAS INTRODUCED AT KEY COMPANIES IN ThE hOlDINg COMPANY.

■ AN ANNUAl PERSONNEl ASSESSMENT PROgRAM wAS lAUNChED.

■ A UNIfIED SOCIAl POlICY wAS INTRODUCED.

»

ARMZ Uranium Holding Co. understands sustainable develop-ment to be a system of consistent economic, environmental and social measures aimed at managing the full life-cycle of mining. These issues are highlighted, not only in the section on sustain-able development, but also in describing the strategy of develop-ment and production activities. Establishment of effective and safe jobs, professional development and social support for em-ployees, environmental protection, support for education, cul-ture and sport are priorities. All activities in the area of sustaina-ble development are carried out based on continuous interaction with interested parties and aim to increase competitiveness.

SOCiAL POLiCy

www.armz.ru87

NUMbER AND MAKE-UP Of ARMz URANIUM hOlDINg

CO. STAff IN 2008–2010

Headcount at the main Russian companies of ARMZ Uranium Holding Co. increased by 621 over 2009 figures to reach 10,700 peo-ple in 2010 (from the inclusion of JSC VNI-PIPRoMTEChNoLogII in ARMZ Uranium Holding Co.). Generally all of the Company’s workers work full time.

In 2010, headcount at JSC Atomredmet-zoloto fell by 7%, which made it possible to reduce the number of management levels.

At most companies in ARMZ Uranium Hold-ing Co., the share of young specialists is increas-ing. Ensuring generational continuity is one of the Company’s key human resource objectives.

Most employees of ARMZ Uranium Holding Co. companies are male which is primarily due to the specific nature of the work required of them.

The implementation of programs aimed at maintaining staff stability made it possible to reduce or leave staff turnover levels un-changed in 2010 at most companies in ARMZ Uranium Holding Co.

At most companies, locals predominate among employees (including managers), on average – 82% in 2008, 87% in 2009 and 91% in 2010. Most teams in Uranium ARMZ Holding Co. companies are multinational. There were no registered cases of discrimination at ARMZ Uranium Holding Co. based on gender, national origin, or other characteristics in 2010.

Professionals and managers are employed from other regions, in case of lack of local spe-cialists with the required qualifications and as a result of the restricted structure of the local labor market (the main production facilities of a number of enterprises are located at quite a distance from major population centers).

The Company is actively developing an in-ternal rotation system, which allows maximum use of the most successful workers and manag-ers, as well as the adoption of the best practices throughout the entire Holding Company.

Average ARMZ Uranium Holding Co. headcount in 2008–2010

12

,70

1

14,000

0

2,000

4,000

6,000

8,000

10,000

12,000 11

,56

5

10

,41

4

2009 20102008

Staff dynamic at ARMZ Uranium Holding Co. broken down by age group

Workers under 35 remaining workers

figure 13

14,000

0

2,000

4,000

6,000

8,000

10,000

12,0002008

2009 2010

8,0724,979 6,287

4,063

6,2634,437

figure 15

Information on staff turnover at ARMZ Uranium Holding Co. Russian companies, broken down by gender

figure 14

Gender staff structure at companies in ARMZ Uranium Holding Co.

Men

0

2,000

4,000

6,000

8,000

10,000

8,6

92

4,2

66

6,8

55

7,1

16

Women

2,9

86

2,9

80

Women Total turnover

Men

0

2%

4%

6%

8%

10%

12%

14%

2%

1%

4%

9%

4%

13

%

2009 2010

2008 2009 2010

figure 12

88JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

PAYROll

In 2010, key enterprises in the Holding Company introduced a unified payroll system, which aims to eliminate different approaches and technologies in the area of remuneration and disproportions in the wages paid for work

in comparable positions. In 2010, a single uni-fied wage system was introduced for all workers at JSC Khiagda, JSC PIMCU and JSC Dalur. This made the payroll payment system more trans-parent and understandable for each worker.

Table 13.

Standard wage amounts in major regions of operations

COMPANy yEAR REgiON Of OPERATiONS STANDARD REgiONAL wAgE, RUb

17,073

19,412

23,654

15,683

18,612

23,025

21,415

26,382

36,393

41,020

44,520

63,066

48,520

65,800

73,200

Trans-Baikal Territory

Kurgan Region

Trans-Baikal Territory / Republic of

Buryatia

Moscow, Kurgan Region, Chita Region,

Republic of Buryatia

Moscow

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

2008

2009

2010

STANDARD COMPANy wAgE, RUb

QUAlIfICATION IMPROvEMENT, TRAININg

AND DEvElOPMENT

Taking the needs of workers in ARMZ Ura-nium Holding Co. companies into account, a corporate training and staff development system was set up. The main objective of the system

is to ensure development of staff knowledge and the skills needed to achieve ARMZ Uranium Holding Co. business goals.

ACTIvITIES AND RESUlTS IN 2010

■ The Company has implemented a system of long-distance learning, offering 10 training courses; since remote learning was intro-duced, 120 workers have taken courses.

■ A “Leadership Academy” expertise continuity program was launched, involving the identi-fication and development of employees who are ready to effectively manage the units. The program gives employees the opportunity to obtain the knowledge and skills necessary to participate in achieving the strategic goals facing the Company.

■ Work was started as part of a “Career Plan-ning” program, which allows each worker to plan their career development and identify opportunities within the Company.

■ A program was implemented to offer oppor-tunities for workers to have training at com-panies in the Group, in the Rosatom manage-ment chain, and at other companies involved in the same sphere of operations.

15,153

16,554

19,036

11,319

12,663

13,090

15,147/14,142

16,607/18,673

18,608/21,388

-

-

-

29,000

33,000

46,000

JSC PIMCU

JSC Dalur

JSC Khiagda

RUSBURMASH INC

JSC VNIPIPROMTECHNOLOGII

www.armz.ru89

In 2010, expenditures on social benefits for workers were distributed among the following areas:

PlANS fOR 2011

■ Transfer JSC VNIPIPRoMTEChNoLogII and RUSBURMASh INC to unified payroll system.

■ harmonize the unified payroll system at JSC Khiagda, JSC PIMCU and JSC Dalur.

■ Include the activity of workers up to specialist level in the annual performance assessment procedure.

■ Clarify the system concerning professional competencies to assess performance of workers at production sub-divisions (work specialization).

■ Continue implementing programs aimed at worker-capability enhancement (“Leadership Academy,” “Career Planning” and an internship program).

■ Establish a functional talent bank at subsidiaries.

■ Extend the remote learning portal: integrate the system at subsidiaries, install an additional “virtual classroom” module for the remote training of workers at subsidiaries.

■ Implement a Company continuous professional development program to retain core competencies.

> 9.2 <SOCIAl POlICY

One of the most important principles of ARMZ Uranium Holding Co. operations is careful attention to the interests of society, promoting the social and economic development of the regions in which the Company operates, creating a favorable business climate, maintaining decent working conditions, and social and spiritual well-being. In this regard, JSC Atomredmetzoloto seeks to ensure sustainable business development, paying attention not only to the economic but also the social component of its operations.

TyPES Of SOCiAL bENEfiTS, RUb MLN

JSC vNiPi-PROMTEChNOLOgii

VMI

VMI, accident & life

Pension benefits

Sporting and cultural events

Material aid

Payment of holiday fares, treatment

Supplementary payments upon retirement

Once-off holiday and anniversary payments

Compensation of housing/hostel rental

ARMZ

0

0

0

0.8

0.8

0

0.4

0.3

0

Table 14.

Amount and terms of social benefits in 2010

1.5

0

0

0

0.01

0

0

0.01

5.6

2.7

0.02

10

0.2

2.7

1.3

0.2

0.6

30

4.4

10.6

4

4.8

14.9

6

1.4

7.9

0.02

0.6

3.6

0.2

0.7

JSC PiMCU JSC DALUR JSC khiAgDA

SECURiTy

90JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

The Company pays great attention to the non-material motivation of Holding Com-pany employees. State, government and indus-try awards for the most distinguished employees

are highly appreciated. In particular, 50 work-ers were awarded the “65 Years of the Nuclear Industry” anniversary medal in 2010.

ACTIvITIES AND RESUlTS IN 2010

■ In 2010, ARMZ Uranium Holding Co. companies began implementing a unified social policy that stipulates the standardization of benefits and guarantees for all employees, considering the specifics of operations, business location and social infrastructure development.

■ Work of the implementation of the unified prin-ciples for ensuring the employees of the Hold-ing against accidents has begun. All workers at ARMZ Uranium Holding Co. are covered against accidents and illnesses.

■ Companies in the Holding Company have joined an agreement with the Russian Federal Medical and Biological Agency, fixing sources of funding and the types and amounts of services provided by compulsory health insurance programs through the federal budget and Company funds within the framework of voluntary insurance.

■ Companies in the Holding Company have begun implementing industry standards in the field of pension benefits. Several pensioner status levels have been introduced: veteran pensioner, honorary pensioner, and pensioner. Each group receives a certain set of benefits and guarantees.

■ JSC PIMCU has launched a housing program. The program involves compensating workers' mortgage interest payments, the sale of housing owned by JSC PIMCU in Krasnokamensk, al-lowing workers to pay in installments over 5-10 years, providing workers with temporary hous-ing owned by JSC PIMCU in Krasnokamensk under commercial tenancy agreements, and purchasing housing under construction, includ-ing outside Krasnokamensk.

■ Collective agreements have been signed be-tween JSC PIMCU, JSC VNIPIpromtechnologii, JSC Dalur and the trade unions of these compa-nies that provide social protection to company employees, including health and safety. The collective agreements cover all the employees of these companies, including those working part-time.

■ A draft JSC PIMCU collective employment agreement for 2011-2013 has been developed and approved, according to the industry agree-ment on nuclear energy, industry and science for 2009–2011.

■ In line with the employee bonus system of industry and corporate awards for outstanding professional achievements, JSC PIMCU employ-ees were awarded the following types of awards to mark professional holidays and anniversaries: › state award Honored Geologist of the Rus-

sian Federation– 1 person; › industry awards – 452 people (Veteran of

Nuclear Energy and Industry medal – 363 people);

› Ministry of Energy of the Russian Federation awards – 13 people;

› Trans-Baikal Territory awards – 63 people (including 3 employees awarded the title of Honorary Employees of Trans-Baikal Re-gion);

› Krasnokamensk and Krasnokamensk District awards – 108 people;

› JSC PIMCU awards – 481 people.

■ In order to ensure the social protection of former employees at JSC PIMCU, additional payments to personal pensions were received by 1,276 retired employees.

■ Based on the agreement between the Com-pany and a non-state pension fund (First National Pension Fund), and on the basis of Regulations Governing Private Pensions for employees at JSC Dalur, workers receive addi-tional private pensions upon their retirement.

SECURiTywww.armz.ru91

PlANS fOR 2011

YOUTh POlICY

■ Bring all companies’ social programs into compliance with unified corporate standards.

■ Standardize compensation packages for Holding Company’s employees.

■ Bring collective employment agreements at JSC PIMCU, JSC Dalur and JSC VNI-PIPRoMTEChNoLogII into compliance

with the industry agreement for atomic en-ergy, industry and science for 2009–2011.

■ Step up cooperation with the Russian Federal Medical and Biological Agency in expand-ing the types and number of services offered under compulsory medical insurance from federal funds and Company funds as part of voluntary health insurance programs.

Company management is implementing an active policy to attract and retain young

specialists, which will allow the Company to look to the future with confidence.

On March 25, 2011, as a part of preparing the Company’s annual report for 2010, a dialogue was held with interested parties on staff devel-opment and the training of young specialists. The dialogue was held with the participation of Company management, representatives from

Rosatom, regional and local authorities, and public organizations, and dealt with important areas of the Company’s youth policy. More de-tailed information is presented in Section 9.8 “Cooperation with interested Parties.”

JSC vNiPiPROM-TEChNOLOgii

Young workers hired

Total number of employees under 35

Share of employees under 35

Targeted contracts

Number of young specialists to have undergone

second-profession training

Number of interns

JSC PiMCU

41

127

28.7

0

9

Table 15.

Main results in 2010

3

183

28

0

1

144

44

1

30

8

57

188

43.7

1

9

1,348

3,659

42.2

6

1,050

183

JSC DALUR JSC khiAgDA

RUSbUR- MASh iNC

ACTIvITIES AND RESUlTS IN 2010

■ Long-term contracts have been signed with educational institutions to jointly organize and conduct educational and information-al, vocational and undergraduate intern-ships for students studying key industry disciplines.

■ Informational work is being carried out at schools on an on-going basis, aimed at attracting in future young professionals to the Company (participation in job fairs, career days).

■ The practice of teaching employees and their family members at academies – with mandatory employment at the Company – has been implemented.

■ Young professionals who attended training and improved their qualifications receive second/related professions.

■ A coaching system has been organized at companies.

■ Sports and cultural events have been organized.

■ JSC PIMCU has formalized a youth policy; the company has a Youth Council. The “Best Young Professional” contest was held.

■ JSC VNIPIPRoMTEChNoLogII has a School for Young Specialists. Lectures were

92JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

held on the history of the institute and its main achievements over 60 years (speakers included the company director and his as-sistants) and 2 lectures on the main activi-ties of JSC VNIPIPRoMTEChNoLogII (design and research, given by key experts in these fields) were also conducted.

■ A remote graduate school is in operation to support master's theses on topics of inter-

est to Rosatom (a scientific and technical advice service is in place for dissertations). Two young professionals have proved their master's theses.

■ Pavel Vereshchagin, a young specialist from JSC VNIPIPRoMTEChNoLogII, received the Rosatom “Nuclear Indus-try Youth Researcher Prize,” worth RUB 100,000.

PlANS fOR 2011

■ Support of existing programs for young pro-fessionals at companies within the Holding Company.

■ Conducting training for professionals respon-sible for implementing youth policy at com-panies within the Holding Company.

■ Carrying out activities for young profession-als at the Holding Company: competition for

scientific papers, with students being award-ed scholarships and included on the Hold-ing Company’s register of young specialists; holding the “Best Young Professional” youth competition.

■ Development of a youth housing policy at JSC PIMCU.

> 9.3 <SECURITY

In 2010, security activity at ARMZ Uranium Holding Co. was carried out in compliance with Russian legislation, regulatory documents and the plans of Rosatom and JSC Atomredmetzoloto.

Operating indicators developed by Rosatom for security divisions include:

■ meeting criteria for the physical security of nuclear facilities and materials (no violations of established access controls, which could lead to sabotage or a terrorist attack against nuclear facilities);

■ compliance with criteria for protecting state secrets (no evidence of leaks of information constituting state secrets that could damage the interests of defense and state security);

■ implementation of a plan for regular inspections to ensure secrecy and control the protection of information constituting state secrets in subordinate organizations;

■ implementation of a plan for the certification of equipment intended for work with information constituting state secrets;

■ implementation of a plan for regular inspections of physical security at subordinate organizations (enterprises); and

■ disbursement of funds allocated for the upgrading and improvement of physical security at organizations (enterprises).

All of the abovementioned KPIs were met in full.

hEALTh AND SAfETywww.armz.ru93

RESUlTS IN 2010

■ A semi-annual extended meeting of the JSC Atomredmetzoloto Security Directorate and the security units of subsidiaries and affiliates was held. The meeting was attended by representa-tives of the Russian Federal Security Service, Rostekhnadzor (Russian Technical Supervisory Authority), the Rosatom State Secret and Infor-mation Protection Department, the Federal State Unitary Enterprise Atom-Okhrana, and sub-contractors, as well as the directors of internal control and procurement departments.

■ A secure electronic-documents workflow infra-structure was launched with a legally- binding electronic signature based on the Crypto-Pro certification authority; a system for monitor-ing the movement of restricted information was introduced, and the first stage of the work on setting up a system to protect personal data at the Company was completed in compliance with applicable legislation. Work along these lines has been positively evaluated by State Atomic Energy Corporation Rosatom and taken into considera-tion when setting up a unified document for the industry.

■ The Company has actively participated in im-plementing a Rosatom program to transform the financial-economic and IT units by meeting requirements for information security, including

projects to implement a unified system of elec-tronic document management for the industry, creation of corporate data networks, the intro-duction of automated library management for geological-mathematical models at JSC Atomred-metzoloto and the automation of mine planning, the creation of key public infrastructure based on a single certification center, and the creation of a unified system of information security for the industry. A significant volume of work was completed in an extremely short time, without any leaks of restricted information or violations of the RF Federal Law “on Personal Data”.

■ The secrecy protection system installed at the Company prevented the loss of secret documents and/or or the leaking/divulging of information constituting a state secret.

■ Comprehensive inspections were carried out at JSC Khiagda, JSC Dalur and JSC PIMCU on issues of secrecy and secret record management, data protection and information security, physical security, etc. The acts prepared as a result of the inspections were sent to the Rosatom State Secret and Information Protection Department. Checks were also carried out on the state of infor-mation security and the protection of restricted information at JSC VNIPIpromtechnologii and JSC Elkon MMP.

PlANS

■ Provide methodical and practical support to subsidiaries and dependent organizations on the protection of information constituting a state secret, and also on information security and the protection of restricted information, including organizing work to protect personal data and implementing projects to create document management systems.

■ Strengthen control over compliance with regulatory documents with regard to interna-tional cooperation.

■ Completion of the second stage of a project to create a personal data security system at the Company in compliance with the RF Fed-eral Law “on Personal Data” and the launch of personal data security systems.

■ Start working on the introduction at JSC Atomredmetzoloto of a system to manage information security in compliance with the international standard ISO 27001:2005 and

the subsequent certification of systems as complying with this standard.

■ The preparation and introduction of a regula-tory base dealing with information security (policies, regulations, guidelines, etc.).

■ A range of activities aimed at increasing awareness among Company workers regard-ing the ensuring of information security.

■ The launch of an automated staff monitoring system.

At JSC PIMCU, the average effective dose fell from 3.6 mSv in 2009 to 3.2 mSv. No employees were exposed to an annual dose exceeding 20 mSv (11 people in 2009). No employees were exposed to the individual dose above 100 mSv in the period 2006–2010.

At JSC Dalur and JSC Khiagda no employees were exposed to the individual effective dose of more than 20 mSv. Average annual exposure amounted to 1.64 mSv and 1.02 mSv, respectively.

94JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

> 9.4 <hEAlTh AND SAfETY

JSC Atomredmetzoloto recognizes the impact its production has on the environment and considers the health and safety of its employees to be an absolute priority.

ARMZ Uranium Holding Co. is organizing the effective management of radiation safety work at all companies in the group. In its work, the Company’s Radiation Safety Department is guided by the legislation and other regulatory acts of the Russian Federation governing radiation safety. Personnel is not exposed to an individual radiation risk exceeding 10-3. The average effective dose for Holding Company personnel does not exceed 10% of the permis-sible level.

The objective of the Radiation Safety Service is to carry out status checks and to ensure the radiation safety of work during the mining, processing, storage and transportation of radioactive substances and waste.

External radiation exposure for Group A personnel at ARMZ Uranium Holding Co. is controlled with the help of individual thermo-luminescent dosimeters. Individual doses are assessed taking the internal radiation exposure of personnel into account. The main radiation factors (volume activity of radon, the power of the equivalent/exposure dose of X-ray and gamma radiation, radioactive contamination of surfaces with alpha- and beta-nuclides) are controlled using modern certified equipment.

ENSURINg RADIATION SAfETY

IN 2006-2010, NO ONE AT ARMz URANIUM hOlDINg CO. ExCEEDED ThE RADIATION SECURITY NORM NRb-99/2009 DOSE lIMIT Of 50 MSv.

»

ACTIvITIES AND RESUlTS IN 2010

■ In 2010, there were no Level 2 incidents or higher on the INES scale: no employees were exposed to the dose above limit (20 mSv in 2010) – for the first time in the history of JSC Atomredmetzoloto and JSC PIMCU. These re-sults were achieved due to the timely rotation of Group A personnel with dose exposure of 80% of the admissible annual effective dose, and also thanks to the installation of new mining equipment and the modernization of ventilation systems.

■ The Company continued implementing its program to modernize radiation control and reduce personnel exposure at JSC PIMCU in 2009–2010.

■ No one exceeded the dose set by safety regulations NRB-99/2009 of 50 mSv at ARMZ Uranium Holding Co. facilities in 2006–2010. There were no incidences of loss of license in the area of nuclear power use.

www.armz.ru95

AT JSC PiMCU:

■ A mobile radiation laboratory was purchased and installed;

■ 66 insulating concrete and wooden brattices were installed at underground mines;

■ 11 DV-1000 ventilation doors were installed in automatic mode;

■ timely personnel rotations were carried out based on individual dosimeter checks; and

■ 12 intake shaft heaters were repaired and replaced.

hEAlTh AND SAfETY

In order to achieve its strategic goals, the Company is actively develop technology, and systems for organizing, planning and controlling production processes.

Work to prevent occupational injuries

is being carried out within the framework of an industry-wide system for labor safety management, approved by Rosatom.

Main steps to improve the technical level of subsidiaries and reduce dangerous working conditions:

■ The design and construction of new production capacities that take modern safety requirements into consideration and ensure high productivity, maximum automation of production, and a reduction in the number of dangerous works;

■ Technical improvements to remove obsolete equipment from existing production facilities;

■ Internal and external audits of production facilities to identify and eradicate previously-accumulated violations of health and safety requirements;

■ Organisation of activities to strengthen discipline and provide additional training.

»“A bASIC CONDITION fOR ThE glObAl DEvElOP-MENT Of NUClEAR POwER INDUSTRY IS ThE COM-PlETE OPENNESS Of ThIS PROCESS AND AbSOlUTE gUARANTEES Of PUblIC SAfETY IN All CIRCUM-STANCES.”

S. v. kiRiENkO, DIRECTOR GENERAL, THE STATE ATOMIC ENERGY CORPORATION ROSATOM

»

ENviRONMENTAL PROTECTiON AND ECOLOgiCAL SAfETy

1 fUEl PEllET CONTAINS ThE EQUIvAlENT ENERgY Of 50 bARRElS (AbOUT 8,000 lITERS) Of OIl, 40 TONS Of COAl OR 900 CUbIC METERS Of gAS. A SINglE POwER blOCK AT A NUClEAR PlANT CONTAINS OvER 17 MIllION Of ThESE PEllETS.

96JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

■ Growth in the number of fatal accidents was halted. There was 1 fatal accident at an ARMZ Uranium Holding Co. facility in 2010 (1 in 2009, 5 in 2008).

■ At JSC Dalur and JSC Khiagda, there were no accidents in 2010.

■ Total expenditures on health and safety at ARMZ Uranium Holding Co. companies amounted to RUB 184 million.

AT JSC PiMCU: » Work began on a technical upgrade program

for mining work in 2010–2012, which aims to put an end to manual labor in the main production processes and reduce radiation exposure and the risk of injury.

» An industrial safety audit was carried out at the hydrometallurgy plant, the combined heat and power plant and the Urtuiskoye mine.

» Competitions were continued between sec-tions of mines and employees were motivated to work without accident.

ACTIvITIES AND RESUlTS IN 2010

The continuing relatively-high rate of work-related injuries at JSC PIMCU.

■ Begin implementation of a comprehensive plan of action in 2011–2012 to reduce the accident rate at JSC PIMCU divisions.

■ Implement an approved program for the technical improvement of existing production facilities in 2011 amounting to RUB 288.5 million.

■ Ensure the implementation of programs to introduce advanced types of reinforcements for underground mining operations.

■ Revise existing Occupational Health and Safety (OHS) systems to take Rosatom analysis, risk assessment and recommendations into consideration.

» Automatic medical examination cabins were purchased and installed as part of a staff medi-cal examination system.

» An information campaign was organized to bolster work discipline.

» Restructuring of the health and safety service commenced.

» The practice of the internal investigation of incidents was introduced.

AT JSC khiAgDA: » A site for the storage of solid domestic waste

was launched.

AT JSC DALUR: » Construction of a road and bridge over the

Barneva River – from the solution-processing unit to the Ust-Uksyanskoye local sorption unit – was completed to prevent the transpor-tation of hazardous freight through populated areas.

PROblEM

Frequency coefficient

Severity coefficient

Number of lost days*

JSC PiMCU

Table 16.

Accident frequency rate

0

0

0

0

0

0

1.3

78.4

816

JSC DALUR JSC khiAgDA

SOLUTiONFurther improvement of health and safety systems.

* Loss of capacity to work for 1 working day or more (days are scheduled working days)

PlANS

www.armz.ru97

All ARMZ Uranium Holding Co. companies have developed and agreed regulatory limits on maximum permissible emissions, wastewater discharges and pollutants, and regulations on the formation and limits of waste disposal. The necessary permits for emissions, discharges and waste disposal are in place, and systems have been set up to monitor radiation, ecological and industrial safety.

Modern laboratories for radiation safety and environmental protection are equipped with devices that provide for the continuous moni-toring of emissions into the environment and keep an eye on the level of harmful substances

at production facilities and company health-protection zones.

The Company has approved an implemen-tation plan for its 2009–2015 environmental policy, which aims to ensure ecological safety and environmental protection at the territories of existing subsidiaries.

The information provided in this section of the annual report is based on information contained in the environmental-safety reports prepared in 2010 by three companies in ARMZ Uranium Holding Co. – JSC PIMCU, JSC Dalur and JSC Khiagda – as the most ecologically-sig-nificant organizations in the industry.

> 9.5 <ENvIRONMENTAl PROTECTION AND ECOlOgICAl SAfETYARMZ Uranium Holding Co.’s environmental policy is based on principles of rational natural-resource management and environmental protection.The main objectives of environmental policy are:

■ Developing and implementing measures to reduce negative environmental impact as much as possible.

■ Protection of the natural environment in areas of operations, land reclamation.

■ Reducing discharges of industrial waste water and harmful substances. ■ Rational use of energy resources. ■ Constant ecological monitoring.

» »»

»

»

»

» »

+»»

Comparative characteristics of coal and nuclear fuel

30–70 kg of ore

NUCLEAR fUEL

COAL fUEL

230 gu3O8

candu »8,000 kilowatt hours of electricity

230 g snf » storage

enrichment

200 g dump

30 g of fuel

» LWr» 8,000 kilowatt hours

of electricity

»30 g snP

20 ml waste

»6 g

glass

8 000 kilowatt hours of electricity

figure 16

3 tons of black coal or 9 tons of brown coal

chP 300 kg of ash

8 tons of cO2, sO2, and othergas and aerosol emissions

DEvELOPMENT Of TERRiTORiES whERE ThE COMPANy OPERATES

98JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

■ The situation was significantly improved with the formation and disposal of waste at the Holding Company’s main production facility– JSC PIMCU. There was a significant reduction in original-ground waste disposal as compared with 2009, due to the disposal of 100% of overburden in internal dumps at the Urtuisky brown coal mine (technical phase of reclamation), and thanks to the shipment of previously-accumulated Hazard Class 4 waste (pyrite cinder from sulphuric acid production) to the cement industry. There is no overburden at JSC Dalur or JSC Khiagda.

■ Waste in Hazard Classes 1–3 is within permissible limits (see Table 17).

RESUlTS IN 2010

figure 17

Disposal of overburden from the Urtuisky brown coal mine (JSC PIMCU)

internal dumps, mln tons

0

5

15

20

25

16

.3

8.2

6.9

15

.7

10

23

.7

0

COMPANy/ hAZARD CLASS

Hazard Class 1

Hazard Class 2

Hazard Class 3

Hazard Class 4

Hazard Class 5

Total

Waste used at the plant, placed at own facilities %

Waste given to specialized contractors for use and disposal, %

Exceeding of established limits

JSC PiMCU

Table 17.

generation of waste of all hazard classes (t) in 2009–2010

0

0

0

0

2

1

3,864

4,071

178

9,027

4,044

13,099

99.90

0.01

No

0

0

0

0

8

2

27

24

15

9

50

35

0

100

No

2009

2010

2009

2010

2009

2010

2009

2010

2009

2010

2009

2010

JSC DALUR JSC khiAgDA

2

4

1

0

475

253

28,881

2,496

22,725,600

23,909,745

22,754,959

23,912,498

99.60

0.40

No

ThIS CYlINDER REPRESENTS ThE vOlUME Of lONg-lIfE hIghlY RADIOACTIvE vITRIfIED wASTE fROM ThE AMOUNT Of NUClEAR fUEl USED TO PRODUCE ENOUgh ElECTRICAl ENERgY TO SUPPORT A TYPICAl MODERN fAMIlY fOR AbOUT 30 YEARS IN A fUllY-ElECTRIfIED hOUSE wITh All AMENITIES (hEATINg, COOKINg AND All OThER hOUSEhOlD CONvINIENCES).

external dumps, mln tons

yEAR

www.armz.ru99

■ The companies did not exceed the established norms for water intake (see Table 18). Com-panies managed not to exceed water-use limits by increasing the use of secondary technical

water supply resources , reducing pressure at night in the city pipes to the minimum level, and repairing leaks in emergency pipes.

■ Maximum emission limits were controlled. As a result of production activity at the three companies, the amount of pollutants released

into the atmosphere did not exceed the maxi-mum emission limits set for the companies.

COMPANy

JSC PIMCU

JSC Dalur

JSC Khiagda

Table 18.

water draught by purpose and company, thousand cubic meters

No

No

No

18,977

75.5

14.3

2,125

21,102

75.5

14.3

12,989

57.5

2.9

8,113

18

11.4

wATER iNTAkE fOR PROD.

NEEDS

wATER iNTAkE fOR DOMEST.

NEEDS

TOTAL wATER iNTAkE

UNDER-gROUND

SOURCES

SURfACE SOURCES

ExCEEDiNg Of LiMiTS

NAME Of POLLUTANT

SO2 (sulfur dioxide)

Non-organic dust, ash

NOx (nitrogen oxides)

CO (carbon monoxide)

Non-organic dust, 20–70% SiO2

Table 19.

Emissions of pollutants into the atmosphere* at JSC PIMCU, 20101.

6,211

5,594

2,550

1,121

182

11,678.1

7,051.9

2,982.4

1,643.4

231.4

6,162.1

6,083.5

1,889.5

845.9

180.9

ACTUAL EMiSSiONS iN 2010, T

ESTAbLiShED PERMiSSibLE EMiSSiON LiMiTS, T

ACTUAL EMiSSiONS iN 2009, T

Here and after, for all subsidiaries: method for calculating regulated emissions as envisioned by the Draft Regulations for Emissions (DRE) for each company individually. Each method describes the characteristics as a source of air pollution, which lists pollutants emitted into the atmosphere, the quantitative and qualitative composition of feedstock used, and the basic characteristics of equipment used. Atmospheric emissions are calculated for each element of pollutant on the basis of the raw materials used.

■ Emissions into the atmosphere were reduced. As a result of production activity at JSC Khiagda in 2010, 138,656 tons of pollutants were released into the atmosphere (61% of the admissible level). Most of these were

boiler-house emissions (86%) (see Table 20). The use of dust-catching equipment reduced emissions into the atmosphere by 22.5 tons in the reporting period.

NAME Of POLLUTANT

Carbon monoxide

Sulfur dioxide

Non-organic dust, ash

Nitrogen dioxide

Soot

Other

Total

Table 20.

Emissions of pollutants into the atmosphere at JSC Khiagda, 2010

76

24

11

11

10

7

138

78.5

24.8

12

9.7

10

3.6

138.6

2010, т 2009, т

DEvELOPMENT Of TERRiTORiES whERE ThE COMPANy OPERATES

100JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

■ The total amount of emissions from all sources at JSC Dalur in 2010 amounted to 10.699 tons, or 59.8% of emissions limit.

NAME Of POLLUTANT

Carbon monoxide

Manganese oxide

Ammonia

Nitrogen dioxide

Sulfuric acid

Nitrogen oxide

Hydrogen chloride

Others

Total

Table 21.

Emissions of pollutants into the atmosphere at JSC Dalur, 2010

0

0

1.4

2.4

0.3

0.4

0.1

6

10.6

4.9

0.0003

1.8

2.2

0.5

0.351

0.1

0.8

10.7

2010, т 2009, т

JSC PiMCU

Table 22.

Expenditure on environmental protection in 2010, RUb million

JSC DALUR JSC khiAgDA

ExPENDiTURE ON MiNiMiZiNg ENviRONMENTAL iMPACT

ExPENDiTURE ON ECOLOgiCAL MANAgEMENT

Air quality protection

Water protection

Land protection

Environmental monitoring

Environmental project work

Total

28.5

37.5

43.1

10.7

6.2

119.8

0.1

1.7

0.2

1.2

-

3.2

1

not required

1

0

-

2

Investments in environmental protection facilities in 2010 amounted to RUB 65.9 million.

AT JSC PiMCU: » 3.1 km of metal sewer pipes were replaced

with polyethylene pipes. » Installation of drinking water disinfection

units, operating on the principle of electro-di-alysis: a synthesis of chlorine ions constantly added to drinking water.

» Disposal of 46,702.7 tons of fly ash in mining production.

» Storage of overburden in internal dumps only.

AT JSC DALUR: » Construction of a road and bridge over the

Barneva River – from the solution-processing unit to the Ust-Uksyanskoye local sorption unit – was completed to rule out the transpor-tation of hazardous freight through populated areas.

» An ecological audit was carried out at JSC Da-lur in November 2010 by representatives from the Finnish company Fortum and JSC TVEL, which gave the company a high rating as a modern, technologically and ecologically safe production facility. During the audit it was

ESSENTIAl wORK TO REDUCE ENvIRONMENTAl

IMPACT

www.armz.ru101

also recommended to certify the Company as complying with ISO 9001, ISO 18001. Earlier, in May and September 2009, an ecological audit of JSC Dalur was carried out by repre-sentatives from Swedish energy companies and JSC TENEX, who also noted the high level of safe production. Based on the recommenda-tions received during the audits, JSC Dalur and

JSC Atomredmetzoloto began evaluating the amount of work needed to introduce environ-mental and quality-control systems complying with ISO 9001 and ISO 18001.

AT JSC khiAgDA: » Launch of a solid domestic waste unit.

AREAS Of lAND DISTURbED OR REClAIMED

JSC PiMCUAs of 31.12.2010, the total amount of natural

territory polluted with radium-226 and uranium was unchanged as compared with 2009, amount-ing to 8,275,000 square meters.

In 2010, under a contract with ATT LLC, a 14.07-hectare area of land was reclaimed near the hydrometallurgical plant and the Promyshlen-naya railway station. The Company spent RUB 926,000 for this project.

Systematic work is being conducted to reclaim developed areas of the Urtuisky brown coal mine. In 2010, 23,737 tons of overburden were buried inside the mine.

JSC DALURAs of 31.12.2010, the total area involved in

production amounted to 6.0 hectares.

JSC khiAgDAIn 2010, 179.6 hectares of land were brought

into development. This land is earmarked for construction of the main production units and well-fields.

There were no claims for compensation filed in the courts or payments made by JSC Atomred-metzoloto companies over violations of environ-mental legislation in 2010.

PlANS

In 2011–2015 the Company intends to imple-ment a consolidated plan for the application of eco-logical policy, developed on the basis of ecological audits and agreed with Rosatom. The plan includes:

■ Organizational work aimed at improving environmental safety:

■ introduction of an automated system of production and environmental monitoring (ASPEM) at JSC PIMCU;

■ reducing the consumption of river water at JSC PIMCU to zero through the company’s own water supply;

■ maintaining the design capacity of existing electric filters at the JSC PIMCU combined heat and power plant, and the installation of renovated dust control equipment at the boiler units (wet capture); and

■ introduction of an ISO 14001:2004 ecological control system at JSC Dalur.

■ technical work aimed at reducing the envi-ronmental impact at subsidiaries stemming from production processes, including as part of a targeted federal program to ensure nuclear and radiation safety in 2008 through

2015, the reconstruction of treatment facili-ties, reclaiming of land, and carrying out of environmental monitoring:

AT JSC PiMCU: » reconstruction and expansion of wastewa-

ter treatment plants with a capacity of up to 40,000 m3/day;

» reducing dust formation in cinder storage at the sulphuric acid plant by removing pyrite cinder from storage and filling the freed-up space with water-diversion water;

» designing and implementing a project to dispose of waste ash from the combined heat-and-power plant in the Krasniy Kamen open pit (in accordance with the targeted federal program to ensure nuclear and radiation safety, as approved by the Government of the Russian Federation);

» selling 35,000–40,000 tons of cinder from the sul-phuric acid plant to the cement industry until the permitted development of a cinder storage unit;

» rehabilitation of land near Oktyabrsky Village as residents move out; and

» reconstruction (expansion) of the radioactive waste storage unit at the Srednee Hydromet-allurgical Plant (in accordance with the tar-geted federal program to ensure nuclear and radiation safety, as approved by the Govern-ment of the Russian Federation).

DEvELOPMENT Of TERRiTORiES whERE ThE COMPANy OPERATES

102JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

AT JSC DALUR: » reclamation of territory polluted as a result

of geological exploration and experimental work – decommissioning of in-situ leaching unit PV-89, operating units PV-2, 5-1, 5-2, and 5-3 and the reclamation of their territories;

» site improvements at the Ust-Uksyansky local sorption unit (preventing production impact on the soil);

» draining banks at Ust-Uksyansky (preventing ISL processes from affecting surface waters); and

» start of ISo certification processes.

JSC khiAgDA: » organization of solution-gathering systems

during repair and reconstruction work on wells;

» construction of systems to divert flood waters and collect surface water from the territory of production units;

» launch of a facility for the complete treat-ment of wastewater from the workers’ village;

» construction of wastewater treatment facili-ties to treat storm-water and melt-water at industrial facilities;

» construction of a solid domestic waste unit – map No. 2, 3; and

» launch of Phase 1 radioactive waste storage point (map No. 1).

> 9.6 <DEvElOPMENT Of TERRITORIES whERE ThE COMPANY OPERATESJSC Atomredmetzoloto policy is aimed at support and development of local communities and covers companies in all areas of its operations. In accordance with the Rosatom concept for interaction with local communities and charitable activities, JSC Atomredmetzoloto not only invests in social infrastructure, but also takes into account possible social and economic impact and regional risks when choosing strategic priorities for development, and participates in strategic development planning in the regions where it operates.

ARMZ Uranium Holding Co. assists in the social development of all regions where it oper-ates. Companies in the holding make a signifi-cant contribution to the development of areas

where they operate, primarily as major employ-ers and taxpayers, with steady growth in pay-ments to regional budgets:

COMPANy

JSC PIMCU

JSC Dalur

JSC Khiagda

Table 23.

Tax payments by ARMz Uranium holding Co. subsidiaries to regional budgets (RUb thous.)

1,012,936

78,997

49,834

605,910

37,467

23,230

2009 2010

ChARiTy AND SPONSORShiP ACTiviTy

www.armz.ru103

An important part of the Company’s social policy is to maintain social stability in all areas of operations. ARMZ Uranium Holding Co. actively engages with local communities. On April 5, 2011, as part of a campaign to prepare the annual report in Moscow, a dialogue was held on developing

regions where JSC Atomredmetzoloto operates. The dialogue was attended by representatives from sub-sidiaries, local authorities and beneficiaries in order to identify issues and topics for joint discussion. More detailed information is presented in Section 9.8 “Cooperation with interested Parties”.

JSC PIMCU

JSC PIMCU is a core company in the single-industry town of Krasnokamensk, Trans-Baikal Region. This status means that management at ARMZ Uranium holding Co. has a significant social responsibility, because possible problems at core companies can affect the stable devel-opment of such towns and become a strategic challenge for the authorities at various levels. The

core company JSC PIMCU is the largest employer in Krasnokamensk, providing employment for 42% of the city's population and over 90% of total industrial production.

In 2010, the company’s share in Krasnoka-mensk city budget revenue amounted to over 40%, and in municipal district budget revenue – to over 19%.

ACTIvITIES AND RESUlTS IN 2010

hOUSiNg AND UTiLiTiES

■ RUB 3.1 million was spent on developing project documentation for the construction of a complex of treatment facilities in Kras-nokamensk. The cost of capital repairs on the water supply system amounted to RUB 318 million, including RUB 159 million in JSC PIMCU funds.

■ As part of a program to resettle villagers from the village of Oktyabrsky, 2 buildings were constructed and 216 families received apartments. There are 138 houses remain-ing in the village with people still living in them, for whom construction is continuing. Resettlement of the last family is planned for spring 2011.

■ When preparing its development program, JSC PIMCU carried out an evaluation of the impact of various company development scenarios on the social and economic situ-ation in the city and the region. Based on recommendations from the Russian Regional Development Ministry, a system was estab-lished of Company impact indicators with respect to the budget, housing and utilities, amenities and other areas of city planning. The results of this evaluation were included in the JSC PIMCU development program.

“fOR OUR TRANS-bAIKAl REgION, JSC PIMCU IS ONE Of ThE MAIN REvENUE-gENERATINg ENTERPRISE IN ThE bUDgET, OCCUPYINg fIfTh PlACE IN TRANS-bAIKAl REgION IN TERMS Of bUDgET CONTRIbUTIONS. AND fOR OUR CITY Of KRASNOKAMENSK, JSC PIMCU IS A CORE bUDgET-fORMINg COMPANY ThAT lARgElY DETERMINES ITS ENTIRE ECONOMY AND SOCIAl POlICY”,

O. P. NOMOkONOv, A REPRESENTATIVE OF THE GOVERNOR OF TRANS-BAIKAL REGION.

»

104JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

SOCiAL iNfRASTRUCTURE

■ Charity and sponsorship was provided to Krasnokamensk schools in the amount of RUB 3.4 million. Each secondary school and supplementary education school, including sports schools, art schools and a children's art school, has received patronage from the com-pany’s divisions. They provide assistance in preparing the educational institutions for the new school year, as well as organizing travel for talented children to various competitions and festivals, and regional and nation-wide sporting events. In cooperation with techni-cal academies, graduates of schools in the city and district have been sent for Compa-ny’s business-related training.

■ Financial aid was provided to retired pen-sioners in Krasnokamensk totaling about RUB 10.6 million.

■ Funds were allocated for the upkeep of social and cultural infrastructure (Dauriya Commu-nity Center and Argun Sports Center) – RUB 8.7 million.

■ The book Argun Veterans was published, and the first documentary on the veterans of the City of Krasnokamensk was made.

For the first time in the history of JSC PIM-CU, a book was published about war veterans and home-front workers who worked at the Ar-gun Industrial Mining and Chemical Combine in various years. The book was published to mark the 65th anniversary of Victory Day and the 65th anniversary of the nuclear industry. At the annual national Book of the Year contest, Argun Veterans book was recognized as the best book on the anniversary of the victory. Journalists from Krasnokamensk television studio produced a documentary about war veterans–former

“ThE ENTIRE CUlTURAl lIfE ThAT gOES ON IN ThE CITY ExISTS IN DIRECT COOPERATION wITh ThE ARgUN INDUSTRIAl MININg AND ChEMICAl ASSOCIATION. NOT MAJOR EvENT IS CONDUCTED wIThOUT ThE PARTICIPATION Of ThE COMPANY: All MATTERS ARE RESOlvED TOgEThER, wE fIND MUTUAl UNDERSTANDINg AND SUPPORT, AND hOPE TO CONTINUE ThIS COOPERATION”,

L. S. vASiLENkO, DEPUTY DIRECTOR OF THE KRASNOKAMENSK CITY AND KRASNOKAMENSK DISTRICT MUNICIPAL ADMINISTRATION.

»

home-front workers at JSC PIMCU.For the first time ever, a war veteran and vet-

eran of JSC PIMCU, Arkady V. Sokin, took part in the Victory Day parade in Moscow as part of a delegation from Trans-Baikal Region and was invited to a reception with Russian President Dmitry Medvedev to mark the 65th anniversary of victory. Another representative of JSC PIMCU, the war and labor veteran Alexander G. Petrov, took part in a victory parade held in the regional

ChARiTy AND SPONSORShiP ACTiviTy

www.armz.ru105

center. For the first time in the history of JSC PIMCU and the city, a photographic exhibition dedicated to war veterans and home-front work-ers was held during the holidays at the Dauriya Community Center.

On May 6, a traditional veterans` gala was held with managers from JSC PIMCU and youth

and community representatives, organized with the assistance of the newspaper Argun Miner. Along with words of gratitude and congratu-lations, each veteran received gifts from the company's management, including plasma TVs, copies of the Argun Veterans book and the Ar-gun Veterans documentary.

PlANS

■ Reconstruction of primary treatment facili-ties and reconstruction of water pipes. Upon completion of this reconstruction and the construction of Phase 2 of the treatment plant, the facilities will be handed over to the community.

As a result of the dialogue with interested parties that took place on April 5, 2010, a suggestion was made to the Board of Directors to speed up the decision to hand over ownership of the treatment plant and water pipes.

JSC DAlUR

JSC Dalur pays significant attention to social and economic issues and infrastructure development in the Dalmatovo and Shumikha districts. The company’s program for the

development of regions where it operates includes financing for sport, supporting local schools, and providing help for graduates from local schools upon university enrolment.

ACTIvITIES AND RESUlTS IN 2010

■ Construction of a residential quarter for JSC Dalur workers was financed. Two buildings were commissioned, as was a small-family 24-room hostel.

■ 10 km of road were built to production facilities.

■ Work was financed to design Uksyanskoye Middle School in the amount of RUB 1,500,000.

■ Charitable and sponsorship donations amounted to RUB 4,619,000, and were aimed at supporting education, culture and sport.

■ Financial support was provided to Company’s workers whose children took part in festivals: Vadim Terletsky (1999 year of birth) took part in the 5th International Mozart Festival in Prague, Valeria Paderina (1997 year of birth) and Anton Mylnikov (1998 year of birth) took part in the national arts festival SochiFest in Sochi.

106JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

PlANS

JSC KhIAgDA. ACTIvITIES AND RESUlTS IN 2010

■ Construction of a bridge over the Barneva River in Uksyanskoye (RUB 18,046,000).

■ Repairs to an Uksyanskoye stadium (RUB 300,000).

■ Construction of 2 residential buildings in Uksy-anskoye and 1 residential building in Shumikha.

■ According to the license agreements, the ad-ministration in Dalmatovo Region will receive RUB 2,500,000, and in Shumikha Region – RUB 380,000.

■ It is planned to continue work to support cul-ture, sport and education in these areas and to allocate RUB 557,000 to finance these efforts.

Within the context of a dialogue with inter-ested parties, a proposal was made to continue work under the license agreement and to develop infrastructure – particularly at rural municipal for-mations, and there was also a request to motivate management at RUSBURMASH INC to build the same mutually-beneficial relations as JSC Dalur, so as to improve development of the Dalmatovo Administrative District.

■ Financial and sponsorship aid provided in the amount of RUB 196,000.

■ To celebrate the 65th anniversary of the Victory Day, sponsorship was provided to veterans of the Great Patriotic War and the labor front, as well as to elderly pensioners living alone in Trans-Baikal Region and the Buryatia Republic: › teams of veterans from Trans-Baikal

Region were put together and sent to take part in an international football tournament in Sochi, organized to mark the 65th anniversary of the Victory Day;

› veteran conferences and rallies were held; and

› housing conditions were improved for veterans of the Great Patriotic War and the labor front and for elderly people living alone.

■ Sponsorship was provided to re-establish the Federal Security Service’s Border History Museum for Trans-Baikal Region.

■ Support was provided for sporting events in Buryatia and Trans-Baikal Region.

■ Aid was provided to a specialized Olympic reserve school, sporting equipment was purchased, and trips organized to Mezhdurechensk, Belovo, Novosibirsk and Novokuznetsk.

■ Nine children of the Company’s workers got the opportunity to attend hockey sections.

■ JSC Khiagda acted as general sponsor of the fishing competition Yeravna-2010.

During one of dialogues with interested parties, representatives from local authorities made a number of proposals to JSC Khiagda:

■ to assist in the tax registration of newly-involved subcontractors;

■ to undertake to maintain the conditions of roads used to transport heavy vehicles using local workers;

■ to sign social and economic agreements with the regional administration to identify specific measures for possible compensation of losses caused by production activity.

COOPERATiON wiTh iNTERESTED PARTiES

www.armz.ru107

ACTIvITIES IN 2010

■ Sponsorship was provided to the charity project “Illustrated Books for Blind Children”. JSC Atomredmetzoloto has been a partner in the Regional Charity Foundation “Illustrated Books for Blind Children” since 2000; the foundation specializes in publishing books for partially sighted and blind children. The books, which are published to suit a child's perception and psychic, expand opportunities for kids suffering from visual impairment to interact with the outside world and support their social adaptation. Expenditures on this project in 2010 amounted to RUB 600 thousands.

■ JSC Atomredmetzoloto sponsored a concert

by the Dominatus Orchestra at the Galina Vishnevskaya Opera Center on April 26, 2010. The sponsorship costs for this project amounted to RUB 1.581 million.

■ Scholarships for two students at the Institute of Modern Arts were set up using the private funds of Company employees.

One problem highlighted during the dialogue with interested parties was the lack of a unified concept of Corporate Social Responsibility. As a solution, the Company proposes to take steps in 2011 to develop a Memorandum on Corporate Social Responsibility at ARMZ Uranium Holding Co. The Memorandum will establish priorities and areas of Company activity in the area of CSR.

> 9.7 <ChARITY AND SPONSORShIP ACTIvITYIn its sponsorship and charitable activity, the Company focuses on supporting areas of public life such as culture, sport, education and science.

108JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

Based on its long-term development strategy, and taking into account the practice of interacting with key interested parties, the Company drew up a chart of interested parties in 2010 (Table 24).

> 9.8 <COOPERATION wITh INTERESTED PARTIES

ARMZ Uranium Holding Co. implements a consistent policy of effective cooperation with interested parties, aimed at strengthening cooperation and confidence, based on the following principles:

■ Active communication to identify and address expectations ■ Mutual respect for interests and productive cooperation ■ Honoring commitments ■ Providing full and timely information on Company’s activities to interested parties ■ Active cooperation with interested parties in all regions of operations.

“…MAxIMUM OPENNESS Of INfORMATION,ThIS IS A bASIC CONDITION fOR ThE ExISTENCE Of NUClEAR INDUSTRY.”.

S. v. kiRiENkO

kEy iNTERESTED PARTiES

Table 24.

Chart of key interested parties

kEy iSSUES COOPERATiON

Product consumers

Shareholders: Rosatom, JSC

TVEL, JSC Atomenergoprom

Business partners on the global

market

State and local government bod-

ies, local associations in regions

of operations

Investment community

ARMZ personnel

Mass media, public organiza-

tions and society at large

Feedback from consumers: gathering

proposals, conducting interviews and surveys,

studying complaints and claims.

Preparing and implementing long-term

development strategy.

Active participation in industry projects,

introducing industry standards.

Holding meetings and negotiations, signing

strategic cooperation agreements.

Actively informing authorities about the

carrying out of activities under agreements.

Communications within the framework of

themed meetings and dialogues.

Meeting with representatives from regional

authorities.

Meeting with representatives of the investment

community, adhering to principles of openness

and transparency.

Assessing staff satisfaction.

Regular dialogues with trade union

participation.

An active information policy, meetings,

briefings, regular comments from management

to the press on all key events at the Company

and the industry.

• Stability, reliability and continuity of product supplies.

• Implementation of strategy to expand and diversify

resource base.

• Effectiveness of investments.

• Unconditional priority for security.

• Stable cooperation.

• Protecting shareholders’ rights and interests.

• Implementing joint projects.

• A responsible, balanced Company policy regarding

personnel.

• Safety and no negative environmental impact

• Tax payments.

• Developing infrastructure in regions of operations.

• Effectiveness of investment and quality of growth.

• Social responsibility.

• Training and developing personnel.

• Decent wages.

• Effectiveness of Company operations.

• Social responsibility.

www.armz.ru109

IMPlEMENTATION Of PlANS INDICATED

IN ThE 2009 ANNUAl REPORT

SECTiON PLANS iMPLEMENTATiON iN 2010

Geological exploration

JSC PIMCU

JSC Dalur

JSC Khiagda

ZARECHNOYE

JSC JV Akbastau

• Geological exploration was carried out at 10

deposits.

• Temporary conditions and reserves regis-

tered with the State Reserves Commission

for the Gornoe, Berezovoe, and Khokhlovskoye

deposits.

• Permanent-condition feasibility studies were

prepared for 5 deposits in the Yuzhnaya Zone,

the Olovskoye deposit, and the Itmanovsky

titanium-zirconium sands placer deposit.

• A report with reserve calculations for

Istochnoye deposit was defended at the State

Reserves Commission.

• As part of a modernization program: 32 piec-

es of mining equipment were acquired, service

centers were organized to service and repair

imported mining equipment; an ore production

complex was launched for mine No. 1K; a pilot

project was launched to introduce a system for

developing horizontal beds in ascending order.

Level 13 launched at the Glubokiy mine.

• Expanded project begun for the technical

development of JSC PIMCU. A state inspec-

tion was carried out, and a positive evaluation

received, for the project to build Mine No. 6 at

JSC PIMCU.

• 507.8 tons of uranium produced.

• 135.1 tons of uranium produced.

• Company construction continued.

• Design and construction work has been

carried out at the site of a sulphuric acid plant,

and the frame of the building has been erected,

with enclosures and foundations for equipment.

• The main building has been fitted out, and the

main equipment installed.

• 778.176 tons of uranium produced.

• Work was carried out to develop production,

an additional sand pond was built, and the

productivity of a pump station for pregnant

and leaching solutions was increased. Work

was carried out to reconstruct the ventilation

system in the solution-processing unit.

• 739.62 tons of uranium produced.

• A feasibility study of permanent standards

was carried out at section No. 3 of the

Budennovskoye deposit, with calculation

of reserves.

• Carry out geological exploration at 10 deposits.

• Defend temporary-condition feasibility studies

for 3 deposits at the State Reserves Commission,

and permanent-condition studies for 6 deposits.

• Prepare a report with reserve calculations for the

Istochnoye deposit.

• Receive development licenses for the Khokhlovskoye,

Vershinnoye, and Tetrakhskoye deposits.

• Increase production efficiency.

• Launch new capacity.

• Produce 460 tons of uranium.

• Ensure growth in uranium production to 150 tons.

• Continue to build industrial complex.

• Increase uranium production to 772 tons.

• Various activities to develop production base.

• Produce 600 tons of uranium.

• Amend subsoil use contracts.

PRODUCTiON ACTiviTy

URANiUM PRODUCTiON

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

»

110JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

Karatau

JSC Elkon MMP

JSC UMC Gornoe

JSC OMCC

JSC Lunnoe

RUSBURMASH INC

LLP JV RBM-Kazakhstan

JSC SY Corporation

• Left the JSC Atomredmetzoloto

management chain in 2010.

• Implementation of the project continued: a

technical report and a report on investment

decisions have been prepared; an R&D

program has been carried out in full.

• A feasibility study of temporary standards at

the Gornoe and Berezovoe deposits has been

prepared and approved by the State Reserves

Committee.

• A declaration of intent has been prepared

and public hearings held on the Gornoe deposit.

• Research has been carried out on large

representative samples and a system has been

developed for processing ore at the Gornoe

deposit.

• A study has been made of the technological

qualities of ore at the Berezovoe deposit in

the contours of the planned open pit; initial

information has been put together for the

preparation of pilot production.

• A great deal of design and pre-project work

has been carried out: assessment drilling and

geo-mechanical studies have been carried out

to JORC standards.

• An international-standard Pre-Feasibility

Study was carried out.

• A report on a feasibility study of permanent

exploration standards, with recalculation of

reserves, was submitted to the State Reserves

Committee.

• A geological-mathematical model has been

prepared for the license zone; a forested-area

development plan was drawn up and approved;

the necessary documentation was drawn up to

lease a section of forest.

• Public hearings were held on an

environmental impact study for the project.

• Plans for the open pit and for mining work

have been prepared as part of a project to build

a pilot industrial unit.

• Geological exploration work involving 18,400

linear meters of coring has been carried out.

• Work carried out in a timely and high-quality

manner.

• Inventory of drilling and auxiliary equipment

significantly increased.

• The company’s drilling fleet grew by 6 units

to 15 rigs.

• Offering of a new type of service-repair of

production wells – is planned for 2011.

• Work to coordinate the project was

continued.

• Reach uranium production of 2,000 tons.

• Continue to calculate and confirm reserves, and also

to design the enterprise in compliance with Russian

and international standards.

• Confirm a feasibility study of temporary conditions

at the Gornoe and Berezovoe deposits.

• Carry out a geological and economic evaluation of

small-reserve uranium deposits in the region.

• Complete geological exploration at the Berezovoe

deposit.

• Development of a project for pilot production at the

Berezovoe deposit.

• Hold public hearings on a declaration of intent for

development of the Berezovoe deposit.

• Carry out a range of pre-project and design work.

• Carry out research and prepare Pre-Feasibility Study

and Feasibility Study.

• Prepare and approve the feasibility study.

• Complete the development of a project to build a pilot

industrial unit at the Lunnoe deposit.

• Hold public hearings on an environmental impact

study for the project.

• Start construction of a pilot industrial unit.

• Carry out a range of scientific research and experi-

mental work to develop a technological system for heap

leaching in field conditions.

• Carry out geological exploration work.

.

• Ensure the timely execution of high-quality drilling

and geological exploration work and also geophysical

and repair work at Russian uranium deposits.

• Increase its drilling fleet to 15 drilling rigs.

• Offer a new type of service on the market – repair of

production wells.

• Continue work to coordinate the project.

CONSTRUCTiON Of NEw MiNiNg COMPANiES iN RUSSiA

SERviCE AND OThER COMPANiES

www.armz.ru111

PERfORMANCE MANAgEMENT AND iNNOvATiON

MANAgEMENT SySTEM

LLC ESC ARMZ

Current projects (Zirconium

Project)

Promising projects with non-

nuclear materials

Performance management

Innovations

Management by objectives

Personnel

Social policy

• The company’s profile was changed in 2010.

• The development of a production system

for the enrichment and separation of ilmenite,

chromite, and hematite concentrate was

completed.

• A feasibility study on exploration conditions,

along with a report including reserve calcula-

tions, was prepared and submitted for the

Itmanovsky titanium-zirconium sands deposit.

• A preliminary assessment of the investment

attractiveness of a number of investment

projects involving the development of deposits

of polymetal ore, rare earth metals and other

minerals was conducted.

• JSC NAC Kazatomprom and JSC

Atomredmetzoloto signed a memorandum of

intent on 30.03.2011 on cooperation in the

industrial production of rare and rare-earth

metals (event outside reporting period).

• Work planned for 2010 to set up a

commercial and technical electrical power

meter system was completed in full.

• Block and frame models have been made for

all deposits.

• To be calculated following the receipt of final

financial information.

• KPI results for 2009 were calculated for the

Director General of JSC Atomredmetzoloto and

his deputies, as well as for the director generals

of subsidiaries and dependent companies; KPI

for 2010 were confirmed.

• Remote-learning system introduced.

• Coaching Academy project was launched.

• Unified wage system introduced at key

companies (JSC PIMCU, JSC Dalur, and

JSC Khiagda).

• Introduction of a unified social policy for

ARMZ subsidiaries and dependent companies

was begun.

• The company began standardizing all its social

programs (plans to complete this work in 2012).

• An assessment was carried out of the ef-

fectiveness of expenditures on social programs

and increasing the level of worker loyalty. Based

on the assessment, social programs were ad-

justed; steps were identified to increase worker

loyalty (to be implemented by the end of 2011).

• Set up a service centre to handle imported equipment.

• Reach annual coal supplies from the Urtuiskoye

deposit of 1 million tons.

• Organize direct supplies of Urtuiskoye coal to the

international market.

• Complete all necessary pre-project work.

• Prepare a feasibility study of permanent exploration

conditions and defend the document at the State

Reserves Commission.

• Perform an assessment of reserves to international

JORC standards.

• Continue searching for promising projects with non-

nuclear materials.

• Carry out work to identify the investment

attractiveness of the most promising projects.

• Identify and invite strategic partners for projects

among Russian and foreign companies with experience

in mining and processing minerals.

• Create an automated commercial electrical power

meter system at JSC PIMCU.

• Produce block and frame models and databases for

all key deposits.

• Increase the innovative potential ratio to 0.135%.

• Implement a program to improve the company’s

management system.

• Introduce a remote-learning system.

• Launch a Coaching Academy.

• Continue introducing a unified wage system at all

companies in the group.

• Introduce unified social policy standards at all ARMZ

Uranium Holding Co. companies.

• Expand the incentive system for achievements by

introducing a unified system of corporate contests and

competitions.

• Assess the effectiveness of expenditures on social

programs and increasing the level of worker loyalty.

SUSTAiNAbLE DEvELOPMENT

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

»

PROJECTS wiTh NON-NUCLEAR MATERiALS

112JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

Environmental protection and

ecological safety

Developing territory of opera-

tions

Charity and sponsorship activity

Cooperation with interested

parties

• Steps are being taken to implement a

consolidated plan for ecological policy in 2011:

• The Company set up a department

responsible for health and industrial,

environmental and radiation safety.

Corresponding departments have been set up

at subsidiaries and dependent companies.

• Development of the corresponding policy is

planned for 2011.

• Development of an ARMZ Uranium Holding

Co. Memorandum on Corporate Social

Responsibility is planned for 2011.

• The geography of charitable work has been

expanded to Armenia and Chelyabinsk Region.

A new form of charitable activity was the

support of cultural initiatives using the personal

contributions of Company workers.

• Within the framework of preparing this

annual report, the form of cooperation with

interested parties was expanded by holding

dialogue with interested parties and attaining

the public certification of this report.

• Development of a policy for cooperating with

interested parties is planned for 2011.

• Implement a consolidated plan for ecological policy.

• Expand the practice of holding public hearings and

consultations with environmental organizations to

Armenia and other countries.

• Develop a policy of cooperation with interested

parties, having systemized the experience of Company

participation in the development of territories where it

operates.

• Expand the geography and type of cooperation with

charitable organizations.

• Develop a policy of cooperation with interested par-

ties, expand the form of cooperation, and make it more

systematic.

COMMUNICATION wITh INTERESTED PARTIES

As part of the preparation of the annual report on the results of work in 2010, two sets of dialogue with interested parties were held.

A dialogue on “Staff Development: Train-ing of Young Specialists” was held on March 25, 2011. It was conducted with the participation of Company management, representatives from Rosatom, representatives from regional and local governments in areas where the company operates, and from public organizations, and ad-dressed important areas of the Company’s youth policy. Participants in the dialogue discussed the problem of the shortage of young specialists in the Company and the need to retain and develop them. one solution identified was the Com-pany's growing cooperation with universities, its Coaching Academy, active social program, assistance in resolving housing issues, etc.

During the dialogue a need was expressed to disseminate best practice in work with young people through the companies in ARMZ Uranium Holding Co., along with the need to actively include youth representatives in de-veloping an effective youth policy. The com-ments expressed on expanding and focusing the results of implementation of the Com-pany’s youth policy in 2010 were taken into account when preparing the annual report and reflected in Section 9.2. The text of the dia-logue minutes is attached to the report.

A dialogue on “The Development of JSC Atomredmetzoloto Regions of Operations” was held on April 5, 2011. The event was at-tended by representatives from Rosatom, key organizations from regions where the com-pany operates, the regional and local authori-ties in these regions, local media and other interested parties.

ARMZ Uranium Holding Co. companies are large taxpayers to regional budgets, and reli-able employers. The companies provide sub-stantial support for the socio-economic and infrastructure development of the regions.

Participants in the dialogue expressed the wish to hold the event on a regular ba-sis. During the dialogue, recommendations were made concerning the development of municipal infrastructure and the signing of socio-economic agreements between the ad-ministrations and businesses. Company man-agement noted the need for the creation of a unified methodology to formalize all areas of cooperation with local communities.

www.armz.ru113

PUblIC hEARINgS

The public hearings held on April 26, 2011, represented the final activity in cooperation with interested parties in preparation for the annual report. The hearings were attended by representatives from Rosatom, state authorities and local governments, customers and partners, financial, environmental, social, educational, sporting and charitable organizations, as well as consulting companies in the field of non-financial reporting. Participants from ARMZ Uranium Holding Co. management included two Deputy Directors General of Atomredmetzoloto, the director generals of JSC Khiagda and JSC Dalur and other management representatives.

Participants were asked to evaluate the text of the annual report for compliance with standards and the requirements of stakeholders, as well as to express their opinions and suggestions regarding the information provided in the report, including public plans, and the Company's commitments included in the report, and to make recommendations for improving the Company’s reporting.

The comments and suggestions expressed by the interested parties during the public hearings were drawn up into minutes. Three groups of questions and suggestions were highlighted.

The first set of issues dealt with fuller disclosure of information on the deal with Mantra Resources Limited, a more accurate description of the information consolidation profile, and the disclosure of the Company’s performance in a competitive context. The second set of questions dealt with proposals to change priorities for the presentation of environmental protection and industrial safety topics. The third block dealt with proposals for a description of the management system and improving its effectiveness, procedures for interaction within the board of directors, and the improvement of management systems and staff management over the long-term. This information is presented in more detail in Sections 9.1 “Personnel”, 9.2 “Social Policy” and 8.2 “Corporate governance System”.

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

114JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

ASSESSMENT Of COOPERATION

wITh INTERESTED PARTIES

gENERAL iNfORMATiONAt the request of JSC Atomredmetzoloto

(hereinafter, ARMZ Uranium Holding Co., ARMZ, the Society, the Company), on April 26, 2011 we took part in Public Hearings on the Company’s draft annual report (hereinafter, the Report) – an event that brought the discussion of the Report with interested parties to an end.

Participants in the hearings, which were held for the second time in the history of the Company, included representatives from ARMZ clients and partners, credit organizations, the investment community, government bodies in the regions where the Company operates,

environmental and charity organizations, and so on. Beforehand, Company management provided the participants with a copy of the Report for discussion. The Hearings were chaired by an independent moderator, allowing for a free exchange of opinion.

Earlier, during preparation of the Annual Report, dialogues were held with interested parties on: “Staff Development: Training of Young Specialists” and “The Development of JSC Atomredmetzoloto Regions of Operations.”

During the Public Hearings, we had the op-portunity to assess the extent to which the com-ments expressed by interested parties during the dialogues were taken into account in the final version of the Report.

During the Hearings, we evaluated the Report as a whole, and assessed the relevance and com-pleteness of the information provided on the issues of most importance to interested parties, and the nature and methods of interaction with interested parties.

In their assessments, participants in the Public Certification of the Report focused on an analysis of two versions of the Report (the draft for Public Hearings, distributed to all partici-pants in advance, and the final version), taking

into account the engagement with JSC Atom-redmetzoloto management and staff during the Public Hearings and the previous dialogues. We can confirm the Company's active response to proposals and comments from participants in the dialogues and hearings.

The Company took most of these suggestions and comments into account when preparing the final version of the document. The text of this conclusion shall be sent for approval to all participants in the hearings – it takes into ac-count the comments received. We, as the certify-ing party, do not receive remuneration from the Company for participating in the Public Certifi-cation.

PUblIC CERTIfICATION

CONClUSION ON PUblIC CERTIfICATION

RESUlTS

In preparing its annual report, it was a priority for JSC Atomredmetzoloto to increase the transparency of the information provided, and to increase the confidence of stakeholders. In accordance with the international standard AA1000SES, Public Certification of the report was organized.

Participants in the Public Certification process received the following documents:

» A draft of the Annual Report for 2010 for Public Hearings

» The final version of the JSC Atomredmetzoloto annual report for 2010

» The minutes of the Public Hearings on the Report

» The minutes of dialogues with interested parties.

JSC Atomredmetzoloto asked the certifying parties to assess information according to the following criteria: its “completeness,” “relevance” and “responsiveness.”

The results of the evaluation of the Report by certifying parties are presented in the Conclusion on Public Certification.

www.armz.ru115

ASSESSMENTS, COMMENTS

AND RECOMMENDATIONS

The format, scope and content of the Report are to be commended. We note with satisfaction the Company's ability to identify problems, to set specific goals and objectives, and to formulate plans and commitments. We note in particular the timeliness of active interaction with interest-ed parties in preparing the Report under difficult conditions for the nuclear industry.

We evaluate the level of disclosure as high; we are unaware of any facts that might cast doubt on the correctness of the information provided.

During the Public Hearings and other activi-ties involving Public Certification of the Report in which interested parties participated, JSC Atom-redmetzoloto provided detailed information on the Company’s strategic objectives and develop-ment potential, the results of the Company’s activities in the reporting period, ARMZ partici-

pation in developing the regions where it oper-ates, and practically all aspects of the Company’s activities were reflected.

In the Report, significant attention was paid to industrial safety and environmental protection, and the list of sustainable development indicators was expanded.

Moreover, JSC Atomredmetzoloto demon-strated a willingness to hold an open dialogue with interested parties on relevant issues, such as youth policy and developing the regions in which it operates.

Problems that arose in the Company’s activi-ties were also reflected in the Report. Company management is making a significant effort to reduce the negative impact on the environment and to improve health and safety systems at its various enterprises.

RElEvANCE Of ISSUES DEAlT

wITh IN ThE REPORT

The report reveals the social significance of JSC Atomredmetzoloto strategic initiatives for the development of the uranium mining in-dustry. The report reflects almost all the major issues for the Company, including aspects of economic impact, the social sphere and environ-ment, and regional development.

We are unaware of any other issues of sig-nificance to interested parties that the Company should have included in the Report.

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

COMPlETENESS Of INfORMATION

In terms of information completeness, the Report responds to most of the issues brought up by interested parties. Nevertheless, some of them – the nature of strategic challenges facing the Company, fuller disclosure of information on the acquisition of Mantra Resources, as well as a description of the international programs that were implemented or planned for implementation in 2010 – were not reflected in the document due to constraints on the volume of the annual report. We believe that JSC Atomredmetzoloto should

disclose more fully information on such issues as the Company’s strategy, its investment policy (one of the channels to provide additional information on these topics could be the Company’s website), and environmental impact in areas where the company operates compared with that of simi-lar companies (information could be provided for publication in the local media in the regions where the Company operates).

116JSC ATOMREDMETzOlOTO 2010 Annual Report

SUSTAiNAbLE DEvELOPMENT

Nomokonov, Oleg Petrovich

Representative of the Governor of Trans-Baikal Region

Pichkurenko, Boris Mikhailovich

Head of the City Council for the City of Krasnokamensk

Kurochkin, Alexei Gennadievich

First Deputy Chief of Dalmatovo District, Kurgan Region

Govorukhin, Valery Nikolaevich

JSC Tekhsnabexport (TENEX) Deputy Director General

Trubin, Dmitry Yevgenievich Head of the Industry and Metallurgy Crediting Department, JSC Nordea Bank

Baranovsky, Sergei Igorevich

Deputy Chairman of the Board at Russian Green Cross, Member of the Rosatom Public Council Plyamina, Olga VladimirovnaExecutive director of the international environmental organization gREENLIghT Feoktistova, Elena NikolaevnaDirector of the Center for Corporate Social Policy and Non-Financial Reporting at RUIE

Shevtsova, Ludmila Ivanovna Trustee of the “Illustrated Books for Blind Children” Foundation

COMPANY’S REACTION TO COMMENTS

AND SUggESTIONS fROM INTERESTED PARTIES

Company management reacted quickly and constructively to the comments, proposals and recommendations of interested parties. Chang-es were made to the text of the final version of the Report, it was augmented, and additional plans and commitments were formulated. In general, the Company has shown significant progress in developing engagement with inter-ested parties.

We hope that our comments and suggestions will help further improve the completeness and quality of the Company’s reporting, and that JSC Atomredmetzoloto management will honor their commitments and implement the plans and intentions set down in the Annual Report for 2010.

REPRESENTATIvES Of INTERESTED PARTIES

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

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118JSC ATOMREDMETzOlOTO 2010 Annual Report

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10

REvIEw Of fINANCIAl SITUATION AND RESUlTS

120JSC ATOMREDMETzOlOTO 2010 Annual Report

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

The Financial Performance section has been prepared based on the information from the Financial Statements prepared under the IFRS for the year ended on December 31, 2010 (Appendix 12.6. financial statements (ifRS)).

In 2010 the Company improved its performance compared to 2009 results. The

growth in revenue that amounted to about 2% was due to the development of activities not connected with uranium sales. Acquisition of Uranium one Inc. contributed to significant growth in the financial result, in addition to non-current assets.

The main factors influencing net profit in 2010 are:

■ profit from a fair value revaluation of investment in Uranium One Inc., held prior to the acquisition of controlling stake on the date of control acquisition;

■ the share of losses of the affiliated company Uranium One Inc. for the period from January 1, 2010 to December 24, 2010 (before the date of the acquisition of control);

■ increased interest income due to effective cash management (including reserves for M&A deals);

■ reduced interest expenses due to the reduction of average debt balance and increasing own sources of funding against a backdrop of favorable financial market conditions;

■ A 2% increase in profit from commercializa-tion (primary due to research and advanced development services rendered by JSC VNI-PIpromtechnologii).

iTEM, RUb MLN

Sales revenue

Cost of sales

gross profit

Sales and general administrative expenses

Operating income

Other income and expenses, net

Pre-tax income

Income tax

net income

Net income attributable to:

Company’s shareholder

Non-controlling interest

reference:

Net operating profit after taxes (NOPAT)

Table 25.

Profit and loss Statement

2.0

-3.0

8.4

2.8

11.1

1998.8

99.7

77.7

113.0

110.9

-720.0

18,5

15,197

-10,054

5,143

-2,514

2,629

-2,335

294

-5

289

278

11

2 586

597

501

1,098

-115

983

8,275

9,258

-2,715

6,543

6,435

108

1 022

29,812

-16,778

13,034

-4,165

8,869

414

9,283

-3,494

5,789

5,804

-15

5 531

30,409

-16,277

14,132

-4,280

9,852

8,689

18,541

-6,209

12,332

12,239

93

6 553

2010 2009* 2008* ChANgE 2010/2009

2010/2009, %

* Indicators for 2008–2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.

AbOUT ThE REPORTwww.armz.ru121

Currency growth in the balance sheet total of 64.2% in 2010 was primarily due to the acquisition of Uranium One Inc.

iTEM, RUb MLN

current assets

Cash and equivalents

Accounts receivable

Reserves

non-current assets

Fixed assets

Investments in associates

TOTaL asseTs

short-term liabilities

Accounts payable

Short-term credits and loans

Long-term liabilities

Long-term credits and loans

equity

TOTaL LiaBiLiTies

Table 26.

balance Sheet

-13.3

-20.9

-21.0

133.7

200.0

55.3

-99.7

64.2

29.0

55.0

-6.6

177.9

106.0

52.9

64.2

14,388

2,626

3,504

7,433

17,850

14,690

19

32,238

13,588

2,093

11,230

5,585

3,549

13,065

32,238

-9,184

-11,017

-1,825

5,972

79,026

10,200

-9,018

69,842

4,276

2,452

-550

22,547

10,412

43,019

69,842

69,223

52,683

8,688

4,467

39,522

18,453

9,047

108,745

14,770

4,462

8,317

12,677

9,824

81,298

108,745

60,039

41,666

6,863

10,439

118,548

28,653

29

178,587

19,046

6,914

7,767

35,224

20,236

124,317

178,587

31.12.2010 31.12.2009* 31.12.2008* ChANgE 2010/2009

2010/2009, %

iTEM

financial soundness indicators

Share of equity in assets

Liquidity indicators, unit fraction

Current liquidity ratio

quick assets ratio

sales profitability indicators, %

Profitability of sales

Table 27.

Key financial indicators

-6.9

-32.7

-38.7

6.3

0.41

1.1

0.5

33.8

-0.05

-1.5

-1.6

2.8

0.75

4.7

4.2

43.7

0.70

3.2

2.5

46.5

2010 2009* 2008* ChANgE 2010/2009

2010/2009, %

* Indicators for 2008–2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.

* Indicators for 2008–2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.

122JSC ATOMREDMETzOlOTO 2010 Annual Report

REviEw Of fiNANCiAL SiTUATiON AND RESULTS

The values of key financial indicators re-mained within standard limits, providing the Company with a platform for further sustain-able development. The substantial growth in investment envisaged in a medium-term plan is based on the harmonious growth in capital and company debt. Excessive liquidity is due to the creation of reserves for M&A deals.

Profitability in 2010 continued to show a positive trend due to an increase in revenue and net income.

In 2010, Uranium Holding ARMZ contin-ued to implement a moderately conservative monetary policy, which is consistent with the purposes and principles of financial man-agement, set down in the Rosatom financial policy.

The Holding Company’s investment re-quirements are met with:

■ funds allocated by the Company’s share-holder;

■ the Holding Company’s own funds;

■ financing received from the largest Russian and international financial institutions, many of whom support the Holding Company’s credit risk limit;

■ loans from JSC Atomenergoprom; and

■ Involvement of private strategic partners in the projects.

Using all these methods of financing allows the Company to make significant investment without worsening its creditworthiness.

A constant requirement of the Uranium Holding ARMZ from all companies in the group is absolute compliance with the norms of acceptable debt level and risks related to specifics and development stage of each com-pany.

The Company prepares consolidated finan-cial statements under International Financial Reporting Standards. Also, all companies in the Holding Company prepare stand alone financial statements in accordance with Rus-sian Accounting Standards. The JSC Atomred-metzoloto financial statements for 2010 under Russian Accounting Standards are presented on the ARMZ website http://www.armz.ru/.

bUDgETINg AND COST CONTROl

In 2010 the Company took a number of steps to strengthen budget control and to reduce costs:

1. The introduction of a unified industry procurement standard increased the effi-ciency of procurement of goods, materials, services and equipment.

2. Steps to increase operating efficiency at uranium mining companies in Russia, including:

■ Reducing specific consumption rates of ma-terials by introducing a new staff incentive system;

■ Intensifying the process of ISL with the use of oxidants.

3. Introduction of a SAP Budgeting model as a part of a Program to Transform the Rosatom Financial-Economic and IT Units, which pro-vided the following results:

■ Reduced labor costs for planning, monitoring and reporting for the main companies in ARMZ Uranium Holding Company;

■ Reduced costs by increasing the efficiency of the analysis system for company operations.

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124JSC ATOMREDMETzOlOTO 2010 Annual Report

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11AbOUT ThE REPORT

126JSC ATOMREDMETzOlOTO 2010 Annual Report

AbOUT ThE REPORT

This report presents the activities of Open Joint Stock Company Atomredmetzoloto (hereinafter, JSC Atomredmetzoloto, ARMZ Uranium Holding Co., ARMZ, the Company, the Holding Company) within the territory of the Russian Federation, Kazakhstan, Armenia, Namibia, Mongolia, and a number of other countries in 2010, and plans for 2011 and the long-term future. This report covers all of the Company’s main subsidiaries and affiliated companies.

The results presented in the report relate to the following parameters:

■ Production indicators presented are based on information from the companies: JSC PIMCU, JSC Dalur, JSC Khiagda, ZARECHNOYE, JSC JV Akbastau, JSC Elkon MMP, JSC UMC Gor-noe, JSC oMCC, JSC Lunnoe, RUSBURMASh

INC, LLP JV RBM-Kazakhstan, JSC VNI-PIPRoMTEChNoLogII, JSC SY Corpora-tion, and LLC USC ARMZ.

■ Ecological indicators– JSC PIMCU, JSC Dalur, and JSC Khiagda.

■ Indicators on staff, and health and safety – ARMZ Uranium Holding Co., JSC PIMCU, JSC Dalur, JSC Khiagda, RUSBURMASH INC, and JSC VNIPIPRoMTEChNoLogII.

■ Financial indicators – towards consolidating reports to IFRS.

REPORT bOUNDARIES

The report prepared by the Company for 2010 is the third report to include not only integrated financial and production perfor-mance indicators, but also information on sustainable development. This report contains an expanded description of indicators related to sustainable development, and significant attention has been paid to issues of safety, human resource and social policy, environ-mental impact and also cooperation with interested parties.

The priority topics in the report are:

■ Development and safety. The social signifi-cance and environmental safety of nuclear power and its role in economic development.

■ Investment attractiveness, respect for inves-tors’ rights and achieving a “synergy effect” in cooperation with foreign partners. The role of strategy as an element of investment attractiveness.

The contents of the report were based on the priorities of Rosatom State Corpora-tion and key interested parties: consumers of uranium products, business partners, regional and local authorities, local communities.

Significant attention was paid to imple-mentation of the Company’s development strategy, which involves expansion and di-versification of its natural uranium mineral reserves through the acquisition of highly-effective foreign assets.

The Company’s development potential is considered on the basis of an analysis of global market trends for natural uranium and possible market development scenarios; therefore the report contains forward-looking statements. Terms such as “believes”, “an-ticipates”, “expects”, “intends”, “plans” and similar terms reflect Company’s management current forecasts and opinions regarding future results. However, there is always a risk that the predictions, forecasts, projections and other forward-looking statements will not be achieved. It must be borne in mind that, under the influence of a number of important factors, actual results could differ significant-ly from the plans and objectives, expectations, estimates and intentions expressed in such forward-looking statements.

gENERAl INfORMATION AbOUT ThE REPORT

ANNExwww.armz.ru127

The report was prepared in compliance with Russian legislation governing report-ing by open joint stock companies, and also with Rosatom policy regarding public report-ing. The financial information is based on information from the Consolidated financial statements prepared in compliance with IFRS standards. The IFRS report is presented in full on the ARMZ website at www.armz.ru.

During preparation of the annual report, public dialogues and hearings on the report were held in compliance with the interna-tional standards AA 1000. Recommendations contained in the Guidelines for Reporting on Sustainable Development of the Global Reporting Initiative (GRI), as well as basic performance indicators developed by the Russian Union of Industrialists and Entrepre-neurs (RUIE) were used. The text of the report presents a corresponding table determining the degree to which GRI and RUIE indicators were reflected.

The level of application of GRI systems corresponds to B+. The reliability of the data contained in the report was confirmed by the Audit Committee, and Internal Control and Audit Department in the form of opinions and the audit report. The Company’s external auditor is JSC BDO.

An audit report was received on the level of compliance of the non-financial part of the Company’s Annual Report for 2010 with GRI G3 guidelines on sustainable develop-ment reporting, and also with criteria such as relevance, completeness and ability to re-spond, according to the standard AA1000AS. This report was prepared by the company JSC BUREAU VERITAS CERTIFICATION RUS.

There were no significant changes in the structure of the Company's assets, which could affect comparability from period to period on a consolidated basis. There were no

significant changes from previous reporting periods with respect to the scope, extent, or measurement methods applied in the report.

REgUlATORY REQUIREMENTS

AND STANDARDS USED IN PREPARINg ThE REPORT

MAJOR ChANgES IN ThE REPORT

In accordance with the current legislation, preparation and publication of annual reports is carried out every year. The Annual Report for 2009 was published on 07.07.2010. For the first time, in 2010 the Company submitted its an-

nual report to the 13th Annual Competition for Annual Reports, conducted by the RTS Stock Exchange, and won an award for “Best Report by a State Corporation/ Public Company”.

ANNUAl REPORT fOR 2009

128JSC ATOMREDMETzOlOTO 2010 Annual Report

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12ANNEx

130JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

ACEMS – automated commercial electric meter systemAERMS– automated energy resource meter systemASPEM – automated system of production and ecological monitoringATEMS – automated technical electric meter systemAw – average wageChP – Combined Heat and Power PlantCRMS – corporate risk management systemCSR – corporate social responsibilityCSU – crushing and sorting unitDSw – design and survey workEiS – environmental impact studyfEb – financial-economic blockfMbA – Federal Medical and Biological AgencyfP – finished productfS – feasibility studyfSC – Federal Securities CommissiongEw – geological exploration workgRi – Global Reporting InitiativehL – heap leachinghMP – Hydrometallurgical PlanthSCS – health and safety control systemsiAEA – International Atomic Energy AgencyifRS – international financial reporting standardsiSMS – information security management systemsiT – information technologyiSL – in-situ leachingJORC – Joint Ore Reserves CommitteeJv – joint venturekPi – key performance indicatorsLSU – local sorption unitNfC – nuclear fuel cycleNPP – Nuclear Power PlantOECD – Organization for Economic Cooperation and DevelopmentPP – pilot projectsPS – pregnant solutionPSPP – pregnant solution processing plantPSPU – pregnant solution processing unitR&D – research and developmentRw – radioactive wasteRwDP – radioactive waste disposal pointSAP – Sulphuric Acid PlantSDO – subsidiaries and dependent organizations

SDw – solid domestic wasteSRC – State Reserves CommissionSUwS – single unified wage systemTiES – technological information exchange systemTTA – technical training aidsUL– underground leachingUMD – uranium mining departmentvfD – variable frequency drivevhi – voluntary health insurancewNA – World Nuclear Association

AbbREvIATIONS USED IN ThE REPORT

> 12.1 <AbbREvIATIONS AND TERMS USED IN ThE REPORT

COMPANy’S MAiN DEPOSiTS

www.armz.ru131

TERMS USED IN ThE REPORT

Atom – the smallest particle of a chemical ele-ment that retains its properties. It consists of a nucleus with protons and neutrons, and elec-trons moving around the nucleus. The number of electrons in an atom equals the number of protons in the nucleus.

Commissioning – a process, during which nuclear plant equipment and systems begin to operate and their compliance with plans are checked, this includes pre-launch adjustment work, the physical and power start-up and, fi-nally, the launch of the nuclear power plant into commercial operation.

Leaching – a method of extracting the indi-vidual components of a solid material, including radioactive elements, by means of a solvent; this is based on the ability of the substances being extracted to dissolve better than the other com-ponents of the material.

Enrichment – a process, which results in the increased content of a particular isotope in a mixture of isotopes.

Uranium ore processing – a set of processes for the primary processing of yellowcake aimed at separating uranium from the other minerals that make up the ore. In this case there is no change in mineral composition, only their me-chanical separation to produce ore concentrate.

Enriched uranium – Uranium, in which the concentration of the isotope Uranium-235 is higher than in natural uranium.

Nuclear fuel cycle enterprise – enterprises dealing with nuclear fuel that require decom-missioning at the end of their life, apart from nuclear power plants, these include uranium ore-processing plants, plants processing urani-um hexafluoride and producing fuel elements, as well as plants for the reprocessing of spent fuel and disposal facilities for low-level waste.

Uranium – Uranium (U) (Uranium) – a chemi-cal radioactive element (metal) with the atomic number 92 and atomic mass of the most com-mon and stable isotope 238. Natural Uranium consists of a mixture of three isotopes – Ura-nium-238, Uranium-235, and Uranium-234, of which the first two are of practical importance for nuclear power.

Off take contract – an agreement to purchase future products.

Pre-feasibility Study – a preliminary analysis of project decisions.

Scoping Study – preliminary assessment.

132JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

lIST Of URANIUM DEPOSITS IN RUSSIA

> 12.2 <COMPANY’S MAIN DEPOSITS

No.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC Dalur

JSC Dalur

JSC Khiagda

JSC Khiagda

JSC Khiagda

JSC Khiagda

JSC Khiagda

JSC Khiagda

JSC Elkon MMP

JSC Elkon MMP

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium,

molybdenum

Uranium

Uranium

Uranium

Uranium,

scandium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Extraction

Geological exploration

Extraction

Geological exploration

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Extraction

LOCATiON (COUNTRy, REgiON, DiSTRiCT)

LiCENSE TyPE MiNERAL NAME Of ENTiTyDEPOSiT

Streltsovskoye

Antei

Luchistoye

Martovskoye

Oktyabrskoye

Tulukuevskoye

Yubilenoye

Novogodneye

Vesenneye

Malo- Tulukuevskoye

Argunskoye

Zherlovoye

Streltsovskoye ore field

Dalmatovskoye

Khokhlovskoye

Khiagdinskoye

Istochnoye

Kolichikanskoye

Koretkondinskoye

Namarusskoye

Dybrynskoye

Elkon

Elkon plateau

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal region,

Krasnokamensk district

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal region,

Krasnokamensk district

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Kurgan Region,

Dalmatovo District

Russia, Kurgan Region, Shumikha

District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Buryatia Republic,

Bauntovsky District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

STAkEhOLDER PROPOSAL STATUS ChART

www.armz.ru133

lIST Of OThER MINERAl DEPOSITS

IN RUSSIA

24

25

26

27

28

29

30

31

32

JSC Elkon MMP

JSC Elkon MMP

JSC Elkon MMP

JSC Elkon MMP

JSC Elkon MMP

JSC Lunnoe

JSC UMC Gornoe

JSC UMC Gornoe

JSC OMCC

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Extraction

Exploration

and extraction

Extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Geological exploration

and extraction

Extraction

Kurung

Neprokhodimoye

Druzhnoye

Severnoye

Zona Interesnaya

Lunnoe

Gornoe

Berezovoe

Olovskoye

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Sakha Republic (Yakutia),

Aldan District

Russia, Trans-Baikal Region,

Krasnochikoisky District

Russia, Trans-Baikal Region,

Uletovsky District

Russia, Trans-Baikal Region,

Chernishevsky District

No.

1

2

3

4

5

6

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

JSC PIMCU

GEOSTAR Ltd.

Sand gravel mix

Coal

Manganese

Zeolite tuffs

Limestone

Titanium-zirconi-

um sands

Extraction

Extraction

Geological exploration

and extraction

Extraction

Extraction

Geological appraisal

and extraction

LOCATiON (COUNTRy, REgiON, DiSTRiCT)

LiCENSE TyPE MiNERAL NAME Of ENTiTyDEPOSiT

PGS-3

Urtuiskoye

Gromovskoye

Shivyrtuiskoye

Ust-Borzinskoye

Itmanovsky placer,

Lukoyanovskoye deposit

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Krasnokamensk District

Russia, Trans-Baikal Region,

Priargunsky District

Russia, Trans-Baikal Region,

Trans-Baikal District

Russia, Trans-Baikal Region,

Mogoituisky District

Russia, Nizhny Novgorod Region,

Gaginsky District

134JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

lIST Of URANIUM DEPOSITS

IN KAzAKhSTAN

1

2

3

4

5

6

7

8

9

ZARECHNOYE

ZARECHNOYE

JSC JV Akbastau

JSC JV Akbastau

JSC JV Akbastau

Karatau

LLP Betpak Dala

LLP Betpak Dala

LLP Kyzylkum

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Exploration

and extraction

Zarechnoye

Yuzhnoye Zarechnoye

Budennovskoye (sect. 1)

Budennovskoye (sect. 3)

Budennovskoye (sect. 4)

Budennovskoye (sect. 3)

Akdala

South Inkai

Kharasan

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

Kazakhstan, South Kazakhstan

Region

lIST Of URANIUM ONE INC. URANIUM DEPOSITS

OUTSIDE KAzAKhSTAN

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Americas

Uranium One Australia

Uranium One Australia

Uranium One Australia

Uranium One Australia

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Uranium

Exploration and extraction

Exploration and extraction

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration

Exploration and extraction

Exploration

Exploration

Exploration

Christensen Ranch /

Irigaray

Moore Ranch

Ludeman-Peterson

Allemand Ross

Barge Deposit

Ross Flats

Jab

West Jab

Jab RD

Red Rim

Clarkson Hill

South Sweetwater

Antelope

Twin Buttes

Cyclone Rim

New Velvet

Old Velvet

Wood

Frank M

Findlay Tank

Honeymoon

Goulds Dam

East Kalkaroo

Billeroo

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

USA

Australia

Australia

Australia

Australia

No. LOCATiON (COUNTRy, REgiON, DiSTRiCT)

LiCENSE TyPE MiNERAL NAME Of ENTiTyDEPOSiT

No. LOCATiON (COUNTRy, REgiON, DiSTRiCT)

LiCENSE TyPE MiNERAL NAME Of ENTiTyDEPOSiT

USE Of STANDARD ELEMENTS Of ACCOUNTAbiLiTy AND PERfORMANCE iNDiCATORS

www.armz.ru135

> 12.3 <STAKEhOlDER PROPOSAl STATUS ChART

No.

1

2

3

4

5

6

7

8

9

10

11

12

13

Included in plans for 2011

Covered in section 9.2. “social

policy”

Included in work plans for 2011

Covered in section 9.7. “charity

and sponsorship activity”

Included in plans for 2011

Covered in section 9.6. “devel-

opment of territories where

the company operates”

Covered in section 5.1. “com-

pany development policy”

Covered in section 5.2. “invest-

ment activity”

Covered in section 9.6. “devel-

opment of territories where

the company operates”

Included in plans for 2011

Included in plans for 2011

Prompted by the situation at the

Fukushima-1 Nuclear Power Plant

(NPP)

Included in the draft structure

of the 2011 report

STATUSSTAkEhOLDER REqUEST

Formulate a youth policy at enterprises

Reflect information connected with youth development more fully in the report, and describe

the requests of the youth section as accurately as possible

Form a targeted order for academies, the establishment of specialized departments, and the

training of necessary specialists

Formulate a single memorandum on corporate social responsibility, including a section on

interaction with local communities in the regions

Turn engagements with interested parties into regular events, and invite regional media

Promote the development of infrastructure in rural municipalities and socio-economic part-

nership in regions where the Company operates

More clearly articulate the Company’s strategy and goals, including in the area of sustainable

development

Describe sources of financing for investment activity

Add information on JSC PIMCU activity to support veterans

Expand social programs and benefits for young professionals, motivate young people to

establish autonomous bodies

Ensure the expansion of intra-industry experience exchanges as part of the development and

training of young people

Describe the strategic challenges faced by the Company

Highlight in detail in the annual report aspects related to financial management, including a

strategy to diversify the credit portfolio

136JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

> 12.4 <USE Of STANDARD ElEMENTS Of ACCOUNTAbIlITY AND PERfORMANCE INDICATORS

gRi SUb-POiNT

1. Strategy and analysis

1.1. Statement from the most senior

decision-maker of the organization

(e.g., CEO, chair, or equivalent senior

position) about the relevance of

sustainability to the organization and

its strategy

1.2. Description of key impacts, risks

and opportunities

2. Organization profile

2.1. Name of the organization

2.2. Primary brands, products and/

or services

2.3. Operational structure of the

organization, including main divisions,

operating companies, subsidiaries,

and joint ventures

2.4. Location of organization’s head-

quarters

2.5. Number of countries where the

organization operates, and names of

the countries where major operations

are underway or those particularly

relevant to the sustainability issues

covered in the report

2. Message

to shareholders

8.3. Key risks and

risk management

9.8. Cooperation with

interested parties

5.1. Company

development

strategy

11. About the report

6.2. Uranium pro-

duction. Develop-

ment of existing JSC

Atomredmetzoloto

companies

3.3. Structure

of ARMZ Ura-

nium Holding Co.,

geography of

operations

12.11. Details,

contact information,

feedback

3.3. Structure

of ARMZ Ura-

nium Holding Co.,

geography of

operations

10–11

78–83

108–117

32–33

126

47–52

15–16

168–170

15–16

REfLECTED iN REPORT

PAgE SECTiON/REPORT POiNT

COMMENTSbASE iNDiCATOR NUMbER (RUiE)

Fully

Fully

Fully

Fully

Fully

Fully

Fully

AUDiT REPORTwww.armz.ru137

2.6 Nature of ownership and legal

form

2.7. Markets served (including

geographic breakdown, sectors

served, and types of customers/

beneficiaries)

2.8. Scale of the organization

2.9. Significant changes during the

reporting period regarding size,

structure, or ownership

2.10. Awards received in the

reporting period

3. Report parameters

3.1. Reporting period (e.g., fiscal/

calendar year) for information

provided

3.2. Date of most recent previous

report (if any)

3.3. Reporting cycle

3.4. Contact point for questions

regarding the report or its contents

3.5. Process for defining report

content

3.6. Boundaries of the report

3.7. State any specific limitations

on the scope or boundaries of the

report.

3.8. Basis for reporting on joint

ventures, subsidiaries, leased

facilities, outsourced operations

and/or other entities capable of

significantly affecting comparability

from period to period and/or

between organizations

3.9. Data measurement techniques

and the bases of calculations,

including assumptions and

techniques underlying estimations

applied to the compilation of the

Indicators and other information in

the report

11. About the report

3.3. Structure

of ARMZ Uranium

Holding Co., geogra-

phy of operations

4.2. Sales and mar-

keting policy

1.1. Key figures

3.3. Structure

of ARMZ Uranium

Holding Co., geogra-

phy of operations

9.1. Personnel

3.4. Main events

of 2010

3.4. Main events

of 2010

11. About the report

11. About the report

11. About the report

11. About the report

12.11. Details,

contact information,

feedback

11. About the report

11. About the report

11. About the report

3.3. Structure

of ARMZ Uranium

Holding Co., geogra-

phy of operations

11. About the report

126

15–16

27

6

15–16

86–89

17–19

17–19

126

126

126

126

168–170

126

126

126

15–16

126

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

»

138JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

3.10. Explanation of the effect of

any re-statements of information

provided in earlier reports, and the

reasons for such re-statement

(e.g., mergers/acquisitions, change

of base years/periods, nature of

business, measurement methods)

3.11. Significant changes from

previous reporting periods in the

scope, boundaries or measurement

methods applied in the report.

3.12. Table identifying the location

of the Standard Disclosures in the

report

3.13. Policy and current practice with

regard to seeking external assurance

for the report

4.1. Governance structure of the

organization

4.2. Indicate whether the Chair of the

highest governance body is also an

executive officer

4.3. For organizations that have a

unitary board structure, state the

number and gender of members of

the highest governance body that are

independent and/or non-executive

members.

4.4. Mechanisms for shareholders

and employees to provide

recommendations or direction to the

highest governance body.

4.5. Linkage between compensation

for members of the highest

governance body, senior managers,

and executives and the organization’s

performance

4.6. Processes in place for the

highest governance body to ensure

conflicts of interest are avoided

No such statements

were made

Board members

undertake to refrain

from actions that could

lead to conflict between

their interests and the

interests of the Company.

In the event of such a

conflict, a member of the

11. About the report

12.4. Use of

standard elements

of accountability

and performance

indicators

12.7. Certification

of non-financial

reporting

8.2. Corporate gov-

ernance system

8.2. Corporate gov-

ernance system

8.2. Corporate gov-

ernance system

8.2. Corporate gov-

ernance system

9.8. Cooperation with

interested parties

8.1. Management

by objectives. KPI

126

136–148

155–160

71–78

71–78

71–78

71–78

108–117

70

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Partially

4. governance, commitments and cooperation with interested parties

gRi SUb-POiNT REfLECTED iN REPORT

PAgE SECTiON/REPORT POiNT

COMMENTSbASE iNDiCATOR NUMbER (RUiE)

AUDiT REPORTwww.armz.ru139

4.7. Process for determining the

composition, qualifications, and ex-

pertise of the members of the highest

governance body and its committees,

including any consideration of gender

and other indicators of diversity

4.8. Internally-developed statements

of mission or values, codes of

conduct, and principles relevant to

economic, environmental, and social

performance and the status of their

implementation

4.9. Procedures of the highest

governance body for overseeing the

organization’s identification and man-

agement of economic, environmental,

and social performance, including

relevant risks and opportunities,

and adherence or compliance with

internationally-agreed standards,

codes of conduct, and principles

4.10. Processes for evaluating the

highest governance body’s own

performance

4.11. Explanation of whether and

how the precautionary approach

or principle is addressed by the

organization

4.12. Externally-developed economic,

environmental, and social charters,

principles, or other initiatives to

which the organization subscribes or

endorses

4.13 Memberships in associations

(such as industry associations) and/

or national/international advocacy

organizations

Board of Directors shall

notify the other members

of the Board, and also

abstain from voting on

related issues.

The Board of Directors

includes the heads of

the executive federal

authorities dealing with

the relevant issues of

social responsibility.

Company operations

comply with the principles

cited in the “Social

Charter of Russian

Business”

Company actively par-

ticipates in the affairs of

WNA, IAEA

8.2. Corporate gov-

ernance system

5.1. Company devel-

opment strategy

9.3. Security

9.4. Health and

Safety

9.5. Environmental

protection and

ecological safety

8.2. Corporate gov-

ernance system

8.3. Key risks and

risk management

9.4. Health and

Safety

9.5. Environmental

protection and

ecological safety

71–78

32–33

92–93

94–96

97–101

71–78

78–84

94–96

97–101

1.1

Partially

Fully

Partially

Fully

Fully

Partially

Fully

»

140JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

4.14. List of stakeholder groups

engaged by the organization

4.15. Basis for identification and

selection of stakeholders with whom

to engage

4.16. Approaches to stakeholder

engagement

4.17. Key topics and concerns

that have been raised through

stakeholder engagement, and how

the organization has responded

to those key topics and concerns,

including through its reporting

5. Management approach and

performance indicators

ec1 (core) Direct economic value

generated and distributed, including

revenues, operating costs, employee

compensation, donations and other

community investments, retained

earnings, and payments to capital

providers and governments

ec3 (core) Coverage of the

organization’s defined benefit plan

obligations

ec5 (add) Range of ratios of

standard entry-level wage by gender

compared to local minimum wage at

significant locations of operation

ec7 (core) Procedures for local

hiring and proportion of senior

management hired from the local

community at significant locations of

operation.

This information is

provided in sections

9.1. Staff, 9.2. Social

policy, 9.3. Security,

and 9.5. Environmental

protection and ecological

safety

9.8. Cooperation with

interested parties

9.8. Cooperation with

interested parties

9.8. Cooperation with

interested parties

12.3. Stakeholder

proposal status

chart

1.1. Key figures

5.2. Investment

activity

9.7 Charity and

sponsorship

activity

9.1 Personnel

10 Review of

financial situation

and results

9.2. Social policy

9.2. Social policy

9.1. Personnel

108–117

108–117

108–117

135

86–88

89–91

92–93

94–98

6

39–41

107

86–89

119–124

89–91

89–91

86–89

1.2

1.3

1.4

1.5

1.6

1.7

1.8

Fully

Fully

Fully

Fully

Partially

Fully

Fully

5.1. Economic performance indicators

gRi SUb-POiNT REfLECTED iN REPORT

PAgE SECTiON/REPORT POiNT

COMMENTSbASE iNDiCATOR NUMbER (RUiE)

AUDiT REPORTwww.armz.ru141

ec8 (core) Development and impact

of infrastructure investments and

services provided primarily for public

benefit through commercial, in-kind,

or pro bono engagement

ec9 (add) Understanding and

describing significant indirect

economic impacts, including the

extent of impacts

en3 (core) Direct energy

consumption by primary energy

source

en7 (add) Initiatives to reduce

indirect energy consumption and

reductions achieved

en8 (core) Total water withdrawal

by source

en20 (core) NOx, SOx, and other

significant air emissions by type and

weight.

en22 (core) Total weight of waste

by type and disposal method

en26 (core) Initiatives to mitigate

environmental impacts of products

and services, and extent of impact

mitigation

en28 Monetary value of significant

fines and total number of non-

monetary sanctions for non-

compliance with environmental laws

and regulations

en30 (add) Total environmental

protection expenditures and

investments by type

La1 (core) Total workforce by em-

ployment type, employment contract,

and region, broken down by gender

La2 (core) Total number and rate

of new employee hires and employee

turnover by age group, gender, and

region

9.6. Development of

territories where the

Company operates

9.6. Development of

territories where the

Company operates

7.1. Performance

management

7.1. Performance

management

9.5. Environmental

protection and

ecological safety

9.5. Environmental

protection and

ecological safety

9.5. Environmental

protection and

ecological safety

9.5. Environmental

protection and

ecological safety

9.5. Environmental

protection and

ecological safety

9.1. Personnel

9.1. Personnel

102–107

102–107

64–65

64–65

97–101

97–101

97–101

97–101

97–101

86–89

86–89

2.2

2.6

2.7

2.7.2

2.8

2.11

2.12

3.1.1

3.1.2

3.1.3

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

Fully

»

5.2. Environmental performance indicators

5.3. Labor practices and decent work performance indicators

142JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

La3 (add) Benefits provided to

full-time employees that are not

provided to temporary or part-time

employees, by significant locations of

operation

La7 (core) Rates of injury

La8 (core) Education, training,

counseling, prevention, and risk-

control programs in place to assist

workforce members, their families,

or community members regarding

serious diseases

La9 (core) Health and safety topics

covered in formal agreements with

trade unions

La10 (core) Average hours of

training per year per employee

sO5 (core) Public policy positions

and participation in public policy

development and lobbying

Pr5 (add) Practices related to cus-

tomer satisfaction, including results

of surveys measuring customer

satisfaction

hr4 (core) Total number of inci-

dents of discrimination and correc-

tive actions taken

ММ1 The amount of land owned,

leased or managed by the organi-

zation in production and extrac-

tion, which has been disrupted or

reclaimed

ММ3 The total volume of overbur-

den, rock waste and associated risks

ММ9 Sites where relocation oc-

curred and the number of displaced

households

9.2. Social policy

9.4. Health and

Safety

9.1. Personnel

9.2. Social policy

12.4. Use of

standard elements

of accountability

and performance

indicators

3.4. Main events

of 2010

5.1. Company devel-

opment strategy

9.1. Personnel

9.5. Environmental

protection and

ecological safety

9.5. Environmental

protection and

ecological safety

9.6. Development of

territories where the

Company operates

89–91

94–96

86–89

89–91

136–148

17

32–35

86–89

97–101

97–101

102–106

3.1.5

3.1.6

3.1.7

3.1.8

3.1.10

Fully

Fully

Fully

Fully

Partially

Partially

Fully

Fully

Fully

Fully

5.4. Society performance indicators

5.5. Product responsibility performance indicators. Aspect: marketing communications

gRi SUb-POiNT REfLECTED iN REPORT

PAgE SECTiON/REPORT POiNT

COMMENTSbASE iNDiCATOR NUMbER (RUiE)

AUDiT REPORTwww.armz.ru143

DYNAMICS Of hEADCOUNT AT MAJOR RUSSIAN

ENTERPRISES IN ARMz URANIUM hOlDINg CO.,

bY TYPE Of EMPlOYMENT

COMPANy

JSC Atomredmetzoloto

JSC PIMCU

JSC Dalur

JSC Khiagda

RUSBURMASH INC

JSC VNIPIPROMTECHNOLOGII

Total

252

224

197

8,408

9,890

11,382

416

411

411

262

260

218

594

321

43

482

459

450

10,414

11,565

12,701

221

257

217

8,669

8,452

11,619

430

383

423

284

267

237

604

509

93

492

480

461

10,700

10,348

13,050

4

3

2

39

49

0

1

2

2

0

0

0

3

0

0

21

16

16

68

70

20

fULL-TiME (NUMbER Of PEOPLE)

PART-TiME (NUMbER Of PEOPLE)

PAyROLL NUMbER

AvERAgE PAyROLL NUMbER

yEAR

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

217

255

217

8,667

8,449

11,619

429

383

423

284

267

237

601

509

93

471

464

445

10,669

10,327

13,034

144JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

AgE STRUCTURE Of EMPlOYEES AT MAJOR RUSSIAN

SUbSIDIARIES Of ARMz URANIUM hOlDINg CO.

COMPANy

JSC Atomredmetzoloto

JSC PIMCU

JSC Dalur

JSC Khiagda

RUSBURMASH INC

JSC VNIPIPROMTECHNOLOGII

TOTAL:

UNDER 35 fROM 36 TO 50 OvER 50yEAR

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

141

143

116

3,659

3,430

4,515

188

146

162

139

115

88

183

134

27

127

95

71

4,437

4,063

4,979

63.80%

55.70%

53.50%

42.20%

40.60%

38.90%

43.72%

37.92%

38.12%

49%

44%

37%

31%

27%

29%

25.80%

19.80%

15.40%

41.47%

39.26%

38.15%

12

36

29

2,257

2,243

3,186

88

75

86

66

71

54

81

130

18

297

261

213

2,801

2,816

3,586

5.40%

14.00%

13.30%

26%

26.50%

27.40%

20.47%

19.49%

20.23%

23%

26%

23%

13%

25%

19%

60.40%

54.40%

46.20%

26.18%

27.20%

27.49%

68

78

72

2,753

2,779

3,918

154

164

177

79

81

94

340

245

48

68

124

177

3,462

3,471

4,486

30.80%

30.30%

33.20%

31.80%

32.90%

33.70%

35.81%

42.59%

41.65%

28%

30%

40%

56%

48%

52%

13.80%

25.80%

38.40%

32.36%

33.54%

34.27%

hEADCOUNT AND TURNOvER AT RUSSIAN

SUbSIDIARIES Of ARMz URANIUM hOlDINg CO.,

bY gENDER

COMPANy

JSC Atomredmetzoloto

JSC PIMCU

JSC Dalur

JSC Khiagda

RUSBURMASH INC

JSC VNIPIPROMTECHNOLOGII

Total

MEN wOMEN TOTAL TURNOvER, %yEAR

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

127

154

130

6,155

5,946

7,815

339

300

331

233

214

189

262

241

227

7,116

6,855

8,692

12.3%

13.62%

No data

12.40%

12%

13.80%

2.64%

3.87%

3.63%

84%

92%

88%

68%

2.80%

5.70%

4.70%

9.28%

2.49%

No data

21.41

22.7

No data

13.7

13.7

16.3

2.64

4.59

3.63

50.38

35.77

54.8

31

6.6

12.8

8.9

13.17

3.51

No data

94

103

87

2,514

2,506

3,804

91

85

94

51

53

47

230

239

234

2,980

2,986

4,266

9.1%

9.08%

No data

1.30%

1.70%

2.50%

0%

0.72%

0%

16%

8%

12%

32%

3.80%

7.10%

4.20%

3.89%

1.06%

No data

AUDiT REPORTwww.armz.ru145

hOURS Of wORKER TRAININg,

bY CATEgORY

COMPANy

JSC Atomredmetzoloto

JSC PIMCU

JSC VNIPIPROMTECHNOLOGII

JSC Dalur

RUSBURMASH INC

JSC Khiagda

ОАО ARMZ

JSC PIMCU

JSC VNIPIPROMTECHNOLOGII

JSC Dalur

RUSBURMASH INC

JSC Khiagda

Total:

2008 2009 2010CATEgORy

Management,

specialists,

employees

Workers

12.6

49.07

5.4

8

8

53.3

15.5

8

23.4

14.7

241

438.8

ShARE Of lOCAlS IN wORKfORCE

AND SENIOR MANAgEMENT AT RUSSIAN

SUbSIDIARIES Of ARMz URANIUM hOlDINg CO.

IN 2010

COMPANy

JSC Atomredmetzoloto

JSC PIMCU

JSC Dalur

JSC Khiagda

RUSBURMASH INC

JSC VNIPIPROMTECHNOLOGII

100

100

0.05

95

85

84

40

40

40

80

66

77.8

73

100

100

90

ShARE Of LOCAL POPULATiON (%)

ShARE Of LOCAL POPULATiON iN SENiOR MANAgEMENT (%)

yEAR

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

2010

2009

2008

100

100

99.5

99.8

99.6

99.5

98.6

98.7

98.8

95

93

94.6

56

100

100

100

5,248

31,946.5

2,365

72

336

1,226

44,116.5

456

2,989

8,261

10,120

107,136

418

651

435

9

42

23

2,855

57

128

562

42

5,222

18.7

30.5

4.3

0

0

50

11.6

8

21.1

0

42

94.1

3,360

30,026

1 810

0

0

396

41,464

456

2,590

0

168

79,706

180

984

423

0

0

8

3,588

57

123

0

4

5,355

26.3

52.5

3.9

0

0

59

10.8

8

22.2

0

n/a

123.5

1,840

19,620

1,573

0

0

472

27,095

432

2,614

0

n/a

53,174

70

374

407

0

0

8

2,517

54

118

0

n/a

3,540

hOUR/PERS.

hOURSPERS.hOUR/PERS.

hOURSPERS.hOUR/PERS.

hOURSPERS.

146JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

AMOUNT AND TERMS Of SOCIAl

bENEfITS

TyPES Of SOCiAL bENEfiTS, RUb MLN

VHI

VHI life and accident

Pension

Mass sporting and cultural events

Welfare assistance

Payment of fares for holidays, treatments

Supplementary payments on retirement

Once-off payments on anniversaries

and holidays

Compensation for housing / hostels

JSC ARMZ JSC PiMCU JSC vNiPiPROM-TEChNOLOgii

0

0

0

0.7

0.6

0

0.4

0.2

0

2

0

0

1

0.8

0

0.6

0.4

0

0

0

0

0.8

0.8

0

0.4

0.3

0

200820092010

3

0.2

0

0

0

0.01

0

0.02

3.2

1.2

0

0

0

0

0.01

0

0.01

1.4

1.5

0

0

0

0.01

0

0

0.01

5.6

200820092010

1.5

0.02

8

0.2

2.3

-

2.7

0.2

-

2.3

0.2

8.7

0.2

1.5

-

2.4

0.2

-

2.7

0.02

10

0.2

2.7

-

1.3

0.2

0.6

200820092010

37.5

-

8.1

0.7

4.4

11.8

11.7

7

1.4

39.6

3.8

9.3

3

3.3

9.8

39.3

3.7

1.5

30

4.4

10.6

4

4.8

14.9

-

6

1.4

200820092010

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

7,9

0,02

-

0,6

3,6

-

-

0,2

0,7

200820092010

JSC DALUR JSC khiAgDA

MANDATORY

POSSIBLE

СLEvEL Of APPLiCATiON

Self-declaration

Third party verification

GRI verification

rep

ort

con

firm

ed e

xter

na

lly

С+ В

rep

ort

con

firm

ed

exte

rna

lly

В+ А

rep

ort

con

firm

ed e

xter

na

lly

А+

AUDiT REPORTwww.armz.ru147

INDICATORS fOUND IN ThE

JSC ATOMREDMETzOlOTO PUblIC

ANNUAl REPORT PER ThE ROSATOM

PUblIC REPORTINg STANDARD

iNDiCATOR

2.1. Economic performance

2.3. Development of production

base

9.1. Provision of qualified and com-

petent personnel

10.1. Economic performance

10.3. indirect economic impact

11.1. Managing environmental

impact

11.2. Use of materials, energy,

water

1. Main operation results

in 2010

10. Review of financial situation

and results

5.2 Investment activity

9.1. Personnel

9.1. Personnel

12.4. Use of standard elements

of accountability and perfor-

mance indicators

1.1. Key figures

5.2. Investment activity

9.7 Charity and Sponsorship

activity

9.1 Personnel

10. Review of financial situation

and results

9.6. Development of territories

where the Company operates

9.6. Development of territories

where the Company operates

7.1. Performance management

9.5. Environmental protection

and ecological safety

9.5. Environmental protection

and ecological safety

7.1. Performance management

9.5. Environmental protection

and ecological safety

6

119–125

39

86

88

142

6

39

107

86

119–125

102–107

102–107

65

97–102

100

65

99

PAgE REPORT SECTiONNAME Of iNDiCATOR

2.1.1. Profit

2.1.3. Financial stability

2.3.1. Investment in fixed assets in reporting period

9.1.1. Provision of qualified personnel

9.1.2. Training

10.1.1. Direct economic value generated and

distributed, including revenues, operating costs,

employee compensation, donations and other

community investments, retained earnings, and

payments to capital providers and governments.

EC1 GRI

10.3.1. Development and impact of infrastructure

investments and services provided primarily for

public benefit through commercial, in kind, or pro

bono engagement. EC8 GRI

10.3.2. Understanding and describing significant

indirect economic impacts, including the extent of

impacts. EC9 GRI

11.1.3. Initiatives to reduce indirect energy

consumption and reductions achieved. EN7 (add.)

GRI

11.1.6. Initiatives to mitigate environmental

impacts of products and services, and extent of

impact mitigation. EN26 GRI

11.1.8. Total environmental protection

expenditures and investments, by type. EN30 (add.)

GRI

11.2.2. Direct energy consumption by primary

energy source. EN3 GRI

11.2.4. Total water withdrawal by source. EN8 GRI

»

148JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

iNDiCATOR

11.3. Environmental impact

(emissions, effluent and waste),

excluding radiation impact

12.1. Employment

12.3. worker welfare

13.1. impact on social situation in

regions of operations

13.4. Charitable activity

14.4. Ethics and human rights

9.5. Environmental protection

and ecological safety

9.5. Environmental protection

and ecological safety

9.1. Personnel

12.4.

9.1. Personnel

12.4.

9.1. Personnel

9.1. Personnel

9.2. Social policy

9.2. Social policy

9.4. Health and Safety

9.1. Personnel

9.2. Social policy

9.4. Health and safety

9.4. Health and Safety

12.4.

9.6. Development of territories

where the Company operates

9.7. Charity and sponsorship

activity

9.1. Personnel

99–100

98

87

143

87

144

87

88

89

146

96

88–89

90

94–95

96

145

102–106

107

87

PAgE REPORT SECTiONNAME Of iNDiCATOR

11.3.8. NOX, SO

X, and other significant air emissions

by type and weight. EN20 GRI

11.3.10. Total weight of waste by type and disposal

method. EN22 GRI

12.1.1. Total workforce by employment type,

employment contract, and region, broken down by

gender. LA1 GRI

12.1.2. Total number and rate of new employee

hires and employee turnover by age group, gender,

and region. LA2 GRI

12.1.4. Share of specialists under 35

12.1.7. Range of ratios of standard entry-level

wage by gender compared to local minimum wage

at significant locations of operation. EC5 (add.) GRI

12.3.1. Benefits provided to full-time employees

that are not provided to temporary or part-time

employees, by significant locations of operation.

LA3 (add.) GRI

12.3.5. Total expenditure on social programs for

workers

12.4.2. Rates of injury, occupational diseases, lost

days, and absenteeism, and total number of work-

related fatalities, by region and by gender. LA7 GRI

12.4.3. Education, training, counseling, prevention,

and risk-control programs in place to assist

workforce members, their families, or community

members regarding serious diseases. LA8 GRI

12.4.4. Health and safety topics covered in formal

agreements with trade unions. LA9 (add.) GRI

12.4.5. Monitoring of staff radiation doses

12.4.6. Expenditures on staff health and safety

13.1.2. Procedures for local hiring and proportion of

senior management hired from the local community

at locations of significant operation. EC7 GRI

13.4.1. Charitable projects and amount of targeted

funding

14.4.8. Total number of incidents of discrimination

and corrective actions taken. HR4 GRI

fiNANCiAL STATEMENTS (ifRS)

www.armz.ru149

> 12.5 <AUDIT REPORT

150JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

> 12.6 <fINANCIAl STATEMENTS (IfRS)

CONSOlIDATED STATEMENT Of fINANCIAl POSITION

AS Of DECEMbER 31, 2010

ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Goodwill

Exploration and evaluation of mineral assets

Investment in associates

Other non-current assets

Total non-current assets

Current assets

Inventories

Income tax receivable

Accounts receivable and advances given

Other current assets

Cash and cash equivalents

Total current assets

TOTAL ASSETS

EqUITY

Share capital

Share premium

Merger reserve

Currency translation reserve

Retained earnings

Equity attributable to the shareholders of JSC Atomredmetzoloto

Non-controlling interest

TOTAL EqUiTy

LIABILITIES

Non-current liabilities

Long-term borrowings

Long-term finance lease liability

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities

Current liabilities

Short term borrowings and current portion of long-term borrowings

Short-term finance lease liability

Accounts payable and accruals

Income tax payable

Other taxes payable

Total current liabilities

TOTAL LiAbiLiTiES

TOTAL EqUiTy AND LiAbiLiTiES

DECEMbER 31, 2010

DECEMbER 31, 2009

JANUARy 1, 2009

28,653

65,725

11,400

9,036

29

3,705

118,548

10,439

468

6,863

603

41,666

60,039

178,587

20,257

48,704

7,201

(271)

17,603

93,494

30,823

124,317

20,236

350

11,395

3,243

35,224

7,767

263

6,064

4,102

850

19,046

54,270

178,587

14,690

1,030

1,817

19

294

17,850

7,433

393

3,504

432

2,626

14,388

32,238

3,956

7,147

(8)

394

11,489

1,576

13,065

3 549

154

986

896

5,585

11,230

236

1,743

29

350

13,588

19,173

32,238

18,453

6,132

3,341

9,047

2,549

39,522

4,467

145

8,688

3,240

52,683

69,223

108,745

20,127

48,029

7,114

(1,081)

5,256

79,445

1,853

81,298

9,824

39

1,696

1,118

12,677

8,317

99

3,865

1,892

597

14,770

27,447

108,745

In RUB millions, unless otherwise stated

CERTifiCATiON Of NON-fiNANCiAL REPORTiNg

www.armz.ru151

CONSOlIDATED STATEMENT

Of COMPREhENSIvE INCOME fOR ThE YEAR

ENDED DECEMbER 31, 2010

Revenue

Cost of sales

gross profit

Administrative and selling expenses

Operating profit

Gain from revaluation of the existing ownership interest

Gain from disposal of investments

Excess of the fair value of the identifiable net assets

Share of (loss) / gain of associates

Financial income / (expenses), net

Other (expenses) /income

Foreign exchange (loss) / gain

Profit before income tax

Income tax expense

PROfiT fOR ThE yEAR

Profit / (loss), attributable to

JSC Atomredmetzoloto shareholders

Non-controlling interest

Profit for the year

Other comprehensive income after income tax

Exchange differences on translation of foreign operations

Total comprehensive income for the period attributable to

JSC Atomredmetzoloto shareholders

Non-controlling interest

TOTAL COMPREhENSivE iNCOME fOR ThE PERiOD

fOR ThE yEAR ENDED DECEMbER 31, 2010

fOR ThE yEAR ENDED DECEMbER 31, 2009

30,409

(16,277)

14,132

(4,280)

9,852

9,822

(1,819)

1,229

(405)

(138)

18,541

(6,209)

12,332

12,239

93

12,332

810

13,049

93

13,142

29,812

(16,778)

13,034

(4,165)

8,869

2,694

(822)

11

(2,704)

32

1,203

9,283

(3,494)

5,789

5,804

(15)

5,789

(1,073)

4,731

(15)

4,716

In RUB millions, unless otherwise stated

152JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

CONSOlIDATED STATEMENT Of ChANgES

IN EQUITY fOR ThE YEAR ENDED DECEMbER 31, 2010

On January 1, 2009

Profit for the year

Other comprehensive income

Total comprehensive income

Issue of share capital

Acquisition of shares of subsidiaries

On December 31, 2009

Profit for the year

Other comprehensive income

Total comprehensive income

Issue of share capital

Disposal of shares of joint ventures

Acquisition of shares of subsidiaries

Dividends

On December 31, 2010

13,065

5,789

(1,073)

4,716

64,200

(683)

81,298

12,332

810

13,142

805

29,082

(10)

124,317

1,576

(15)

(15)

292

1,853

93

93

28,877

30,823

11,489

5,804

(1,073)

4,731

64,200

(975)

79,445

12,239

810

13,049

805

205

(10)

93,494

TOTAL EqUiTy

NON-CON-TROLLiNg iNTEREST

COMPANy’S ShAREhOLD-

ERS EqUiTy

394

5,804

5,804

(942)

5,256

12,239

12,239

(87)

205

(10)

17,603

(8)

(1,073)

(1,073)

(1,081)

810

810

(271)

7,147

(33)

7,114

87

7,201

RETAiNED EARNiNgS

CURRENCy TRANS-ACTiON

RESERvE

MERgER RESERvE

48,029

48,029

675

48,704

3,956

16,171

20,127

130

20,257

ShARE PREMiUM

ShARE CAPiTAL

In RUB millions, unless otherwise stated

CERTifiCATiON Of NON-fiNANCiAL REPORTiNg

www.armz.ru153

CONSOlIDATED STATEMENT Of CASh flOwS

fOR ThE YEAR ENDED DECEMbER 31, 2010

CASH FLOWS FROM OPERATING ACTIVITIES:

Pre-tax profit

Depreciation of property, plant and equipment

Amortisation of intangible assets

(Release) / accrual of bad debt provision

Interest income

Interest expenses

Foreign exchange loss / (gain)

Interest on finance lease

Excess of the fair value of the identifiable net assets

Effect of discounting

Dividends accrued

Provision for bonuses

Loss on derivative financial instruments

Loss on disposal of other assets

Gain from revaluation of investments

Gain from sale of financial investments

Share of loss / (profit) of associates.

Other accruals

Cash from operating activities before changes in working capital and income tax

Changes in working capital

Change in accounts receivable and advances given

Change in inventories

Change in other non-current assets

Change in accounts payable and accruals

Change in other taxes payable

Change in other long-term liabilities

Income tax paid

Interest paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest income received

Long-term loans issued

Short-term loans issued

Repayment of long-term loans issued

Repayment of short-term loans issued

Purchase of property, plant and equipment

Proceeds from sale of property, plant and equipment

Purchase of intangible assets

Purchase of promissory notes

Proceeds from sale of promissory notes

Dividends received

Purchase of derivative financial instruments

Purchase of exploration and evaluation of assets

Acquisition of shares of Uranium One Inc.

Acquisition of shares of JSC VNIPIPROMTECHNOLOGII

Acquisition of interest on LLC Schekotovo

Acquisition of shares of Effective Energy N.V.

fOR ThE yEAR ENDED DECEMbER 31, 2010

fOR ThE yEAR ENDED DECEMbER 31, 2009

18,541

1,592

134

(132)

(2,814)

701

371

37

846

654

55

(9,822)

1,819

230

12,212

5,913

(3,268)

(2,273)

(1,707)

(15)

(242)

(4,525)

(720)

5,375

2,673

(782)

(936)

878

(5,120)

2,162

(824)

2,660

(1,674)

(3,106)

(185)

9,283

1,092

118

233

(368)

2,615

(1,528)

91

822

82

(112)

259

396

105

(2,694)

(11)

48

10,431

(4,904)

2,867

25

2,500

193

(38)

(1,795)

(2,493)

6,786

347

(172)

129

193

(5,130)

28

(504)

(405)

254

112

(657)

(1,475)

(119)

(17,027)»

154JSC ATOMREDMETzOlOTO 2010 Annual Report

ANNEx

Acquisition of shares of CJSC Rusburmash

Other acquisitions

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term borrowings

Proceeds from long-term borrowings

Repayment of short-term borrowings

Repayment of long-term borrowings

Proceeds from share issue

Pensions paid

Finance lease payments

Net cash generated from / (used in) financing activities

increase / (decrease) in cash and cash equivalents

CASh AND CASh EqUivALENTS AT ThE bEgiNNiNg Of ThE yEAR

CASh AND CASh EqUivALENTS AT ThE END Of ThE yEAR

fOR ThE yEAR ENDED DECEMbER 31, 2010

fOR ThE yEAR ENDED DECEMbER 31, 2009

(31)

(4,285)

14,369

13,488

(29,482)

(11,128)

805

(21)

(138)

(12,107)

(11,017)

52,683

41,666

(600)

(16)

(25,042)

21,800

34,560

(25,348)

(26,587)

64,200

(39)

(273)

68,313

50,057

2,626

52,683

In RUB millions, unless otherwise stated

www.armz.ru155

> 12.7 <CERTIfICATION Of NON-fINANCIAl REPORTINg

INDEPENDENT CERTIfICATION

Of SOCIAl REPORTINg

iNTRODUCTiON

This audit certification applies to the 2010 Annual Report for JSC Atomredmetzoloto (hereinafter, the Report). The Report was pre-pared by JSC Atomredmetzoloto (hereinafter, the Company), which is responsible for col-lecting, organizing and presenting all of the information contained therein. Bureau Veri-tas Certification Rus is responsible only to the Company for work conducted on the certifica-tion of the Report, and assumes no liability to any party for decisions made or deferred on the basis of this certification.

CERTifiCATiON ObJECTivES AND LEvEL

1. Evaluate the nature and degree of the Com-pany’s compliance with the principles of inclu-siveness, relevance and responsiveness, as set out in the AA1000 Accountability Principles Standard (APS) 2008.

2. Assess the quality of disclosure as regards the Company's sustainable development based on the АА1000 Assurance Standard (AS) 2008.

3. Assess the extent and quality of stakeholder engagement in the reporting process in accord-ance with the AA1000 Stakeholder Engagement Standard (SES) 2011.

4. Assess the degree of the Report’s compli-ance with the standard public annual report of Rosatom State Corporation in terms of report-ing process requirements, as well as the structure and contents of the Report.

5. Assess the Report’s compliance with level B + (Company self-evaluation) of the Global Re-porting Initiative Sustainability Reporting Guide-lines, version G3 2006.

6. Make recommendations for the develop-ment of corporate governance within the context of social reporting.

7. Apply a “reasonable” level of certification, as specified in the standards for report certification activities AA1000AS (2008) and the International Standard on Assurance Engagement ISAE-3000.

During verification of the Report, information published on the Company’s corporate website http://www.armz.ru/ was taken into account, in addition to materials from various publications, the magazine Rosatom Country, federal and re-gional media, television broadcasts, and also the Public Reporting Policy of Rosatom and other intra-corporate regulations.

METhODOLOgy

■ Interview senior management on significant economic, social and environmental aspects of Company operations, commitments, pri-orities and goals for sustainable development, tools to achieve these goals, and the level to which they have been achieved.

■ Attending Company dialogues with interested parties, studying reports on the dialogues, interviews with management responsible for holding the dialogues, and also with partici-pants in the dialogues.

■ Attending Public Hearings on the Company’s Annual Report for 2010.

■ Verification of the achievement of sustainable development objectives for 2010, as set down in the annual report for 2009.

■ Verification of documents and data on the effectiveness of the approaches used at the Company for the management of economic, social and environmental aspects.

■ Verification of collecting, processing, analyz-

ing and documenting processes used at the

Addressed to JSC Atomredmetzoloto

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Company for a sample of the representative data included in the report.

■ Verification of the adequacy of a series of as-sertions, statements and information present-ed in the Report by: › a visit by the certifier in May 2011 direct-

ly to the Company, and interviews with managers and professionals in a number of departments dealing with environmen-tal management, performance indicators, marketing activity, and corporate commu-nications;

› a visit by the certifier in May 2011 to industrial and social infrastructure at JSC Dalur, which is part of the Compa-ny, and situated in the Dalmatovo Dis-trict of Kurgan Region. A meeting with the Director General of JSC Dalur, with the head of the personnel department, experts in environmental protection, health and safety, with the production staff. A meeting with the First Deputy Head of Dalmatovo District. A visit to social welfare sites (Uksyanskoe Second-ary School, in the Village of Uksyanskoe, Dalmatovo District), a meeting with the school director.

■ Analysis of a sample of data from the mass

media and published statements by third par-ties describing the Company's commitment to the values of sustainable development, in order to verify the validity of the statements contained in the Report.

■ Verification of compliance of the Report and information published on the corporate web-site with the standards AA1000AS (2008), AA1000APS (2008), AA1000SES (2011), the Rosatom Standard and GRI guidelines.

■ Performance test of the reporting feedback mechanism.

CERTifiCATiON LiMiTS

■ Certification does not apply to the perfor-mance indicators that go beyond the time-frame of the current 2010 reporting cycle.

■ Certification does not take into account state-ments, which express the opinions, beliefs or

intentions of the Company to take any action in the future.

■ At an operational level, certification was lim-ited to visits to Company headquarters (Mos-cow) in April-May 2011 and one of the regions where the Company operates (Dalmatovo Dis-trict, Kurgan Region, JSC Dalur) in May 2011.

bASiS fOR OUR OPiNiON

Certification work was based on an analysis of information provided by Company management, its structural divisions, subsidiaries, and repre-sentatives of a number of interested parties, on state statistical reports, and data from available sources with the use of analytical confirmation methods. Certification takes into consideration the industry-specific activities of the Company and objective limitations based on its confiden-tial nature. Carried out within the framework of a “reasonable” level of certification, the selective verification of information in the Report pro-vides a lower level of assurance for certification than a full inspection of all data (“high” level). With respect to the numerical information in the Report, the work carried out cannot be consid-ered totally sufficient to identify all potentially inaccurate statements. Nevertheless, the data collected during our work is a sufficient basis for our findings, based on the applied “reasonable” level of certification as to the nature and extent of the Company’s compliance with principles of inclusiveness, relevance and responsiveness of standard AA1000APS (2008), as well as the qual-ity of disclosure of information on sustainable development performance in accordance with the standard AA1000AS (2008).

OUR OPiNiON

■ The Report accurately reflects the overall per-formance of the Company from the point of view of corporate public reporting.

■ The Report is presented in an understandable form; it is accurate, objective, informative and balanced in content. The Report contains in-formation to the extent required by interested parties, and at the same time avoids excessive detail. Abbreviations and technical terms are explained.

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■ Individual errors in quantitative data identi-fied during the certification are not funda-mental and do not significantly affect the abil-ity of stakeholders to reach conclusions about the Company’s results.

■ The Company has an effective approach to management, enabling the identifica-tion of significant economic, social and environmental aspects of activities, and to plan, manage and improve the related pro-

cesses, to determine the expectations of stakeholders on these issues and respond to them.

■ Company management’s control systems for public reporting are fully supported by the Company’s mission, its policies, procedures and resources, as well as the compliance of its activities with the principles of the “Social Charter of Russian Business.”

COMPlIANCE Of ThE REPORT

wITh AA1000APS (2008)

PRiNCiPLE 1. iNCLUSivENESS

■ The information presented in the Report and objective and indirect evidence received sug-gest that in the preparation of information for the Report, the interests of key stakeholders were taken into account.

■ The Company puts together a chart of inter-ested parties, reflecting key issues and mecha-nisms for engagement. A table of stakeholder input is maintained. Stakeholders are involved in the identification of significant aspects of the Company’s activities.

■ In case of divergent interests, the Company uses efficient mechanisms for their mutual coordination.

■ The Company assesses the degree of imple-mentation of identified stakeholder interests, and activities planned in the previous Report.

■ The main means of communication and inter-action with stakeholders are reports, includ-ing this Report, public hearings, dialogues, news reports, press releases, interviews, talks, surveys, the company website, and publica-tions in the mass media.

■ Structured interaction with interested parties is disclosed in the Report in information about two dialogues with interested parties and the public hearings on the Report, which were at-tended by a certification officer. The Compa-ny’s information transparency is illustrated by the provision of substantial presentations and

a draft of the Report to stakeholders for their feedback and comments.

■ The involvement of the regions where the Company operates is reflected in the pub-lished information on the implementation of Company restructuring programs and social projects. A certificate on the performance of social obligations to employees is also pre-sented.

PRiNCiPLE 2. RELEvANCE Of iNfORMATiON

■ The Company has implemented a process to identify important (essential) aspects of its activity, providing clear and understandable criteria for relevance. During the reporting period, the process of updating the essential aspects was maintained on a continuous basis.

■ The Report is a balanced and reasonable presentation of information essential for stakeholders regarding economic, social and environmental aspects, and defining the Com-pany’s sustainable development indicators.

■ The Report provides essential information about maintaining economic stability and the development of an investment program, and provides a self-assessment of the achievement of sustainable development and social com-mitments made in 2010, provides an assess-ment of the social and regional significance of investment projects, and sets the goal of optimizing the public reporting system. The degree of attention given to various topics in

158JSC ATOMREDMETzOlOTO 2010 Annual Report

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the Report is proportionate to their relative significance.

■ The organization demonstrates an under-standing of the concept of sustainable de-velopment and uses objective information in reflecting different topics in its Report. The report contains future sustainable develop-ment objectives for 2011 and the long term.

■ Based on an analysis of data in the Report and interviews, not one significant aspect of sus-tainable development can be identified which was omitted or wrongly excluded from the Report. The Report covers the majority of GRI performance indicators.

■ Information provided on essential aspects of the Company’s sustainable development has sufficient traceability in the process of data collection, processing, transmission and pres-entation.

■ The information presented in the Report, the annual report and the Company's website, is of significance to interested parties, as it can affect their future decisions and behavior with respect to the Company.

■ The report provides sufficient information about the Company's compliance with Rus-sian laws, regulations and industry standards for the nuclear industry, as well as the provi-sions of the Code of Corporate Conduct rec-ommended by the FSC (FFMS).

PRiNCiPLE 3. RESPONSivENESS TO STAkEhOLDERS’ ExPECTATiONS

■ We do not currently know of any possible areas not disclosed in the Report concerning which the Company would be unable to respond to reasonable inquiries from interested parties.

■ The Company established the following priority topics for the Report: a) social relevance, envi-ronmental safety of nuclear energy and its role in economic development, and b) investment activ-ity and respect for the rights of investors.

■ The requirements of consumers are met with planned deliveries of products of guaranteed quality. In shaping a positive image of the

Company as a reliable partner and of its com-petitive advantage, a significant role is played by expanding its international presence, in-vestment and innovation, a tiered quality-control system, high level of staff competence and continuous training and effective custom-er relations procedures.

■ The opinions and expectations of shareholders are taken into account by implementing the principles of corporate governance, including holding annual shareholders’ meetings.

■ The interests of the Company's workers are taken into account by the adoption of a col-lective agreement between management and a trade union committee (workers’ council).

■ The needs of the regions are responded to by participating in targeted planning for the implementation of a wide range of social pro-jects. Within the framework of agreements on social and economic partnership, the Com-pany supports social-economic development in all regions where it operates, and together with the regional administrations is involved in financing major sporting and cultural facili-ties, assists in the improvement of cities and towns, implements sports, educational and cultural programs, and makes a significant contribution to the development of social in-frastructure, the state of which dictates the quality of life of both staff and their families and the entire population in these regions.

■ The right of the public to a favorable environ-ment is provided for the Company’s planned environmental activities. The Company has adopted a plan for the implementation of en-vironmental policy in 2009-2015, which aims to ensure ecological safety and environmental protection in areas where subsidiaries oper-ate. As a result of a wide range of activities, positive changes have been achieved in key environmental impact indicators.

REPORT’S COMPLiANCE wiTh gRi gUiDELiNES

The Report was drawn up using the recommen-dations in GRI guidelines for reporting on sustain-able development, contains information on all standard reporting elements, as well as GRI per-

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formance indicators, and in general corresponds to a reporting level of B+. The fact that the Report does not contain detailed information about in-dividual GRI performance indicators is due to the fact that at present these issues are of minor sig-nificance to stakeholders, and their contribution to the Report can be neglected compared with the Company’s core activities.

LEvEL AND qUALiTy Of STAkEhOLDER ENgAgEMENT iN COMPLiANCE wiTh АА1000SES (2001)

In general, the process of public accounta-bility is consistent with the recommendations of AA1000SES (2011). This concerns the iden-tification of stakeholders, the initial identifi-cation of significant issues, determining the strategy, objectives and scope of engagement, establishing a plan and timetable for the struc-turing of engagement, the organization of en-gagement, and responding to the challenges of engagement.

COMPLiANCE wiTh ThE ROSATOM STANDARD

The process of public reporting and the struc-ture of the Report are broadly consistent with the requirements of the Standard Model.

RECOMMENDATiONS fOR ThE DEvELOPMENT Of CORPORATE MANAgEMENT Of SOCiAL ACCOUNTAbiLiTy

■ Fine-tuning of the process for deciding on Report content, and methods for measuring data and calculations, including assumptions and techniques used to prepare indicators and other information included in the Report (items 3.5, 3.9 in GRI guidelines for reporting on sustainable development).

■ Organization of annual publications on social accountability for each region where the Com-pany operates.

■ A more balanced reflection in the Report of both positive and negative trends in the achieving of planned sustainable develop-ment objectives in the reporting period.

■ Holding of an internal audit of the social ac-countability process in the Company and the presentation of related materials in subse-quent reporting cycles.

■ Inclusion in reports for the subsequent period

of supplementary and expanded recommen-dations for reporting on sustainable devel-opment (GRI guidelines: version G3.1 from March 23, 2011).

■ A fuller reflection in the Report of the Com-pany's commitments in the field of sustain-able development in relation to climate change and reducing carbon emissions (positive practice of AREVA Corporation, www.areva.com).

■ The design and implementation of systems for the management of social responsibility in ac-cordance with the international standard SA 8000 and the guideline ISO 26000.

■ Improving the process of collecting, process-ing and documenting information on environ-mental aspects of the Company’s activities.

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STATEMENT fROM bUREAU vERiTAS CERTifiCATiON RUS ON iNDEPENDENCE, iMPARTiALiTy AND COMPETENCE

■ JSC Bureau Veritas Certification Rus is an independent professional international company spe-cializing in providing services for the accredited certification of various management systems (such as quality-control systems, occupational health and safety, environmental protection, social responsibility, etc.).

■ Bureau Veritas Certification Rus officially states that this Conclusion is an independent assess-ment by a third party auditor. Bureau Veritas Certification Rus has no commercial interests in the Company except for the provision of certification services.

CertifierJSC Bureau Veritas Certification RusMay 18, 2011

Leonid Yaskin – Director general, Senior Auditor, Cand. Sc.

Vladimir Mityashin – Senior Auditor, Ph.D. in economics

Pursuant to Minutes No. 5 of the Annual General Meeting dated 30.06.2010, the Audit Com-mission of JSC Atomredmetzoloto (hereinafter, the “Company”), elected to include the follow-ing members:

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www.armz.ru161

> 12.8 <AUDIT COMMITTEE REPORT

AUDIT COMMITTEE REPORT

ON ThE fINDINgS Of AN AUDIT Of ThE bUSINESS

AND fINANCIAl PERfORMANCE AND ANNUAl

ACCOUNTINg (fINANCIAl) STATEMENTS

Of JSC ATOMREDMETzOlOTO fOR 2010

Moscow 04 May 2011

fULL NAME

Andrienko, viktoria Alexandrovna

burel, Oksana vladimirovna

Zakharov, Alexei Mikhailovich

POSiTiON OCCUPiED AT ThE TiME Of ELECTiON

Chief Accountant, State Atomic Energy Corporation Rosatom

Chief Specialist, Research Division, Internal Audit Department, JSC Atomenergoprom

Deputy Director, Corporate Financing Treasury Office, State Atomic Energy

Corporation Rosatom

and guided by the scope of authorities established under the RF Federal Law “on Joint Stock Companies”, the Company Charter, and the Statute on the Company’s Audit Commission, con-ducted an audit of the Company’s business and financial performance for the period running from 01.01.2010 to 31.12.2010.

gENERAL COMPANy iNfORMATiON:Full name: Open Joint Stock Company Atomredmetzoloto.Short name: JSC Atomredmetzoloto.Registered and mailing address: 22, Bolshoi Drovyanoi Lane, Moscow, 109004.

State registration: Company registered on 22.02.1995 by the Moscow Registration Chamber under No. 004.997; on 02.08.2002, an entry was made to the Unified State Register of Legal Entities to reflect the reregistration of JSC Atomredmetzoloto under number 1027700043645.

As of 01 January 2010, the Company’s charter capital totaled RUB 3,956,039,897 (three bil-lion nine hundred fifty-six million thirty-nine thousand eight hundred ninety seven rubles) divided into 3,956,039,897 (three billion nine hundred fifty-six million thirty-nine thousand eight hundred ninety seven) uncertificated ordinary shares. The par value of each such share totals RUB 1 (one ruble).

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At the Extraordinary General Shareholders Meeting held on 20.02.2009, a resolution was adopted to execute an additional securities issue of 16,372,795,900 shares with a par value of RUB 1 each. The RF FFMS Report dated 16.03.2010 and the additional securities-issue report registered 16,171,284,635 shares with a par value of RUB 1 each. On the basis of the amend-ment of the JSC Atomredmetzoloto Charter on 29.03.2010, the Company’s charter capital grew by RUB 16,171,284,635.

At the Extraordinary General Shareholders Meeting held on 16.04.2010, a resolution was adopted to execute an additional securities issue of 129,915,429 shares with a par value of RUB 1 each. The RF FFMS Report dated 05.08.2010 and the additional securities-issue report regis-tered 129,915,429 shares with a par value of RUB 1 each. On the basis of the amendment of the JSC Atomredmetzoloto Charter on 19.08.2010, the Company’s charter capital increased by RUB 129,915,429.

As of 31 December 2010, the Company’s charter capital stood at RUB 20,257,239,961 (twenty billion two hundred fifty-seven million two hundred thirty-nine thousand nine hundred sixty-one rubles) divided into 20,257,239,961 (twenty billion two hundred fifty-seven million two hundred thirty-nine thousand nine hundred sixty-one) uncertificated ordinary shares. The par value of each such share totals RUB 1 (one ruble).

On the basis of the Securities Exchange Agreement between State Atomic Energy Cor-poration Rosatom and JSC Atomic Energy Power Corporation (JSC Atomenergoprom) dated 02.08.2010, 16,171,284,635 ordinary shares were transferred from State Atomic Energy Corpo-ration Rosatom to JSC Atomenergoprom.

Company shareholder composition as of 31.12.2010 (reflecting shareholding as a percentage of total charter capital): JSC TVEL – 20.021%, JSC Atomenergoprom – 79.979%.

The Company has no branches or representative offices.

Pursuant to the Charter, the Company’s core operations encompass the geological explora-tion and mining of commercial minerals containing, inter alia, nuclear materials and radioac-tive substances, as well as the production of yellowcake.

Company senior management during the period in question:

Director General – Zhivov, vadim Lvovich.

Individual responsible for bookkeeping and the compilation of financial (accounting) state-ments:

Chief Accountant – Pozdeeva, Anna Dmitrievna.

The audit of the Company’s business and financial performance for 2010 was conducted ac-cording to the sampling method.

The business and financial documents requested by the Audit Commission were submitted thereto and audited at random.

On the basis of its audit, and in due consideration of the report submitted by the auditing firm LLC Nexia Pacioli on its audit of financial (accounting) statements, the Audit Commission affirms the accuracy of the Company’s Annual Report, Annual Financial (Accounting) State-ments, and Business and Financial Performance for the period running from 01.01.2010 to 31.12.2010, inclusively, with the exception of the possible impact of the factors cited in Item 14 of the Audit Commission Report on the Company’s accounting statements.

Audit data are presented in Appendix No. 1.

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MAiN AUDiT CONCLUSiONS:

1. Profitability index per 2010 net profit demonstrates growth from 29% to 33% due to in-creased financial earnings.

2. As of 31.12.2010, the Company's net asset value totaled RUB 109,156 mln and its charter capital stood at RUB 20,257 mln, which complies with the net-assets to charter-capital ratio requirements established under RF Federal Law No. 208-FZ dated 26.12.1995 “on Joint Stock Companies” (as amended and supplemented). The Company’s assets, liabilities and capital are reflected legitimately and comprehensively in its accounting statements.

3. Pursuant to the audit report issued by LLC Nexia Pacioli, the Company’s financial (ac-counting) statements accurately reflect, in all material respects, its financial position as of 31 December 2010 and its business and financial performance for the period running from 01.01.2010 to 31.12.2010, inclusively.

4. In the opinion of the Audit Commission, with the exception of the possible impact of the factors cited in Item 14 of the Audit Commission Report on the Company’s accounting state-ments, its accounting statements accurately reflect, in all material aspects, the Company’s fi-nancial position as of 31 December 2010, as well as its business and financial performance and cash flow movements for 2010, in accordance with established accounting rules.

Chairman of the Audit Commission

Members of the Audit Commission: V. A. Andrienko

O. V. Burel

A. M. Zakharov

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> 12.9 <INTERNAl AUDIT REPORT

The internal audit department at JSC Atom-redmetzoloto has conducted an audit of the re-liability of information presented in the annual report.

Preparation of the Annual Report (hereinafter, the “Report”) was conducted in accordance with Order No. 28 dated 28.02.2011 “On Organizing Work for Preparation of the Annual Report of JSC Atomredmetzoloto 2010”. Most of the relevant subdivisions of JSC Atomredmetzoloto and its subsidiaries (hereinafter, the Holding Company, ARMZ) participated in its preparation. The views of interested parties were taken into considera-tion. Reports on the implementation of plans for 2010 were critically evaluated.

This Report reflects the main segments of the Holding Company’s activities and the indicators to which Holding Company management and staff pay special attention, and to which most re-sources are dedicated:

» increasing financial stability; » risk management; » social policy;

» monitoring and improving health and safety systems;

» monitoring and improving environmental safety;

» improving production efficiency.The information reflected in the Report, as-

suming the sufficiency of the evidence presented, fully reflects in all material respects the main facts and achievements of ARMZ Uranium Hold-ing Co. in 2010.

The Report allows for the communication to users of information on existing systems for the effective management of various sustainability indicators, reflects the level of responsiveness to the opinions of interested parties, and reflects not only past events at ARMZ, but also plans for the short- and long-term future.

The audit allows us to conclude that the in-formation contained in the Report, accurately reflecting a favorable level of sustainable devel-opment at the Holding Company and the aspi-rations of its managers and workers to improve thereupon, is capable of influencing the findings and decisions of stakeholders.

Internal Audit Department Director

G. Ye. Fedichkin

www.armz.ru165

The Report was prepared in accordance with the format established in guidelines for the composition and presentation of information on compliance with the Corporate Code of Conduct in the annual reports of joint stock companies, approved by Federal Securities Commission of Russia directive No. 03-849/p dated 30.04.2003.

> 12.10 <REPORT ON ObSERvANCE Of ThE CORPORATE CODE Of CONDUCT

#

1

2

3

4

5

When convening general shareholders’ meetings,

schedules are respected for the timely notification of

such meetings, the right of shareholders to familiarize

themselves with the list of persons entitled to participate

in the AGM is observed, shareholders are entitled

to review materials (information) for the general

shareholders’ meeting, and are entitled to include items

on the agenda of the General Shareholders’ Meeting.

In accordance with Sub-Clause 25, Clause 13.2 of the

Charter, the remit of the Board includes approval of

annual plans, budgets and estimates for the Company's

operations and progress reports on their implementa-

tion, and the Company’s financial and business targets.

In accordance with Sub-Clause 23, Clause 13.2 of the

Charter, the remit of the Board includes deciding on

the formation of a temporary sole executive body in the

event of the termination of the office of the Director

General, or their inability to discharge their duties for any

reason, and to hold an Extraordinary General Meeting

of shareholders to decide on the early suspension of the

sole executive body and the formation of a new Company

executive body.

Independent directors were not elected to the Board of

Directors.

There are no such individuals on the Company’s Board of

Directors.

Observed

Observed

Observed

Not observed

Observed

ObSERvED OR NOT ObSERvED

NOTECORPORATE CODE Of CONDUCT PROviSiON

»

Respect for shareholders’ rights

Respect for the rights and legal interests of

shareholders in compliance with applicable legislation

and adherence to the main rules of the Code of

Corporate Conduct.

board of Directors

The presence in the Company Charter of the authority

of the Board of Directors to annually approve the

Company’s financial and business plan.

The presence in the Company Charter of the right of

the Board of Directors to suspend the powers of the

Director General, appointed by the AGM.

The presence on the Board of Directors of at least

3 independent directors, in compliance with the

requirements of the Corporate Code of Conduct.

The absence on the board of directors of a joint

stock company of persons who were found guilty of

committing economic crimes or crimes against the

government, the civil service or local government

services, or who were subject to civil penalties for

violations in the field of business or finance, taxes, or

the stock market.

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6

7

8

9

10

11

12

13

14

15

Members of the Company’s Board of Directors do not

hold positions on the management boards of competing

companies.

Used in the practice of corporate governance. In 2010,

there were 16 meetings of the Board of Directors. A

meeting frequency of at least once every six weeks was

observed.

Section 10 of the Statute on the Company’s Board of

Directors established the basic rules for the holding of

meetings of the Company’s Board of Directors.

In accordance with Sub-Clause 12, Clause 2.1 of the

Statue on the Board of Directors, the remit of the Board

of Directors includes approving a transaction or series

of related transactions involving property whose value

ranges from 10 to 50 percent of the book value of

Company assets.

The Company has not set up Board of Director

committees.

The Company has not established a collegial executive

body (Management Board).

The Director General of the Company is not a member

of the governing body or employee of a legal entity

competing with the Company, and has not been found

guilty of committing economic crimes, crimes against the

state, or other crimes and offenses.

The Director General submits a report on his work to

the Board of Directors at the request of the Board of

Directors.

The contract signed with the Director General

establishes the liability of the Director General for

the violation of statutes on the use of confidential and

privileged information.

The Company has elected a corporate secretary, who

organizes the work of its managing bodies.

In accordance with Articles 12.1, 13.2 and 14.3 of the

Charter, the remit of managing bodies includes making

decisions on approving transactions in cases stipulated

by Chapter 10, Approval of Major Transactions, of RF

Federal Law No. 208-FZ “On Joint Stock Companies”

dated 26.12.1995.

Observed

Observed

Observed

Observed

Not observed

Observed

Partially-

observed

Observed

Observed

Observed

The absence on the board of directors of a joint stock

company of persons who are party to, the director

general (manager) of, member of the governing body

or employee of a legal entity competing with the

company.

The holding of meetings of the Board of Directors

during the year for which the annual report of the joint

stock company is being prepared, at intervals of not

less than once every six weeks.

The presence in the Company’s internal documents of

an order on the holding of board meetings.

The presence in the Company’s internal documents

of the need for approval by the Board of Directors of

Company transactions worth more than 10 percent

of Company assets, except for transactions made in

the ordinary course of business.

The presence in the Company of Board of Director

committees.

Executive bodies (Director general)

The absence in executive bodies of persons who are

party to, the director general (manager) of, a member

of the governing body of, or employee of a legal entity

competing with the Company.

Presentation by the executive bodies of a joint stock

company of monthly reports on its work to the board

of directors.

The establishment in agreements concluded

between a joint stock company, its director general

(managing organization, manager) and members of

its management board, of responsibility for violation

of the statute on confidentiality and privileged

information.

Company Secretary

The presence in the Company of a special officer

(company secretary), whose task is to ensure that the

bodies and officials of the joint stock company comply

with procedural requirements to guarantee the rights

and legitimate interests of shareholders.

Significant corporate actions

The presence in the Charter or internal documents

of the Company of a requirement to approve major

transactions prior to their conclusion.

# ObSERvED OR NOT ObSERvED

NOTECORPORATE CODE Of CONDUCT PROviSiON

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16

17

18

19

Implemented in practice. An independent appraiser is

invited by the Company to determine the value of shares

and other Company assets earmarked for divestment or

acquisition.

The Company meets its obligation to disclose relevant

information in accordance with the laws of the Russian

Federation on the site www.armz.ru.

The Company has set up an internal control unit and

elected an audit commission, which act in accordance

with their respective governing statutes.

Dividends are paid by the Company in line with decisions

reached by the General Shareholders’ Meeting.

Information on dividend payments is posted on the site

www.armz.ru in the Company’s annual reports.

Observed

Observed

Observed

Observed

The mandatory involvement of an independent

appraiser to estimate the market value of property

involved in a major transaction.

Disclosure of information

The presence of a company Internet site and regular

disclosure of information about the joint stock

company on this website.

Control over financial activity

The presence of a special unit in the joint stock

company, ensuring compliance with internal control

procedures (supervision and audit service).

Dividends

Payment of dividends.

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> 12.11 <DETAIlS, CONTACT INfORMATION, fEEDbACK

fULL COMPANy NAME

ShORT NAME

LOCATiON Of hEADqUARTERS (hEAD OffiCE)

AND POSTAL ADDRESS

TELEPhONE / fAx

NAME Of REgiSTERiNg AUThORiTy, NUMbER,

AND DATE Of REgiSTRATiON

MAiN STATE REgiSTRATiON NUMbER (OgRN)

iNDiviDUAL TAx NUMbER / CODE Of REASON

fOR REgiSTRATiON (iNN / kPP)

MAiN TyPE Of ACTiviTy

iNTERNET SiTE

iNfORMATiON ON AUDiTOR AND REgiSTER

hOLDER

Open Joint Stock CompanyAtomredmetzoloto

JSC Atomredmetzoloto

22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004

(495) 508-88-08 / 508-88-10

Moscow Registration Chamber,No. 004.997 dated 22.02.1995

1027700043645

7706016076 / 770901001

Geological exploration and extraction of minerals containing, inter alia, nuclear and radioactive substances, production of natural uranium concentrate

http://www.armz.ru

Open Joint Stock Company Registrar R.O.S.T.

Registrar’s details:OGRN 1027739216757, INN 7726030449

Address: 18 Ul. Stromynka Building 13, Moscow

Telephone / fax (495) 771-73-36

Victoria VasilievaDirector of Corporate CommunicationsARMZ Uranium Holding Co. (JSC Atomredmetzoloto)22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004Tel.: +7-495-508-8808 ext. 295Fax: +7-495-508-8810E-mail: [email protected]

Artem GorbachevPress Secretary of PR GroupARMZ Uranium Holding Co. (JSC Atomredmetzoloto)22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004Tel.: +7-495-508-8808 ext. 241Fax: +7-495-508-8810E-mail: [email protected]

www.armz.ru169

fEEDbACK fORM

Feedback: your opinion is important to usYou have now read the JSC Atomredmetzoloto Annual Report for 2010. We are interested in learning your opinion about it. We would be grateful if you could help us improve the quality of the Company’s reporting by responding to a few simple questions.

Did you find relevant information in the Report on issues that con-cern you?

1.

Yes

No

Just browsed the Report

Please tell us which items were particularly important, and which items were missing?

will the information presented in the JSC Atomredmetzoloto Report facilitate improved interaction with the Company?

2.

Yes

No

Not applicable

Please tell us which information was particularly useful, and which was missing?

which sections of the Report were of most interest to you?3.

which sections of the Report interested you least of all?4.

how do you assess the reliability and objectivity of our Report?5.

170JSC ATOMREDMETzOlOTO 2010 Annual Report

Did the fact that the Report was certified by an independent audit company influence your assessment of its reliability?

6.

will you require the next JSC Atomredmetzoloto Annual Report?7.

Yes

No

in what form would you like to see the next Report?8.

what recommendations would you like to make to improve the activities of the holding Company and its subsidiaries and affiliated companies?

9.

Other comments10.

Please indicate to which group you belong (please do not tick more than two).

11.

ShareholderInvestorContractor/supplierIndustry companyIndustrial consumerSME representativeFederal government representativeRegional government representativeLocal government representativeEnvironmental NGO representativeRepresentative of business association or other public bodyMediaEmployee of ARMZ Uranium Holding Co.Employee of subsidiary or affiliated company of ARMZ Uranium holding Co.Other (please specify)

if you would like to receive a response to your comments, please leave your contact details (name, mailing address with postal index, telephone number and e-mail address) and we will definitely contact you.

12.

ThANk yOU!

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www.armz.ru171

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172JSC ATOMREDMETzOlOTO 2010 Annual Report

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174JSC ATOMREDMETzOlOTO 2010 Annual Report

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176JSC ATOMREDMETzOlOTO 2010 Annual Report

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