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An Investor Presentation on ZYL Limited (ASX:ZYL) by Managing Director Dr Eric Lilford

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  • Held the positions of National Head of Mining for Deloitte Touche Tohmatsu and Partner of Deloitte Corporate Finance. Over 23 years operational and investment experience across the global resources sector. Mine production experience at multi-billion dollar underground gold, platinum, copper and coal mines. Previous Director of Project and Business Development at Beny Steinmetz Group Resources, managed aspects of a $500 million dollar copper-cobalt mine and refinery in Zambia producing 30,000tpa of copper and 6,500tpa of cobalt. Mine Overseer for Randcoal Limited’s Rietspruit and Khutala coal mines; responsible for producing over 3Mtpa of coal from three operating sections in the underground coal mine.Experience includes completion of both pre feasibility and bankable feasibility studies (BFS) in numerous jurisdictions. 12 years of investment banking and commodities research experience.
  • Existing box-cut on the property to facilitate the removal of a bulk sample for metallurgical testing and marketing trialsProject located approximately 100km from Maputo Port by direct rail link, with an existing rail siding on the property. Road, power and water all located nearbyCoal seam widths between 4m and 6m, dipping to the East at 6oHighly experienced Management TeamAdjacent to operating Nkomati Anthracite coal mineSiyanda Resources (JV / BEE partner) has extensive experience in South African coal mining, currently operating two mines and previous owners of the Koornfontein Coal MineProgressing discussions with a number of project opportunities identified in close proximity to Kangwane for acquisition and investment
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  • Zyl%20 %20 investor%20presentation%20-%20november%202011%20(s-tedits1)1

    2. 2. IMPORTANT INFORMATION The information in this presentation is an overview and does not contain all information necessary to make an investment decision. To the extent permitted by law, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation, any of which may change without notice. This document is not a prospectus, disclosure document or offering document under Australian law or under any other law. It does not constitute an offer or invitation to apply for securities. It is for information purposes only. This presentation is not an offer of securities for subscription or sale in the United States or any other jurisdiction in which such an offer or solicitation is not authorised or to any other person to whom it is unlawful to make such an offer or solicitation. Some of the information contained in this presentation constitutes forward-looking statements that are subject to various risks and uncertainties, not all of which may be disclosed. These statements discuss future objectives or expectations concerning results of operations or financial condition or provide other forward looking information. Prospective investors should make their own independent evaluation of an investment in the securities. The material contained in this document does not take into account the investment objectives, financial situation or particular needs of any particular investor. No recommendation to investors regarding the suitability of the securities has been made and the recipient must make its own assessment and/or seek independent advice on financial, legal, tax and other matters, including the merits and risk involved. This presentation and its contents have been distributed to you, in confidence, solely for your information and may not be retransmitted or otherwise reproduced or disclosed to third parties or made public in any way, in whole or in part, for any purpose without written permission. Competent person statement Information in this presentation that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Dawie Van Wyk who is a consultant to the Company and is a member and fellow of the Geological Society of South Africa and SACNASP, a Recognised Overseas Professional Organisation. Mr Van Wyk has sufficient experience which is relevant to the style of mineralisation 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, Mineral Resources and Ore Reserves’. Mr Van Wyk consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears. ZYL - Metallurgical Coal Projects 2
    3. 3. CORPORATE OVERVIEW & STRATEGIC INTENT Capital Structure ASX Code: ZYL Current shares on issue 488,535,899 Options on issue (20c ex.) 20,000,000 Options on issue (10c ex.) 3,000,000 Options on issue (6c ex.) 4,000,000 Market Capitalisation * $82.2 million Cash on hand $30 million Share price range (H/L) $0.26 - $0.10 Mission - to develop high margin metallurgical coal deposits for domestic and export markets * Market Capitalisation calculated as at 27 October 2011 3
    4. 4. BOARD OF DIRECTORS – TWO NEW APPOINTMENTSBevan Tarratt – Executive ChairmanDirector of a number of ASX listed companies with experience in primary and secondarycapital raisings and strategic consulting. Accounting background focussed on small capresources companies and equity markets experience with Patersons Securities.Dr Eric Lilford – Managing Director, Kangwane BFS Committee23 years operational experience across the global resources sector, including large gold,platinum, copper and coal mines. 12 years in investment banking and commoditiesresearch. Completion of bankable feasibility studies (BFS) in numerous jurisdictions.Ian Benning – Operations Director, Kangwane BFS Committee25 years of mining industry experience in both production and mine management, andinvestment banking. Previously worked for Rand Merchant Bank and Investec focussingon corporate & specialised finance and asset management.Phillipe Lalieu – Commercial DirectorCo-founder of Opes Capital with 13 years experience in corporate finance advisoryspecializing in the mining and infrastructure sectors. Previously established and jointlymanaged a SA based private equity fund for a Dubai based company and worked forAnglo Platinum in corporate finance and project development. 4
    5. 5. SENIOR MANAGEMENT AND NON-EXECUTIVE DIRECTORDavid Greenwood – Non-Executive Director29 years of geological and mining experience with a number of coal, precious metal andbase metal producers. Extensive operational knowledge of the South African coalenvironment. Previously section head of new business and international operationswithin the coal division at Gold Fields of South Africa Limited.Nicholas Ong – Company SecretaryManagerial experience with the ASX; approved and listed over 100 companies. Detailedknowledge and understanding of all facets of the listing process, company restructuringsand compliance with industry codes.Garth Reardon –Business Development Manager22 years experience in financial, strategic and business development roles spanning theEPCM engineering, mining, media, investment banking, asset management, printing,professional accounting and tax industries.Mzwandile Nombewu – Director Siyanda Resources, Kangwane BFS Committee15 years of coal (Ingwe) and gold (AngloGold) mining experience in South Africa withadditional experience in mining education. Currently holds the position of TechnicalDirector, Coal and Mineral Rights in Siyanda Resources. 5
    6. 6. MBILA & KANGWANE – COMPLEMENTARY MULTI SITE FOCUS ZYL - Metallurgical Coal Projects PG 6
    7. 7. MBILA PROJECT• ZYL (44%) and its partner York Energy Pty Ltd (30%) have the right to earn 74% of the Mbila Anthracite Project• Mbila project consists of two licences in the KZN Province; – Mbila Mining Right covering a total area of 19,000 Ha (enabling early production) – New Order Prospecting Right covering 53,000 Ha• Full BFS completed in 2008, SRK and RMB updated the financial model in 2009• No additional drilling required for the first 5 years of mineral extraction• Combination of underground and open pittable operations available PG 7
    8. 8. MBILA - OPPORTUNITY • SAMREC resource of 89Mt GTIS, 97% in Measured and Indicated with target seam resource of 20Mt – 60Mt • 2 anthracite formations, ECCA and Beaufort: – Ecca - ultra low phosphorous products – Beaufort - low phosphorous product • Both products ideal for domestic mineral sands, ferrochrome and ferromanganese markets • Significant shortfall exists in South African market; short and long term opportunity for Mbila • High quality metallurgical coal to generate premium pricing (estimates of US$140 – US$180 per tonne at mine gate) PG 8
    9. 9. MBILA ANTHRACITE PROPERTIES Mining Right Mining Right Prospecting Area – Area – Ecca Right Area – Beaufort Seam Beaufort Seam Seam High Rank B High Rank C High Rank C Coal Classification Anthracite Anthracite Anthracite Yield % 65.5 57.1 51.9 Ash Content % 9.9 15.1 15.1 Inherent Moisture % 1.5 2.0 <2.0 Volatile Matter % 5.2 5.9 7.3 Fixed Carbon % 84.9 79.0 77.6 Gross Calorific Value MJ/kg 32.25 29.78 30.41 Total Sulphur % 1.06 0.65 0.76 Phosphorous % 0.008 0.012 0.012 ZYL - Metallurgical Coal Projects PG 9
    10. 10. MBILA – HIGH QUALITY = COMPETITIVE ADVANTAGE 95% Semi Anthracite Anthracite Standard Metallurgical High Grade Metallurgical 92% 88% 90% 87% 85% 85% 85% 85% 84% 85% 83% 83% 83% 82% 78% 78% 80% 77% 77% 76% 75% 72% 71% 70% 70% 70% 66% 65% ZYL - Metallurgical Coal Projects PG 10
    11. 11. MBILA – CLOSE TO INFRASTRUCTURE & DOMESTIC MARKETS Power: Water: Rail: Port: Power supply is in Water sourced from Two rail sidings close Either Richards Bay local boreholes in to tenement or Durban Harbour close proximity to the project Zululand District (200km) Direct rail link access to port facilities ZYL - Metallurgical Coal Projects PG 11
    12. 12. KANGWANE LOCATION & RAIL - IDEAL FOR EXPORTZYL - Metallurgical Coal Projects 12
    13. 13. KANGWANE CENTRAL – EXPORT FOCUS • JORC Compliant Resources of 114Mt including a Measured Resource of 21.4Mt • Open Pittable Resource of 60.79Mt at a stripping ratio up to 5 : 1 • Initial feasibility results in Q4 2011 with the focus on production from open pit operations (indicative 2.1 Mt per annum ROM) • Approximately 100km from Maputo Port by direct rail link, with existing rail siding. Road, power and water all located nearby • Siyanda Resources (BEE partner) has extensive experience in South African coal mining; currently operating two mines and previous owners of the Koornfontein Coal Mine • High quality metallurgical coal has the potential to generate premium pricing (estimates of US$100 - US$120 per tonne at mine gate) 13
    14. 14. KANGWANE CENTRAL - CURRENT JORC RESOURCES Coal Resource Estimate Statement (JORC and SAMREC compliant) for Kangwane Central (gross tonnes in situ – GTIS) Total Measured Coal Resource (GTIS) 21.4 Mt Total Indicated Coal Resource (GTIS) 25.5 Mt Total Inferred Coal Resource (GTIS) 67.2 Mt Total JORC compliant Coal Resources at Kangwane Central Anthracite 114.1 Mt Exploration Target 1 of 350Mt to 450Mt at an expected calorific value range of 6,635 kcal to 6,712 kcal ideal for export markets 1 The potential quantity and grade of the above Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. ZYL - Metallurgical Coal Projects 14
    15. 15. KANGWANE CENTRAL - MINING RESOURCES Indicated Resource Estimate (JORC and SAMREC compliant) for Kangwane Central Anthracite (gross tonnes in situ – GTIS) Indicated Coal Resource North Open Cut area (GTIS) 11.17 Mt Indicated Coal Resource South Open Cut area (GTIS) 49.62 Mt Indicated Coal Resource Central Underground area (GTIS) 29.78 Mt Total JORC compliant Indicated Coal Resources at Kangwane Central Anthracite 90.57 Mt Total JORC compliant Coal Resources at Kangwane Central Anthracite 114.1Mt PG 15
    16. 16. KANGWANE CENTRAL - EXPORT QUALITY COAL Washed coal specifications based on exploration to date @ 20% ASH @ 16% ASH Yield % 79.34 66.36 Ash Content % 17.78 15.46 Inherent Moisture % 2.43 2.40 Volatile Matter % 6.35 6.17 Fixed Carbon % 74.32 76.80 Gross Caloric Value MJ/kg 27.74 28.70 Total Sulphur % 0.62 0.61 *These are the average specifications based on the drilling and washability analysis conducted during 2011. It does not suggest that Kangwane’s product will ultimately be a 20% or 16% ash content product. The final targeted ash content will be dictated by market demand and economics. PG 16
    17. 17. KANGWANE SOUTHERN – COMPLEMENTARY EXPORT FOCUS • Conceptual Exploration Target of 90Mt - 190Mt at an expected calorific value range of 19MJ/kg to 28MJ/kg¹ (5,250kcal to 6,680kcal) unwashed • Approximately 25km to the South and considered highly complementary to Kangwane Central; potential to share services and infrastructure • Close proximity to port, water, electricity, roads and rail; approximately 130km by rail to Maputo Port in Mozambique with existing rail siding • Mining Right Application (MRA) submitted • Anthracite qualities expected to be similar to Kangwane Central 1The potential quantity and grade of this exploration target is conceptual in nature, there has been insufficient exploration to define a Mineral Resource on the property and it is uncertain if further exploration will result in discovery of further Mineral Resources on the property. 17
    18. 18. KANGWANE SOUTHERN – SAMREC RESOURCE Coal Resource Estimate Statement (JORC and SAMREC compliant) for Kangwane Southern (gross tonnes in situ – GTIS) Total Indicated Coal Resource (GTIS) 73.9 Mt Total Inferred Coal Resource (GTIS) 25.8 Mt Total SAMREC* compliant Coal Resources at Kangwane Southern Anthracite 99.7 Mt • Minimum seam width of 1.2 metres used in estimation • Seam depth ranges between 20 metres and 400 metres below the surface • Approximately 2Mt open pittable coal on the shallow western limit with the remaining coal to be mined using underground methods • A total of 103 boreholes drilled since 1982 *SAMREC: The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves. 18
    19. 19. KANGWANE INFRASTRUCTURE Rail: Power Lines: Water: Port: - Rail siding access - Mains power 18km - Nkomati River - Maputo Port operates traverses north and adjacent to Kangwane 24 hrs from project Central west of the - Power currently Kangwane Central - Port can handle 6Mt Project - Capacity of 100,000 of product per annum supplied to tonnes/month at rail neighbouring Nkomati siding Anthracite Mine - Supplied to - Direct rail link access neighbouring to port facilities Nkomati Anthracite - 100km by direct rail - Sealed road passes link to Maputo Port through Kangwane Mine - Capacity upgrade occurring allowing for power line extensions ZYL - Metallurgical Coal Projects 19
    20. 20. MBILA PROJECT - JOINT VENTURE STRUCTURE Right to earn a 44% interest via • Payment of US$2.8 million for the acquisition of an initial 5% of Mbila’s total issued share capital on 16 September 2011 • Payment of an aggregate amount of US$24,200,000 on the 5th business day following the later of 1 May 2012 and the date of fulfillment of the Suspensive Conditions for the acquisition of an additional 39% of Mbila’s total issued capital to be paid via: - US$13,200,000 cash - US$11,000,000 by way of issue or transfer of listed shares in ZYL valued as: i) the AUD Equivalent of US$5,000,000 at the AUD denominated volume weighted average price (VWAP) at which the shares in ZYL traded on the Australian Securities Exchange (ASX) for the 30 day period prior to 14 December 2011, or ii) the VWAP at which the shares in ZYL traded on the ASX for the 30 day period prior to the date of conclusion of the Formal Agreement, whichever is the higher amount; iii) If a secondary listing on the JSE has not occurred on or before the Second Payment Date, then ZYL will acquire the 39% Subscription Shares for a cash amount of US$24,200,000 escalated by 1% per month for each month settlement does not occur from 16 September 2011. PG 20
    21. 21. KANGWANE CENTRAL - JOINT VENTURE STRUCTURE Right to earn a 50.12% interest subject to spend commitments: • ZYL to expend ZAR20 million (~A$3 million) over 12 months to complete a FS • ZYL will invest ZAR30 million (~A$4.5 million) in equity for capital expenditure items in connection with mine development • Loan of ZAR3.00 per tonne (~A$0.45 per tonne) of economically mineable coal (as demonstrated by the BFS) capped at ZAR100.5 million (~A$15.5 million) provided in two tranches repaid out of profits after an initial 3 year period of operations • After selling 36.6Mt of anthracite, the original shareholders will receive a royalty of ZAR2/tonne for anthracite sold (~A$0.30/tonne) above 36.6Mt 21
    22. 22. KANGWANE SOUTHERN - JOINT VENTURE STRUCTURE Right to earn a 70% interest via • Initial payment of $500,000 to Prosperitas Capital on signature of the Share Sale Agreement • Subsequent payment of $500,000 to Prosperitas Capital on obtaining ZYL Shareholder Approval • Final payment of 3,472,000 fully paid shares in ZYL issued to Prosperitas Capital on acceptance of the Mining Right Application • ZYL’s medium term funding commitments will be to maintain the Mining Right in good standing with the Department of Mineral Resources and to complete a FS PG 22
    23. 23. ANTHRACITE – HIGH CARBON & ENERGY, LOW MOISTURE LOW Carbon and Energy Content of Coal HIGH Moisture Content of Coal Low Rank Coal Hard Coal % OF WORLD RESERVES 47% 53% Peat/Bog Lignite Sub-Bituminous Bituminous Anthracite 17% 30% 52% 1% Thermal Metallurgical Steam Coal Soft Coking Hard Coking power generation power generation power generation iron and steel clean heating cement manufacture cement manufacture smokeless fuel USES industrial industrial anode paste carbon source Source: World Coal Association 23
    24. 24. INVESTMENT OPPORTUNITYFor further information on investment opportunities in this emerging metallurgical coal producer go to www.zyllimited.com.au or contact: Bevan Tarratt Dr Eric Lilford Ian Benning Chairman / Director Managing Director Operations Director Telephone +61 8 9486 4036 Telephone +61 8 9486 4036 Telephone +27 87 350 2751 Facsimile +61 8 9486 4799 Facsimile +61 8 9486 4799 Facsimile +27 11 245 9801 Mobile +61 (0)418 928 719 Mobile +61 (0)424 757 452 Mobile +27 (0)837 028 221 btarratt@zyllimited.com.au elilford@zyllimited.com.au ibenning@zyllimited.co.za 24