June 19, 2013

TAVAN TOLGOIproject

Coal deposit overview

Scope of the project

Company profile

Ulaanbaatar

Mongolia

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

ERDENES TAVAN TOLGOI JSC – CURRENT STATUS

3

Tavan Tolgoi coking coal deposit

4

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

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

fieldEast 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)

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

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

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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

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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

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6

12

20

2013 2014 2015 2016 2017

West Tsankhi planned extraction, Mt

INFRASTRUCTURE PROJECTS

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Coal Handling and Preparation Plant (CHPP)

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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.

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

Цахилгаан хангамжийн төсөл

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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.

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.

RAISING FINANCING, CURRENT ISSUES

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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

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

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• 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

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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

Thank you for your kind

attention