Zimbabwe Mining and Energy

Strictly confidential – Onward Distribution is not permitted

Enquiries may be directed to

Ryan Long Tel. +35699344338

Email: ryan@africanlionholdings.com

Leveraging a cash investment, a country and valuable resource

Without Capex you cannot monetize mining resource

A country rich in resource with no investment is in an equal position to a country with no investment and no resource!

The only requirement to “enable” the country with resource is the investment required to monetize/beneficiate its resource at which point a degree of self-

sustainable growth can be reached

A country struggling for investment would be willing to make a greater effort to encourage investors to invest

The right assets with the right commitment from the country’s government and the required investment can create a perfect investment scenario which

presents a win-win situation to all stakeholders

2

Our Value Added

Regional expertise on Zimbabwean mining industry enabled access and cherry-picking of key assets

Expertise beyond just Zimbabwe and are regularly offered M&A deals across Africa and sometimes even Europe and Latin America

We have early-mover advantage with years of preparatory work specifically on Zimbabwe

A fully legally compliant Zimbabwean indigenized structure

No politically exposed or sanctions hit individuals or properties

Strong human capital with strong local knowledge that is highly respected at Government and corporate level

Strong access and relationships to Government who have bought into our investment approach

3

The Integrated Business Vertical

BORDERLESS Chromite/coal/gold/tantalite

resource

ZIMBABWE SMELTER

PLAN B SALES OF

CHROMITE GOLD

TANTALITE

SALES OF FERRO-

CHROME

COAL POWER PLANTS BOT or

OWNERSHIP

COAL

SUPPLY

1.6M TPA

POWER

SUPPLY

OFFTAKE

CHROMITE MINING CAPACITY

ORE SUPPLIES MANAGED TO

REQUIRED DESTINATION

ORE

EXPORT

HIGH VALUE

FERROCHROME

AND OTHER

SMELTER

PRODUCTS

POWER SALES

Minimalized due to B+

Country rating

4

IDEAL SCENARIO WITH OFFTAKE

FULLY INDIGENIZED PRIVATE EQUITY STYLE STRUCTURE

PUTTING TOGETHER RESOURCE, IDEAS, KNOW-HOW, EXPERIENCE

AND FINANCIAL CAPABILITY

ZIMBABWE SMELTER

BORDERLESS Shareholding

Indigenization

Shareholding

Indigenization

5

Margin

Shareholding

added value

Active

replacement of

guarantees

from margins

on offtake

Required Investment

$500million for a 40% shareholding for chrome and coal projects

• Investment sufficient for self-sustained growth

• Allows for a small war-chest for possible add-on assets and geo surveying to identify PGM and Base Metal opportunities on existing concessions

6

Zimbabwe Facts

Starved for investment

Lowest African illiteracy rates

Fast improving healthcare

Mining not supported by from Supranational and Sovereign investors

OECD Cat. 7 with no export credit financing from key countries

Sanctions limited only to a list of people

Regional mood much more positive towards Zimbabwe when compared to South Africa

100% support and political will to enable beneficiation and bring in investment

Abundant Labour and entrepreneur supply

Resources diversity, quantity and quality

Cheap mineable resource almost untouched

One of Africa’s largest coal reserves!

Solid 5 year plan to be net-power exporters

Landlocked so un-beneficiated resource export expensive

People hungry to prove themselves and to put past mistakes behind them

Early-mover advantage means we have secured exceptional assets and deals

7

Mineralogy 40 minerals/ mineral-based commodities produced.

Several billion tones of Coal reserves

7th largest producer of lithium (2%)

6th largest producer of chrysotile asbestos (4%) and vermiculite (2%)

PGM’s and chrome form the principal endowments.

13% of world’s total chromium reserves

80% of world’s metallurgical grade chromite

Second largest producer of PGM’s after South Africa

Ranked fourth for platinum (2.3%) and fifth for palladium and other PGM’s (1.7%).

Gold production Zimbabwe tenth largest gold producer in Africa

Diamonds Zimbabwe was rated as the seventh largest producer in Africa.

8

Road, Rail and Port Infrastructure

9

MOZAMBIQUE PORTS INFO

Regional Power Situation

10

No. Country Utility

Installed

Capacity

[MW] As at

Feb 2014

Available

Capacity

[MW]

Feb 2014

Forecast

Demand

Capacity

Shortfall

including

reserves,

MW

Calculated

Reserve

Margin, %

1 Angola ENE 2,028 1,805 1333

2 Botswana BPC 352 322 580

3 DRC SNEL 2,442 1,268 1342

4 Lesotho LEC 72 72 138

5 Malawi ESCOM 351 351 323

6 Mozambique EDM /HCB 2308 2,279 763

7 Namibia NamPower 501 392 635

8 South Africa Eskom 44,170 41,074 38775

9 Swaziland SEC 70 70 222

10 Tanzania TANESCO 1380 1,143 898

11 Zambia ZESCO / CEC/LHPC 2,128 2,029 2287

12 Zimbabwe ZESA 2,045 1,600 2267

57,847 52,405 49,563 (4,592) 5.4%

54,088 49,106 47,009 (2,787) 4.3%

TOTAL SAPP

Total Interconnected SAPP

Capacity

Announcements

Sino Hydro 1GW

capacity increase coal

and hydro

Middle Eastern company

indicated interest to

install 450MW capacity

We are looking at options to be energy neutral including a coal plant or potential Coal

bed methane options on our own property. However the domestic picture appears quite

promising since planned capacity in the 5 year plant would deliver required power in

absence of own power

The Chromite and Coal Play

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Uses of Chromite

Chromite Ferrochrome Stainless Steel

Chromite lumpy, fines exported or processed

Briquetting, pelletizing

Foreign Smelters

High Quality Chromite

Concentrate

Pure chromium compounds

Chrome plating and other

applications

Ferrochrome recipe

One Tonne Ferrochrome

From Smelter

Coking coal

1 Tonne

Chromite ore

2-3 Tonnes

Power

3.6MW

Scale Of Production- 1million tonnes per annum

Roughly 3 million tonnes chromite for 1million tonnes of Ferrochrome production

Capex of $650 million on smelters required to reach 1million tonne output before factoring in mining and power capex

Zimbabwe has not achieved such Chromite production output to date, however our model and in-house expertise should allow us to be the number 1 producers in Zimbabwe

Zimbabwe’s should target at least 10-15% of the 14million TPA market or1.5-2 million TPA Ferrochrome

Chrome Exports to enable Beneficiation

Chromite exports will grow the chromite mining production volumes with immediate returns for the capex outlay since the product can be at clients and payments settled in a month

Smelter production requires 15 month lead time to initiate and this means we would require flexible export delivery schedules that enable us to better manage mining output and divert production towards our own smelters

We cannot simply switch off chromite production from mines since this is the area where heavy employment occurs, however we can time mining capacity upgrades to coincide with export deals being concluded and subsequently shift mined product to smelting capacity upgrades

Whether beneficiated in country or exported, chromite production is the area which will ensure employment levels achieved within the industry become significant

Maintaining our Natural Advantage

Mineral resource grade gives higher margins in final product and therefore Zimbabwean ore provides a competitive advantage

Our chosen ore offtake partners will benefit from a reduced competitive advantage due to logistics overheads, however will still benefit from significant upside

Maximizing efficiencies with the best model and continued investment, and integrating supply chain ensures we secure our advantage

OWNING THE ENTIRE SUPPLY CHAIN

CHROMITE MINING

Offtake for internal and external clients with priority on developing a consistent quality product leveraging all the dyke with non-beneficiated and lightly beneficiated products

Capex of around $40-60million

COKING COAL

Leveraging a low sulphur, low phosphorous coal plant to deliver fuel for power plant and coking coal for smelting possibility of supply third parties

Capex of around $40million

POWER

Achieving self-sufficiency on Power enabling company to limit the impact on local power with 3.6MW power per Tonne of Ferrochrome

Capex $3-700/tonne depending on chosen technology

SMELTING Requires roughly $1million / 1500 tonnes annual

output

Our initial target 100-200,000

tonnes

Advantage of Integrated Model

Reductant (coking coal), Power (up to

3.6MWh/tonne), Ore (chromite)

Low sulphur and low Phosphorous coal can

deliver reductant (coking coal) and also serve as a

source of fuel for a power plant

Power plant on site uses Carbon Monoxide Off Gases and saves 25%-35% of the

fuel costs

Capex made knowing resource for feedstock is

there for decades Predictability of costs

Ability to scale up and scale down as required any

production

Improving efficiency-Improving competitiveness

Higher Efficiency

and greater margins

Power plant next to smelter requires transport of coal,

however, using off-gasses from smelting delivers 25-35% fuel

savings

Proper selection and blending of chromite fed into smelter can improve yield and

efficiency

Correct plant selection and introduction of

specific improvements can reduce power costs

and improve yields Hub structure with local processing limits

transport volumes to higher premium

product

Improving rail efficiency lowers the carbon

footprint of the delivered product

whether this is coking or thermal coal, or

chromite

Capex Investment for Integrated model

350

20

60

650

CAPEX ALLOCATION IN $/Tonne FeCr Production BASED ON 1 MILLION TONNES PER ANNUM FeCr OUTPUT

Sourced from$200million injection and reinvestment of over $800million

POWER CHROMITE SUPPLY CHAIN THERMAL/COKING COAL SUPPLY CHAIN SMELTING

Return on Capex

40%

300%

80% 90%

0%

50%

100%

150%

200%

250%

300%

350%

Power Chromite Mining andprocessing

Coal (Coking and Thermal) Smelting

Project return on Capex based on debt free model

Power Chromite Mining and processing Coal (Coking and Thermal) Smelting

Effect of Grade on Beneficiation Facts

A 2:1 Cr:Fe ratio is required to achieve >60% Cr

contained FeCr, Zimbabwe grades between 2-3.6:1 are

in good supply

S.A which has Cr:Fe ratios of 1.3-1.7:1 which yield, only once upgraded, 56% FeCr.

Zimbabwe Cr2O3 content > 42% whereas S.A. is making use of grades as low as 25%

better grades are usually mined at $100/tonne

minimum in S.A.

Since Zimbabwe’s high grade lumpy and fines are

relatively untouched, so, extracting ore at $50 in open

cast mining is still possible

Higher grade of ore also means less ore is required

A >60% Cr contained FeCr will achieve a price premium

of $0.12/Lb on the market

A high Cr:Fe ratio also means that your reductant is going towards reducing Cr and not

Fe oxides

Higher quality feedstock means less power required to produce an equivalent

amount of Cr contained FeCr since less impurities take up

power and reductant

Chromite Pricing Formula Maintaining a competitive advantage in price war

FeCr PRICE ($0.98-1.10/Lb Cr contained 56-65% FeCr depending on Cr:Fe ratio in ore)

150 150

500 600

280 500 240 240

169 169

288

288

200 200

200 200

200

200

100 100

30 30

100

100

200 200

200 200

200

200 683 469 108

374

139

285

ZIMBABWE $1.1/LB 65%

ZIMBABWE $0.95/LB 65%

CHINA $0.98/LB 56%

CHINA/ZIM ORE $1.1/LB 65%

SOUTH AFRICA $0.98/LB 56%

SOUTH AFRICA/ZIM ORE

$1.1/LB 65%

COST MARGIN COMPARISON

CHROMITE POWER REDUCTANT TRANSPORT OTHER MARGIN

Aggressive pricing to gain market-share

Our cost model means we could in theory enter into LTSA with

several off takers at prices other companies simply cannot

approach thereby securing offtake for 100% of production

Since FeCr is a key ingredient and a major cost in production of Stainless steel, the demand is

surely there

We believe no country could compete in a price war meaning our plants can afford to run 24/7

at full production

CAPEX IMPACT- Economic game changer

CAPEX for 1million tonne output approximately

$700million

40,000 jobs created per million TPA in coal and

chromite mining, smelting, logistics and services plus

ancillary jobs

20% additional GDP creation over and above

export value of ferrochrome and chromite

resource export

GDP upside would be around $1.6billion or 10%

increase

OUR RESOURCE BASE

Chromite

• Over 300million tonnes within 45km2 of Great Dyke concessions having >42% Cr2O3 and greater than 2:1 Cr:Fe ratios

Coal

• >1billion tonnes confirmed in a concession with up to 7billion tonnes inferred. Total resource is approx. 35% open cast and there is also potential for Coal Bed Methane

26

The Numbers Plan A Chromite/Offtake*/Smelting/Coal/Power

27

ITEM Start Q2 Q3 Q4 End Yr 1 2016 Q1 Q2 Q3 Q4 End Yr 2 2017 Q2 Q3 Q4 End Yr 3 2018 Q2 Q3 Q4 End Yr 4 2019 Q2 Q3 Q4

OLD Smelting( Thousands Tonnes/Quarter) 0 0 0 0 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30

New Smelting (Thousands Tonnes/Quarter) 0 0 0 0 0 20 20 20 20 40 60 80 120 120 160 240 360 360 360 400 480 480 480

Total Capacity 0 50 390

Power offtake Old GWh 0 0 0 0 108 108 108 108 432 108 108 108 108 432 108 108 108 108 432 108 108 108 108

Power offtake New GWh 0 0 0 0 0 72 72 72 216 144 216 288 432 432 576 864 1,296 1,296 1,296 1,440 1,728 1,728 1,728

Power production balance point 24/7 peak power 0 0 0 0 50 83 83 83 83 117 150 183 250 250 317 450 650 650 650 717 850 850 850

Power Production MW PEAK 0 0 0 0 0 0 0 700 700 700 700 700 700 700 700 700 700 700 700

Power Plant capacity upgrade MW PEAK 0 0 0 0 0 0 0 0 0 0 0 700 0 0 0 0 0 0 0 0 0 0 0

Net offtake/uptake MW PEAK 0 0 0 0 105 175 175 175 175 245 315 -1,086 -946 -946 -806 -526 -105 -105 -105 35 315 315 315

Coal Mining output (Thosands Tonnes/Quarter) 0 0 0 0 0 0 0 0 0 0 0 0 250 250 250 250 250 250 1000 250 250 250 251

Coking coal (Thousands Tonnes/Quarter) 0 0 0 0 30 50 50 50 180 70 90 110 150 420 190 270 390 390 1,240 430 510 510 510

Chromite smelting volume 0 0 0 0 90 150 150 150 540 210 270 330 450 1,260 570 810 1,170 1,170 3,720 1,290 1,530 1,530 1,530

Chromite offtake volume 50 200 400 650 710 950 950 950 3,560 890 830 770 650 3,140 530 290 0 0 820 0 0 0 0

Chromite Total volume 50 200 400 650 800 1,100 1,100 1,100 4,100 1,100 1,100 1,100 1,100 4,400 1,100 1,100 1,170 1,170 4,540 1,290 1,530 1,530 1,530

Export revenue 8 32 64 104 114 152 152 152 570 142 133 123 104 502 85 46 0 0 131 0 0 0 0

Export cost 5.5 22 44 72 78 105 105 105 392 98 91 85 72 345 58 32 0 0 90 0 0 0 0

Chromite mining capex $MM $ 5 $ - $ - $ - $ 5 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Old Smelting Capex $MM $ - $ - $ 20 $ 40 $ 60 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Legacy payments $ - $ 18 $ - $ - $ - $ 18 $ - $ 18 $ - $ - $ - $ -

Smelting Capex $MM $ - $ - $ - $ - $ - $ 48 $ - $ - $ - $ 48 $ 48 $ 48 $ 96 $ - $ 96 $ 192 $ 288 $ - $ - $ 96 $ 192 $ - $ -

Power Capex $MM $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 500

Coal Mining capex $MM $ - $ - $ - $ - $ - $ 30 $ - $ 30 $ - $ 60 $ 30 $ - $ - $ 30 $ 30 $ - $ - $ - $ 30 $ - $ -

CASH $MM $ 100 $ 95 $ 98 $ 88 $ 88 $ 50 $ 73 $ 3 $ 51 $ 51 $ 130 $ 151 $ 169 $ 227 $ 227 $ 240 $ 257 $ 245 $ 195 $ 195 $ 419 $ 286 $ 405 $ 217

Equity injection/Dividends $ - $ - $ - $ - $ - $ - $ -15 $ - $ - $ -15 $ -300

Short/Med-Term Financing $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Production costs $MM $ 5.5 $ 22 $ 44 $ 0 $ 102 $ 144 $ 144 $ 144 $ 142 $ 153 $ 162 $ 172 $ 190 $ 283 $ 208 $ 245 $ 308 $ 308 $ 774 $ 340 $ 403 $ 403 $ 403

Revenue $MM $ 8.0 $ 32 $ 64 $ 104 $ 156 $ 222 $ 222 $ 222 $ 640 $ 241 $ 259 $ 277 $ 314 $ 713 $ 351 $ 425 $ 547 $ 547 $ 678 $ 603 $ 715 $ 715 $ 715

Margin $MM $ 3 $ 10 $ 20 $ 33 $ 54 $ 78 $ 78 $ 78 $ 288 $ 87 $ 97 $ 106 $ 124 $ 414 $ 143 $ 180 $ 238 $ 238 $ 799 $ 263 $ 312 $ 312 $ 312

CHROMITE MINE SELF-SUSTAINS GROWTH THANKS TO $10/TONNE MARGIN PRICED INTO MODEL

MODEL ASSUMES NO DEBT RAISING IS POSSIBLE THROUGH SMELTER SUPPLIERS OR OTHER FINANCING ROUTES

Leveraging external producers to the maximum

TURNOVER BASED ON 95% NAMEPLATE OUTPUT FINAL CAPEX ON SMELTERS SUBJECT TO NEGOTIATION AND CONDITIONS COAL ASSETS

POWER ASSUMED AT $75/MWh however power should be lower in year 3 CHROMITE MINING

MARGIN IS EBITDA SMELTING ASSETS

MILLIONS USD POWER BUILD OPERATE AND TRANSFER

CASH- EQUITY INJECTION REPAID WHEN SUFFICIENT CASH FLOW PERMITS FINANCING REQUIREMENTS

INVESTOR SHORT TERM FINANCING MAINLY REQUIRED FOR GUARANTEES FOR CAPEX/CASH FLOW TO SUSTAIN OPERATION DURING RAMPING-UP PHASE POWER ASSETS

* Export ban is now lifted

Target Asset snapshot by year 5

>5% of world’s chrome reserves within the portfolio worth multi-billion USD

>1 million TPA ferrochrome and other smelted products output

>1TPA Gold output

Valuation in excess of $5billion for entire group based on approx. $1billion P/L and P/E of 5

3MMTPA Coal mine output with possible roll-over into CTL

500-1000MW Power plant owned by group

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Upside to Zimbabwe by Year 5

Company valuations are effected by main country exposure

Creation 50,000 well paid jobs

Contributing an increase of 10-15% in GDP

And a 10-digit contribution towards reducing trade deficit

Considerable tax and Royalty revenue steams for Government.

Help Communities through key tribute agreements

All the above reduce credit risk and increase credit worthiness of country

We can impact valuation by impacting country due to small size of economy!

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Asset Valuation- What is it worth?

Mechel/Yildirim deal valued at $20/tonne or $15/tonne if one considers replacement value of furnaces

Our proposed chromite portfolio would be worth over $1.2billion with a $300million investment in smelters, based on open cast reserves and smelting capacity

$7.2billion based on entire portfolio of assets (not only open castable) and a cumulative investment/reinvestment of $1billion in smelting capacity

Coal asset within the ferrochrome value chain can be priceless since it guarantees security of supply and price visibility of power and Coking coal and guarantees higher margins on finished ferrochrome

Significant upside on specific concessions and PGM potential not factored in

30

SUMMARY OF REQUIREMENT Without Offtake

$200million total requirement

$50million to secure chromite and coal groups enters within deal (Year 1)

$100million to secure first smelter (80% from Q3 after IPO)

$20million for various capex projects across different mines and to secure specific properties (low investment, high upside)

$30million balance to cover fees, operational cash flow and guarantees required for future orders of smelters

31

Tantalite Add-on We have in place also a very inexpensive tantalite project

This requires under 1million in financing and can deliver the full capex repayment in months

We also have offtake deals which can be tapped at competitive prices

32

Gold Add-on Gold asset which was offered

to us with over 9million ounces of proven resource

and 11 inferred with existing production approaching 6

tonnes annually

A business plan is in place to lift production to over 1

tonne per month

We require total financing of $260million

over 3 years to include this asset

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Possible IPO route 2015

$2,500-3,000million issue for 40-50% of the business

• P/E of 14 by end of year 1 @ $50million profit based on 50% equity and $700million valuation

• P/E of <5 by end of year 2 @$150million profit based on 50% equity and $700million valuation

• P/E of <2 by end of year 3 @ $400million profit based on 50% equity and $700million valuation

34

Possible IPO route 2020

$2.5-3Billion issue for 40-50% of the business

• Based on a P/E of 5-7 and profits in excess of $1billion annually

35