23.04.2012, presentation, an update on developments at tavan tolgoi, graeme hancock

ERDENES TAVAN TOLGOI JSC

GRAEME HANCOCK

CHIEF OPERATING OFFICER

23 APRIL 2012

ERDENES TAVAN TOLGOI JSC // PAGE 1

THIS PRESENTATION INCLUDES CERTAIN ―FORWARD-LOOKING STATEMENTS‖. ALL STATEMENTS,

OTHER THAN STATEMENTS OF HISTORICAL FACT, ARE FORWARD-LOOKING STATEMENTS THAT

INVOLVE RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO THOSE THAT RELATE TO

COAL RESOURCES AND SALEABLE PRODUCT YIELDS, PRODUCTION PLANS, COSTS OF

PRODUCTION, STRIP RATIOS, CAPITAL EXPENDITURES, COAL PRICES AND MARKETS. THERE CAN

BE NO ASSURANCES THAT THESE STATEMENTS WILL PROVE ACCURATE; AND ACTUAL RESULTS

AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH

STATEMENTS. THE INFORMATION CONTAINED HEREIN REPRESENTS THE COMPANY’S JUDGMENT

AS OF THE DATE HEREOF, BASED ON INFORMATION CURRENTLY AVAILABLE, INCLUDING THE

INFORMATION CONTAINED IN A DRAFT INDEPENDENT TECHNICAL REPORT PREPARED AT THE

REQUEST OF THE COMPANY. THE DRAFT TECHNICAL REPORT AND THE COMPANY’S MINE

DEVELOPMENT PLANS ARE SUBJECT TO CHANGE. THE COMPANY DOES NOT ASSUME ANY

OBLIGATION TO UPDATE ANY STATEMENT. NEITHER THE COMPANY NOR ANY OF ITS PERSONNEL

ACCEPTS OR ASSUMES RESPONSIBILITY, OR HAS ANY LIABILITY, TO ANY PERSON IN RESPECT OF

THIS PRESENTATION. THIS PRESENTATION DOES NOT FORM PART OF AND IS NOT MADE IN

CONNECTON WITH ANY OFFERING OF SECURITIES, AND IT SHOULD NOT BE RELIED UPON IN

CONNECTION WITH ANY CONTACT, INVESTMENT, DECISION OR COMMITMENT WHATSOEVER.

DISCLAIMER


Overview Current Corporate Structure

Erdenes Tavan Tolgoi JSC owns

licences over a majority of the

Tavan Tolgoi coalfield, one of the

largest open pittable coking coal

deposits in the world

The Company holds 7.4Bt of

Measured, Indicated and Inferred

coal reserves and resources and

1.8Bt of Proven and Probable coal

reserves in accordance with JORC

The Company commenced

commercial production in July

2011

COMPANY SNAPSHOT

Government of Mongolia

Erdenes MGL LLC

Erdenes Tavan Tolgoi JSC

100%

100%

Anticipated Future Corporate Structure

Government of Mongolia

Erdenes MGL LLC


51% or more

100%

Mongolian Shareholders Publicly Traded Shares

20% Up to 29%


Location

COMPANY SNAPSHOT - LOCATION

The Tavan Tolgoi coalfield

is located in the central

South Gobi region of

Mongolia

Approximately 200km

north of the Mongolian-

Chinese border


Tavan Tolgoi deposit consists of 6 sub-fields: Tsankhi, Ukhaa Khudag, Bortolgoi,

Borteeg, Southwest and Eastern coalfields

ETT owns licences over 5 of the 6 sub-fields (excluding Ukhaa Khudag)

Tsankhi is the main and best explored of the coalfields owned by ETT and contains

the highest portion of Measured and Indicated coal resources

COALFIELD STRUCTURE

Source: Draft Technical Report

~25km


Tavan Tolgoi deposit consists of 6 sub-fields: Tsankhi, Ukhaa Khudag, Bortolgoi,

Borteeg, Southwest and Eastern coalfields

ETT owns licences over 5 of the 6 fields (excluding Ukhaa Khudag and Small TT)

Tsankhi is the main and best explored of the coalfields owned by ETT and contains

the highest portion of Measured and Indicated coal resources

COALFIELD STRUCTURE


~25km

MMC 500Mt 286 Mt

Small TT


The current focus of the Group is on the Tsankhi coalfield

1Represents ROM coal Reserves. Reserves for East Tsankhi exclusive of reserves within mining licences owned by third parties 2In-situ coal Resources at <300m depth limit and estimated under JORC Code. Resources inclusive of reserves. Resources for East Tsankhi exclusive of resources within mining licences owned

by third parties


Eastern coalfield Borteeg

coalfield

Southwest

coalfield

Tavan Tolgoi JSC

(“Small TT”) (third party)

Daitsuki LLC

(third party)

Bortolgoi coalfield

Measured

Indicated

Inferred

287А

11977А

11945А

West Tsankhi coalfieldReserves1: 888Mt (~59% coking coal)

Resources2: 1,734Mt (~72% coking coal)

East Tsankhi coalfield

Reserves1: 948Mt (~61% coking coal)

Resources2 1,262Mt (~71% coking coal)

JORC RESERVES AND RESOURCES


Coal Resources (Mt, inclusive of coal Reserves)

JORC COAL RESERVES AND RESOURCES


Coalfield

Proved

(Mt ROM)

Probable

(Mt ROM)

Total

(Mt ROM)

Marketable

(Mt Product)

East Tsankhi 359 589 948 619

West Tsankhi 482 406 888 610

Total ETT 841 995 1,836 1,229

Coal Reserves (Mt)

Coal Reserves split by coal type (Mt)

Coalfield

Measured

(Mt ROM)

Indicated

(Mt ROM)

Inferred

(Mt ROM)

Total

(Mt ROM)

East Tsankhi 410 726 126 1,262

West Tsankhi 576 706 452 1,734

Others1 - 1,554 2,833 4,387

Total ETT 986 2,986 3,411 7,382

Coal Resources split by coal type (Mt)

1Include Southwest, Borteeg, Eastern and Bortolgoi coalfields


Tsankhi coking coal specifications Tsankhi coking coal quality benchmarked

against global coking coal projects

COAL QUALITY



Overview

EAST TSANKHI – OVERVIEW

JORC Reserves and Resources statement completed

— Total Reserves 948Mt (>60% coking coal)

— Total reserves and resources 1262Mt

Commenced pre-stripping and box cut development in August 2010

Production commenced in July 2011 with total production just under 2Mt to date

Currently producing at an annualized rate of 3.5Mtpa

New large equipment to enter into service at the end of this month

Target 3Mt ROM of raw coking coal in 2012 and gradually increasing capacity to

steady state 20Mtpa ROM by 2017 with potential for further expansion

— Estimated mine life @20Mtpa: 50 years

— Production of high quality unwashed coking coals for export in first two years

while Coal Handling and Preparation Plant (―CHPP‖) is being constructed

— Highly competitive cost with the estimated LOM average mine operating cost:

US$40.70/t of saleable washed coal



Contract mining agreement

EAST TSANKHI – OVERVIEW

Contract mining agreement commenced with Macmahon/Operta Joint Venture

Structured as an Alliance Contract, with a Base + KPI risk based compensation

scheme

An initial 5 year term with option to extend for an additional 2 years on meeting KPIs

Contractor to raise financing for and procure all necessary mining equipment – ETT

to purchase all mining equipment at the end of the contract term at book value

Offtake agreement

5 Year offtake agreement signed with Chalco

Exports to China under the agreement commenced in October 2011


Open-pit surface mining with a life of ~50 years Total LOM saleable product of 619Mt

EAST TSANKHI – OPERATIONS

Targeted steady state annual ROM production of ~ 20Mtpa (after ramp-up)

Estimated LOM average strip ratio at ~ 2.74

Targeted annual saleable production of ~ 13-15 Mtpa (after ramp-up)

Estimated LOM average washing yield at ~64%Source: Draft Technical Report and related mine development plan


Chinese Demand for Coking Coal

ETT Cost ranking (CFR Bohai Sea)

EAST TSANKHI – MARKET AND ECONOMICS

Source: Draft Technical Report and related mine development plan

0

20

40

60

80

100

120

14020

11

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Mt

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Landborne

imports

(Clean)

Seaborne

imports

% Mongolian

Supply

0

50

100

150

200

250

300

0 100 200 300 400

Mt

FO

B U

S$

/t

Erdenes TT

Australia

Canada

China

Mozambique

Indonesia

Russia

South Africa

USA

Venezuela

Vietnam

New Zealand

ETT Cost ranking (FOR Mine Gate)

0

20

40

60

80

100

120

0 100 200 300

Mt

FOB

US$/

t

Erdenes TT

Australia

Canada

China

Mozambique

Indonesia

Russia

South Africa

USA

Venezuela

Vietnam

New Zealand


Overview Recent development

WEST TSANKHI – OVERVIEW

JORC Reserves and Resources

statement completed

— Total Reserves 888Mt

— Total reserves and resources

1,734Mt

Feasibility study almost completed

— Supports a steady state 20Mtpa

ROM production rate over a five

year ramp-up period

— Estimated mine life of ~48 years

We plan to commence mining in May-

June this year

Currently in negotiations with

leading foreign companies to

develop the West Tsankhi Coalfield

as a consortium

— Interested parties from the US,

China, Russia, Japan and Korea

Erdenes TT will retain title to the

West Tsankhi mining licences and

the consortium will operate under a

Contract arrangement similar to an

Indonesian style Coal Contract of

Works


Road from Tavan Tolgoi to Gashuun Sukhait Border Crossing

INFRASTRUCTURE – KEY ELEMENTS

The Company has received Cabinet approval to construct a sealed highway parallel

to the Mongolian Mining Corporation (―MMC‖) paved road

20 Mtpa CHPP will employ ―world-class‖ technologies and processes and is

expected to be one of the largest and most advanced in Asia

East Tsankhi CHPP

Railroad from Tavan Tolgoi to Gashuun Sukhait

Mongolian Mining Corporation (MMC) has a license to build the rail from Tavan

Tolgoi to the Gashuun Sukhait border crossing. ETT anticipates cooperating in this

development.

Water Supply

Cabinet approved water use permit for Balgasyn Ulaan Nuur (―BUN‖) ground water

Power Supply

The company has approval to construct a 300MW power plant to meet its long-term

power requirements


Mine camp

SELECT PHOTOS


Mine pit from waste dump

SELECT PHOTOS (CONT’D)


SELECT PHOTOS (CONT’D)Seam 4 in Pit wall



Seam 4 thickness and low stripping ratio




In pit equipment Stripping operations




Coal ROM stockpile




Current waste dump




Open cut operations



Jigjidjav 8, 1st khoroo,

Chingeltei District

Ulaanbaatar, Mongolia

Tel: (976) 7011-8585

Fax: (976) 7011-9595


THANK YOU FOR YOUR ATTENTION

23.04.2012, presentation, an update on developments at tavan tolgoi, graeme hancock

Business