ALROSA Announces Intention to Proceed with International Offering

  ALROSA Announces Intention to Proceed with International Offering

Business Wire

MOSCOW -- October 2, 2013

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      ALROSA ANNOUNCES INTENTION TO PROCEED WITH INTERNATIONAL OFFERING

Open Joint Stock Company “ALROSA” (“ALROSA” or the "Company"), the world’s
largest diamond mining company based on rough diamond production volume, today
announces its intention to proceed with an offering (the “Offering”) of
ordinary shares (the “Shares”) admitted to trading on the “A1” quotation list
of CJSC MICEX Stock Exchange (“MICEX SE”), a subsidiary of the Moscow
Exchange, under the ticker symbol “ALRS”.

The Offering will be part of the on-going privatisation programme in the
Russian Federation and will involve the sale of the Shares by the Russian
Federation and the Republic of Sakha (Yakutia) ("Yakutia"), a subject of the
Russian Federation located in the North East of Russia, in which most of the
Company’s production assets are based. The following shareholders will offer
the Shares as part of the Offering:

  *The Russian Federation will offer up to 515,547,593 Shares representing
    approximately 7 per cent in the Company’s share capital.
  *OJSC RIC Plus, an open joint-stock company, wholly-owned by the Republic
    of Sakha (Yakutia), will offer up to 515,547,593 Shares representing
    approximately 7 per cent in the Company’s share capital.
  *Wargan Holdings Limited, a company organised under the laws of the
    Republic of Cyprus and controlled by ALROSA, will offer up to 150,237,555
    Shares representing approximately 2 per cent in the Company’s share
    capital. The net proceeds of the Offering to be received by ALROSA from
    the Shares sold by Wargan Holdings Limited will be used to repay existing
    debt.

The Offering consists of an offering of the Shares (i) in the Russian
Federation to institutional and retail investors (including through the
facilities of MICEX SE pursuant to the MICEX SE settlement procedures); (ii)
in the United States to certain persons reasonably believed to be qualified
institutional buyers (“QIBs”), as defined in, and in reliance on, Rule 144A
under the Securities Act; and (iii) outside the United States and the Russian
Federation to certain persons in "offshore transactions" as defined in, and in
reliance on, Regulation S under the Securities Act.

Branch office of private unlimited company Goldman Sachs (Russia) is acting as
agent (poverenny) in the name and on behalf of the Russian Federation in
connection with the sale of the Shares by the Russian Federation and is
providing services as organizer of the sale of the Shares by OJSC RIC Plus.
Goldman Sachs International, J.P. Morgan Securities plc, Morgan Stanley & Co.
International plc and VTB Capital are joint global coordinators and joint
bookrunners of the Offering. Renaissance Capital is a joint bookrunner of the
Offering.

Fedor Andreev, President of ALROSA, said:

“We are very excited to be offering ALROSA’s shares both domestically and
internationally. We expect that the Offering will help to reinforce our unique
position in the global diamond industry. We also expect that the Offering will
expand our access to the international capital markets and help to unlock the
value of the Company.

We will continue to focus on our core business of exploration, mining and sale
of rough diamonds, pursuing expansion opportunities in Russia and other
regions, such as Africa. We will also continue to improve operational
efficiency and to consolidate our position as the global leader in the diamond
mining industry. Corporate social responsibility will remain among key
priorities, especially in Yakutia where most of our operations and the
majority of our 39,000 employees are based.”

Olga Dergunova, Deputy Minister for Economic Development of the Russian
Federation and Head of the Federal Agency for State Property Management,
commented:

“This Offering marks an important milestone for both ALROSA and the on-going
privatisation programme in the Russian Federation. ALROSA has an important and
unique role in the international diamond market. It is also one of the largest
Russian mining companies and a key contributor to the local economy in its
areas of operation. The Company’s partial privatisation, including the
offering of the Shares through the facilities of MICEX SE, is a landmark step
in the implementation of the government’s policy of reducing the state’s role
in the economy.

We believe that high standards of corporate governance and transparency
required for publicly traded companies are important for improving the
efficiency and profitability of ALROSA’s business”.

Egor Borisov, President of Republic of Sakha (Yakutia), further commented:

“I am pleased to see the planned part-privatisation of ALROSA under the agreed
scheme, which will allow the company to benefit from its engagement with the
international capital markets while the state will retain a controlling stake.
ALROSA has historically been the backbone of the Yakutian economy, and it
remains one of the largest employers and contributors to the regional budget.

In Yakutia, we are very proud of the beauty of our land and the wealth of our
natural resources. I believe that the Offering of ALROSA shares will help to
promote our region to the international community. Yakutia is the world’s
leading diamond mining region and it has a lot more to offer”.

About ALROSA

ALROSA is the largest diamond mining company in the world based on production
volume. Its strategic focus is on mining and distribution of rough diamonds.
In 2012, ALROSA produced 34.4 million carats of rough diamonds, accounting for
27 per cent of the world’s rough diamond output based on carat volume,
according to Kimberley Process statistics. In the six months ended 30 June
2013, the Company produced 17.1 million carats of rough diamonds.

ALROSA operates six open-pit mines, three underground mines and thirteen
alluvial placers. Its principal mining and processing operations are located
in Yakutia, in the north-eastern part of Russia, and Arkhangelsk Region, in
the north-western part of Russia.

Based on published reserves, ALROSA has the largest JORC Code-compliant
reserve base and its JORC Code resource base is one of the largest in the
industry. As at 1 July 2013, the Company’s total JORC Code-compliant measured,
indicated and inferred resources amounted to 973.0 million carats (68.3%
measured and indicated) with an average grade of 1.38 carats/tonne; and its
JORC Code-compliant proven and probable ore reserves were 607.5 million carats
with an average grade of 1.34 carats/tonne, based on an independent expert
report on ALROSA’s resources and reserves by Micon International, mineral
industry consultants. In addition, ALROSA owns a 32.8 per cent stake in Catoca
Limited, which mines the Catoca kimberlite pipe in Angola.

ALROSA has its own marketing and distribution network with offices in all key
diamond distribution hubs across the world. In 2012, a majority of ALROSA’s
diamonds were sold through long-term contracts, with the rest sold mainly
through competitive sales (auctions and tenders) and spot sales. Its customer
base includes cutting/polishing companies, vertically integrated jewellery
groups and wholesalers.

In addition to its diamond mining and distribution business, ALROSA has some
non-diamond assets in adjacent business areas. The Company plans to gradually
dispose of selected non-diamond assets over the period of 2013-2020.

In the six months ended 30 June 2013, ALROSA’s revenue was RUB 82,229 million
(six months ended 30 June 2012: RUB 76,529 million; full year 2012: RUB
150,880 million); and its net income amounted to RUB 14,616 million (six
months ended 30 June 2012: RUB 16,191 million; full year 2012: RUB 33,634
million), according to its IFRS results.

As of 2 October 2013, the Company’s largest shareholders include the Russian
Federation with approximately 50.9 per cent stake and Yakutia, together with
OJSC RIC Plus, with approximately 32.0 per cent stake.

ALROSA is committed to on-going improvement in corporate governance. It has
prepared and published its audited annual IFRS financial statements since
2002, and produces its IFRS reviewed statements on a quarterly basis. The
Company’s Supervisory Board currently includes five independent non-executive
directors, according to Russian standards of independence.

Contact:

Media Enquiries:
College Hill
Leonid Fink, Tony Friend, Galyna Kulachek
+44 207 457 2020
or
ALROSA Media Center
+7 (495) 620–92–50, ext. 13-21
E-mail: smi@alrosa.ru
or
ALROSA Investor Relations Center
+7 (495) 620–92–50, ext. 11-81
E-mail: IR@alrosa.ru
 
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