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ROUNDING
Some numerical figures included in this Management Presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the
figures that preceded them.
{2}
3. Presenters
Eduard
Alekseenko
First Deputy Chief Executive Officer
Vasily
Rumyantsev
Investor Relations
{3}
4. Table of contents
I. KTK at a glance 5
II. Production growth prospects 6
III. Market overview 7
IV. Sales and distribution 11
V. Business strategy and investment program 16
VI. Operational and financial highlights 19
Contacts 26
Appendix Unaudited IFRS Financial Statements for 9M 2011 27
{4}
5. I. KTK at a glance
One of the fastest-growing thermal coal producers in Russia. Coal production history with open-pit mine breakdown
9.0 8.7
One of major suppliers of coal in Western Siberia. .
8.0
.
In 2011 the Company became 7th largest coal producer in Russia.(1) 6.8
7.0
. 6.2 3.7
Since its establishment in 2000, the Company has launched 3 open-pit mines and 6.0
. 5.5
mln tonnes
developed an extensive production and distribution infrastructure: 2.5
5.0
. 4.3 4.3 1.0 2.1
4.1
8.74 mln tonnes of thermal coal produced in 2011; .
4.0 1.8
3.1 1.9 1.5
1.8 1.6 1.4 1.4
100% high-quality grade “D” thermal coal under Russian classification; 3.0
. 2.3 2.4 0.4
2.0
. 1.3
402 mln tonnes of coal resources and 185 mln tonnes of proven and 3.2
2.3 2.4 2.7 2.6 2.6 2.7 2.6 2.7 2.8
probable reserves(2); .
1.0 0.4 1.3
Structural capacity(3) of 11 mln tonnes; 0.0
.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Developed railway network and facilities;
Всего Cheremshansky Vinogradovsky
Source: Company
Enrichment plant with 2 mln tonnes input capacity.
Key operating and financial indicators(1)
Utilization of modern and high-performance equipment fleet supporting efficient
low-cost production - US$17 per tonne of coal VS US$26 per. tonne average in US$ mln 2008 2009 2010
Russia.(4) Coal sales (mln tonnes) 7.5 7.4 8.5
incl. purchased coal 2.3 1.4 2.2
Diversified sales capabilities balanced between domestic market (4.21 mln tonnes
Revenue 344 336 466
sold in 2011) and export markets (6.45 mln tonnes sold in 2011).
% of growth 128% -2% 39%
One of the largest retail coal distribution networks in Western Siberia. EBITDA (2)
87 69 70
% margin 25% 20% 15%
Employing about 4,000 people.
Net Income 44 21 27
KTK shares are quoted on RTS and MICEX (ticker: KBTK). % margin 13% 6% 6%
66% of share capital is owned by the management (I. Prokudin - 50%, V. Danilov – Source: audited IFRS FS for 2009-2010 in which all amounts are presented in RUB, Company
16%), free-float – 34%. (1)- In the table US$ are converted from RUB using average Central Bank of the Russian Federation exchange rates
for each year (2008: 24.86 RUB/US$; 2009: 31.72 RUB/US$; 2010: 30.38 RUB/US$)
(1)- Metal Expert, January 2012 (2)- EBITDA for each period is defined as results from operating activities, adjusted for amortization and
depreciation, impairment loss and loss on disposal of property, plant and equipment
(2)- Run-of-mine coal, JORC classification;
(3)- Here and further the presentation structural capacity means the maximum production capacity that the Company believes could be achieved (taking into account projected stoppages for planned repair and maintenance) in an annual
period if the Company were able to process all the coal that could be mined using the Company’s existing mine facilities after acquisition of certain mining and transportation equipment in accordance with its current capital expenditure
program
(4)- AME Mineral Economics, Thermal Coal Cost Report 2010, for KTK – Company
{5}
6. II. Production growth prospects
Historical production volume and attainment of structural capacity (1)
The Company has established a well-developed production, logistics and distribution
infrastructure required to sustain production capacity of the existing mining facilities
12.0
. 11.0
– 11 mln tonnes per year 10.0 10.0
.
10.0 9.3
8.7
Modern high-performance mining and transportation equipment
mln tonnes
(Komatsu, P&H and BelAZ); .
8.0 6.8
6.2
5.5
100% of coal transported to the Russian Railway network by the Company’s .
6.0
4.1
own railway company (70 km of railroads, 6 railway stations, 12 mln tonnes .
4.0
p.a. capacity);
.
2.0
Own repair and maintenance services;
.
0.0
Own power infrastructure. 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F
The intra-year volatility of production and stripping ratio, driven by a seasonality of Source: Сompany
Russian coal market should become lower with the growth of export volumes.
Further expansion of the production will be based on existing facilities, licenses, and
Targeted production composition
infrastructure and will not require significant capital expenditure, other than into
additional mining and transportation equipment. The total value of Company’s
2011 2015(2)
investment program for 2011-2015 is RUB 8.6 bln (US$ 287 mln).
ROM coal (3) Enriched coal
In Q3 2010 the Company has commissioned its 1st
coal enrichment plant with 2 mln
tonnes annual capacity. Furthermore, in the period of 2012-2013, the Company plans 68%
to commission another 2 coal enrichment facilities that will increase the total 28%
installed annual capacity to 10.1 mln tonnes. Enriched coal 8% 8.7 mln 11.0 mln
tonnes tonnes
7%
64% 25%
ROM coal (3)
Sorted coal Sorted coal
Source: Сompany
(1) - subject to production on 3 current open-pit mines
(2) - subject to the attainment of the structural capacity by 2015 and CAPEX plan
(3) - Run-of-mine coal, ready for sale upon extraction without any processing {6}
8. III. Thermal coal: global industry overview and prospects (I)
Japan and China are expected to continue their dominance in the traded thermal coal market. Their combined market share of thermal coal demand is expected to remain
close to 40%.
Indonesia and Australia are expected to remain the major suppliers with the combined share of world thermal coal export of around 50%.
Export (mln tonnes) Import (mln tonnes)
Indonesia Japan
256 270 125 125 130
196
2007 2010 2013 2007 2010 2013
Australia China
119
100
141 162
112 45
2007 2010 2013
2007 2010 2013
Russia South Korea
97 91 88 90
76 66
2007 2010 2013 2007 2010 2013
Global thermal coal export split evolution Global thermal coal import split evolution
2010 2013 2010 2013
95Mt 96Mt 125Mt 130Mt
13% 12% 17% 17%
270Mt 271Mt 307Mt
65Mt 37%
256Mt 74Mt 35% 40%
9%
36% 10%
119Mt 100Mt
67Mt 78Mt 13%
17%
9% 10%
97Mt 91Mt 88Mt 92Mt
53Mt
13% 141Mt 12% 161Mt 65Mt 12% 55Mt 12%
7% 90Mt
20% 21% 9% 7% 12%
Indonesia Australia Russia South Africa Colombia Japan China South Korea Taiwan India RoW
Source: UBS Research {8}
9. III. Thermal coal: global industry overview and prospects (II)
Industry fundamentals outlook Thermal coal prices
Global traded thermal coal demand is forecasted to lift 2.4% in 2011 and
200
2-3% per year out to 756 mln tonnes in 2013:
India’s import is expected to increase at 12% per year to 90 mln tonnes in 2013 160
and is a dominant growth driver;
US$ / tonne
China’s net imports increased 171% in 2009 to 92 mln tonnes and further 120
(US$/t)
increased to 116 mln tonnes in 2010:
Expected to ramp up domestic coal production capacity undermining 80
demand for coal imports.
Japan’s power sector consumes 18% of the thermal coal’s trade: 40
Short-term downside following earthquake damage to some facilities – 2%
of seaborne's trade is at risk; 0
Longer-term potential uplift in demand due to partial switch away from 2006 2007 2008 2009 2010 2011 2012 2013
(2)
nuclear. Newcastle Richard's Bay Consensus forecast ²
Global thermal coal supply is forecasted to lift only 1% in 2011; next three years
CAGR expected at 2.1%:
Dominated by Indonesia and Australia which account for 55%
Supply/demand balance (1)
of global exports;
0.7 0.4 0.8
Indonesia’s wet season and Australian infrastructure issues still constraining 0.0
Market balance mln tonnes
supply growth; 0
Market balance (Mt)
Supply side likely to respond to the market’s relatively high stable prices as key (0.7)
infrastructure issues are resolved. (4)
Main drivers of merchant market balance:
(5.5)
Continuing rail constraints in Australia and South Africa and barging constraints (8)
in Indonesia; (8.0)
China domestic production – high cost, but remains a big swing factor;
(9.2)
(12)
Indonesia and South Africa may need to redirect exports to domestic markets
2010E
2011E
2012E
2013E
2006
2007
2008
2009
to meet growing domestic demand.
Source: UBS Research, Broker notes
Notes:
1 Defined as traded supply less traded demand
2 Average of forecasts from 8 brokers {9}
10. III. Thermal coal: Russian industry overview and prospects
Rising share of thermal coal in the Russian fuel balance: Liberalization of domestic gas and electricity markets:
Share of coal in the Russian fuel balance is expected to increase due Potential increase of domestic gas prices to export net-back parity
to the rising power generation, gas export and liberalization of the level and growth of gas exports.
domestic gas prices. Domestic liberalization of power generation market may lead to
growth in coal prices.
Fuel consumption by the Russian power generation Domestic wholesale gas price forecast
2008 2030
180 165
28% Coal 32% Coal CAGR 2010-2015 – 15%
2% Oil fuel
142
1% Oil fuel 150
124
US$/mcm
120 108
94
82
70% Gas 90
67% Gas
60
2010 2011 2012 2013 2014 2015
Source: Russian Energy Balance Forecasting Agency, November 2010, Base scenario
Source: UBS, 2011
Coal consumption by the Russian power generation Electricity price forecast in Russia
30 26.6
CAGR 2008-2030 – 1.5 - 2.7% 261
260 25 CAGR 2010-2030 – 7.2%
234 21.4
US$ cents/kWh
210 20 17.3
220 203
193 199
12.3
mln tonnes
15 11.1
180 8.8 9.8
157 10 7.8
146 151 6.6
140 5
100 0
2008 2015F 2020F 2025F 2030F 2010 2011 2012 2013 2014 2015 2020 2025 2030
Base scenario Max scenario Source: Russian Energy Balance Forecasting Agency, 2010
Source: Russian Energy Balance Forecasting Agency, November 2010 Note: converted from RUR to US$ at exchange rate 30.38 RUR/US$ for 2010, 30 RUR/US$ for 2011-2030
{ 10 }
12. IV. 2011 Coal sales breakdown
{
{
Coal re-sale Domestic market
19.5% 60.5%
10.66 mln 10.66 mln
tonnes tonnes
39.5%
80.5%
Export market
{
Own coal
Domestic market Export market
Power generating
companies (TGK/OGK) Asia-Pacific Region
Retail customers
45.3%
13%
31%
4.21 mln 6.45 mln
tonnes tonnes
55%
54.7%
Public utilities Eastern Europe
Source: Company { 12 }
13. IV. Average realised prices vs benchmarks
KTK realized export prices vs. international FOB and CIF benchmarks, US$/t
120
101 101
100 93
87
83 82
US$ / t.
80
70
79 77 79
62
60
64 62
61 60
57
40
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11
(1) (2)
CIF ARA 6,000 kkal/kg FOB Indonesia 5,800 kkal/kg KTK Eastern export (CPT Vostochniy) KTK Western export (DAF)
Source: Company, Argus for FOB Indonesia and CIF ARA
KTK FCA prices vs. Russian EXW benchmark, $US/t
42 44
42
38
37
34
US$ / t.
31 31
32
30
30
26
26
22
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11
KTK - domestic price, FCA Meret Average price EXW in Russia, based on 4,500-5,000 kkal/kg
Source: Company, Metal Expert for average EXW prices in Russia
(1) - Average KTK realized Eastern shipments price CPT Vostochniy { 13 }
(2) - Average KTK realized quarterly Western shipments price DAF, excluding shipments to Ukraine
14. IV. Distribution map
KTK’s transport flows
North-West FD Omsk region Domestic sales
3.53 mln tonnes (1)
0.11
Domestic market Asia-Pacific Export sales
Headquarters
Eastern European
Countries
Moscow
Central FD
mln tonnes (1)
4.21
Railroad to the Urals FD mln tonnes (1)
Polish border
0.01 0.10 Russia
mln tonnes (1) (1)
mln tonnes
Volga FD
0.15
Tomsk Region
2.52
mln tonnes(1)
2.92
mln tonnes (1)
Siberian FD mln tonnes (1)
Omsk Region
Asia-Pacific
Novosibirsk Region Kemerovo Region
Railroad to the station at
Altay Region Nakhodka-East port
Source: Company
(1) - sales volumes FY 2011 (incl. purchased coal)
Quarterly coal sales breakdown by market Average quarterly domestic and export prices comparison (2)
11 10.66 1,300
, 1,213 1,237 1,228
10 ,
1,200 $42
8.54 2.08 $41 $42
9
7.41 ,
1,100 1,021
8 977
2.16 2.13 1,000 970 943
7 1.38 ,
892 $34
mln tonnes
6 900 848 $31 $32
$31
5 2.63 $27
4 3.33 800 $28
3 6.45 700
2 3.75
1 2.69 600
0 500
2009 2010 2011 2009 2010 2011
Series4 Russia (purchased coal) Russia (own coal) Average domestic price Average export price Average general price
Source: Company
(2) - prices are net of VAT and railroad tariffs; domestic prices include costs associated with retail distribution network; prices are converted to US$ using average Central Bank of the Russian Federation exchange rates for each year (2009: 31.72
RUB/US$; 2010: 30.38 RUB/US$; 2012: 29.39 RUB/US$) { 14 }
15. IV. Retail network
Since its establishment, the Company has been continuously expanding and Retail network in Western Siberia 2011
building its retail sale and storage network:
own 67 points of sale as at the end of 2011;
Company’s
additional points of sale planned to be acquired or established. Retail Subsidiary ownership
Kuzbasstoplyvosbit 100%
Wide distribution network and strong regional presence position the Company Omsk Region
TransUgol 51%
as one of the principal suppliers of coal to retail costumers, municipalities, and
public utilities in Western Siberia. 5 Novosibirsk TK 51%
When export prices are high, the Company uses lower quality third-party coal
points Altay TK 51%
of sale
to satisfy domestic demand, while shifting its own higher quality coal to export
markets. 0.09 mln tonnes (1)
Omsk
26
points
of sale
1.24 mln tonnes (1)
Novosibirsk Region Kemerovo
Kemerovo Region
Novosibirsk
Breakdown of total sales by produced and purchased coal
5.0
. 4.71 4.79
9 27
4.21 Barnaul points
4.0
. 1.38 points of sale
2.16 of sale 1.43 mln
Altay Region
2.08
mln tonnes
3.0
. 0.29 mln tonnes (1)
tonnes (1)
2.0
.
3.33
2.63
.
1.0 2.13
Headquarters
.
0.0
Source: Company
2009 2010 2011 (1) - including coal re-sale
Series3 Purchased Coal
Source: Company { 15 }
17. V. Key strategic directions
Further production growth at existing mines supported by existing infrastructure capacity.
Further Production Growth Expansion of coal reserves through reclassification of existing resources, development of deeper
deposits at existing mines, in tenement drilling and acquiring new licenses in the region.
Coal quality enhancement through construction of 3 coal processing and enrichment facilities
Enhancement of Product utilizing steeply inclined and dense-medium separation processes with an aggregate input capacity of
Quality and Entering New 10.1 mln. t. per year.
Markets Focus on value-added products with higher profitability margins.
Entering new export markets with more stringent coal quality requirements.
Strengthening of regional presence through further expansion of retail network, broadening product
Further Strengthening of
range and improving customer services.
Distribution and Sales
Widening export capabilities through signing contracts with major global coal traders and power
Capabilities companies, and establishing trading representatives at key locations abroad.
Further upgrade of mining equipment and optimization of labor, administrative and overhead costs.
Cost Optimization and Hedging against transportation costs by entering into long-term leasing contracts for railway cars
with JV “Kuzbasskaya Transportnaya Company”. By 2012 the Company plans to export the major
Efficiency Improvements volume of coal in railroad cars rented from JV at a 10-year fixed price, thus hedging rent rates
growth and railroad cars availability risks.
Further Enhancement of Focus on transparency and refining the Company’s corporate governance.
Corporate Governance Introducing BoD Investment and Strategy Committee in 2011.
{ 17 }
18. V. Investment program
In 2011-2015 there will be 2 major investment categories: 1 Equipment procurement plan
Continued procurement of mining equipment to increase production at the
existing open-pit mines; 30 June 2011 CAPEX ’11-’15
construction of 2 new coal processing and enrichment facilities to improve
Shovels
coal quality and raise production efficiency. 25 (2 P&H) 18 (1 P&H)
(P&H, Komatsu, EO)
Enrichment facilities launching schedule:
Enrichment plant #2 (KNS and Dense-medium technology) with 3.6 mln t
Trucks (BelAZ) 105 53
annual capacity planned to be launched in 2012;
Enrichment plant #3 (Dense-medium technology) with 4.5 mln t annual Dozers (Komatsu and 28 14
capacity planned to be launched in 2013. others)
Loaders (Komatsu and 36 14
others)
New VS previous CAPEX plan 2011(1) Drill Rigs (Ingersoll Rand) 4 2
Variance
82 Source: Company
80 76 + US$ 4 mln – additional land purchase for
12 potential greenfield licenses acquisitions
70 8
2 CAPEX forecast breakdown, 2011-2015(1)
60 14 18 + US$ 4 mln - faster Uba railroad station
capacity expansion
7%
US$ mln
50 140
40 28 115 4%
120
31 + US$3 mln - faster mining equipment purchase
30 100 27
20
82 41% US$ 291 mln
47%
US$ mln
- US$5 mln – a part of enrichment plant equipment 80
10 26 21
will be bought in 2012 instead of 2011 60 18 50
0
40 87 18
2011 2011 Correct 31 22 23
20
Total Other Other infrastructure Equipment 21 30 22 23
0 - -
2011 2012 2013 2014 2015
Series5 Other Other infrastructure Equipment
Source: Company
(1)- net of VAT, US$ are converted from RUR using 30 RUR/US$ exchange rate Source: Company { 18 }
20. VI. Q4 and full year 2011 operational highlights
YOY growth of coal In Q4 2011 coal production increased by 5.3% QOQ to 2.57 mln tonnes (Q3 2011: 2.44 mln tonnes).
During 2011 it increased 28.4% YOY to 8.74 mln. tonnes (2010: 6.80 mln tonnes).
extraction and The coal sorting volume in Q4 remained on the level of Q3 2010 - 1.51 mln tonnes. As for total 2011 – the
processing volume increased by 35.4% YOY to 5.56 mln tonnes (2010: 4.10 mln tonnes).
KNS enrichment
In 2011 the Company’s first KNS enrichment plant worked at full capacity and produced 736 th. tonnes of
plant is working at export quality coal (2010: 200 th. tonnes).
full capacity
During Q4 2011 the sales volume increased by 18.9% QOQ to 3.34 mln tonnes (Q3 2011: 2.81 mln
Boost of coal sales tonnes). The volume of coal sales in 2011 increased by 24.8% YOY and reached 10.66 mln. tonnes (2010:
8.54 mln tonnes).
volume and increase
of average realised In Q4 the average realized coal price (1) increased by 4.5% QOQ to RUB 1,285 per tonne (Q3 2011: RUB
price 1,229 per tonne). The average price for 2011 increased by 25.6% YOY to RUB 1,228 per tonne (2010: RUB
977 per tonne).
The stripping ratio in Q4 decreased by 0.5% QOQ to 7.35x (Q3 2011: 7.38x). The volume of blasted rock
mass increased by 42.3% QOQ to 10.72 mln cbm. (Q3 2011: 7.53 mln cbm.). The average stripping
Stripping ratio QOQ transportation distance decreased by 4.1% QOQ to 2.95 km (Q3 2011: 3.08 km)
decrease, but slight
growth YOY During 2011 the stripping ratio raised by 7.2% YOY to 7.80x (2010: 7.27x). The blasted rock mass grew by
29.0% to 32.79 mln cbm. (2010: 25.43 mln cbm.). The average stripping transportation distance extended
by 6.0% YOY to 2.88 km (2010: 2.72 km).
Source: Company
(1) - excl. VAT, Russian Railways tariff (FCA Meret, incl. KTK retail margin) { 20 }
21. VI. Financial highlights
Q3 Revenue - RUB 6,207 mln 26% QoQ 9M Revenue - RUB 16,389 mln 71% YoY
US$ 213 mln(1) US$ 471 mln
Due to the seasonal increase in coal sales volumes on the domestic market quarterly revenue increased by 26% to RUB 6,207 mln QOQ (Q2 2011:
RUB 4,937 mln). 9M revenue gained 71% YOY up to 16,389 mln (9M 2010: RUB 9,756 mln).
Q3 EBITDA – RUB 1,078 mln 105% QoQ 9M EBITDA – RUB 2,551 mln 108% YoY
US$ 37 mln US$ 73 mln
Growth in revenue and a decrease in production cash costs per tonne of coal resulted in 105% QOQ increase in EBITDA to RUB 1,078 mln (Q2
2011: RUB 525 mln). 9M EBITDA increased by 108% YOY to RUB 2,551 mln (9M 2010: RUB 1,224 mln).
Q3 Net Profit – RUB 449 mln 125% QoQ 9M Net Profit – RUB 1,242 mln 252% YoY
US$ 15 mln US$ 36 mln
In Q3 the Company earned a net profit of RUB 449 mln compared to RUR 200 mln in the previous quarter. Net profit for the 9 month period
increased by 252% to RUR 1,242 mln (9M 2010: RUB 353 mln)
Net Debt - RUB 2,268 mln 13% QoQ -2% YoY
US$ 71 mln(2)
Net Debt amounted to RUB 2,268 mln, having increased by 13% QOQ (Q2 2011: RUB 2,012 mln) and decreased by 2% YOY (9M 2010: RUB 2,311
mln). Net Debt to EBITDA ratio remained 0.7.
Source: unaudited 3M 2011 IFRS FS
(1) - Hereinafter figures were converted to USD using average Central Bank of the Russian Federation exchange rates for Q3 2011 - 29.08 RUR/US$ and for 9M 2011 - 28.74 RUR/US$
(2) - Figures were converted to USD using Central Bank of the Russian Federation exchange rates as at 30.06.2011 28.08 RUR/US$ { 21 }
22. VI. Financial highlights: Revenue
Key financial indicators Q3 2011 Revenue breakdown by segments
RUB mln. Q3 2011 Q2 2011 9M 2011 9M 2010
68%
Revenue 6,207 4,937 16,389 9,576
Growth rate 26% 71% 2% Own coal, Russia
Cost of sales (4,942) (4,284) (13,361) (7,968) RUB 6,207 mln Coal resale, Russia
US$ 213 mln(1)
Gross profit 1,265 653 3,028 1,608 Own coal, export
Gross profit margin 20% 13% 18% 17% 19% Other revenue
SG&A and other expenses (429) (369) (1,200) (930)
EBITDA(2) 1,078 525 2,551 1,224
11%
EBITDA margin 17% 11% 16% 13%
Operating profit (EBIT) 836 284 1,828 678
Segment revenue dynamics(3)
Operating margin 13% 6% 11% 7% Q3 2011/Q2 2011
Net income 449 200 1,242 353 4,937 +26%
Net income margin 7% 4% 8% 4% 6,000
, -5%
4,584 682 +140%
5,245
Gross debt 4,080 2,228 4,080 2,576 ,
5,000 3,925 404 284 1,203 +247%
Net debt 2,268 2,012 2,268 2,311 2,734 347
4,000
, 801 1,053
RUB mln
605
3,000
, 1,013
919
0%
,
2,000 4,206 4,227
3,607
2,312 2,594
1,000
,
0
Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011
Series5 Other revenue Coal resale, Russia Own coal, Russia
Source: hereinafter unaudited 3M. 6M, 9M 2010 IFRS FS; audited Full Year 2010 IFRS FS; unaudited 3M, 6M 2011, 9M 2011 IFRS FS
(1)- Figures were converted to USD using average Central Bank of the Russian Federation exchange rates for Q3 2011 - 29.08 RUR/US $
(2)- EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and loss on disposal of property, plant and equipment
(3)The cost of coal purchased from neighboring enterprises on EX-works terms and delivered to coal storages on the Company’s open pit mines for processing and sorting is included in production costs and revenue from its sale is distributed between
“Domestic sales of coal produced” and “Export sales of coal produced” segment. Volumes of such coal amounted to 0.43 mln tonnes (9M 2011) { 22 }
23. VI. Financial highlights: Production cash costs
Average realized price and production cash cost per 1 t of coal(1) Quarterly production cash costs volatility
8.7
,
1,300 1,229 8.0
1,175 7.2 7.4
1,200
, 1,155
$42 6.1
,
1,100 1,041 $42 1,000
, 5.0
.
1,010 $40
,
1,000 $34
$33 800 688
900 4.0
.
631
591
RUB / t
800 600
RUB / t.
mln tonnes
688 471 441
700 631 2.4 3.0
.
590 $25 591 400 2.2
600 $22 1.9 1.9
$20 1.8
500 $19 441 2.0
.
200
400 $14
300 0 1.0
.
Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011
Production cash costs Average price Pr. сash costs Production Stripping ratio
Dynamics of production cash costs per 1 t of coal produced Production cash costs breakdown, Q3 2011 (1)
800
688 Q3 2011/Q2 2011
700 631 29
48 591 - 14%
600 45 Mining and environment taxes 10%
55
57 26- 9% 18%
28 - 41%
500 471 44 85 49 - 13% Other expenses 8%
441
RUB / t
38 60 60 - 30% Repair and maintenance
400 18 39 130 5%
38 42 104 - 20%
31 134 Spare parts RUB 591/1 t
87 4%
300 44 19% US$ 20(1)
152 111 - 27% Salary and UST
96 99
200 151 Fuel
95 94
100 188 213 + 13% Production services
99 142 36%
93
-
Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011
Source: Company, cash costs extracted from unaudited 3M-9M 2011, 3M-9M 2010 IFRS FS, audited 12M 2010 IFRS FS
(1) - prices are net of VAT and railroad tariffs; domestic prices include costs associated with retail distribution network; prices are converted to US$ using average Central Bank of the Russian Federation exchange rates for each quarter
(Q2 2010: 30.24 RUR/US$; Q3 2010: 30.62 RUR/US$; Q4 2010: 30.72 RUR/US$; Q1 2011: 29.16 RUR/US$; Q2 2011: 28.01 RUR/US$; Q3 2011: 29.08 RUR/US$)
{23 }