Kalimantan Coal 3rd Annual conference

at Balikpapan

PT. Hardeo Mines Update

By,

B. Prasad AVP-Mines, PT. Hardeo Mines

Structure of presentation 1. Overview and history of Hardeo Group

2. Overview of world coal reserve incl. Indonesia

3. Location of our coal concession

4. Introduction of our concession

5. Overview of coal quality at our mine

6. Production Plan of PT. Hardeo Mines for 2014-16

7. Major challenges facing coal mining industry

8. Opportunities in current market

9. Production trends of major PKP2B & BUMN for 2010-13

10. Production trends of Indonesia for 2004-13

11. Coal export and local sale from Indonesia for 2004-13

HARDEO GROUP OF COMPANIES

Sh. Devilal Jaiswal is the founder of Hardeo Group. He has initiated his business journey in the year 1974 & has a very clear perception about the things he envisages to do. His sons Vishal Jaiswal & Vaibhav Jaiswal has brought the dawn of a new era - An era that inherited qualities of high virtues, innovation & inspiration for being the best in the business. Continuing the fervor of innovation & quality, the group sets new bench-marks in the diversified areas of operation. Establishment of Konkan Agro Marine Industries Pvt. Ltd Nagpur Plant in Nov, 1995 is a remarkable benchmark in the Group’s journey towards success. With curiosity to explore & expand Hardeo Group upgraded its footprint in 2002 with start up of Konkan Agro Marine Industries Private Limited Aurangabad plant & thus evolving from one to multiple businesses. Hardeo group has successfully woven over 4 decades of innovation & enterprises. And the urge for innovation is still continues……..

History

Global Coal Reserve

Indonesia Coal reserve_ Region wise

Kalimantan location

Location of our concession

Location of our concession

Location of PT Hardeo Mines

Location of the Mine: 35 Km from Sangatta, the capital of the East Kutai Regency (Kutim), East Kalimantan province,

Indonesia. On the banks of the Sangatta River. 50 km north of the equator on the east coast of Kalimantan Island. 180 km north of the provincial capital Samarinda . 310 km north of the major population centre of Balikpapan.

www.hardeomines.com

PT. Hardeo Mines-Damanka Prima Project

• Highlights of coal project: • Concession area- 4923 Ha Maps_Damanka prima block\Map Block.jpg

• IUP OP- received in May, 2010

• Resource estimtated- 37 Million tons

• Total Number of Known seams-16 Nos

• Seam thickness ranges- 1m to 6m

• Stockpile Capacity- 100,000 metric tonne, beside Jetty

• Jetty availaibilty- Just beside concession, current mining location 7 km from Jetty/stockpile

• Haulroad, Jetty and stockpile is constructed and owned by PT. Hardeo Mines

• Coal quality of seams differ from seam to seam

PT. Hardeo Mines -Coal Quality

• Typical Coal Quality

Parameter Unit Basis Typical

Total Moisture % ARB 22-27

Inherent Moisture % ADB 10--14

Ash Content % ADB 5--8

Volatile Matter % ADB 38-42

Total Sulphur % ADB 0.6-1.8

GCV Kcal/kg ARB 4600-5300

GCV Kcal/kg ADB 5500-6200

HGI 45-55

PT. Hardeo Mines –Production Plan_2014

Month Projected Production (Metric Tonne)

January 25,000

February 25,000

March 40,000

April 40,000

May 40,000

June 50,000

July 50,000

August 50,000

September 50,000

October 50,000

November 50,000

December 50,000

PT. Hardeo Mines –Production Projection_2015

Quarter

Monthly Production (Metric Tonne)

Quarterly Projection (Metric Tonne)

January- March, 2015 100,000 300,000

April-June, 2015 110,000 330,000

July-Sept, 2015 125,000 375,000

October-December, 2015 140,000 420,000

Total 1,425,000

PT. Hardeo Mines –Production Projection_2016

Quarter

Monthly Production (Metric Tonne)

Quarterly Projection (Metric Tonne)

January- March, 2016 250,000 750,000

April-June, 2016 250,000 750,000

July-Sept, 2016 250,000 750,000

October-December, 2016 250,000 750,000

Total 3,000,000

Major Challenges facing the Industry

• Ever falling coal price_..\Falling Coal Price.xlsx

• Frequent changes Government policy – Ownership structure of foreign investment company

operating mine

– ET Batubara

– Restriction on IUPK-OP for coal hauling and sale

– Restriction on issue of RPTKA for technical manpower and shortage of local manpower

• Tough stand of local mining departments in collecting royalty

• No support from Govt. on land acquisition for mining

Falling coal prices • Graphical representation of HBI (Jan 09 to Aug 14)

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HBA ( USD Ton)

Gunung Bayan I 7000 Kcal/kg(GAR)

Prima Coal 6700 Kcal/kg(gar)

Pinang Coal 6150 Kcal/kg (gar)

Indominco IM East 5700 Kcal/kg

Melawan Coal 5400 Kcal/kg

Enviro Coal 5000 Kcal/kg (gar)

Jorong J-1 4400 Kcal/kg (gar)

Eco Coal 4200 Kcal/kg (gar)

Major Challenges facing the industry…

• Infrastructure of coal evacuation is inadequate in many of resource rich regions

– Need PPP(Public Private Partnership)

– Stability in Govt policy on issues related with coal mining

Opportunities in current market

• Opportunity of investing in Coal mine with Pit head coal based power plants. As Indonesia is still deficient with Power and having enough coal reserve over 5.529 Billion tons*

• Opportunity of investors for investing in Indonesia- As the energy price is possibly at bottom of market cycle, acquisition can be at least possible price

• Possibility of added coal requirement in India to feed its ever increasing coal need for Power and other infrastructure needs

• Improving market demand world over

Production trends of major PKP2B& BUMN

during period 2010-13

Production(Metric ton during 2010-13)

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

 2010

2011

2012

2013

Overall Production trends of Indonesia for

PKP2B& BUMN during

period 2004-13

Coal Production statistics

Year Production (Ton) Annual Increase in

production Cumulative annual increase

2004 113,162,525

2005 133,690,443

18.1% 18%

2006 163,197,032

22.1% 20%

2007 167,242,774

2.5% 14%

2008 177,018,905

5.8% 12%

2009 197,589,535

11.6% 12%

2010 219,029,654

10.9% 12%

2011 255,729,965

16.8% 12%

2012 231,017,995

-9.7% 9%

2013 249,401,916

8.0% 9%

Indonesian Coal Production(Ton) for 2004-13

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50.00

100.00

150.00

200.00

250.00

300.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Production ( Million Ton)

Production ( Million Ton)

Coal Export & Local Sale

Coal export and local sale

Year Export (ton) Local sale(ton)

2004 82,619,043 25,572,866

2005 96,823,594 34,027,578

2006 113,072,550 31,243,852

2007 127,376,122 38,603,540

2008 133,561,384 40,525,092

2009 156,526,659 41,915,457

2010 173,247,008 46,183,015

2011 192,319,857 57,460,354

2012 175,622,409 49,571,479

2013 187,558,361 53,238,826

Export and local sale(2004-13)

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

20042005

20062007

20082009

20102011

20122013

Local sale(ton)

Export (ton)

Export and local sale(2004-13)

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Export (ton)

Local sale(ton)

Sources of Information

1. www.minerba.esdm.go.id

2. www.hardeomines.com

3. www.worldcoal.org

4. www.coalspot.com