THE STATE ATOMIC ENERGY CORPORATION “ROSATOM”

SUSTAINABLE DEVELOPMENT OF URANIUM PRODUCTION: STATUS, PROSPECTS, CHALLENGES (an inside outlook)

Dr. Alexander Boytsov Uranium One Group

Content

1

Uranium supply & demand analysis

Uranium production by countries, companies and mining methods

ISL uranium mining: history & forecast

Uranium mining challenges & opportunities

Uranium resources availability

Kazakhstan uranium resources and production capabilities

Conclusion remarks

Global Uranium Supply Demand Projections

2

UxC Uranium Market Outlook, Q1 2018. Mid case supply-demand scenario WNA The Nuclear Fuel Report, 2017. Base case scenario

Starting from 2025 uranium demand may exceed supply

WNA 2017 report Primary uranium production must be increased from current

59 to 90kt U in 2035, i.e. by 1.5 times. Production from existing mines will decrease by 50% in 2035,

while new mines may partially replace exhausted capacities. U output from stand by projects must reach 30 ktU/y by 2035.

27 ktU

UxC Q1 2018 report Uranium production ramp up by 24% or to 73kt U in 2035 Uranium production from existing and new mines will

decline by 28% by 2035 Output from stand by projects must reach 27 ktU/y by 2035. Demand may exceed supply in 2018

2018 undersupply

30,000 tU in 2035 from new mines

New discoveries-exploration

Stand by deposits

development

Secondary sources

and stockpiles

3

How to supply future uranium demand?

Are uranium resources and mining capacities sufficient to meet future requirements?

4

NPP U requirements

U production

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t U

Historical Uranium Supply – Demand Relationship

Production was substantially ahead of reactor requirements until 1990. About 1mtU have been stockpiled

Since 1990, requirements have exceeded production by approximately 0,6 mtU. The difference was covered by inventories and other secondary sources

Current variance between cumulative production and demand is 414 ktU - potential stockpiles

Tons U 000’ 1945-1990 1990-2016 TOTAL

U production 1,748 1,059 2,807

NPP requirements 713 1,680 2,393

Stockpiled 1,035 -621 414

Stockpiles accumulation

Stockpiles consumption

* Source: UxC Q4 2017 Uranium Market Outlook, public reports, author private expertise

Global Uranium Production Trends

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Historical Uranium Production by Countries 2017 Production by Companies

After 2014 drop, in 2016 uranium production restored to a level of 62 ktU – a maximum since 1983, and dropped back to 59 ktU in 2017

Sustainable U production grow in Kazakhstan - six-fold over 10 years

Kazakhstan produced 40% and Canada 22% of 2017 global uranium

Kazatomprom keeps leadership with 21% share, followed by Orano, Cameco with 16% and Rosatom (Uranium One + ARMZ) with 14% share

Uranium One was the forth largest producer in 2017 with 9% share

In Situ Leach (or In Situ Recovery) is the main uranium mining method since 2009. Its share in the global production has increased from 20% in 2005 to 50% in 2016 and 2017 (30 ktU). Kazakhstan ISL mining contributed 40%, while five other ISL producing counties 10% of world total.

ISL mining capacities will decline after 2028 from 33 ktU to 27 ktU in 2030.

Low cost (< $20/lb) ISL production will sharply decline in 6 times during 2022 - 2029 due to mines closure, while higher cost ($20-30/lb) ISL production may partly replace capacities until 2028

Казахстан увеличил добычу урана в 6 раз

за 10 лет

Uranium Production by Mining Methods - History and Forecast

* - Uranium Production Cost Study, UxC Consulting, September 2017

Production Capacities Forecast by Mining Method*

K t

U/y

ISL Production Forecast by Cost *

6

Companies may face economic and technical challenges in new ISR projects development

Source: U production cost study, UxC 2017

Казахстан увеличил добычу урана в 6 раз

за 10 лет

Operating Uranium Mines Production Capacity and Full Cost

7

Operating ISL uranium mines:

26 of 43 operating mines (60%)

Operating ISL mines in Kazakhstan

17 of 19 mines (95%) with full cost below current spot price

27% of total existing production capacity and 29% of total U resources

Five Uranium One mines in Kazakhstan are in TOP 10 global low cost mines

Planned Mines

Seven small new ISL mines including only one mine in Kazakhstan

Today is the era of Kazakhstan and ISL mining Only low cost producers or companies with favorable contracts survive

Companies Revise Uranium Mining Plans

8

Production plans revise. Major events

Uranium production may drop by another 10% in 2018 and cause temporary undersupply. Over 12 ktU will be unavailable to the market during the 2016-2018 period*

Factors Affecting Uranium Production and Mines Development

Asia North America Australia Africa

Production cut & halt

Kazakhstan all mines: - 10% drop in 2017

- 20% below contracts in 2018-2020

Canada: McArthur - minus 7ktU in 2018;

USA: multiple ISL mines

Ranger

Niger - Somair, Cominak; Namibia-

Langer Henirich, Rossing

Postponed development

Ukraine – Novokonstatinovka

Canada: Millennium, Midwest, Roughrider

Kintyre, Ranger Deep, Olympic

Dam expansion

Namibia - Husab, Niger- Imouraren,

Namibia – Trekkopje

Care and maintenance

Russia – Elkon, Gornoye Canada: Rabbit Lake

USA: White Mesa

Honeymoon, Jabiluka, Ranger

Deep

Malawi: Kayelekera, Niger: Azelik,

Tanzania: MRP

Actual production is often behind mining capacities and original forecasts. Companies adjust mining plans, put projects on hold, under care and maintenance. Main reasons:

Current uranium supply demand imbalance and uranium oversupply.

Depressed uranium market and low prices - historical minimum during last decade;

Technical constraints, political, social and environmental factors.

* Source: Trade Tech, Nuclear Fuel Review, March 23, 2018.

Global Uranium Resources by Cost Categories and by Countries

.

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During 2009 to 2015 the total global uranium resources increased by 21%, but low cost resources in <80$/kgU category decreased by 48% and its share decreased from 59% to 27%.

65% of global resources in <130$/kg category belong to operating and under construction mines Leaders in uranium resources: Australia (23%), Kazakhstan (12% leader in low cost resources), Canada and Russia (both 9%)

796 681 683 647

3,742

3,079

1,957 2125

5,403 5,327

5,903 5718

6,306

7,097 7,635 7642

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KtU

<40 $/kgU <80 $/kgU <130 $/kgU <260 $/kgU

Uranium Resources by Cost Categories Uranium Resources by Countries

Source: URANIUM 2016: resources, production, demand. NEA/IAEA, OECD 2016

Total resource base is sufficient to ensure long-term needs of nuclear power industry. The great share of resources is poorly explored and belongs to high cost categories.

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The History of Uranium Discoveries in Kazakhstan by Volkovgeology

Total initial resources 1,326 ktU (3,448 Mlbs), including 1,238 ktU (3,219 Mlbs) of sandstone type roll front type for ISL mining

Almost all deposits in Kazakhstan for ISL mining were discovered between 1970 and 1990.

During 2000’s, detailed exploration occurred to convert resources to higher level of confidence

Ref. Tomsk University

Kazakhstan Uranium Resources and Production Capacities*

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Kazakhstan U resources amounted to 1,073 ktU as of 01.01.2015, including 760 ktU (71%) of low cost sandstone type, amenable for ISL.

95% of ISL resources belong to low cost category and to operating and under construction mines

Maximal annual Uranium production capacity of 25 ktU may be maintained until 2020.

Uranium production capacities may decrease after 2020: by 40% in 2030 and by 70% in 2035 due to resources mining depletion

Limited potential for new ISL mines development

* Source: URANIUM 2016: resources, production, demand. NEA/IAEA, OECD 2016.

Tanzania

Namibia

Argentina

Australia

China

Mongolia Kazakhstan

USA

Brazil

India

Uruguay

Paraguay

Turkey

Uzbekistan

Russia

Active ISL production Potential ISL production

Current and Potential ISL Mining Countries

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Conclusion remarks

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1. Starting from 2023 global uranium demand may exceed supply.

2. The global resource base is sufficient to ensure the long-term production, but its great share belongs to high cost categories.

3. In 2016 global uranium production reached a historical maximum since 1983 but dropped by 10% in 2017.

4. In 2018 uranium production may drop by another 10% and cause undersupply.

5. Low uranium prices don’t boost production. Major uranium companies revise plans due to unfavorable market.

6. Uranium companies face economic and technical challenges in operating and new mines development.

7. Companies with low cost production and favorable long term contracts may survive in current challenging market

8. Kazakhstan increased uranium production more than six times during the last decade and keeps the world leadership since 2009 with about 40% from the world total output in 2017. After 2020 uranium production may decline due to resources mining depletion and mine closure.

9. Uranium exploration must be focused on low cost resources discovery.

Thank You!

Zarechnoye

Akdala Karatau

Akbastau

Kharasan

South Inkai