TSX/JSE : FMC                                        February 2012        GROWING COAL PRODUCER IN SOUTHERN AFRICA        ...
Disclaimer                                                                                                                ...
Company Overview                                                                                                          ...
Investment Highlights                                                        TSX/JSE : FMC Strategic assets in one of the...
Experienced Management Team                                                                         TSX/JSE : FMC Stephan...
Directors                                                                                   TSX/JSE : FMC Stan Bharti, P....
Progress to Date                                                                                                   TSX/JSE...
Ramping Production and Sales1                                                                                      TSX/JSE...
Strong Financial Results Reflecting Growth                                 TSX/JSE : FMC                    Q1 2012       ...
Access to Lucrative Export Markets                                                 TSX/JSE : FMC     • In Q3 2012 Forbes C...
Coal Markets Overview                                                                                           TSX/JSE : ...
Established Mining Region   TSX/JSE : FMCSource: Company reports                                            12
TSX/JSE : FMCCompany Outlook                                  13
2010 – 2013 Mine Plan                                                                                                     ...
Organic Growth Opportunities                                               TSX/JSE : FMCRamp up at Magdalena• Double produ...
Positioned for Multi-Year Export Growth                           TSX/JSE : FMCSECURED ADDITIONAL EXPORT CAPACITY AT RICHA...
Mining Resource                                                                                                           ...
U/G LOM Production Profile                                            1                                                   ...
Magdalena Bituminous Coal Operations   TSX/JSE : FMC                                                       19
Magdalena Bituminous Coal Operations                                                                                      ...
Magdalena Bituminous Coal Production Profile                                                                              ...
Magdalena Project Area & Mining Rights1                                                                                   ...
Aviemore Anthracite Coal Operations   TSX/JSE : FMC                                                      23
Aviemore Anthracite Coal Operations                                                                                       ...
Aviemore Anthracite Coal Production Profile                                                                               ...
Aviemore Project Area & Mining Rights1                                                                                    ...
Corporate Structure                                                                  TSX/JSE : FMC                        ...
Responsible Development                          TSX/JSE : FMC• Good working relationship with its two  unions: National U...
Capitalization and Share Performance                                                                                      ...
Peer Group Trading Analysis                                                                                               ...
Comparable Trading Analysis                                                                                               ...
Summary                                                                     TSX/JSE : FMC Currently producing high qualit...
TSX/JSE : FMCAppendix                           33
South Africa – Overview                                                     TSX/JSE : FMC•   South Africa is the most attr...
Historical Coal Prices                                                                                                    ...
Thermal Coal Global Overview                                                         TSX/JSE : FMC•      Significant upsid...
Thermal Coal Global Overview                                          TSX/JSE : FMC  • India will be relying heavily on co...
Thermal Coal Global Overview                                           TSX/JSE : FMC       • As a result of reliance on th...
Thermal Coal Global Overview                                     TSX/JSE : FMC  • Chinese thermal coal imports have been h...
Metallurgical Coal Global Overview                                                   TSX/JSE : FMC•      The coking coal m...
Metallurgical Coal Global Overview                                       TSX/JSE : FMC          • Many metallurgical coal ...
Metallurgical Coal Global Overview                                 TSX/JSE : FMC  • Supply growth in 2011 is set to be muc...
Metallurgical Coal Global Overview                                                           TSX/JSE : FMC                ...
TSX/JSE : FMC                                                     February 2012                               CONTACT INFO...
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Fmc corporate presentation feb 2012

  1. 1. TSX/JSE : FMC February 2012 GROWING COAL PRODUCER IN SOUTHERN AFRICA CORPORATE PRESENTATION A Forbes & Manhattan Group Company
  2. 2. Disclaimer TSX/JSE : FMCThis presentation contains forward-looking statements under Canadian securities legislation. Forward-looking statements include, but are not limited to, statementswith respect to the development potential and timetable of the Magdelena and Aviemore projects; the Company’s ability to raise additional funds as necessary;the future price of coal; the estimation of mineral resources; conclusions of economic evaluations (including scoping studies); the realization of mineral resourceestimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures;success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks.Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”,“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases orstatements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements arebased on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost ofmining at the Company’s projects are based on assumptions underlying mineral resource estimates and the realization of such estimates; results of previous miningactivities at the projects, and detailed research and analysis completed by independent consultants and management of the Company; research and estimatesregarding the timing of delivery for long-lead items; and knowledge regarding certain factors described in the technical report filed under the profile of theCompany on SEDAR. Capital and operating cost estimates are based on results of previous mining activities, research of the Company and independentconsultants. Production estimates are based on mine plans and production schedules, which have been developed by the Company’s personnel andindependent consultants. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results,level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements,including but not limited to risks related to: timing and availability of external financing on acceptable terms; unexpected events and delays during construction,expansion and start-up; variations in ore grade and recovery rates; receipt and revocation of government approvals; actual results of exploration and miningactivities; changes in project parameters as plans continue to be refined; future prices of coal; failure of plant, equipment or processes to operate as anticipated;accidents, labour disputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that couldcause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated,estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially fromthose anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake toupdate any forward-looking statements except in accordance with applicable securities laws.Investors are advised that National Instrument NI 43-101 of the Canadian Securities Administrators (“NI 43-101”) requires that each category of mineral reserves andmineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Johan Odendaal,B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101 hasreviewed and approved the scientific and technical information contained in this presentation.Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred ResourcesThe information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms arerecognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineralresources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of aninferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis offeasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will everbe converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or iseconomically or legally mineable. 2
  3. 3. Company Overview TSX/JSE : FMC Forbes & Manhattan Coal Corp.’s (“Forbes Coal” or the “Company”) vision is to build a high quality bituminous and anthracite coal company with production capacity in excess of 10 million tonnes per year Company Summary Headquarters: Toronto, Ontario Total coal resource 51.7 million tonnes Bituminous (NI 43-101): 35.7 million tonnes Anthracite1 (15.1 million tonnes anthracite inferred) Number of 2 (Magdalena Historical annual saleable 648,000 saleable tonnes in mines: and Aviemore) production: fiscal 2011 Mine location: Kwa-zulu, Natal, 2 year target production2: 1,000,000 saleable tonnes South Africa Bituminous - Magdalena 420,000 saleable tonnes Anthracite - Aviemore Production capacity: 1.5 million saleable tonnes1. As set out in the Technical Report of the Company entitled “An Independent National Instrument 43-101 Technical Report on Slater Coal and Subsidiaries, KwaZulu-Natal Province, South Africa”, dated March 1, 2011, prepared for the Company by Minxcon (the “Technical Report”). A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com. 32. As per management’s guidance
  4. 4. Investment Highlights TSX/JSE : FMC Strategic assets in one of the best developed coal markets in the world Resource base of high quality bituminous and anthracite coal Ability to TRIPLE production within three years from 2010 historic levels using existing infrastructure and capacity In-place infrastructure to reach export corridors and growing domestic market Substantial upside through organic production growth and strategic acquisitions Experienced coal-focused management teamAs per management’s guidance 4
  5. 5. Experienced Management Team TSX/JSE : FMC Stephan Theron, B.Comm, CGA │President and Chief Executive Officer Extensive management, project finance and equity analysis experience in the mining, energy and infrastructure sectors Previous capital and project experience includes Weir PLC and AMEC PLC Former sector head materials and energy with a specific focus on South African coal market Malcolm Campbell, Pr. Cert. Eng. (Mining) │Chief Operating Officer Fourth generation coal miner with 25 years industry experience Skilled in operational management, turnaround strategies and business development Spent 20 years with Anglo Coal; held a variety of positions including Regional Manager for New Business Development and Strategy Kuda Muchenje, │VP Exploration & Development Seasoned exploration geologist with over 15 years experience in the generation of exploration targets and management of exploration and evaluation programs Former Country Manager(Mozambique)for Rio Tinto Deb Battiston, CGA │Chief Financial Officer Financial specialist with over 20 years experience in the mining sector Kevern Mattison, NHD (Mining), B. Tech.│General Manager More than 20 years operational coal mining experience Spent over 20 years with Anglo Coal, most recently Manager Mining 5
  6. 6. Directors TSX/JSE : FMC Stan Bharti, P.Eng. │ Executive Chairman Business consultant and a professional mining engineer with more than 25 years experience Founder and Chairman of Forbes & Manhattan, Inc., a private merchant focused on the resource sector, since July 2001 Stephan Theron, B.Comm, CGA , │ President and CEO David Stein, MSc., CFA │ Director Over nine years of asset evaluation, research and corporate finance experience President and Director of Aberdeen International (seed investor in Forbes Coal) Grant Davey, P. Eng. │ Director Mining Engineer with close to 20 years experience in coal, platinum and gold mining industry Previously held senior operational management roles for Anglo American in South Africa & Australia David Gower, P. Geo. │ Director Professional Geologist and the former Global Head of Nickel Exploration for Falconbridge Ryan Bennett, M.Mining Eng. │ Director Masters degree in Mining Engineering from the Colorado School of Mines Extensive technical mining project analyses experience Senior Partner of Resource Capital Fund;(significant shareholder in Forbes Coal) 6
  7. 7. Progress to Date TSX/JSE : FMC Corporate Milestones…dual listed with experienced management team Completed RTO within 60 Forbes Coal reports days, began trading on the Closed CDN$42 million capital revenue of $31.2 million Toronto Stock Exchange under raise at $4.55/share; Forbes in fiscal third quarter Secured ZAR230 million the symbol “FMC” Coal increased ownership in 2012, an increase of (approximately $C30 September 2010 Slater Coal to 76.75%; million) loan facility from 245% year-over-year Completed second NI 43-101 Investec to fund Technical Report Company’s expansion January 2012 March 2011 November 2011 Operational Highlights…production up 53% since acquiring the Slater Coal properties Signed three year offtake agreement Q2 2012 revenue with leading energy trading company increased 80% to $35.2 for 1.75 million tonnes of thermal coal; Delivered solid fiscal Q3 million as a result of record Increased export capacity at January and February 2011 production 2012 production number, export sales of 192,400 Navitrade Terminal at Richards increases 28% including a 235% tonnesBay; Magdalena upgraded mining increase in total sales April 2011 year-over-year operations; increased saleable October 2011 production capacity by 330,000 December 2011 tonnes per annum December 2010 7
  8. 8. Ramping Production and Sales1 TSX/JSE : FMC Run of Mine Production Saleable Production 354,003 290,278 246,570 187,802 + 22% + 31% FY11Q3 ROM FY12Q3 ROM FY11Q3 SALE FY12Q3 SALE (Sep 10 - Nov 10) (Sep 11 - Nov 11) (Sep 10 - Nov 10) (Sep 11 - Nov 11) Total Sales 320,251 95,610 + 235% FY11Q3 FY12Q3 (Sep 10 - Nov 10) (Sep 11 - Nov 11)1. All figures are tonnes 8
  9. 9. Strong Financial Results Reflecting Growth TSX/JSE : FMC Q1 2012 Q2 2012 Q3 2012 % Change (Mar – May 2011) (Jun – Aug 2011) (Sept- Nov 2011) (YTD) Revenue $19.6 million $35.2 million $31.2 million + 59 % Gross Profit $4.2 million $5.6 million $6.8 million + 62 % Consolidated $5.6 million $6.9 million $8.2 million + 46 % EBIDTA Cash and Cash $19.8 million $24.2 million $16.8 million - 15 % Equivalents 9
  10. 10. Access to Lucrative Export Markets TSX/JSE : FMC • In Q3 2012 Forbes Coal reported record export sales of 199,200 tonnes an increase of 117% from March 2011, reflecting strong demand from export markets • Global thermal trade flows show India and China as major global importers of thermal coal ― South Africa exported an estimated 23 million tonnes of thermal coal to India in 2010 • Asia dominates demand for anthracite coal ― 83% of global imports; 95% of expected export demand growth1 Global Thermal Coal Trade Flows1. Source : Company Reports 10
  11. 11. Coal Markets Overview TSX/JSE : FMC Thermal Metallurgical • Aviemore one of four listed metallurgical (anthracite) coal • Thermal (bituminous) coal sold producers in South Africa directly to independent industrial companies in South Africa • Cost-effective replacement for coking Domestic • Thermal coal sold at circa US$80 coal/coke per tonne vs low quality coal sold • Applications include iron ore to Eskom priced at US$20 - 30 per pelletizing, PCI for blast furnaces, tonne calcining for electrode manufacturing, ferroalloys and power generation • Demand increasing from emerging Asian markets, especially India and China • Demand driven by the metal refining industry • Indian government expecting domestic coal shortfall of approx. 112 million tonnes for year ended March • Pricing highly correlated with PCl coal Export 2012; 35% increase from previous forecasts prices • Australian coal producers starting to • South African coal exports to India settle PCl contracts at a record increased 161% 2008 – 2009 US$275 per tonne FOB for April –June quarter 1 • China imported165 million tonnes of coal in 2010, up 31% from prior yearSource: Company reports1. McCloskey Coal Report, March 22, 2 011 11
  12. 12. Established Mining Region TSX/JSE : FMCSource: Company reports 12
  13. 13. TSX/JSE : FMCCompany Outlook 13
  14. 14. 2010 – 2013 Mine Plan TSX/JSE : FMC• Increasing production: saleable production is expected to grow at a CAGR of 41% from 2010 to 2013 – Driven by expansion of production from the Magdalena and Aviemore underground mines Saleable Production1(000 t) 1,423 1,061 648 505 2010FY 2011FY 2012FY 2013FY Bituminous Anthracite 1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 14
  15. 15. Organic Growth Opportunities TSX/JSE : FMCRamp up at Magdalena• Double production from fiscal 2010 to fiscal 2013• FY2011 CAPEX: $9.7 million• Estimated FY2012 CAPEX: $12.4 millionIncrease wash plant recovery rates• Improve from current level of 60% to 70%• Investigate product upgrade potential• FY2011 CAPEX: $1.5 million• Estimated FY2012 CAPEX: $1.2 millionAviemore anthracite operations• Ramp-up saleable production to 500,000 by tonnes/year by fiscal 2014• FY2011 CAPEX: $0.16 million• Estimated FY2012 CAPEX: $3.7 millionSource: Company reports, all figures in CDN $ unless otherwise indicated 15
  16. 16. Positioned for Multi-Year Export Growth TSX/JSE : FMCSECURED ADDITIONAL EXPORT CAPACITY AT RICHARD’S BAYMilestone agreement inked on December 7, 2010 increasesexport capacity incrementally by 960,000 tonnes per annumfor a total export capacity of 1,157,000 tonnes in 2013.SIGNIFICANT OFFTAKE AGREEMENT PROVIDES STEADYCASH FLOWThree year offtake agreement reached with global energy tradingcompany for 1.75 million tonnes (total) of thermal coalCash flow from offtake agreement will fund continued ramp up ofproduction at the two operating mines 16
  17. 17. Mining Resource TSX/JSE : FMC NI 43 – 101 Global Resource1 Measured Indicated MI Inferred Yearly LOM ROM2 Magdalena 51.7 m - 51.7 m - 1.0 m + 20 years Bituminous Aviemore 1.6 m 34.1 m 35.7 m 15.1 m 0.25 m + 20 years Anthracite1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com.2. As per management’s guidance 17
  18. 18. U/G LOM Production Profile 1 TSX/JSE : FMC 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 Tonnes 1,000,000 800,000 600,000 400,000 200,000 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Magdalena O/C Magdalena U/G Aviemore U/GMagdalena2 Aviemore2• Section 1: ABM30 High Seam, 40,000 tonnes/month • Section 1: Conventional, 22,000 tonnes/month• Section 2: Conventional Low Seam, 10,000 tonnes/month • Section 2: Conventional, 22,000 tonnes/month• Section 3: Dyke, 12,000 tonnes/month • Investigate low seam CM’s for future• Section 4: ABM30 High Seam, 40,000 tonnes/month• Section 5: CM Low Seam, 25,000 tonnes/month• Section 6: CM Low Seam, 25,000 tonnes/month• Section 7: CM Low Seam, 25,000 tonnes/month1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com.2. As per management’s guidance. 18
  19. 19. Magdalena Bituminous Coal Operations TSX/JSE : FMC 19
  20. 20. Magdalena Bituminous Coal Operations TSX/JSE : FMC Magdalena Operations and Site Layout Asset Summary1Location: • Dundee, Kwa-Zulu, NatalCoal Type: • BituminousResource: • 51.7 million tonnesAcres: • 4,557Average BTU: • 12,250 BTU/lb • 6,800 kcal/kgAsh: • 15.0%Volatility: • 16.7%Saleable • 2011FY2: 555,000 tonnesProduction: • 2012FY2: 900,000 tonnesMine Life: • Approximately +20 yearsInfrastructure: • Wash plant, processing plant and siding1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com.2. Fiscal year-end February 28 20
  21. 21. Magdalena Bituminous Coal Production Profile TSX/JSE : FMC• Ramp-up on schedule• New ABM30 continuous miner arrived in December 2010 (further increased saleable production capacity by close to 30,000 tonnes per month)1• Second ABM30 continuous miner scheduled for delivery end September 2011 Magdalena Saleable Bituminous Coal Production2 (000 t)/February 28 year-end 1,003 900 556 449 485 347 326 299 2006 2007 2008 2009 2010 2011 2012E 2013E Magdalena - open pit Magdalena - underground1. As per management’s guidance2. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 21
  22. 22. Magdalena Project Area & Mining Rights1 TSX/JSE : FMC1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 22
  23. 23. Aviemore Anthracite Coal Operations TSX/JSE : FMC 23
  24. 24. Aviemore Anthracite Coal Operations TSX/JSE : FMC Aviemore Operations Asset Summary1Location: • Dundee, Kwa-Zulu, NatalCoal Type: • AnthraciteResource: • 35.7 million tonnes (15.1 million tonnes inferred)Acres: • 13,818Average BTU: • 12,800 BTU/lb • 7,100 kcal/kgAsh: • 13.7%Volatility: • 7.9%Saleable • 2011FY2: 92,000 tonnesProduction: • 2012FY2: 161,000 tonnesMine Life: • Approximately +20 yearsInfrastructure: • Wash plant, processing plant and siding 1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 2. Fiscal year-end February 28 24
  25. 25. Aviemore Anthracite Coal Production Profile TSX/JSE : FMC• Annual production capacity expected to hit 500,000 tonnes of saleable coal per annum in fiscal 20141 Aviemore Anthracite Coal Saleable Production2 (000 t)/February 28 year-end 420 161 102 92 59 62 61 20 2006 2007 2008 2009 2010 2011 2012E 2013E1. As per management’s guidance2. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 25
  26. 26. Aviemore Project Area & Mining Rights1 TSX/JSE : FMC1. Source: National Instrument 43 – 101 Report (Minxcon March 1, 2011) available under the profile of the Company on SEDAR at www.sedar.com. 26
  27. 27. Corporate Structure TSX/JSE : FMC Forbes Coal Ownership Structure Forbes and Manhattan Coal Corp. (Ontario, TSX/JSE Listed) 100% Forbes and Manhattan Coal Inc. (Ontario) 76.75% → 100%Corondale Prospecting and Slater Coal (Proprietary) LimitedMining (Proprietary) Limited Slater Vendors Dormant Company 100% (South Africa) 23.25% → 0% 70% Zinoju Coal (Proprietary) Limited BEE (South Africa) 30% (Nulane) 100% 100% Magdalena Aviemore Bituminous Coal Anthracite Coal Source: FM Coal Corp 27
  28. 28. Responsible Development TSX/JSE : FMC• Good working relationship with its two unions: National Union of Mineworkers (NUM) and Amalgamated Mining & Construction Union (AMCO) • Labour contracts are negotiated on an annual basis• Implementing internationally recognized safety, health, environmental and quality management systems• Adheres to the tenets of the Mining Charter and promotes local procurement and procurement from BEE companies• Committed to developing local communities 28
  29. 29. Capitalization and Share Performance TSX/JSE : FMC Share Structure Basic Shares Outstanding 34.8 million FD Shares Outstanding1 39.5 million Canadian Share Performance South African Share Performance Company Ticker TSX: FMC Company Ticker JSE: FMC Closing Price (February 3, 2012) C$1.88 Closing Price (February 3, 2012) ZAR 1,625 Trading Range C$1.65 – $4.64 Trading Range ZAR 1,430 –2,750 (52 week) (since July 28, 2011) Market Capitalization (Basic) C$65 million Market Capitalization (Basic) ZAR 565 million Market Capitalization (FD) C$72 million Market Capitalization (FD) ZAR 642 million1 Includes2,700,000 performance warrants that convert into common shares upon the company reaching certain operating targets. Also includes3,445,300 options with a weighted average exercise price of C$5.35 per share, 763,887 broker warrants convertible into common shares at an exerciseprice of C$2.80 per share and expiring on January 23, 2012 and 480,000 broker warrants convertible into common shares at an exercise price of C$4.55 29per share and expiring on February 22, 2013.
  30. 30. Peer Group Trading Analysis TSX/JSE : FMC Share price performance: South African listed peers Relative valuation: South African listed peers x 25.0x 23.4x FY+1 average (1)= 12.7x FY+2 average(1) = 9.2x250 20.0x 15.0x 12.2x200 11.2x10.9x 11.0x 10.0x 8.3x 5.1x 5.5x 5.0x 2.3 x150 1.3 x 0.0x Coal of Africa Optimum Coal Keaton Energy Exxaro Forbes Coal Corp.100 FY 12 P/E FY 13 P/E Sales growth (FY12 to FY13) versus FY12 P/E: South African listed peers 50 80.0% Market cap represented by bubble size 70.0% Keaton Energy 0 Sales Growth (FY12 to FY13) 60.0% 50.0% 40.0% Forbes Coal 30.0% Coal of Africa Exxaro Forbes Exxaro Optimum Coal Keaton 20.0% Optimum Coal 10.0% Wescoal Hwange Firestone Resgen 0.0% -5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 -10.0% FY12 P/E Source: Bloomberg, 20 December 2011 (1) Excluding Forbes Coal 30
  31. 31. Comparable Trading Analysis TSX/JSE : FMC• Forbes Coal trades at Comparable Trading Analysis Market Cap EV EV / EBITDA P/CFPS a significant discount Company (US$M) (US$M) 2011E 2012E 2011E 2012E to comparable coal U.S. Coal Producers Alliance Resource Partners LP $2,500 $2,882 5.0x 4.6x 5.6x 5.0x producers on an Alpha Natural Resources Inc.1 $4,483 $6,856 4.8x 3.4x 4.0x 2.7x Arch Coal2 EV/EBITDA and P/CF $3,239 $7,162 5.7x 4.1x 3.4x 2.6x Cloud Peak Energy Inc. $1,052 $1,312 3.8x 3.6x 3.5x 4.0x basis Consol Energy, Inc. Corsa Coal Corp. $7,859 $160 $11,270 $177 6.1x 5.8x 5.0x 3.5x 5.5x 7.4x 4.7x 4.8x James River Coal Co. $245 $725 3.5x 3.5x 1.8x 1.8x Lipari Energy, Inc. $95 $97 4.2x 2.9x 6.7x 3.7x Natural Resource Partners LP $3,762 $4,469 14.9x 13.3x 13.3x 13.5x Oxford Resource Partners, LP $535 $654 11.5x 7.5x 13.2x 9.4x Patriot Coal Corporation $829 $955 4.8x 2.2x 6.7x 2.8x Peabody Energy Corp.3 $10,029 $12,812 5.1x 4.0x 5.6x 4.3x Rhino Resource Partners LP $509 $669 7.4x 5.8x 6.0x 5.4x Xinergy Ltd. $173 $265 5.5x 2.4x 7.5x 2.8x Walter Energy, Inc. $4,001 $6,266 5.1x 4.5x 5.1x 3.9x U.S. Coal Producers Average (excluding high and low) 5.8x 4.2x 6.2x 4.3x African Coal Producers Coal of Africa Limited $428 $429 7.4x 2.0x 14.4x 5.3x Continental Coal Limited $77 $93 4.7x 1.3x 419.3x 1.4x Exxaro Resources Limited $7,930 $7,415 8.7x 5.9x 10.7x 6.5x Keaton Energy Holdings Limited $53 $50 NA 4.2x NA NA Optimum Coal Holdings Limited $1,129 $985 5.2x 4.0x 6.6x 4.5x Petmin Limited $188 $79 NA 2.0x NA 0.0x African Coal Producers Average (excluding high and low) 6.3x 3.0x 12.5x 3.7x Other Coal Producers Cline Mining Corp. $281 $196 NA 1.4x NA 2.3x Coal & Allied Industries Ltd.4 $8,204 $7,952 8.4x 7.1x 11.4x 9.2x Gloucester Coal Ltd.5 $1,350 $1,517 9.0x 6.4x 8.3x 6.8x Grande Cache Coal Corporation $484 $536 NA 3.3x NA 2.5x Macarthur Coal Ltd.6 $3,567 $3,008 8.0x 6.5x 14.7x 9.6x Other Coal Producers Average (exluding high and low) 8.4x 5.4x 11.4x 6.2x Overall Average (excluding high and low) 6.3x 4.2x 8.0x 4.6x Note: As of September 22, 2011 Forbes Coal (C$)7 $83 $86 2.9x 1.7x 3.9x 1.9x 1. Pro forma acquisition of Massey Energy Inc. Forbes Coal - Discount to Comparables (54%) (60%) (52%) (58%) 2. Pro forma acquisition of International Coal Group 3. Pro forma the joint takeover offer with ArcelorMittal SA to acquire Macarthur Coal Ltd. 4. Coal & Allied Industries is shown pre-announcement of a bid by Rio Tinto and Mitsubishi Development Pty to acquire the remaining 14% of Coal & Allied Industries on August 8, 2011 5. Gloucester Coal is shown pro-forma the acquisition of Donaldson Coal and Monash Group 6. MacArthur Coal is shown pre-announcement of a joint take-over offer by ArcelorMittal and Peabody Energy on July 11, 2011 7. Forbes Coal’s operating forecast is based on Canaccord Genuity Research estimates. Market cap and EV includes 2.7M in performance warrants 31 Source: Consensus estimates and company reports
  32. 32. Summary TSX/JSE : FMC Currently producing high quality bituminous and anthracite coal Plans to organically TRIPLE production from 2010 historic levels to 1.5 million saleable tonnes per annum in three years Export capacity at Richards Bay Coal Terminal and Grindrod Terminals Richards Bay to increase incrementally to 1,157,000 tonnes per annum by 2013 Offtake agreement with global energy trading company provides cash to fund ramp up at two operating mines Growing demand for coal from emerging markets Looking at strategic acquisition opportunities in the region Strong balance sheet and coal-focused management team 32
  33. 33. TSX/JSE : FMCAppendix 33
  34. 34. South Africa – Overview TSX/JSE : FMC• South Africa is the most attractive country in Africa in which to do business according to Richard’s Bay Port Ernst & Young 2011 Africa Attractiveness World’s Largest Coal Terminal Survey• Modern infrastructure system supporting distribution of commodities for both domestic and export markets – Extensive rail network (10th longest in the world) – Majority of electricity generated via coal fired power stations – Richard’s Bay port in South Africa is the world’s largest bulk coal terminal • 91 million tonne capacity • Coal railed from approximately 49 mines• Long history in resource development – World’s largest PGM & ferrochrome producer – Significant coal, iron ore and manganese resources 34
  35. 35. Historical Coal Prices TSX/JSE : FMC• South African thermal coal (Richard’s Bay terminal) and coking coal prices have increased significantly over the last several months• The recovery to 2008 levels have been driven by increased demand, particularly from China and India, and higher cost supply from key producing nations such as Russia and the U.S. Historical South African Thermal Coal and PCI Coal Prices $300 $250 $200(US$ /tonne) $150 $100 $50 $0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Mar-07 May-07 Sep-07 Nov-07 Mar-08 May-08 Sep-08 Nov-08 Mar-09 May-09 Sep-09 Nov-09 Mar-10 May-10 Sep-10 Nov-10 Richards Bay Thermal Coal Spot Price McCloskey/Xinhua Infolinks Coking Coal Price Source: Bloomberg 35
  36. 36. Thermal Coal Global Overview TSX/JSE : FMC• Significant upside potential to export prices Global Thermal Demand and Supply Forecast• A tightening of the global seaborne market in late 2010 provided the initial base for thermal coal to rise• Robust import demand from India• Growing imports into China due to increasing demand and production curtailments• Slowing export supply growth from Indonesia as more coal is diverted for domestic use• Short-term supply constraints caused by flooding in Australia• Australia is the second-largest exporter of bituminous coal• Wood Mackenzie stated that prices could exceed 2008 highs Source GTIS, Macquarie Research, February 2011 36
  37. 37. Thermal Coal Global Overview TSX/JSE : FMC • India will be relying heavily on coal fired power plants in the near future 37
  38. 38. Thermal Coal Global Overview TSX/JSE : FMC • As a result of reliance on thermal power generation, Indian thermal imports are expected to rise significantlySource GTIS, Macquarie Research, February 2011 38
  39. 39. Thermal Coal Global Overview TSX/JSE : FMC • Chinese thermal coal imports have been huge; this trend is expected to continue into near future 39
  40. 40. Metallurgical Coal Global Overview TSX/JSE : FMC• The coking coal market was fundamentally tight prior to the Global Thermal Demand and Supply Forecast Queensland floods, which have further constrained the market• Current situation highlights the lack of geographical diversity to supply side portfolio, leaving it prone to shocks• Market deficit likely to prevail, keeping price at decent premium to cost support• Requirement for projects in high geopolitical and infrastructure risk regions will keep long-term prices elevated Source GTIS, Macquarie Research, February 2011 40
  41. 41. Metallurgical Coal Global Overview TSX/JSE : FMC • Many metallurgical coal basins exist, however there is a challenge in bringing new projects onlineSource GTIS, Macquarie Research, February 2011 41
  42. 42. Metallurgical Coal Global Overview TSX/JSE : FMC • Supply growth in 2011 is set to be much lower than in 2010, while key regions increase demand 42
  43. 43. Metallurgical Coal Global Overview TSX/JSE : FMC • Global anthracite coal demand driven by the metal refining industry – Cost-effective replacement for coking coal/coke • Emerging markets consuming the most steel • China is the world largest steel producer – Accounts for 44% of global steel production – Expected to sustain steel consumption growth of 6%-8% annually • China accounts for 52% of the world’s coking coal consumption – Imports more than half of coking coal consumed from export markets Increasing steel production and consumption drives demand for anthracite coalGlobal steel consumption: Macquarie Commodities Research February 2011 43
  44. 44. TSX/JSE : FMC February 2012 CONTACT INFORMATIONStephan Theron Sabina SrubiskiPresident & CEO Investor Relations ManagerForbes & Manhattan Coal Corp. Forbes & Manhattan Coal Corp.Tel: + 1 416 861 5912 Tel: + 1 416 309 2957info@forbescoal.com ssrubiski@forbescoal.comwww.forbescoal.com www.forbescoal.com 65 Queen Street West, Suite 815 P.O. Box 71, Toronto, Ontario, Canada, M5H 2M5 44
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