19.11.2013 Spotlight presentations showcasing Mongolian investment opportunities – Natural Resources, Batmunkh Batkhuu

Mongolia 2013 Investment

Summit

November 2013Hong Kong

Sharyn Gol JSC – A New Dawn

Sharyn Gol JSC –A New Dawn

2013.NOV.19

Charles Robert Darwin (1809-1882) scientist & geologist 1859, wrote book “ On the origin of the species,”

introduced “Theory of Evolution by Natural selection “

- … must be to sort out proper structure, & adapt it to changes"

BANKRUPTCY !!! OR SURVIVE !!!

Important Notice

This presentation may contain forward looking statements that are subject to risk factors associated with the natural resources sector and the business of coal mining.

Sharyn Gol JSC believes that the expectations reflected in these statements are reasonable however they may be affected by a range of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, supply and demand dynamics, currency fluctuations, drilling and production results, estimates of reserves and resources, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.

Sharyn Gol JSC believes that any information contained in this document was accurate as Nov 2013. However, Sharyn Gol JSC does not warrant its accuracy or reliability.

This information is provided expressly on the basis that recipients will carry out their own independent enquiries into the matters contained here in and make their own independent decisions about the affairs, financial position, or prospects of Sharyn Gol JSC; who reserves the right in its absolute discretion, to update or amend and/or supplement any information at anytime.


� Discovered 1958� Exploration 1958 – 1960� Mining started 1965� Listed in MSE 1993� Fully privatized 2003� Peak production 2.5 Mtpa (1975-1983)� Current production 0.8 Mtpa� Connected to Trans-Mongolian Railway � Supply coal to TPPs and Industrial users


Sharyn Gol JSC - Overview

Construction commenced in 1964

Opening Ceremony in 1965

Sharyn Gol Mine History

Over-burden removing by USSR Haul trucks / in 1975/

Sharyn Gol Mine History

� Run by state, Post-Communist method of mine and

management

� Big impact from Political and economical transacti on period

� Production was dropping down by each year

� Lack of management

� Old and non-productive mining fleet

� Increased overburden removal – high-wall issues

� Nearly Bankruptcy

Condition before privatization


Firebird took controlling package in 2010.


� Full scale drilling program – JORC program (1st phase – 2010; 2 nd phase 2012; 3 rd phase 2013 – on going)(168 Mt measured; 73 Mt indicated; 83 Mt inferred – 324 Mt)

� Dedicated Railway’s study done independent experts � Coal Resource renewed and approved by MRAM � New Pit development and design has been approved by

relevant authority ( Satellite area)� Pre-feasibility study on Coal handling and preparat ion

plant made by C Clarkson & Associates Pty Ltd. ( 5m t/a)� Capital Increase : 18.3 Billion MNT on Mongolian Stock

Exchange � Fleet Innovation First Program

Achievements of Sharyn Gol JSC between 2010-2013



� Introduction of New International Management Team ( Sep 2012 )� Tripled annual production up to 850,000 tons� In 2012, SHG announced 50 MNT dividend. (first divid end since )� New mine design and ten year mine plan of Current p it is near to

be completed� Management anticipates increasing annual production to 1.4

million tons in 2014� Fleet Innovation Second Program � Acquisition of first module of Washing plant from D erek Parnaby

UK.� FS and EIA of the wash plan is on the way and subje ct to be

approved by MRAM� Successful closure of Naco (NKT :MSE )acquisition – 9 2,9% of

shares

Achievements of Sharyn Gol JSC between 2010-2013


Fleet Innovation Program


• Sharyn Gol invested considerable amount in new fleet in 2012 and 2013:

• 8 new 65t Komatsu 65 dumpers for over burden remova l

• 6 new Nord Benz coal trucks

• 1 new Sandvik blasting drill

• 3 new Doosan excavators of 35t and 70t size

• New Caterpillar D9 bulldozer

• Refurbishment of existing dragline and rope shovel fleet

• New Locomotive purchased due to production increase

Total Investment made in last 3 years


� Mine Development and Exploration Program – 12.7 Billion MNT

� Business Development (Wash Plant and Naco Fuel JSC

Acquisition) – 8.1 Billion MNT

� Fleet Innovation Program – 4.3 Billion MNT

� TOTAL INVESTMENT

25.1 Billion MNT (equal to 16.0 Mill USD)

Corporate snapshot

Share price (Jun’ 30, 2013) ₮8200

Share price (USD Jun’ 30, 2013)

US$5.6

Shares outstanding 10.23 m

Market capitalisation US$ 58.0m

Cash (at Jun’ 30, 2013) US$ 5.8 m

Debt (at Jun’ 30, 2013) NIL

Subsidiary Company Naco Fuel JSC

70.84% 22.4% 6.76%

Capitalisation Last year’s share price performance

Key shareholders

Local partners

Small shareholders or

free float


The Vision Fulfilling the Local Market


Local Thermal Coal and Coal based product demand is analysed to reach 15 million tons per annum in 2015.

Government of Mongolia has approached to developmen t program for DarkhanCity Area as heavy industrial zone and power generating expansion point due

the shortage of power grid. • Darkhan TPP expansion – 68 MW expected• Darkhan Heavy Industrial Development Zone development – 12 8 MW

• New Coal Heating Power Plants Project /above 5 GW/• Pig Iron Plant extension -• Erdenet TPP expansion – 48 MW• Erdenet Copper Mine’s Extension on the power generating sec tion• Smokeless fuel demand to reduce the air pollution in areas of

Ulaanbaatar, Darkhan and Erdenet Cities• Cement Factory expansion due to rapid increase of construct ion

demand

Sharyngol’s Target Market expected to reach 3.1 mill/tn perannum up to 2015

Company Action

• First module of Wash Plant /600k tons capacity/ - will help to meet the cement factories demand and feed the Naco plant

• Naco Fuel JSC acquisition will be perfect match to fit into smokeless fuel market in Ulaanbaatar, Darkhanand Erdenet Cities

• New Fleet Program has been implemented to increase the ROM –on going

• Railway expansion possibility study has been finalized. (5.0 million transportation capacity per annum)

The Vision Fulfilling the Local Market


Sharyn Gol’s Strategic Location in local market

Naco Fuel JSC

The Vision – Access to Major Thermal Coal Markets


Recent Railway Development in Mongolia

Government Support on Logistics • Bilateral agreement on transportation

tariff for coal transportation via Trans-Siberian Railway System (52% discount)

• Bilateral agreement between Mongolia and People’s Republic of China on transit transportation of coal to sea ports (Ganqimaodou and Qinhuangdao port)



Significant strategic advantage due to connection t o the Trans-Siberian Railway to create opportunities to work with Russian companies and au thorities, enhancing coal exports and

regional prosperity

SharynGol

Vostochny

Qinhuangdao

Ganqimaodou

Manzhouli

• Concession agreement between Democratic People's Re public of Koreaand Mongolia on Ung-Sang Port for commodity transpo rtation and access to international market

Company Action Plan

• Wash Plant purchased to meet the international quality standard (upgrade is available up to 3.5 Mtpa)

• Trial Shipment to South Korean Port (SAMMOK Int’ PTY JV of Republic of Korea and Mongolia) – 1 st Quarter of 2014 (planned)

• Trail Shipment to Western Europe with a cooperation of DEUTSCHE BAHN – 1 st

Quarter of 2014 (planned)



Trans-Siberian Railway

Sharyn Gol JSC Investment Highlights

Coal will remain a fundamental energy source in the world and and Mongolian domestic thermal coal consumption will be reach

15 mill tn per annum

Sharyn Gol represents a unique operation in the country with its large, high quality resource base and a dedicated rail spur giving

the company access to international markets...

Sharyn Gol became perfect example of Theory of evolution by Natural selection in the business field of Mongolia,

driven by new management

Mongolia is at the start of a major development programme to develop mineral resources for both domestic and export use...

Russian rail infrastructure and port opportunities are the best options to maximise the value of Mongolian coal and commodity and offer a unique opportunity to work together for the benefit of

regional prosperity. This includes using Mongolian coal in Russia to allow increased Russian exports...


Building a Leading Mongolian Coal Producer and Exporter

Thank You for your

attention !!!