Half Yearly Report

17 August 2011

Eurasian Natural Resources Corporation PLC

Announcement of 2011 Half Year Results

Financial Highlights for H1 2011

·; Strong growth against H1 2010. Recovery in our traditional markets, the continued strength of the Chinese economy and significantly higher commodity prices. Revenue up 32% to US$4,011 million.

·; Total costs increased 30% to US$2,344 million, due to higher unit costs of sale, volume growth and the costs for developing the businesses in Africa and Brazil.

·; Underlying EBITDA up 33%, to US$1,927 million; Underlying EBITDA margin steady at 48% (H1 2010: 47%).

·; Earnings per share up 30%, to US 91 cents.

·; Dividend per share of US 16 cents; a dividend payout ratio of 18%.

·; Strong balance sheet: gross available funds, US$1,600 million; net debt, US$2 million.

·; A substantial increase in the operating cash flow, to US$1,184 million.

Business Highlights for H1 2011

·; Production remained at full capacity across the Group, with incremental growth in aluminium and the continued planned expansion of copper and cobalt.

·; Iron Ore Division emerged as the largest single Underlying EBITDA contributor, at 43% of the Group's total.

·; Copper and cobalt in Africa continued to develop in line with planned growth.

·; The Group's relative low cost production advantage was maintained, notwithstanding industry-wide cost growth.

·; Capital expenditure of US$0.7 billion: new Aktobe ferroalloys plant on track; alumina expansion to 1.7 mtpa completed; power unit 2 at EEC completed and commissioned.

Outlook for Full Year 2011

·; Production and saleable volumes expected to be maintained at effective full capacity.

·; Risk of near term volatility in both prices and growth trajectories for our key commodities.

·; Revenue momentum expected to slow in H2 2011. Improvement in commodity markets expected in late 2011/early 2012.

·; Continued strong growth in China and emerging markets expected to underpin growth in 2011-2012.

·; Cost pressures remain, with unit cost of sales growth of approximately 20% in line with expectations. Continued high development costs in Africa and Brazil and the impact of increased social investment.

·; 2011 capital expenditure estimated at US$2.2 billion; total project spend of US$11.0 billion.

·; Approval of the Kazakhstan Iron Ore Division's capital expenditure to 'Execution' stage.

"ENRC continued its strong financial and operational performance in the first half of 2011. Building on solid foundations in Kazakhstan, we are strategically well located to benefit from China's continued economic growth. Notwithstanding the greater near term volatility that we expect in commodity markets, we are focused on enhancing productivity and controlling costs across the Group to maintain our advantageous low cost position. We are developing our assets in Africa and Brazil, which promise to deliver significant growth and value in the coming years, as well as continuing our investment in Kazakhstan. I can report that the Board corporate governance review, announced at the AGM, is well underway. We are confident that the review will result in the right Board needed to lead the Group through its next growth phase."

Felix J Vulis, Chief Executive Officer

Summary Group Financial Information (Unaudited):

Results of operations (Unaudited)

The following table sets out selected financial information of the Group's operations for the six months ended 30 June 2011 and 30 June 2010:

1 Results for 2010 have been restated to reflect the transfer of the SABOT business from the Other Non-ferrous Division to the Logistics Division effected in Q4 2010, as detailed in note 4 to the consolidated interim financial statements.

2 Underlying EBITDA: Profit before finance income, finance cost, income tax expense, depreciation, amortisation and impairment, net gains and losses on derivatives not qualifying for hedge accounting, share of profit or loss of joint ventures and associates and acquisition related costs now expensed under IFRS3 (revised).

3 Underlying EBITDA margin: Underlying EBITDA as a percentage of revenue.

For further information, please contact:

The information set out in this announcement relates to the six months ended 30 June 2011 and, unless otherwise stated, is compared to the corresponding period of 2010, the six months ended 30 June 2010. The Chief Executive Officer's Outlook statement includes an update for the period since 30 June 2011. 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. Statements relating to market data contained in this announcement, unless stated otherwise, are based on external sources, for example research institutes and industry bodies, including: Reuters, Factiva, Bloomberg, CRU, Datastream, Fairfax IS, Heinz H Pariser, the IMF, CISA, Metals Bulletin, Tex Report, NBS, Beijing Axis Analysis and others, and are derived from actual and/or estimated data relating to 2010 and 2011 and are prepared in H1 2011 or early H2 2011.

Eurasian Natural Resources Corporation PLC ('ENRC') will announce its 2011 Half Year Results on Wednesday, 17 August 2011. There will be a presentation to investors and analysts, commencing at 09:00 (London time) in the Auditorium at Deutsche Bank, 75 London Wall, London, EC2N 2DB, United Kingdom. There will be a simultaneous webcast and audiocast on the ENRC website (www.enrc.com).

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.

Disclosure and Transparency Rules

This 2011 Half Year Results Announcement has been prepared to meet the requirements of the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority ('FSA') 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

In H1 2011 the Group delivered a strong operating and financial performance, with the Iron Ore Division emerging as the largest single contributor of Underlying EBITDA. Production volumes were maintained at effective full capacity, with some incremental growth in the core businesses in Kazakhstan, whilst copper and cobalt in Africa continued to develop in line with our strategy. Sustained strong economic growth in China and the Group's low cost production advantage remained key to underpinning the Group's performance. However, global-economic uncertainties grew through the first half of 2011, with the result being greater market volatility in terms of commodity pricing and demand. We were pleased with our success in navigating these challenging market conditions.

The Group continued with the implementation of its growth strategy. In Kazakhstan capital expenditure focused on enhancing the existing asset base and increasing capacity. In Q2 2011 we completed the full commissioning of the new power unit 2 at Aksu, with 325 MW of capacity, and took power unit 6 offline for planned refurbishment. During H1 2011 we continued to progress the new Aktobe ferroalloys plant expansion with site works and equipment and construction orders, whilst the anode plant, due for commissioning in 2012, signed procurement and installation contracts. In July 2011 the Alumina and Aluminium Division completed its planned expansion of alumina production, which is now running at its capacity of 1.7 mtpa. In the Other Non-ferrous Division we continued with the capital investment to support the growth plan, whilst the Logistics Division took delivery of wagons, containers and platforms from its 2010 and 2011 procurement programmes.

The development potential of the Group's businesses in Africa is very significant. The exploration programme in the Democratic Republic of the Congo ('DRC') seeks to prove up the level of resources into reserves. The development of the Camrose licences is currently being reviewed as part of an upscaling of our ambitions in the DRC, beyond our current targets of 130 ktpa contained copper and 12 ktpa contained cobalt. In Mozambique we initiated a feasibility study for the coal assets that is expected to be completed in H1 2012; this also represents a significant long-term growth opportunity.

Our acquisitions in Brazil provide us with the opportunity to develop as a leading global iron ore player, with a seaborne trade operation of 45 mtpa. As previously announced, we have agreed to relocate the port facility. We are ready to commence the mine construction as soon as the necessary port approvals are granted. The Brazilian Government's development of the East-West Railway is proceeding to plan and we now expect commissioning in 2014.

As previously announced, we are committed to expanding our social investment in FY 2011, giving US$100 million to the Nazarbayev Fund in Kazakhstan to support the development of university education in the country. US$64 million of this was paid in H1 2011 through our charitable fund Komek. We see this as an important commitment and one of the ways we can contribute to the social infrastructure of the countries which host our operations.

The management team was recently strengthened by the appointment of a Chief Executive Officer for our Brazilian operations, Mr Jose Francisco Martins de Viveiros. The Group's management extends its thanks to all of its employees for their continued efforts in H1 2011 and for their ongoing loyalty and dedication.

PRODUCTION

In H1 2011 the Group's production performance reflected effective full available capacity at its principal Kazakhstani businesses throughout the period, with some incremental volumes, and the continued growth in copper and cobalt in Africa in line with stated objectives. The Group's success was built on the leveraging of its low cost production, the Group's strategic location and loyal workforce, in addition to a recovery in sales volumes, notably for ferroalloys, in traditional markets as well as into China.

·; Ferroalloys: chrome ore extraction remained broadly steady at full capacity; 2,416 kt (H1 2010: 2,418 kt) in the period. Saleable production of ferrochrome - 647 kt (H1 2010: 625 kt) and of ferroalloys overall, 792 kt (H1 2010: 785 kt) - was slightly higher than in the comparable period of 2010, with notable additions of low- and medium-carbon volumes.

·; Iron Ore: iron ore extraction was slightly down on H1 2010, with the production of primary concentrate broadly flat. The product mix has been enhanced with pellet volume increasing to 4,326 kt (H1 2010: 4,205 kt), or 54.0% (H1 2010: 50.0%) of the mix, although total saleable production declined to 8,006 kt (H1 2010: 8,505 kt).

·; Alumina and Aluminium: bauxite volumes rose slightly and alumina volumes were flat at 813 kt. Aluminium volumes were higher at 124 kt (H1 2010: 103 kt) with the smelter operating at full capacity from May 2010.

·; Other Non-ferrous: copper and cobalt ore extraction volumes were higher, however, of particular importance was the significant increase in copper and cobalt production. Copper contained production was 13,933 t (H1 2010: 9,327 t), up 49.4%; cobalt contained production was 5,471 t (H1 2010: 4,057 t), up 34.9%.

·; Energy: coal extraction amounted to 10,165 kt (H1 2010: 10,119 kt) and power generation of 6,900 GWh (H1 2010: 6,766 GWh), both slightly ahead of the comparable period.

FINANCIAL PERFORMANCE

The Group delivered a strong financial performance in H1 2011, reflecting production at effective full capacity, materially higher commodity prices and the Group's low cost position. Revenue rose 32%; Underlying EBITDA was up 33%; and EPS grew 30%. A significant development in H1 2011 was the emergence of the Iron Ore Division as the largest single Underlying EBITDA contributor at 43.3% (H1 2010: 34.1%), fuelled by a strong price performance. Good growth was also achieved in the Alumina and Aluminium Division, which benefitted from much higher aluminium sales, as well as in the Energy Division from higher prices. Growth in the Ferroalloys Division was solid, with revenue growth impacted by higher costs. A more detailed discussion of the financial performance is contained in the Chief Financial Officer's review.

HEALTH & SAFETY AND COMMUNITY & SOCIAL RESPONSIBILITY

Health and safety remains a key priority for the Group. In H1 2011 we undertook a number of major initiatives to raise engagement and compliance with health and safety standards. This was in response to the challenging goals to implement a best practice safety management system and to improve the performance across the Group. We continued with the implementation of more effective incident investigation tools, with better reporting and with the rollout of our Safety Culture Project across our businesses in Kazakhstan and Russia. A special site visit was conducted to the African operations in May 2011, following which the Group developed a safety management system integration plan. Group corporate safety standards and reporting procedures are being applied to all operations in Africa.

For the Group the total number of fatalities in H1 2011 was four (H1 2010: six), with five out of eight of the principal operations in Kazakhstan and Russia, as well as the Other Non-ferrous Division in Africa, avoiding fatalities in H1 2011 and FY 2010. We will continue with our efforts to avoid such deaths, all of which are regrettable, and we express our condolences to the families involved. For the first time, the Group has included contractor fatalities in our external reporting. The table below provides a breakdown of fatalities between permanent employees and contract workers for H1 2011, as well as for half year periods in 2010.

The number of work related injuries (excluding the Other Non-ferrous Division) for H1 2011 was 26 (H1 2010: 26). The Lost Time Injury Frequency Rate ('LTIFR') (excluding the Other Non-ferrous Division) was 0.48 (H1 2010: 0.48) per one million hours worked. The LTI and LTIFR have been reported by the Other Non-ferrous Division on a comparable basis to the rest of the Group since December 2010. In H1 2011 the number of LTI was 8 and the LTIFR for the Division was 0.92. The Group remains focused on improving its delivery of health and safety, based on its aspiration of 'zero injuries'.

An independent non-financial data review has been commissioned as a first stage in the preparation for external assurance. The study will be conducted in accordance with international assurance standards. The data review programme will occur over a significant period of time and will be aligned with the roll out of our health and safety standard programme across the Group. The first stage of the work includes attention to Fatalities and Lost Time Injury data.

Also in H1 2011, the Group launched an energy efficiency programme, including a planning process to maintain energy efficiency at existing production sites and another process by which to consider energy and green-house gases ('GHG') issues in the implementation of new projects and technologies. The Group also started to develop its first report on sustainable development, in compliance with the requirements of the Global Reporting Initiative and Mining and Metal Sector Supplement, for publication in 2012.

CAPITAL EXPENDITURE

For H1 2011 capital expenditure amounted to US$697 million (H1 2010: US$483 million), a rise of 44.3%. The rate of capital expenditure is set to rise sharply in H2 2011 as a number of major equipment orders are placed, notably in the Ferroalloys, Iron Ore and Other Non-ferrous Divisions.

Project highlights of H1 2011 included:

·; Ferroalloys: at the new Aktobe ferroalloys plant work continued with site works and equipment and construction orders. Significant equipment orders will be placed in H2 2011.

·; Iron Ore: the Division reviewed its planned expansion projects for mining, a high grade concentrating and pelletising plant and for Hot Briquetted Iron ('HBI') capacity. The Board approved these projects for 'Execution' in August 2011.

·; Alumina and Aluminium: work continued with the expansion of the alumina capacity; the increased run-rate of 1.7 mtpa was reached in mid-July 2011. The anode plant project, focused on achieving significant costs savings, advanced with the signing of procurement and installation contracts.

·; Other Non-ferrous: commissioning of the first phase of the cobalt SX/EW plant along with progress on the phased expansion of the copper oxide production capacity including tank houses and associated heap leach pads.

·; Energy: the new power unit 2 at Aksu was fully commissioned in H1 2011, with 325 MW of capacity, whilst power unit 6 was taken offline for refurbishment; and

·; Logistics: the Division took delivery of wagons, containers and platforms from its 2010 and 2011 procurement expansion programmes.

In mid-2011 management re-evaluated its capital expenditure plans, adding additional capital expenditure of US$430 million. The increase was due to a reappraisal and 'Execution' approval of the expansion projects in the Iron Ore Division. In H1 2011 the Group completed US$697 million of capital expenditure. As a result, 'Execution', 'Planning and Design' and 'Pre-feasibility' capital expenditure now totals US$11.0 billion (previously US$11.1 billion).

For the full year 2011 capital expenditure is now expected to amount to approximately US$2.2 billion - including US$0.6 billion for sustaining capital expenditure - as we continue with the Group's key growth initiatives, in particular spend on the new Aktobe ferroalloy plant and in the Iron Ore, Other Non-ferrous and Logistics Divisions. This is a small reduction on the previous guidance (US$2.5 billion) and reflects the retiming of certain investments by the Ferroalloys Division into 2012. Capital expenditure on the BMSA Project in Brazil continues to await the approval of the port licence, following an agreement in H1 2011 to relocate the port that required a revised application to be submitted.

ACQUISITIONS

In January 2011 the Group announced the extension of a call option, originally granted in February 2009, in conjunction with the acquisition of a 25% interest in Shubarkol, one of Kazakhstan's largest thermal coal producers. The call option gives ENRC the right to acquire the outstanding 75% of the ordinary shares of Shubarkol for a consideration of some US$600 million. The call option extension, which was granted for nil consideration, extended the option expiry date to 31 January 2012. An acquisition would be subject to Board recommendation and shareholder approval.

The Group acquired 100% of the ordinary shares of Dezita Investments Limited ('Dezita') for total consideration of US$195 million. An initial payment of US$100 million was made in April 2011, and a subsequent amount of US$95 million was paid in July 2011. Dezita owns Exploitation Permit Number PE 1284 in the Democratic Republic of the Congo that is believed to contain a significant copper and cobalt resource. This copper and cobalt asset is immediately adjacent to and contiguous with the permits held by the Group's Camrose joint venture and its purchase is consistent with the Group's strategy of consolidating resources in areas proximate to existing Group operations in the region.

INDUSTRY OVERVIEW

Stainless steel production in H1 2011 is estimated at 17.6 mt (H1 2010: 16.7 mt), up 5.4%, and up 12.1% against 15.7 mt in H2 2010. 2010 itself saw a strong recovery from the prior year. H1 2011 was mixed, split between a very strong Q1, with stainless steel production at a record 8.9 mt, ahead some 8.4%, but a relatively weaker Q2 (8.7 mt). China remained the largest and fastest growing stainless steel producer with an estimated 7.0 mt in H1 2011.

The stainless steel industry ended 2010 with a phase of destocking and an excess supply of ferrochrome which resulted in a reduction in the Q1 2011 European high-carbon ferrochrome benchmark price of US 5 cents, to US$1.25 per pound. During Q1 2011 fundamentals improved, with a phase of re-stocking and general New Year confidence resulting in a recovery in stainless steel production. This was buoyed by continued high growth rates in the Chinese economy as well as an improved global economic outlook. These factors helped to tighten the ferrochrome market and the benchmark rose US 10 cents (to US$1.35) in Q2 2011. In the course of Q2 2011 economic confidence again turned down due to a number of factors: the aftermath of the Japanese earthquake and impacts on the supply chain; renewed concerns as to weakening economic growth from the fiscal tightening in China and the withdrawal of quantitative easing ('QE2') in the United States; and sovereign debt issues in Europe. Confidence was further impacted by: a declining nickel price, undermining order intake levels with stainless steel mills; continued Chinese chrome ore imports and ferrochrome production; and South African charge chrome producers maintaining their ferrochrome output. These factors resulted in a ferrochrome surplus, coinciding with reduced stainless steel production; the benchmark price reacted, falling US 15 cents, to US$1.20 for Q3 2011. The benchmark price has broadly followed the pattern set by the Chinese spot ferrochrome price, which we increasingly view as the better industry bellwether for the realised price. Prospects for low- and medium-carbon ferrochrome continued to improve in the period as demand rose in the engineering, alloy and speciality steel segments. For the ferrochrome industry, capacity utilisation in H1 2011 amounted to some 86%.

Looking forward to Q4 2011, stronger pricing depends largely on a recovery in Chinese demand and the prospects of a restocking in Japan - particularly for low- and medium-carbon ferrochrome - as the industrial production supply chain recovers from the Japanese earthquake, along with the potential benefits of production cutbacks announced by South African producers. The price outlook risks being constrained by the spare capacity of the ferrochrome industry, notably in South Africa, and the ability of China to increase its own production to meet domestic demand, as well as the threats to economic growth in Europe and the United States. Longer term, rising costs, particularly in South Africa, should support higher prices, while supply constraints, if maintained, could provide further upside.

For iron ore, through much of H1 2011, a continued steady improvement in Russian steel demand and the industry's export market enabled us to increase sales volumes to our principal customer, Magnitogorsk Iron and Steel Works ('MMK'), and to agree a Platts-based pricing formula effective until the end of 2012. Sales were still limited by the iron ore surplus that continued in Russia. In Q2 2011, there was some weakening in the Russian steel industry, with a slowdown in production and some shutdowns. In H1 2011 sales to MMK amounted to 5.5 mt (H1 2010: 5.2 mt). Sales to China, specifically steel producers in the north west region, amounted to 2.2 mt in H1 2011 (H1 2010: 2.9 mt), taking up any shortfall to Russia. Regional Chinese demand remains strong for infrastructure and automobiles. Residual sales were in Kazakhstan. The greatest opportunity for the Group to grow is the ongoing industrial growth of our traditional markets in North West China, along with the additional access that will be offered by the China Gateway rail link due to commence operation at the end of 2012.

The pricing environment for iron ore remained very strong through H1 2011, reflecting sustained Chinese demand but also supply constraint issues. Through H2 2011 and into 2012 we expect China to continue to increase steel production and to maintain its strong demand for iron ore and for restocking and construction to keep the market tight and underpin pricing in the medium-term.

OUTLOOK

We expect the progress in the Group's financial performance to continue through H2 2011, although at a slower rate than in H1. The Group's production volumes are expected to be maintained at full capacity; in ferroalloys our business is sustained by our more specialised commodities and customer base and low cost position. The market's general optimism for our main commodities earlier in the year, fuelled by short-term factors including supply constraints, supported prices in the period, but this has been tempered in recent months. This coincides with the traditional seasonal slowdown, China's efforts to control inflation and economic growth which have had an evident but controlled impact, along with heightened uncertainties around moderating global economic growth, higher inflation and financial fragility in the United States and Europe.

This more cautious short-term market outlook, notably for ferrochrome fuelled by the surplus supply that persists, is likely to extend well into H2 2011, with the likelihood of near term volatility in both prices and growth trajectories for our commodities. However, we anticipate an upturn in demand and restocking from China later in 2011 or in early 2012, with GDP growth set to remain in line with our longer term expectation of 7% to 9%. The sustainable outlook for the Group's main commodities and its principal markets of China, other emerging market countries and Russia remains positive, as these commodity intensive and urbanising economies continue to grow at a faster rate than the OECD countries.

The Group's management maintains an intense focus on cost control, an area of continued pressure both for the industry and ENRC. Overall Group unit costs are expected to rise at around 20% in 2011 in addition to some limited volume growth. We will continue to focus on productivity and efficiency improvements. Additional costs will arise on the continued development of our early stage businesses in Africa and Brazil and the additional social investment, predominantly in Kazakhstan, to which we have committed.

The Group's strategy remains focused on growing long-life, scalable and low cost production assets to deliver value to shareholders. We aim to maximise the potential of our strong balance sheet and cash flow, the scalable asset base, the low cost advantage of our asset suite and strategic locations to enhance shareholder value over the longer-term. Management's focus on proving the new assets, firming up development plans and implementing the capital expenditure programme are coming together as an enhancement of its African strategy. We will pursue the potential of further acquisitions as an important route for future growth, particularly assets complimentary to our portfolio and in line with our strategy.

BOARD CORPORATE GOVERNANCE REVIEW

The Board of ENRC had, for some time, been considering issues relating to its own efficiency and ahead of the Annual General Meeting ('AGM') in June 2011 had agreed a plan for a corporate governance review concerned with board leadership, composition, effectiveness and accountability. The corporate governance review is well underway. We are confident that the outcome of the review will be a properly constituted Board, which will encompass the interests of all stakeholders.

Felix J Vulis

Chief Executive Officer

chief financiaL officer's review 

In H1 2011 the Group produced strong financial results. Revenue and Underlying EBITDA growth, when compared to H1 2010, were driven by higher commodity prices in all of the principal businesses and by additional sales volumes. However, growth in Underlying EBITDA continued to be affected by significant cost pressures. Management of these cost pressures remained a key focus for the Group. The Group's basic and diluted earnings per share increased to US 91 cents per share (H1 2010: US 70 cents per share).

The Group also progressed with developing growth opportunities whilst maintaining full capacity levels of production. The Group continued to diversify its sources of capital for its capital investment programme, which is underpinned by its strong operational cash generation and robust balance sheet. During H1 2011 the Group put in place an unsecured senior US$500 million corporate revolving credit facility. This has not yet been utilised, but gives the Group additional confidence in its funding headroom and liquidity position.

SUMMARY INCOME STATEMENT

Revenue

Revenue increased 31.7% to US$4,011 million (H1 2010: US$3,045 million), reflecting higher commodity prices and improved market demand. Of this increase in revenue US$751 million (77.7%) was due to higher prices and US$197 million (20.4%) due to higher sales volumes.

These increases were driven primarily by;

·; Iron ore prices which in February 2011 were at a high of around US$160 per tonne and for H1 2011 as a whole were significantly higher than the average in the comparable period of 2010; and

·; Higher sales volumes, notably for high-carbon ferrochrome and iron ore pellet, compared to H1 2010.

The Ferroalloys Division accounted for 40.8% of Group revenue, the Iron Ore Division 32.3%, the Alumina and Aluminium Division 14.0%, the Other Non-ferrous Division 7.4%, the Energy Division 3.2% and the Logistics Division 2.1%.

Gross margin

The gross margin improved to 57.9% (H1 2010: 56.6%). This was due to significant increases in the realised prices achieved for our products, partially offset by increased raw materials and electricity costs, higher Mineral Extraction Tax ('MET') and higher depreciation and amortisation. Total MET for the period was US$161 million (H1 2010: US$130 million).

The Group has mitigated cost increases through a number of cost cutting initiatives, including improvements in operational efficiency through the reduction of a number of consumption rates, greater energy efficiency and labour productivity improvements.

The Group expects only a limited appreciation of the Kazakhstani tenge ('KZT') against the US dollar during the course of 2011, with only a small adverse effect on costs. Capital expenditure projects are also aimed at improving efficiency through reduction of consumption rates and employment of up-to-date high-performance technologies.

Distribution costs

The increase in distribution costs of 4.1% was primarily due to a US$7 million rise in transportation costs. This was as a result of higher sales volumes of ferroalloys and iron ore and an increase in Kazakhstani State railway tariffs.

General and administrative expenses

General and administrative expenses increased, mainly reflecting US$64 million of additional social investment in the Nazarbayev Fund (H1 2010: US$ nil), through our charitable fund Komek. In addition, staff costs increased US$29 million, exploration expenses rose US$22 million due to additional activity in our Other Non-ferrous Division and professional and other services grew US$18 million.

Net finance costs

Net finance costs increased to US$41 million (H1 2010: US$2 million), as a result of the drawdown of facilities to fund the Group's strategic development.

Share of profit/(loss) of joint ventures and associates

The net share of profits of joint ventures and associates in the period included a US$7 million profit contribution from the Group's 25% interest in Shubarkol, offset by a loss of US$1 million from the Group's interest in Camrose Resources Limited and a loss of US$1 million from Taurus Gold Limited.

Taxation

The Group's income tax expense was US$449 million (H1 2010: US$330 million), an Effective Tax Rate ('ETR') of 27.5% (H1 2010: 26.9%).

Exchange rates

In H1 2011 the average Kazakhstani tenge ('KZT') to US dollar ('US$') exchange rate was 146.01(H1 2010: 147.26).

RESTATEMENT OF PRIOR PERIODS

The Group has made a number of restatements in accordance with IFRS in respect of measurement period adjustments relating to prior period acquisitions. These have resulted in a number of changes to the previously reported consolidated balance sheets at 30 June 2010 and 31 December 2010. There is no effect on the consolidated income statement for these periods. Further detail in respect of these restatements can be found in note 6 to these condensed consolidated interim financial statements.

In addition, the results of SABOT have been transferred from the Other Non-ferrous Division to the Logistics Division for the period ended 30 June 2010 in accordance with the disclosure the Group adopted in the Group's Annual Report and Accounts for the year ended 31 December 2010.

CASHFLOW

The following table provides a summarised cash flow statement for the six months ended 30 June 2011 and 30 June 2010:

Net cash generated from operating activities

In H1 2011 the Group generated cash of US$1,184 million (H1 2010: US$929 million) from operating activities. Increased commodity prices and a recovery in demand were the main drivers of the rise in operating cash inflows in H1 2011 versus H1 2010. Working capital outflows were US$308 million in H1 2011 (H1 2010: US$300 million).

Net cash used for investing activities

In H1 2011 the Group utilised US$952 million for investing activities (H1 2010: US$1,178 million). Investing activities consisted primarily of: purchases of property, plant and equipment amounting to US$721 million; and an initial payment of US$100 million in respect of the acquisition of Dezita Investments Limited ('Dezita') (total consideration US$195 million). An initial payment of US$100 million was made in April 2011, and a subsequent amount of US$95 million was paid in July 2011. Dezita owns Exploitation Permit Number PE 1284 in the Democratic Republic of the Congo that is believed to contain a significant copper and cobalt resource. This copper and cobalt asset is immediately adjacent to and contiguous with the permits held by the Group's Camrose joint venture and its purchase is consistent with the Group's strategy of consolidating resources in areas proximate to existing Group operations in the region. In addition, the Group acquired a 25% stake for US$25 million in Project Mining and Development SA, an entity set up to develop potential opportunities in southern Africa. The Group advanced this associated undertaking a loan of US$50 million to enable it to further develop certain of these opportunities.

Net cash flow (used for)/generated from financing activities

There was a net outflow from financing activities as a result of dividends paid to shareholders of US$232 million and the repayment of bank borrowings.

FUNDING AND LIQUIDITY

On 18 March 2011, the Group signed an unsecured senior US$500 million revolving credit facility which has significantly enhanced the Group's financing headroom and provides liquidity to the Group's business operations. As at 30 June 2011 there were no drawings outstanding on this facility. As at 30 June 2011 there were no issues under the US$3 billion Euro Medium Term Note ('EMTN') programme.

The average maturity date on outstanding debt facilities is currently greater than five years.

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, Russia and China. 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 the Sokolov-Sarbai Mining Production Association ('SSGPO') in the Republic of Kazakhstan, as well as Bahia Mineração SA ('BMSA') (formerly Bahia Mineração Limitada ('BML') or the BML Project ('BML')), Mineração Minas Bahia SA ('MIBA') and Mineração Peixe Bravo SA ('MPB') in Brazil. SSGPO produces and sells iron ore concentrate and pellets primarily to steel producers. On the basis of full year 2010 data SSGPO is believed to be a material exporter of iron ore and in the lowest quartile of the cost curve. The Iron Ore Division's operations in Kazakhstan include iron ore mines, crushing, beneficiation and pelletising plants and a thermal power station. BMSA is focused on the development of a high-quality iron ore deposit in the Caetite region in the State of Bahia, while MIBA and MPB are 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 2010 data, that the Alumina and Aluminium Division is the world's ninth largest supplier of traded alumina by volume and is at the lower end of the global industry cost curve for alumina and 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. The smelter allows the Alumina and Aluminium Division to process its own alumina into aluminium and Phase 2 of the smelter, with a total annual capacity of 250 kt, came online in May 2010.

Energy Division

The Energy Division is one of the largest electricity providers in the Republic of Kazakhstan, accounting for approximately 16.6% of the country's recorded electricity production in 2010 (2009: 17.2%). 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 22.6% in 2010 (2009: 23.5%). The Energy Division provides a cost-effective energy supply to the Group's principal Kazakhstani operating divisions, with internal consumption of 73.9% (2009: 60.8%) of the electricity produced in 2010, 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, a subsidiary of ENRC, with the State-owned LaGénérale des Carrières et des Mines ('Gécamines') as a minority (30%) partner. ENRC also owns 50.5% of Camrose Resources Limited, whose primary assets, held through its subsidiaries, include interests in five copper and cobalt exploitation licences situated in the DRC. The Chambishi smelter, acquired in April 2010 and located in Zambia, processes material mined in the DRC. 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.

Logistics Division

The Logistics Division provides transportation and logistics services to the Group's principal Kazakhstani and African operating Divisions, as well as to third parties. The Division's operations include freight forwarding, wagon repair services, railway construction and repair services and trucking. 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. The Group's African logistics and trucking business, SABOT, operates in Central and Southern Africa and was purchased as part of the CAMEC acquisition.

OPERATING AND FINANCIAL REVIEW

Ferroalloys Division

1 Gross production volume; net production after the internal consumption of ferroalloys products.

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

Production

In H1 2011, the Ferroalloys Division produced: 1,884 kt of saleable chrome ore (H1 2010: 1,700 kt); 453 kt of saleable manganese ore concentrate (H1 2010: 455 kt); and 792 kt of saleable ferroalloys (H1 2010: 785 kt), including 575 kt (H1 2010: 561 kt) of its primary product, saleable high-carbon ferrochrome. For the period ended 30 June 2011, the Ferroalloys Division had third party revenue of US$1,637 million (H1 2010: US$1,394 million), which represented 40.8% (2010: 45.8%) of the Group's consolidated revenue.

In late June 2011 a fire at the Aktobe ferroalloys plant temporarily affected the electricity supply; however, by early July all furnaces had resumed full operation. There was a limited loss of production, not material to the Division for the full year.

Sales and Pricing

The high-carbon ferrochrome market remained subdued at the end of Q4 2010, largely as a result of excess of inventory, mainly from South Africa. This resulted in a US 5 cent decrease in the Q1 2011 European ferrochrome benchmark price, to US$1.25 per pound of chrome. However, Q1 2011 saw a progressive improvement in the market as a result of higher demand with global stainless steel output hitting a record 8.9 million tonnes, some 8.4% higher than the same period in 2010. Production of stainless steel in Q2 2011 declined versus Q1 to 8.7 million tonnes. Cost pressures in South Africa, resulting from markedly higher input costs, also helped push through an increase of US 10 cents in the benchmark for Q2 2011, to US$1.35 per pound of chrome.

The strength in the ferrochrome market was short lived, with the sovereign debt crisis in Europe, further fiscal tightening in China, post-earthquake stock adjustments in Japan and a falling nickel price, all undermining sentiment and demand. The resultant fall in the Chinese spot price for high-carbon ferrochrome, from US$1.05 to US$0.90 per pound of chrome, set the tone for the fall in the Q3 2011 benchmark price, of US 15 cents, to US$1.20 per pound of chrome.

In H1 2011 the demand for medium- and low-carbon ferrochrome progressively increased, as the outlook in the engineering, alloy and specialty steel sectors continued to improve, with prices increasing by between US 30 to 40 cents against the start of the period. Chrome ore demand also grew, for imports to sustain higher domestic production in China. The price of chrome ore rose strongly in Q1 2011, reaching a peak in March-April, before slowing down as fiscal tightening and the need for cash forced Chinese domestic producers to liquidate their high stocks of chrome ore.

Manganese alloys saw prices decline as excess inventory weighed on buying sentiment in China, the world's largest consumer. This decline in ore prices systematically fed through to lower pricing for manganese alloys. As a result, inventory increased and Chinese and Indian producers sold down material as cash flow constraints negatively impacted their balance sheets.

Sales across all ferroalloys products reflected the effective maximum capacity of the Group's operations. In H1 2011, the geographical mix of sales saw marked declines to China and South Korea/Far East compared to the same period last year. These were offset by a marked increase in the proportion to Japan and a more modest increase in the share to Western Europe. All other regions were broadly steady.

Results for the six months ended 30 June 2011

The Division contributed US$655 million, or 34.0%, of the Group's Underlying EBITDA in H1 2011 (H1 2010: US$636 million; 44.0%), an increase of US$19 million.

In H1 2011 the Division's performance benefitted from higher prices, but was impacted by significantly higher operating costs. A 5.2% increase in ferroalloys sales volumes was largely offset by an 8.0% decline in chrome ore sales.

Ferroalloys Division revenue increased US$246 million, or 17.6%; US$182 million was due to higher commodity prices whilst US$67 million reflected higher sales volumes. High-carbon ferrochrome sales contributed US$167 million (US$121 million due to higher prices and US$46 million due to higher sales volumes), or 67.9% of the increase in the Division's revenue.

A US$107 million increase in cost of sales was due to an increase in cash costs per unit, US$44 million from increased sales volumes, whilst depreciation and amortisation increased cost of sales by US$4 million. The unit cost of sales for ferroalloys increased 21.5% on H1 2010, mainly due to higher prices of certain input materials and electricity, as well as higher MET which reflected an increase in the chrome ore price. In total MET was US$95 million (H1 2010: US$81 million).

A US$20 million increase in distribution costs was mainly attributable to higher sales volumes and increased railway tariffs.

General and administrative expenses increased US$48 million, largely as a result of additional social investment.

Iron Ore Division 

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

Production

In H1 2011, the Iron Ore Division mined 21,332 kt of iron ore (H1 2010: 21,847 kt). This was processed into 8,783 kt of primary iron ore concentrate (H1 2010: 8,836 kt), with saleable concentrate production of 3,680 kt (H1 2010: 4,300 kt), with the balance used to produce 4,326 kt (H1 2010: 4,205 kt) of pellet. For the period ended 30 June 2011, the Iron Ore Division had third party revenue of US$1,295 million (H1 2010: US$864 million), which represented 32.3% (H1 2010: 28.4%) of the Group's consolidated revenue.

Sales and Pricing

Conditions within the global steel industry continued to improve in H1 2011, with global crude steel production during the period January to June 2011 up 8% period-on-period. During H1 2011 the industry capacity utilisation rate was in excess of 82% (H1 2010: 80%), with China accounting for approximately 46% of the total volume produced. With the onset of financial austerity measures adopted by many governments in Q2 2011, the recovery in global industrial production started to slow, particularly in the construction and automotive manufacturing industries. Global demand for steel products fell from Q2 2011 onwards, resulting in weaker prices.

The Japanese earthquake in early March 2011 negatively impacted the global iron ore market, and the spot iron ore price fell by about US$20 per tonne, before gradually recovering in Q2. Any slowdown in steel production generally has the additional effect of reducing the demand for pellet relative to concentrate, as a focus on throughput is replaced by an emphasis on low cost raw materials. Steel production decreased slightly in Q2 2011 in Russia and the CIS, with monthly output below pre-crisis levels despite a better pricing environment. A marked change in the fortunes of the Russian steel industry was also evident with strong production in H1 2011.

ENRC continued to sell its iron ore products mainly to MMK and to the steel producers in North West China. The contractual prices with its main customers remain on a quarterly basis. As announced in the 2010 Preliminary Results, ENRC reached an agreement with MMK, effective from Q2 2011, to price products using the trailing quarterly pricing methodology, as adopted by many producers, based on the Platts index. In H1 2011 67% (H1 2010: 63%) of the sales volume was to MMK, whilst 27% (H1 2010: 35%) went to China, with the remaining 6% sold within Kazakhstan (H1 2011: 2%); of the 8 million tonnes of product sold 53% (H1 2010: 50%) was pellet.

Iron Ore Division

Results for the six months ended 30 June 2011

In H1 2011 the Iron Ore Division overtook from the Ferroalloys Division to become the largest contributor to the Group's Underlying EBITDA. The Division contributed US$835 million, or 43.3%, to the Group's Underlying EBITDA (H1 2010: US$493 million; 34.1%). The Division also had the highest Underlying EBITDA margin of the Group in H1 2011, at 64.4%, an improvement from 57.1% in H1 2010.

In H1 2011 the Iron Ore Division experienced record sales. Volumes were at the level of H1 2010 and realised prices increased 51.0% on that period. In addition, higher priced iron ore pellet represented 52.5% of the sales mix, an improvement from the comparable period (H1 2010: 49.8%).

Revenue rose US$432 million, or 50.0%. US$419 million of this was attributable to increased sales prices, US$10 million due to higher volumes and the remaining US$3 million due to other sales. Higher priced pellet contributed US$271 million of the Division's revenue growth (US$237 million due to higher prices and US$34 million due to higher sales volumes). The rise in concentrate prices increased the Division's revenue by US$181 million, offset by a US$23 million decrease due to lower sales volumes.

A US$30 million increase in cost of sales resulted from the increase in cash costs per unit; depreciation and amortisation increased cost of sales by US$5 million. The unit cost of sales for iron ore was 18.8% ahead of H1 2010, due to higher MET which resulted from increased prices, as well as higher prices of input materials and rise in wage rates. MET totalled US$58 million (H1 2010: US$43 million) and led to a US$15 million increase in cost of sales.

General and administrative expenses increased US$59 million mainly as a result of US$37 million additional social investment, US$8 million increase in staff costs and US$7 million increase in professional services.

Alumina and Aluminium Division

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

Production

In H1 2011, the Alumina and Aluminium Division extracted 2,689 kt of bauxite (H1 2010: 2,645 kt) and produced 813 kt of alumina (H1 2010: 813 kt) and 124 kt (H1 2010: 103 kt) of aluminium. For the period ended 30 June 2011, the Alumina and Aluminium Division had third party revenue of US$563 million (H1 2010: US$433 million), representing 14.0% (H1 2010: 14.2%) of the Group's consolidated revenue.

In mid-July 2011 the Alumina and Aluminium Division announced the completion of the expansion of its alumina refinery in Kazakhstan, Aluminium of Kazakhstan ('AOK'), reaching its targeted alumina production capacity of 1.7 mtpa.

Sales and Pricing

London Metal Exchange ('LME') aluminium prices were volatile during H1 2011, with a low of US$2,360 per tonne in early January and a peak of US$2,772 recorded in late April. Primary aluminium is used to make aluminium semi-finished products like sheet and plate, extrusions, forgings, and castings. Demand for these products in H1 2011 was strong in all key applications - transportation, packaging, building and construction - and across all geographical markets. Global output capacity remained strong, due to China maintaining its output despite reported higher energy costs and with India, together with the Middle East, adding new capacity to the market. In H1 2011, compared to the prior year period, aluminium premiums, an indicator of the metal's physical availability, rose further from already high levels in Europe and the USA. Pricing premiums in Asia remained unchanged. This was primarily driven by large volumes of aluminium being tied up in inventory under financing deals, which was unavailable for immediate consumption.

In H1 2011 the Group shipped 567 kt (1H 2010: 602 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 2011 RUSAL, the Division's largest single customer accounted for 38.3% (H1 2010: 45.6%) of the Division's sales revenue. The balance of the alumina production is consumed by the Group in its own aluminium smelter (Kazakhstan Aluminium Smelter, or 'KAS').

Alumina and Aluminium Division

Results for the six months ended 30 June 2011

The Alumina and Aluminium Division continued to deliver good results in H1 2011. The Division had third-party revenue of US$563 million, 30.0% higher than H1 2010. The Division contributed US$188 million, or 9.8%, to the Group's Underlying EBITDA (H1 2010: US$122 million; 8.5%).

Third-party revenue rose US$130 million due to the significant increase in the LME aluminium price as well as higher sales volumes of aluminium. Higher prices increased revenue by US$80 million whilst additional aluminium sales volumes contributed US$64 million. This resulted in a reduction in alumina third-party sales volumes and consequently a US$11 million decrease in the revenue contribution. As a result of the increase in aluminium production with the smelter operating at its full capacity from May 2010, aluminium sales volumes in H1 2011 were 29.6% higher than in H1 2010.

Higher unit cash costs increased the cost of sales US$34 million, whilst depreciation and amortisation grew US$3 million. Higher sales volumes increased cost of sales US$30 million. Unit cost of sales for alumina was up 19.1%, to US$274 per tonne (H1 2010: US$230 per tonne), mainly due to the higher prices for certain input materials, whilst for aluminium it reduced by 4.0% to US$1,661 per tonne (H1 2010: US$1,731 per tonne) as a result of economies of scale.

Distribution costs grew US$2 million, or 8.0%, to US$27 million (H1 2010: US$25 million), mainly reflecting higher aluminium sales volumes and, consequently, increased transportation costs.

General and administrative expenses increased US$11 million, or 57.9%, to US$30 million (H1 2010: US$19 million), mainly due to higher staff costs, actuarial costs, professional and other services.

Other Non-ferrous Division

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 in order to reflect the revised methodology of unit cost.

3 The methodology for calculation of unit costs for copper and cobalt was revised with a view to standardising reporting across the diversified range of production units of the Other Non-ferrous Division and to apply market best practice to benchmark the Group's performance versus its peers. 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 less copper by-product credits at Chambishi divided by cobalt metal sales volumes.

Overview

In the first six months of 2011 the operations of the Other Non-ferrous Division focused on exploration and resource delineation, as well as the progress on the expansionary capital expenditure programme. The resource statement has been updated with an increase of 916 kt of contained copper at a 0.5% copper cut-off grade for measured, indicated and inferred resources.

The design for the new 100 ktpa copper concentrator (based on a head-grade of 3.5%) at Kakanda in the DRC was finalised and the major long-lead items (crusher and mills) were ordered. Progress with the oxide copper expansion at Luita is on track. The commissioning in April 2011 of tank house 4 and associated heap leach pads created an incremental additional capacity of 4.8 ktpa of Grade A copper equivalent. Tank house 5 was successfully commissioned in Q3 2011, adding a further 6.5 ktpa of additional capacity. The Chambishi copper SX/EW installation is on track for completion in H1 2012.

A project has been initiated covering mine planning, reviewing and modelling of the resource, mining execution and grade control, as well as processing and production output. The key outcome from this project will be the optimisation of operations and extension of the resources in terms of better quality control of ore management.

Chambishi Metals ('Chambishi'), located in Zambia was acquired in April 2010, thus the comparative H1 2010 results included only 3 months contribution from Chambishi. The acquisition of the outstanding 50% of Société Minière Kabolela et de Kipese Sprl ('SMKK') was effective in June 2010; of Congo Cobalt Corporation Sprl ('CCC'), a DRC-based mining contractor, from July 2010; whilst the formation of the Camrose joint venture, through the acquisition of a 50.5% interest in Camrose Resources Limited, was completed in August 2010. The recent acquisition of Dezita Investments Limited ('Dezita') is included in this Division.

Exploration - DRC

During the period drilling was concentrated on the Kakanda North, South and East deposits, which resulted in the expansion of estimated, measured and indicated resources over the previously announced historic amounts at the end of 2010. Most recent internal estimates of measured and indicated resources for all in situ, hard rock deposits were 72 mt averaging 2.08% total copper and 0.25% total cobalt, using a 0.5% copper cut-off grade.

Drilling also focused on the Menda permit and the delineation of near surface oxide copper mineralisation. To 30 June 2011 the business had completed 70,100 metres of exploratory drilling in the DRC, against a target for the full year 2011 of 105,750 metres.

At Comide's Mashitu and Safwe deposits, resources have now been fully delineated in preparation for a fast tracked mining start up, subject to completing feasibility work on the properties. Updated resources numbers will be estimated in Q3 2011, once assays are completed. Drilling is now focused on completing sterilisation and geotechnical holes for the ongoing feasibility studies. Drilling also commenced on Africo's Kalukundi deposit.

Mining

A total of 1.3 million tonnes of ore was mined during the period from the Mukondo and Kabolela mines in the DRC. Average copper grades in H1 2011 were 3.17% (H1 2010: 2.19%), predominantly due to the shifting of mining activities to Kabolela from Disele. The average copper production grade is expected to decline over the course of H2 2011, to be around 2.7% for the full year (FY 2010: 2.3%). An average cobalt grade of 1.37% was achieved in H1 2011 (H1 2010: 1.25%).

Production: Copper

Copper production was 13,933 t (H1 2010: 9,327 t) during the period, 49.4% higher than for the same period in 2010. The increased production is due to higher ore grades mined and the commissioning of tank house 4 in April 2011, increasing capacity by 4.8 ktpa.

A total of 2,400 t of Grade A equivalent copper was produced at the new cobalt SX/EW plant at Boss Mining. Commissioning of the second and more complex phase continued.

In the latter part of H1 2011, Boss Mining operations were frequently disrupted due to power supply interruptions. The power interruptions had a limited impact on production as alternative on-site temporary power sources were used. The option of increasing permanent on site power generation capacity is being examined.

Production: Cobalt

A total of 5,471 t of cobalt was produced in H1 2011 (H1 2010: 4,057 t). The increase in production was due to improved ore grades from Mukondo, plus increased third-party party cobalt concentrate purchases, as well as the inclusion of Chambishi's production for the whole of H1 2011 versus only Q2 2010 in the comparable period.

Sales and Pricing: Copper

Copper prices as traded on the London Metal Exchange ('LME') peaked at a record of US$10,148 per tonne on 14 February 2011. Prices slipped 16% from the record peak to a low of US$8,505 per tonne in May, amid signs of slowing demand and monetary tightening measures in China. The average price for the first six months of the year was US$9,397 per tonne (H1 2010: US$7,130 per tonne). However, given continuing positive fundamentals, limited market surplus and strong investor demand, copper traded largely within a range of US$9,000 to US$10,000 per tonne during the period, a significantly higher level than in H1 2010.

Weakening demand in China - which accounts for 38% of global consumption - was signalled by a rising inventory, both reported and non-reported, weak manufacturing growth data and the Shanghai Futures Exchange ('SHFE') price for copper traded below the LME equivalent. This was a clear sign China did not need or was unwilling to pay record prices for imported LME-priced material.

A belief that Chinese copper stocks were low and required re-stocking, coupled with a widely forecasted supply deficit, was a key factor in the LME copper price breaking the US$10,000 per tonne price barrier shortly after the end of the Chinese New Year. However, demand was met by increasing exchange traded stocks and bonded warehouse stocks held in Chinese ports. As copper prices weakened during April, May and early June, these stocks, especially within China, reduced dramatically, and the SHFE price then approached the LME price in order to attract imports.

During H1 2011 the Group sold 13,418 t (H1 2010: 9,839 t) of copper products, primarily produced at the Luita metallurgical plant in the Democratic Republic of Congo. Among this volume was the first externally confirmed LME Grade A equivalent quality from the recently commissioned solvent-extraction ('SX') plant. All copper sales were based on the LME price, with varying discounts/premiums depending on the copper grade and terms of the sale.

Sales and Pricing: Cobalt

During H1 2011, the Metal Bulletin low-grade cobalt price fluctuated between a peak of US$18.30 per pound in early March 2011 and a low of US$15.65 per pound at the end of June, with demand declining at the beginning of summer, due to a slowdown in manufacturing, which negatively impacted pricing.

The majority of ENRC's cobalt concentrates are sold to China, with pricing of cobalt products mainly based on London Metal Bulletin quotations. China is one of the largest markets for cobalt raw materials as it produced nearly 43% in 2010 (2009: 40%) of the world's refined cobalt output while having a very limited domestic supplies.

Industry metal sales during H1 2011 reflected improved demand from Asia (non-China). Sales in China were also strong, along with a revival in demand in the US and Europe.

Exploration - Mozambique Coal

Exploration on the Group's coal licences 870L, 869L and 844L, continued on the North Shore of Cahora Bassa following the end of the wet season. The business is targeting around 47,000 metres of percussion and diamond drilling during 2011, to identify the mineable resources and assess the quality of the coal blocks. As of March 2011 the business had an in-house inferred resource estimate (non-JORC compliant) for the North Shore of 1.35 billion tonnes.

A feasibility study has been commissioned on Licence 871 - Project Estima. This licence has a JORC compliant resource of 1.03 billion tonnes. The feasibility study is targeted for completion in H1 2012.

Other Non-ferrous Division

Results for the six months ended 30 June 2011

The Other Non-ferrous Division contributed US$66 million, or 3.4% (H1 2010: US$32 million; 2.2%), to the Group's Underlying EBITDA.

Higher copper and cobalt sales volumes contributed, respectively, US$23 million and US$40 million to the Division's revenue increase. The results were also impacted by the improved pricing of both copper and cobalt, contributing US$41 million and US$9 million respectively.

Cost of sales was impacted by a US$25 million expense for the amortisation of acquired mineral rights, as well as the increase in production volumes.

The unit cost of copper increased to US$3,173 per tonne from a credit of US$836 million in H1 2010. This was largely due to higher non-cash amortisation charges and lower cobalt by-product credits, partially offset by a reduction of cash costs of approximately US$1,005 per tonne.

The unit cost of cobalt metal decreased to US$33,067 per tonne from US$43,012 in H1 2010. This was mainly due to a reduction of cash costs of US$7,403 per tonne.

Cash unit costs are declining through increases in volumes and cost synergies achieved by integrating the acquired businesses, as well as improving operational efficiencies. This trend is expected to continue as production volumes increase as planned.

Distribution costs increased to US$22 million (H1 2010: US$17 million), reflecting increased sales volumes.

The Division's exploration costs, which are part of general and administrative expenses, totalled US$26 million for H1 2011 (H1 2010: US$4 million). The exploration programme focused on the Division's greenfield copper and cobalt as well as coal deposits.

Energy Division

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

Production

In H1 2011 the Energy Division produced 6,900 GWh (H1 2010: 6,766 GWh), of which 80.1% (H1 2010: 81.2%) was used internally within the Group. Coal production was broadly flat at 10,165 kt (H1 2010: 10,119 kt). In addition to sales of surplus electricity, the Energy Division also sold 3,314 kt of coal to third parties (H1 2010: 3,524 kt), which represented 32.6% of total coal mined (H1 2010: 34.8%).

Sales and Pricing - Coal

Strong demand from the industrial and power sectors impacted coal output in Kazakhstan, which increased 7.6% in H1 2011. The Energy Division's total sales of coal to third parties nevertheless fell 6.0% in H1 2011, due to growth in the Group's internal consumption. In Kazakhstan, ENRC sold 1.0 million tonnes of coal to third parties (H1 2010: 1.6 million tonnes), at an average sales price of KZT1,152 (US$7.90) per tonne (H1 2010: KZT937 (US$6.36) per tonne), an increase of 22.9% in local currency terms. The 0.6 million tonne reduction in coal sales reflected the decision to divert some coal sales to higher margin Russian customers. Russian utilities increased their steam coal imports from Kazakhstan, which was prompted by a rise in electricity generation in Russia in response to the improving economy and a rise in industrial demand. The Energy Division sold 2.3 million tonnes of coal to Russia (H1 2010: 1.9 million tonnes) at an average sales price of US$29.0 per tonne (H1 2010: US$25.4 per tonne).

Sales and Pricing - Electricity

Improvements in economic conditions and industrial demand saw electricity demand continue to recover in H1 2011. Total electricity generation in Kazakhstan grew 5.5% to 43.3 billion kWh. Energy Division sales of electricity to third parties increased 5.7% in H1 2011 due to increased electricity generation. The average sales price to third parties in local currency increased 19.9% to KZT5.6 (US 3.83 cents) per kWh (H1 2010: KZT4.67 (US 3.17 cents) per kWh. This increase was in line with the State regulated tariff price cap increase set in Kazakhstan.

Energy Division

Results for the six months ended 30 June 2011

The results of the Energy Division were significantly impacted by higher sales prices for both coal and electricity, which increased in line with the State regulated annual price cap increases in Kazakhstan. The Division contributed US$188 million, or 9.8%, to Group's Underlying EBITDA (H1 2010: US$162 million; 11.2%).

The Energy Division's third party revenue increased US$27 million, or 27.0%, to US$127 million (H1 2010: US$100 million). Higher sales prices and volumes increased third-party revenue US$19 million and US$9 million respectively. The Division's sales to other Group entities grew US$10 million, or 5.7%, to US$186 million (H1 2010: US$176 million).

Cost of sales increased US$18 million, or 20.5%, to US$106 million (H1 2010: US$88 million), mainly due to higher depreciation and amortisation and a rise in staff costs and materials.

Distribution costs rose US$10 million, or 35.7%, to US$38 million (H1 2010: US$28 million), due to increased transportation costs.

General and administrative expenses declined US$8 million, or 40.0%, to US$12 million (H1 2010: US$20 million), principally due to a reduction in social investment spend in the Division.

Logistics Division

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

2 Data applies to Transsytema only, which accounts for virtually all third-party tonnage transported in Kazakhstan. Data does not include SABOT operating in Africa.

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

Sales and pricing

For the six months ended 30 June 2011, the Logistics Division transported 31,261 kt of goods (H1 2010: 29,772 kt), of which 87.3% (H1 2010: 91.4%) was intra-Group.

Logistics Division

Results for the six months ended 30 June 2011 

The results of the Logistics Division reflect higher volumes for freight forwarding and lower volumes for railway line repairs against the comparable period. The Division contributed US$37 million, or 1.9%, to the Group's Underlying EBITDA (H1 2010: US$26 million, 1.8%), of which SABOT's contribution was US$(1) million (H1 2010: US$4 million).

The Division's third-party revenue increased US$30 million, or 54.5%, to US$85 million (H1 2010: US$55 million). This was primarily due to US$31 million of additional revenue from participation as a contractor in the Republic of Kazakhstan' Government-managed China Gateway project and repairs of railway track and a US$5 million increase in third-party revenue at SABOT.

Sales to other Group Divisions increased US$31 million, or 41.9%, to US$105 million (H1 2010: US$74 million).

Cost of sales increased US$43 million, or 43.9%, to US$141 million (H1 2010: US$98 million), driven by the China Gateway project, rail repairs and increased costs at SABOT.

CAPITAL EXPENDITURE

During H1 2011 the Group's capital expenditure amounted to US$697 million (H1 2010: US$483 million), an increase of 44.3%.

Capital expenditure is designated by the Group as either 'expansionary' or 'sustaining'.

'Expansionary' capital expenditure refers to investments made to drive future growth through increasing production capacities. This may include the construction or purchase of property, plant and equipment or the upgrade or expansion of existing facilities.

'Sustaining' capital expenditure refers to investments designed to keep existing operations running at their current levels. This may include major cyclical capital repairs or the replacement of existing property, plant and equipment.

The table below shows the Group's capital expenditure in H1 2011:

Capital Expenditure

The Group's major capital expenditure projects are detailed in the tables on the following page.

The Group classifies its projects under four categories:

1. Execution: full approval by the Board; ordering of equipment and construction in progress;

2. Planning and Design: initial approval by the Board for feasibility studies;

3. Pre-feasibility: projects at the stage of pre-feasibility study that have not been approved by the Board; or

4. Deferred: previously identified projects that have been put on hold.

1 Completion of construction.

2 Previously as Expansion/replacement of ferroalloy smelting capacity (Aktobe).

3 Strategy for the Iron Ore Division has been updated.

4 Previously, this project and the following one were shown as one project at US$190 million estimated cost.

Completed Projects

The expansion of alumina production has been completed. Production capacity of 1.7 mtpa alumina was achieved in July 2011. The new power unit 2 at Aksu with capacity of 325 MW was fully commissioned in June 2011.

Capital Expenditure Programme

The Group's capital expenditure programme totals US$11.0 billion. The US$0.1 billion decrease compared to our previous estimate reflects the completion of two projects amounting to US$555 million partially offset by a US$430 million increase in the estimated project costs in the Iron Ore Division. The capital expenditure programme comprised of expansionary projects which are in 'Execution', 'Planning and Design' and 'Pre-feasibility' stages, and allocated by Divisions, are as follows:

Ferroalloys

The investment programme of the Ferroalloys Division includes the construction of four new Direct Current ('DC') furnaces at the new ferroalloy plant in Aktobe with 440 ktpa capacity. The total project cost is approximately US$750 million, with completion planned for 2013. The following phases on the project have been completed:

·; The feasibility study;

·; Signing the supply agreements for capital equipment and machinery and engineering, procurement and construction contracts; and

·; Site construction and preparation works.

Iron Ore

The Division reviewed and updated its expansionary strategy in Kazakhstan and as a result of this review, estimated costs and timing were updated. The Board has now approved the project for 'Execution'. The strategy includes the increase of ore mining volume and increase in resources, and the production of three new saleable products: high quality concentrate, high quality pellets and HBI.

Mine expansion:

·; Estimated cost increased to US$825 million (previously US$720 million);

·; Stripping works at Kachar and Rudny sites are in progress; and

·; Design of first stage of conveyor at Kachar pit is in progress.

Concentrator expansion

·; New estimated cost of US$455 million (previously US$440 million); and

·; Installation in progress of steel frame and construction of ore supply shaft.

Pelletiser

·; The project capacity was increased to 5 mtpa (previously 3 mtpa), with a total cost of US$555 million (previously US$270 million), reflecting market demand and the better economics of the enlarged project; and

·; Completion of the tender for the feasibility report and design works for construction.

HBI plant

·; New estimated cost is US$675 million (previously US$650 million); and

·; Initial works are in progress, including road and railway construction, site preparation and installation of water pipes.

Regarding the BMSA Project (formerly 'the BML Project') in Brazil, construction works have been delayed due to the agreement to relocate the port to an alternative nearby site. All engineering works related to alternative site location are in progress. We are expecting to receive the provisional license for the port and the installation license during Q4 2011 and Q1 2012 respectively. The main construction activity is scheduled to begin after all required licenses are received and currently will start in Q2 2012. Production is expected to start at the end of 2014.

Alumina and Aluminium Division

For the anode plant project, contracts for the procurement and installation works were signed and infrastructure works, such as construction of auxiliary and power units as well as installation of the framing for the anode smelting case, were completed.

Other Non-ferrous Division

The expansion of copper oxide production continued with a phased approach to increase the leaching and electro-winning ('EW') installed capacity of the Luita plant in the DRC to 70 ktpa of copper. The commissioning in April 2011 of tank house 4 and associated heap leach pads created an incremental additional capacity of 4.8 ktpa of Grade A copper equivalent. Tank house 5 was successfully commissioned in August 2011, adding a further 6.5 ktpa of additional capacity. Q4 2011 will see the completion of tank house 6, adding a further annualised capacity of 8.5 ktpa. The target start-up date for phase 3 remains 2013, to coincide with the commissioning of the concentrator in the copper sulphide expansion project. The total current project cost remains at US$280 million.

The first phase of the cobalt oxide SX/EW was completed and commissioned during H1 2011 and is currently running at its copper nameplate capacity of 4.4 ktpa of Grade A copper. Commissioning of the plant continues. Cobalt metal production has been delayed due to difficulties experienced with the complex second phase of the commissioning.

For the expansion of copper sulphide production, construction commenced during H1 2011 with site clearing for the process plant, crusher, temporary accommodation camp and overhead power lines completed. Long-lead time items, including the crusher and mills for the concentrator, have been ordered. The current plan has a greater volume of oxides being treated at Luita with less sulphides than initially intended being sent to Chambishi.

The Chambishi copper SX/EW plant has been rescheduled and commissioning is expected to commence at the end of H1 2012. The plan remains for capacity to increase to 55 ktpa of Grade A copper.

Energy Division

From 1 April 2011 power unit 6 was taken offline and put under reconstruction. Washing and disassembly were executed. Turbine, generator and boiler unit were disassembled. Auxiliary equipment was disassembled completely. Procurements contracts were signed.

Logistics Division

In relation to the 2011 capital expenditure programme, 800 open-top wagons, 1,000 containers and 600 platforms were ordered, of which 38 open-top wagons, 800 containers and 215 platforms were delivered in H1 2011. Additionally, 362 open-top wagons, 209 containers and 20 platforms, related to prior year expenditures, were also delivered in H1 2011.

PRINCIPAL RISKS AND SIGNIFICANT FACTORS AFFECTING THE GROUP'S RESULTS OF OPERATIONS

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 2010, on pages 53 to 57.

Since publishing the Group's Annual Report and Accounts for the year ended 31 December 2010, a number of the key risks disclosed in that Annual Report and Accounts have been the subject of media focus and comment. As part of their regular review of risks, the management and the Board have reconsidered the Group's key risks and believe that there have been no material changes and that they remain appropriate.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by Disclosure and Transparency Rules ('DTR') 4.2.7R and 4.2.8R, namely:

·; An indication of important events that have occurred during the first six months of 2011 and their impact on the consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of 2011; and

·; Material related-party transactions in the first six months of 2011 and any material changes in the related-party transactions described in the Group's Annual Report and Accounts for the year ended 31 December 2010.

The Directors of Eurasian Natural Resources Corporation PLC ('the Company') are listed in the Group's Annual Report and Accounts for the year ended 31 December 2010 and 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

17 August 2011

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 Announcement of the 2011 Half Year Results for the six months ended 30 June 2011, 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 Announcement of the 2011 Half Year Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Directors' responsibilities

The Announcement of the 2011 Half Year Results is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Announcement of the 2011 Half Year Results in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed consolidated interim financial information included in this Announcement of the 2011 Half Year Results 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 consolidated interim financial information in the Announcement of the 2011 Half Year Results 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 United Kingdom's Financial Services Authority 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.

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 consolidated interim financial information in the Announcement of the 2011 Half Year Results for the six months ended 30 June 2011 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 Services Authority.

PricewaterhouseCoopers LLPChartered AccountantsLondon

17 August 2011

Notes:

(a) The maintenance and integrity of the Company's web site 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 Announcement of 2011 Half Year Results since initially presented on the web site.

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

CONSOLIDATED INTERIM INCOME STATEMENT (Unaudited)

The notes below are an integral part of the consolidated interim financial statements.

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (Unaudited)