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was RESULTS Q1 - 2018 May 30, 2018 FORWARD-LOOKING STATEMENTS - - PowerPoint PPT Presentation

was RESULTS Q1 - 2018 May 30, 2018 FORWARD-LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for


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SLIDE 1

was

RESULTS Q1 - 2018

May 30, 2018

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SLIDE 2

FORWARD-LOOKING STATEMENTS

2

  • Matters discussed in this presentation may constitute forward-looking statements. The Private Securities Litigation Reform Act of

1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are including this cautionary statement in connection with this safe harbor legislation. Words such as "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "will," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this presentation are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.

  • In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause

actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and

  • ther important factors described from time to time in the reports filed by the Golden Ocean Group Limited with the U.S.

Securities and Exchange Commission.

  • Certain third-party shipping, steel and global industry information, statistics and charts contained herein have been derived from

several sources. You are hereby advised that such industry data, charts and statistics have not been prepared specifically for inclusion in these materials and Golden Ocean Group Limited has not undertaken any independent investigation to confirm the accuracy or completeness of such information

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SLIDE 3

COMPANY UPDATE

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SLIDE 4

4

HIGHLIGHTS

4

  • The Company reports net income of $16.7 million and earnings per

share of $0.12 for the first quarter of 2018, compared with net income of $27.1 million and earnings per share of $0.19 for the fourth quarter of 2017

  • Adjusted EBITDA in the first quarter was $53.3 million, compared

with $65.3 million in the fourth quarter of 2017 and $17.5 million in the first quarter 2017

  • Completed the newbuilding program by taking delivery of the

remaining five Capesize newbuildings.

  • Took delivery of the Golden Monterrey, a Capesize vessel acquired

in October 2017

  • Agreed a $120 million loan facility to refinance 10 vessels at

favorable terms

  • Agreed to sell the Golden Eminence, a Panamax vessel, for $14.7

million to an unrelated third party

  • Announces a cash dividend of $0.10 per share for the first quarter
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SLIDE 5

(in thousands of $) Q1 2018 Q4 2017 Quarterly Variance

Operating revenues 147,888 150,712 (2,824) Voyage expenses (30,841) (28,949) (1,893 Net revenues 117,047 121,763 (4,717) Ship operating expenses (37,279) (36,383) (896) Administrative expenses (3,668) (3,279) (389) Charter hire expenses (27,642) (20,382) (7,260) Depreciation / impairment (22,113) (20,873) (1,239) Other gains (losses) 65 (505) 570 Net operating expenses (90,637) (81,423) (9,214) Net operating income (loss) 26,409 40,340 (13,931) Net financial expenses (15,903) (15,619) 284 Derivatives and other financial income (loss) 6,190 2,386 (3,804) Net income before taxation (loss) 16,696 27,107 (10,411) Income Tax expense 13 (16) 23 Net income (loss) 16,683 27,124 (17,878) Earnings (loss) per share: basic and diluted $0.12 $0.19 Adjusted EBITDA 53,273 65,325 (12,053) TCE per day 15,593 16,444 (851)

PROFIT & LOSS

5

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SLIDE 6

CASH FLOW DURING THE QUARTER

6

Cash at beginning of period(1) Cash from

  • perations

New debt Final installments for NBs Repayment

  • f debt

Dividends paid Vessel acquisition costs Other Cash at end

  • f period(1)

(1) INCLUDES RESTRICTED CASH

Q1 2018

372.0 28.5 150.0 (144.6) (24.8) (14.4) (7.5) (0.8) (358.4)

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SLIDE 7

BALANCE SHEET

(in thousands of $) Q1 2018 Q4 2017 Quarterly Variance

ASSETS

Short term Cash and cash equivalents (incl. restricted cash) 306,192 317,139 (10,947) Other current assets 144,019 127,361 16,658 Long term Restricted cash 52,193 54,845 (2,652) Vessels (incl. newbuildings and held-for-sale) 2,489,836 2,320,730 169,106 Other long term assets 44,988 49,983 (4,995) Total assets 3,037,228 2,870,058 167,170

LIABILITIES AND EQUITY

Short term Current portion of long term debt and capital lease 306,636 114,910 191,726 Other current liabilities 71,284 66,817 4,467 Long term Long term debt and capital lease 1,143,060 1,186,223 (43,163) Other long term liabilities 7,944 8,059 (115) Equity 1,508,304 1,494,049 14,255 Total liabilities and equity 3,037,228 2,870,058 167,170

7

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SLIDE 8

MODERN, EFFICIENT FLEET

8

$4 $9 $8 $6 $7 $7

  • 5

10 15 20 25 30 35 40 45

  • 5

10 15 20 25 30 35 40 45

Expected cost by year ($ millions) # of vessels

# of vessels Expected cost 5 100 5 200 5 200 205

  • 1 000

2 000 3 000 4 000 5 000 6 000 Supramax Panamax Capesize OPEX Drydock & Surveys

BWTS INSTALLATION SCHEDULE OPERATING EXPENSES (Q1 2018)

  • Fully-burdened Opex includes dry docking and management fees
  • One vessel dry docked in the first quarter of 2018, and five more to be docked later this year
  • Average fleet age of ~5 years and majority of the fleet designed with fuel-efficient engines and ballast water treatment systems
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SLIDE 9

FLEET DEPLOYMENT

NOTE: CHARTERING PROFILE AS OF FEBRUARY 2018; GROSS RATES SHOWN ARE FOR 2018; FOUR PANAMAX CHARTERS EXPIRE BETWEEN JANUARY 2020 AND DECEMBER 2021 * GOLDEN EMINENCE TO BE DELIVERED TO THE NEW OWNER LATER THIS YEAR

9 CHARTERING PROFILE

2018 2019 2020 2021

Capesize

12 vessels at $17,960 34 vessels trading spot

Panamax

6 vessels at $20,750 23* vessels trading spot

Supramax

3 vessels trading spot

12 fixed 6 fixed 4 fixed

Fleet heavily skewed towards spot exposure to capture market upside

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SLIDE 10

191

200

311 1,165 311 974

CREDIT FACILITY SUMMARY(1)

CREDIT FACILITIES

(1) BASED ON MARCH 31, 2018 FIGURES, ADJUSTED FOR NEW LOAN FACILITY SIGNED IN MAY 2018 TO BE DRAWN BY END OF Q2-18

10

Selected covenants

  • Resumed ordinary amortization of 16.5 million per quarter
  • No further cash sweep or outstanding deferred debt
  • 125 - 135% MVC
  • Convertible Bond matures in January 2019

RECOURSE DEBT

Selected covenants through July 1, 2019

  • No amortization payments
  • Cash sweep mechanism
  • 105% MVC

Selected covenants post July 1, 2019

  • Amortization payments resume
  • 125 - 135% MVC

NON-RECOURSE DEBT RECENT DEVELOPMENTS

  • New $120 million loan facility to refinance $58.3 million due

under two loan facilities maturing in 2018 and seller credit loans of $65.5 million

  • 20-year amortization profile with seven year tenor and

interest of L + 2.25% 900 120 181 358 245

200 400 600 800 1 000 1 200 1 400 1 600

Recourse debt New loan Convertible loan Non-recourse debt Total Cash

USD (thousands)

Recourse Non-recourse

245 1,201

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SLIDE 11

DRY BULK MARKET UPDATE

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SLIDE 12

DRY BULK SUPPLY / DEMAND & UTILIZATION

12 SUPPLY, DEMAND AND UTILIZATION RATE - DRY BULK SHIPS 10,000 DWT +

Utilization decreased in the first quarter following increased capacity due to easing of port delays

SOURCE: MARITIME ANALYTICS 60% 65% 70% 75% 80% 85% 90% 95% 100% 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Fleet utilization Tonne miles (billions)

Demand Supply Utilization Rate

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SLIDE 13

GROWTH IN SEABORNE TRADE CONTINUES

13 SEABORNE TRADE OF DRY BULK COMMODITIES (MAJOR IMPORTERS)

First quarter import increased due to discharge after port delayed and

  • verall increases in year-over-year imports

SOURCE: MARITIME ANALYTICS 700 800 900 1 000 1 100 1 200 50 100 150 200 250 300 350 400 2010 2011 2012 2013 2014 2015 2016 2017 2018

Metric tonnes (billions) Metric tonnes (millions) Total Iron Ore Coal Other Bulks Agribulks

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SLIDE 14

WORLD STEEL PRODUCTION TRENDS INTACT

ANNUAL CHANGE IN STEEL PRODUCTION

Synchronised growth both in Chinese and Rest of World production

SOURCE: MARITIME ANALYTICS

14

  • 10%
  • 5%

0% 5% 10% 15% 20%

jan.12 mar.12 mai.12 jul.12 sep.12 nov.12 jan.13 mar.13 mai.13 jul.13 sep.13 nov.13 jan.14 mar.14 mai.14 jul.14 sep.14 nov.14 jan.15 mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 mar.18

China Rest of World

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SLIDE 15

20 40 60 80 100 120 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18

TSI 62% FE content Qingdao TSI 58%

15 IRON ORE PRICE DIFFERENTIALS

SOURCE: SSY, STORMGEO, NENA ANALYTICS

GROSS PROFIT (STEEL PRICE MINUS COST OF COKING COAL AND IRON ORE; ALL PRICES SPOT)

STEEL MARGINS AND IRON ORE PRICE DIFFERENTIALS SUPPORTIVE

  • 100
  • 50

50 100 150 200 250 300 350 2016 2017 2018

$/t Gross profit using Au coking coal, Au iron ore price and Tangshan steel billett price Gross profit using Cn coking coal price, Au iron ore price and Tangshan steel billett price

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SLIDE 16

AUSTRALIA AND BRAZIL REMAIN MAJOR IRON ORE EXPORTERS

16

SOURCE: MARITIME ANALYTICS, STORMGEO, NENA ANALYTICS; DISPLAYS VOLUMES BY QUARTER

QUARTERLY EXPORTED IRON ORE VOLUMES PER COUNTRY

20 40 60 80 100 120 140 160 180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Australia Brazil South Africa India Other

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SLIDE 17

81,1 81,6 94,5 73,6 65,5 65,0 62,7 11,0 16,2 13,8 30,6 21,0 13,2 15,9

20 40 60 80 100 120 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 End April China India

COAL IMPORTS REMAINS HEALTHY, AND INVENTORIES REMAIN AT LOW LEVELS AHEAD OF COOLING SEASON

17 CHINA AND INDIA COAL INVENTORIES COAL IMPORTS BY MAJOR IMPORTERS

SOURCE: MARITIME ANALYTICS, COMMODORE RESEARCH

10 20 30 40 50 60 70 80 90 2010 2011 2012 2013 2014 2015 2016 2017 2018 Metric tonnes (millions) China Japan

  • S. Korea

India Europe

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SLIDE 18

300 350 400 450 500 550 600 650

jan.10 apr.10 jul.10

  • kt.10

jan.11 apr.11 jul.11

  • kt.11

jan.12 apr.12 jul.12

  • kt.12

jan.13 apr.13 jul.13

  • kt.13

jan.14 apr.14 jul.14

  • kt.14

jan.15 apr.15 jul.15

  • kt.15

jan.16 apr.16 jul.16

  • kt.16

jan.17 apr.17 jul.17

  • kt.17

jan.18 apr.18

Kilowatt hours (billions)

SEASONALLY STRONG ELECTRICITY CONSUMPTION SUPPORTS COAL DEMAND

18 CHINESE ELECTRICITY OUTPUT BY SOURCE

SOURCE: COMMODORE RESEARCH / NARIONAL BUREAU OF STATISTICS OF CHINA

CHINESE ELECTRICITY OUTPUT

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % jan.10 mar.10 mai.10 jul.10 sep.10 nov.10 jan.11 mar.11 mai.11 jul.11 sep.11 nov.11 jan.12 mar.12 mai.12 jul.12 sep.12 nov.12 jan.13 mar.13 mai.13 jul.13 sep.13 nov.13 jan.14 mar.14 mai.14 jul.14 sep.14 nov.14 jan.15 mar.15 mai.15 jul.15 sep.15 nov.15 jan.16 mar.16 mai.16 jul.16 sep.16 nov.16 jan.17 mar.17 mai.17 jul.17 sep.17 nov.17 jan.18 mar.18

Coal-derived electricity output Hydropower output Other output sources

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SLIDE 19

U.S. GRAIN EXPORTS SURGED AHEAD OF THREATENED TARIFFS

19 SOYBEAN AND SOYBEAN MEAL EXPORTS BY SOURCE

SOURCE: FEARNRESEARCH

GRAIN EXPORTS BY SOURCE

2 4 6 8 10 12 14 16 18 20

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

USA Brazil Argentina 2 4 6 8 10 12

Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

USA

  • Aust. Wheat Only

Argentina EU to 3rd c. Canada

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SLIDE 20

0,0 1,0 2,0 3,0 4,0 5,0 6,0

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Mill dwt

  • 0,5

0,0 0,5 1,0 1,5 2,0 2,5

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Mill dwt

  • 2,0
  • 1,0

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Mill dwt

  • 4,0
  • 2,0

0,0 2,0 4,0 6,0 8,0 10,0 12,0

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018

Mill dwt

DELIVERIES WERE DOWN COMPARED TO THE FIRST QUARTER OF 2017 DESPITE LOW SCRAPPING YTD

20 PANAMAX / POST-PANAMAX CAPESIZE

LTM Delivered: 11.5m dwt LTM Scrapped: 4.3m dwt LTM Delivered: 8.1m dwt LTM Scrapped: 2.2m dwt LTM Delivered: 5.8m dwt LTM Scrapped: 2.5m dwt LTM Delivered: 2.6m dwt LTM Scrapped: 1.0m dwt

HANDYSIZE HANDYMAX / SUPRAMAX

SOURCE: CLARKSONS PLATOU

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SLIDE 21

18% 24% 58% 76% 52% 46% 67% 40% 24% 41% 35% 8% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q2 2018 H2 2018 2019 2020-> Total % of Orderbook Not commenced (%) Under construction (%) Launched (%)

DOWNSIDE CASE FOR SUPPLY GROWTH

STATUS OF ORDERBOOK

Continued slippage is expected as ~22% of vessels scheduled for delivery in 2018 have not even commenced construction

SOURCE: VIAMAR, IHS SEAWEB

21

(3.6m dwt) (4.7m dwt) (1.9m dwt) (1.1m dwt) (9.6m dwt) (3.5m dwt) (0.8m dwt) (14.3m dwt) (20.1m dwt) (5.2m dwt) (16.0m dwt) (5.6m dwt) (33.7m dwt) (42.0m dwt)

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SLIDE 22

4% 5% 2% 1% 0% 5% 10% 15% 20% 25% 30% 100 200 300 400 500 600 700 800 900 1 000

Annual fleet growth Fleet (MdWT) Fleet size Deliveries Scheduled deliveries Fleet growth

PROJECTED FLEET GROWTH STILL MODERATE

FLEET GROWTH (ASSUMES NO SCRAPPING OR NEW ORDERING)

Forecasted fleet growth is still moderate, despite new ordering observed; any additional capacity from now expected to be placed in 2020 or later

SOURCE: SSY

22

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SLIDE 23
  • 10

20 30 40 50 60 70

  • 10 000

20 000 30 000 40 000 50 000

Asset values (mm USD) 1 yr-TC (USD/day) 1 yr-TC 5 yr SH Capesize 10 yr SH Capesize

  • 5

10 15 20 25 30 35 40 45

  • 5 000

10 000 15 000 20 000 25 000 30 000 35 000

Asset values (mm USD) 1 yr-TC (USD/day) 1 yr-TC 5 yr SH Panamax 10 yr SH Panamax

S&P PRICES STABLE, YET STILL LOW

23 PANAMAX VALUES AND EARNINGS

SOURCE: CLARKSONS PLATOU

CAPESIZE VALUES AND EARNINGS

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SLIDE 24

OUTLOOK AND STRATEGY

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SLIDE 25

EXPECTATION FOR CONTINUED IMPROVEMENT WITH INHERENT SEASONALITY AND VOLATILITY

25 DOWNSIDE RISKS UPSIDE POTENTIAL

  • Increased tonne-miles if additional

iron ore capacity comes from Brazil

  • Coal demand grows due to increased

consumption, restocking and arbitrage

  • pportunities
  • More tonne-miles due to longer sailing

distances on continued demand increase in Asia replacing European demand

  • Supply constraints, including port

congestion and slow steaming on higher bunker prices

  • Removal of older vessels ahead of

BWTS and sulphur emissions regulations

  • Lower steel margins impact import /

export volumes

  • Draw down of iron ore inventories in

China

  • Economic activity decreases in China,

leading to lower consumption of steel and energy

  • Trade tensions reduce global trade
  • New ordering increases fleet growth

expectations for 2020+

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SLIDE 26

1 3 5 7 9 11131517192123252729313335373941434547495153555759616365676971 Weekly Capesize Rates Weekly Panamax Rates

  • 5 000

10 000 15 000 20 000 25 000 30 000 35 000 Capesize Panamax OPEX G&A Interest Leases Repayment

COMPETITIVE CASH COSTS DRIVE EARNINGS

26 CASH BREAKEVEN LEVELS VS. INDEXES(1)

$14,200 $9,900

(1) ESTIMATED CASH BREAKEVEN LEVELS AT TODAYS INTEREST LEVEL, INCLUDING FULL CASH-SWEEP FOR NON-RECOURSE DEBT AND EXCLUDING PROFITABLE CHARTERS WHICH WILL REDUCE THE CASH BREAKEVEN FROM THESE LEVELS SOURCE: CLARKSONS

  • Fully-burdened Opex includes dry docking and management fees
  • G&A net of management fees are estimated to be approximately $400 per day in 2018 on a fully delivered fleet
  • Average margin above LIBOR on bank financing is competitive at ~2.3%
  • Majority of bank debt has 20 year profile (adjusted for year of age)

Jan 2017

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SLIDE 27

QUESTIONS & ANSWERS

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SLIDE 28

THANK YOU FOR YOUR ATTENTION!