alrosa€¦ · alrosa's diamond inventories were up 36% qoq alrosa's diamond inventories...

ALROSA

MOSCOW, 8 NOVEMBER 2019

Q3&9M 2019 IFRS RESULTS

DISCLAIMER

For notes:The below applies to the presentation (the “Presentation”) following this important notice, and you are therefore advised to read this

important notice carefully before reading, accessing or making any other use of this Presentation.

This Presentation contains statements about future events and expectations that are forward-looking statements. Any statement

herein (including, without limitation, a statement regarding our financial position, strategy, management plans and future objectives)

that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and

other factors which may cause ALROSA’s actual results, performance or achievements to be materially different from any future

results, performance or achievements expressed or implied by such forward-looking statements. Past performance should not be

taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future

performance. The information and opinions contained in this document are provided as at the date hereof (unless indicated

otherwise) and are subject to change without notice. ALROSA assumes no obligation to update, supplement or revise the forward-

looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

This Presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an

offer to buy or acquire any securities in any jurisdiction or an inducement to enter into any investment activity. The contents hereof

should not be construed as investment, legal, tax, accounting or other advice, and investors and prospective investors in securities of

any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial

condition of such issuer and the nature of the securities and consult their own advisers as to legal, financial, tax and other related

matters.

This Presentation has not been independently verified. No representation or warranty or undertaking, express or implied, is made as

to the accuracy, completeness or fairness of the information or opinions contained in this Presentation. None of ALROSA nor any of

its shareholders, directors, officers or employees, affiliates, advisors, representatives nor any other person accepts any liability

whatsoever for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection

therewith. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its

completeness, accuracy or fairness.

This Presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or

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Presentation and/or such information may come are required to inform themselves thereof and to observe such restrictions.

Some figures included in this Presentation have been subject to rounding adjustments.

By reviewing and/or attending this Presentation you acknowledge and agree to be bound by the foregoing.

DIAMOND MARKET OVERVIEW

3

7 9 11 10 8 10 12

26 31 25 3024

30 23

26 30

81 7733

40 3541

3239 35

108 107

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

ALROSA Other

8.6 9.2

6.8

9M '17 9M '18 9M '19

Source: Company data and analysis.1. Data based on results of ALROSA and other diamond producers with a market share totalling c. 75% in 9M 20192. ALROSA, De Beers, Rio Tinto, Catoca, Petra Diamonds, Mountain Province, Stornoway Diamond

Decrease in global diamond output1

9M’19 miners2 diamond sales were 26% down

$ bn

m ct 9M ‘19 global output down 1% yoy, driven by

DeBeers and Rio Tinto

Stocks of polished diamonds at mid-stream began

to decline as supply of rough decreased faster than

demand for polished

9M ‘19 industry-wide diamond sales were -26% yoy

as mid-stream and retail was actively destocking

-1%

-11%

-26%

ALROSA PRODUCTION (1/2)

4

17.9 20.116.1 17.0 19.7 21.6 18.0

54.159.2

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

5.7 10.1 17.2

7.5 6.4 10.517.2

33.0 34.0

1.30 0.84 0.61

1.38 1.23 0.93 0.71 0.80 0.87

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

Grade, ct/t

Source: Company data and analysis.1. ROM – run of mine

Q3 run-of-mine ore was up by 12% yоy

Ore and sands processing goes up 64% qoq

m t

m m3 Q3‘19 ROM1 ore seasonally down by 17% qoq; +12%

yoy was due to the launch of production at the

V.Munskoye deposit and implementation of design

solutions at the Arkhangelskaya pipe (Severalmaz)

(cutback for pit deepening).

9M‘19 ROM ore was 9% yoy up to 59.2 m m3, mostly

due to V.Munskoye deposit launch (Oct’18)

Q3‘19 processed feedstock seasonally grew by 64%

qoq (unchanged yoy).

Ore and gravels processing in 9M ‘19 increased 3% yoy

to 34.0 mt on ramp-up of production at V.Munskoye

deposit and increased productivity at Nyurba Division

and Udachny’s processing plants.

Q3 ‘19 average grade was 16% up yoy on better

grades at Botuobinskaya pipe. A qoq decrease of 24%

was due to seasonality.

-17%

+9%

ALROSA PRODUCTION (2/2)

5

5.3 4.1 3.86.5 6.1 5.6 5.2

2.02.1

1.0

3.31.5 2.2

1.60.2 2.3 5.8

0.5

0.21.9

5.4

13.1 16.9

5.1

5.3

8.2

7.5

7.48.5

10.5 10.3

7.89.7

12.1

26.4

29.7

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

Open pit Underground Alluvials

Source: Company data and analysis.

Diamond production was up by 24% qoq

m ct Q3 ’19 diamond output grew 24% qoq to 12.1 m

cts, mostly due to seasonal activity at alluvial

deposits.

Q3 ’19 output was up 15% yoy driven by:

o launch of production at the V.Munskoye deposit

o increase in higher-grade ore processing at the

Botuobinskaya pipe (Nyurba Division)

9M ‘19 diamond output grew 12% yoy driven by:

o +3.4 m cts - increase in ore processing at the

Botuobinskaya pipe and productivity gains

o +1.2 m cts - launch of production at V.Munskoye

deposit

o +0.7 m cts – growth from the Udachnaya underground

mine as a result of a scheduled ramp-up to design

capacity.

Share

25%

18%

57%

+24%

+12%

INVENTORIES

6

17.5 18.312.3 11.7 15.5 17.0 14.3 15.9

21.7

Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

56% 59% 64%

27% 17%25%

17% 24% 11%

15.5 15.9 21.7

Q3 '18 Q2 '19 Q3 '19

Other

Work in progress

Finished goods

Source: Company data and analysis.1. Diamond inventories at mining and processing divisions

ALROSA's diamond inventories were up 36% qoq

ALROSA's diamond inventories structure

m ct

m ct Q3 ‘19 diamond inventories grew by 5.7 m cts

(+36% qoq) to 21.7 m cts as output was seasonally

up (+24% qoq), while sales were down (-24% qoq)

on lower demand

40% yoy growth in Q3 inventories (+6.2 m cts)

driven by lower sales (-37% yoy) caused by softer

demand, while output increased (+15% yoy)

attributed to the launch of production at the

V.Munskoye deposit in Q4 ’18 and the growth of

diamond production at the Botuobinskaya pipe on

the back of both the increased higher-grade ore

processing and the roll-out of the operational

efficiency improvement programme.

+36%

+40%

+36%

1

ALROSA ROUGH DIAMOND SALES

7

10.1 6.3 4.7 5.3

7.9 6.0 4.3

3.2

2.7 2.0

3.7 2.7

2.32.1

21.1 18.2

8.07.0

13.4

9.0 6.7

9.0 10.6

8.36.4

29.125.3

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

Gem-quality diamonds Industrial quality diamonds

1,5561,034 933 802 969 780 585

26

23 1622

1816

16

3,5232,334

65

51

1,582

1,057 949824

988796

601

3,588

2,386

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 9M '18 9M '19

Gem-quality diamonds Industrial quality diamonds


Q3 diamond sales went down by 23% qoq (-5% yoy)

Q3 diamond sales by value were down by 24% qoq

$ mn

m ct Q3 ‘19 sales down by 23% qoq (-5% yoy) to 6.4 m cts,

as customers were destocking (qoq decline was also

due to seasonally lower buying activity)

Q3 ‘19 sales in USD decreased by 24% qoq ($601 m)

due to 23% qoq sales decline in carats partially offset

by higher average realized price (see next slide)

Q3 ‘19 sales declined 37% yoy on lower average

realized price (incl. like-for-like impact) and lower sales

volumes (-5%)

9M’19 sales in USD were $2.4 bn on lower sales

volumes (-13%) and prices (both due to mix and like-

for-like factors)

-13%

-34%

Share

28%

72%

Share

2%

98%

-23%

-24%

PRICE DYNAMICS

8

2% 0.3%

(2%)

3% 2% 2%

(2%) (3%) (2%) (3%)

1.00 1.02 1.02 1.01 1.02 1.04 1.06 1.04 1.01 1.00

0.96

Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

LFL price index change LFL price index

0.3% 22%

3%

11% 6% 22%

(23%) (19%)

5% 4%

117138

169139

154 164199

153123 130 135

Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

Price change

Source: Company data and analysis.1. Average index change of like-for-like diamonds prices (excl. +10.8 carats)2. Average realized prices (sales revenue divided by sales volumes in carat terms) are also impacted by changes in the product mix throughout the reported period.

Price index for gem-quality diamonds was down by 3% qoq

Average realized price2 for gem-quality diamonds was up by 5% qoq

$/ct

Q3’19 like-for-like price index (LFL PI) was -3.1%

qoq,

9M LFL PI was down ~7.5% due to lower demand

from mid-stream and limited access to affordable

financing for mid-stream in India

Q3’19 average realized prices (ARP) for gem-quality

diamonds rose 5% qoq to $135/ct due to a lower

share of small-size diamonds

Q3’19 ARP for GEMs was 32% yoy down due to:

o LFL PI decrease of 9.2% yoy (9M’19: -7.5%)

o Mix effect as in Q3’19 share of small-size stones in sales

dropped from 83% to 76%

1

FINANCIAL HIGHLIGHTS

9

70 57 4640 25 21

57%

44% 46%

Q3 '18 Q2 '19 Q3 '19

Revenue EBITDA EBITDA margin

1.9x 1.9x1.7x

0.5x0.7x

0.4x 0.3x 0.3x0.6x

2013 2014 2015 2016 2017 2018 Q1 '19 Q2 '19 Q3 '19

Source: Company data and analysis

Q3 EBITDA margin amounted to 46%

Leverage remains low

Net debt/LTM EBITDA, x-times

RUB bn Q3 ‘19 revenue came at RUB 46 bn (-20% qoq) due

to a 23% decline in diamond sales in carats.

35% yoy decrease due to decrease in both sales

volumes and like-for-like prices.

Q3 ‘19 EBITDA was RUB 21 bn (-16% qoq and -47%

yoy) largely due to top line decrease.

Q3 ‘19 EBITDA margin was up to 46% (+2 p.p. qoq,

-11% p.p. yoy)

Q3 ‘19 net income was up by 1% qoq to RUB 14 bn

(-56% yoy)

Q3 ‘19 FCF amounted to RUB 2.5 bn

Net debt / LTM EBITDA was up to 0.6x

GEM-QUALITY DIAMONDS REVENUE DRIVERS

10

5038

3 0.1(14) (2)

Q2 '19

Revenue

Sales

volume

Sales mix Pricing

like-for-like

FX Q3 '19

Revenue

61

38

(5)

(14) (4) (1)

Q3 '18

Revenue

Sales

volume

Sales mix Pricing

like-for-like

FX Q3 '19

Revenue


Q3 gem-quality rough diamond revenue bridge (qoq)

Q3 gem-quality rough diamond revenue bridge (yoy)

RUB bn

RUB bn Q3 ‘19 gem-diamond sales were down by 25% qoq

to RUB 38 bn driven by:

o (-) 28% decrease in sales volumes (in carats)

o (+) normalized product mix

o (-) softer like-for-like prices (av. index change – -3.1%)

o (+) positive FX rate impact as RUB weakened

39% yoy decrease driven by:

o (-) 8% reduction in sales volumes (in carats)

o (-) weaker product mix

o (-) softer like-for-like prices (av. index change – -9.2%)

o (-) FX rate impact on stronger RUB

1.8 1.4 1.1

5.34.7 6.3

3.94.3 3.0

1.5 1.7 1.6

1.1 1.6 1.2

1.4 1.2 1.2

15.1 14.9 14.3

Q3 '18 Q2 '19 Q3 '19

Other taxes and payments

Social expenses

Exploration expenses

SG&A

Extraction tax and royalty

Other non-production costs

COSTS DYNAMICS AND BREAKDOWN

11

Source: Company data and analysis.1. Mainly includes cost of diamonds for resale and other non-production costs

Total costs down by 23% qoq

RUB bn Q3 ‘19 total costs were down by 23% qoq to RUB 24.7 bn

mostly due to decrease of sales in carats by 23%

Q3 ‘19 total costs were down by 18% yoy mostly due to

decrease of sales in carats by 5%

Non-production cost adjustment for diamonds stocks change

m ct RUB bn

(19.8)

(1.0)

(10.9)

Q3 '19

Q2 '19

Q3 '18

Non-production costs adjuctment for movements of

diamonds in inventory

5.7

1.6

3.8

Q3 '19

Q2 '19

Q3 '18

Rough diamond inventories change

30.132.2

24.7

Tota

l co

sts

7.1

(3.0)

7.6

0.3

0.2

0.4

10.0

12.2

11.7

2.2

3.8

3.83.6

3.1

3.92.7

2.0

2.626.0

18.3

30.2Services and transportation

Materials costs

Fuel and energy

Labor costs

Other production costs

Movement of ore and sands Pro

duct

ion c

ost

N

on-p

rod

uct

ion c

ost

1

PROFITABILITY ANALYSIS

12

2521

3 0.12

(8)(2)

Q2 '19

EBITDA

Sales

volume

Sales mix Pricing

like-for-like

FX Other Q3 '19

EBITDA

12978

9

(11)

(35) (7) (6)

9M '18

EBITDA

Sales

volume

Sales mix Pricing

like-for-like

FX Other 9M '19

EBITDA

Source: Company data and analysis.1. Mainly includes G&A expenses decrease due to reduction of wages, salaries and other staff costs2. Mainly includes impact of inflation (-RUB 3,7 bn)

Q3 EBITDA – key drivers (qoq)

9M EBITDA – key drivers (yoy)

RUB bn

RUB bn Q3 ‘19 EBITDA was down by 16% qoq driven by:

o (-) 23% decrease in volumes: net impact -RUB 8 bn (revenue

decline: -RUB 14 bn, COGS reduction: +RUB 6 bn)

o (+) sales mix +RUB 3 bn

o (-) like-for-like prices: -RUB 2 bn

o (+) FX rate: +RUB 0.1 bn

o (+) other factors: net impact +RUB 2 bn

9M ‘19 EBITDA was down by 40% yoy driven by:

o (-) 13% reduction in carat sales: net impact -RUB 11 bn

(revenue decline: -RUB 32 bn, COGS reduction: +RUB 20

bn)

o (-) sales mix: -RUB 35 bn

o (-) like-for-like prices: -RUB 7 bn

o (+) FX rate: +RUB 9 bn

o (+) other factors: net impact -RUB 6 bn

1

2

CAPEX

13

3.34.8 5.9

3.2 2.4 2.81.6

1.0

1.62.1

3.6

1.2 1.52.5

0.6

0.7

0.8

0.2

0.40.3 0.6

4.8

7.28.8

7.0

3.9 4.5 4.6

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

Infrastructure

Equipment

maintenance

Mining capacity

38.2 36.1 34.2 31.826.9 27.8

23.0 26.1 28.122.4

15.8 17.9

2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024ESource: Company data and analysis.

Q3 capex remains flat qoq

Annual capex dynamics

RUB bn

RUB bn Q3’19 capex was up by 2% qoq to RUB 4.6 bn

-47% yoy (down by RUB 4.1 bn) mainly due to

lower capex in V.Munskoye deposit by 92% yoy

(down by RUB 4.0 bn)

2019 capex outlook was reduced to RUB 23.0 bn

+2%

DEBT POSITION

14

3,0622,347

1,622 1,535 1,646 1,415 1,631

2,781

1,374 1,494971 599 561

978

1.7x

0.5x 0.7x0.4x 0.3x 0.3x

0.6x

2015 2016 2017 2018 Q1 '19 Q2 '19 Q3 '19

Total Debt Net Debt Net Debt / LTM EBITDA, x

653

3,635

28

496 510

13 8

501

4,288

Q3 '19 2019E 2020E 2021E 2022E 2023E 2024E

Eurobonds

Bank loans

Source: Company data and analysis.1. Including operating lease obligation (RUB 5.0 bn) starting from 2019Y 2. Based on EBITDA and Net Debt denominated in rubles3. Excluding operating lease obligation (RUB 5.0 bn) and amortization of discount4. Or RUB 29.8 bn based on USD/RUB FX rate of 62.5 RUB/USD

Sound financial profile

Liquidity position Debt3 repayment schedule

$ mn $ mn

$ mn Total debt in Q3 increased by 15% qoq or by $0.2 bn to $1.6 bn

Q3 ‘19 liquidity down by 24% qoq to $0.7 bn due to cash payment

of H2’18 dividends of $0.5 bn4

Net debt up by $0.4 bn to $978 m (+74% qoq)

Net debt/LTM EBITDA up to 0.6x on lower LTM EBITDA and Net debt

growth

In Q3 ‘19 a 2Y $200 m bank loan raised

2.72.9

2.1

1.41.1

2.82.4

2015 2016 2017 2018 Q1 '19 Q2 '19 Q3 '19

Weighted average debt maturity decreased

years

2

Cash and

Equivalents

(incl. deposits)

Credit Lines

1

DEBT ANALYSIS

15

35.463.0

29.8

1.3

(2.5)

(0.8) (0.1)

Net Debt

Q2 '19

FCF Dividends paid Net interest FX Other Net Debt

Q3 '19

Source: Company data and analysis.1. Including finance lease liabilities2. Mainly includes income from grants, operating lease obligation change, etc.

Q3 Net Debt1 bridge

Q2 Total Debt1 bridge

RUB bn

RUB bn In Q3 ‘19 net debt in RUB was down by 74% qoq to

RUB 63.0 bn due to:

o (-) free cash flow (-RUB 2.5 bn)

o (+) dividends paid (+RUB 29.8 bn)

o (-) net interest expense (-RUB 0.8 bn)

o (+) FX rate (+RUB 1.3 bn)

o (-) other factors (-RUB 0.1 bn)

In Q3 ‘19 total debt in RUB increased by 18% qoq

to RUB 105.1 bn due to:

o (+) 2Y $200 m bank loan and bank overdraft of RUB

14.8 bn received

o (-) bank overdraft of RUB 13.8 bn repaid

o (+) FX rate (+RUB 1.3 bn)

o (+) change of operating lease obligation

0.3x

2

0.6xNet Debt/

LTM EBITDA

89.2105.1

28.11.3 0.2

(13.8)

Total Debt

Q2 '19

Loan received Loan repaid FX Change of operating

lease obligation

Total Debt

Q3 '19

FREE CASH FLOW

16

25.1

21.1

7.1

2.5

0.2

(4.1)

(11.9)

(5.7)

(4.6)

Q2 EBITDA

Change in profitability

Q3 EBITDA

Changes in NWC

Income tax

Other

Operating cash flow

Capex

Free cash flow


EBITDA to Free cash flow bridge

RUB bn Q3 ‘19 FCF increased to RUB 2.5 bn (vs. RUB 2.4 bn

in Q2) mainly due to:

Profitability decline by 16% qoq (-47% yoy)

Working capital growth by RUB 11.9 bn or +13% qoq

(+21% yoy) mainly due to:

o (+) increase of diamond inventories by RUB 19.2 bn due

to excess production over sales volumes

o (-) seasonal decrease of ores and sands inventories by

RUB 7.6 bn primarily on alluvial deposits

o (+) seasonal growth of mining and construction materials

by RUB 4.4 bn due to the navigation period

o (-) decrease of trade and other receivables by RUB 4.0

bn due to lower domestic diamond sales and seasonal

decrease of other receivables

DIVIDENDS

17

10.8 15.4

65.8

38.643.7

(H1'18)28.3

(H1'19)

30.3

(H2'18)

1.47 2.09

8.93

5.24

10.04

3.84

2014 2015 2016 2017 2018 2019

10.8 10.8 15.4

65.738.0

(12M’17)29.81

(H2’18)

42.71

(H1’18)

2014 2015 2016 2017 2018 2019

Source: Company data and analysis.1. Dividends paid less than dividends accrued due to exclusion of dividends for treasury shares.

Dividend accruals

Dividend payments

RUB bn

RUB bnRUB per share

On 26 June the AGM approved H2’18 dividends - 100% of

FCF (RUB 30.3 bn or RUB 4.11 per share)

On 30 September the EGM approved H1’19 dividends -

100% of FCF (RUB 28.3 bn or RUB 3.84 per share)

ALROSA's dividend policy adopted in 2018: FCF-linked with

the payout ratios depending on the level of

Net debt/LTM EBITDA ratio

35%

50%

50% 50%

76%

95%76%

70%

26%

37%

59% 52%

70%

100% 100%

2013 2014 2015 2016 2017 H1 '18 H2 '18 H1 '19

Payment ratio based on IFRS net income Payment ratio based on FCF

Dividend payout ratios

Market outlook

Diamond jewelry sales in 2019, following a several consecutive years of growth, are expected to stabilize at around 2017 levels

(down from all-time record high of 2018)

Market started to gradually restore supply and demand balance in H2’19 – supply of rough diamonds was quickly adjusted,

while polished stocks at mid-stream are expected to decrease as season approaches

Long-term fundamentals for the jewelry demand growth remain strong in both Developed and Emerging markets

Company performance

2019 capex outlook revised down from RUB 28 to 23 bn with no effect on operational performance

2019 production outlook is expected to slightly exceed our previous guidance of 38 to ~38.5 m ct driven by efficiency gains

2020 production outlook is expected to decrease to 34.3 m ct (see p. 20)

2019 sales are expected to come lower than planned to 32-33 m ct due to market conditions. ALROSA’s “price over volume”

strategy offers more flexibility and accuracy when it comes to defining sales, hence holding back pressure on the market

OUTLOOK


18

APPENDIX

UPDATED 2020 PRODUCTION OUTLOOK

20


2020 production outlook

m ct 2020 diamond production outlook was decreased

by 11% (-4.4 m ct) to 34.3 m ct mostly due to:

o processing of kimberlites with a lower grade at the

Botuobinskaya pipe

o conservation of several alluvial deposits at Almazy

Anabara and reduction of sands processing on the

other deposits of this asset, as well as reduction of ore

processing at the Aikhal underground mine on the back

of cost control

o challenging mining and geological conditions at the

International underground mine

3.6 3.9 4.2 4.2

6.2 4.96.0 6.0

0.2 1.82.0 1.92.5

3.7

4.6 4.93.42.9

2.8 1.95.4

5.1

5.13.3

1.5

4.1

3.7

1.7

9.0

6.55.4

7.2

4.85.1 4.9

3.1

36.738.0 38.7

34.3

2018 2019E 2020E

(old outlook)

2020E

(new outlook)

Other

Jubilee

Botuobinskaya

Almazy Anabara

International

Udachny

Verkhne-Munskoye

Nyurbinskaya

Severalmaz

Udachny

UG mine

VM1

deposit

Zaria

pipe

Maiskaya

pipe

VG2

deposit

Type of mining Underground Open-pit Open-pit Open-pit Alluvials

Production start 2014 2018 2020 2025 2024

Ramp-up 2021 2020 2021 2027 2025

Target ore output pa, m t 4.0 3.0 1.2 0.3 1.1

Target production pa, m ct 5.6 1.8 0.4 1.2 0.4

Total CAPEX, RUB bn 63.9 22.3 8.4 5.6 2.3

Invested share 86% 82% 94% 4% 0%

Resource base3, m ct 207.6 40.4 7.1 12.7 4.7

KEY INVESTMENTS PROJECTS

Source: Company data1. Verkhne-Munskoye deposit2. Vodorazdelnye Galechniki deposit3. Diamond mineral resources in accordance with the JORC Code as at 1 July 2018

21

Yakutsk

Mirny

Udachny

Aikhal

1 2 3 4 5

1

2

3

4

Nyurba5

1.0 0.7

0.9 1.2

1.3 1.7

2.43.3

2.91.3

1.2

3.99.7

12.1

Q2 '19 Q3 '19

Almazy Anabara

Aikhal Division

Nyurba Division

Udachny Division

Severalmaz

Mirny Division

DIAMOND PRODUCTION BY ASSETS

22


Diamond output

m ct Key drivers of diamond production increase in

Q3 ‘19 (+24% qoq) mainly due to seasonal return

to production at alluvial deposits

Drivers affecting Q3 ‘19 performance:

o Almazy Anabara - seasonal return to production

o Nyurba Division – output was up by 39% due to higher

share of high-grade Botuobinskaya ore treated at

processing plant No. 16 and operational efficiency

improvement programme rolled out across all process

stages, as well as rise of sands processing at alluvials on

the back of higher capacity and longer operation of

processing plant No. 15

(55%)

30%

25%

(29%)

+24%

39%

3.2x

91%

18%26%

63%

96%

9%

82%74%

37%

4%

Revenue Cost of sales Capex Cash and cash

equivalents

(incl. bank deposits)

Total

debt

RUB

USD

FX RATE

23


Financial metrics breakdown by currency

% of metric's total ALROSA is an exporter with 91% of revenue

denominated in USD

Major portion (74%) of costs and capex is

denominated in RUB, 96% of the Company’s debt

portfolio is denominated in USD to create a natural

hedge against FX risks

ALROSA's financial sensitivity analysis shows that a

change in the USD exchange rate by +/- 1

RUB/USD leads to the following change in metrics:

o revenue – +/-1.39%

o cost of sales – +/-0.28%

o EBITDA – +/-2.80%

o capex – +/-0.39%

OPERATING CASH FLOW AND CAPEX

46 41

28 21

25

16 21

14

30 26

7 2

73 3

(5)

(7)

(9)(7)

(4)

(5) (5)

Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19

OCF CAPEX FCF21

Operating cash flow and capex dynamics

RUB bn

Source: Company data and analysis.1. OCF – operating cash flow2. FCF – free cash flow is defined as OCF net of capex in the core business

THANK YOU!

SERGEY TAKHIEVHEAD OF CORPORATE FINANCEM: +7 985 760 55 74E: [email protected]

RUSSIA, 115184MOSCOW24 OZERKOVSKAYA EMB.

DMITRY BYALOSHITSKIYCORPORATE FINANCEM: +7 915 113 32 04E: [email protected]

alrosa€¦ · alrosa's diamond inventories were up 36% qoq alrosa's diamond inventories...

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