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ALROSA Announces Price Range for International Offering

  ALROSA Announces Price Range for International Offering

Business Wire

MOSCOW -- October 14, 2013

ALROSA:

    NOT FOR DISTRIBUTION IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

These materials are not for distribution, directly or indirectly, in or into
the United States (including its territories and possessions, any State of the
United States and the District of Columbia). These materials are not an offer
or solicitation to purchase or subscribe for any securities in the United
States. Securities may not be offered or sold in the United States absent
registration with the United States Securities and Exchange Commission or an
exemption from registration under the U.S. Securities Act of 1933, as amended
(the “Securities Act”). It is not intended that any part of the offering will
be registered in the United States or that a public offering of securities
will be conducted in the United States.

This document is an advertisement and is not a prospectus for the purposes of
Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU,
to the extent implemented in any relevant Member State and any relevant
implementing measure in the relevant Member State).

In any EEA Member State that has implemented the Prospectus Directive, this
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expression “Prospectus Directive” means Directive 2003/71/EC (and amendments
thereto, including Directive 2010/73/EU, to the extent implemented in any
relevant Member State) and includes any relevant implementing measure in the
relevant Member State.

This communication is only being distributed to and is only directed at (i)
persons who are outside the United Kingdom or (ii) investment professionals
falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth
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described herein are only available to, and any invitation, offer or agreement
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only with, relevant persons. Any person who is not a relevant person should
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Information contained herein is not an offer or an invitation to make offers,
sell, purchase, exchange or transfer any securities in Russia or to or for the
benefit of any Russian person or any person in Russia, and does not constitute
an advertisement of any securities in Russia.

           ALROSA ANNOUNCES PRICE RANGE FOR 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 the price range for its offering (the “Offering”) of existing shares
in the form of ordinary shares (the “Shares”) that are 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 price range for the Offering has been set at between RUB35 and RUB38
    per Share.
  *The Offering consists of a sale of the Shares by the following
    shareholders:

       *The Russian Federation will offer up to 515,547,593 Shares,
         representing approximately 7 per cent of 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 of 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 of the
         Company’s share capital.

  *In connection with the Offering, VTB Capital plc, acting as a stabilising
    manager, may procure the purchase, for stabilisation purposes, of the
    Shares on MICEX SE or otherwise in a total number of up to 10 per cent of
    the number of the offer shares within 30 days of the announcement of the
    offer price. Sunland Holding SA, a wholly-owned subsidiary of ALROSA, has
    granted the stabilising manager an option to require Sunland Holding SA to
    purchase the Shares held by the stabilising manager as a result of
    stabilisation transactions in total number of up to 10 per cent of the
    number of the offer shares at the offer price.
  *The announcement of the offer price is expected on 28 October 2013.
  *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 coordinator 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 plc are joint global coordinators
    and joint bookrunners of the Offering. Renaissance Capital is a joint
    bookrunner of the Offering.

Ilya Yuzhanov, Chairman of the Supervisory Board, commented:

“The Company looks forward to meeting Russian and international institutional
investors and updating them on its business and development strategy. As the
world's largest producer of rough diamonds, ALROSA is well placed to benefit
from the growing demand for diamonds on the international market.

Reflecting the strength of ALROSA’s financial position, the Supervisory Board
intends to recommend to the Company’s shareholders to increase the minimum
level of dividend payments to 35% of net profit under IFRS, commencing with
the annual dividend payment for the full year of 2013, and to implement
relevant changes in the Company’s dividend policy. Our plans to consistently
increase cash flow and execute our strategy at each stage of the Company’s
development create a strong platform for rewarding our shareholders and drive
higher return on investment.”

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

“We are confident that the investment community will appreciate ALROSA’s
offering, which reflects the unique role of the Company in the global diamond
market, its ability to generate positive cash flow, the industry's leading
reserve base and its attractive growth prospects.

We support the Company in its initiative to increase the minimum level of
dividend payments to 35% of net profit under IFRS. Higher dividend payments
are beneficial to the State, minority shareholders and the Company, and should
be positively received by the stock market.”

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

“We are pleased to see the next big step in the scheduled partial
privatisation of ALROSA.

ALROSA is the largest contributor to the budget of Yakutia. As one of the
major shareholders of ALROSA, we have previously suggested increasing the
minimum level of dividend payment, and we now fully support the Company’s
proposal to increase the dividend payments, commencing with the annual
dividend payment for the full year of 2013.

ALROSA’s history is closely associated with Yakutia. We are pleased that due
to the Offering more people in many of the world’s financial centres will
learn about both the Company and Yakutia.”

About ALROSA

ALROSA is the largest diamond mining company in the world based on rough
diamond 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. The Company’s 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 prepared by Micon International, mineral industry consultants. In
addition, ALROSA owns a 32.8 per cent interest 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. The Company’s
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.

Under IFRS, ALROSA’s revenue was RUB 82,229 million in the six months ended 30
June 2013, RUB 76,529 million in the six months ended 30 June 2012 and RUB
150,880 million in 2012). Under IFRS, the Company’s profit amounted to RUB
14,616 million in the six months ended 30 June 2013, RUB 16,191 million in the
six months ended 30 June 2012 and RUB 33,634 million in 2012.

As of 14 October 2013, the Company’s largest shareholders include the Russian
Federation that holds approximately 50.9 per cent interest and Yakutia, that
together with OJSC RIC Plus, hold approximately 32.0 per cent interest.

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
London
Leonid Fink, Tony Friend, Galyna Kulachek
+44 207 457 2020
Moscow
Anton Karpov, +7 (495) 660 05 91
or
ALROSA Media Centre
+7 (495) 620 92 50, ext. 13-21
smi@alrosa.ru
ALROSA Investor Relations Centre
+7 (495) 745 58 72
IR@alrosa.ru