General Discussion, page-446

I was doing a review of this investment today and thought I'd share why I originally bought in.

1) received major Govt approvals

2) 100% company owned asset
3) Mining Licence status 30 year – granted 2012. Extendable by up totwo 20 year periods"
4) 247MT of met coal reserves in open pit
5) received approval for the CCHP, road and DEIA
6) major shareholder has agreed to provide $100m aud in loan guarantees for the project
7) have spent >$50m on project to get to this point
8) China designated Mongolia as preferred source of metcoal in 2020 - there is an order of magnitude more metcoal going to China from Mongolia then Australia
9) 1200 local jobs - means local wealth and happy communities
10) PFS Nov 2019 has following outcomes
a) pre tax NPV of $878m USD and IRR of 49%
b) capex of $262usd
c) Cash operating cost (Erlian border) $97usd
d) met coal sale price of $150 USD assumed
e) at usd $250t met coal spot price gives a pre tax NPV of circa $2.87b usd
f) therefore for every $1 above $150t they get NPV increases by $20m

They have the CHPP approved for half the pfs volume, however margins have gone from $50/t to $150/t. Lets see what happens with capex and opex, but I'd guess either way it will be a very profitable starter operation that has a lot of capacity to expand. GLTAH