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Leading PCI coal producer with significant reserves and resources

Leading PCI coal producer with

significant reserves and resources

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Leading PCI coal producer with significant reserves and resources

Overview

• The deposit was founded in 2009 for miningand export of high quality PCI coal that goesinto coking mix

• It owns 224 hectares of land (covers miningand waste sites) and a license for coalmining in Prokopievsky District of KemerovoRegion valid until 30 October 2027

• T he reserves of high quality Low VM PCI coalamount to 28 mln. tons, while the resourcesof 212 mln. tons show further growth potential

• T he company has sufficient fleet of newvehicles and equipment in place for annualproduction of 1. 5 mln. tons, while theextension is underway to reach 3 mln. tons

• T he producer owns railway loading stationthat provides significant competitive advant-age in terms of logistics

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Leading PCI coal producer with significant reserves and resources

Favorable location in the heart of the major coal region

Russian Federation Kemerovo region

• Coal deposit is located in Kemerovo Region, which is the heart of Russian coal mining

industry, with abundant materials, technology and labor supply

• The location allows the company to export coal both to Asia and to Europe depending on the

market conditions in these regions

• The nearest railway stations Trudarmeiskaya (1 km) and Tyrgan (3 km) are situated in close

proximity to the deposit

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Leading PCI coal producer with signi�cant reserves and resources

State approved reserves with substantial growth potential

• The table below shows the reserves approved by the State Commission of Reserves as well as the resources

• The reserves of high quality T -grade coal amount to 28 mln. tons

• The resources of 212 mln. tons show further potential . The drilling program of $2 mln. is planned to convert these resources into reserves

Categories Reserves and resources, ‘000 tons

State approved reserves 28 010

State approved resources 212 000

State approved reserves and resources

240 010

Moisture, %

Ash, %

Volatile matter, %

Sulphur , %

Net calori�c value, kcal/kg

5.5 9.3 12.2 0.34 7069

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Leading PCI coal producer with significant reserves and resources

Own mining equipment allows to work independently

The Company has its own mining equipment and infrastructure, allowing it to work

independently from other companies:

• There are two coal storage areas with two rail sidings 0.9 km and 2.7 km with capacities of

150,000 tons and 80,000 tons

• Production buildings with floor space of 442.2 m2

• Site roads of over 27.0 km

• Four waste stockpile sites with total capacity of 200 million m3

• Power lines over 10 km of 2.5 MW

• Pumping infrastructure providing drainage for the deposit

• Crushing and sorting complexes

• Two fuel storages

• Loading site of 1 hectare, weighing equipment with scales for auto and rail transport

• 224 hectares of land in ownership (mining operations and waste sites)

• Maintenance shed – 500 m2 with equipment for repairs

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Leading PCI coal producer with significant reserves and resources

Considerable fleet of vehicles in ownership

The Company has its own fleet of mining vehicles:

• Mining dump trucks BELAZ–7547 – 8 units

• Grader DZ-98 - 1 unit

• Loader M-4026 - 1 unit

• Loader Caterpillar-970 - 1 unit

• Loader Shantui SL50W – 1 unit

• Loader Komatsu WA 420-3 - 1 unit

• Bulldozer T-25 - 1 unit

• Bulldozer T-170 - 1 unit

• Bulldozer Komatsu D65E-12 - 2 units

• Roller-bit drilling rig SBSh-200-36 - 1 unit

• Excavator Liebherr R-962 - 1 unit

• Excavator Komatsu PC-1250-7 – 1 unit

• Excavator Hitachi ZX330LC-3 – 1 unit

• Excavator EK-400-03 - 1 unit

• Excavator EKG-4Y - 2 units

• Excavator EKG-5A - 2 units

• Excavator Caterpillar 330 CL – 1 unit

• Excavator Caterpillar 365 BLME – 1 unit

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Leading PCI coal producer with significant reserves and resources

Vehicles in leasing allow to further increase production

The Company also has mining vehicles in leasing:

• Mining dump trucks BELAZ–7555B – 18 units

• Roller-bit drilling rig Atlas Copco DML+ - 1 unit

• Excavator Volvo EC 700 B - 2 units

• Roller-bit drilling rig Atlas Copco - 1 unit

• Grader DZ-98B - 1 unit

• Bulldozer CAT В 9-R - 1 unit

• Loader CAT 980H – 3 unit

• Tip-truck CAT 740 – 3 unit

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Leading PCI coal producer with significant reserves and resources

Open pit deposit is favorable for further expansion

• The deposit is an open pit

• The first step of mining consists

of site preparation, drilling and

blasting operations

• The second step of mining involves

excavation of the overburden and

its storage in the stockpiles that

are owned by the company

• The third step of mining includes

excavation of coal and its storage

in storage areas that are owned by

the company

• The fourth step consists of coal

sorting and wagon loading at the

railway station that is owned by

the company

First step

Second step

Third step

Fourth step

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Leading PCI coal producer with significant reserves and resources

PCI coal market and production growth

• Our low volatile PCI coal provides further carbon (over that derived solely from the coke)

for iron-making. As a result of the extra carbon introduced by PCI coal, steel makers can

reduce the amount of coke necessary for steel making

• This low volatile PCI (LV PCI) coal is increasingly sought by steel mills in preference to

higher volatile coal because it provides superior performance in the blast furnace due to

its higher carbon and energy content

• The replacement ratio of LV PCI coal to coke varies according to the requirements of

each blast furnace. Typically, 1.0 ton of LV PCI coal can replace 1.3 tons of more

expensive coking coal

• Consequently, LV PCI coal has proven to be effective in lowering the cost of steel

making and has established a niche in the market for metallurgical coal

The producer implements two-stage development plan of the deposit

First stage (currently underway):

• Reaching of production level of 125,000 tons of coal per month by the first half of 2014

Second stage (gradually starts in 2014):

• Purchase/leasing of new equipment (mining dump trucks, graders, bulldozers, loaders)

• Reaching of production level of 250,000 tons of coal per month by the end of 2014