A Forbes & Manhattan Group Company
Investor Presentation
July 2011TSX: FMC
EMERGING SOUTHERN AFRICAN COAL COMPANY
2
TSX: FMCDisclaimer
This presentation contains forward-looking statements under Canadian securities legislation. Forward-looking statements include, but are not limited to, statementswith respect to the development potential and timetable of the Magdelena and Aviemore projects; the Company’s ability to raise additional funds as necessary;the future price of coal; the estimation of mineral resources; conclusions of economic evaluations (including scoping studies); the realization of mineral resourceestimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures;success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks.Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases orstatements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements arebased on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost ofmining at the Company’s projects are based on assumptions underlying mineral resource estimates and the realization of such estimates; results of previous miningactivities at the projects, and detailed research and analysis completed by independent consultants and management of the Company; research and estimatesregarding the timing of delivery for long-lead items; knowledge regarding certain factors described in the technical report filed under the profile of the Companyon SEDAR. Capital and operating cost estimates are based on results of previous mining activities, research of the Company and independent consultants.Production estimates are based on mine plans and production schedules, which have been developed by the Company’s personnel and independentconsultants. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity,performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements, including but notlimited to risks related to: timing and availability of external financing on acceptable terms; unexpected events and delays during construction, expansion andstart-up; variations in ore grade and recovery rates; receipt and revocation of government approvals; actual results of exploration and mining activities; changesin project parameters as plans continue to be refined; future prices of coal; failure of plant, equipment or processes to operate as anticipated; accidents, labourdisputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that could cause actual resultsto differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated orintended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from thoseanticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake toupdate any forward-looking statements except in accordance with applicable securities laws.
Investors are advised that National Instrument NI 43-101 of the Canadian Securities Administrators (“NI 43-101”) requires that each category of mineral reserves and
mineral resources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Johan Odendaal,B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101 hasreviewed and approved the scientific and technical information contained in this presentation.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred ResourcesThe information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms arerecognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineralresources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of aninferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis offeasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will everbe converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or iseconomically or legally mineable.
3
TSX: FMCCompany Overview
Forbes & Manhattan Coal Corp.’s (“Forbes Coal” or the “Company”) vision is to build a high quality bituminous and anthracite coal company with potential
capacity in excess of 10 million tonnes (“M t”) per year
C o m p a n y S u m m a r y
Headquarters: Toronto, Ontario Total coal resource
(NI 43-101):
51.7 million tonnes Bituminous1
(measured and indicated)
35.7 million tonnes Anthracite1
(measured and indicated)
15.1 million tonnes Anthracite1
(inferred)
Number of
mines:
2 (Magdalena
and Aviemore)
Historical annual ‘run-rate’
production:
550,000 saleable tonnes
Mine location: Kwa-zulu, Natal,
South Africa
2-3 year target production: 900,000 saleable tonnes
Bituminous - Magdalena
340,000 saleable tonnes
Anthracite - Aviemore
Production capacity: 1.5 million saleable tonnes
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
4
TSX: FMCInvestment Highlights
Strategic assets in one of the best developed coal markets in the world
Substantial resource base of high quality bituminous and anthracite coal
Ability to TRIPLE production from historic levels using existing infrastructure and
capacity
In-place infrastructure to reach export corridors and growing domestic market
Substantial upside through organic production growth and opportunistic
acquisitions
Coal-focused management team sponsored by Forbes & Manhattan
5
TSX: FMCExperienced Management Team
Stephan Theron, B.Comm, CGA │President and Chief Executive Officer Extensive management, project finance and equity analysis experience in the mining, energy and infrastructure sectorsPrevious capital and project experience includes Weir PLC and AMEC PLCFormer sector head materials and energy with a specific focus on South African coal market
Malcolm Campbell ,Pr. Eng. (Mining) │Chief Operating Officer Fourth generation coal miner with 25 years industry experienceProfessional Certified Mining EngineerSkilled in operational management, turnaround strategies and business development Spent 20 years with Anglo Coal; held a variety of positions including Regional Manager for New Business Development and Strategy
Johan Louw, Pr. Eng. │Vice President, African Operations Capital project specialist with over 15 years experience in the Southern African mining and energy sectorsFormer project manager for Weir PLC and KBR Inc.Former senior plant metallurgist for Anglo Coal covering numerous export focused coal mines
Kuda Muchenje, │VP Exploration & Development Seasoned exploration geologist with over 15 years experience in the generation of exploration targets and
management of exploration and evaluation programs
Former Country Manager(Mozambique)for Rio Tinto
Deb Battiston, CGA │Chief Financial OfficerFinancial specialist with over 20 years experience in the mining sector
Bob Bentley, │Mining ManagerFormer Mine Inspector in Kwa-Zulu, Natal
Over 30 years of mining management experience
6
TSX: FMCDirectors
Stan Bharti, P.Eng. │ Executive Chairman
Business consultant and a professional mining engineer with more than 25 years experience
President of Forbes & Manhattan, Inc., a private merchant bank operating in Canada, the U.S. and
Western Europe, since July 2001
Stephan Theron, B.Comm, CGA , │ President and CEO
David Stein, MSc., CFA │ Director
Over nine years of asset evaluation, research and corporate finance experience
President and Director of Aberdeen International (seed investor in Forbes Coal)
Grant Davey, P. Eng. │ Director
Mining Engineer with close to 20 years experience in coal, platinum and gold mining industry
Previously held senior operational management roles for Anglo American in South Africa & Australia
David Gower, P. Geo. │ Director
Professional Geologist and the former Global Head of Nickel Exploration for Falconbridge
Ryan Bennett, M.Mining Eng. │ Director
Masters degree in Mining Engineering from the Colorado School of Mines
Extensive technical mining project analyses experience
Senior Partner of Resource Capital Fund, major shareholder in Forbes Coal
7
TSX: FMC Progress to Date
April 2010
June/July 2010
September 2010
December 2010
Completed NI43-101
Technical Report
Aviemore anthracite
mine reopened
at full capacity
Closed CDN$36 million
private placement at
$2.80/share
Completed RTO within 60 days, began
trading on the Toronto Stock Exchange
under the symbol “FMC”
Increased export capacity at
Navitrade Terminal at Richards Bay
Magdalena upgraded mining operations;
increased saleable production capacity by
330,000 tonnes per annum
March 2011
Closed CDN$42 million capital raise at
$4.55/share
Forbes Coal increased ownership in Slater
Coal to 76.75%
April 2011
Signed three year offtake
agreement with leading
energy trading company for
1.75 million tonnes of thermal
coal
Reported January and
February 2011 production
increases of 28%
May 2011
Released fiscal 2011 full year results: FMC
produced 648,000 saleable tonnes
(combined) and $16.5 million EBITDA (for 12
months ended February 28, 2011 at Slater
Coal properties)
June 2011
First fiscal quarter 2012
production increased of
45% and export sales
increased 61%
8
TSX: FMC Coal Markets Overview
• Thermal (bituminous) coal sold directly to independent industrial companies in South Africa
• Thermal coal sold at circa US$80 per tonne vs low quality coal sold to Eskom priced at US$20 - 30 per tonne
• Demands increasing from emerging Asian markets, especially India and China
• Indian government expecting domestic coal shortfall of approx. 112 million tonnes for year ended March 2012; 35% increase from previous forecasts
• South African coal exports to India increased 161% 2008 – 2009
• China imported165 million tonnes of coal in 2010, up 31% from prior year
Domestic
Export
• Aviemore one of four listed metallurgical (anthracite) coal producers in South Africa
• Cost-effective replacement for coking coal/coke
• Applications include iron ore pelletizing, PCI for blast furnaces, calcining for electrode manufacturing, ferroalloys and power generation
Thermal Metallurgical
Source: Company reports1. McCloskey Coal Report, March 22, 2 011
• Demand driven by the metal refining industry
• Asia dominates demand for anthracite coal
o 83% of global imports; 95% of expected export demand growth
• Pricing highly correlated with PCl coal prices
• Australian coal producers starting to settle PCl contracts at a record US$275 per tonne FOB for April –June quarter 1
9
TSX: FMCEstablished Mining Region
Source: Company reports
10
TSX: FMC
Company Outlook
11
TSX: FMC2010 – 2015 Mine Plan
Saleable Production1
• Increasing production: saleable production is expected to grow at a CAGR of 22% from 2010 to 2015
– Driven by expansion of production from the Magdalena and Aviemore underground mines
(000 t)
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
505
648
1,061
1,423
2010FY 2011FY 2012FY 2013FY
Bituminous Anthracite
12
TSX: FMCOrganic Growth Opportunities
Ramp up at Magdalena
• Double production
• FY2011 CAPEX: $9.7 million
• Estimated FY2012 CAPEX: $12.4 million
Increase wash plant recovery rates
• Improve from current level of 60% to 70%
• Investigate product upgrade potential
• FY2011 CAPEX: $1.5 million
• Estimated FY2012 CAPEX: $1.2 million
Aviemore anthracite operations
• Ramp-up saleable production to 500,000
tonnes/year(represents US$20.0M in incremental EBITDAbased on current forecasted price)
• FY2011 CAPEX: $0.16 million
• Estimated FY2012 CAPEX: $3.7 million
Source: Company reports, all figures in CDN $ unless otherwise indicated
13
TSX: FMCPositioned for Multi-Year Export Growth
Milestone agreement inked on December 7th increases export
capacity incrementally from 197,000 by 960,000 tonnes per annum
for a total export capacity of 1,157,000 tonnes in 2013.
SECURED ADDITIONAL EXPORT CAPACITY AT RICHARD’S BAY
SIGNIFICANT OFFTAKE AGREEMENT PROVIDES STEADY
CASH FLOW
Three year offtake agreement reached with global energy trading
company for 1.75 million tonnes (total) of thermal coal
Cash flow from offtake agreement to fund continued ramping up of production at the two operating mines
14
TSX: FMCExternal Growth Opportunities
Source: Company reports
Target consolidation in area
• 6 mining operators estimated in the region
• 2 acquisition opportunities
currently identified in Kwa-Zulu, Natal, South Africa
• Substantial enhanced upside by improving acquired business operating practices
• Increased export allocation and marketing advantage
• Synergy in product base and
cost savings with central management team
15
TSX: FMCMining Resource
NI 43 – 101 Global Resource1
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011.
• Recently completed NI 43 – 101 technical report calls for +20 year weighted life
of mine (“LOM”)
Measured Indicated Inferred MI & I
Magdalena – bituminous 51.7 - - 51.7
Aviemore – anthracite 1.6 34.1 15.1 50.8
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TSX: FMCMagdalena Bituminous Coal Operations
17
TSX: FMCMagdalena Bituminous Coal Operations
Location: • Dundee, Kwa-Zulu, Natal
Coal Type: • Bituminous
Resource1: • 51.7 million tonnes (measured and indicated)
Acres: • 4,557
Average BTU: • 12,250 BTU/lb
• 6,800 kcal/kg
Ash: • 15.0%
Volatility: • 16.7%
Saleable
Production:
• 2011FY2: 556,000 tonnes
• 2012FY2: 900,000 tonnes (estimated)
Mine Life1: • Approximately +20 years
Infrastructure: • Wash plant, processing plant
and siding
Asset Summary
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
2. Fiscal year-end February 28
Magdalena Operations and Site Layout
18
TSX: FMCMagdalena Bituminous Coal Production Profile
• Ramp-up on schedule
• New continuous miner arrived in December (further increase saleable
production capacity by close to 30,000 tonnes per month)
Magdalena Saleable Bituminous Coal Production1
(000 t)/February 28 year-end
299347 326
449485
556
900
1,003
2006 2007 2008 2009 2010 2011 2012E 2013E
Magdalena - open pit Magdalena - underground
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
19
TSX: FMCAviemore Anthracite Coal Operations
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TSX: FMCAviemore Anthracite Coal Operations
Location: • Dundee, Kwa-Zulu, Natal
Coal Type: • Anthracite
Resource1: • 35.7 million tonnes(measured and indicated)
• 15.1 million tonnes(inferred)
Acres: • 13,818
Average BTU: • 12,800 BTU/lb
• 7,100 kcal/kg
Ash: • 13.7%
Volatility: • 7.9%
Saleable
Production:
• 2011FY2: 92,000 tonnes
• 2012FY2: 161,000 tonnes (estimated)
Mine Life1: • Approximately +20 years
Infrastructure: • Wash plant, processing plant
and siding
Asset Summary
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
2. Fiscal year-end February 28
Aviemore Operations
21
TSX: FMCAviemore Anthracite Coal Production Profile
• Annual production capacity expected to hit 500,000 tonnes of saleable coal
per annum in FY2014
Aviemore Anthracite Coal Saleable Production1
(000 t)/February 28 year-end
1. As set out in “An Independent National Instrument 43-101 Technical Report for Forbes Coal on its Slater Coal Properties, KwaZulu-Natal Province, South Africa” with an effective date of March 1, 2011 and an issue date of March 27, 2011. A copy of the Technical Report is available under the profile of the Company on SEDAR at www.sedar.com.
59 62 61102
20
92
161
420
2006 2007 2008 2009 2010 2011 2012E 2013E
22
TSX: FMCCapitalization and Share Performance
Company Ticker TSX: FMC
Closing Price (July 5, 2011) C$3.39
Trading Range
(since September 27, 2010)
C$2.50 – C$5.01
Basic Shares Outstanding1 34.8 million
FD Shares Outstanding2 39.5 million
Market Capitalization (Basic) C$118 million
Market Capitalization (FD) C$134 million
1 Includes 2,700,000 performance warrants that convert into
common shares upon the company reaching certain
operating targets2 Includes 3,445,300 options with a weighted average
exercise price of C$5.35 per share, 763,887 broker warrants
convertible into common shares at an exercise price of
C$2.80 per share and expiring on January 23, 2012 and
480,000 broker warrants convertible into common shares at
an exercise price of C$4.55 per share and expiring on
February 22, 2013.
Share Performance Major Shareholders
• Forbes & Manhattan and
Management
• Resource Capital Fund
• RBC Global Asset Management
• Chilton Resource Fund
23
TSX: FMCComparable Trading Analysis
Comparable Trading Analysis
Note: As of June 3, 20111. Pro forma acquisition of Massey Energy Inc.2. Pro forma acquisition of International Coal Group3. International Coal Group is shown prior to announcement of acquisition by Arch Coal announced on May 2, 2011
4. Note: Riversdale Mining is shown pre-announcement of offer by Rio Tinto on December 6, 20105. Note: Gloucester Coal is shown pro forma A$585 million acquisition of Donaldson Coal and A$30 million (with contingent share payments) acquisition of Monash Group6. Forbes Coal’s operating forecast are based on Canaccord Genuity Research estimatesSource: Consensus estimates and company reports
Market Cap EV
Company (US$M) (US$M) 2011E 2012E 2011E 2012E
U.S. Coal Producers
Alliance Resource Partners LP $2,560 $2,946 5.1x 4.7x 6.1x 5.4x
Alpha Natural Resources Inc.1
$11,339 $13,283 6.4x 5.0x 8.0x 5.5x
Arch Coal2
$4,487 $9,228 6.7x 4.9x 4.7x 3.2x
Cloud Peak Energy Inc. $1,205 $1,455 4.3x 3.9x 4.7x 4.4x
Consol Energy, Inc. $11,389 $14,622 8.2x 6.3x 9.2x 7.2x
International Coal Group3
$2,252 $2,399 7.3x 4.8x 9.8x 7.6x
James River Coal Co. $720 $1,058 3.8x 4.1x na na
Natural Resource Partners LP $3,762 $4,460 15.2x 13.3x 13.3x 13.5x
Oxford Resource Partners, LP $535 $647 8.8x 6.6x 13.2x 9.4x
Patriot Coal Corporation $1,977 $2,170 6.2x 3.5x 8.1x 4.1x
Peabody Energy Corp. $16,030 $16,492 6.7x 5.4x 9.2x 7.1x
Rhino Resource Partners LP $612 $642 7.2x 5.6x 7.0x 6.1x
Xinergy Ltd. $225 $297 5.6x 2.4x 8.9x 3.3x
U.S. Coal Producers Average (excluding high and low) 6.6x 5.0x 8.4x 6.0x
African Coal Producers
Coal of Africa Limited $678 $680 5.6x 2.8x 12.3x NA
Exxaro Resources $8,194 $8,523 7.3x 5.8x 6.5x 5.0x
Keaton Energy $75 $37 NA NA NA NA
Optimum Coal $1,103 $1,006 3.8x 3.2x 4.2x 3.5x
Petmin Limited $244 $214 4.3x 3.2x NA 0.0x
Riversdale Mining4
$3,290 $2,765 40.5x 16.0x 45.0x 23.1x
African Coal Producers Average (excluding high and low) 5.7x 4.1x 9.4x 4.3x
Other Coal Producers
Cline Mining $549 $526 7.0x 2.0x 7.6x 2.6x
Coal & Allied Industries $10,034 $9,757 7.7x 7.1x 9.6x 8.8x
Gloucester Coal5
$1,861 $1,940 9.4x 6.9x 8.9x 7.2x
Grande Cache Coal $801 $851 5.5x 4.1x 5.3x 3.7x
MacArthur Coal $3,633 $3,152 7.8x 5.6x 10.9x 8.5x
Walter Energy6
$7,447 $9,953 5.8x 5.8x 6.9x 5.2x
Other Coal Producers Average (exluding high and low) 7.1x 5.6x 8.3x 6.1x
Overall Average (excluding high and low) 6.9x 5.2x 8.5x 6.1x
Forbes Coal (C$)6
$113 $128 2.7x 1.6x 2.2x 1.6x
Forbes Coal - Discount to Comparables (61%) (69%) (74%) (74%)
EV / EBITDA P/CFPS
• Forbes Coal trades at a significant discount to comparable coal producers on an EV/EBITDA and P/CF basis
24
TSX: FMCSummary
Currently producing high quality bituminous and anthracite coal
Plans to organically TRIPLE production from historic levels to 1.5 million saleable
tonnes per annum in two to four years
Export capacity at Richards Bay Coal Terminal to increase incrementally to
1,157,000 tonnes per annum by 2013
Offtake agreement with global energy trading company provides cash to fund
ramp up at two operating mines
Growing demand for coal from emerging markets
Looking at potential acquisition opportunities in the region
Strong balance sheet and coal-focused management team
25
TSX: FMC
Appendix
26
TSX: FMCSouth Africa – Overview
• South Africa is the most attractive country in
Africa which to do business according to Ernst
& Young 2011 Africa Attractiveness Survey
• Modern infrastructure system supporting
distribution of commodities for both domestic
and export markets
– Extensive rail network (10th longest in
the world)
– Majority of electricity generated via
coal fired power stations
– Richard’s Bay port in South Africa is the
world’s largest bulk coal terminal
• 91 million tonne capacity
• Coal railed from approximately
49 mines
• Long history in resource development
– World’s largest PGM & ferrochrome
producer
– Significant coal, iron ore and
manganese resources
Richard’s Bay Port
World’s Largest Coal Terminal
27
TSX: FMCHistorical Coal Prices
• South African thermal coal (Richard’s Bay terminal) and coking coal prices have increased significantly
over the last several months
• The recovery to 2008 levels have been driven by increased demand, particularly from China and India,
and higher cost supply from key producing nations such as Russia and the U.S.
Historical South African Thermal Coal and PCI Coal Prices
$0
$50
$100
$150
$200
$250
$300
$350
Jan
-07
Ma
r-0
7
Ma
y-0
7
Jul-0
7
Se
p-0
7
No
v-0
7
Jan
-08
Ma
r-0
8
Ma
y-0
8
Jul-0
8
Se
p-0
8
No
v-0
8
Jan
-09
Ma
r-0
9
Ma
y-0
9
Jul-0
9
Se
p-0
9
No
v-0
9
Jan
-10
Ma
r-1
0
Ma
y-1
0
Jul-1
0
Se
p-1
0
No
v-1
0
Jan
-11
Ma
r-1
1
Ma
y-1
1
Jul-1
1
(US
$/
ton
ne
)
Richards Bay Thermal Coal Spot Price McCloskey/Xinhua Infolink's Coking Coal Price
Source: Bloomberg
28
TSX: FMCThermal Coal Global Overview
• Significant upside potential to export prices
• A tightening of the global seaborne market in late 2010 provided the initial base for thermal coal to rise
• Robust import demand from India
• Growing imports into China due to increasing demand and production curtailments
• Slowing export supply growth from Indonesia as more coal is diverted for domestic use
• Short-term supply constraints caused by flooding in Australia
• Australia is the second-largest exporter of bituminous coal
• Wood Mackenzie stated that prices could exceed 2008 highs
Global Thermal Demand and Supply Forecast
Source GTIS, Macquarie Research, February 2011
29
TSX: FMC
• Global thermal trade flows show India and China as major global importers of thermal coal
• South Africa exported an estimated 23 million tonnes of thermal coal to India in 2010
Thermal Coal Global Overview
30
TSX: FMCThermal Coal Global Overview
• India will be relying heavily on coal fired power plants in the near future
31
TSX: FMCThermal Coal Global Overview
• As a result of reliance on thermal power generation, Indian thermal
exports are expected to rise significantly
Source GTIS, Macquarie Research, February 2011
32
TSX: FMCThermal Coal Global Overview
• Chinese thermal coal imports have been robust; this trend is expected
to continue into the near future
33
TSX: FMC
Global Thermal Demand and Supply Forecast
Metallurgical Coal Global Overview
• The coking coal market was fundamentally tight prior to the Queensland, Australia floods, which have added considerable fuel to the fire
• Current situation highlights the lack of geographical diversity to supply side portfolio, leaving it prone to shocks
• Market deficit likely to prevail, keeping price at decent premium to cost support
• Requirement for projects in high geopolitical and infrastructure risk regions will keep long-term prices elevated
Source GTIS, Macquarie Research, February 2011
34
TSX: FMCMetallurgical Coal Global Overview
Source GTIS, Macquarie Research, February 2011
Many metallurgical coal basins exist, however there is a challenge in
bringing new projects online
35
TSX: FMCMetallurgical Coal Global Overview
• Supply growth in 2011 is set to be much lower than in 2010, while key
regions increase demand
36
TSX: FMC
• Global anthracite coal demand driven by the metal refining industry
– Cost-effective replacement for coking coal/coke
• Emerging markets consuming the most steel
• China is the world largest steel producer
– Accounts for 44% of global steel production
– Expected to sustain steel consumption growth of 6%-8% annually
• China accounts for 52% of the world’s coking coal consumption
– Imports more than half of coking coal consumed from export markets
Global steel consumption: Macquarie Commodities Research February 2011
Increasing steel
production and
consumption
drives demand
for anthracite
coal
Metallurgical Coal Global Overview
37
Stephan TheronPresident & CEO
Forbes & Manhattan Coal Corp.
Tel: + 1 416 861 5912
www.forbescoal.com
July 2011
CONTACT INFORMATION
65 Queen Street West, Suite 815 P.O. Box 71, Toronto, Ontario, Canada, M5H 2M5
Sabina SrubiskiInvestor Relations Manager
Forbes & Manhattan Coal Corp.
Tel: + 1 416 309 2957
www.forbescoal.com
TSX: FMC