Batsuuri Yaichil, CEO, Erdenes Tavan Tolgoi JSC

1. June 19, 2013
TAVAN TOLGOI
project
 Coal deposit overview
 Scope of the project
 Company profile
Ulaanbaatar
Mongolia

2. Content
 “Erdenes Tavan Tolgoi” JSC – current status
 Tavan Tolgoi coal deposit
 Company profile and recent development
 Ongoing progress to streamline infrastructure
routes
 CHPP
 Water supply
 Power supply
 Road and Rail
 Raising financing for the continued development of
Tavan Tolgoi – Possibilities and options
2

3. ERDENES TAVAN TOLGOI JSC – CURRENT STATUS
3

4. Tavan Tolgoi coking coal deposit
4
Tavan Tolgoi is one of the largest developing coking coal deposit in the world

5. 5
According to Norwest’s preliminary estimation of TT In-Situ coal resource by JORC code, there are 7.5 billion tons of thermal and coking
coal within 300 m depth range limit
West Tsankhi coal
field
East Tsankhi coal
field
1.2 Bt*
Coking coal 65 %
1.08 Bt*
Coking coal 78 %
Eastern
(Onch
Kharaat)
Borteeg
South-
Western
(Oortsog)
Tavan Tolgoi JSC
Measured
Indicated
Inferred
282.5 Mt
Calculation within *200m depth
1,21 Bt*
Coking coal 63%
765 Mt*
Coking coal 72 %
Calculation by JORC code
Preliminary calculation made by Norwest (within 200 m depth)
60.3 Mt
Coking coal 70%
74,5 Mt
Coking coal 61%
78.8 Mt
Coking coal 82%
298 Mt
Coking coal 53%
Bor tolgoi
Ukhaa khudag
Formation of Tavan Tolgoi deposit
(Resource calculation by JORC code)

6. Erdenes-TT competitive advantages
6
Abundance of high-quality coal resources
Location: ease of transport to the Chinese market
Low mining cost related to the open pit mine
Exploration works leading to new coal reserves expected
Processing of raw coal will produce added value

7. 7
Mining agreement
 Following the contract mining agreement from January, 2012, McMahon Operta Joint Venture
commenced mining operation on East Tsankhi.
 Overburden stripping commenced on 16th of February, 2013 by Mongolian company.
 Bid on operating West Tsankhi coal mine was announced and results on the selection of the
operating company will be released soon.
 Erdenes-TT JSC has signed off-take agreement with Chalco Trading Hongkong Co.,Ltd in July 26, 2011
for long-term supply of coal from East Tsankhi deposit
 As of June 2013, the company has supplied over 3 Mtn of coal to Chalco
 Establishment of Inland customs (bounded stockyard) - transport logistics is simplified and loading cost is
reduced
 Some measures were taken to reduce the cost of production by 20 percent and increase the profitability
 The Company has taken measures to streamline West Tsankhi operations and increase the number of off-
takers
Coal supply and purchase agreement
 Erdenes-TT JSC was established in December 23, 2010.
 Pre-stripping and box cut development started in August 27, 2010.
 Coal export commenced in August 04, 2011
 Over 500 employees in the company
“Erdenes-TT” JSC profile and recent development

8. 8
West Tsankhi
East TsankhiBorteeg coal field
Eastern coal field
Ukhaa hudag
Таван толгой ХК
уурхай
• Overburden stripping commenced in 27.08.2010.
• Production capacity is ROM 20 Mtpa.
• Estimated mine life is 50 years.
• Production will reach capacity of 20 Mtpa by 2016.
Extracted
2011: 1 Mt
2012: 2.5 Mt
Planned
2013: 6 Mt
“Erdenes-TT’’ JSC - East Tsankhi mine
6
10
15
20 20
2013 2014 2015 2016 2017
East Tsankhi planned
extraction, Mt

9. 9
 Pre-stripping and box cutting development began
February 2013.
 Extraction and export of 2Mt coal in 2013.
 West Tsankhi mine will run a full capacity of 20 Mt in
2017.
Steady state capacity of open pit mine 20 Mtpa.
“Erdenes-TT’’ JSC - West Tsankhi mine
1
3
6
12
20
2013 2014 2015 2016 2017
West Tsankhi planned extraction, Mt

10. INFRASTRUCTURE PROJECTS
10

11. Coal Handling and Preparation Plant (CHPP)
11
Project overview
 Feasibility study completed and approved by the Mineral
Resource Professional Committee’s meeting in June 2013.
 Front end engineering study of the plant completed.
 Selection of the project contractor and construction work
begins in 2013.
 Commissioning first 5 Mt capacity module in 2015.
 Targeted to reach the capacity of coal handling with 20 Mt
by 2016/2017.
Investment
 Estimated investment about USD 500 million.
Plant with capacity to handle and process 20 Mt coal annually.

12. Water supply
12
Project overview
 Cabinet approved water use permit minimum 150 liters/sec from
Balgasyn Ulaan Nuur ground water in 2011.
 Feasibility study completed.
 Ready to announce bidding for potential contractors.
 Exploration to be commenced for additional water supplies.
 Completion of water supply pipeline and structure targeted in
2014.
Investment
 Estimated investment is USD 110 million.
70 km water pipeline
Усны хангамжийн хэтийн төлөвлөлт
 Implementation of water saving technology
 Water recycling and proper water usage

13. Цахилгаан хангамжийн төсөл
13
 Tavan Tolgoi project activities require approximately 170-200 МВт
of power. This includes power supply for the mine extraction and
infrastructure projects such as coal handling and preparation plant
(CHPP), water supply.
Power usage
Power supply
Power source
 Government of Mongolia has issued a permission to construct a
coal-fired power plant with 450 MW capacity based on Tavan Tolgoi
coal deposit in March, 2013 and the Ministry of Power is in charge
of it’s implementation.
 Commissioning of the first 300 MW power plant in 2016
 This power plant with full capacity of 450 МВт will supply the power
required for the Erdenes Tavan Tolgoi project activities.
 Thermal coal input required for the power plant will be sourced from
the Erdenes Tavan Tolgoi mine.

14. Цахилгаан хангамжийн төсөл
14
240 km road from Tavan Tolgoi to Gashuun Sukhait border crossing
Road and Rail
Project overview
• Design, feasibility and EIA studies completed
• Development of the road design is underway
Investment
• Heavy-truck sealed road - 250 USD
Current issues
• Find financing and contractor
• Currently planned construction could be reconsidered pending early
development of rail
247 km railroad from Tavan Tolgoi to Gashuun Sukhait
• “Mongolian Railway” state-owned joint stock company, is currently in
full charge of the railway policy and a construction of the rail from Tavan
Tolgoi to the Gashuun Sukhait border crossing.
• “Erdenes-TT” JSC cooperating in this development.

15. RAISING FINANCING, CURRENT ISSUES
15

16. 16
 Fundraising through Initial Public Offering (IPO)
 Domestic stock exchange
 Foreign stock exchanges– London and Hong Kong
 Coal sale revenue
 Market expansion to overseas countries
 Marketing agreement with end-users
 Receivable from government “Human Development Fund”
 Infrastructure project’s financing
 Long-term loan from international investment banks
 Loan from commercial banks
 Loans from suppliers
 Government support
Tavan Tolgoi project financing

17. Investors would require clear and stable allocation of the company shares.
Until now par value of share and shareholding movement has not yet been cleared
out.
Downturn on all stock exchanges due to international market recession.
Company’s evaluations' are far below the predicted estimations. Investors are
reluctant to buy share from IPO proceedings.
Inclusion of the West block economic efficiency into the evaluation process.
Company’s own operations on the West block would increase evaluation by 70-80
per cent.
Downturn on the
international capital
market
Unclear shareholding
structure
Need for the full
evaluation of the
deposit
17
Infrastructure projects
need to be started
Legal issues
There was no direct way for the registered company on the Mongolian Stock
Exchange to go public on the Hong Kong Stock Exchange. After long debates this
is possible now with the renewal of the Securities Markets Law in accordance with
international standards. Recently this new Securities Markets Law was approved
by the parliament.
Infrastructure developments must be certain for investors. For example coal
transportation should be solved in a more cost efficient way. This includes
processing coal and transporting it by railway.
IPO on international stock exchanges

18. 18
• Investment Banks:
• Goldman Sachs, USA
• Deutsche Bank, Germany
• BNP Paribas, France
• Macquarie, Australia
• Jefferies, USA
• Barclays Capital, UK
Depository receipt bank
• Bank of New York, Mellon, USA
• Financial Advisors
• PriceWaterhouseCoopers
• Independent Technical Advisors
• Norwest Corporation, Canada-USA
• Appointed Legal Counsel
• Norton Rose, Hogan Lovells
• Marketing research advisors
• Wood Mackenzie
Company has Appointed Advisors to support possible IPO

19. 19
Current company’s activitiesCurrent issues
 Company financing
 Working capital
 Resolve prepayment debt with Chalco
 Obtain steady provision of working capital
 Increase the number of customers, contract with end-users
 Utilization of other Tavan Tolgoi coal fields
 Long-term capital investment
 Infrastructure project’s financing
 Capital expenditure on West Block

20. Thank you for your kind
attention