Investor Presentation I October 2014

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Scot Patrick
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1 Investor Presentation I October 2014

2 DISCLAIMER This document, which is personal to the recipient, has been issued by Ncondezi Energy Limited (the Company ). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. In particular, this document and the information contained herein does not constitute an offer of securities for sale in the United States. This document is being supplied to you solely for your information. The information in this document has been provided by the Company or obtained from publicly available sources. No reliance may be placed for any purposes whatsoever on the information or opinions contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of the Company s directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of the Company s members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. Nothing in this document or in the documents referred to in it should be considered as a profit forecast. Past performance of the Company or its shares cannot be relied on as a guide to future performance. Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company s or, as appropriate, the Company s directors current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document. This document has been prepared in compliance with English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this document. 2

3 NCONDEZI ENERGY INVESTMENT HIGHLIGHTS Developing an integrated 300MW (2x 150MW units) power plant and mine in growth region of Mozambique Supported by 4.8bt JORC coal resource Scalable to 1,800MW Focused on meeting SADC 1 region energy demand First 300MW targeted at Mozambican demand Potential to expand into South Africa, Zimbabwe, Botswana and Malawi Commercial Deal agreed with Electricidade de Moçambique 2 (EDM) in Q US$ based tariff range agreed for 25 year Power Purchase Agreement Currently working with EDM to agree the timetable to Financial Close MOU with Shanghai Electric Power Company Limited (SEP) to become a strategic investor in both the power station and the mine SEP looking to acquire control of the power project Attractive project economics / value prospect Competitive equity IRR Significant value unlock to Financial Close 1 Southern African Development Community 2 Mozambican state power and transmission utility 3

MOZAMBIQUE HAS THE HIGHEST ENERGY CONSUMPTION GROWTH IN THE SADC 1 REGION Currently generates in excess of 2,000MW (2 nd largest in SDAC 1 ) 1,300MW exported to South Africa Power demand growth at

4 MOZAMBIQUE HAS THE HIGHEST ENERGY CONSUMPTION GROWTH IN THE SADC 1 REGION Currently generates in excess of 2,000MW (2 nd largest in SDAC 1 ) 1,300MW exported to South Africa Power demand growth at c80mw p.a (14%), the highest in SADC 1 (avg. 3%) Large incentives to expand power generation Imports accounted for 4% of domestic consumption in 2013 but 40% of total expenditure c. 20% of households have access to electricity Projected GDP growth of 7-8% Existing under utilised transmission infrastructure MW of capacity Plans to expand by over 3,000MW by 2020 Potential to sell power into SADC 1 region Mozambique already sells to SA, Zimbabwe, Botswana & Namibia South African Power Pool 1 Southern African Development Community 4

COAL FIRED POWER GENERATION STRATEGIC TO MOZAMBIQUE Large gas discoveries Mozambique wants a diversified generation mix Hydro, gas and coal all form part of

commissioning (7 years) and requires substantial transmission upgrades Coal ideally suited to meet supply gap 1. Cahora Bassa 2. Mpanda Nqua 3.

Moatize 5. Ncondezi 6. Benga 7. Sasol 8. Aggrekko 9.

5 COAL FIRED POWER GENERATION STRATEGIC TO MOZAMBIQUE Large gas discoveries Mozambique wants a diversified generation mix Hydro, gas and coal all form part of Mozambique s energy strategy Power supply gap exists Gas generation limited to 600MW and only connected to southern grid Hydro long lead time commissioning (7 years) and requires substantial transmission upgrades Coal ideally suited to meet supply gap 1. Cahora Bassa 2. Mpanda Nqua 3. Lupata Hydro Scalable to meet available transmission capacity 150MW units Commissioning achievable within 3 years Long life of operation +25 years Moatize 5. Ncondezi 6. Benga 7. Sasol 8. Aggrekko 9. Kuvaninga Coal Gas Located close to power generation & transmission infrastructure hub in Tete Ncondezi dedicated coal power generator for Mozambique Power is main focus not reliant on export coal development Other potential coal generators believed to be focused on internal energy requirements 5 Source: Company

6 NCONDEZI VS SA COAL BASELOAD PROGRAMME The Ncondezi Project has a number of advantages versus similar projects taking part in the SA coal baseload programme, namely: US$ based tariff structure Competitive equity IRR Clear timetable to market Exclusivity to develop (no competition/tender risk) Ability to sell into the wider Southern African Power Pool Can be expanded beyond 600MW The Ncondezi Project will also be cost competitive into SA and across the SADC region Agreed shareholding structure Less onerous local content requirements (more cost effective) Captive coal supply for life of plant Existing transmission infrastructure with spare capacity 6

91km away) Coal supply to come from Ncondezi Mine (c.

7 NCONDEZI POWER PLANT OVERVIEW First Phase 2x150MW Power Plant Project Base Map 25 year life EDM exclusive offtaker for 300MW Supplying Mozambican Northern Grid (c.91km away) Coal supply to come from Ncondezi Mine (c.2km conveyor) Transmission evacuation route approved by EdM Concession Area Topography Potential to expand up to 1,800MW ESIA approved 7

8 ATTRACTIVE POWER PLANT ECONOMICS FOR PHASE 1 US$ Tariff range agreed with EDM 25 year Power Purchase Agreement in advanced stage of negotiation Power Plant EPC binding bids received Process managed by STEAG and KPMG Mine EPC and Contractor binding bids received Process managed by KPMG Target project capital structure of 70% debt / 30% equity Competitive equity IRR Strong cash flow generation Projected average annual EBITDA of >$130 million Projected net equity cash flow of >$2.0 billion over 25 years Potential for significant value unlock to Financial Close 8

9 MOU SIGNED WITH SHANGHAI ELECTRIC POWER COMPANY Ncondezi and Shanghai Electric Power Company Limited ( SEP ) have signed a nonbinding Memorandum of Understanding ( MOU ) SEP is a subsidiary of China Power Investment Corporation ( CPI ) which is one of China s largest power generation companies SEP has total installed capacity of c. 7GW (80% coal fired). CPI has total installed capacity of c. 90GW and total assets of c. US$100bn SEP has an international expansion strategy in East Africa and specifically Mozambique MOU provides for SEP to acquire a controlling interest in the Ncondezi Power Plant and a minority interest in the Ncondezi Mine MOU follows 10 months of due diligence completed by SEP Ncondezi will look to reinvest proceeds of sale to maintain equity stake to commercial operations MOU contains timetable to agree binding Joint Venture Agreement which is targeted for end of 2014 Ncondezi has granted SEP limited exclusivity to end of November

10 PROJECT PROGRESS UPDATE Delivered Power Framework Agreement Mine Concession granted Power Plant ESIA 1 approved Mine ESIA 1 approved Power Plant EPC binding bids Mine EPC and Contractor binding bids Transmission EPC binding bids Confirmation of Commercial Deal with EDM Next Milestones Confirmation of Strategic Investor Agreed timetable to Financial Close Final Form Power Purchase Agreement Final Form Power Concession Agreement Power Plant EPC Selection Transmission EPC Selection Mine EPC and Contractor Selection Initiate financing process 1 Environmental and Social Impacts Assessment 10

11 NCONDEZI INVESTMENT HIGHLIGHTS Strong regional demand backdrop and expansion potential Commercial deal agreed with EDM MOU with SEP to become strategic investor in both power plant and mine Attractive project economics / value prospect Clear pathway to unlocking value 11

12 Appendices

13 NCONDEZI POWER PROJECT BENEFITS TO MOZAMBIQUE Security of supply - dedicated mine mouth power station Affordable source of electricity Proven and reliable technology Energy portfolio diversification - reduced exposure to hydro and gas Ideally sized and located - not reliant on large longer term transmission projects Scalability - potential to scale up to 1800MW meet future demand Increase in economic investment and national income Job creation and skills development Government revenues from taxes and levies 13

EXPERIENCED AFRICAN POWER TEAM LEVERAGING WORLD CLASS CONSULTANTS Ncondezi Board Michael Haworth Paul Venter Dr Estevão Pale Christiaan Schutte Peter O Connor Jacek Glowacki Senior Partner at

14 EXPERIENCED AFRICAN POWER TEAM LEVERAGING WORLD CLASS CONSULTANTS Ncondezi Board Michael Haworth Paul Venter Dr Estevão Pale Christiaan Schutte Peter O Connor Jacek Glowacki Senior Partner at Greenstone Resources. Director of Strata Limited, extensive investment banking experience at J.P Morgan in natural resources. +39 years experience in Africa, Russia & Asia, mining, power generation & transport logistics Ex-Prophecy Coal, Gobi Coal & Energy, EN+, Eskom Ncondezi s representative on Liaison Committee with EdM & Government CEO, Companhia Mocambicana de Hidrocarbonetos, formerly National Director of Mines & Energy +20 years working for Eskom in Group Generation and Technology divisions +20 years working for Eskom across Generation Transmission, and Capital Expansion divisions +30 years international experience in the power sector Vice President of the Management Board of Polenergia SA Legal Counsel Local Counsel Corporate Advisor Power, EPC Selection Power & Mine EPC Selection Power Transmission Evacuation Commercial Advisor - Power Insurance Advisor EPC Selection Transmission 14

15 BASE MAP OF POWER PLANT AND MINE Phase 1-300MW Phase 2-300MW Transmission line Coal Mine 15

16 THE NCONDEZI COAL MINE WILL SUPPLY THE POWER PLANT Mine will be located next to power plant - Open pit, low strip mining contractor operation - c.2km conveyor to power plant Key permitting completed - Mining Concession granted & ESIA approved Coal Supply Agreement HoT agreed - 25 year fuel supply - Mine to ring-fence coal resources Financing to be secured via bankable offtake agreement with power plant Optimised Mine Feasibility Study Global Resource Measured JORC Resource Production Life of Mine Life of Mine Opex Coal Transfer Pricing +4.8Bt 120Mt 1.3Mtpa 25 years contingency up to 40 years $15-20/t c. $25/t Capex Excluding Box Cut $53m Mine operations will be managed by contractors - Bindings bids received from mining contractors 16

17 MINE OVERVIEW CONCESSION MAP & RESOURCE BLOCKS Source: Company 17

18 MINE OVERVIEW RING FENCING OF REQUIRED RESOURCES +4.8Bt Concession coal resource Previous Mine area Drill Spacing Mining Concession issued August 2013 ESIA approved October 2013 Mining area identified in South Block to feed 300MW power station 800Mt JORC resource Area within South Block ring fenced to provide sufficient product For 25 year life of mine (ca. ROM 50Mt) plus a 40% contingency (ca. ROM 20Mt) Key for bankable CSA between mine and power plant Infill drilling in ring fenced area to upgrade resource to measured category Drilling completed September 2013 Lab results completed October 2013 Updated resource published November 2013 Source: Company Updated Mine area Drill Spacing Source: Company 18

19 NCONDEZI TRANSMISSION CONNECTION LINE Electricity generated at Power Plant will be evacuated into national grid via new 91km transmission line Transmission evacuation study complete Route and technical specification approved by EdM 400kV double circuit line, initially operated at 220kV Allows for easy expansion to 600MW Transmission line to connect to grid will be Build Own Transfer EdM will own, operate and maintain new line Lump sum and/or fixed monthly payment to Ncondezi Power sold to EdM at power plant gate EPC tender process commenced Q Future potential to expand Matambo substation into Zimbabwe, South Africa and Botswana Connect to Malawi (<100kms) Connect to future north south backbone line (STE Project) Transmission Solution Power Plant EDM Matambo 104 km Source: PNO Evacuation Study 300 MW Ncondezi power plant 294 km Ncondezi 220 kv substation 85 km Ncondezi mining load M M M M 190 km Coal Mine New Transmission Infrastructure Chimuara Existing EDM Transmission Lines 19

SUCCESSFUL GAS TO POWER PLANT DEVELOPMENT CTRG, MOZAMBIQUE

SUCCESSFUL GAS TO POWER PLANT DEVELOPMENT CTRG, MOZAMBIQUE Africa Utility Week Cape Town Kribs Govender Vice President Business Development Power & Gas 13 May 2015 Forward-looking statements Forward-looking