investor visit to vanggatfontein complex

LAYING THE FOUNDATION TO GROW SUSTAINABLY

INVESTOR VISIT TO VANGGATFONTEIN COMPLEX

06 March 2020

2

DISCLAIMER

This presentation contains forward-looking statements, including but not limited to, statements with respect to Wescoal Holding Limited’s plans and operating performance, the estimation of coal reserves and resources, the timing and amounts of estimated future production, costs of future production, future capital expenditure, and the success of mining activities. While based on management’s bes t estimates and assumptions, forward-looking statements are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by these forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions, risk related to operations, risks related to general economic conditions and credit availability, actual results of current mining activities, unanticipated expenses, changes in project parameters as plans continue to be refined, fluctuations in coal prices, increases in market prices of mining consumables, possible variations in grade rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in the country. Although Wescoal Holdings Limited has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, no undue reliance should be placed on forward-looking statements. Wescoal Holdings Limited undertakes no obligation to update or reverse forward-looking statements, whether as a result of new information or future developments. The information in this presentation has not been reviewed or reported on by Wescoal Holdings Limited’s auditors.

This presentation is provided for informational purposes and does not constitute investment, legal, tax or other advice, nor is it to be relied upon in making investment decisions. Wescoal Holdings Limited will not be responsible for any liability for loss or damages of any kind which arises, directly or indirectly, and is caused by the use of the information provided. The information contained herein shall not be published, rewritten for broadcast or publication or redistributed in any medium without prior written consent from Wescoal Holdings Limited. The entire presentation is subject to copyright, with all Wescoal Holding Limited’s rights remaining strictly reserved

33

CONTENTS

1. Welcome (Group CEO)

2. Introduction (Group CEO)

3. Q3 Update (Group CFO)

4. Vanggatfontein (VGF) Complex (Mining CEO)

5. Conclusion (Group CEO)

4

GROUP STRUCTURE

Wescoal Holdings Limited

(Registration Number: 2005/006913/06)

(100%)

Wescoal Mining (Pty) Ltd


(100%)

Proudafrique 147 (Pty) Ltd


(100%)

Wescoal Exploration (Pty) Ltd


(100%)

Wescoal Mineral Recoveries (Pty) Ltd


(100%)

Wescoal Trading (Pty) Ltd


(100%)

Blanford 006 (Pty) Ltd


100%

Keaton Energy Holdings Limited


(100%)

Neosho Trading 86 (Pty) Ltd

(Registration number: 2008/010470/07)

(100%)

Keaton Mining (Pty) Ltd


(100%)

Leeuw Braakfontein Colliery Proprietary Limited

(100%)

Labohlano Trading 46 (Pty) Ltd


(50%)

Arnot Holdco (Pty) Ltd

(Registration Number:

2019/019247/07)

(50%)

Arnot Opco (Pty) Ltd

(Registration Number:

2009/072282/07)

5

CORE VALUES

Safety

Delivery

Dynamic

Integrity

Accountability

Well-being

Stability

Sustainability Scalability

Safety,

health and

environment

MISSION

• To become a dynamic black-

owned and black-led coal

company which champions socio-

economic change and

transformation

• To lead the industry in

shareholder value-creation,

environmental sustainability and

stakeholder partnerships with

communities, employees and

shareholders

VISION

• To play a leading role in

delivering a reliable energy

source in a manner which adds

transformational value to society.

STRATEGY OVERVIEW

LAYING THE FOUNDATION TO GROW SUSTAINABLY

6

STRATEGY UPDATE

STABILITY

Sweat current operations, manage business well to maintain steady state

TARGET: 8Mt ROM FY20

Vanggatfontein turnaround

• Ramp up in progress and expected to reach over 300kt ROM in March

Elandspruit

• Consistently operating at 240kt ROM target from opencast

Khanyisa

• Operations back to full capacity following flooding and labour dispute in December 19 and January 20

Customer-centric; balance between Eskom, domestic and export coal

TARGET: 60% Eskom

SUSTAINABILITY

Optimal balance sheet and capital structure

TARGET: Sustained shareholder returns

Refinance facilities secured appropriate funding

CSI projects

• Delivering on all Social Labour Plan’s

Khanyisa Triangle 2

• Extension project required for the remaining life of mine

• First coal will be reached during April 2020

VG5

• Extension project to replace VG3 pit

• Primary development phase is expected to be completed by Q2 FY21

Regulatory and social license to operate

TARGET: Develop Group ESG framework

SCALABILITY

Fast-track development of organic growth projects

TARGET: Increase ROM to 10Mt FY21

Moabsvelden

• Box cut development and related infrastructure activities will commence in March 2020

• First coal and delivery to Eskom is scheduled for early calendar H2 2020

Arnot

• Mine to be restarted during calendar H2 2020 subject to conclusion of coal off-take agreements

Continue to evaluate available inorganic (M&A) growth opportunities

TARGET: Investment evaluation criteria

7

Q3 UPDATE

Production

Dec 2019

(Q3 FY’20)

(Kt)

Sep 2019

(Q2 FY’20)

(Kt)

Variance

(Kt)

Variance

(%)

Dec 2018

(Q3 FY’19)

(Kt)

Variance

(Kt)

Variance

(%)

Elandspruit 621 697 (76) -11% 681 (60) -9%

Khanyisa 219 370 (152) -41% 24 195 813%

Intibane

Vanggatfontein 621 529 92 17% 563 58 10%

Total 1 461 1 596 (135) -8% 1 268 193 13%

Sales (Kt)

Elandspruit 443 446 (3) -1% 586 (143) -24%

Khanyisa 324 323 1 0% 56 268 479%

Intibane 14 (14) -100%

Vanggatfontein 665 725 (60) -8% 426 239 56%

Mining 1 432 1 493 (62) -4% 1 082 350 32%

Trading 140 271 (131) -48% 204 (64) -31%

Total 1 572 1 764 (193) -11% 1 286 286 18%

Production

• Group mining production levels 13% higher than the comparable quarter ending December 2018

and 8% lower when compared to the immediately preceding quarter

• All operations were affected by unprecedented levels of rainfall during December 2019

• Lower than anticipated production at Khanyisa and Elandspruit was partially offset by better than

prior period production at Vanggatfontein (+17%)

Sales

• Group coal sales volumes increased 18% on comparable quarter of December 2018 and

11% lower when compared to the immediately preceding quarter

• This increase is a remarkable achievement given significantly reduced offtake by Eskom

during the December 2019 holiday period where Eskom was generally not taking coal

deliveries from 23rd December 2019 to 2nd January 2020

• Trading sales were in line with expectations although significantly below the comparable

quarter and previous quarter

VGF COMPLEX

9

LOCALITY MAP

10

VGF ORGANISATIONAL STRUCTURE

Mine Manager

Thakadu Saasa

Chief Safety Officer

Pieter Pretorius

Training Facilitator

SHE Administrator

Mine Engineer

Eshumael Chauke

Junior Engineer

Production Superintendent

Paul Simelane

Stockpile Supervisor

x 4

Geologist

Rendani Shiwalula

Junior Geologist

Environmental Intern

Njabulo Mxusile

Logistic Coordinator

De Wet Lombard

Diesel Attendant Weighbridge Clerks

General Worker

x 2

Junior Engineer

Phomolo Lekgae

11

0.2

0

1

2

Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

LTI LTIFR (FYTD)

SAFETY

Safety record• Regrettable fatal incident (June 19)

• 4 Lost Time Injuries recorded

• FYTD Total Recordable Injury Frequency Rate (TRIFR) at 1.34

Health & Hygiene• No Compensable Occupational Illnesses FYTD

• Increased focus on chronic disease monitoring

• Continuous monitoring of personal exposure

Q1 FY20

1.3

1.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20

Total Recordable Injury Frequency Rate (TRIFR) Performance

TRIFR (Month) TRIFR (FYTD) TRIF Target

Q2 FY20 Q3 FY20

Lost Time Injury Frequency Rate (LTIFR) Performance

Safety interventions• Operations running weekly Visible Felt Leadership schedules

• Proximity detection system installed and training of operators in progress

• Focusing on hazard identification and reporting by operators

• Effective closeout of actions from Visible Felt Leadership visits and incident

investigations

12

Current priorities • Implementation and monitoring of production improvement initiatives• Pit de-coupling project finalisation• Completion of workshop and offices relocation from VG4• Initiating infrastructure project for VG5 transition to Wescoal• Synchronisation of VG3 depletion with the handover of VG5

Challenges • Low production volumes due to:- Regulatory shutdown (fatality) – 17 June 2019- Absenteeism- Contractor changeover- Production downtime (protest action)- Equipment availability challenges- Production sequence inefficiencies

Solutions

and initiatives

• Deployment of senior Wescoal personnel directly to operation• Appointment of independent productivity consulting group to assist with a back-to-basics turnaround strategy• New equipment onboarded• Implementing improved operational management control processes, training, operating and supervisory structures• Appointed mining sub-contractor with own fleet to focus on Pit de-coupling project

LoM extension

initiatives

• Common box cut execution – VG5• Continuous mine planning and optimisation e.g. VG6

Cost drivers • Absorption rate of fixed costs due to low production volumes• Inflationary increase of operational costs

KEY INDICATORS

KEY INDICATORS

17 615

permanent contractors

1.9Mt (YTD19: 2.5Mt)

coal mined

26.3Mt

reserves

1.2Mt (YTD19: 1.9Mt)

sales volume

9 years (FY19: 9 years)

LoM

LTIFR 0.2 (FY19: 0.24)

safety

13

ROM & SALES PERFORMANCE TREND

59 70

92

202

127

200

228 232

158

211

284

-

50

100

150

200

250

300

Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20

Kt

VGF ROM

Actual ROM kt

51 47

69

153

79

111

150

122 123 123

183

-

50

100

150

200

Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20

Kt

VGF Own Sales

Actual Own Sales Kt

14

CURRENT AND GEOLOGICAL RESOURCES

Moabsvelden Coal

Project

VG4

VG3

VG5

VG6

Mine out Area Vanggatfontein Colliery

Infrastructure i.e. CHPP, Mine

Offices, PCD, Discard Facility

VANGGATFONTEIN

EXTENSION

15

DEVELOPMENT TIMELINES

Schedule base

Sept 19Reserve(Mt) FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

VG3 2.2Mt

VG4 11.1Mt

VG5 10.8Mt

Moabsvelden 29.0Mt

VG6 Underground 2.2Mt

Ave ROM

steady state

120ktpm

Ave ROM steady state 200ktpm




March 2021Depleted

Dec 2023Depleted

Nov 2026Depleted

Dec 2025Depleted

16

VG5 COMMON BOX CUT

▪ Extension project to replace VG3 pit during calendar H2 2020

▪ Well progressed to open a new box cut for an additional mining pit and coal face

▪ Joint development project, which will further enable extraction of some 450 000

tonnes boundary pillar area coal that would otherwise have been sterilized

▪ Primary development phase expected to be completed by Q2 FY21, at which

point the joint project will be dissolved and mining activities integrated with

existing Vanggatfontein operations, thus coinciding with the depletion of and

replacing production from VG3 pit

▪ Wescoal 4 Upper coal stockpiled in February was 16 700 tons and 4 Lower coal

supplied to Universal was 21 288 tons

VG5 PRODUTION

Dump m3

Topsoil m3 977 665

5 seam Waste m3

4 seam Waste m3 22 861 484

2 seam Waste m3 9 604 124

Total Waste m3 33 443 274

4 seam ROM t 5 419 745

CV MJ/Kg 21.0

2 seam ROM t 5 668 211

CV MJ/Kg 19.8

VG5 ROM Tonnes t 11 087 956

VG5 Strip Ratio x 3.0

Wescoal

Neighboring

Miner

17

MOABSVELDEN PROJECT

CONTRACT MINER

AND CAPEX

▪ Selection of a contract miner concluded following an extensive selection process

o Appointment remains subject to conclusion and signature of a contract mining agreement - an advanced stage

▪ Box cut development and related infrastructure activities will commence in March 2020

▪ First coal and delivery to Eskom is scheduled for early calendar H2 2020 (previously H1 2020)

o Ramp up to full target production volume of 200 Kt per month ROM expected to be achieved over a period of 18 months

▪ CAPEX for the first phase of mine development, the box cut development and auxiliary infrastructure to start mining operations and produce a ROM product in early calendar

H2 2020 - R250 million to R290 million

▪ CAPEX for the second phase to reach steady state of 200Kt per month ROM from Moabsvelden in early calendar H2 2021, inclusive of a coal handling and processing plant,

expected to be similar to that of phase one

▪ Thus, at the conclusion of phases 1 and 2 in 18 months’ time, Moabsvelden will be able to supply 2.0 - 2.1 million tonnes of coal per annum to Eskom

BOX CUT DESIGN

AND COAL

DISTRIBUTION

DESCRIPTION UNITS VOLUMES

WASTE

Load and Haul softs to dump -

500m m3 7,981,586

Drill and Blast Overburden m3 4,045,172

Load and Haul 5/4 IB to dump -

1,500m m3 1,952,183

Drill and Blast 4L/2U IB m3 101,945

14,080,886

COALING

Drill and Blast 5# t 438,395

Drill and Blast 4UU# t 55,9

Drill and Blast 4U# t 470

Drill and Blast 4L# t 650

Drill and Blast 2U# t 380

Drill and Blast 2L# t 770

2,764,295

18

PCD

Mining

Area

Access

Ramp

Waste Dump

Area

Mine

access

Mine offices

& Hardpark

Box cut

Crushing &

Screening

Area

Mining

Area

MOABSVELDEN SITE PLAN

19

CONCLUSION

› Most recent performance showing marked improvement, with ROM

expected to reach over 300Kt in March

› Contractor resourced to achieve plan consistently

› Capital investment into de-coupling of pit almost complete

› New pit VG5 on track to be handed over seamlessly at the end of VG3

› Moabsvelden commencement on track with coal expected in calendar H2

2020

investor visit to vanggatfontein complex

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