© 2010 Ncondezi Coal Company – All Rights Reserved July 2010
An Emerging Mozambican Coal Exploration and
Development Company
Graham Mascall – Chief Executive OfficerMozambique Coal Conference, Maputo - 20 July, 2010
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Ncondezi Coal Company LTD: NCCL
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Admission onto AIM Market of the London Stock Exchange June 10th, 2010
Number of shares issued c.29 million
Price per share 123 pence
Gross proceeds raised US$52m (£36m)
Shares in issue post raising c.119 million
Market capitalisation on admission c.£147m (US$212m)
Shareholder structure
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100%1
Additional Licences(Licences 1314L & 1315L)
Ncondezi Project(Licences 804L & 805L)
Dos Santos
Family
10%
1 Licences 100% held indirectly through 100% owned subsidiaries in Mozambique and Mauritius
MinoritiesManagement
EBTFree floatStrata Ltd
5%46% 15% 24%
100%1 100%
Introduction
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Ncondezi Coal Company Limited (“Ncondezi” or the “Company”) is a AIM listed coal exploration and development company with 4 licences in the Tete province of Mozambique
The licences were first issued in December 2004
Strata Limited became a majority shareholder in the Group in 2007 and funded the two subsequent work programs between 2007 and 2009
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 focused on licences 804L and 805L (“Ncondezi Project”)
122 boreholes or 16,737 m drilled to date
Scoping Study on licences 804L & 805L completed Q2 2010
Investment Summary
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Strategic licences in one of the world’s largest undeveloped coking and thermal coal basins in Mozambique
Close proximity to coal projects being developed by Vale and Riversdale and existing rail infrastructure
Large scale resource with significant upside potential
Ncondezi Project is one of the largest contiguous licence areas in the region
JORC resource classification of 1.8Bt
Only 3 of 7 blocks drilled
Additional exploration target of 400-1,600Mt1 identified with further drilling
SRK Scoping Study confirms economically robust 10Mtpa thermal coal project
Coking coal potential to be further tested
Initial results from 3 holes show encouraging coking coal potential
Experienced management team
Over 70 years collective experience in the mining sector
Board includes Mozambique’s ex National Director of Mines
Current Work Program designed to complete fast track Bankable Feasibility Study (“BFS”) in H2 2012
1 Initial estimates are based on limited drilling and are scheduled to be explored further. Reported in accordance with clause 18.1 of the JORC code
Ncondezi Board
Richard Stuart - Chairman Chairman of Strata Limited
Former Joint Senior Partner of Fleming-Martin, one of South Africa's leading brokerage firms that was acquired by Flemings in 2000
Estevao Pale - Non Executive Director Current CEO of Companhia Moçambicana de Hidrocarbonetos (CMH), a Mozambican natural gas company
Former National Director of Mines in the Ministry of Mineral Resources and Energy between 1996 and 2005
Has sat on the board of numerous companies in the mining sector, and conducted several consultancies for international organizations
Graham Mascall - CEO Over 35 years of experience in mining and mining finance
Chairman of Gemfields, an AIM listed Emerald/Gemstone company, and on the Board of Directors of London Mining PLC
Previously CEO of International Molybdenum and Lubel Coal Company
Mark Trevan - Non Executive Director Currently Managing Director at Caledon Resources
Previously worked for Rio Tinto for 25 years as a senior executive in the coal division
Nigel Sutherland - Non Executive Director Over 34 years experience in the global resource sector
Previously worked with Anglo American for 17 years and Goldfields for 4 years
Colin Harris - Non Executive Director Currently Director General of the MPD Zanaga iron ore project in Congo Brazzaville
Over 40 years experience as an exploration geologist
Previously worked for Rio Tinto for 25 years, Anglo American for 5 years and Cominco for 14 years
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Mozambique: An African Success Story
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
Political and economical stability
Strong resource development and investment track record
Vale – Moatize US$1.3 billion
Riversdale/Tata Steel – Benga US$260 million
BHP – Mozal US$2 billion
Kenmare – Moma US$500 million
Sasol Gas Pipeline US$1.2 billion
Other companies investing in Mozambique include ENRC, Coal of India,
JSW and Jindal
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Tete: One of the Largest Undeveloped Coal Regions
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Ncondezi Project
1.4bn resource
US$1.3bn project cost
First production in H2 2011
Capacity for 11Mtpa production, 8.5Mtpa coking, 2.5Mtpa thermal
Building one of the largest wash plants in the southern hemisphere – 26Mtpa
Zambeze Project
24,740 ha
150 boreholes drilled
JORC resource of 9.0Bt
6.1Bt at <500m depth
Coking and thermal coal potential
MoU signed with Wuhan Iron and Steel to acquire a 40% stake for US$800m in three tranches
Sena Railway
Moatize Town
Tete Town
Vale (Moatize Project)
ENRC licence 871L
JORC resource of 1.0Bt
Located south of Zambezi River
Others
Opening first box
cut at MoatizeBenga Project
4,560 ha
4Bt resource, reserves of 502Mt
Tata Steel acquired 35% stake in 2007 for A$100m
First production in H2 2011
Phase 1 to produce 1.7Mtpa coking and 0.3Mtpa thermal with capex of US$260m
Potential capacity of 10Mtpa
Riversdale Mining (US$1.6bn market cap.)
38,700 ha
JORC resource of 1.8Bt tonnes
100% of resource at c.200m
Scoping study confirms 10Mtpa thermal coal open cast mine
10kms to Sena Railway and c.40kms from provincial capital Tete
Source: SRK (May 2010), Golder Associates Africa maps, Company websites and publications
The Ncondezi Project – Licences 804L and 805L
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c.35kms
c.11
kms
Source: SRK (May 2010)
c.35kms
North
122 boreholes totalling 16,737 metres have been drilled across 804L and 805L to date
Ncondezi Project Exploration History
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1980-1981 Swede Coal Exploration (No resource classified)
8 core holes completed
Confirmed presence with initial indications of substantial coal resource
2004 Company awarded licences 804L and 805L
2006 Exploration Programme
2 twin core holes completed on 804L and 805L to confirm Swede Coal results
2007 Strata Limited investment in the Company
2007-2008 Exploration Programme
65 core holes totalling 5,522 meters completed
Drilling in Southern, Northern, and Western Blocks
Samples sent to ACT laboratories in Tete for wash tests
2009 Exploration Programme (1.8Bt JORC resource classified)
SRK review of project
New management team recruited
54 Percussion holes totalling 10,978m including 8,555m of geophysical logging completed
31 twinning holes and 23 new holes
3 cored holes drilled for coking tests
3D geological modelling completed
2010 Exploration Programme
1.8Bt JORC resource classified
Scoping Study produced by SRK
Core recovery from S18
Percussion chips from W05
1.8Bt JORC Resource Identified
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Significant resources identified (JORC) on 804L & 805L
Geological loss factor of 30% applied to all blocks
Drilling limited to 200m depth
JORC classification and tonnages (South, North and West Blocks only)1
Block
Measured
Mt
Indicated
Mt
Measured &
Indicated
Mt
Inferred
Mt
Total
Mt
South 24 447 471 127 597
North 0 174 174 503 677
West 0 0 0 534 534
Total 24 620 644 1164 1,809
Resource (804L & 805L)
Characteristics (804L & 805L)
Five distinct coal zones identified in the North, South and
West blocks
Varying thickness but Zone 1 thickest at up to 83.5m
Average thickness of coal seams: 4.4-49.3m
Shallow nature of deposits conducive to open pitmining
General dip 5-30 degrees
Coal zones can be beneficiated at acceptable yields by
dense medium separation to produce export coal products Source: SRK (May 2010)
Source: SRK (May 2010)
Note: In situ resources tonnages have been adjusted for a 30% geological loss factor1 Numbers are rounded
South Block Cross Sections
Size of Resource Still to be Quantified
Only 3 of the 7 blocks drilled
SRK estimates that Central and River blocks
have potential additional exploration target of
between 400Mt and 1,600Mt1
North East and East blocks are currently
undrilled but underlain with Karoo Outcrop
Drill density currently at 0.5-1km
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1 Initial estimates are based on limited drilling and are scheduled to be explored further. Qualities assumed to be similar to qualities already defined. Reported in accordance with clause 18.1 of the JORC code :
1) the potential quantity and grade as reported in respect of the exploration tonnages are conceptual in nature, 2) there has been insufficient exploration to define a mineral resource and 3) it is uncertain if
further exploration (as planned by the company) will result in the determination of a mineral resource.
Coking Coal Potential
During 2009, SRK and Ncondezi agreed that a more
detailed set of coking tests should be undertaken on at
least one of the exploration blocks
Three core holes were identified in the South Block,
namely S20, S22 and S23
Coking results gave indications of coking potential in the
licence blocks
More work is needed to confirm coking potential
SRK noted that future improvements in test-work and
tightening of sampling procedures will help to better
understand coking potential
MBGS now mandated to oversee more systematic and
prescribed exploration approach
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Scoping Study – Key Results
Five distinct coal zones identified in the North, South and West blocks
Optimisation study undertaken to provide potential for future economic extraction
Open pit mining operation producing 10Mtpa of export thermal coal identified
Estimated capital cost of US$376m
Life of mine cash costs of US$48.6/t, including 10% contingency and prestripping
Cash costs at mine gate of US$27.2/t
Transport costs of US$17/t
Mining schedule based on mining South block initially, then West block
24% ash, 6,000kcal/kg GAR export thermal product (post washing)
37 year mine life
Average strip ratio: 1.3
Ramp up
− Yr 1 - 2.6 Mtpa product
− Yr 3 - 6 Mtpa product
− Yr 5 - 10 Mtpa product
− 2 year mine construction period
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Note: Figures assume no geological loss is applied
Production commencing 2014/15
Maximum depth of approximately 200m
200 Mt of 24% ash, 6,000 kcal/kg GAR coal export
product
22 year mine life
Total material movement 1,788 Mt
Raw coal production of 756 Mt
Stripping ratio of 1.4
Scoping Study Conceptual Pit – Configuration and phasing
Production commencing year 23
Maximum depth of approximately 200 m
15 year mine life
Average stripping ratio of 1.2
South Block
West Block
Optimised pit shells for the South and West Blocks
For a primary 24% ash, 6,000kcal/kg GAR coal export product
Overview
Source: SRK (May 2010)
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Mozambique Strategically Positioned to Supply Growth Markets in the Seaborne Coal Markets
+3.5Bt tonnes of global coal demand growth forecast by 2030
90% of long term coal demand expected to come from Asia,
particularly India and China
Mozambique competitively positioned for exports into India,
China, Brazil and Europe
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
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+150
+50
+690
+110
+380
+2,210
Global Coal Demand Growth Forecast 2007-2030 (Mt)
Source of Additional Seaborne Coal Demand 2009-2015 (Mtpa)
India
125
Japan
25
Taiwan
12.5
Other Pacific
40
Atlantic
45
Total additional seaborne coal demand 2015E = 378Mtpa
China
100
South Korea
30
Total growth in global coal demand 2007-2030 = 3.8Bt
Source: Peabody, JPMorgan Cazenove Equity Research
0
20
40
60
80
100
120
140
2009A 2010E 2011E 2013E 2015E 2017E 2019E
Investment case for thermal coal remains robust Global seaborne thermal coal demand traditionally robust with CAGR
of 10% over last 30 years
Ongoing demand growth will be driven by increased electrification of the planet
94 GW of new coal fired power generation to come on line in 2010
This represents an additional thermal coal requirement of 375Mtpa
Asia, particularly China and India, is already leading the growth in power generation demand
China and India account for 40% of the World’s population
US per capita electricity use is 5x higher than China and 25x higherthan India
India forecast to be the World’s fastest growing importer of coal
India currently has 78GW of new coal fired power generation underconstruction
Supply side problems developing for the seaborne market
China & India – Insufficient domestic production, both net importers ofthermal coal in 2009 and predicted to continue going forward
Australia – Mine tax on coal producers limits development of newprojects. Capacity constraints at port and rail
Indonesia – Coal quality decreasing. Regulation being developed tolimit coal exports as domestic coal fired industry ramps up
South Africa – Rail constraints already limiting exports
Columbia – Coal industry threatened by industrial action
Russia – Cash costs have risen 45% in last two years, largely drivenby increases in rail charges
USA – Appalachian exports only viable at thermal coal prices of$105/t and above
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Indian Seaborne Thermal Coal Demand
Millions of Tonnes
Source: Peabody, McCloskey, JPMorgan Cazenove Equity Research
New Coal Fired Power Generation 2010 (GW)
China
55
India
19
Other Asia
8
USA
7
Others
5
Total new power generation 2010E = 94GW
Infrastructure Options
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570km railway line recently refurbished
10km rail spur required for Ncondezi Project to join line
Initial capacity of 5Mt via existing coal terminal at Beira (currently being refurbished)
New coal terminal in 2014/15 with c. 20Mtpa capacity under investigation by Mozambican government
Port is tidal - restricted marine access will require dredging to handle Panamax vessels
Sena Line to Beira Port
525km
Initial surveys show transport is technically feasible,
Feasibility study and EIS currently being undertaken by Riversdale with results expected in H1 2011 with potential to export from 2012
Will require transshipment at sea
Large capacity potential >20Mt
Barge to Chinde
Approx. 800km by rail
Currently connects Blantyre in Malawi to Port of Nacala
Options to connect rail to Moatize under investigation
1Mtpa capacity currently
US$1.6Bn upgrade announced by Vale and Moz Govt. in November 2009
Plan to upgrade rail and port to 20Mtpa coal capacity, with further potential to +40Mtpa
Port of Nacala a natural deep water port
US$500m funding already secured for connection to Moatize
Nacala Line and Port
Ncondezi Project
All port and rail government owned, with participation in operating concessions
Open user access to port and rail expected
A number of options for port and rail upgrades on either Sena/Beira or the Nacala rail and port
Sena Line Refurbishment
Port of Beira
Port of Nacala
Source: Google Maps, Company, public information
Additional Licences 1314L and 1315L
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Licence 1314L
Located 130km south west of Tete on the border
with Zimbabwe
Total area of 17,380 hectares
Licence 1315L
Located 320km North West of Tete on north shore of
Cahora Basa Lake.
Total area of 17,080 hectares
Licence 1314LLicence 1315L
Source: SRK (May 2010)
Environmental and Social Responsibility
Environment and Social Policy in place
Full time Community Liaison Officer appointed in Tete
Commence Environmental Social Economic baseline study in Q3 2010
Environmental and Social Impact Assessments (“ESIA”) to completed in 2012
Important part of the BFS and standalone requirement for mining licence application
ESIA work to be carried out by independent local and international consultants
Work will begin in Q3 2010
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“Environment, Social, Health and Safety responsibilities are integral to the way we do business”
Work Program Overview Work Program fully funded from proceeds of June 2010 AIM placing
Work Program budget of US$47.2m over two years
+US$40m dedicated to exploration work
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
MBGS to provide consulting input and overview on exploration management, procedures and data
management activities
Will target yield increases and coking coal potential
Additional coking coal test work on cored holes that display coking characteristics
SRK has reviewed and given its support of the Work Program, and considers it to be achievable
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Professionals already mandated for Work Program to date
Strategy
Target completion of BFS 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
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Summary
Largest undeveloped coal region in the world
Access to key growth markets
Infrastructure revitalisation underway
Supportive government with track record of world-class projects
Well
Positioned
to Serve
Growth
Market
Ncondezi Project
JORC compliant resource of 1.8Bnt
Fast track to BFS and project development
SRK Scoping Study supports 10Mtpa export thermal coal project with coking coal
potential
Attractive
Resource
Base with
Significant
Upside
Potential
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