FINANCING OILS, GAS & METALSIN THE RUSSIAN FEDERATION

25-26 MARCH 2003, MOSCOW

OverviewOverview

The world’s largest producer of nickel and palladium as well as a significant producer of copper, cobalt, PGMs and gold

Largest producers in 2001(In '000 tons, share of world production)

5%6%

8%

18%19%

0

50

100

150

200

250

NorilskNickel

Inco Falconbridge BHP Billiton WMC

Largest producers in 2001(Share of world production)

14%

9%6%

4%

>40%

0%

10%

20%

30%

40%

50%

NorilskNickel

AngloPlatinum

ImpalaPlatinum

Stillwater Lonmin

Largest producers in 2001(Share of world production)

22%

17%

12%

3%

36%

0%

10%

20%

30%

40%

50%

AngloPlatinum

ImpalaPlatinum

NorilskNickel

Lonmin Inco

Commodities produced by Norilsk Nickel are deliverable on

international exchanges: LME, LPPM, LBME, etc.

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

Source: Company reports except for Norilsk Nickel

Ni

Pd

Pt

Production & Sales 2002 (preliminary)Production & Sales 2002 (preliminary)

Production, t% chg.y-o-y

Exports, t% chg.y-o-y

DomesticSales, t

Nickel 218’000 -2% 208’000 14% 11’000

Copper 454’000 -4% 354’000 -16% 83’000

Cobalt 4’200 -9% 4’100 - 9

Distribution 2002Distribution 2002

PLATINUM

Asia3%

USA4%

Europe93%

PALLADIUMAsia15%

Europe40%

USA45%

COPPER

Europe91%

Asia5%

USA4%

NICKEL

Asia19%

USA9%

Europe72%

Credit EnvironmentCredit Environment

Needs of the company:• short-term financing of working capital • medium-term financing for capital investments• long-term financing for investment / acquisition projects

Security:• required in form of future export proceeds assignment• minimum appetite yet for unsecured credits in the bank loan market

Available markets: • bank loans• bonds• equity and equity linked products

Limitations of the export contracts:• short or medium term • substantial volumes of spot sales• governmental regulation of PGMs’ sales

Working Capital FinanceWorking 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

Capital Investment and Project FinanceCapital Investment and Project Finance

restrictive Russian legislation

• strategy/investment programme is under consideration

• off-shore security

• secured deals require export collateral matching in tenors to the loan repayment and pay-back period of investments

Issues

Solutions

• corporate (unsecured) finance

• project finance (secured by incremental cash flow generated by the project)

• high financing costs«Escrow accounts»

• structured deals (bank market + capital market)

• ECAs

Trade FinanceTrade Finance

Bank guarantee

Tender

Selection of a supplier

Advancepayment

20%

Letter of credit(confirmed)

80%

Shipment from Dudinka

Norimet Ltd., LondonBills of Lading

Warehouse Receipts

Off-taker

Short-term banking commodity finance

14days

Payment methodagreed upon

$

$

IMPORTEXPORT

19981998

19971997

Cross-Border Credit HistoryCross-Border Credit History

$ 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)

$ 25’000’000 loan for pre-export financing of copper sales (6 months)19991999

20032003

20022002

Cross-Border Credit History (continued)Cross-Border Credit History (continued)

$ 200’000’000 syndicated loan secured by nickel inventory (3 years)

$ 250’000’000 syndicated loan for pre-export financing of nickel sales (3 years)

$ 75’000’000 syndicated loan for pre-export financing of copper sales (1 year)

$ 30’000’000 loan for pre-export financing of copper sales (1 year)

$ 30’000’000 loan for pre-export financing of nickel sales (8 months)

no international loans2000200020012001

$ 30’000’000 NIB loan (plus $ 30 million Norwegian government grant) for modernisation of Pechenganickel facilities (7 years)

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

Loan DetailsLoan Details

$ 75’000’000 syndicated loan for PGM sale financing (4 months):

19971997

$ 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):

«Euromoney» named this deal «Deal of the year 1998»

no government guaranties which proved the evidence of acknowledgement of Norilsk Nickel as a sound borrower

Loan Details (continued)Loan Details (continued)

19981998

«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

$ 25’000’000 loan for pre-export financing of copper sales (6 months:

Loan Details (continued)Loan Details (continued)

19991999

Loan Details (continued)Loan Details (continued)

0

200

400

600

800

1000

1200

'97 '98 '99 '00 '01 '02

0

100

200

300

400

500

600

700

Palladium

Platinum

0

2000

4000

6000

8000

10000

12000

'97 '98 '99 '00 '01 '02

0

500

1000

1500

2000

2500

3000Nickel

Copper

High metal prices ensured robust

cash flows

2000200020012001

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%

Loan Details (continued)Loan Details (continued)

ING Barings Natexis Societe Generale Standard Bank

Creditor banks:

Citibank Commerzbank CSFB Deutsche Bank

* Norilsk Nickel also enjoyed short-term borrowing from Russian banks

2002 Loan Details2002 Loan Details

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

$ 30’000’000 NIB loan for modernisation of Pechenganickel facilities:

margin 2.75% over LIBOR

tenor 7 years

NIB Ecological Project

2002 Loan Details (continued)2002 Loan Details (continued)

US$ 200 Million Secured 3 year Loan Facility

tenor 3 year (amortising from 18th month on a quarter basis)

margin 2% over LIBOR

Nickel Inventory Finance

scurity pledge of nickel located in international warehouses, stock

is freed up by repayments

United Financial Group, Russia Morning Comment, 5 April 2002

Killing two … first, it [Norilsk Nickel] replenishes its cash reservebirds with one … secondly, this [the deal] lifts the pressure off the nickelstone…again market, which is well aware of Norilsk’s nickel stockpile

2002 Loan Details (continued)2002 Loan Details (continued)

Long-term Loan Facility Secured by PGM

secrecy terms and conditions were subject to state secrecy laws

creditor Ministry of Finance of Russian Federation

Repayment of Government PGM Loan…

purpose financing of “Northern deliveries”

repayment in metals in August 2002 ahead of schedule

…provided for improved transparency

disbursement 1994

since then no more loan agreements subject to state secrecy

2003 Debt Programme2003 Debt Programme

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

deal oversubscribed to USD 320 mln

first revolving credit facility for a Russian corporate to be syndicated in the international markets

grace 18 months

First Ever Revolver Syndicated In International Markets

Credit PolicyCredit 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

Further StepsFurther 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

Credit RatingCredit 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

Recent Corporate DevelopmentsRecent 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 marketsin 2003 and 2004

Acquisition ofZAO «Polyus»

Acquisition of51% interest in Stillwater Mining Company

Russia’s most profitable gold company with a net profit margin of 40% or $54 million from 2001 revenues of $135 million

- approved by the boards of both companies- requires Stillwater shareholder approvaland US antitrust clearance

Funding Needs For 2003Funding Needs For 2003

• current market prices ensure sufficient cash flows for working capital and capital investments needs

• strategic development plan in elaboration

Nataly LoginovaDebt Finance Department

phone:fax:

e-mail:

+7 095 787 76 45+7 095 787 04 62loginova@rao.nornik.ru