ENRC.L Regulatory News (ENRC)

14 August 2013

Eurasian Natural Resources Corporation PLC

Announcement of 2013 Half Year Results

Financial Highlights for 2013

· Financial performance impacted by poor pricing environment, higher finance costs, increased Effective Tax Rate and impairment at Boss Mining.

· Revenue declined by 1% to US$3,209 million.

· Cost of sales up 9% to US$1,917 million, primarily driven by growth in operations in Africa.

· Underlying EBITDA fell by 17% to US$944 million; Underlying EBITDA margin of 29.4%.

· Non-cash charges for impairment totalling approximately US$161 million primarily related to Boss Mining and the Group's interest in Northam Platinum Limited.

· Basic earnings per share of US 17 cents (2012 earnings per share: US 38 cents); earnings per share (adjusted) of US 21 cents (2012: US 40 cents).

· No interim dividend proposed (2012 interim dividend of US 6.5 cents).

· Gross available funds of US$789 million; borrowings of US$6,194 million.

Business Highlights for 2013

· Solid cash flow generation from assets in Kazakhstan; increase in production volumes for all key saleable products against the comparable period.

· Significant increase in African copper volumes as Frontier development phase 1 is completed and Chambishi SX/EW plant commissioned.

· Cost control and productivity enhancing initiatives kept unit costs for key products well below initial guidance; material decrease in unit costs in the Ferroalloys Division.

· Capital expenditure cash flows of US$720 million; progressed development of the New Aktobe Ferroalloys Plant, Frontier, Chambishi Metals PLC, Power Unit 6 and the expansion of logistics capacity.

· Final maturity of US$1 billion VTB facility extended from April 2014 to June 2018; new US$500 million facility with Sberbank signed.

Takeover Offer

· Takeover offer received from Eurasian Resources Group B.V., a consortium of the Founder Shareholders and the Government of the Republic of Kazakhstan, of US$2.65 and 0.230 Kazakhmys shares per ENRC PLC share; Kazakhmys shareholders have agreed to sell into the offer.

· Offer document released by the consortium on Wednesday 7 August 2013. Response to the offer document by ENRC's Independent Committee will be released shortly.

"Our first half results reflect the impact of a weaker pricing environment for the majority of our products. Our operational achievements, as demonstrated through higher production, solid cashflows, and a rigorous focus on costs, have helped to mitigate the overall impact of lower prices.

We continued to invest in our business during the period making good progress at key projects in Kazakhstan and Africa. By extending maturities of our debt facilities we have also strengthened our balance sheet.

"It has been a difficult period for the Company, not least with the on-going SFO investigation. We continue to work closely with them and remain committed to a full and transparent investigation of all our procedures and conduct."

Felix J Vulis, Chief Executive Officer

RESULTS OF OPERATIONS (Unaudited)

The following table sets out selected financial information of the Group's operations for the six months ended 30 June 2013 and 30 June 2012:

The information set out in this announcement relates to the six months ended 30 June 2013 and, unless otherwise stated, is compared to the corresponding period of 2012, the six months ended 30 June 2012. The Chief Executive Officer's Outlook statement includes an update for the period since 30 June 2013. Where applicable in the document all references to 't' are to metric tonnes, to 'kt' are to thousand metric tonnes, and 'mt' to million metric tonnes unless otherwise stated. Unless stated otherwise, statements relating to market data contained in this announcement are based on external sources, for example research institutes and industry bodies and are derived from actual and/or estimated data relating to 2012 and 2013 and are prepared in H1 2013 or early H2 2013.

Eurasian Natural Resources Corporation PLC ('ENRC') will announce its 2013 Half Year Results on Wednesday, 14 August 2013. There will be a conference call for investors and analysts, commencing at 09.30 (London time). Slides for the Half Year Results conference call are available on the ENRC website (www.enrc.com). Participant dial-in details are as follows:

UK Toll Number: 02031394830UK Toll-Free Number: 08082370030Pin: 58589024#

Forward-looking statements

This announcement includes statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may', 'will', or 'should' or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include matters that are not historical facts or are statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries in which the Group operates. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed upon them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and generally beyond the Group's control. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. The Group cautions you that forward-looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if the assumptions underlying any of these statements prove incorrect, the Group's actual results of operations, financial condition and liquidity and the development of the industry in which the Group operates may materially differ from those made in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if the Group's results of operations, financial condition and liquidity and the development of the industry in which the Group operates are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in future periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations, changes in business strategy, political and economic uncertainty. Subject to the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules or any applicable law or regulation, the Group expressly disclaims any obligation or undertaking publicly to review or confirm analysts' expectations or estimates or to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any changes in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast. The forward looking statements contained in this document speak only as at the date of this document.

Listing Rules

This 2013 Half Year Results Announcement has been prepared to meet the requirements of the Listing Rules of the United Kingdom's Financial Conduct Authority to provide additional information to shareholders and should not be relied on for any other purpose or by any other party.

CHIEF EXECUTIVE OFFICER'S STATEMENT

The Group has faced a challenging past six months, with Board and management changes, the launch of a Serious Fraud Office ('SFO') investigation and a weakening commodity price environment, which has impacted the Group's financial performance. The Group has reported Underlying EBITDA of US$944 million, a decrease of 17.3% and a decrease in Earnings per Share ('EPS') of 55.3% to US 17 cents.

Takeover Offer

In June of this year the terms of an offer to privatise the Group were announced by Eurasian Resources Group B.V., a consortium comprised of the Group's founding shareholders and the Government of the Republic of Kazakhstan. An offer document in this regard was released on 7 August 2013. Kazakhmys Plc shareholders recently voted in favour of selling their 26% stake in ENRC, which was a precondition to the offer. An update from the Independent Committee of the Board of ENRC on the takeover offer, in the form of a response to the consortium's offer document, will be released shortly.

Serious Fraud Office ('SFO') Investigation

The SFO opened its formal investigation into the activities of the Group in April of this year and we have retained the legal services of Fulcrum Chambers LLP ('Fulcrum') and Debevoise & Plimpton LLP to assist us with this investigation. Earlier this year in March the SFO served a Section 2 Notice on the Company's previous lawyers, Dechert LLP ('Dechert'), requiring delivery up of all non-privileged documentation. This has since been effectively transferred to Fulcrum, in the form of two Section 2 Notices. We are pleased with this move as it allows our legal team to properly address the relevant issues and progress the investigation. The first Notice requires the delivery of certain Dechert materials by the end of August 2013 and the second Notice requires that the remainder of the Dechert materials are submitted to the SFO by the end of October 2013. An initial tranche of documents was provided at the end of July. The Group continues to cooperate fully with the SFO and are committed to a full and transparent investigation of all of our procedures and conduct.

Operational Performance

Operationally, the Group has performed well in the first half of 2013. With the exception of iron ore sales volumes, production and sales for all of our key commodities have either been in line or ahead of comparable period in 2012. Our focus on cost control has yielded positive results, with ferroalloys unit costs having fallen almost 10% and iron ore unit costs increasing only 4% - 6%, both well below earlier market guidance.

Development Projects and Financing

Our investment programme continues to reflect our determination to maintain our leading low cost position, to expand our product portfolio and develop our existing asset base. In Kazakhstan, the development of the New Aktobe Ferroalloys Plant remains on budget and on-track for commissioning in Q4 2013. The reconstruction of Power Unit 6 and all major construction works on the anode plant were completed in H1 2013 and the Group's railway fleet was expanded through the acquisition of further wagons and containers. All of these projects aim to continue to strengthen our integrated and low-cost model in Kazakhstan.

In Africa, the first phase of development of the Group's Frontier Mine is now complete and Chambishi's solvent extraction and electrowinning ('SX/EW') plant was commissioned, leading to a significant increase in copper contained production.

The Group's capital expenditure cashflows for H1 2013 amounted to US$720 million (H1 2012: US$1,075 million), a decrease of 33%. The majority of expenditures were incurred by the Ferroalloys Division, followed by the Other Non-ferrous and Iron Ore Divisions.

The Group entered into two new financing agreements in H1 2013. Firstly, an amendment to the US$1 billion loan from VTB Group was signed, which extends the date of maturity from 25 April 2014 until 25 June 2018. Secondly, a new US$500 million facility was entered into with Sberbank of Russia. The Group has also negotiated to delay the remaining BML acquisition payment to June 2014 at the earliest, providing additional relief during the current period of intensive capital spend.

Safety Performance

There were seven fatalities at our operations in H1 2013 (H1 2012: 12). Of these, five were employees (H1 2012: 6) and two contractors (H1 2012: 6). The Board and senior management team would like to express their sincere condolences to the families involved in these unacceptable and tragic events. Following these accidents the Group reviewed plans for the roll-out of corporate standards on fatal risk control to ensure full implementation of the most critical risks across our Divisions during 2013.

There were 40 employee lost time injuries ('LTI') recorded during H1 2013 (H1 2012: 44) with a corresponding LTIFR of 0.56 (H1 2012: 0.62). Our LTI definition is aligned with international practices, and we continue to work with our contractors to develop reliable lost-time injuries reporting. In addition, we have further improved our contractor management processes following several contractor working-at-height accidents during construction of our new ferroalloys plant in Aktobe.

As part of our zero injuries aspiration, we continue to focus on developing our safety culture and improving safety behaviours as well as paying increased attention to risk assessment and process safety improvements.

As a Group, we employ almost 80,000 employees across four continents. Our people are the very core of our business and I would like to thank all of our employees for their commitment and passion, particularly during such challenging times.

Felix J Vulis

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

INCOME STATEMENT

The Group's performance continued to be impacted by lower commodity prices. The Group generated Underlying EBITDA of US$944 million, down 17.3% from the comparable period in 2012. The Group continued its efforts to control costs in this challenging economic environment.

Basic EPS for the period was US 17 cents (June 2012: US 38 cents) and adjusted EPS was US 21 cents (June 2012: US 40 cents).

Revenue

Revenue was significantly impacted by lower market prices. Nevertheless higher sales volumes across all Divisions, except for the Iron Ore Division, helped to maintain H1 2013 revenue broadly level when compared to the H1 2012 at US$3,209 million (H1 2012: US$3,246 million). Higher revenue was reported in the Alumina and Aluminium and Other Non-ferrous Divisions where production and sales volumes increased.

Sales prices were lower for all of the Group's commodities, except for iron ore which stayed flat. Reduction in prices significantly impacted the financial results.

The average realised prices for ferroalloys were 10.9% below the average prices in the same period last year. The chrome ore average price was 18.0% down and the manganese concentrate average price was 1.3% below the corresponding period of 2012. Sales volumes of LC and MC FeCr as well as other ferroalloys also had an adverse impact on the Division's revenue. Sales of chrome ore, high-carbon ferrochrome and FeSiCr increased revenue.

Average realised prices for iron ore were broadly flat compared to the first half of 2012 with a 2.9% reduction in the realised prices for pellets and a 1.0% increase in concentrate price. The product mix was more favourable to the Iron Ore Division's revenue in H1 2013 with a higher share of pellets and lower volumes of sold concentrate and screening.

The Alumina and Aluminium Division reported higher sales volumes in H1 2013. The division is now operating at full production capacity following the technological problems experienced at the alumina refinery in early 2012.

The Other Non-ferrous Division had the highest increase in revenue fully attributable to higher sales volumes, with the majority coming from Frontier's start-up and commissioning of the copper solvent extraction plant at Chambishi. Average realised prices for cobalt metal were 11.9% below H1 2012 and 8.3% below for copper metal.

The Ferroalloys Division accounted for 38.3% of the Group revenue, the Iron Ore Division 30.0%, the Alumina and Aluminium Division 14.8%, the Other Non-ferrous Division 11.2%, the Energy Division 5.4% and the Logistics Division 0.3%.

Cost of sales

Higher costs of sales were driven mainly by growth of the scale of our operations and greater production output, particularly in the Other Non-ferrous Division. In addition, increased wage rates, higher depreciation and Mineral Extraction Tax ('MET') has also contributed to cost of sales growth. These were partially offset by the lower cost of some input materials and management efforts to keep costs under control by continuing process optimisation and cost cutting initiatives.

Distribution costs

Distribution costs rose by 5.7% to US$280 million (H1 2012: US$265 million). The increase was mainly driven by higher volumes in the Other Non-ferrous and Energy Divisions, partially offset by lower transportation costs in the Ferroalloys Division as a result of shipping to less remote destinations.

General and administrative costs

General and administrative costs reduced by 6.3% to US$340 million (H1 2012: US$363 million). This is predominantly due to lower social investments and staff costs, partially offset by increased professional and consultancy costs including costs incurred for the Group's bid defence and related regulatory costs which totalled US$25 million at 30 June 2013.

Exploration expenses

Exploration expenses were 18.6% down and amounted to US$48 million (H1 2012: US$59 million).

Net other operating income

Net other operating income comprised mainly foreign exchange gains and losses from operating activities.

Net finance costs

Net finance costs increased by 88.5% to US$164 million (H1 2012: US$87 million) as a result of the increased borrowings to support the Group's capital expenditure projects and strategic development. Total finance costs capitalised were US$43 million for the six months ended 30 June 2013 (2012: US$16 million).

Share of loss of joint ventures and associates

The net share of joint ventures and associates results amounted to a US$0.6 million loss (H1 2012: US$9 million). This is comprised of the Group's share in the loss of its joint venture investments in Taurus Gold Limited of US$1.1 million and the Group's share in the profits of Asmare Coking Coal of US$0.5 million.

Impairment

The Group suffered a further impairment charge at Boss Mining of US$152 million, primarily as a result of the deferral of capital expenditure as the Group continues to focus on projects which provide the highest returns within the shortest execution time.

Property, plant and equipment held by the Kazakhstan Aluminium Smelter suffered an impairment charge of US$31 million due to increased costs. Aluminium of Kazakhstan had an impairment reversal, US$48 million, following further review of expected future marketing and distribution costs. There is also a reversal of impairment totalling US$40 million following a further review of the fair value less cost to sell of Zhairemsky GOK assets.

The Group has also suffered further impairment, US$66 million, in respect of its investment in Northam Platinum Limited due to further falls in that company's market value.

The impairment tests for the CGUs are sensitive to changes in commodity prices, discount rates and operating costs. In particular, adverse future changes in these assumptions could result in an impairment charge for the following CGUs: Aluminium of Kazakhstan, Eurasian Energy Corporation, Kazakhstan Aluminium Smelter, Zhairemsky, Chambishi, the Boss Mining Group and Frontier.

Taxation

The Group's income tax expense for the six months ended 30 June 2013 was US$161 million (H1 2012: US$212million), an Effective Tax Rate ('ETR') of 52.1% (H1 2012 as restated: 30.5%).

Excluding the impact of impairments, the Group's adjusted income tax expense was US$213 million, an ETR of 45.3%. The main drivers behind the adjusted ETR being higher than the 20% corporate income tax rate in the Republic of Kazakhstan, where the majority of the Group's operations are located, included losses not recognised for deferred tax (+18.7%), and excess profits tax charges in Kazakhstan (+4.3%).

The ETR for Kazakhstan remained broadly stable. However, the Group's ETR is substantially higher, mainly due to expenditure in Africa, Brazil and the UK where currently no significant revenues are being generated. The Group's ETR also remains sensitive to prices and market conditions.

DRC concentrates export ban and tax rate

On 5 April 2013 an Inter-ministerial Decree was adopted by the Minister of Mines and the Minister of Finance of the Democratic Republic of the Congo (the 'DRC') relating to the exportation of minerals. The Decree provided, amongst other measures, for a ban of the exportation of copper and cobalt concentrates. It has subsequently been announced that the ban is postponed until 31 December 2013. The Minister of Mines also announced that the rate of tax on concentrates will be increased with effect from 15 July 2013 as a compensatory measure for the delay of the ban, but this has not been enacted yet.

BALANCE SHEET

The Group's net book value of property, plant and equipment at 30 June 2013 was US$14,712 million (31 December 2012: US$14,688 million). Goodwill and other intangibles at 30 June 2013 totalled US$1,760 million (31 December 2012: US$1,766 million). The Group continued its capital expenditure programme during the period as set out later in this review.

The Group's gearing is higher than at 30 June 2012 reflecting the funding drawn down in H2 2012 to fund the acquisitions and on-going capex programme. Gearing was 36.0% at 30 June 2013 (23.7% at 30 June 2012). A summary of the Group's borrowings is set out in note 16 to this interim announcement.

The Group's return on capital employed was 3.6% (year ended 30 June 2012: 5.6%). The calculation of return on capital employed is set out in note 20 to the interim announcement.

CASHFLOW

Net cash generated from operating activities

The Group generated US$487 million of net cash from operating activities (2012: US$763 million), a fall of 36.2% as a result of the Group's lower profitability. Working capital requirements increased during the period by US$56 million (2012: reduction of US$28 million) primarily due to increases in the Iron Ore and Ferroalloys Division's trade receivables and a reduction in trade payables across the Group.

Net cash used for investing activities

During the period the Group utilised a net total of US$706 million for investing activities (2012: US$2,503 million). The primary use of these funds was for the acquisition of property, plant and equipment and intangible assets (2013: US$720 million, 2012: US$1,075 million).

Net cash flow used for financing activities

The Group generated a cash inflow of US$270 million (2012: US$2,656 million cash inflow) from its financing activities during the six months ended 30 June 2013. Additional funding primarily consisted of US$660 million (net of fees) drawn from a revolving credit facility, US$32 million (net of fees) drawn from various export credit facilities and US$11 million drawn from trade finance facilities. These cash inflows were offset by repayment of borrowings and deferred consideration of US$413 million (2012: US$209 million), payment of borrowing costs of US$17 million (2012: US$nil), purchase of non-controlling interests of US$1 million (2012: US$29 million) and cash outflows for dividends of US$2 million (2012: US$141 million).

FUNDING AND LIQUIDITY

During H1 2013, the Group entered into two financing agreements. Firstly, the Group signed an amendment to the US$1 billion loan agreement, dated 25 April 2012, with Russian Commercial Bank (Cyprus) Limited (part of the VTB Group). The agreement amends the final maturity of the facility to 25 June 2018 from 25 April 2014 and the applicable interest rate to 7.50% per annum from LIBOR plus 6.25%. The purpose of this facility is to extend the maturity profile of the Group's debt.

Secondly, the Group entered into a 5 year, US$500 million facility with Sberbank of Russia. This facility bears an interest rate of LIBOR plus a margin of 7.25% and under certain circumstances the margin applicable to this facility could increase to 8.25%. The use of this facility is restricted to the refinancing of the Group's existing debt.

As of 30 June 2013, the average maturity of the Group's outstanding debt was 4.5 years (31 December 2012: 3.9 years).

ENRC PLC is subject to a takeover bid which if it proceeds, may trigger change of control clauses in various loan facilities and other arrangements existing across the Group. These change of control clauses generally allow the lender to demand repayment within 14 days. Hence, the announcement of the bid has created a degree of uncertainty regarding the going concern of the Group and its subsidiaries. Management considers the risk of a material issue to be low given the execution of backstop arrangements by the bidding consortium.

RESTATEMENTS

The Group has restated its previously issued interim financial statements for the six months ended 30 June 2012 as a result of finalisation of the accounting for the acquisitions which was completed during H2 2012. Certain adjustments have also been made to reclassify to other comprehensive income foreign exchange differences on intercompany loans and to capitalise finance costs incurred on borrowings to finance the acquisition or construction of qualifying assets.

The previously reported 31 December 2012 balance sheet and income statement have also been restated to reflect the changes in the provisional purchase price allocation with respect to the acquisition of Camrose Resources Limited.

These adjustments have led to consequential amendments in the presentation of the cash flow statement for the relevant periods. Further detail regarding these restatements can be found at note 1 (Accounting policies).

H1 2013 CAPITAL EXPENDITURE

In 2013, the Group's cash outflow in respect of capital expenditures amounted to US$720 million (2011: US$1,075 million) a decrease US$355 million, or (33%). The geographical split of capital expenditure for H1 2013 was as follows: Kazakhstan US$504 million, Africa US$186 million, Brazil US$15 million, and other US$15 million.

1See note 1 accounting policies.

DIVISIONAL OVERVIEW

Ferroalloys Division

The Ferroalloys Division primarily produces and sells ferrochrome, as well as other ferroalloys, for use as alloying products in the production of steel, whilst manganese and chrome ore are sold to third-party producers of ferroalloys as well as the chemical industry. ENRC is the largest ferrochrome producer in the world by chrome content and the lowest cost producer of high-carbon ferrochrome. The Ferroalloys Division is vertically integrated, having its own chrome ore and manganese ore mines feeding its ferroalloy production in Kazakhstan and Russia. In addition to its own ore, the Division also benefits from competitively priced electricity supplied by the Energy Division, as well as having a gas-fired power station at its Aktobe plant.

Iron Ore Division

The Iron Ore Division consists of producing assets in the Republic of Kazakhstan and exploration and development assets in Brazil. In Kazakhstan the Iron Ore Division produces and sells iron ore concentrate and pellets primarily to steel producers and on the basis of full year 2012 data, is a material exporter of iron ore and in the lowest quartile of the global cost curve. Kazakhstan-based operations include iron ore mines, crushing, beneficiation and pelletising plants and a thermal power station. In Brazil, the Division is focused on the development of a high-quality iron ore deposit in the Caetite region in the State of Bahia, as well as two early stage exploration projects, both located in the State of Minas Gerais.

Alumina and Aluminium Division

The Alumina and Aluminium Division produces and sells alumina to aluminium producers, and also produces and sells the Group's own aluminium. ENRC believes, based on full year 2012 data, that the Alumina and Aluminium Division is the world's 14th largest supplier of traded alumina by volume and is at the lower end of the global industry cost curve for aluminium. The Alumina and Aluminium Division's vertically integrated operations include: bauxite mines, a limestone mine, an alumina refinery, an aluminium smelter and a power station.

Energy Division

The Energy Division is one of the largest electricity providers in the Republic of Kazakhstan, accounting for approximately 15.8% of the country's recorded electricity production in 2012 (2011: 16.2%). Taking into account all of the energy generation facilities of ENRC, including SSGPO, the alumina refinery (Aluminium of Kazakhstan ('AOK')) and the Aktobe ferroalloys smelter ('Kazchrome'), the Group's share of Kazakhstan's energy supply was 21.4% in 2012 (2011: 22.3%). The Energy Division provides a cost-effective energy supply to the Group's other principal Kazakhstani operating divisions, with internal consumption of 73.2% (2011: 71.5%) of the electricity produced in 2012, as well as producing a surplus for sales to third parties in Kazakhstan.

Other Non-ferrous Division

The Other Non-ferrous Division operates principally in the Democratic Republic of the Congo ('DRC'), where it mines copper and cobalt and processes the ore through Boss Mining Sprl ('Boss'), a subsidiary of ENRC, with the State-owned La Générale des Carrières et des Mines ('Gécamines') as a minority (30%) partner. ENRC also owns Camrose Resources Limited, whose primary assets, held through its subsidiaries, includes interests in five copper and cobalt exploitation licences situated in the DRC. In Q1 2012, ENRC acquired additional processing capacity at the Roan Tailings and Reclamation Project ('RTR') and at the Frontier mine. Chambishi Metals PLC, acquired in April 2010 and located in Zambia, processes material mined in the DRC at Boss and concentrate from the Frontier mine. The Other Non-ferrous Division's copper and cobalt operations include open cast mines, crushing, beneficiation, concentrator plants and an electro-winning facility in the DRC and the Chambishi copper and cobalt smelter in Zambia. In addition, the Other Non-ferrous Division includes a number of development prospects: Mozambique - coal; Mali - bauxite; Zimbabwe - platinum; and South Africa - fluorspar, coal and manganese. The Group's African logistics and trucking business, SABOT, operates in Central and Southern Africa.

Logistics Division

The Logistics Division provides transportation and logistics services to the Group's principal Kazakhstani operating Divisions, as well as to third parties. The Division's operations include freight forwarding and wagon and railway repair services. The availability of these services within the Group mitigates many of the risks associated with the supply of raw materials and delivery of products to customers. In addition, the Division operates a railway transfer and reloading terminal on the Kazakhstan/China border, facilitating the Group's access to the Chinese market.

1 Unit costs: Cost of sales divided by sales volumes.

Production

In H1 2013, the Ferroalloys Division produced: 1,922 kt of saleable chrome ore (H1 2012: 1,729 kt); 460 kt of saleable manganese ore concentrate (H1 2012: 447 kt); and 749 kt of ferroalloys (H1 2012: 752 kt), including 541 kt (H1 2012: 524 kt) of its primary product, high-carbon ferrochrome. In H1 2013, 103 kt (H1 2012: 114 kt) of ferroalloys were consumed internally.

Sales and Pricing

Capacity utilisation at stainless and specialty steel mills in Europe was estimated to have been approximately 70% in H1 2013. The profitability in the stainless steel sector remained an issue with many mills operating at a loss. In the USA, on the contrary, the sector experienced a rather good H1 with the oil and gas and automotive sectors being the main drivers. Japan started the year rather weak but the situation improved during Q1 with a depreciated Japanese Yen playing a positive role in increasing Japanese mills' competitiveness versus their counterparts in Korea and China. Simultaneously, however, ferrochrome producers in China increased their output in H1 despite their margins being squeezed and their products being offered at or just slightly above perceived production cost. China in H1 continued on its path towards becoming self-sufficient in ferrochrome by adding more production capacity.

The European ferrochrome benchmark price in Q1 2013 settled at US$1.125 per pound of chrome, up US 2.5 cents on the previous quarter. The Q2 2013 benchmark increased US 14.5 cents to US$1.27 per pound of chrome. This unusually large increase was primarily driven by reduced supply of charge chrome as South Africa's Eskom's power buyback programme continued from 2012. This created a short-term squeeze on ferrochrome supply as many South African charge chrome producers had no other option than to temporarily shut down part of their production.

Chrome ore pricing was depressed in H1. This was the result of a combination of slowing growth in China (which represents around 90% of the free traded chrome ore market) and of South Africa increasing output of chrome ore driven by lower demand because of the power buy-backs and opportunistic attractive export opportunities based on the lower exchange rate of the South African Rand.

Results for the six months ended June 2013

The Ferroalloys Division contributed US$380 million or 40.3% to the Group's Underlying EBITDA (H1 2012: US$451 million; 39.5%), a reduction of US$71 million due to adverse market conditions resulting in a 10.9% decline in realised prices for ferroalloys. Operating costs were slightly below the corresponding period in 2012. Lower energy and materials costs, distribution, general and administrative expenses were offset by the adverse impact of a change in inventory.

During the first half of 2013 total ferroalloy sales were 727 kt, 9 kt above H1 2012, largely due to higher volumes of HC FeCr and FeSiCr. Chrome ore sales increased 75.5% over the corresponding period, amounting to 337 kt (H1 2012: 192 kt).

The Division's revenue was US$98 million below H1 2012. This was attributable to lower prices which reduced revenue by US$145 million. However higher sales volumes partially compensated for the fall, increasing revenue by US$42 million. The major impact was from higher volumes of HC FeCr, which added US$39 million to revenue, Cr ore, which added US$32 million and FeSiCr, which increased revenue by US$23 million. Sales of other goods and services increased revenue by US$5 million.

Cost of sales was US$31 million higher than the previous period. This was due to adverse inventory movements of US$90 million reflecting a reduction in ferroalloys inventory during 2013. Production costs, namely energy and materials, were substantially lower in 2013 with price reductions for electricity and certain input materials; however, there was an increase in staff costs following the labour rates rise in H2 2012 in Kazakhstan. Depreciation and amortisation costs amounted to US$74 million (H1 2012: US$68 million). Mineral Extraction Tax ('MET') was US$71 million (H1 2012: US$71 million).

Although sales volumes increased, the Division reported lower distribution costs which totalled US$134 million (H1 2012: US$148 million). Reduction in transportation costs was driven by a change in transportation routes with higher volumes of HC FeCr transported to China and lower volumes to North America and Europe.

General and administrative expenses were US$79 million (H1 2012: US$93 million). The decrease of US$14 million mainly reflected lower social investments.

Capital Expenditure 

Construction of the New Aktobe Ferroalloys Plant in Kazakhstan is on track to be completed in Q4 2013 which will result in the availability of direct current ('DC') furnaces with a capacity of 440 ktpa. Realisation of this project will allow unit cost savings, reduce our dependence on 3rd party coke suppliers, and promote greener technologies. The estimated total project cost remains unchanged at US$750 million.

1 Unit costs: Cost of sales divided by sales volumes.

Production

In H1 2013, the Iron Ore Division mined 20,728 kt of iron ore (H1 2012: 20,097 kt) in Kazakhstan and Brazil. In Brazil the Group produced 155 kt of Direct Shipping Ore ('DSO'). In Kazakhstan ore mined was processed into 8,214 kt of primary iron ore concentrate (H1 2012: 8,068 kt), with saleable concentrate production of 3,971 kt (H1 2012: 3,824 kt). The balance was used to produce 3,809 kt (H1 2012: 3,687 kt) of pellet.

Sales and Pricing

Global steel production increased slightly with the annual cumulative crude steel production from January to June up 2.0% year-on-year. Emerging economies contributed to the majority of this increase.

Iron ore prices strengthened during the start of 2013, with Platts 62% Fe iron ore peaking at approximately US$160/dmt in February due to increased demand from China and seasonal restocking. Prices have since declined on expectations of slower global economic growth, with Platts 62% Fe iron ore at the end of June declining to roughly US$120/dmt.

Russia and China continued to be the Group's main markets for its iron ore product, in particular The Magnitogorsk Iron and Steel Works OJSC ('MMK') in Russia and steel producers in North West China. Since lower contractual volumes were agreed with MMK in 2012, the Group has also entered into a prolonged supply agreement for iron ore concentrate with JSC Chelyabinsk Metallurgical Plant ('Mechel'). The Group's contractual prices with its main Chinese customers are negotiated on a quarterly basis. Based on an agreement signed at the end of 2012, ENRC continues to use a monthly pricing mechanism regarding sales to MMK based on the Platts index.

In H1 2013 57.9% (4.6 mt) of iron ore sales by volume were to Russia (H1 2012: 61.0%; 5 mt), whilst 35.4% (2.8 mt) of sales went to China (H1 2012: 32.2%; 2.6 mt), with the remaining 6.7% (528 kt) of iron ore product sold within Kazakhstan (H1 2012: 6.8%, 571 kt). 47% of sales in H1 2013 (3.7 mt) were comprised of pellet (H1 2012: 45.7%, 3.6 mt).

Results for the six months ended June 2013

Consistent with its performance in 2012, the Iron Ore Division was the largest contributor to the Group's Underlying EBITDA in the first half of the year. It generated US$462 million or 48.9% of the Group's Underlying EBITDA (H1 2012: US$473 million; 41.4%), a decline of 2.3% compared to the same period last year.

Total sales volumes of iron ore produced in Kazakhstan declined 3.2% which reduced revenue by US$31 million. At the same time an improved sales mix consisting of a greater proportion of higher-priced pellet had a favourable impact on revenue adding US$8 million. In the first six months of 2013 pellets accounted for 47.1% of total iron ore sales volumes (H1 2012: 44.3%). In addition, the Group shipped small amounts of direct shipping ore ('DSO') extracted from our iron ore deposit located in the Caetite region in the state of Bahia in Brazil. This increased the Group's revenue by US$7 million. With respect to the geographic sales mix, Russia represented more than a half of the Group's sales base, a slight decrease compared to last year, while the proportion of sales to China was unchanged. Iron ore prices were largely in line with H1 2012. Concentrate sales increased by 1.0%, while pellet sales fell 2.9% compared with same period last year. This led to reduction in the Division's revenue of US$12 million.

The US$32 million increase in cost of sales was a result of higher unit cost of sales (US$44 million) and was partially offset by lower sales volumes (US$12 million). The average unit cost for iron ore product increased 5.5%, below the previous 2013 guidance, which was an increase of 10%-15%. Higher unit cost of sales was driven by uncontrollable factors such as price inflation for diesel, tyres, grinding rods, explosive materials and coal, as well as, an increase in wage rates in H2 2012. In addition to inflationary factors, increased depreciation and higher Mineral Extraction Tax ('MET') had a negative impact on unit costs. Depreciation and amortisation increased US$9 million and MET by US$3 million, which amounted to US$42 million (H1 2012: US$39 million). The Group has continued with its process optimisation and cost cutting initiatives such as a shift to cheaper tyres, a reconfiguration of mine roads and facilities across our pits, and the partial replacement and consumption of cast-iron grinding balls rather than steel grinding balls.

Distribution costs amounted to US$128 million (H1 2011: US$128 million).

General and administrative expenses declined 27.1% and amounted to US$51 million (H1 2012: US$70 million). This was primarily due to a reduction in social investments.

Capital Expenditure 

Current strategy at the Iron Ore Division in Kazakhstan focuses on maintaining production volumes while gradually shifting emphasis towards the higher value added products. The planned product portfolio expansion includes: high quality concentrate, high quality pellets and hot briquetted iron with the total programme cost estimates still being assessed.

In respect of Brazil, in May 2013 the Ministry of Mines and Energy of Brazil granted two mining decrees, giving legal certainty to the further development of the BMSA (Pedra de Ferro project). The previously announced experimental DSO mining proved to be a valuable compliment to the existing concept. The Group is working now with respective authorities on integrating it in to the BMSA project.

1 Unit costs: Cost of sales divided by sales volumes.

Production

In H1 2013, the Alumina and Aluminium Division mined 2,618 kt of bauxite (H1 2012: 2,568 kt) and produced 820 kt of alumina (H1 2012: 706 kt) and 124 kt (H1 2012: 124 kt) of aluminium.

Sales and Pricing

London Metal Exchange ('LME') aluminium prices declined through H1 2013. Early optimistic pricing expectations were mitigated by the high level of metal stocks held by the LME, as well as macroeconomic factors. During H1 2013 the LME price peaked at US$2,123 per tonne in February, declining to a low of US$1,720 per tonne in June. Demand for semi-finished aluminium products in H1 2013 was weak in Europe but strong in the CIS and Russia. Global supply is expected to increase by 6.8 per cent in 2013, while demand is expected to rise 6.3 per cent.

During H1 2013 primary aluminium premiums remained high, reaching a peak of US$210-230 per tonne on a delivered duty unpaid basis by the end of the period. Premiums act as an indicator of the metal's physical availability. Rising premiums were driven by large volumes of aluminium being tied up in inventory under financing deals, which was unavailable for immediate consumption.

In H1 2013 the Group shipped 572 kt (H1 2012: 462 kt) of alumina to United Company RUSAL ('RUSAL') under a long-term supply contract to supply a minimum annual volume of 1.2 mtpa. The pricing under this contract is linked as a percentage of the LME price of primary aluminium. In H1 2013 RUSAL, the Division's largest single customer accounted for 39% (H1 2012: 35%) of the Division's sales revenue. The balance of alumina production is consumed by the Group in its own aluminium smelter (Kazakhstan Aluminium Smelter, or 'KAS') and also by a local Kazakhstan refractory materials producer (Kazogneupor).

Results for the six months ended June 2013

The Division's contribution to the Group's EBITDA amounted to US$24 million, or 2.5% (H1 2012: US$48 million; 4.2%). Lower commodity prices negatively affected the Division's results but were partially offset by improved sales volumes.

The Division's revenue was US$24 million or 5.3% above H1 2012 level. US$61 million of this increase was from higher sales volumes of alumina and aluminium. Increased sales of electricity generated by Aluminium of Kazakhstan also positively impacted the Division's results. Lower realised sales prices were due to a decrease in LME prices which reduced revenue by US$26 million.

Excluding the impact of the release of the onerous contract provision cost of sales rose by US$51 million. This was mainly a result of higher production and sales volumes and an increase in labour costs from the second half of 2012. Including the effect of the onerous contract provision the Division's cost of sales amounted to US$399 million (H1 2012: US$396 million). Production costs of alumina significantly improved compared to H1 2012 as the processing problems experienced in the beginning of 2012 were rectified and material consumption rates resumed to normal levels. MET stayed at US$6 million (H1 2012: US$6 million).

Distribution costs declined by 15.4% and amounted to US$22 million (H1 2012: US$26 million) mainly as a result of the utilisation of the onerous contract provision as well as slightly lower transportation costs and distribution fees. General and administrative expenses fell by 17.9% to US$23 million (H1 2012: US$28 million) reflecting the utilisation of the onerous contract provision and a reduction of social investments and staff costs.

Capital Expenditure

Construction of the 136 ktpa Anode Plant now completes the development of the Group's integrated aluminium business in Kazakhstan. The Anode Plant will produce high quality anodes, thus providing sufficient supplies for the Group's aluminium production and reducing our dependence on third party suppliers. All major works were completed in H1 2013 with full commissioning expected in H2 2013. The estimated total project cost is US$298 million.

1 Production numbers for saleable copper and cobalt refers to tonnes of contained metal. Contained metal consists of total units, whether in metal form or metal units contained in concentrate and sludge, net of internal consumption.2 Prices do not include by-products.

3 Unit cost of copper: Cost of sales for copper less cobalt concentrate by-product credits at Luita divided by copper metal sales volumes. Unit cost of cobalt: Cost of sales for cobalt metal at Chambishi divided by cobalt metal sales volumes.

Production: Copper

Saleable copper contained production volumes increased by 43% to 25.0 kt at the Group's copper operations in Africa, compared with H1 2012 (17.5 kt), due to the commissioning of the Frontier Mine and the roaster at Chambishi. During the period the Group produced 11.6 kt of copper sulphate concentrate at Frontier.

Production: Cobalt

Saleable cobalt production decreased by 11.1% to 4.8 kt (H1 2012: 5.4 kt) due to less cobalt ore being mined at Mukondo and unreliable electricity supply to Chambishi.

Sales and Pricing: Copper

During H1 2013 the Group sold 33.4 kt (H1 2012: 18.0 kt) of copper products. The period saw the successful launch of high grade (LME equivalent quality) cathode from Chambishi Metals and concentrate from the Group's Frontier Mine. These new products complement the Group's existing standard grade cathode produced at Boss Mining.

The successful ramp-up in production of both concentrate and cathode has allowed entry into new market sectors and for cathode to be placed at a premium to the LME price. All copper sold was referenced against the LME copper price, with a premium or discount applied to reflect quality and delivery location. A deduction is made over the monthly average LME price for concentrate sold reflecting the cost of conversion to metal by the consuming smelter.

The LME copper price during H1 2013 was characterised by a strong rally followed by a steady and then sharp decline. The price fell more than 19% from its peak in February to its low in June, with an average price of US$7,540 per tonne for the period. Demand for the Group's copper products has remained strong in our core markets of Zambia, China and the Arabian Gulf.

Sales and Pricing: Cobalt

Cobalt demand is expected to grow globally by 5.5% in 2013, after only growing 3.4% in 2012. In H1 2013 sales of Cobalt metal were 2.3% higher (4.5 kt) compared to H1 2012 (4.4 kt).

The Metal Bulletin Cobalt metal price started 2013 at US$10.50 per pound, climbing to US$12.00 per pound during February. Subsequently it fell to US$11.10 per pound at the end of March, before recovering to US$13.80 per pound at the end of June 2013. This price recovery was partially attributed to the anticipation that the market will tighten because of energy restrictions and export restraints in the DRC.

Results for the six months ended June 2013

For the first six months of 2013 the Other Non-ferrous Division recorded Underlying EBITDA of US$(3) million (H1 2012: US$(13) million). The slight improvement in financial performance was associated with additional sales of copper metal and copper concentrate along with cost reduction initiatives, which were partially offset by weak prices.

Substantial revenue growth was driven by higher sales volumes of US$93 million, due to sales of copper sulphide concentrate produced at Frontier plant amounting to US$66 million as well as sales of copper metal produced as a result of commissioning of copper SX/EW plant at Chambishi which amounted to US$67 million. These additions, were partially offset by lower sales of copper metal produced at Boss and copper by-products produced at Chambishi. A decline in prices for both copper and cobalt had a negative impact of US$22 million on revenue. The Group's African logistics business, SABOT, contributed US$24 million (H1 2012: US$24 million) to the Division's third parties revenue.

Cost of sales increased US$50 million and was mainly related to expanded production. The overall unit cost of copper decreased by US$611/t to US$6,477/t. This decline was largely attributable to the start of production at the SX/EW plant at Chambishi, which has a lower cost of production compared with Boss. Copper unit cost was also affected by a decrease in the cobalt concentrate by‑product credit. Cobalt unit costs decreased to US$28,203/t (H1 2012: US$30,036/t).

Distribution costs increased 63.6% to US$18 million (H1 2012: US$11 million) reflecting higher sales volumes.

General and administrative expenses increased slightly to US$48 million (H1 2012: US$46 million).

Exploration costs were reduced to US$47 million (H1 2012: US$52 million) as a result of the scaling down of exploration programmes.

A charge of US$152 million has been recognised in respect of impairment of the assets of Boss Mining.

Capital Expenditure

In 2013, the Group has continued to focus on those projects which are expected to bring higher returns with a shorter execution time.

Frontier - the first phase of development was completed ahead of schedule in H1 2013. Target production of 80-90 ktpa of copper in concentrate is planned when the project will be fully commissioned. The estimated total cost expected is to be about US$440 million.

RTR - the project is still being reviewed and estimated total project cost is under assessment.

Chambishi - construction of a new SX/EW plant at Chambishi was completed in 2012 and is now fully operational. A pre-feasibility study is in progress and the feasibility study for the second roaster is planned to be completed in 2014.

Boss Mining - the expansion of copper (sulphide) production project has been put into care and maintenance, with the focus shifting to full commissioning of Frontier and RTR.

1 Unit costs: Cost of sales divided by sales volumes.

Production

In H1 2013, the Energy Division produced 7,707 GWh (H1 2012: 7,177 GWh), of which 70.3% (H1 2012: 70.2%) was used by other Divisions internally within the Group. Coal extraction at EEC was broadly flat at 10,249 kt (H1 2012: 10,258 kt). Coal extraction at Shubarkol amounted to 3,343 kt (May and June 2012: 927 kt).

Sales and Pricing: Coal

Kazakhstan coal output decreased 3.2% down to 54.7 mt in H1 2013 (H1 2012: 56.5 mt). The Energy Division's total sales of coal to third parties were up 53% in 2013, as a result of the acquisition of Shubarkol Komir, which completed in April 2012. In Kazakhstan, the Group sold 2.1 million tonnes of coal to third parties (H1 2012: 1.5 million tonnes), including sales of 0.8 million tonnes of Shubarkol coal. The average sales price of Vostochny coal was KZT1,357 (US$9.0) per tonne (H1 2012: KZT1,179 (US$8.0) per tonne), an increase of 15% in local currency terms. The average sales price for Shubarkol coal, which has a higher calorific value and lower ash content than coal from Vostochny, was KZT3,325 (US$22.0) per tonne (H1 2012: KZT3,387 (US$22.9) per tonne). In Russia, the Energy Division sold 2.3 mt of coal (H1 2012: 2.2 mt), 88% of which is coal from Vostochny, at an average sales price of US$30.4 per tonne (H1 2012: US$29.9 per tonne). Since the acquisition of Shubarkol the Group has expanded its customer base and sales geography delivering coal to consumers in Europe and Central Asia.

Sales and Pricing: Electricity

Improvements in industrial demand in Kazakhstan saw electricity demand continue to grow in 2013 with electricity generation rising by 2.3% for the country as a whole to 45.6 billion kWh. The Energy Division's sales of electricity to third parties increased 8.9% in 2013 due to increased electricity generation. The average sales price to third parties in local currency decreased 43.4% in 2013 to KZT3.17 (US 2.1 cents) per kWh (H1 2012: KZT5.6 (US 3.78 cents) per kWh).

Results for the six months ended June 2013

The Energy Division's contribution to the Group's EBITDA was US$137 million, or 14.5% (H1 2012: US$215 million; 18.8%). The Division benefited from higher sales of coal and special coke from Shubarkol following its acquisition in April 2012, but was negatively affected by a lower tariff cap set for EEC electricity for 2013.

The Division's third party revenue increased by US$22 million compared to H1 2012, primarily due to the contribution of higher sales volumes of Shubarkol's products which were reported for the full half year in 2013 as opposed to only two months in 2012. Additional revenue of US$41 million from Shubarkol was offset by lower revenues from electricity sales driven by a 44.7% drop in realised price. The Division's sales to other Group entities were reduced to US$158 million (H1 2012: US$207 million).

Cost of sales amounted to US$191 million (H1 2012: US$145 million). US$46 million of the increase was attributable to Shubarkol. At EEC costs were impacted by higher depreciation and amortisation costs, higher prices for input materials (explosives and masut) and an increase in labour costs from H2 2012.

Distribution costs increased to US$45 million (H1 2012: US$38 million) mainly due to the inclusion of Shubarkol (US$7 million).

General and administrative expenses increased by US$4 million, to US$21 million (H1 2012: US$17 million) with US$3 million of the increase due to the inclusion of Shubarkol.

Capital Expenditure

Reconstruction of Power Unit 6 has been completed with its capacity having increased from 300 MW to 325 MW. The total project cost was US$275 million.

1 Data includes all internal and third-party rail transportation.

2 Data applies to Transsystema only.

3 Unit costs: Data applies to Transystema only. Cost of sales divided by sales volumes (attributable to third parties).

Results for the six months ended June 2013

The Logistics Division contributed US$52 million, or 5.5%, to the Group`s Underlying EBITDA (H1 2012: US$35 million, 3.1%). The disposal of Zhol Zhondeushy LLP, the railway line repair business, in May 2012 had an insignificant impact on the Group`s Underlying EBITDA, although its exclusion had an effect on reported revenue and costs when looked at separately in the Divisional income statement.

The Division`s third-party revenue decreased US$34 million, or 82.9%, to US$7 million (H1 2012: US$41 million). This was mainly a result of the disposal of Zhol Zhondeushy LLP. Sales to other Group Divisions decreased US$8 million, or 6.5%, to US$115 million (H1 2012: US$123 million) which was mainly associated with a lower volume of transported iron ore, as well as a change in invoicing for goods shipped in rented wagons.

Cost of sales decreased US$46 million or 39.0%, to US$72 million (H1 2012: US$118 million) mainly driven by the exclusion of Zhol Zhondeushy LLP and lower expenses associated with renting third party wagons.

General and administrative expenses declined by 47.8% to US$12 million (H1 2012: US$23 million) driven by the exclusion of Zhol Zhondeushy LLP.

Capital Expenditure

In H1 2013 the Logistics Division completed its three year railway fleet expansion programme in Kazakhstan. Since 2010 the Group has purchased 3,763 open top wagons, 372 pellet wagons, 100 cement wagons, 621 platforms and 1,250 containers, amounting to US$425 million.

PRINCIPAL RISKS AND SIGNIFICANT FACTORS AFFECTING THE GROUP'S RESULTS

The Board is responsible for the Group's systems of Risk Management and Internal Control and for reviewing their operational effectiveness.

Details of the Group's key risks were set out in our Group's Annual Report and Accounts for the year ended 31 December 2012, on pages 50 to 58.

Since publishing the Group's Annual Report and Accounts for the year ended 31 December 2012, a number of the key risks disclosed in that Annual Report and Accounts have been the subject of media focus and comment. As a result the management and the Board believe the reputational risk described on page 57 has increased.

Further details on the risks are included in the relevant business reviews throughout the document.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors of Eurasian Natural Resources Corporation PLC ('the Company') confirm that to the best of their knowledge this condensed consolidated half year financial information has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union and that this half year financial report includes a fair review of the information required by the UK Listing Authority's Disclosure and Transparency Rules 4.2.7R and 4.2.8R, namely:

· An indication of important events that have occurred during the first six months of 2013 and their impact on the consolidated half year financial statements, and a description of the principal risks and uncertainties for the remaining six months of 2013; and

· Material related-party transactions in the first six months of 2013 and any material changes in the related-party transactions described in the Group's Annual Report and Accounts for the year ended 31 December 2012.

The Directors of the Company are listed in the Group's Annual Report and Accounts for the year ended 31 December 2012. Sir Paul Judge and Professor Dr Dieter Ameling retired at the AGM on the 5th of June 2013. A list of current Directors is maintained on the Group's website at: www.enrc.com.

By order of the Board

Felix J Vulis

Chief Executive Officer

14 August 2013

Independent Review Report to Eurasian Natural Resources Corporation PLC

Introduction

We have been engaged by Eurasian Natural Resources Corporation PLC (the company) to review the condensed consolidated interim financial information in the half-yearly financial report for the six months ended 30th June 2013, which comprises the consolidated interim income statement, consolidated interim statement of comprehensive income, consolidated interim balance sheet, consolidated interim cash flow statement, consolidated interim statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority; and to satisfy Rule 28.3(b) of The City Code on Takeovers and Mergers and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Accordingly, we assume no responsibility in respect of this report to Eurasian Resources Group B.V. (the "Offeror") or to any person connected to, or acting in concert with, the Offeror, or to any other person who is seeking or may in future seek to acquire control of the Company (an "Alternative Offeror"') or to any person connected to, or acting in concert with, an Alternative Offeror.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30th June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLPChartered Accountants14th August 2013London

Notes:

a) The maintenance and integrity of the ENRC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

1See note 1 accounting policies.

The above Consolidated interim income statement should be read in conjunction with the accompanying notes.