June 2012 Investment project of Kostroma region ferrosilicon plant construction and high- quality ferrosilicon production

Ferrosilicon is an alloy of iron with silicon. Silicon increases the hardness of steel, tear resistance, the limits of fluidity and elasticity, increases the resistance to oxidation, reduces energy losses. Ferrosilicon, produced at the enterprise using high-quality quartz sand and charcoal, has minimum of impurities such as sulfur, phosphorus that is necessary in the high-quality steel production. % Ferrosilicon production in Ferrosilicon is produced at the following Russian plants: – “Serovsky plant of ferroalloys” OJSC; – “Tchelyabinsky electrometallurgical plant” OJSC; – “Kuznetskie ferroalloys” OJSC; – “Bratsky plant of ferroalloys” LLC; – “Novolipetsky metallurgical plant” OJSC. 1. Characteristics of ferrosilicon production sector

Яковлево Нагатино Вяхирево СтруковоЕкимово Галичское озеро Васильевское Вострилово Сальково Абабково Горки Апушкино Челсма Починок Nagatinskoe deposit of molding sands is situated 12 km to the West from Galich (Kostroma region). Useful layer capacity is from 1,1 to 29,7 m. Overburden is represented by morainic loam and clay glacial sands with the capacity from 4,0 to 16,0 m. License for the right of bowels use belongs to “Nagatinskie industrial sands” LLC. 2. Location of the Nagatinskoe deposit of molding sands

Production capacity of the main product – ferrosilicon FS75 – tons per year. Plant’s main workshops Technical structure of the main equipment Preparatory workshop Acceptance and preparation of charge materials Briquette-making workshop Preparation of mixture and briquetting Metallurgical workshopReceipt of liquid ferrosilicon Filling of ferrosiliconFilling workshop GranulationCrushing and packaging Energy workshopElectricity production Bunker and metering devices complex Equipment for grinding of charcoal Briquetting materials mixer Briquetting equipment Thermal electric furnaces RKZ-6,3 Filling machines Equipment for grinding and sorting of ferrosilicon Packaging equipment Conveyor system Hoisting-and-transport equipment Gas-power station equipment 3. Plant’s plan. Production capacity

№Stage Period IIIIIIIVIIIIIIIVIIIIIIIV 1 Project development. Technical regulation development. Project and construction working plan development 2 Working project development including construction documentation for non- standard equipment development 3 Industrial site reconstruction and building. Equipment manufacturing. RMC. Personnel formation. Starting-up and adjustment works 4 Plant functioning in permanent mode of operation 4. Stages of project realization

Investment volume, million RUR st half of 2014 Buildings and constructions Equipment and RMC Project Total Total project value – million RUR NPV – 128,7 million RUR IRR – 9,2% Payback period – 5,9 years 5. Investment volume

PositionAmount Сaverage salary (thousand roubles per month) Payments Management Administration515 Monthly, during the whole project period Guarding1015 Monthly, during the whole project period Specialists2025 Monthly, during the whole project period Management1050 Monthly, during the whole project period Production Production workers13025 Monthly, during the whole project period Workers, employees, engineers, not engaged in production 2025 Monthly, during the whole project period Marketing Marketing specialists535 Monthly, during the whole project period The number of new working places – 200 * Amount of constantly working personnel and salary is defined below. It is expected a growth of wages co-ordinated with the rate of inflation. Serious attention will be paid to the labour protection and fire safety. 6. Personnel plan

Indicator Value, million RUR Total revenue Sold products costs280,45560,9 Gross profit519, Profit tax103,95207,8 Net profit415,6831,2 Cumulative net profit415,61 246, ,23 740, ,6 Factors of investment project realization success: There is no ferrosilicon plant in European Russia (with the exception of ferrosilicon production workshop for own needs with capacity of tons at Novolipetsky metallurgical plant); The presence of large ferrosilicon consumers: Tcherepovetsky metallurgical plant, metallurgical plant «Electrostal’», «Tulachermet», Starooskolsky plant, Izhorskie plants, Volgogradsky metallurgical plant; Own raw materials (quartz sand), restorer, charcoal, own power energy provides low prime cost; High quality of ferrosilicon defined by presence in its structure of charcoal with low content of harmful impurities (sulfur and phosphorus). 7. Major financial and economic indicators. Factors of investment project realization success