IRON SAND MININGEXECUTIVE SUMMARY

Overview of PT. TIMUR RAYA MAS

1. The IUP covers two large concession: 710 Ha and 7,378 Ha

2. Measured deposit in explored area: 69 million tonnes

3. Inland and offshore concession. 25 km coastline length

4. Offshore potential for Iron Sand and Heavy Minerals

5. Mining permit: IUP Operasi Produksi for 20 years

6. CNC (Clear and Clean) certified from ESDM (Ministry of Energy and Mineral Resources)

7. Low operating cost to achieve profitable margin.

Resources• From the exploration of the 710ha there is measured deposit of 18

million tonnes

• From exploration of 4 blocks in the 7378Ha concession there is a measured deposit of 51 million tonnes.

• The offshore potential has yet to be explored

• The Fe content of the concessions range from 12% to 25%

• With simple beneficiation the Fe content can be increased to >50%. Grinding of the concentrate increases the iron content to 55 -58% by breaking off the pyroxene ( Aluminium Sulfate and Silica ).

• From the deposit resource, it is more than sufficient for 30 years of mining.

Company Vision To realise the value of Indonesia’s

abundant natural resources to establish an Indonesian steel industry using 100% local raw

materials: We will be:

The supplier of choice to the growing Indonesian Steel Industry

and the

The Indonesian supplier of choice to the Asian metals industry

Establishing a Steel Industry in Indonesia • The origins of the world steel industry can be traced

back to the early 1800’s and the development of the Bessemer and Blast Furnace processes in Europe

• The processes were established to process local Haemetite iron ore

• Indonesia has a limited Haemetite resource but an abundant, low cost local iron ore in the form of iron sand

• The development of iron making processes to consume iron sand commenced 150 years ago in New Zealand and UK

• The commercialisation of Direct Reduced Iron (DRI) technology has created the opportunity to develop a steel industry based entirely upon local iron sand

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Project Implementation Strategy

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Phase 112 Months

Product

Mining Magnetic Separation

Grinding + Magnetic

Separation

Phase 236 Months

Iron Concentrate

Pelletising DRI(Sponge

Iron)

Phase 340 Months

Direct Reduction

Ladle Furnace

Electric Arc Furnace

Billet Caster

Steel Billets

6.7mt 1mt

550kt1.1mt

550kt610kt

Inert Gas Cooling

Phased ImplementationTwo critical elements drive the implementation Strategy: Financing, Sourcing of a fuel / reductant

Financing Fuel / Reductant Source

Following the Global Financial Crisis the tightening of rules and regulations governing financial markets has impacted project structure1. Projects are required to be broken down into value

chain components financed on a stand alone basis2. Detailed engineering design is now required prior

to finance approval thus requiring significant funds to be raised prior to Project finance e.g. The DRI Definitive Feasibility study will now cost $20 to $40 million.

3. Issuing of government, licenses and permits are conditions of funding e.g. Construction permits, Environmental permits, Export permits etc

1. Choice of DRI technology is dependent on the choice and availability of the fuel / reductant source

2. The DRI process uses either natural gas or coal as the fuel / reductant

3. The process is a chemical reaction which uses Hydrogen and carbon to remove oxygen from the ore

4. Significant coal reserves in Indonesia make coal the obvious choice, however small changes in coal chemistry have a significant impact on the operation of the DRI process

5. DRI plants are designed for a minimum 25 year life6. Ideally the process requires the same coal from the same

coal seam for the life of the plant. This requires a long-term commercial contract from a large seam (>30 million tonnes)

7. If consistent coal quality can not be guaranteed, coal gasification may be required

8. Clean natural gas provides a consistent reliable fuel source

Project Financial Summary (Phases 1& 2)IRR 25%NPV $327Iron Concentrate Sales 10mtDRI (Sponge Iron) Sales 26mtConstruction Period 4 YearsPlant Life 25 YearsCAPEX $337mProject Costs $511mCash Requirements Year 1 $92mIron Concentrate selling price $39/tDRI Selling price $250/tIron Concentrate Production cost

$26/t

DRI Production Cost $146/t

Financial Assumptions:1. Mineral reserve >30 years2. The deposit will use dredge mining

methodology3. Two million tonnes of iron concentrate

will be produced each year4. Iron concentrate will be exported for

the first 5 years of the project 5. A one million tonne per annum DRI

plant will commence commissioning year 4

6. A 2.5 years ramp up period to achieve full iron making design capacity

7. RP to US$ exchange rate 12,5008. A 10 year tax free exemption period

will apply9. The project will be funded 70% debt,

30% equity

Project Financial Profile (Phases 1 & 2)Year 1 Year

2Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Concentrate Sales /mt

0 1 2 1.45 0.7 0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

DRI Sales/mt 0 0 0 0.3 0.7 0.9 1 1 1 1 1 1 1 1 1

CAPEX / $m 92 53 125 150 77 31 0 0 0 0 0 0 0 0 0

Gross Revenue $m

0 39 78 132 203 239 257 257 257 257 257 257 257 257 257

Cash Cost /$m 8 26 51 80 117 136 146 146 146 146 146 146 146 146 146

EBITDA /$M -8 6 11 41 80 85 94 94 94 94 94 94 94 94 94

Nett Income $m -8 5 11 38 77 82 44 47 50 54 58 62 67 72 77

Iron Ore Price and Relationship to Iron sand

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The full cost of iron ore to the Steel companies reflects international ore plus freight rates:

The International Iron sand price standard has been established by New Zealand Steel indexed against the 62% Iron ore index:•Ironsand CIF price=(Index price/62)*X*Y

-. Where X= iron content of ironsand Y= % Discount

e.g: Assuming today’s 62% index price $65/t and 55% Fe ironsand concentrate:

=(65/62)*55*0.85= $49/t CIF

Assume shipping rates $10/t, realised price ex barge: $39 /t

F/Cast 62%Fe long-term $80/t applying ironsand formula = $50/t ex barge

High Level Organisational Structure

Project Director

Project Managers

External Turn Key Providers

Technical Consultant

s

President Director

HR Legal External Affairs Finance

The Project Director:• Is Accountable for the technical and financial success of the project• Overseas the project teams and coordinates activities• Has the authority to direct the project team• Manages the vendor supplier client relationship

President Director• Is accountable for the Socialisation and environmental success of the project• Manages national and local government relations• Overseas the financial control of the business• Ensures legal compliance

Direct Reduced Iron (DRI) - Overview

◦ DRI or Sponge Iron is a source of iron units demanded by Electric Steelmakers. It allows them to produce higher specification steel grades than is possible with conventional steel scrap

◦ Global DRI production of >80 million tonnes has been growing at a steady rate, mostly in regions where cheap natural gas is available

◦ It is estimated that 75% of the worlds DRI is produced via gas based technologies

◦ Coal based plants make up the balance

◦ The Middle East countries are major uses of the DRI process using cheap abundant natural gas and imported iron ores to supply the regions growing steel demand

◦ DRI production in the USA, led by Steel market leader Nucor, is increasing rapidly on the back of cheap natural gas and the surge in shale gas extraction in Canada

◦ India is the largest producer of DRI with >35million tonnes of capacity, 70% using coal based technology

Process Overview• The Iron Sand resource is similar to the deposits in New Zealand which are beneficiated for export, and also processed in New Zealand to finished steel products by New Zealand Steel

• The mine beneficiation process comprises of magnetic separation and grinding to produce iron concentrate

•The iron making process will use DRI (Direct Reduced Iron) technology similar to that used by New Zealand Steel

• The technology can be supplied by a number of international specialist companies

• Flow chart of processing :

Mining Beneficiation DRI Steelmaking

• Coal or Natural Gas is required for the DRI process

Examples of DRI Technologies

Coal based DRI process using a rotary Kiln Natural gas based DRI using a reactor vessel

Recently Completed & Pending Gas Based DRI/HBI Plants

Project Location

1. Mine site is in Saleh Bay - on the island of West Nusa Tenggara

2. The concessions are located in Dompu district

3. The mine site is approximately 3 hours drive from Bima airport

4. Bima is a 1 hour flight from Bali with a daily service

Geographic Location Of The Concession

Concession

Concession

710 Ha Concession Map

7.378 Ha Concession Map

Jetty Location

Jetty

Site Photographs

20 Ha Site at the Jetty to construct an export facility and DRI processing plant

Unloading Activities at Jetty 8 Feb 2015

Requirements To Sustain the Business Model

Infra Structure:•Electricity / Co-gen•Natural Gas•Diesel•Water, and water treatment•Port facilities•Rail•Road

Service Industries:• Training /

Education• Medical facilities• Cleaning

services• Food and

catering• Transport

services• Administration

services• Engineering

services• Environmental

monitoring

Support Businesses:

• Fabrication• Construction• Brick and

refractory's• Storage• Oxygen plant• Lime

manufacture

Key to Project Success: Socialisation

• An absolute key to a successful project and essential at three levels:

National GovernmentProvincial GovernmentLocal villages

• Mining has a very poor image in the minds of many Indonesian people

• Perceived threats to way of life and traditional values are very real

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Factors to Consider:

•Current land use•Current drivers of the local economy•What is currently missing•Employment & training •What legacy will be left after mining

Key to Project Success: Environment and Sustainability

Environment:

• Intimately linked to Socialisation

• Create leverage through imposing Western Standards:Adopt a zero waste philosophyRehabilitate immediately employing local

businesses

Sustainability:

• Demonstrate a whole of business approach, profit, environment and social responsibility

• Demonstrate the long term benefits to the local people, employment, training etc

• Plan mine closure from day 1

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Committed to Sustainability and Environmental Values

Vision: The Safest, Cleanest, sustainable development in the world

Mission Statement.•To achieve 100% use of Resources through innovative Process and Product design.

•Zero waste, 100% recycling, restructuring production and distribution systems to prevent waste from being generated.

Committed to Providing Local Benefits• Establish programs to train and employ local

operators

• Full scale iron concentrate operations to

create 300+ jobs

• Establish local community boards to grow

local businesses and create employment

opportunities

• Scholarship program to provide further

education opportunities

• Developing new regional community facilities

and infrastructure

• Increased agricultural production and crop

selection post mine rehabilitation