Corporate Presentation May 2015 NOT INTENDED FOR SALES OR PROMOTION - PowerPoint PPT Presentation

Corporate Presentation May 2015 NOT INTENDED FOR SALES OR PROMOTION page 1

Content I. Attractive Investment Opportunity II. Assets Overview III. Market Overview IV. Management Profiles V. Financial Performance VI. Group Structure NOT INTENDED FOR SALES OR PROMOTION page 2

Attractive investment opportunity Existing attributable 380m mineable tonne resource  Attractive core Plans to ramp up attributable annual production to 10m within 2 years (15 - 20mt longer term) asset base &  strong Solid track record of successful operational performance with steadily improving KPIs  Well connected to world’s largest coal terminal in Richards Bay via rail network operations  5 large miners produce >90% of coal and 120 junior miners account for 7%  Lack of scale and resources constrain junior miners’ ability to grow sustainably  M&A Funders have largely withdrawn from this market  Consolidation of the junior coal market is next logical step  IchorCoal viewed as credible player in this  Many SA coal mines are old and depleted  Excellent Eskom well on the way to completing 2 new coal fired power stations, with possibility of Coal 3  domestic longer term demand Supply gap of 60m tonnes p.a. means more coal juniors will be needed as this is Eskom focus  conditions Exports will also grow as additional capacity is added to rail, port in medium to long term  Strong management track record:  Experienced CEO: Nonkululeko Nyembezi-Heita (also non-executive chairman of the JSE and formerly CEO of  management ArcelorMittal South Africa) COO: Andries Engelbrecht (formerly COO of Riversdale Mining)  Significant expansion of production achieved in 2014  Uniquely able to Successfully improving operational performance  execute strategy Able to bolster relationship with key stakeholders (Eskom; SA government; communities)  Demonstrating capability to pursue value accretive M&A transactions  NOT INTENDED FOR SALES OR PROMOTION page 3

Asset overview – Locality map NOT INTENDED FOR SALES OR PROMOTION page 4

Asset overview – Vunene Mining IchorCoal has significant interests in several high profile domestic mining companies with core operations currently at Vunene Mining Usutu Colliery: 125mt resource  Zero fatal accidents since inception  Underground refurbishment project commenced with first production expected in  Q1 2016. Underground life of mine in excess of 15 years  Coal supply agreement in place with Eskom  16% reduction in cash cost per strip ratio since 2014  Vunene Mining > 80% increase in produced tons per annum since 2013  (74%) > 90% increase in overburden moved per annum since 2013  NOT INTENDED FOR SALES OR PROMOTION page 5

Asset overview – Mbuyelo Coal Manungu Colliery  40mt phase 1 LOM plan completed  Coal supply agreement with Eskom signed  Boxcut commenced  First coal Q2 2015 Welgemeend Colliery  JV agreement in place – double original Mbuyelo Coal resources (45%)  Processing plant to be commissioned in May 2015  Multi-product mine – export, other domestic and Eskom opportunities Vlakvarkfontein Colliery  Approx. 100kt/m to Eskom  Production flexibility  5 year LOM  Low cost mine  Managed by Continental Coal NOT INTENDED FOR SALES OR PROMOTION page 6

Asset overview – Universal Coal Kangala Colliery  Fully operational and profitable  CSA in place for phase 1 life of mine 22mt sales – 8yrs  Low cost mine  Production flexibility  Export market exposure  Life of mine extension to 16 years being investigated Universal Coal (29,99%) New Clydesdale  Project execution phase  1,2mt Eskom supply  Multi product mine  Export and non-Eskom domestic market exposure  3 coal plants available  Siding available NOT INTENDED FOR SALES OR PROMOTION page 7

Market overview Domestic  SA produces 260mtpa coal – 70% for domestic use (Eskom 47%) but poor volume growth – just Million tons per annum 1% cagr since 2000  Coal to remain a key fuel for energy production in the long run – significant coal resources, relative cost advantage  2 new power stations with total 9600 MW Why South coming on stream 2016 onwards Africa? Eskom demand: IEA World Energy  Estimated 60m tonnes p.a. coal supply gap from outlook 2012 2016 unsecured Long Term Coal Consumption by Region International Well supported  Decreasing use of coal as percentage of energy by fundamentals mix but rise in absolute tonnage Global demand: BP Energy outlook Billion Tons  SA well positioned to serve export markets – advantaged basin with good geology and coal grades  Access to good infrastructure with rail efficiency gradually improving  Longer-term growth driven by China (close to peak?) and India 1965 2035 2000  In response to oil price collapse, the closing coal price at 2014 year end was down 25% vs 2013, with sentiment turning very pessimistic  Investor Depressed valuations provide good opportunity sentiment for M&A at attractive price points  turning sharply However, sellers becoming increasingly negative unwilling as undervalued asset prices restrict appetite to consummate deals  Macro conditions increase importance of cash and constrain availability of cheap financing NOT INTENDED FOR SALES OR PROMOTION page 8

Management profile  Nonkululeko has spent the last 6 years as CEO of ArcelorMittal South Africa, before which she was the Chief Corporate Strategy Officer at the Vodacom Group in South Africa Nonkululeko  Since May 2014 Nonkululeko Nyembezi-Heita is the Independent Non- Nyembezi-Heita Executive Chairman of the Johannesburg Stock Exchange  She began her career as an engineer at IBM in USA before returning to work (CEO) for the company in South Africa. Nyembezi-Heita then switched direction to head the financial services group Alliance Capital Management before joining Vodacom  Andries has 20 years of experience in the mining industry. Before joining IchorCoal he was the Chief Operating Officer of Riversdale Mining Limited, an Andries Australian mining company specialized in coal mines in Africa. In this capacity, Engelbrecht he was responsible for all projects on that continent (COO)  Before that Mr. Engelbrecht was General Manager and Engineering Manager at Zululand Anthracite Colliery. He has also held positions at Khutala Colliery (Ingwe Coal Corporation) BHP Billiton and Richards Bay Coal Terminal NOT INTENDED FOR SALES OR PROMOTION page 9

Financial performance 1) € k FY2013 FY2014  Improvement in operating performance (higher Income Statement production and lower cash costs) due to successful Sales 24,565 48,630 mine management reflected in financial results: EBITDA 1,208 7,266 EBIT -3,952 -108 FY 2014 sales already higher than FY 2013 sales  EBT -11,324 -16,693 Operating profit margin improved significantly  EBITDA Margin 4.9% 14.9% 2) € k FY2013 FY2014 Balance Sheet Current Assets 29,073 26,196 Non Current Assets 123,998 150,432 Total Assets 153,071 176,629 Current Liabilities 5,788 9,193 of which financial 1,231 2,676 Non Current Liabilities 130,101 103,199 of which financial 111,497 81,501 Total Liabilities 135,889 112,392 Equity 17,182 64,236 Net Debt 103,393 65,037  Capital structure significantly enhanced following debt Net Debt/EBITDA 86x 9x to equity swap in July and December 2014 Debt/Equity 7.9x 1,7x Debt/Equity ratio significantly improved  1) € k FY2013 FY2014 Cash Flows Cash from Operating Activities -6,328 9,906  Solid cash position as operating activities are now cash Cash from Investing Activities -50,938 -18,280 flow positive Cash from Financing Activities 53,136 18,178 Cash & Equivalents at end of period 9,335 19,140 1 From continued operations 2 Restated as per FY 2014 year end Financials Source: Company Data NOT INTENDED FOR SALES OR PROMOTION page 10

Group structure IchorCoal N.V. 29.99%* 74.00% 45.16% Mbuyelo Coal Usutu Colliery 100% 100% 82% Universal Coal and Energy Holdings South Africa Orha Mining Xilombe Mining (Pty) Ltd (“Universal Coal”) 100% 70.5% Tshedza Mining Ntshovelo Resources UCD I (Pty) Ltd Kangala Eloff (Manungu) Vlakvarkfontein 40% 100% 100% 50.3% UCD III (Pty) Ltd Brakfontein Linarox Cozispot Welstand Welgemeend 49.0% UCD IV (Pty) Ltd 100% 100% NCC/Roodekop UCD VIII (Pty) Ltd Vapovox Cozifin Kuilfontein Palmietfontain 50% 1 Bernice and UCD II (Pty) Ltd 100% 75% Somerville Linanite Akisa Mining Langverwacht Loskop Derdehoek 50% UCD V (Pty) Ltd Cygnus 50% 2 UCD VI (Pty) Ltd Donkin Note: * Post conversion of preferred shares 49.0% Identity Bold italics mining rights Resources (Pty) Arnot South 1 Option to acquire a 74% Shareholding Ltd 2 Earn in 50% shareholding 4 UCD II (Pty) Ltd is a JV between Universal Coal and Bono Lithihi Investment Group (Pty) Ltd which houses the Berenice and Somerville prospecting rights Source: Universal Coal Company Presentation (February 2015) NOT INTENDED FOR SALES OR PROMOTION page 11