Tuesday 16th April, 2013

MASHALE PHUMAPHI Managing Director - Shumba Coal

INTRODUCTION

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Background to Shumba Coal

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Shumba Coal is a Botswana Stock Exchange listed Batswana owned and managed coal exploration company.

Experienced management team with 100 years of mining experience

The focus of the company is the acquisition and development of highly prospective coal exploration licenses in Botswana.

The objective of the management team is to develop the production and sustainable supply of thermal coal in Botswana.

Shumba Coal has a portfolio of coal exploration assets in Botswana at various stages of development.

The most advanced is the Sechaba Thermal Coal Project (“Sechaba”).

The company is well funded to complete a Preliminary Feasibility and Full Environmental Impact Assessment at Sechaba in the coming 12 months

Investment objectives

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Shumba Coal only intends to secure assets with a route to early low cost production

Shumba Coal intends to list on recognised stock exchanges

This will provide liquidity to investors as well as increasing funding options for the projects being developed.

One of the key objectives of Shumba Coal is to ensure significant diversified Botswana citizen participation in the ownership of Botswana’s coal assets. How?

• Listing on the Botswana Stock Exchange (“BSE”) allows Batswana to trade shares

• Only majority Batswana owned listed company in the mining sector.

• Currently have over 200 local shareholders including 8 pensions

• Shumba Coal has “Local Asset Status” and thus it will also qualifies to be treated as a local investment by local funds

LISTINGS

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Listing on the BSE and SEM

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Shumba Coal is currently listed on the BSE.

Once the listing is completed, Shumba will be the first Primary listed coal exploration company on the BSE.

Raise the regional profile of Shumba Coal and its brand

It is the intention of the management of Shumba Coal to pursue a dual listing of the company on the Stock Exchange of Mauritius (“SEM”) shortly after the BSE listing is concluded as the first Botswana/Mauritius cross listing.

Benefits of the Stock Exchange of Mauritius

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At the New York Stock Exchange (“NYSE”) African Investor Index Series Awards on 21 September 2012 the SEM was presented the award as the ‘Most Innovative Stock Exchange’.

Approximately 40% of stock traded on the SEM in by foreign investors.

Shumba shares will be traded and settled in United States Dollars.

World-class stock exchange infrastructure.

State-of-the art Automated Trading System.

Listing Rules based on JSE Securities Exchange and LSE requirements.

A well developed institutional and retail investor base.

SEM Granted Designation As A Recognised Stock Exchange By The United Kingdom joining the ranks of the NYSE, LSE, ASX, TSX and JSE.

SECHABA THERMAL COAL

PROJECT

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Coal Fields of Botswana

Sechaba Drill Core

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Sechaba Core Sample

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Project Specifications

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Project acquired in December 2011.

4,000 m of drilling programme successfully completed in 2012/2013.

Approximately 1 billion tonnes (JORC Compliant) of good quality export thermal coal delineated.

Two main coal seam horizons defined, one suitable for high quality export thermal coal and the other suitable for high quality thermal coal (similar to Morupule Colliery).

Results to date have confirmed that the MMS is well developed in the area being explored 3-4m in thickness and is likely to be unweathered even as shallow as 20m.

Potential opencast block identified, containing the Taukome Bright seam at relatively shallow depths.

Over 150 boreholes drilled at Project.

Plan at Sechaba Project is to build a mine to supply coal to a nearby Powerstation in 2016, and to expand operations to export coal via rail once the required infrastructure is in place.

Samples from both Seams

MARKETS FOR SHUMBA’S COAL

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1. Export Market

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Export market

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Export Markets

o Growing global thermal coal deficit.

o 39GW under construction in India.

o Botswana coal is currently being sold to regional power producers in Namibia and South Africa

Railway developments

o Transnet Freight and Rail have commenced a feasibility study for a rail link between Botswana and South Africa as part of the current heavy haul expansion in Limpopo's Waterberg to bring coal from Botswana. In the next couple of months Transnet plans to rail Botswana to Durban for export

o The first dedicated export coal train from Botswana has exported coal using exisiting rail via Zimbabwe to the Matola Coal Terminal in Mozambique consisting a train of 34 wagons which carried 1,600 tonnes of coal. Grindrod is keen to see the utilisation of this route as it is currently expanding its Matola Port

o Two consortia intend to construct two separate rail way lines. The Trans-Kalahari route shall terminate at ports in Namibia and the Ponto Techobanine rail route will terminate at the Mozambique port.

2. The Regional Power Situation

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Situation of Regional Power Market?

Opportunity in Regional Power Market

• The South African economy has been growing in excess of 3- 5% per year. This growth rate has resulted in a situation where ESKOM, southern Africa’s major generating utility, no longer has sufficient surplus generating capacity.

• Leading coal industry experts, Wood Mackenzie believes that there is a massive potential power deficit that could emerge in South Africa with a potential capacity shortfall of up to 32,000MW by 2030. Eskom has struggled to meet supply and growth and end users are now seeking alternative suppliers outside of Eskom.

• In SADC, Namibia and Zimbabwe have historically been power deficit countries. It is likely both will remain net importers of power until at least 2019. Zambia is expected to run short of power as its mining sector grows. Combined; these three countries will have a power deficit of nearly 4,000MW of capacity by 2030.

• Eskom’s average tariff adjustments have meant an 150% price increase in the last 4 years and there is a 100% price increase planned over the coming 5 years.

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SAPP (Southern African Power Pool)

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Eskom’s average tariff adjustments

Year Average price

adjustment CPI

01-Jan-97 5,00% 8,62%

01-Jan-98 5,00% 6,87%

01-Jan-99 4,50% 5,21%

01-Jan-00 5,50% 5,37%

01-Jan-01 5,20% 5,70%

01-Jan-02 6,20% 9,20%

01-Jan-03 8,43% 5,80%

01-Jan-04 2,50% 1,40%

01-Jan-05 4,10% 3,42%

1 April 2006/7 5,10% 4,60%

1 April 2007/8 5,90% 5,20%

1 April 2008/9 27,50% 10,30%

1 July 2009/10 31,30% 6,16%

1 April 2010/11 24,80% 5,40%

1 April 2011/12 25,80% 4,50%

1 April 2012/13 16,00% 5,20% (projected)

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Source: ESKOM Eskom Prices up 150% in the last 4 years and will double again in next 5 years!!!

3. How Power Generation would compliment coal

exports

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Products of washing coal for export

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Mine Economics

1. All projects can economically produce coal solely for

mine mouth power stations alone

2. From review of feasibility studies the most profitable

operations are those that produce an export product

and are able to burn their middlings

3. The second best economics are for Coal mines

producing feed for Mine Mouth power stations

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QUESTIONS?

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