This document provides an update on the Theunissen UCG Project from African Carbon Energy. It discusses the history and founding of Africary, their coal resources in the Theunissen area, plans for exploration and site infrastructure, the UCG process, power generation using UCG syngas, and the project timeline and milestones towards commercialization. The goal is to build and operate a commercial-scale UCG plant to generate electricity in South Africa.

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Dr Johan van Dyk, Technology Manager
African Carbon Energy
Johan.vanDyk@Africary.com
Mr. Johan Brand, CEO, African Carbon Energy
Johan.Brand@Africary.com
August 2015
Theunissen UCG Project
Update
Africary is proud to be a founding
member of the SA UCG Association!

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Thank you to all our sponsors!
We appreciate your support!
And to Raquel Richardson from Ap22ude (Pty) Ltd
Money Box
Investment 156 ( Pty.)

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History of the Theunissen project
3
By 2008 he has successfully developed
the first UCG proposal at Sasol; proving
the value of this exciting technology.
Mr Brand became the UCG Business
Manager for Sasol, Director of the UCG
Association in London + the Technical
Director of Wildhorse Energy
Mr Monkoe left Sasol Mining in 2006 to
become COO at Ingwe Collieries and later
non-executive Director at Optimum Coal.
He was part of the Optimum buy-out
where he retained a substantial
shareholding and became financially
independent at the listing of Optimum.
In 2001 Johan Brand (Mining Engineer) and
Eliphus Monkoe (Operations Manager) met
at Sasol Mining as part of the Brandspruit
Mining team.
Eliphus told Johan about his experience in
the Former Soviet Union where UCG has
been implemented since the 1940’s.
Together they initiated the implementation of
UCG at Sasol.

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African Carbon Energy (“Africary”)
• African Carbon Energy was established as a South African coal mining
company in 2007 as a 50:50 Partnership between Johan and Eliphus.
• The company was founded on our expertise in mining, exploration,
gasification and specifically Underground Coal Gasification (UCG) and our
business philosophy then is to support equity investments with operational
involvement
• From 2011 to 2012 Africary finalized the deal for a massive coal resource
from BHP Billiton SA that is ideally suited for UCG in the Free State.
• We also bought 2 farms ideally placed for our first project.
• Our business philosophy grew to invest and develop our own UCG to Power
project on the Theunissen resource for implementation in the DoE process.

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AFRICARY’s vision
“To build own and operate a
Modern Commercial UCG plant”
and then grow to large scale Poly-generation
 Low cost and abundant resource “COAL”
 Growing market demand “ELECTRICITY”
 rising price and 30 year off-take agreement
 Clean, Green and efficient technologies “UCG”
 Use learning and experience from other projects to
fast-track and focus

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Sasol above ground gasification process
Steam,
oxygen or air Ash
Syngas for
electricity
generation
Coal
Coal Mining
Coal exploration
& drilling
surface
Coal seam
Ash dump

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With UCG, the same coal gets
mined and gasified in one step
Syngas for CTL or
electricity generation
Coal exploration
& drilling
surface
Coal seam
Oxygen
or air
Ash

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Coal gasification is an old concept
UCG has a long history…
• Coal gasification was used more than 150 years ago to produce “town-gas”
for lighting streets in the UK and the US
• Sasol (South Africa) has been gasifying coal for over 50 years and currently
produces about 40% of the nation's current liquid fuel requirements
(160,000 bbl/day)
• Commercial UCG has been successfully operated in 15 mines for more than
50 years in Russia – supplying UCG syngas for power generation
8
First
UCG
test
1930

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More than 30 countries in the World are currently
undertaking UCG activities
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Source: UCG Association

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TUCG Setup – trident system
Injection well
Production well
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Bloodwood panel 2 Dry Gas Composition – Air Blown
average of 12 months production
Primary Constituents – Dry Gas Basis Average – Mol %
Hydrogen (H2) 20.94
Methane (CH4) 8.60
Carbon Monoxide (CO) 2.56
Ethane (C2H6) 0.54
Carbon Dioxide (CO2) 21.63
Nitrogen (N2) 44.67
Average Calorific Value – LHV (MJ/Sm3)
(MJ/Sm3)
5.71
Average Calorific Value – HHV (MJ/Sm3)
(MJ/Sm3)
6.46

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Carbon Energy Syngas HHV for 1 year
average
+ 1 standard deviation
- 1 standard deviation

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Over a 6 month period with the injection flow rate kept constant 1500 nm3/hr, the
graphs indicate changes in volume of syngas produced and the energy content of the
syngas.
There is clear correlation between these two parameters, when there is more gas
being generated, the gas is of higher energy content.

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UCG Gas Engines in commercial operation

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Project basic mass and energy balance
Coal to Gas:
Energy conversion is
75% to 85% efficient
Gas to Electricity:
Energy conversion is
38% efficient

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Why UCG in SA?
 With Eskom’s 7 years production experience at Majuba – UCG is a proven SA
technology
 With increase in tariffs electricity generation by gas engines is cost competitive!
 The graph below shows the increase in the average annual selling price of Eskom
electricity from 17.91c/kWh in 2006 to 79,73c/kWh in 2015 and is set to continue this
upwards trend (www.NERSA.co.za, 2015)
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Where is Theunissen?
The Africary Rights include all coal exploration licences previously
owned by BHP Billiton. The Rights comprise an area of 322km2 and
consist of:
 A northern (34km2) coal resource area
 A southern (173 km2) coal resource area
 A western (122 km2) coal resource area 18

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Coal Target Blocks
The coal tonnage (gross-in-situ)
in the target farms are:
• Inferred as 20.5 million tons
• Measured as 3.7 million tons
The coal tonnage in the
rest of the resource is
Inferred at 976 million
tons

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Coal Geology: Proven coal supply!

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Exploration &
Electro-seismic grid
 Exploration Drilling
o ±4Mt of measured resource from the #3 seam
o Proximate Analysis
o Ultimate Analysis
o Fischer Analysis
o Hydrogeology – porosity and conductivity
o Rock strength
 3D Electro-Seismic
o Confirm Aquifers
o Confirm coal seam continuity
o Identify dykes, sills and displacements

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ANALYSES PURPOSE
Proximate analysis: Moisture, Volatile matter, Ash, Fixed Carbon* Mass balance, ash content, water
Total Sulphur* Environmental, gas cleaning design
Gross Calorific Value* Efficiency of process
True relative density Mass balance on coal, measured resource classification
Ultimate: C, H, N & O (by difference) Mass balance, oxygen consumption, gas quality
Forms of sulphur: Pyritic, Sulphate & Organic Speciation, environmental, gas cleaning
AFT (oxidizing conditions) Gasifier operating window
Ash composition: SiO2, Al2O3, Fe2O3, TiO2, MgO, CaO, Na2O,
K2O, P2O5, SO3 Influence acid/base ratio of ash, slagging, trace element capturing
Fischer Assay: Char, Liquid hydrocarbons, Water, Gas (by
difference) Liquid hydro carbon yields, tar and oil
Petrographics: Maserals and rank (COAL DEFINITION) Reactivity, coal classification, tar yields, and much more
Mineral composition
Type of minerals and not composition, i.e. clay, sulfates,
carbonates
Trace elements analyses Environmental, gas cleaning design
Chlorine, Cl Environmental, gas cleaning design, corrosion
Fluorine, F Environmental, gas cleaning design, corrosion
Crucible swelling number If coal is caking coal / plasticity
Gieseler fluidity If coal is caking coal / plasticity
Self-heating and Spontaneous Combustion Rate of combustion, start-up
Pore size and surface area Reactivity, cavity formation, gas velocity expected
MEASURED RESOURCE
ENVIRONMENTAL + *
MASS AND ENERGY BALANCES + *
GASIFIABILITY AND RATE OF GASIFICATION
Coal Geology: Properties of the coal

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“Coalology” Geophysical study
ADVANCE
100m 100-300m >300m
Cavity Width
0-100m
Only local
collapse
Only local
collapse
Only local
collapse
100-300m
Only local
collapse
30-100m
collapse
30-100m
collapse
>300m
Only local
collapse
30-100m
collapse
Full
collapse
3m
30m300m
Surface
Coal seam
Water table
50m
Not to Scale!
(Otherwise you will not be able to see what is
happening…)

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Supporting & Access Infrastructure
Aqua Alpha – Directional Drilling
• Specialists in cavity design
• Specialist drilling management
• International and local track record
• Sasol
• Anglo American
• China
• Hungary
SASOL ALPHA DRILLING RIG
Ssr/coreldraw/kaths01.cdr

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Underground technology and getting
into the coal seam

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Power Generation Gas Engines can operate on Syngas
produced directly from UCG

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Power Generation Gas Engines can operate on Syngas
produced directly from UCG

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Possible 132kV Power Line Route

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Project Lifecycle Roadmap and Timeline
PlanInitiateTimeLineExecuteClose
Implementation PhasePhase Concept Phase (FEL1) Pre-Feasibility Phase (FEL2) Feasibility Phase (FEL 3)
Mobilize
Team
Kick-Off
Charter
Devel.
07 Jan.
2013
Nov. 2013 Jan. 2014
15 Feb.
2013
Group/Individual
Plan & Align
Develop Business
Case &
Investment Plan
Decision
Gate 1
Mobilize
Team
Kick-Off
Charter
Update
Group/Individual
Plan & Align
Develop Eng. &
Bus. Options
Mobilize
Team
Kick-Off
Group/Individual
Plan & Align
Develop Basic
Design
Mobilize
Team
Kick-Off
Group/Individual
Plan & Align
Final Design
Fabricate/Procure
Construct
Commission
Decision
Gate 2
Decision
Gate 3
Hand
Over
Jun. 2015Apr. 2014
IPP Award
Jul. 2014
Jan
2012
Coal
from
BHP
2
Farms
Aug
2013
June
2014
EIA
appr
IPP FC
Q2/ 16
Exploration
Drilling
BANKABLE
BO
Q3/ 18
Project Roadmap - 45,000 hrs
- R250m
Grid
conn
EIA
start
WUL
Chose
Technology
CDE
appoint
Jan
2015
DoE Bid
Sep 15

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The UCG Commercialization flow for
South Africa…
 Step 1: Find a suitable energy Market and do competitor analysis
 Step 2: Obtain a suitable UCG coal Resource
 Step 3: Explore the resource and find and obtain rights to a suitable site - AA
 Step 4: Concept Design finalize Technology choices of the planned facility - CDE
 Step 5: Risk Assessment and financial suitability assessment – CDE + McRoberts
 Step 6: Environmental Applications and permit approvals – Golder Associates
 Step 7: Bankable Feasibility Study with Engineering Designs and Cost Estimate
 Step 8: Bank approval – Signed Nedbank as MLA!
 Step 9: EPC Negotiations and O&M service level agreements
 Step 10: Offtake Agreement and financial close

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Key Milestones
Gas RFP
Bid Opening;
Sept 2015
to Dec 2015
PPA Finalisation
Project
Financial Close
Q2 2016
Project
syndication and
BEE Partners
H1 2015
DoE Gas RFI
Registration
May 2015
Completion of
Bankable Feasibility
Study in Q4 2014
PROJECT READY
for
IMPLEMENTATION
Africary value
proposition for
International
Investor
17 Dec 2014
Construction and
Commissioning
and first
electricity
production by
H2/2018
24 moths

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 >40 years coal conversion experience within Africary
 Dr JC van Dyk
 Mr JF Brand
 Mr D du Preez and team (decades of engineering and gas processing
experience)
 Mr Conrad Katz, Aqua Alpha (decades of engineering and directional drilling
experience)
 NWU – Proff Waanders, Proff Neomagus, Proff Strydom and Proff Dennis
Gasification science - Experience

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Africary’s international involvement and
local support towards UCG implementation
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 Standardization of UCG measurements, control and operation through
South-African Bureau of Standard (SABS) and ISO Technical Committee
Members
 Groundwater Monitoring During Mining of Coal In-situ by Means of an
Underground Coal Gasification Process - PWI23691 (1 Oct 2014)
 ISO/TC 263, Standard for integrated pillar less co- extraction of coal and gas
(amendment of standard)(2 Feb 2015)
 ISO/TC 263, Coalbed methane exploration and development (19 Apr 2015)
 Collaboration with NWU, WITS, UFS
 Advisory Member to the Minister of Energy in South-Africa
 Collaboration with Freiberg University and Virthucon - Germany and
Advisory Board Member
 Pittsburgh Coal Conference to be hosted by Africary and NWU in Cape
town South Africa in 2016!

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Advantages of Africary's commercial UCG
technology – positive environmental impact
 UCG power generation produces 25% less CO2 per MWe and in large scale
Combined Cycle mode can reach energy efficiencies of up to 58%
compared to current 35%.
 UCG has no dust particulate emissions or ash handling AND little or no
leaching of trace elements from ash when operated correctly / optimally
 UCG mining and power generation uses 90% less water
 Less sulphur and heavy metals are released or emitted by the UCG
process
 Gas Engines offer higher fuel efficiency (up to 40%), than any boiler
operated in SA today (±35%)

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Advantages of Africary's commercial UCG
technology – positive social impact
 UCG can monetize economically unmineable coal that would be otherwise lost
to the economy (<26% of coal reserves recoverable with conventional
mining…Source: U.S. Energy Information Administration, “International Energy
Statistics: Coal,” 2011)
 New high value jobs created in the drilling, gas processing and gas engine /
CCGT maintenance industries
 UCG projects can be located in economically depressed areas away from
current mined areas
 There are no chemicals used in the UCG process as only air and water are used
for gasification
 No fracking required and there are no drilling chemicals injected when drilling
the boreholes
 Clean Coal Technologies provide a much needed injection of R&D capital with a
new industry being developed and creating high value jobs

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