TOMMOT INDUSTRIAL PARK 2015

TOMMOT INDUSTRIAL PARK PROJECT GOAL – CREATING NEW PRODUCTION CAPACITY BASED ON INTEGRATED PROCESSING OF LOCAL RAW MATERIALS AND WASTE, INCLUDING:  wood processing, including refuse wood utilization  output of construction materials  utilization of worn car tires Required investments – 100m USD Sources of demand – interregional and domestic markets (for pilot projects), APR markets 2

PROJECT TEAM Initiator: South Yakutia Development Corporation, a public company  South Yakutia Development Corporation has been working since 2007 on the investment project of national importance, called “Integrated Development of South Yakutia”. 3

INFRASTRUCTURE AND LOGISTICS 4

5 PROSPECTIVE TERRITORY IN SOUTH YAKUTIA Tommot Industrial Park

PLOTS OF LAND ю в з 6 Base 9.5-ha plot Reserve 30.5-ha plot с

OUTPUT OF TOMMOT INDUSTRIAL PARK  Products of the wood processing plant with capacity of up to 300 cu. m per year:  lumber  materials for quick-erect houses  prefabricated furniture parts  boiler pellets  bioactive additives (catechyn hydrate)  dendrochemistry products, etc.  Mineral processing products: heat insulation, composite, fire-insulation materials, radioprotectors, sorbents and other materials based on diopside, vermiculite, metanthracite, mica and other minerals  Worn car tire processing products: rubber crumb, tiles for road building and construction projects (annual output of up to 5,000 tons) 7

MARKET AND ITS KEY PLAYERS FOREST PRODUCTS MARKET TIRE PROCESSING PRODUCTS MARKET At the present time the main woodworking product in Yakutia is lumber with low added value. The sales market is the APR. The potential of the Japanese timber market is about 200m cu. m, Chinese market – over 100m cu. m, Korean market – about 20m cu. m. According to the FTS, 17.64m cu. m of conifer lumber has been exported to China, including 7.21m cu. m from Russia. The competition is concentrated in Khabarovsk Territory, JAR, Eastern and Western Siberia, Trans- Baikal Region. The key advantage is processing of unique timber species, namely Dahurian larch. By strength and density (1,150 kg/cu. m) it surpasses pinewood by 30%. The Russian Far East market is underdeveloped. A major processor in Vladivostok produces up to 2,000 tons. The main problem is underuse of crumb in road building (projects need to be adjusted) and in landscaping (stadiums, walkways, pathways, etc.). The key advantage is agreements signed with mining ventures of South Yakutia for the processing of bulky stock of quality large-size rubber. 8

CURRENT STAGE OF THE PROJECT  The project is at the pre-investment stage  The following projects are being contemplated with potential investors:  processing of worn car tires with the capacity of 5,000 tons a year (UNERA group)  building a plant for pellet production from refuse wood (LLC AldanLesprom, LLC AYAM Association)  building a plant for panel production for quick-erect houses (LLC LesPromstroy)  building a woodworking complex with capacity of 300,000 cu. m of raw stuff per year (CAMCE) 9

AMOUNT OF AND RETURN ON INVESTMENTS Investments into a pellet producing plant: 12m rubles Pay-back time – 3 years Investments into a woodworking plant to process up to 300 thou cu. m. of raw stuff: about 90 million USD Pay-back time – 5 years Investments into a rubber processing plant: 600m rubles Pay-back time – 4 years 10

STRENGTHS  Abundant timber and fresh rubber reserves  Favorable situation on the world and domestic lumber markets  Favorable competitive environment in view of the lack of similar production capacity in the region  Acceptable cost effectiveness even under moderate woodworking volumes of 300 thou cu. m per year. POTENTIAL  The possibility of increasing the wood processing depth and widening of the product lineup  The possibility of project cost optimization through the use of advanced technologies  Expansion of the rubber crumb sales market due to road building and landscaping works in Russia’s Far East. CONCLUSIONS 11

INVITATION FOR INVESTORS AND RESIDENTS We’ll select plots of land and organize their connection to grids and infrastructure We’ll collect source data and help in feasibility report preparation We’ll provide administrative support from regional authorities and local government bodies We’ll organize engagement with potential consumers in the Republic, including with major manufacturers If needed, we’ll take care of building production and storage facilities We are open for any forms of collaboration. 12

127473, Moscow, 11b Seleznevskaya St +7 (495) Thanks for your attention! SOUTH YAKUTIA DEVELOPMENT CORPORATION