Xstrata Coal South Africa and ARM Coal Site Visit

6 November 2006

Coal

Introduction

Steve Mashalane(Chief Executive Officer - ARMCoal)

Coal

3

Index

• Overview Xstrata Coal

• Xstrata Coal South Africa (XCSA)

• Goedgevonden Joint Venture

• Coal Market Review

• ATCOM site visit

Coal

Xstrata Coal

Leon Binedell(Chief Financial Officer – XCSA)

5

Xstrata Coal Profile

• The second largest of Xstrata plc’s commodity businesses post the Falconbridge transaction (19% of enlarged Xstrata Plc EBIT)

• One of the world’s largest producers of export thermal coal and a significant exporter of coking coal

• Interests in over 30 operating coal mines located in South Africa, Columbia and Australia, employing around 10,000 people

47

41

35

26

23

0 20 40 60

Enlarged Xstrata

BHP Billiton

Anglo American

PT Bumi Resources

Drummond Co.

Mt

58

16

12

11

10

0 20 40 60 80

BHP/Mitsubishi

Fording

AngloEnlargedXstrata

Rio Tinto

Mt

Top 5 Coking Coal producersTop 5 Thermal Export producers

1

1-Includes 1/3 share of Cerrejon coal for 2005

6

Our Vision

We have an absolute commitment to leadership in the areas of health, safety, environment and the community

We are a fatality free business which operates beyond compliance in our HSEC obligations

Our participation and presence in the communities in which we operate is valued by both those who live there and the wider community

7

Structure 2006 Xstrata Coal employs 10,000 people worldwide

Xstrata Coal South Africa

(XCSA)Sam Coetzer

Xstrata Coal Americas(XCAm)

Jeff Gerard

Xstrata Coal Queensland

(XCQ)Ian Cribb

Xstrata Coal New South Wales

(XCN)Mick Buffier

20.9 Mt- coking 8.7 Mt- thermal 12.2 Mt

18.6 Mt36.1 Mt- coking 5.2 Mt- thermal 30.9 Mt

2005 Total Managed Production:75.6 Mt(XCSA – Attributable production)

Peter Coates, Chief ExecutivePeter Freyberg, Director of Operations

Xstrata Coal8 Mt

8

World’s major export thermal coal companyHeadquartered in AustraliaOperating in Qld, NSW, South Africa, Colombia

Source: AME

Com

pan

y Equity

Shar

e (M

tpa)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Xstrata BHP Billiton Pt Bumi Resources Anglo American Drummond Rio Tinto

9

Organic Growth Optionality

2009+2007

Roseby Project (Cu)Oaky Creek (Coal)Cook (Coal)Wollombi (Coal)Ravensworth West (Coal)Lion Project (Ferrochrome)Bulga, Ulan and Liddell (Coal)Mount Isa (Cu)

2009

Koniambo (Ni)Altonorte Phase 5 (Cu)Nickel Rim (Ni)

Ulan West (Coal)Togara North (Coal)

2008

Collahuasi (Moly)Raglan (Ni)AA

Collahuasi (Moly)Raglan (Ni)AA

2006

Oaky Creek (Coal) Wollombi (Coal)Ravensworth West (Coal)Southstock 5 seam open cut (Coal)Ulan and Liddell (Coal)

Wandoan (Coal)Glendell (Coal)Goedgevonden (Coal)Rolleston expansion (Coal)

Bulga UG – Blakefield (Coal)Cerrejon expansion (Coal)Southstock 5 seam underground (Coal)Donkin (Coal)

Xstrata Coal South Africa

Coal

11

Xstrata Coal South AfricaCoal

12

13

Overview – XCSA (Including GGV JV)

• Third largest exporter in South Africa (13.5Mt in 2005)

• Operations

• 10 managed mines integrated into 3 complexes

• 2 mines managed by Bhpbilliton (16% JV)

• Goedgevonden complex JV with ARMCoal

• Substantial increase in productivity since moving to more mechanised mining methods

• 65% of production from underground operations*

• 73% of production exported #

• Xstrata owns 20.9% of RBCT

• Total domestic sales in 2005 of 6.9 Mt #

*Note: Managed = 100% of all Xstrata managed operations including GGV but excluding DTJV

# Consolidated Xstrata and ARMCoal combined interest in exports

Coal

14

0

5

10

15

20

25

30

Bhpbilliton (Ingwe) Anglo Coal Xstrata

Mill

ion

tonn

es p

er a

nnum

*

South Africa’s 3rd Largest Exporter of Thermal Coal

*Xstrata marketed sales

Note: Figures based on 2005 RBCT throughput

Coal

15

2005 Production Statistics

Note: Figures reflect XCSA proportionate share of DTJV(16%), ATC/ATCOM (50%) and GGV (100%)

*

0

1

2

3

4

5

6

DTJVTav

istoc

k

South

Witban

kBos

chman

sTse

lentis

Witcons

ATCOMPho

enix

Spitzk

opATC

Goedg

evon

denWater

pan

Mines

Tonn

es (M

t)

ROMSaleable

Coal

16

The operating strategy

2006H2 H1 H2 H1 H2 H1 H2

Tweefontein•Waterpan•Boschmans•Witcons

Southstock•South Witbank•Tavistock•5 Seam

iMpunzi•ATC•ATCOM•Phoenix

Mpumalanga•Tselentis•Spitzkop•Verkeerdepan

Goedgevonden•Goedgevonden

2007 2008 2009

Convert from 3 plants and FEL operations to Underground and Opencast Operations with a Central Plant and Central Rapid Loading Terminal

Approval Design and Construction Commission

Finalise issues pertaining to defunct JV

Optimise LOM plan re 5/4/2 Seam and O/C and U/GOptimise Processing Plant requirementsCentral Rapid Loading Terminal

Tselentis re-plan and commission new Spitzkop Shaft

Develop Verkeerdepan Rationalise sidings and coal transport systems

Coal

17

Total recordable injury frequency rate

Rehabilitated mining area

• We strive for zero harm at our operations• 14 months fatality free• South Witbank - after a record of more

than 9000 Fatality Free Shifts sustained a fatality on 10 October 2006

• Mpumalanga Opencast – 7200 Fatality Free Shifts

• Goedgevonden – 2000 Fatality Free Shifts

• Waterpan – 3000 Fatality Free Shifts• We are committed to progressive

rehabilitation and the highest standards of environmental management

• Comprehensive HIV and AIDs testing, counselling and treatment provided; extended to community

• Extensive community support and social development projects for communities associated with operations

Health, Safety, Environment and Community

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006

Coal

18

Social & Community Development

Xstrata is involved in the implementation of integrated development plans for communities where mining takes place

Company officials serve in various local community structures (government as well as civil) including Local Economic Development forums in Witbank and Ermelo.

With regard to labour sending areas, Xstrata shares in the TEBA social development initiatives.

Discussion on the price of mielies!

Coal

19

HIV/AIDS Programme

VCT Campaign

Clinic services

CD4 < 200ART

-ve

+ve

XCSA Employees

Education &Training

ODT* Monitoring Nutrition

CD4 > 200

* Opportunistic Diseases Treatment

CD4 < 200

•Award winner for Testing and Counselling from the Global Business Coalition. PEPFAR awarded XCSA $600 000 which will be used in cofunding our PPP initiatives with Government.

•In excess of 80% of Xstrata employees know their HIV status.

•Employees and their families have access to clinics and ART.

•XCSA established a HIV/AIDS clinic in Breyten In 2005 for employees and the community.

•Currently setting up a PPP with Local and Provincial Government with the purpose of capacitating Primary Health Care clinics with the objective of registering them as ART roll out sites.

Middelburg Care Centre – accommodates 120 children

Coal

20

Productivity Enhancements

50%

16%

0%

29%

5%10%

54%3%

14%

19%

U/G CDBU/G CMU/G Contr.O/C OwnO/C Contr.

2000 2005

Managed* ROM Production 21.9Mt Managed* ROM Production 28.2Mt

* Managed = 100% of ATC/ATCOM and GGV excludes DTJV

Coal

21

Productivity Enhancements

• Reduction of 1200 employees over four years while managed production increased

by 26%

• In 2000: CMs produced only 16% of coal, now CMs produce 58% of managed

production *

• In 2001 added new mine with zero increase in total employee numbers

• CM output increased from 0.55mtpa to >1.0mtpa

• Systematically re-engineering of operations

• Vigorous mine planning standards implemented through XC

* Managed = 100% of ATC/ATCOM, GGV and excludes DTJV

Coal

22

Reserves: Proved and Probable (Mt)(XCSA Managed Operations)

Goedgevonden ,357

South Witbank, 92 Witcons , 43

Tselentis , 26

ATCOM , 63ATC , 15

Waterpan , 80

Spitzkop , 16

Phoenix , 15

Tavistock , 65

Boschmans , 55

Coal

23

Growth in Exports – 2006 TO 2011

RBCT Phase 1-4

RBCT Quattro

RBCT Phase 5

71.076.0 76.0

91.0 91.0 91.0

17.616.816.014.414.013.6

2006 F 2007 B 2008 B 2009 B 2010 B 2011 B

XCSA Net Entitlement (Mtpa)

• 2001 to 2004: RBCT expansion stalled resulting in significant threat to long-term throughput as a result of lack of access for BEEs to export market

• 2004 / 5 Xstrata led rethink of expansion strategy

• 2006 announcement of 91Mtpa expansion

• 2006 Ingwe announce inability to utilise their port entitlement

• Opportunity for Xstrata and ARM Coal to grow export business beyond above curve

Coal

Market Review

Murray Houston (General Manager Marketing – Atlantic Markets)

Coal

25

World Energy Consumption by Fuel and Region

Oil shocks decouple Energy and GDP: EJ/GDP improving 1.2%/y since 1980, and 0.85% to 2025

Oil, gas gaining market share, at expense of coal and nuclear

Carbon intensity (MtC/EJ) declined 30% over the last 100 years, but forecast to increase +1% in next 25

Coal grows, but slower than other fossil fuels

Global energy use 70 GJ/capita, rising to 88 GJ/capita

China accounts for 21% of future energy growth, US 21%, India 6%

IEA: $16 Trillion needed to fund energy supply

Nuclear: 5%

0

100

200

300

400

500

600

700

1900 1925 1950 1975 2000 2025

Source: RMI analysis, IEA 2004, EIA IEO 2004, BP Statistical Review 2003, IFP, WCI 2005Age of Oil

BeginsAge of Oil

BeginsAge of Gas

BeginsAge of Gas

Begins

World Energy Consumption by Primary Fuel1900-2025

Coal: 23%(-3.2%)

Oil: 41%(+3.5%)

Gas: 26%(+2%)

Renewables: 3%

EJ

0

100

200

300

400

500

600

700

1965 1975 1985 1995 2005 2015 2025

World Energy Consumption by Region1965-2025

OECD: 27%(Non-US)

US: 23%

China: 15%

India: 5%

Rest of World: 31%

EJ

Coal

26

Who owns fossil energy reserves and how long might they last?

North America

16 11

258

Central and South America

25 11 22

USSR and Successor Countries

2186

225

Africa25 21

55

Western and Southern Europe

7 8

97

Asia and Oceania

6 17

94

1 1

84

Central and Eastern Europe

1 133

Middle East179

110

2

China

6 3

115

The Location of the World’s Main Fossil Fuel Reserves (Gtce)

India

Source: BP2003, wci 2005Oil Natural Gas Coal

Reserve/Production Ratios

Yea

rs

200

60 40

0100200300

Coal Oil

Oil and GasReserves

Concentrated

Non-traditional reserves are large but recovery is questionable• Oil related: ~440 Gtce (2x Oil)• Methane clathrates ~1,000-

8,000 Gtce (4-30x Gas)

Non-traditional reserves are large but recovery is questionable• Oil related: ~440 Gtce (2x Oil)• Methane clathrates ~1,000-

8,000 Gtce (4-30x Gas)

Coal

27

In 2003….

• World primary energy consumption increased by 2.9%

• For the second year running, coal was the fastest growing fuel, increasing by 6.9%, driven by China, Russia, Japan and North America

Coal as a Component of World Energy

More generally……

• Coal fuels almost 40% of the world’s power generation

• Coal as a raw material underpins some 70% of the world’s steel industry

EJ

0

100

200

300

400

500

600

700

1900 1925 1950 1975 2000 2025

Coal - 23%

Oil - 41%

Gas - 26%

Nuclear- 5%Renew - 3%

Global Coal Production - 5.0 Billion tons

Hard Coal Production - 4.1 Billion tons

Low Rank Coal - 0.9 Billion tons

Domestic Hard Coal - 3.5 Billion tons

Seaborne Hard Coal - 0.6 Billion tons

Thermal Seaborne - 0.4 Billion tons

Metallurgical Seaborne - 0.2 Billion tons

World Energy Consumption by Primary Fuel1900-2025

Virtually all serious commentators now recognise that coal will have a critical role to play for at least the next 30 years and very likely (reserves) for much longer

Coal

28

4.4

14.11.8

2.7

9.1

14.4

Developing Nations

Transition Economies*

OECD

20302002

Total (‘000s TW.hr): 15.4 31.2

1.5%

1.4%

3.8%

CAGR

Global Power GenerationElectricity Generation by Region (TWh x 103)

2.4%

• The world and in particular, the developing world (Asia, Latin America, Africa) is going to demand more energy – much of it will come from (cost-effective) coal

* Transition economies are those of Eastern Europe, Russia and the FSUSource: IEA World Energy Outlook 2004

Coal

29

Global Power GenerationWorld Electricity Demand

• Power generation from coal is set to double in the next 25-30 years, with export coal set to grow faster than this to feed fast-growing Asia

Source: IEA World Energy Outlook 2004

Coal

30

Overview of Global Coal Market

Production: 4.000 Mt (est.)Production: 4.000 Mt (est.)

DomesticDomestic3,3,340340 MtMt

TradedTraded660660 MtMt

ThermalThermal2,2,940940 MtMt

SeaborneSeaborne615615 MtMt

CokingCoking400 Mt400 Mt

Land TradeLand Trade4455 MtMt

ThermalThermal443 Mt443 Mt

CokingCoking171722 MtMt

Thermal 85% Coking: 15%

Source: IEA, McCloskey& various 2004

Coal

31

XCSA -Geographical Distribution of Exports - 2005

25.2%

1.5%

5.9%

13.3%19.0%

6.0%

0.2%

6.7%

3.4%

2.4%

3.6%

0.3%

3.4%

0.6%

8.1% 0.3%

U.K.

Croatia

France

Israel

Spain

Germany

Netherlands

Belgium/Denmark

Europe via ARA

Italy

Portugal

Mauritius

Turkey/Morocco

South America

India/Pakistan

UAE / West Africa

* Including 100% of GGV and XCSA share of DTJV

Coal

32

South African & XCSA Sales Profile - 2005

South African Coal Sales XCSA Coal Sales

17% (41Mt)43% (105Mt)

29% (69Mt)11% (26Mt)

ExportPetrochemicalPower (incl. Eskom)Industrial & Metcoal

66% (13.5Mt)

11% (2.2Mt)

23% (4.6Mt)

ExportPower (incl. Eskom)Industrial

Note: XCSA coal sales reflect XCSA share of DTJV (16%), ATC/ ATCOM (50%) and GGV (100%)

Coal

33

3-Year Spot Price History & Forward Curves

• RB prices and NEWC prices have come off the peaks of mid-2004, in US$ terms.• Both RB and NEWC prices are in contango on the forward curve.

* GlobalCOAL Index and API#4 Forward Curve prices are basis 6000kcal/kg NAR

Thermal Coal Prices 2003 to 3Q'06 Actuals4Q'06 to 2008 Forecast

(US$/Tonne)

GlobalCOAL NEWC Index Forward

Curve as at 27/10/06

API#4 Forward Curve as at

27/10/06

15202530354045505560657075

Jan-03

Apr-03

Jul-03

Oct-03

Jan-04

Apr-04

Jul-04

Oct-04

Jan-05

Apr-05

Jul-05

Oct-05

Jan-06

Apr-06

Jul-06

4Q'06 2007 2008

US$

/Ton

ne F

OB

GC NEWC Index (US$)

GC RB Index (US$)

Coal

34

Lower Freight Rates: the “China Effect”

• Newc/SA Spot freight rate differential into Europe is currently at +-US$6.00/T• 6-month forward curve suggests a relatively flat freight market through 2006

onwards, however may have some volatility due to:o new ship additions and switchingo Ship-scrapping rate (may increase as freights reduce)o Queue reductions and shorter shipping distanceso Bunker prices (linked to oil)

Source: Freight Investor Services; McCloskey Coal Report; Xstrata

Spot Capesize Freight Rates 2003 to 3Q'06 Actuals4Q'06 to 2008 Forecast

(US$/Tonne)

C4 Forward Curve as at 27/10/06

5

10

15

20

25

30

35

40

45

50

Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 4Q'06 2007 2008

US$

/Ton

ne F

OB

Spot : NEWC-Rott

Spot: RBCT-Rott

Coal

35

Xstrata Coal’s Export Thermal Coal Business: Spot vs. Contract

• The split of XCA’s and XCSA’s export thermal coal sales reflect the differing nature of the European and Asian markets (Europe traditionally more of a spot market)

• Although XCA’s sales are still mostly on a term contract basis, there has been a (buyer-driven) shift towards shorter-term deals and spot purchases by most major Asian power utilities, particularly over the last 2-3 years

6043

4057

2005Xstrata Coal Australia (%)

2005Xstrata Coal South Africa (%)

Total (%) 100 100

Spot

Annual/Term Contract

Coal

36

Atlantic Thermal Coal Market:1998-2005 (Key Markets and Suppliers)

• Demand growth has been steady in the major Atlantic markets• The USA is now a net importer of thermal coal, while Poland’s exports are stagnant and likely

to reduce.• Note that Russia which supplies +-25% to Pacific and +-75% to the Atlantic market increased

exports from 7.25MT in 1998 to 37.9MT in 2005.

CAGR (%)1998-2005

Source: National Statistics/Giag

Demand (M Tonnes)

16

7

21

7

Supply (M Tonnes) CAGR (%)1998-2005

1

10

(27)

Germany

Iberia P.

UK

USA

(2)

South Africa

Poland

Colombia

USA

Italy 12

Russia27

0

5

10

15

20

25

30

35

40

1998 1999 2000 2001 2002 2003 2004 2005 2006(fc)

2007(fc)

05

101520253035404550556065707580

1998 1999 2000 2001 2002 2003 2004 2005 2006(fc)

2007(fc)

Coal

37

Issues – 2005 Atlantic Market

•Continued growth in European and Mediterranean market (± 4.8%)•Market is undersupplied, swing supply will have to come from the Pacific (+-24Mt)

• Indonesian growth countered by lower Australian expectations and Chinese reductions •Declining domestic production/phase out of subsidies

• U.K., Germany, Spain and Poland•Market drivers

• Physical coal fundamentals: • Supply : Infrastructure (rail & ports), production (weather related, equipment

availability, mining capacity and production costs) • Demand : reducing domestic production, seasonal effects ~ temperature, hydro &

wind, and alternative energy costs/availability• Energy complex fundamentals:

• Robust oil, gas & electricity prices as well as freight and CO2 costs coupled with exchange rates

• Trading utilities, forward power sales and derivatives/spread trading•Freight rates – showing signs of “normalising” albeit with volatility (China effect & port queues)•Growth in Colombian supply more than offset by US & Americas import growth (+-15.6%)

• European destined volumes flat in 2005•South African exports remain constrained (mine capacity, rail & port)

• Rail efficiency improved in second-half 2005 resulting in annual exports of ± 69Mt.

Coal

Transformation in Xstrata Coal South Africa

Coal

39

Transformation

Key Legislation:

• Mineral & Petroleum Resources Development Act • Charter and Scorecard for Broad Based Socio-Economic Development in

Mining• Royalties Bill

Xstrata response:

• Formation of Xstrata Transformation Committee– Ownership & JVs – Human Resources & Employment Equity Strategy– Housing and Accommodation– Social & Community Development– BEE procurement

Coal

40

Background to BEE ownership deal• The Minerals and Petroleum Resources Development Act (MPRDA) provides for the conversion of old

order mining rights into new order mining rights

• One of the requirements defined in the MPRDA to achieve conversion is the transfer of 26% ownership of mining industry assets in 10 years by each mining company

• BEE deal with African Rainbow Minerals Limited (“ARM”) concluded in February 2006

• Effective date 1 July 2006

• 10% option to increase shareholding in XCSA was exercised by ARM on 1 September 2006

• Structured to maximise growth opportunities for both ARM and XCSA through a new jointly owned company ARM Coal.

Coal

41

Structure & Transaction Steps

ARM Coal was incorporated and ARM and Xstrata subscribed for their interests in the newly issued shares of the company.

ARM Coal subscribed for a 20% interest in Xstrata South Africa in the form of participative preference shares, giving ARM Coal the right to participate in Xstrata’s existing South African coal business excluding GGV

ARM Coal acquired a 51% controlling stake in the Goedgevonden (unincorporated) Joint Venture

ARM exercised its option and acquired a further 10% directly into Xstrata’s existing South African coal business excluding GGV.

Xstrata Schweiz

Xstrata South Africa

Xstrata Coal SA

ARM Coal

ARM

Goedgevonden Joint Venture

49%

20%80% (70%)

51%

51%49%

(10%)

Coal

42

Mentoring JVs

Liketh

BEE supplying coal to Eskom from Xstrata operations

• Started off as JV

• Then Liketh managed contractors

• Now Liketh owns equipment and is the principle in the relationship with Eskom

Zingisa

Female led HDSA empowerment company:

• JV with Xstrata to supply coal to Eskom

• Eskom want to expand and extend agreement

• The JV agreement provides for significant development opportunities for this BEE.

Liketh reclaim operation

Coal

43

Human Resource Development & Employment Equity

Present Organisation

Future Organisation

EE Targets

% by level

No. by skill / profession

Organic Development

Employee evaluation systems

Career path system

Employee Development & Training systems

ABET / Skills training

Management training

Individualised programmes

Inorganic Development

Sponsorship of training & education:

Learnerships (108)

Pre-university (15)

College & University (16)

Recruiting systems

Fast Track System

Evaluation

Six-monthly review

Reporting

Succession Planning System

Coal

44

HDSAs in Management

0%

10%

20%

30%

40%

50%

2001 2002 2003 2004 2005 200611.9% of XCSA employees and 12 % of management are female.11.9% of XCSA employees and 12 % of management are female.

HDSAs in Management

BandTotal

Positions 2001 2002 2003 2004 2005 2006Directors and General Managers F 13 0 0 1 1 2 2

Colliery Managers & Senior Specialists E 47 0 1 4 5 5 8HODs & Specialists D 132 7 12 21 29 44 59

Coal

45

Literacy training

Xstrata Coal South Africa –Adult Basic Education Centre

•Xstrata provides adult basic education & training (ABET) to both employees and community members from basic literacy to computer skills.

•26% of XCSA employees are illiterate.

•Employees are interviewed individually in order to encourage ABET uptake – 972 employees indicated they would like the opportunity to do ABET. There are currently 54 employees attending full time ABET classes

•XCSA and the Emlalahleni Local Council are jointly developing a community-based learning and trade centre with a capacity of 258 students – this will be available to employees and community members with effect from January 2007.

Coal

46

Career paths

•Career paths are discussed with all employees during career development interviews – this is a one on one process. •To date more than 80% (3250) employees have been exposed to this process.•Over 400 employees are now in the career development programme.•High-flyers enter the Fast TrackFast Trackprogramme:

• Individual development programmes

• Annual review in front of development panel chaired by COO

Coal

47

Housing, Accommodation

• Xstrata has eliminated hostels except for Boschmans – and unsustainable “mine villages” –currently 116 residents in hostel.

• XCSA pays industry leading “living out allowances” (minimum R1847 per month) which are based on affording employees the opportunity to live in normalised social circumstances.

• XCSA educate and train all employees during annual induction training on how to access and the merits of living in formal housing as opposed to informal housing.

Witbank Presidential Housing initiative

Coal

48

Access to the land - BEE Farming

•Large scale commercial farm management training for 4 HDSAs

•476 hectares – 226ha maize and 270ha Soya

•This will increase to 1235 hectares in 2007

•“Bumper” season in 2005/2006

Coal

49

Procurement

• HDSA supplier companies enjoy a preferred supplier status with XCSA and a policy is in place.

• The company has identified its base level of procurement from HDSA companies.

• XCSA increased its HDSA spend from a base of 10% of discretionary expenditure in 2002 to 39% in September 2006.

• The target for 2007 is 50% of discretionary.

Tselentis mine – BEE opencast mining contractor

Coal

ARMCoal has the potential to significantly grow in the South African coal industry

• Currently already holds the following investments• 20 % in Xstrata Coal South Africa• 51% interest in Goedgevonden

• First right of refusal on any new projects generated by ARM or Xstrata in SA

• Various prospecting rights have been converted by XCSA for future development

Coal**

Goedgevonden Joint Venture Project

Coal

Goedgevonden Project

• Approval will be sought from the ARM and Xstrata Boards for capital expenditure of R2.9bn (nominal terms) to construct a new open cut complex at Goedgevonden (GGV)

• GGV will be a long life producer and one of the lowest cost export coal mines in South

Africa

• Part of the strategy of providing a low cost “anchor” to the existing XCSA business and

into ARMCoal

• GGV is set up as a JV with ARM Coal – ARM Coal 51% / Xstrata South Africa 49%

• Potential for significantly increasing scale

Slide 52Slide 52

Coal

Goedgevonden Project

• Potential 12.3 Mtpa ROM Multi-Product mine

– 3.1 Mtpa Export– 3.6 Mtpa Eskom

• 33 year LOM• Feasibility Study completed 2005• Murray & Roberts as Managing

Consultants• Detailed design completed• Tenders received for construction

of CHPP and expression of interest for mine equipment.

+/- 24 Month construction program with mine fully operational in 2009

Slide 53Slide 53

CoalGoedgevonden Project

54

GGV Indicative ramp-up

Slide 54Slide 54

Coal

-

1

1

2

2

3

3

4

4

2006 2007 2008 2009 2010 2011

Export tonsEskom tons

Note- indicative ramp-up subject to approvals, rail capacity and other factors.

Goedgevonden Project

Slide 55Slide 55

Coal

56

57

GGV on Export Thermal Cost Curve

Slide 57Slide 57

2006 Export Thermal FOB Cash Cost Curve

Energy Adjusted to 6350kcal/kg gar

-

10

20

30

40

50

60

0 50 100 150 200 250 300 350 400 450 500 550

Million Tonnes

US$/t

AustraliaIndonesiaChinaSth africaRussia EastRussia WestNew ZealandNorwayCanadaColombiaVenezuelaVietnamUSAPoland

GGV

Coal

ATCOM Site Visit

Coal

59

Coal

60

Dragline

Slide 60Slide 60

HDVHDV

Lub & Fuel bay

LDV

You are here

Rom Tip

Coal

61

Mine Overview and ROM tipCoal

62

ATCOM Plant

Slide 62Slide 62

TK4TK1

Product Discard

M1 M2

Workshops

Coal

63

Engineering Workshops and Refueling Bay

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LDV

Lub & Fuel bay

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Rom Tip

Coal

Sectional presentation of coal seams

Spoil

Previously mined areas

Buffer

Overburden (0 – 25m)4l Seam (ave 2m)

Interburden (20 – 25m)

2 Seam (4 - 5m)

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Coal

Pillars

Dragline Cut Width (50m)

Plan View

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Coal

66

Coal

“Empowered growth”