23.05.2012 Introducing Tavan Tolgoi to the international markets, Graeme Hancock

ERDENES TAVAN TOLGOI JSC

GRAEME HANCOCK

CHIEF OPERATING OFFICER

22 MAY 2012

ERDENES TAVAN TOLGOI JSC // PAGE 1

THIS PRESENTATION INCLUDES CERTAIN “FORWARD-LOOKING STATEMENTS”. ALL STATEMENTS,

OTHER THAN STATEMENTS OF HISTORICAL FACT, ARE FORWARD-LOOKING STATEMENTS THAT

INVOLVE RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO THOSE THAT RELATE TO

COAL RESOURCES AND SALEABLE PRODUCT YIELDS, PRODUCTION PLANS, COSTS OF

PRODUCTION, STRIP RATIOS, CAPITAL EXPENDITURES, COAL PRICES AND MARKETS. THERE CAN

BE NO ASSURANCES THAT THESE STATEMENTS WILL PROVE ACCURATE; AND ACTUAL RESULTS

AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH

STATEMENTS. THE INFORMATION CONTAINED HEREIN REPRESENTS THE COMPANY’S JUDGMENT

AS OF THE DATE HEREOF, BASED ON INFORMATION CURRENTLY AVAILABLE, INCLUDING THE

INFORMATION CONTAINED IN A DRAFT INDEPENDENT TECHNICAL REPORT PREPARED AT THE

REQUEST OF THE COMPANY. THE DRAFT TECHNICAL REPORT AND THE COMPANY’S MINE

DEVELOPMENT PLANS ARE SUBJECT TO CHANGE. THE COMPANY DOES NOT ASSUME ANY

OBLIGATION TO UPDATE ANY STATEMENT. NEITHER THE COMPANY NOR ANY OF ITS PERSONNEL

ACCEPTS OR ASSUMES RESPONSIBILITY, OR HAS ANY LIABILITY, TO ANY PERSON IN RESPECT OF

THIS PRESENTATION. THIS PRESENTATION DOES NOT FORM PART OF AND IS NOT MADE IN

CONNECTON WITH ANY OFFERING OF SECURITIES, AND IT SHOULD NOT BE RELIED UPON IN

CONNECTION WITH ANY CONTACT, INVESTMENT, DECISION OR COMMITMENT WHATSOEVER.

DISCLAIMER


Location

COMPANY SNAPSHOT - LOCATION

The Tavan Tolgoi coalfield is

located in the central South

Gobi region of Mongolia

Approximately 200km north

of the Mongolian-Chinese

border


Overview Current Corporate Structure

Erdenes Tavan Tolgoi JSC (ETT) is a Mongolian

coal producer and developer

The Company holds mining licences over the

Tavan Tolgoi coalfield in Mongolia, one of the

largest undeveloped deposits of high-value

coking coal in the world

The Company holds 7.4Bt of Measured,

Indicated and Inferred coal reserves and

resources and 1.8Bt of Proven and Probable

coal reserves in accordance with JORC

The Company commenced commercial

production in July 2011

The Company is in the process of expanding

production with the objective of becoming a

large scale producer and exporter of high

quality washed coking and thermal coal

products to Chinese and North Asian markets

COMPANY SNAPSHOT

Government of Mongolia

Erdenes MGL LLC

Erdenes Tavan Tolgoi JSC

100%

100%

Anticipated Future Corporate Structure

Government of Mongolia

Erdenes MGL LLC


51% or more

100%

Mongolian Shareholders Publicly Traded Shares

20% Up to 29%

Erdenes Tavan Tolgoi JSC owns licences over a majority of the Tavan Tolgoi coalfield, one

of the largest open pittable coking coal deposits in the world


Tavan Tolgoi deposit consists of 6 sub-fields: Tsankhi, Ukhaa Khudag, Bortolgoi, Borteeg,

Southwest and Eastern coalfields

ETT owns licences over 5 of the 6 sub-fields (excluding Ukhaa Khudag)

Tsankhi is the main and best explored of the coalfields owned by ETT and contains the

highest portion of Measured and Indicated coal resources

Significant exploration and expansion potential exists at other 4 sub-fields

COALFIELD STRUCTURE

Source: Draft Technical Report

~25km


Tavan Tolgoi deposit consists of 6 sub-fields: Tsankhi, Ukhaa Khudag, Bortolgoi, Borteeg,

Southwest and Eastern coalfields

ETT owns licences over 5 of the 6 sub-fields (excluding Ukhaa Khudag)

Tsankhi is the main and best explored of the coalfields owned by ETT and contains the

highest portion of Measured and Indicated coal resources

Significant exploration and expansion potential exists at other 4 sub-fields

COALFIELD STRUCTURE


~25km

MMC


The current focus of the Group is on the Tsankhi coalfield

1Represents marketable coal Reserves (i.e. sold raw or washed and sold as premium coal). Reserves for East Tsankhi exclusive of reserves within mining licences owned by third parties

2In-situ coal Resources at <300m depth limit and estimated under JORC Code. Resources inclusive of reserves. Resources for East Tsankhi exclusive of resources within mining licences owned

by third parties


Eastern coalfield Borteeg

coalfield

Southwest

coalfield

Tavan Tolgoi JSC

(“Small TT”) (third party)

Daitsuki LLC

(third party)

Bortolgoi coalfield

Measured

Indicated

Inferred

287А

11977А

11945А

West Tsankhi coalfield Reserves1: 888Mt (~59% coking coal)

Resources2: 1,734Mt (~72% coking coal)

East Tsankhi coalfield

Reserves1: 948Mt (~61% coking coal)

Resources2 1,262Mt (~71% coking coal)

JORC RESERVES AND RESOURCES







Coal Resources (Mt, inclusive of coal Reserves)

JORC COAL RESERVES AND RESOURCES


Coalfield

Proved

(Mt ROM)

Probable

(Mt ROM)

Total

(Mt ROM)

Marketable

(Mt Product)

East Tsankhi 359 589 948 619

West Tsankhi 482 406 888 610

Total ETT 841 995 1,836 1,229

Coal Reserves (Mt)

Coal Reserves split by coal type (Mt)

Coalfield

Measured

(Mt ROM)

Indicated

(Mt ROM)

Inferred

(Mt ROM)

Total

(Mt ROM)

East Tsankhi 410 726 126 1,262

West Tsankhi 576 706 452 1,734

Others1 - 1,554 2,833 4,387

Total ETT 986 2,986 3,411 7,382

Coal Resources split by coal type (Mt)

1Include Southwest, Borteeg, Eastern and Bortolgoi coalfields


Tsankhi coking coal specifications Tsankhi coking coal quality benchmarked

against global coking coal projects

COAL QUALITY



Overview

EAST TSANKHI – OVERVIEW

Independent Technical Report completed by Norwest

JORC Reserves and Resources statement completed

— Total Reserves 948Mt (>70% coking coal)

— Total reserves and resources 1262Mt

Commenced pre-stripping and box cut development in August 2010

Production commenced in July 2011 with total production over 2.2Mt as at May 20th

— 1.3Mt year to date

Currently producing at an annualized rate of 4.5 Mtpa

Target 3Mt ROM of coking coal in 2012 and gradually increasing capacity to steady

state 20Mtpa ROM by 2017 with potential for further expansion

— Estimated mine life: 50 years

— Production of high quality unwashed coking coals for export in first two years while

Coal Handling and Preparation Plant (“CHPP”) is being constructed

— Highly competitive cost with the estimated LOM average mine operating cost:

US$40.70/t of saleable washed coal




Upon completion of first CHPP module, plan is to start producing a range of premium

washed products including hard coking coal, semi-soft coking coal and high quality

thermal coal for export

— The current plan envisages the first module coming on line around mid 2014

Current mine workforce of 300 expanding to approximately 1,000 as capacity increases

— Mining camp and onsite mine facilities under development

Offtake agreement

5 Year offtake agreement signed with Chalco

Exports to China under the agreement commenced in October 2011

To date exported 1.1Mt to China


Continued…


Contract mining agreement


Contract mining agreement commenced with Macmahon/Operta Joint Venture in January

2012

Structured as an Alliance Contract, with a Base + KPI risk based compensation scheme

An initial 5 year term with option to extend for an additional 2 years on meeting KPIs

Contractor to raise financing for and procure all necessary mining equipment – ETT to

purchase all mining equipment at the end of the contract term at book value

Production targets are as follows:

2012 – 3 Mt

2013 – 6 Mt

2014 – 10 Mt

2015 – 15 Mt

Operations going very well with monthly production tonnages increasing month on month

Occupational health and safety standards are being raised and working conditions of

operators improved

New large mining equipment entered into service in late April 2012 and additional equipment

on order for delivery late 2012 to ensure 6 Mtpa target is achieved in 2013



EAST TSANKHI PRODUCTION - 2012

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

January February March April May June July August September October November DecemberYTD

Monthly Production

Cumulative Production YTD

Annual Budget Target


Open-pit surface mining with a life of ~50 years Total LOM saleable product of 619Mt

EAST TSANKHI – OPERATIONS

Targeted steady state annual ROM production of ~ 20Mtpa (after ramp-up)

Estimated LOM average strip ratio at ~ 2.74

Targeted annual saleable production of ~ 13-15 Mtpa (after ramp-up)

Estimated LOM average washing yield at ~64%

Source: Draft Technical Report and related mine development plan


Chinese Demand for Coking Coal

ETT Cost ranking (CFR Bohai Sea)

EAST TSANKHI – MARKET AND ECONOMICS


0

20

40

60

80

100

120

14020

11

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Mt

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Landborne

imports

(Clean)

Seaborne

imports

% Mongolian

Supply

0

50

100

150

200

250

300

0 100 200 300 400

Mt

FO

B U

S$

/t

Erdenes TT

Australia

Canada

China

Mozambique

Indonesia

Russia

South Africa

USA

Venezuela

Vietnam

New Zealand

ETT Cost ranking (FOR Mine Gate)

0

20

40

60

80

100

120

0 100 200 300

Mt

FOB

US$/

t

Erdenes TT

Australia

Canada

China

Mozambique

Indonesia

Russia

South Africa

USA

Venezuela

Vietnam

New Zealand


Overview Recent development

WEST TSANKHI – OVERVIEW

Covering land area of 3,004 hectares

Independent Technical Report completed

by Norwest Corporation

JORC Reserves and Resources

statement completed

— Total Reserves 888Mt

— Total reserves and resources 1734Mt

Pre-feasibility study completed

— Supports a steady state 20Mtpa ROM

production rate over a five year ramp-

up period

— Estimated mine life of ~48 years

Currently in negotiations with leading

foreign SOEs and private interests to

develop the West Tsankhi Coalfield as a

consortium

— Interested parties from the US, China,

Russia, Japan and Korea

Erdenes TT will retain title to the West

Tsankhi mining licences and the

consortium will operate under a Contract

arrangement similar to an Indonesian

style Coal Contract of Works

Erdenes TT now completing Feasibility

Study for the commencement of Mining

on West Tsankhi


Open-pit surface mining with a life of ~48 years Total LOM saleable product of 610Mt

WEST TSANKHI – OPERATIONS

Targeted steady annual ROM production of ~20Mtpa

Estimated LOM average strip ratio at ~ 2.8

Targeted annual saleable production of ~14Mtpa

Estimated LOM average washing yield at ~67%


-

5.00

10.00

15.00

20.00

25.00

Yr 01 Yr 07 Yr 13 Yr 19 Yr 25 Yr 31 Yr 37 Yr 43

Pro

duction (

Mt)

ROM coal Saleable coal

Yr 48


Road from Tavan Tolgoi to Gashuun Sukhait Border Crossing

INFRASTRUCTURE

The Company has received Cabinet approval to construct a sealed highway

parallel to the Mongolian Mining Corporation (“MMC”) paved road

Currently planned to commence construction in 2013

Design, feasibility and EIA studies about to commence

Combination with MMC paved road will increase capacity and safety

The CHPP will employ “world-class” technologies and processes and is expected to be one of the

largest and most advanced in Asia

Phased construction schedule

— 2 x 10Mtpa phases

Expected commissioning of the first 5Mtpa module by mind 2014 and processing full capacity of

20Mtpa by 2017

Prequalification of EPC contractors has been completed and tender documents issued.

East Tsankhi CHPP

Railroad from Tavan Tolgoi to Gashuun Sukhait

Mongolian Mining Corporation (MMC) has a license to build the rail from Tavan Tolgoi to the Gashuun

Sukhait border crossing. ETT anticipates cooperating in this development.

Design, feasibility and EIA studies completed and construction commenced


INFRASTRUCTURE

Water Supply

Cabinet approved water use permit for Balgasyn Ulaan Nuur (“BUN”) ground water

— Located ~65km west of East Tsankhi coalfield

Estimated water requirements for a 20Mtpa CHPP are ~200 litres/sec

Estimated water requirements for a 300MW Power station are ~20 litres/sec

ETT has been granted permits to use a minimum of 151 litres/sec from BUN

The Group plans to begin construction of water pipeline from BUN to mine site by 1H2013

and intends for the pipeline to be operational prior to commissioning the first CHPP module

targeted for 2014

The Group is currently exploring additional water supplies complementary to BUN

Power Supply

Currently using diesel generator at mine site with plan to connect to the CES Grid to

provide sufficient supply for the Group’s operations until late 2013

The Group is completing a bankable feasibility study to develop and construct its own

300MW (two 150MW modules) power plant to meet its long-term power requirements

The power plant will be sufficient to supply all of East and West Tsankhi operation at steady

state production with excess capacity to be sold to other mines in the region, to the

Mongolian Central Grid and potentially to China via the OT Inner Mongolia grid connection


Expand production at the East Tsankhi coalfield 1

Develop the West Tsankhi coalfield to significantly increase output 2

Maximise sale prices by developing a CHPP to produce value-added products 3

Reduce costs by using low cost rail to export the coal products and taking advantage of

economies of scale 4

Cooperate with other South Gobi coal producers to develop regional transport

infrastructure 5

Develop a 300MW thermal power plant to supply the company’s power needs and create

an additional revenue source 6

Expand sales and marketing capabilities to broaden customer base, develop relationships

with end users and maximize price 7

Conduct sustainable operations in accordance with international best practice for

environmental, social and health and safety standards 8

Explore the potential to expand production through development of other ETT coalfields 9

FUTURE BUSINESS DEVELOPMENT STRATEGIES


Mine camp

SELECT PHOTOS


Mine pit from waste dump

SELECT PHOTOS (CONT’D)


SELECT PHOTOS (CONT’D) Seam 4 in Pit wall



Seam 4 thickness and low stripping ratio




In pit equipment Stripping operations




Coal ROM stockpile




Current waste dump




Open cut operations



Jigjidjav 8, 1st khoroo,

Chingeltei District

Ulaanbaatar, Mongolia

Tel: (976) 7011-8585

Fax: (976) 7011-9595


THANK YOU FOR YOUR ATTENTION

Business

23.05.2012 Introducing Tavan Tolgoi to the international markets, Graeme Hancock