ARMZ Uranium Holding Co.: Year in Review

In 2017 ARMZ Uranium Holding Co. showed stable operation, achieving key goals set by the State Atomic Energy Corporation Rosatom.

The important milestone in the Company's history is the start of construction financing for Mine No. 6 of PIMCU, PJSC. Investment committee of Rosatom allocated RUB 350 million for the construction of the mine’s infrastructure facilities. Mineable reserves of Argunskoe and Zherlovoe deposits of Streltsovsky ore field contain approximately 38 thousand tU (35% of PIMCU, PJSC total reserves). Average strategic metal content in those deposits is higher than in currently active mines which will guarantee competitive production costs. The beginning of construction works at the plant area is planned for 2018 with first ore batch to be produced in 2023. Launching the new mine shall secure stable operation of the town-forming enterprise and the development of Krasnokamensk monotown for decades to come.

In 2017 ARMZ Uranium Holding produced 100% of the planned output of the strategical materials for the nuclear industry, maintaining production rate at 3000 tons. PIMCU produced 1631 tons of triuranium octoxide. Lower production rates using the “expensive” mining method was balanced out by the use of modern and environmentally-friendly method of in-situ leaching (ISL). For instance, Khiagda, JSC which employs the ISL method shows a yearly upward trend. Production volume in 2017 amounted to 693 tons. As a reminder, development of Khiagda, JSC plant was motivated by the launch of primary infrastructure facilities – production building, sulfate plant and power supply plant in 2015-2016. The production is expected to reach design output of 1000 tons a year by 2019. Dalur, JSC maintained its output at the previous level of 592 tons of the strategic material.

This past year we have continued to optimize the production costs and increase production efficiency to follow general industry trends of the recent years. The Holding as a whole managed to attain 10% lower uranium production costs than the projected target figure.

The Holding's most efficient enterprise, JSC Dalur, has begun preparations to develop a new uranium deposit Dobrovolny in Zverinogolovsky District of Kurgan Region. Its launch will allow maintaining the current production volumes in the long term. The project is supported by the District's government as one of the most important venues for its social and economic development.

Considering the supply surplus and low uranium prices on the market, for several past years ARMZ has been following the program of production diversification. Considerable progress was achieved in 2017: Dalur, JSC produced a pilot batch of scandium oxide, PIMCU’s machinery and engineering plant developed new models of mining machinery for external consumers, a new granular explosives production plant is set to launch in 2018 in Krasnokamensk, and the Holding also begun regular exports of commercial-grade coal and signed preliminary cooperation agreements for the Holding’s biggest project “Pavlovskoe”.

Atomredmetzoloto, Joint Stock Company conducts regular activities to increase investment attractiveness of the presence regions. In 2016, the company created Krasnokamensk Priority Social and Economic Development Area (PSEDA) in Trans-Baikal Territory, development of which will allow diversifying the town’s economy. In 2017, first residents of PSEDA were registered, with the holding’s participation, first workplaces were created and RUB 5 million have already been paid to the municipal budget.

ARMZ cooperates in activities to develop social environment in the presence region. Over RUB 7 million were used for charity which includes the construction of Uksyanskaya School in Kurgan Region, recognized as the best school in the region. Consolidated taxpayer group's funds were used to reconstruct the Krasnokamensk-Matsievskaya highway in Trans-Baikal Territory, repair “Argun” stadium and other infrastructure objects.

In general, the Holding's operations in 2017 were stable. Effective management system and cutting-edge technologies allowed keeping production volume at projected level and successfully implementing new projects. In 2018 the Holding faces important challenges – to continue increasing production efficiency, increase profits from non-uranium business initiatives and secure the construction of the new uranium mine.