Ncondezi Coal Company A Mozambican Coal Exploration and Development Company Graham Mascall CEO Ncondezi Coal Company UK-Mozambique Investment Forum, 2 December, 2010 2010 Ncondezi Coal Company All Rights Reserved
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Mozambique is an Attractive Environment for Investment Political and economical stability One of Africa s fastest growing economies Politically stable since the end of civil war in 1992 Considered successful example of post-conflict reconciliation President re-elected in elections in October 2009 Key mining sector ministers reappointed for further 5 years High inflows of Foreign Direct Investment Strong commercial links with South Africa as its main trading partner Attractive mining environment Strong resource development and investment track record BHP Mozal US$2 billion Kenmare Moma US$500 million Sasol Gas Pipeline US$1.2 billion Established and transparent licence granting process Straight forward transition from exploration to mining licences Realistic/attractive fiscal regime No BEE equivalent requirements 3
Zambezi Coal Basin Considered to be One of the Largest Undeveloped Coal Basins in the World Ncondezi Project Moatize Project Benga Project Significant coal exploration and development work already underway Vale Moatize Project US$1.3 billion Riversdale/Tata Steel Benga Project US$260 million Ncondezi - Ncondezi Project US$52 million Others: Riversdale Zambezi Project, Jindal Songa Project 4
+3.5Bt tonnes of Global Thermal & Coking Coal Demand Growth Forecast by 2030 Global Coal Demand Growth Forecast 2007-2030 (Mt) Additional Seaborne Coal Demand 2009-2015 (Mtpa) +150 +110 +2,210 Other Pacific 40 Atlantic 45 India 125 +690 +380 Taiwan 12.5 South Korea 30 Japan 25 China 100 +50 Total growth in global coal demand 2007-2030 = 3.8Bt Total additional seaborne coal demand 2015E = 378Mtpa 90% of long term coal demand expected to come from Asia, particularly India and China India and China to account for c.60% of growth in seaborne demand between 2009 and 2015 Expected strong demand for Mozambique s coal products Mozambican coal expected to be competitive with those of Australia, South Africa, Indonesia, Colombia Source: Peabody, JPMorgan Cazenove Equity Research 5
Mozambique Strategically Positioned to Supply Growth Markets for Seaborne Coal Mozambique competitively positioned for exports into India, China, and Brazil Strategic investments in Mozambican are already being made: India Tata Steel, Coal India and Jindal Steel & Power China WISCO and China Communications Construction Company Brazil Vale and CSN Others to follow? 6
Infrastructure Upgrades Ongoing Sena railway to Port of Beira Coal export options Sena line recently refurbished between Moatize and Port of Beira Berth 8 being refurbished for initial production from Vale and Riversdale of 5Mtpa from H2 2011 New coal terminal at Beira with expanded rail network for between 18-24Mtpa expected to be announced by Mozambican Government soon Connect Nacala railway line and port to Moatize Natural deep water port with potential capacity of +40Mtpa Requires c.200kms of new railway line to connect to Moatize US$1.6Bn upgrade announced by Vale and Mozambican Government in November 2009 Initial production targeted for transport in 2014 First coal exports from H2 2011 Barge down the Zambezi and trans ship from Chinde Technical and environmental studies currently being done by Riversdale Large potential but dependent on results from environmental studies Sena line refurbishment Port of Beira Port of Nacala Zambezi river 7
Corporate Profile and Shareholder Structure Overview Ncondezi Coal Company Shareholder Structure Listed on AIM Market of the London Stock Exchange on June 10 th, 2010 US$52m gross proceeds raised Shares in issue 119 million Market capitalisation of 164m (approx. US$255m) 1 Free Float 24% Management EBT 5% Strata Ltd 46% Net cash of US$49m as at June 30 th, 2010 1 As at December 1, 2010 Dos Santos Family 10% Minorities 15% Ncondezi Coal Company Holding Structure 100% 1 Additional Licences (Licences 1314L & 1315L) Ncondezi Project (Licences 804L & 805L) 100% 1 100% 1 Licences 100% held indirectly through 100% owned subsidiaries in Mozambique and Mauritius 8
Ncondezi - An Emerging Mozambican Coal Exploration and Development Company Ncondezi is an AIM listed coal exploration and development company with 4 licences in the Tete province of Mozambique Current management team, led by CEO Graham Mascall, joined the company in Q4 2009 Nigel Walls Chief Operating Officer Manish Kotecha Chief Financial Officer Exploration activities to date have been focused on licences 804L and 805L (the Ncondezi Project ) 1.8Bt JORC coal resource classified in February 2010 Scoping Study completed in April 2010 confirmed economically viable 10Mtpa export thermal project and coking coal potential US$52m raised in June 2010 to fund completion of a Definitive Feasibility Study ( DFS ) on the Ncondezi Project DFS work programme officially started on September 1, 2010 and is planned for completion by mid 2012 9
Ncondezi Project Strategically Located in the Moatize- Minjova Basin and Close to Existing Infrastructure Ncondezi Project Extensive licence area covering 38,700 ha. Equivalent to 35kms by 11kms Moatize Town Sena Railway Represents larger licence area then Moatize or Benga and Zambeze projects combined Approximately 26kms from Vale s Moatize project Tete Town 10kms to Sena Railway and c.40kms from provincial capital Tete 10
Overview of the Ncondezi Project Significant coal resource has been classified Drilling to date limited to 200m depth Aeroborne magnetics confirm that there are large areas currently undrilled but underlain with Karoo outcrop Large additional potential exists on currently undrilled blocks Only 3 of the 7 blocks drilled Block Measured Mt JORC classification and tonnages Measured Indicated & Indicated Mt Mt Inferred Mt Total Mt Total 24 620 644 1164 1,809 Source: SRK (May 2010) Note: In situ resources tonnages have been adjusted for a 30% geological loss factor. Numbers are rounded Previously drilled areas Results from 3 core holes gave indications of coking potential in the licence blocks More work being undertaken to confirm coking potential Improvements in test-work and tightening of sampling procedures will help to better understand coking potential Aeroborne magnetics 11
Scoping Study Key Results Open pit mining operation producing 10Mtpa of export thermal coal identified 24% ash, 6,000kcal/kg GAR export thermal product (post washing) Estimated capital cost of US$376m Average life of mine cash costs of US$48.6/t, including 10% contingency and prestripping Assumes contract mining Cash costs at mine gate of US$27.2/t Transport costs of US$17/t 37 year LOM with low average strip ratio of 1.3 Mining schedule based on two open pits in the South and West blocks Ramp up Yr 1-2.6 Mtpa product Yr 3-6 Mtpa product Yr 5-10 Mtpa product 2 year mine construction period Initial coal production expected H2 2014 Ncondezi Project conceptual pits 3D model of South Block pit Note: Figures assume no geological loss is applied 12
DFS Work Programme Initiated 1 September, 2010 Work Programme over the next 18 months will provide further detailed information on the Ncondezi Project required to complete a DFS by June 2012 Work Programme budget of US$47.2m over two years +US$40m dedicated to exploration work US$15m budgeted for exploration and technical work in 2010 All major Work Programme contractors now appointed TWP Projects appointed as project manager of the DFS Environmental Resources Management and Impacto appointed to conduct Environmental and Social Impact Assessments ( ESIA ) study on the Ncondezi Project McElroy Bryan Geological Services appointed as exploration consultants Resource drilling on the Ncondezi Project to identify coal potential on all blocks Total drilling on 804L & 805L of 64,000m budgeted Focus on coal quality data Target yield increases and coking coal potential Additional coking coal test work on cored holes that display coking characteristics First of the 2010 percussion holes being drilled on the Ncondezi project 13
Environmental and Social Responsibility Environment, Social, Health and Safety responsibilities are integral to the way we do business Environment and Social Policy in place Full time Community Liaison Officer appointed in Tete Environmental Social Economic baseline study commenced in September 2010 ESIA to be completed in 2012 Important part of the DFS and standalone requirement for mining licence application ESIA work to be carried out by independent local and international consultants 14
Additional Licences 1314L and 1315L Source: SRK (May 2010) Licence 1315L Licence 1315L Located 320km North West of Tete on north shore of Cahora Basa Lake. Total area of 17,080 hectares Licence 1314L Licence 1314L Located 130km south west of Tete on the border with Zimbabwe Total area of 17,380 hectares 15
Strategy Target completion of DFS and ESIA by H2 2012 2 year construction phase - target first production in late 2014 Upgrade and increase resource at Ncondezi Project Maximise transition of resources from Inferred to Measured & Indicated Yield optimisation on saleable product Assess and maximise coking coal potential Assess other value creating options Offtake agreement Corporate opportunities Infrastructure participation Target to be next coal exporter after Vale and Riversdale 16
Summary Attractive Resource Base with Significant Upside Potential Ncondezi Project JORC compliant resource of 1.8Bnt Fast track to DFS and project development Scoping Study supports 10Mtpa export thermal coal project with coking coal potential Largest undeveloped coal region in the world Well Positioned to Serve Growth Market Coal qualities competitive with export grade coals from South Africa and Indonesia Access to key growth markets Infrastructure revitalisation underway Supportive government with track record of world-class projects 17
Thank You 18