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2016-10-10

Lubel Coal Company Ltd.(BVI) – a privately-owned company focused on mine construction project implementation on coking coal mining. Company owns 100% in Lubelska Coal Project located in Western Ukraine
 
High Production Capacity

  • 8m diameter two shafts of 920m and 940m in depth
  • State-of the-art high-production mechanized plow system

- It is anticipated to apply high productive Caterpillar plow systems

  •  Scale and method of production are similar to LW

Bogdanka Mine (Poland)
– Recently achieved 24 400 t/day from one face equipped with plow  system
– Seam thickness of 1.63m

  •  ???? – world-known coal mine construction company, the

EPC contractor of Lubel mine construction, upon visit to
Bogdanka mine in July 2014, has confirmed annual output
capacities for Lubel mine of ca. 8Mt p.a.
 
Strategic location with well-developed infrastructure

  •  Situated in a region of high demand on coking coal with convenient infrastructure for coal supply
  •  Located in close proximity to European steelmakers
  •  Available high-skilled and experienced mine workers in the region

 
High quality coking coal with potential for resource extension

  •  High quality coking coal with attractive metallurgical characteristics
  •  Major project with long-term operation period based on high quality coking coal resources
  •  177Mt of reserves at block No.1 and block No.2 according to JORC classification
  •  129 Mt additional reserves of ?/Zh-grade ranked by DKZ(1) at block No.3 and 108Mt of ?/Zh-grade at Lubelska No.4 block to be compliant to JORC standards based on existing 3D model

 
Positioned to be among the largest pure-play coking coal producers globally

  •  Underground mine with average salable coal production capacity over 6.1 Mt p.a. DKZ-compliant ?-grade(2) and DKZ-compliant ?/Zh-grade(2) hard coking coal per annum
  •  Clear construction scheduling not exceeding 38 months (term of construction and reaching the project capacity are warranted by general contractor CCMC), potential commissioning in 2019
  •  Mine life of 42 years

 
Project attractive economics

  •  Latest studies allow to achieve an IRR more then 38% for the Lubelska Project
  •  Attractive low production costs below US$ 30.0 per ton (average cash cost during full

operational years 2020-2060 according to Luganskgiproshakht BFS). In accordance with CCMC BFS average cost per ton is US$26,6 for the period of 2020-2027
 
High productivity mining method

  •  Modern, high-productive plow systems Caterpillar applied at similar operations in the world mines
  •  The use of the latest plow technology allows to improve throughput and achieve lower operating costs

 
Project status

  •  Invested funds - USD 51,9m
  •  Mine construction project and electricity and other technical supply terms approved;
  •  Land is allocated, infrastructure construction in progress: roads, bridges, drainage systems, removal of soil etc.;
  •  PAT «Luganskdiproshakht» elaborated an updated version of BFS in January 2014.
  •  In October 2014 CCMC (general contractor) and Hefei project institute developed an adaptation of BFS according to terms and rules of potential international creditors – Chinese financial institutions
  •  Term of construction, according to CCMC, will not exceed 38 months, planned start of operations – 1st quarter of 2019; CCMC will provide the performance guarantee on estimated mine output, construction term and quality of equipment
  •  The Company is continuing the preparation works for construction commencement and is in the process of boreholes drilling for further reclassification of resources to a higher class on field #3 and further certification by JORC

 
Bankable Feasibility Study Results
                                                                                           
 Resources for Lubelska No.1 and Lubelska No.2 areas amount to 177 Mt

  •  Large-scale geological exploration program since 1978.
  •  Drilled 436 boreholes with 250x500 drill spacing.
  •  Three coal seems lying at the depth of 700-850m.
  •  Recoverable thickness of coal seams ranging 0.9 ÷ 1.8?.
  •  Low potential of methane at blocks No’s 1 and No.2, continuous and flat

bedding of seams Lubelska No’s 3 and No.4 areas -potential increase of reserves

  •  Additional resources of 129 Mt for block No.3
  •  Additional 108Mt resources at Lubelska No.4 area currently not included in economic analysis

 Budget plans for 2013-2015 include 14-15 boreholes drilling on the block No 3 for further reclassification of resources to a higher class in accordance with JORC, currently internal drilling department is drilling 12th borehole using owned Atlas Copco drilling