Coal Sales Agreement

							              BOTSWANA RESOURCE SECTOR CONFERENCE

                  Morupule Colliery – “The Story Is Not Over”
                                   •June 2010




•David Scott
•Senior Project Manager
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term supply
   of export and domestic customers
3. Morupule Colliery Expansion in execution phase
4. Project finance being sought
5. Substantial options for further development
                                                     A DEBSWANA COAL MINING OPERATION




   MCL Overview - History
 Morupule colliery is located west of Palapye in
  the eastern part of Botswana
 Exploration around Morupule colliery area
  started in 1957 driven by a desire to assess the
  potential for Botswana’s coal resources
 Morupule is Botswana’s only operating coal
  mine and has been in production since 1973
 Since the mid-80’s the colliery has expanded
  considerably with the commissioning of the
  Morupule A Power Station and the Botswana
  Ash Operation
 Debswana took ownership of the colliery when
  Anglo American exited Botswana in 2000
                                                           A DEBSWANA COAL MINING OPERATION




     MCL Overview - Operations
 Installed capacity of colliery is 1.1 million tonnes per annum of Run-of-
  Mine (“ROM”)
 2010 budget production some 900,000 tonnes
 Major customer Botswana Power Corporation (“BPC”), with other local
  and export sales to Zimbabwe and Zambia
 In 2009 a small wash plant was commissioned which has, allowed the
  development of a higher quality washed coal market, with substantial
  growth options
                                          A DEBSWANA COAL MINING OPERATION




      MCL Overview – Safety & Community
 In 2009 MCL was awarded
  the Botswana Chamber of
  Mines - Best Improvement
  in Safety Performance
 Safety and health of
  employees and contractors,
  environmental conservation
  and compliance to relevant
  legislation are the Colliery’s
  top priority in all activities
 Adherence to the Equator
  Principles & ISO 14001
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term
   supply of export and domestic customers
3. Morupule Colliery Expansion in execution phase
4. Project finance being sought
5. Substantial options for further development
                                          A DEBSWANA COAL MINING OPERATION




Exploration History




 Exploration Permit as at December 2009
                                                          A DEBSWANA COAL MINING OPERATION




Morupule Coal Measures
   Southeast central Kalahari
          sub basin             Morupule area




                                                                                Opencast



                                                Underground
                                                  A DEBSWANA COAL MINING OPERATION




MCL - Upgrading Historical Exploration Data
 Over the past two years, through drilling programs, the Project
  Feasibility Study, collating historical data and other concept
  studies, MCL has built a considerable knowledge base.
 Much improved understanding of the tonnage, extent and quality
  specifications of the Resources
 Total Resources (to JORC code standard), within Morupule Main
  and No2 Seam are some 2.9 billion tonnes
 The coal Resources at MCL are considerable, and substantial
  work remains to determine the ultimate size and potential of the
  coal resources
                                                              A DEBSWANA COAL MINING OPERATION




Morupule Coal Resource Areas                                                  MCL3 potential
                                                                               opencast for
                                                                              potential power
                                Mine Lease Boundary                           station market
                                                      MCL3 North               and possibly
                                                                                  export
                                         MCL2


     MCL2 u/g
                                                            MCL3 South
    collieries to
 supply Morupule
 B Phase 2 600MW
 power station and
 export market via                                                                  MCL1 mine
  rail link to port   Prospecting Licence Boundary                                  expansion
                                                                                     project
                                                        MCL1 South




                      Recently relinquished ground
                                                                                        A DEBSWANA COAL MINING OPERATION



Classified Coal Resource Estimate Summary
As at 31/12/2009 (JORC Code)
                                            TONNAGE             Seam Thickness CATEGORY
   Morupule Main Seam                       (Mt)                   (metres)

   MCL1 – Project
                                                 424.5               8.59        Measured Indicated & Inferred
   MCL1 Southern Ext.
                                                 694.7               8.59                    Inferred
   MCL2 Underground
                                               1,444.5               6.68                    Inferred
   MCL3 South Open Cut
                                                 213.4               9.80                    Inferred
   TOTAL                                       2,777.1


   Resource Area No 2                        TONNAGE            Seam Thickness   CATEGORY
      Seam                                   (Mt)                  (metres)
   MCL3 South
   TOTAL                                         130.7               6.08                    Inferred

  (Tonnages are quoted on an air dried, uncontaminated basis)
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term supply
   of export and domestic customers
3. Morupule Colliery Expansion in execution
   phase
4. Project finance being sought
5. Substantial options for further development
The MCL Expansion Project in Brief

   Expansion of Room & Pillar Underground Mine (~1mt/yr to ~3.mt/yr)
   Mining Fleet from 1 Continuous Miner (CM) to 4 CMs
   New Surface Plant (crushing, screening, stockpiling & coal handling)
   Upgraded Power Supply, Water Supply & Ventilation System
   Surface infrastructure - Workshops, Construction Offices etc
   EPCM contractor Fluor appointed
   Imminent mobilisation to site
   Purchasing long lead items
   Project on schedule




                                                                           •Page 13
The MCL Expansion Project in Brief


 Expansion driven by the need to
  Supply first coal to Morupule B Phase 1
  by June 2011
 Coal Sales Agreement signed with
  BPC, for the delivery of approximately
  50 million tonnes of coal to both
  Morupule A and Morupule B Phase 1
 Term of contract over 20 years
 Proven & Probable Reserves are 70
  million tonnes (based on 4.2m mining height)



                                                 •Page 14
                                     A DEBSWANA COAL MINING OPERATION




Surface Facilities – Final Designs
               A DEBSWANA COAL MINING OPERATION




Project Team
                                                     A DEBSWANA COAL MINING OPERATION




    Morupule B Phase 1 Power Station
 Five year programme of power reduction
  agreed between Eskom and BPC was the
  catalyst for the construction of Morupule B
  Phase 1 power station
 Morupule B Phase 1 will be a 600 MW power
  station, located next to the existing Morupule A
  Power Station
 Construction of the power station commenced
  in February 2010 and is progressing to
  schedule
 The contractors are the China National
  Electric Equipment Corporation and Shenyang
  Blower Works Electro-Mechanics Import and
  Export Co. Ltd
                                    A DEBSWANA COAL MINING OPERATION




Morupule B Phase 1 – The Customer
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term supply
   of export and domestic customers
3. Morupule Colliery Expansion in execution phase
4. Project finance being sought
5. Substantial options for further development
                                                  A DEBSWANA COAL MINING OPERATION




Project Finance
 Approx capital cost 1.7 billion Pula
 Equity contribution has been allocated
 Lead Arranger appointed - Standard Bank SA
 Financial Advisor - Fieldstone & Capital Corporate Finance
 Shortly to go the market for limited recourse debt package
 Financial close by September - October 2010.
 Feasibility study has passed full review by the appointed
  independent technical consultants
 Expecting BWP syndicated facility from leading Botswana banks.
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term supply
   of export and domestic customers
3. Morupule Colliery Expansion in execution phase
4. Project finance being sought
5. Substantial options for further development
                                                             A DEBSWANA COAL MINING OPERATION




   MCL Project Expansion – Longer Term Plans
 Current expansion will act as a catalyst for a series of further expansions and
  investments that will allow development to the resource’s full potential
     Expand production organically, to supply to new markets in Zambia,
      Zimbabwe and RSA as they become available
     Build a major new underground mine in conjunction with a new power
      station, (Morupule B Phase 2) allied with thermal coal exports via the
      Trans Kalahari Railway
     Potentially construct a new open pit mine that will maximise resource
      recovery and create a step change in mine economics
     Conceptual studies carried out by international consultants have been
      completed on these two development opportunities and have shown
      robust economics, subject to availability of suitable markets
     MCL is a member of the Trans Africa Railway Consortium, with IDC,
      Exarro and CIC Energy Macquarie Bank and others – This is the key
      enabler for the coal industry in Botswana
                                                              A DEBSWANA COAL MINING OPERATION




Morupule Coal Resource Areas                                                  MCL3 potential
                                                                               opencast for
                                                                              potential power
                                Mine Lease Boundary                           station market
                                                      MCL3 North               and possibly
                                                                                  export
                                         MCL2


     MCL2 u/g
                                                            MCL3 South
    collieries to
 supply Morupule
 B Phase 2 600MW
 power station and
 export market via                                                                  MCL1 mine
  rail link to port   Prospecting Licence Boundary                                  expansion
                                                                                     project
                                                        MCL1 South




                      Recently relinquished ground
                                                       A DEBSWANA COAL MINING OPERATION




    MCL2 Underground – In Brief
 Study prepared by Wardell Armstrong of the UK :
 12km from Morupule Colliery focussing on the Morupule Main Seam
 Underground mining 8.5Mt per annum, potential saleable coal plus 400mill
  tonnes
 Producing some 5Mtpa of 26-27MJ/kg export quality coal and 2-3 Mtpa of
  18-20 MJ/kg power station fuel
 Capital cost requirement is around US$700M
 No substantive technical, environmental or social issues would prevent the
  development of the mine
 Project
     has a workforce of 1140 people earning in wages US$26M pa
     royalty payments of US$4.3Mpa
     Linked directly to the Morupule B Phase 2
MCL2 - Proposed Surface infrastructure
Conceptual Layout Mogorosane Colliery
                                                         A DEBSWANA COAL MINING OPERATION




    MCL3 Open Pit – In Brief
 Study prepared by Zenith Consulting from Australia
 Large open cut mine development – 10Mtpa ROM producing 5mtpa export
  and 2 - 3Mtpa power station feed
 9m of Morupule Main seam & 6m of No2 Seam, at this stage
 Low strip ratios mining & no significant technical issues to prevent operation
 The open cut project has a direct initial workforce of some 600 and an
  annual cashflow into the regional economy of approximately BWP 1 Billion
  per annum over a mine life of 25 years
 The total MCL3 area has the potential for a significantly larger open cut
  operation and larger power development than is currently planned
 Project success is directly linked to access to markets via the successful
  construction of a rail link to a coastal port, and the development of a power
  station that can accept the proposed secondary coal product
 Progress – End of Year 2




28
 Progress – End of Year 6




29
 Progress – End of Year 10




30
                                          A DEBSWANA COAL MINING OPERATION




The Trans Kalahari Rail (“TKR”) Project
  MCL is a member of the Trans
   Africa Railway Consortium, with
   IDC, Exarro, CIC Energy,
   Macquarie Bank and others.
  Key enabler for expansion of the
   coal industry in Botswana
  The consortium is proposing a
      Dedicated, 1500km, heavy–
        haul rail
      Associated port facility
      Capacity – up to 100 Mil
        tonnes / year
      Fully private funding
                                        A DEBSWANA COAL MINING OPERATION




Key Messages

1. Established colliery with strong, safe operating
   history
2. Substantial resources to underpin long term supply
   of export and domestic customers
3. Morupule Colliery Expansion in execution phase
4. Project finance being sought
5. Substantial options for further development
                     A DEBSWANA COAL MINING OPERATION




  THANK YOU
for your attention
                                                                             A DEBSWANA COAL MINING OPERATION




Competency Statements

1.   The information in this report that relates to the MCL1 Mineral Resources is based on information
     compiled by Mr Grant van Heerden Pr.Sci.Nat., who is a Principal Coal Geologist with SRK
     Consulting. Mr Grant van Heerden have 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 Competent Persons as defined in the 2004 Edition of the JORC Code (Australasian
     Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves). Mr van Heerden
     consents to the inclusion in this report of the matters based on his information and in the form
     and context in which it appears.
2.    The information in this report that relates to the MCL1 Mineral Reserves is based on information
     compiled by Mr Andre Dougall, Pr.Cet.Eng., who is a Principal Mining Engineer with SRK
     Consulting. Mr Andre Dougall have 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 Competent Persons as defined in the 2004 Edition of the JORC Code (Australasian
     Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves). Mr Dougall
     consents to the inclusion in this report of the matters based on his information and in the form
     and context in which it appears.
3.   The information in this report that relates to the MCL2&3 Mineral Resources is based on
     information compiled by Mr Paul Norman., who is a Technical Director and Chief Geologist
     Geologist with Wardell Armstrong LLP Consulting. Mr Paul Norman have 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 Competent Persons as defined in the 2004 Edition of
     the JORC Code (Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore
     Reserves). Mr Norman consents to the inclusion in this report of the matters based on his
     information and in the form and context in which it appears.