About Us

Introduction

Ncondezi Coal Company Ltd (and with its subsidiaries the “Ncondezi Group”) is an exploration and development company with four coal exploration and prospecting licences in the Tete Province of Mozambique. The Company holds prospecting and exploration licences over more than 73,160 ha in the Zambezi Basin, a geological environment considered to be one of the last undeveloped coal basins in the world.

The majority of the exploration work to date has been focused on the Company’s two main licences, 804L and 805L which comprise the Ncondezi Project where 122 boreholes or 16,737m have been drilled and a 1.8 billion tonne JORC resource identified. A scoping study has been completed by SRK Consulting (UK) Ltd (“SRK”), an independent technical consultant, which confirmed the economic potential for an open pittable 10 million tonne per annum export thermal coal operation. Good potential exists to increase the resources within the Ncondezi Project where there is also considered to be potential for coking coal but further work is required to confirm this.

The other licences held by the Company are 1314L and 1315L, which have undergone limited exploration.

The Company now intends to fast-track a feasibility study to bankable standards on the Ncondezi Project, and ultimately to develop mining operations producing export thermal and, potentially, coking coal products. The bankable feasibility study is scheduled to begin in the second half of 2010 and be completed in the second half of 2012.

The Zambezi Basin is located in the Tete Province in north-west Mozambique, and is considered to be one of the last undeveloped coal basins in the world. Considerable exploration has taken place in the Zambezi Basin since 2004 when a consortium of companies headed by major mining company, Vale S.A. (“Vale”), won the right to develop the Moatize coal deposit. To date, significant coal resources have been identified across the Zambezi Basin with Vale’s Moatize and Riversdale Mining PTY Ltd’s (“Riversdale”) Benga projects being the most developed and due for first production in the latter half of 2011. The identification of coal in the region has led to the strategic investment by major mining companies, steel producers and energy companies, including Vale, Tata Steel Ltd, Jindal Steel & Power Ltd and Cia. Siderurgica Nacional SA (“CSN”).

The Company, led by Graham Mascall, has an experienced management team and Board with a proven track record in the mining sector. The Board also has a proven track record in the capital markets industry, both through financing companies as well as merger and acquisition activity.

The Company Directors believe that the key highlights of the Ncondezi Group’s business are:

1. Large scale thermal coal resource identified
2. Scoping study supports a potential 10 Mtpa export thermal coal operation
3. Potential to increase overall coal resource and upgrade the currently defined JORC mineral resources
4. Potential to identify coking coal
5. Ncondezi Project located in a strategic coal basin
6. Ongoing development and expansion of export infrastructure

Large scale thermal coal resource identified

The Company has identified a JORC coal mineral resource classification of 1.81 billion tonnes on the Ncondezi Project. This includes 1.16 billion tonnes in the Inferred category, 0.62 billion tonnes in the Indicated category and 0.02 billion tonnes in the Measured category. Refer to the Mineral Resource Statement in the Ncondezi Project for more detailed information.

Scoping Study supports a potential 10 Mtpa export thermal coal operation

SRK completed a scoping study on the Ncondezi Project in April 2010 confirming the economic and technical viability, at a scoping study stage, of mining and processing coal from the Ncondezi Project. The scoping study confirmed the potential for a 10 Mtpa open-pit mining operation, producing a 6,000 kcal/kg GAR thermal grade coal for export. Key highlights from the scoping study were a total mine capital cost of US$376 million (including contingencies and implementation charges), average stripping ratio of 1.3 and life of mine of 37 years.

Potential to increase overall coal resource and upgrade the currently defined JORC mineral resources

The Group’s current JORC coal mineral resource of 1.81 billion tonnes only includes coal identified on 3 of the 7 blocks on the Ncondezi Project. British Geological Survey (“BGS”) studies suggest that coal bearing Karoo Outcrop exists in all 7 of the blocks on the Ncondezi Project and represents significant coal resource upside potential if drilled further.

In the Central and River Blocks, which have undergone limited drilling, SRK estimate a combined Exploration Target of between 400 Mt and 1,600 Mt¹ (having applied applicable geological losses) assuming similar qualities to those already defined in the JORC coal mineral resource statement. Both of these areas need further drilling to be considered as JORC resources.

Potential also exists in the undrilled North East and East Blocks, as BGS studies have shown that these areas are also underlain with coal bearing Karoo Outcrop.

Additionally, there is potential to upgrade the currently defined JORC mineral resources and identify higher quality coal zones through more detailed drilling and sampling of the North, South and West Blocks on which the current 1.81 billion tonne JORC resource is currently based.

¹Initial estimates are based on limited drilling and are scheduled to be explored further. Reported in accordance with clause 18.1 of the JORC code:

1. the potential quantity and grade as reported in respect of the exploration targets 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.

Potential to identify coking coal

Coking coal exists in the coal bearing Zambezi Basin, evidenced by historic production at the Minas Moatize mine and proven exploration results and forecast production from Vale’s Moatize and Riversdale’s Benga projects.

Results from a detailed set of coking coal tests performed by the Company on 3 core hole composites on the South Block in 2009 demonstrated that potential for coking coal exists, but further work is required to confirm this.

Ncondezi Project located in a strategic coal basin

Coal exploration activity in the Tete Province has picked up significantly since 2004, when a consortium of companies headed by the international major mining company, Vale, won the right to develop the Moatize project. To date, significant coal resources have been identified across the Zambezi Basin with Vale’s Moatize and Riversdale’s Benga projects being the most developed and due for first production in the latter half of 2011. Capital investment from these two companies alone is expected to be approximately US$1.6 billion by the time coal production starts next year. The identification of coking coal in the region has led to the strategic investment by major mining companies and steel producers alike, including Vale, Tata Steel Ltd, Jindal Steel & Power Ltd and CSN. In addition, the presence of companies such as Vale, CSN, Tata Steel Ltd, Jindal Steel & Power Ltd and Coal India Ltd in the Zambezi Basin demonstrates the strategic importance of Mozambique’s location to countries such as Brazil and India. The Ncondezi Project’s close proximity to Vale’s Moatize and Riversdale’s Benga projects highlights the Ncondezi Project’s strategic location.

Ongoing development and expansion of export infrastructure

Currently there are three options available for the transport of coal from the Tete Province to the seaborne market for export. These are:

• Utilise the existing Sena Railway from Moatize to the Port of Beira.
• Extend the existing Nacala Corridor railway line from Blantye in Malawi to Moatize and export from the Port of Nacala.
• Barge down the Zambezi.

Although current refurbishment of the Sena railway line is expected to deliver first coal from producers in 2011, it is widely accepted that the initial coal handling facilities of the Sena railway and Port of Beira will not be sufficient for the forecast coal production from the Zambezi Basin. The capital commitments already being made by Vale and Riversdale will result in coal production well in excess of what can currently be transported. Upgrades to both the railways and ports for export from Beira and Nacala are under investigation, and it is expected that these upgrades could provide up to 40 Mtpa of coal handling capacity by 2015 with potential for further increases.

Barging down the Zambezi River offers another transport option, and is being investigated by Riversdale. Although barging on a limited scale has been successful in the past, a key milestone in the development of this option will be the issuing of environmental approvals from the Mozambican government.

The Ncondezi Project is targeted to begin exporting coal in the latter half of 2014 at the earliest and so will be in a good position to utilise infrastructure upgrades assuming they develop as planned.