FINANCING OILS, GAS & METALS IN THE RUSSIAN FEDERATION 25-26 MARCH 2003, MOSCOW

1. FINANCING OILS, GAS & METALS IN THE RUSSIAN FEDERATION 25-26 MARCH 2003, MOSCOW

2. Overview Ni • The world’s largest producer of nickel and palladium as well as a significant producer of copper, cobalt, PGMs and gold Pd • Exports from Russia represent over 90% of Norilsk Nickel’s revenues annually and remain a significant influence on the supply/demand balance in Western markets Pt • Commodities produced by Norilsk Nickel are deliverable on international exchanges: LME, LPPM, LBME, etc. Source: Company reports except for Norilsk Nickel

3. Production & Sales 2002 (preliminary)

4. Distribution 2002

5. Credit Environment Needs of the company: • short-term financing of working capital • medium-term financing for capital investments • long-term financing for investment / acquisition projects Available markets: • bank loans • bonds • equity and equity linked products Security: • required in form of future export proceeds assignment • minimum appetite yet for unsecured credits in the bank loan market Limitations of the export contracts: • short or medium term • substantial volumes of spot sales • governmental regulation of PGMs’ sales

6. Working Capital Finance Issues • bulky and complicated documentation • extensive preparation period • considerable legal expense Solutions • long for big-ticket deals • extend tenors from short-term to medium-term • change structure from term loans to revolving facilities

7. Capital Investment and Project Finance Issues • strategy/investment programme is under consideration • secured deals require export collateral matching in tenors to the loan repayment and pay-back period of investments • off-shore security restrictive Russian legislation «Escrow accounts» • high financing costs Solutions • corporate (unsecured) finance • project finance (secured by incremental cash flow generated by the project) • structured deals (bank market + capital market) • ECAs

8. Trade Finance IMPORT EXPORT Shipment from Dudinka Tender 14 days Selection of a supplier Norimet Ltd., London Bills of Lading Warehouse Receipts Payment method agreed upon $ Short-term banking commodity finance Advance payment 20% Letter of credit (confirmed) 80% $ Bank guarantee Off-taker

9. Cross-Border Credit History 1997 $ 75’000’000 syndicated loan for PGM sale financing (4 months) $ 110’000’000 loan for pre-export financing of copper sales (1 year) $ 13’000’000 loan for equipment leasing financing guaranteed by Swedish export credit agency (EKN) (3 years) $ 17’000’000 loan for equipment leasing financing (3 years) 1998 1999 $ 25’000’000 loan for pre-export financing of copper sales (6 months)

10. Cross-Border Credit History (continued) 2000 2001 no international loans $ 30’000’000 NIB loan (plus $ 30 million Norwegian government grant) for modernisation of Pechenganickel facilities (7 years) $ 30’000’000 loan for pre-export financing of copper sales (1 year) 2002 $ 30’000’000 loan for pre-export financing of nickel sales (8 months) $ 200’000’000 syndicated loan secured by nickel inventory (3 years) $ 75’000’000 syndicated loan for pre-export financing of copper sales (1 year) 2003 $ 250’000’000 syndicated loan for pre-export financing of nickel sales (3 years)

11. Loan Details 1997 $ 75’000’000 syndicated loan for PGM sale financing (4 months): • syndicated among a number of large foreign banks • low cost of borrowing (3.5% over LIBOR) • the first and the only deal after privatization secured by sales of PGMs

12. Loan Details (continued) 1998 $ 110’000’000 loan for pre-export financing of copper sales (1 year): • low cost of borrowing (4% over LIBOR) • 6 months grace period • survived the 1998 default crisis without disruption of disbursement schedule $ 13’000’000 loan for equipment leasing financing (3 years): • the first leasing deal financed by a foreign bank • the only deal of Norilsk Nickel since 1997 guaranteed by export credit agency (EKN, Sweden) $ 17’000’000 loan for equipment leasing financing (3 years): • no government guaranties which proved the evidence of acknowledgement of Norilsk Nickel as a sound borrower • «Euromoney» named this deal «Deal of the year 1998»

13. Loan Details (continued) 1999 $ 25’000’000 loan for pre-export financing of copper sales (6 months: • «Trade Finance» named this deal «The best deal of 1999» • the first foreign loan after the crisis of 1998 • a sign for foreign banks to resume lending activities in Russia

14. Loan Details (continued) 2000 2001 High metal prices ensured robust cash flows

15. Loan Details (continued) 2002 - Norilsk Nickel resumes borrowing from foreign banks * • total funds raised $ 335’000’000 • margin over LIBOR 2 - 3.8 % • tenors 1 - 3 years • secured borrowings 100% Creditor banks: • Citibank • Commerzbank • CSFB • Deutsche Bank • ING Barings • Natexis • Societe Generale • Standard Bank * Norilsk Nickel also enjoyed short-term borrowing from Russian banks

16. 2002 Loan Details NIB Ecological Project $ 30’000’000 NIB loan for modernisation of Pechenganickel facilities: • margin 2.75% over LIBOR • tenor 7 years • part of $ 93’500’000 modernisation project also financed by Norwegian government grant ($ 30’000’000) and own funds of Norilsk Nickel ($ 33’000’000) • anticipated substantial improvement in ecology conditions (reduction by 95% of sulfur dioxide) in the Russian-Norwegian border area, as well as other Scandinavian countries by 2006

17. 2002 Loan Details (continued) Nickel Inventory Finance US$ 200 Million Secured 3 year Loan Facility • margin 2% over LIBOR • tenor 3 year (amortising from 18th month on a quarter basis) • scurity pledge of nickel located in international warehouses, stock is freed up by repayments Killing two … first, it [Norilsk Nickel] replenishes its cash reserve birds with one … secondly, this [the deal] lifts the pressure off the nickel stone…again market, which is well aware of Norilsk’s nickel stockpile United Financial Group, Russia Morning Comment, 5 April 2002

18. 2002 Loan Details (continued) Repayment of Government PGM Loan… Long-term Loan Facility Secured by PGM • creditor Ministry of Finance of Russian Federation • disbursement 1994 • secrecy terms and conditions were subject to state secrecy laws • purpose financing of “Northern deliveries” • repayment in metals in August 2002 ahead of schedule • since then no more loan agreements subject to state secrecy …provided for improved transparency

19. 2003 Debt Programme First Ever Revolver Syndicated In International Markets US$ 250 Million Structured Pre-Export Finance Facility • structured as a combination of • a revolving credit line for USD 100 mln margin 3% over LIBOR tenor committed for 1 year + 2 extension options • a term loan of USD 150 mln margin 3.25 over LIBOR tenor 3 year • grace 18 months • deal oversubscribed to USD 320 mln • first revolving credit facility for a Russian corporate to be syndicated in the international markets

20. Credit Policy • promote Norilsk Nickel to a diverse pool of international investors and build up international investor confidence • penetrate the high-quality, international financial investor base • minimise debt servicing costs on new funds raising • diversify funding base beyond the bank loan market • selection of arrangers on the competitive basis • further co-operation with relationship banks

21. Further Steps • Intention to diversify credit portfolio of Norilsk Nickel • increase tenors • provide for the optimal balance of secured and unsecured loans • step in the international bond market • Improvement of the image of Norilsk Nickel as an international borrower • access to the international capital markets • improve disclosure / transparency • enhance Norilsk’s credit profile • get credit rating

22. Credit Rating • As the world’s leading producer of base and precious metals, Norilsk Nickel has the ability to be rated at par with leading Russian corporates. The following should facilitate the company’s potential rating: • binging financial accounts and reporting in line with IAS. Audited financial statements for 2002 will be announced in June-July 2003. • improvement of corporate governance • increase transparency • develop long-term strategy • pursue efficient M&A policy

23. Recent Corporate Developments • announced dividend policy • disclosed base metals production, sales and reserves • started prepation of a base metal reserves audit at two largest orebodies • initiated program for reduction of sulfur emissions to international standards better access to international capital markets in 2003 and 2004 Russia’s most profitable gold company with a net profit margin of 40% or $54 million from 2001 revenues of $135 million Acquisition of ZAO «Polyus» Acquisition of 51% interest in Stillwater Mining Company - approved by the boards of both companies - requires Stillwater shareholder approval and US antitrust clearance

24. Funding Needs For 2003 • current market prices ensure sufficient cash flows for working capital and capital investments needs • strategic development plan in elaboration

25. Nataly Loginova Debt Finance Department phone: fax: e-mail: +7 095 787 76 45 +7 095 787 04 62 loginova@rao.nornik.ru