OREANDA-NEWS. METALLOINVEST (“the Company”), a leading global iron ore and HBI producer, announces its audited financial results reported under IFRS for the full year ended December 31, 2012.

Finance & Corporate Governance

Debut issue of RUR 25 bn (c. USD 853 mn) 9.0% RUR-denominated unsecured corporate bonds maturing in 2022 with an early redemption option in 2015

Disposal of Metalloinvesttrans for a cash consideration of USD 569 mn

Assignment of ‘BB-‘ rating with a positive outlook by Standard & Poor’s

Acquisition of 24% of own shares for a consideration of USD 3,023 mn

Review of the Board of Directors and its committees composition

Social responsibility and Public Relations

Signing of Social Partnership Programmes for 2012 with the authorities of Belgorod and of Kursk regions

Announcement of METALLOINVEST new brand and launch of a new corporate website

Eduard Potapov, Chief Executive Officer of Management Company METALLOINVEST, commented:

“Despite the challenging world economic situation and continued market volatility, METALLOINVEST demonstrated robust financial and operational results for 2012, maintaining its leading industry positions in Russian ferrous sector in terms of EBITDA and profitability.

The 2012 results reaffirmed that we had chosen the right strategy which enables us to maintain efficient operations in the adverse market conditions.”

INCOME STATEMENT

USD mn

FY 2012

FY 2011

Change

Revenue

8,194

9,919

-17.4%

EBITDA

2,553

3,873

-34.1%

EBITDA margin

31.2%

39.0%

-7.8 ppt

Net Income

1,724

1,432

20.4%

Revenue

In 2012, METALLOINVEST’s revenue decreased by 17.4% and amounted to USD 8,194 mn compared to USD 9,919 mn in 2011 mostly due to a decline in iron ore prices during the second half of 2012.

Mining segment accounted for 48.9% of revenue in 2012 versus 49.2% in 2011, while Steel segment – 45.9% (compared to 46.3% in 2011). Revenue from mining operations declined by 17.9% y-o-y to USD 4,009 mn, while revenue from Steel segment declined by 18.1% y-o-y to USD 3,762 mn.

Share of Russia & the CIS in revenue increased to 52% (compared to 44% in 2011) due to sales secured under long-term contracts. Share of Europe amounted to 18%. China and MENA contributions to revenue accounted for approximately 8% and 12%, respectively.

Cost of Sales and SG&A

In 2012, cost of sales amounted to USD 4,149 mn, representing a decrease of 7.5% compared to USD 4,485 mn in 2011. Materials and components contributed the most to the decrease, contracting by 16.0% y-o-y. As a percentage of revenue, cost of sales accounted for 50.6% in 2012 compared to 45.2% in 2011.

In 2012, distribution expenses decreased by 17.8% to USD 1,349 mn from USD 1,642 mn in 2011, while shipments were largely flat y-o-y. The effect was caused by the shift of sales from export to domestic customers, leading to a significant reduction of transportation expenses by 18.5% y-o-y.

General and administrative expenses decreased by 1.6% y-o-y to USD 474 mn in 2012 from USD 482 mn in 2011, representing a 5.8% share of revenue in 2012, which is 0.9 ppt higher y-o-y.

Profitability

METALLOINVEST’s EBITDA decreased by 34.1% y-o-y to USD 2,553 mn and EBITDA margin amounted to 31.2%, representing a decline of 7.8 ppt y-o-y. The contraction in EBITDA resulted primarily from the decrease in iron ore prices during the second half of 2012.

Mining segment contributed 86.7% to consolidated EBITDA, representing an increase from 81.1% in 2011, while Steel segment contributed 9.9% versus 14.7% in 2011. Mining segment EBITDA contracted by 29.5% y-o-y to USD 2,214 mn, while the steel segment EBITDA declined by 55.7% y-o-y to USD 252 mn.

In 2012, net income grew by 20.4% y-o-y to USD 1,724 mn and was affected by multiple factors: the Company recognized gain from the disposal of Metalloinvesttrans in the amount of USD 369 mn, received financial income of USD 195 mn on discount promissory notes and faced foreign exchange loss on operating activities of USD 189 mn due to appreciation of the ruble against the US dollar.

FINANCIAL POSITION

As of 31 December 2012, METALLOINVEST’s total assets amounted to USD 10,352 mn, a decrease of 1.1% compared to USD 10,465 mn at the end of 2011, while total equity reached USD 2,233 mn compared to USD 3,337 mn, a decrease of 33.1% since 31 December 2011, mainly due to the acquisition by a wholly-owned subsidiary of the Company of 24% of Holding Company METALLOINVEST shares for a consideration of USD 3,023 mn in December 2012.

As of 31 December 2012, METALLOINVEST’s total debt amounted to USD 6,471 mn, with Total Debt / EBITDA ratio amounted to 2.53x vs. 1.45x at the end of 2011.

As of 31 December 2012, the proportion of long-term debt accounted for 95% vs. 80% at the end of 2011, which is in line with the Company’s strategy to increase the proportion of long-term debt.

METALLOINVEST’s cash and cash equivalents amounted to USD 468 mn as of 31 December 2012, against USD 1,166 mn as of 31 December 2011.

LIQUIDITY AND CAPITAL RESOURCES

In 2012, METALLOINVEST’s net cash generated from operations amounted to USD 1,848 mn in 2012, compared to USD 2,876 mn in 2011, representing a decrease of 35.7%.

In 2012, net cash used in investing activities amounted to USD 53 mn against USD 3,033 mn in 2011. The difference was mainly due to the acquisition of a stake in Norilsk Nickel in 2011 for a USD 2,226 mn consideration as well as cash consideration for the disposal of Metalloinvesttrans in 2012.

In 2012, net cash used in financing activities amounted to USD 2,493 mn as compared to net cash inflow of USD 1,306 mn in 2011. The major cash outflow was attributed to the acquisition of 24% of its own shares for a consideration of USD 3,023 mn in December, 2012.

In January 2012, METALLOINVEST paid dividends in the amount of USD 290 mn on the Company’s ordinary shares for the 9 months of 2011.

In March 2012, METALLOINVEST issued RUR 25 bn (c. USD 853 mn) 9.0% RUR-denominated unsecured corporate bonds maturing in 2022 with an early redemption option in 2015, which subsequently were included in the Lombard List of the Central Bank of the Russian Federation.

In June 2012, METALLOINVEST returned to a 4% stake in Norilsk Nickel via a purchase of 8.3 mn ADRs for a total consideration of USD 126 mn. Dividends received on Norilsk Nickel stake in 2012 amounted to USD 43 mn.

In September 2012, METALLOINVEST executed the drawdown of RUR 50 bn 3-year credit line to repay ahead of schedule the RUR-denominated loans maturing in 2013.

DEVELOPMENT PROGRAMME

During 2012, capital expenditures amounted to USD 463 mn, representing a decrease of 9.6% compared to USD 512 mn in 2011.

During the course of 2012, METALLOINVEST continued the implementation of one of its major investment projects – construction of Pellet Plant #3 at MGOK, which will increase current pellet production capacity by 5 mn tonnes per annum, when completed. During the reporting period, construction works were carried out and some parts of equipment were installed.

In June 2012, METALLOINVEST commenced construction of an oxygen facility at OEMK.

In August 2012, METALLOINVEST signed a contract with Siemens and MIDREX consortium for construction of HBI-3 at LGOK with a capacity of 1.8 mn tonnes per annum.

During the course of 2012, the Company continued construction of new coke-oven battery #6 at Ural Steel with a capacity of 0.7 mn tonnes per annum.

In November 2012, another stage of modernisation at MGOK’s crushing and processing plant was completed. The renovation works resulted in a 10% increase in the conveyor belt’s transport capacity.

In November 2012, METALLOINVEST completed one of the required stages of the upgrade of equipment at HBI-2 Plant at LGOK resulting in its capacity increase of 58 thousand tonnes of HBI per annum, which corresponds to a 4% increase.

In November 2012, a new vacuum degasser was launched at Ural Steel. The vacuum degasser will process up to 1.2 mn tonnes of steel per year, as well as enable production of high grade steel products.

OPERATIONAL RESULTS

tonnes’ 000

FY 2012

FY 2011

Change

Production

Iron ore

39,782

40,148

-0.9%

Pellets

22,629

22,410

1.0%

HBI/DRI

5,174

5,151

0.4%

Hot metal

2,084

2,458

-15.2%

Crude steel

5,618

5,821

-3.5%

Shipments

Iron ore

12,526

12,743

-1.7%

Pellets

14,063

13,620

3.3%

HBI/DRI

2,284

2,324

-1.7%

Pig iron

811

1,126

-28.0%

Steel products

5,103

5,226

-2.3%

In 2012, the Company achieved record high output of pellets, one of its major iron ore high value-added products. Pellet production amounted to 22.6 mn tonnes (+1.0% y-o-y), while pellet shipments to external customers increased by 3.3% y-o-y to 14.1 mn tonnes.

Despite the planned modernisation of HBI-2 Plant in 2012, the Company was able to maintain HBI/DRI output at the level of 5.2 mn tonnes (+0.4% y-o-y) due to optimisation of the maintenance schedule.

In 2012, iron ore production amounted to 39.8 mn tonnes. The slight reduction (-0.9% y-o-y) was caused by maintenance work carried out during a period of falling prices in Q4 2012.

Hot metal and crude steel production decreased to 2.1 mn tonnes (-15.2% y-o-y) and 5.6 mn tonnes (-3.5% y-o-y), respectively, due to the major maintenance and repair works at the plants.

In June 2012, METALLOINVEST and ChelPipe agreed to broaden their cooperation over the next three years and to increase sales of flat steel products.

In December 2012, METALLOINVEST and MMK entered into a new agreement for supplying iron ore and pellets, according to which the Company will increase its shipments to MMK.

HSE & QUALITY MANAGEMENT

In January 2012, Ural Steel successfully passed an audit of quality management system in accordance with an international automotive ISO/TS 16949:2009 standard.

In May 2012, OEMK was awarded a gold medal for its contribution to environmental protection according to the results of the “100 Best Companies of Russia: Ecology and eco-management” competition.

In October 2012, METALLOINVEST completed the sale of the greenhouse gas Emission Reduction Units received in 2008 and 2009 under the Kyoto Protocol. The funds were invested in projects aimed at reducing the Company’s impact on the environment.

In October 2012, OEMK won the 2012 Schaeffler Supplier Award recognizing its product quality, reliability, competitive cost structures, service, innovation and global presence.

In November 2012, MGOK successfully passed an audit of its eco-management system, quality management system, and occupational health and safety system in accordance with ISO 14001:2004, ISO 9001:2008 and OHSAS 18001:2007 standards, respectively.

In November 2012, LGOK successfully passed an audit of its environmental management system, and occupational health and safety management system in accordance with the GOST R ISO 14001-2007 and MS ISO 14001:2004, and OHSAS 18001:2007 standards.

BAIKAL MINING COMPANY (UDOKAN COPPER DEPOSIT)

In 2012, Baikal Mining Company (BMC), the operator of Udokan copper deposit, carried out several major steps to develop the deposit.

In April 2012, BMC together with Federal Grid Company of United Energy System and regional authorities of the Transbaikal region signed a cooperation agreement relating to the provision of power supply for the industrial complex within the framework of the Udokan copper deposit development project.

In October 2012, BMC commenced the preparation of the international feasibility study (IFS) for the project. As part of the IFS, BMC launched the definition phase study with Fluor, an international engineering and construction company. During the definition phase Fluor elaborated and performed a metallurgical testwork programme and carried out a number of studies required to define design criteria and scope of work for the subsequent stages of the IFS.

In December 2012, BMC received an updated JORC-compliant estimate of mineral resources of the deposit issued by SRK Consulting, an independent international consulting company specialising in the mining sector. Mineral resources (measured + indicated + inferred) were estimated at 2.3 bn tonnes with average copper grade of 1.06%. Contained copper amounted to 24.6 mn tonnes.

SOCIAL RESPONSIBILITY AND PUBLIC RELATIONS

In February 2012, METALLOINVEST signed the Social Partnership Programmes for 2012 with the authorities of Belgorod and Kursk regions as well as with administrations of Stary Oskol, Gubkin and Zheleznogorsk. The Programmes stipulate mutual commitment of the parties regarding priority investments in social development of the regions.

In December 2012, METALLOINVEST introduced a new brand to the public audience, comprising logo, slogan, and corporate colors, which unifies the image of the Company’s production assets.

CORPORATE GOVERNANCE & TRANSPARENCY

In 2012, METALLOINVEST held a number of meetings with investors at conferences and forums in Russia and carried out a non-deal road show to Asia in order to meet with asset managers in Hong Kong and Singapore.

In August 2012, the Company held a debut site visit for investors and analysts to LGOK and OEMK, its major production assets.

In December 2012, following a series of transactions among the companies of METALLOINVEST and its shareholders, Metalloinvest Ltd (a subsidiary of METALLOINVEST) acquired a 24% stake in METALLOINVEST Holding Company. VTB Group sold its stake in METALLOINVEST Holding Company, and USM Holdings acquired control over all 100% shares of the Company.

SUBSEQUENT EVENTS

In February 2013, METALLOINVEST announced the new composition of its Board of Directors comprising seven members: a chairman, two independent directors, two non-executive directors, and two executive directors. As a result, the first female director was appointed on the Board. In March, the Board approved composition of two newly formed committees: the Finance, Budgeting and Strategy Committee and the Audit Committee.

In February 2013, METALLOINVEST issued RUR 10 bn (c. USD 330 mn) 8.9% RUR-denominated unsecured corporate bonds maturing in 2023 with an early redemption option in 2018. Entire proceeds were used to refinance RUR-denominated banking loans.

In March 2013, METALLOINVEST and Severstal signed a 3-year contract for supplying 3 mn tonnes of iron ore.

In March 2013, the Company repaid USD 250 mn ahead of schedule under PXF from operating cash flow.