Executive Committee Meeting

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On March 17, 2010 the ALROSA Executive Committee held its regular meeting under the chairmanship of President Fyodor Andreev in Mirny, Republic of Sakha (Yakutia).

The Executive Committee pre-approved and recommended for approval by the Supervisory Board a draft annual report, financial statements, including the P&L statement, and distribution of net profits for 2009.

The draft annual report contains an overview of the situation in the diamond sector in 2009. In H1 2009 ALROSA actually suspended all of its rough diamond sales to the market, with most of its supplies made to the Gokhran of the Russian Federation. Direct sales to the market were resumed only in July 2009.

Subsequently ALROSA successfully implemented a set of measures to boost sales. As a result, the aggregate diamond sales of the ALROSA Group amounted to USD 2,212.6 m. The net profit for the reporting period totaled RUB 2,348.4 m.

In spite of the recession in its sector, ALROSA managed to preserve jobs and maintain its production levels, and produce in 2009, in the aggregate, 34 m carats of rough diamonds. This enabled the Company to rank first in the world in terms of physical volumes of diamond production.

Exploration in 2009 was carried out in 50 sites throughout six diamond-bearing areas in Western Yakutia and four areas of the Russian North-West. For financing prospecting and exploration works RUB 2,762.6 m was allocated.

Capital investments amounted to RUB 11,804.4 m, with RUB 7,710.8 m of this sum spent on construction and installation of new production capacities of the underground mines. In August Phase 1 of the first start-up facility of the Mir underground mine, with an annual capacity of 150 thousand tons of ore. Also Phase 2 of the second start-up facility of the Aikhal underground mines, with an annual capacity of 250 thousand tons of ore.

The Executive Committee proposals concerning net profit distribution include allocations for capital expenditure, loan repayments and financial provisions in accordance with the Company’s Charter. Due to the difficult economic situation of ALROSA resulting from the downturn of the global rough and polished markets, the Company’s considerable capital expenditure on underground mine construction, and a need to substantially reduce its debt obligations, the Executive Committee resolved to propose that the Supervisory Board recommend to the General Meeting of Shareholders that no dividends be paid for 2009.

The implementation of the corporate program of energy saving measures in ALROSA structural divisions and subsidiaries for 2009 — 2011 was reviewed, and «The Regulations for the Procedure of Management of ALROSA Co. Ltd. Long-term Financial Investments» were approved.

The Executive Committee also considered some issues related to gratuitous assignment to the City of Lensk Municipality of some buildings in Lensk, including the complex of St. Innocent’s Church built by ALROSA in 2001.

This page was last updated on 17 March 2010 at 10.42