Business Strategy - November 2013

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•Direct Export to India/China. Strategy is being driven by increasing international demand for thermal coal
•Export to South Africa, ESKOM and Richards Bay is currently under PFS and is a short two to three year implementation
•Coal to Liquid and Coal to Gas strategy has no risk and is being subsidised

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Business Strategy - November 2013

  1. 1. Business Strategy November 2013
  2. 2. Current Operations Takatokwane Coal Deposit Takatokwane Coal Development Admin & Compliance Kigoma Copper Exploration Other Exploration and New Business Admin and Compliance 2
  3. 3. General View 2014 SPP + Capital Placement to Raise $2.2m* Takatokwane Coal Kigoma Copper Other and New Business Admin and Compliance Integrated Feasibility Study Drilling of Malagarassi N Stockwork Structures Assess New Projects or JV’s Capacity Building Develop Market for Coal Work towards Orebody Definition Partnerships Costs paid by Coalswana according to HOA Moving to Wider Regional Exploration Low Cost Opportunities Value Transactions Lean and Mean Payfreeze Ongoing 3
  4. 4. Coal Market Options Takatokwane Coal Deposit Direct Export to India / China Export to South Africa ESKOM, Richards Bay Coal to Liquid, Coal to Gas Power and by-products Direct Coal Fired Power 4
  5. 5. Coal Development Strategy 1 Highlights Best long term utilisation of assets Locked in margins for long periods Large scale economic activity Coal Deposit Requirements Direct Export to India / China Rail line to be built Co-ordinated industry approach Lobbying and collaboration Value Proposition High Volume, Long Term Producer Margins Up to $40/t 5
  6. 6. Driving International Demand Forecast Prices Thermal Coal • India and other rapidly emerging economies heavily reliant on thermal coal $170 • India, China and others have little alternative but coal fired power expansions $130 Period of introduction of higher cost marginal coal $150 Period of overhang productive and infrastructure capacity $110 • Southern Africa and India facing thermal coal import “cliff” $90 • USA Infrastructure for export surplus coal now reaching capacity $50 $70 $30 2007 2009 2011 2013 2015 2017 2019 FOB Newcastle @ 6,322 kcal/kg GAR FOB Richards Bay @ 6,300 kcal/kg GAR 2021 2023 2025 2027 2029 FOB Indonesia EnviroCoal @ 5,000 kcal/kg GAR FOB HA Newcastle @ 5,500 kcal/kg GAR Source: Anglo-American Coal Presentation, Wood McKenzie Coal Service Forecasts 6
  7. 7. Coal Development Strategy 2 Highlights Currently under PFS Short implementation period (2-3 years) Mineral Rights legitimised De-risks Takatokwane Project Coal Deposit Requirements Export to South Africa, ESKOM, Richards Bay Overcome road transport hurdle Coal prices need to increase as proposed to provide a stronger value proposition Value Proposition Low Volume, Short Term Producer Margins Up to $10/t 7
  8. 8. Driving Local Demand RSA Pending Coal Supply Cliff 180 • Eskom Coal Cliff 160 • Export capacity Richards Bay Strategic National Initiative • Existing mines deeper and more expensive • Emergence of other Southern African Economies 120 M tonnes per annum • SA Infrastructure late in developing 140 100 80 60 40 20 Contracted Coal Junior Coal Non Contracted 2035 2034 2033 2032 2031 2030 2029 2028 2027 2026 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 0 Waterberg Source: Eskom 8
  9. 9. Coal Development Strategy 3 Highlights No capital risk for WKT Coalswana subsidises studies On site sales of Coal and Fuels Appropriate Power Generation Coal Deposit Requirements Coal to Liquid, Coal to Gas, Power and byproducts Reduce the technical risks Dependent volumes Logistics to be finalised Value Proposition Technology De-Risked Moderate Volume, Long Term Producer Margins Up to $30/t 9
  10. 10. Driving Emerging Economies World Growth in CTG Capability 250,000 • Severe lack of power infrastructure – remote and localised power opportunities 200,000 • Mining and industrialisation held back by power access • Export of by-product to Southern Africa MWth Synthesis Gas • Botswana imports 100% of liquid fuels 150,000 100,000 50,000 Operating (2013) Construction (2015) 2016 2013 2010 2007 2004 2001 1998 1995 1992 1989 1986 1983 1980 1977 1974 1971 1968 1965 1962 1959 1956 1953 1950 0 Planned (2018) Source: Gasification Technologies Council (2013) 10
  11. 11. Coal Development Strategy 4 Highlights Politically sensitive Pricing Margins are low High Capital Risk Coal Deposit Requirements Direct Coal Fired Power Need High Tension Electrical Distribution Need Regulatory Integration Need Price Certainty Value Proposition High Capital Moderate Volume, Long Term Producer Margins Up to $10/t 11
  12. 12. Coal Fired Power Market Southern Africa very immature in terms of Private Power Producer concepts Dominated by State Electrical Utilities that work according to politically sensitive pricing issues Margins will remain tight with little consideration for traditional business models No high tension reticulation available – capital constraint Not attractive proposition for WKT 12
  13. 13. Coal Development Strategy Risks & Returns High Risk Coal to Liquid, Coal to Gas Power and by-products Direct Coal Fired Power Short Term Long Term Export to Local / BTS South Africa ESKOM Richards Bay Low Risk Direct Export to India / China (Rail line) 13
  14. 14. Nett Return Potential Strategic Projects Timeline Direct Export to India / China (Rail line) Coal to Liquid, Coal to Gas Power and by-products Direct Coal Fired Power Export to South Africa ESKOM Richards Bay 0 Years 4 Years 7 Years 14
  15. 15. Kigoma Copper Project Malagarassi North Quartz Vein Mineralised System Interpreted at least three off-set quartz vein structures ranging between 4m and 7m thick each and open to strike 15
  16. 16. Kigoma Copper Project Selected Results - Malagarassi North Quartz Veins Structure No. Hole No. Depth (downhole) m Cu % Ag g/t Au g/t 1 30 25-26 0.4 14 7.2 26-27 3.1 85 10.1 7-8 0.24 8 17.0 12-13 2.3 82 14.0 13-14 0.35 32 9.1 18-19 0.5 8 10.0 2 and 3 31 * Grades are by XRF and 1m bulk consolidation and wet -sieving of drill chips 16
  17. 17. Points of Difference Low risk business model Create strategies that are developable Diversified by location Pipeline of projects a different stages Diversified by commodity Adopt a long term vision 17
  18. 18. Disclaimer Forward-Looking Statements This presentation includes certain “Forward-Looking Statements.” All statements, other than statements of historical fact, included herein, including without limitation, statements regarding forecast cash flows and potential mineralisation, resources and reserves, exploration results and future expansion plans and development objectives of Walkabout Resources Ltd are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Competent Person Statement The information in this report that relates to exploration results and Mineral Resources is based on information compiled by Mr. Nathan Jombwe, who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of Walkabout Resources Ltd. Mr Jombwe has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (The JORC Code). Mr Jombwe consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 18

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