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INVESTOR PRESENTATION:
METALLURGICAL COAL PROJECTS
NOVEMBER 2011
PG 2ZYL - Metallurgical Coal Projects
IMPORTANT INFORMATION
The information in this presentation is an overview and does not contain all information necessary to make an investment decision. To the extent
permitted by law, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates
or opinions or other information contained in this presentation, any of which may change without notice. This document is not a prospectus, disclosure
document or offering document under Australian law or under any other law. It does not constitute an offer or invitation to apply for securities. It is for
information purposes only. This presentation is not an offer of securities for subscription or sale in the United States or any other jurisdiction in which
such an offer or solicitation is not authorised or to any other person to whom it is unlawful to make such an offer or solicitation. Some of the
information contained in this presentation constitutes forward-looking statements that are subject to various risks and uncertainties, not all of which
may be disclosed. These statements discuss future objectives or expectations concerning results of operations or financial condition or provide other
forward looking information.
Prospective investors should make their own independent evaluation of an investment in the securities. The material contained in this document does
not take into account the investment objectives, financial situation or particular needs of any particular investor. No recommendation to investors
regarding the suitability of the securities has been made and the recipient must make its own assessment and/or seek independent advice on
financial, legal, tax and other matters, including the merits and risk involved. This presentation and its contents have been distributed to you, in
confidence, solely for your information and may not be retransmitted or otherwise reproduced or disclosed to third parties or made public in any way,
in whole or in part, for any purpose without written permission.
Competent person statement
Information in this presentation that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Dawie
Van Wyk who is a consultant to the Company and is a member and fellow of the Geological Society of South Africa and SACNASP, a Recognised
Overseas Professional Organisation. Mr Van Wyk has sufficient experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for
Reporting of Exploration, Mineral Resources and Ore Reserves’. Mr Van Wyk consents to the inclusion in the presentation of the matters based on his
information in the form and context in which it appears.
PG 3
CORPORATE OVERVIEW & STRATEGIC INTENT
Capital Structure
ASX Code: ZYL
Current shares on issue 488,535,899
Options on issue (20c ex.) 20,000,000
Options on issue (10c ex.) 3,000,000
Options on issue (6c ex.) 4,000,000
Market Capitalisation * $82.2 million
Cash on hand $30 million
Share price range (H/L) $0.26 - $0.10Mission - to develop high margin metallurgical coal deposits for domestic and export markets
* Market Capitalisation calculated as at 27 October 2011
PG 4
BOARD OF DIRECTORS – TWO NEW APPOINTMENTS
Bevan Tarratt – Executive ChairmanDirector of a number of ASX listed companies with experience in primary and secondary capital raisings and strategic consulting. Accounting background focussed on small cap resources companies and equity markets experience with Patersons Securities.
Dr Eric Lilford – Managing Director, Kangwane BFS Committee23 years operational experience across the global resources sector, including large gold, platinum, copper and coal mines. 12 years in investment banking and commodities research. Completion of bankable feasibility studies (BFS) in numerous jurisdictions.
Ian Benning – Operations Director, Kangwane BFS Committee25 years of mining industry experience in both production and mine management, and investment banking. Previously worked for Rand Merchant Bank and Investec focussing on corporate & specialised finance and asset management.
Phillipe Lalieu – Commercial DirectorCo-founder of Opes Capital with 13 years experience in corporate finance advisory specializing in the mining and infrastructure sectors. Previously established and jointly managed a SA based private equity fund for a Dubai based company and worked for Anglo Platinum in corporate finance and project development.
SENIOR MANAGEMENT AND NON-EXECUTIVE DIRECTOR
5
David Greenwood – Non-Executive Director29 years of geological and mining experience with a number of coal, precious metal and base metal producers. Extensive operational knowledge of the South African coal environment. Previously section head of new business and international operations within the coal division at Gold Fields of South Africa Limited.
Nicholas Ong – Company SecretaryManagerial experience with the ASX; approved and listed over 100 companies. Detailed knowledge and understanding of all facets of the listing process, company restructurings and compliance with industry codes.
Garth Reardon –Business Development Manager22 years experience in financial, strategic and business development roles spanning the EPCM engineering, mining, media, investment banking, asset management, printing, professional accounting and tax industries.
Mzwandile Nombewu – Director Siyanda Resources, Kangwane BFS Committee15 years of coal (Ingwe) and gold (AngloGold) mining experience in South Africa with additional experience in mining education. Currently holds the position of Technical Director, Coal and Mineral Rights in Siyanda Resources.
ZYL - Metallurgical Coal Projects
MBILA & KANGWANE – COMPLEMENTARY MULTI SITE FOCUS
PG 6
MBILA PROJECT
PG 7
ZYL (44%) and its partner York Energy Pty Ltd (30%) have the right to earn 74% of the Mbila Anthracite Project
Mbila project consists of two licences in the KZN Province;
– Mbila Mining Right covering a total area of 19,000 Ha (enabling early production)
– New Order Prospecting Right covering 53,000 Ha
Full BFS completed in 2008, SRK and RMB updated the financial model in 2009
No additional drilling required for the first 5 years of mineral extraction
Combination of underground and open pittable operations available
MBILA - OPPORTUNITY
PG 8
SAMREC resource of 89Mt GTIS, 97% in Measured and Indicated with target seam resource of 20Mt – 60Mt
• 2 anthracite formations, ECCA and Beaufort:
– Ecca - ultra low phosphorous products – Beaufort - low phosphorous product
• Both products ideal for domestic mineral sands, ferrochrome and ferromanganese markets
• Significant shortfall exists in South African market; short and long term opportunity for Mbila
• High quality metallurgical coal to generate premium pricing (estimates of US$140 – US$180 per tonne at mine gate)
ZYL - Metallurgical Coal Projects
MBILA ANTHRACITE PROPERTIES
PG 9
Mining Right Area – Ecca
Seam
Mining Right Area –
Beaufort Seam
Prospecting Right Area –
Beaufort Seam
Coal Classification High Rank B Anthracite
High Rank C Anthracite
High Rank C Anthracite
Yield % 65.5 57.1 51.9
Ash Content % 9.9 15.1 15.1
Inherent Moisture % 1.5 2.0 <2.0
Volatile Matter % 5.2 5.9 7.3
Fixed Carbon % 84.9 79.0 77.6
Gross Calorific Value MJ/kg 32.25 29.78 30.41
Total Sulphur % 1.06 0.65 0.76
Phosphorous % 0.008 0.012 0.012
ZYL - Metallurgical Coal Projects
MBILA – HIGH QUALITY = COMPETITIVE ADVANTAGE
PG 10
Leeuwpan
Kiepersol
Slate
r
Mbila Beau
fort Middlin
gs
Sprin
glake
Duff
Nkomati
Vaalkr
antz
Alfred
Somkh
ele Stan
dard
Vietnam
ese 0 x
15, 15% as
h
Mbila Beau
fort
Russian
Duff (Stan
dard)
Vaalkr
antz
Gus
Vietnam
ese 0 x
15, 10% as
h
Russian
sized (S
tandard
)
Maloma P
ea
Mbila Ec
ca 20 x
45, 10% as
h
Vietnam
ese 0 x
15, 8% as
h
ZAC Prim
ary 20 x
45
Mbila Ec
ca 0 x
10, 10% as
h
Russian
Duff (Top)
Vietnam
ese 15 x
35, 6% as
h
Russian
Size
d (Top)
65%
70%
75%
80%
85%
90%
95%
66%
70% 70%71%
72%
76%77% 77%
78% 78%82%
83% 83% 83%84%
85% 85% 85% 85%87%
88%
92%Semi Anthracite Anthracite Standard Metallurgical High Grade Metallurgical
ZYL - Metallurgical Coal Projects
MBILA – CLOSE TO INFRASTRUCTURE & DOMESTIC MARKETS
PG 11
Rail:
Two rail sidings close to tenement
Direct rail link access to port facilities
Port:
Either Richards Bay or Durban Harbour (200km)
Power:
Power supply is in close proximity to the project
Water:
Water sourced from local boreholes in Zululand District
PG 12ZYL - Metallurgical Coal Projects
KANGWANE LOCATION & RAIL - IDEAL FOR EXPORT
PG 13
KANGWANE CENTRAL – EXPORT FOCUS
JORC Compliant Resources of 114Mt including a Measured Resource of 21.4Mt
Open Pittable Resource of 60.79Mt at a stripping ratio up to 5 : 1
Initial feasibility results in Q4 2011 with the focus on production from open pit operations (indicative 2.1 Mt per annum ROM)
Approximately 100km from Maputo Port by direct rail link, with existing rail siding. Road, power and water all located nearby
Siyanda Resources (BEE partner) has extensive experience in South African coal mining; currently operating two mines and previous owners of the Koornfontein Coal Mine
High quality metallurgical coal has the potential to generate premium pricing (estimates of US$100 - US$120 per tonne at mine gate)
PG 14ZYL - Metallurgical Coal Projects
KANGWANE CENTRAL - CURRENT JORC RESOURCES
Coal Resource Estimate Statement (JORC and SAMREC compliant)for Kangwane Central (gross tonnes in situ – GTIS)
Total Measured Coal Resource (GTIS) 21.4 Mt
Total Indicated Coal Resource (GTIS) 25.5 Mt
Total Inferred Coal Resource (GTIS) 67.2 Mt
Total JORC compliant Coal Resources at Kangwane Central Anthracite 114.1 Mt
Exploration Target 1 of 350Mt to 450Mt at an expected calorific value range of 6,635 kcal to 6,712 kcal ideal for export markets
1 The potential quantity and grade of the above Exploration Target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.
KANGWANE CENTRAL - MINING RESOURCES
PG 15
Indicated Resource Estimate (JORC and SAMREC compliant)for Kangwane Central Anthracite (gross tonnes in situ – GTIS)
Indicated Coal Resource North Open Cut area (GTIS) 11.17 Mt
Indicated Coal Resource South Open Cut area (GTIS) 49.62 Mt
Indicated Coal Resource Central Underground area (GTIS) 29.78 Mt
Total JORC compliant Indicated Coal Resources at Kangwane Central Anthracite 90.57 Mt
Total JORC compliant Coal Resources at Kangwane Central Anthracite 114.1Mt
KANGWANE CENTRAL - EXPORT QUALITY COAL
PG 16
@ 20% ASH @ 16% ASH
Yield % 79.34 66.36
Ash Content % 17.78 15.46
Inherent Moisture % 2.43 2.40
Volatile Matter % 6.35 6.17
Fixed Carbon % 74.32 76.80
Gross Caloric Value MJ/kg 27.74 28.70
Total Sulphur % 0.62 0.61
Washed coal specifications based on exploration to date
*These are the average specifications based on the drilling and washability analysis conducted during 2011. It does not suggest that Kangwane’s product will ultimately be a 20% or 16% ash content product. The final targeted ash content will be dictated by market demand and economics.
PG 17
KANGWANE SOUTHERN – COMPLEMENTARY EXPORT FOCUS
Conceptual Exploration Target of 90Mt - 190Mt at an expected calorific value range of 19MJ/kg to 28MJ/kg¹ (5,250kcal to 6,680kcal) unwashed
Approximately 25km to the South and considered highly complementary to Kangwane Central; potential to share services and infrastructure
Close proximity to port, water, electricity, roads and rail; approximately 130km by rail to Maputo Port in Mozambique with existing rail siding
Mining Right Application (MRA) submitted
Anthracite qualities expected to be similar to Kangwane Central
1The potential quantity and grade of this exploration target is conceptual in nature, there has been insufficient exploration to define a Mineral Resource on the property and it is uncertain if further exploration will result in discovery of further Mineral Resources on the property.
PG 18
KANGWANE SOUTHERN – SAMREC RESOURCE
Coal Resource Estimate Statement (JORC and SAMREC compliant)for Kangwane Southern (gross tonnes in situ – GTIS)
Total Indicated Coal Resource (GTIS) 73.9 Mt
Total Inferred Coal Resource (GTIS) 25.8 Mt
Total SAMREC* compliant Coal Resources at Kangwane Southern Anthracite 99.7 Mt
Minimum seam width of 1.2 metres used in estimation
Seam depth ranges between 20 metres and 400 metres below the surface
Approximately 2Mt open pittable coal on the shallow western limit with the remaining coal to be mined using underground methods
A total of 103 boreholes drilled since 1982
*SAMREC: The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves.
PG 19ZYL - Metallurgical Coal Projects
KANGWANE INFRASTRUCTURE
Rail:- Rail siding access
adjacent to Kangwane Central
- Capacity of 100,000 tonnes/month at rail siding
- 100km by direct rail link to Maputo Port
Port:- Maputo Port operates
24 hrs
- Port can handle 6Mt of product per annum
- Direct rail link access to port facilities
- Capacity upgrade occurring
Power Lines:- Mains power 18km from project
- Power currently supplied to neighbouring Nkomati Anthracite Mine
- Sealed road passes through Kangwane allowing for power line extensions
Water:- Nkomati River
traverses north and west of the Kangwane Central Project
- Supplied to neighbouring Nkomati Anthracite Mine
MBILA PROJECT - JOINT VENTURE STRUCTURE
PG 20
Right to earn a 44% interest via
• Payment of US$2.8 million for the acquisition of an initial 5% of Mbila’s total issued share capital on 16 September 2011
• Payment of an aggregate amount of US$24,200,000 on the 5th business day following the later of 1 May 2012 and the date of fulfillment of the Suspensive Conditions for the acquisition of an additional 39% of Mbila’s total issued capital to be paid via:
- US$13,200,000 cash
- US$11,000,000 by way of issue or transfer of listed shares in ZYL valued as:
i) the AUD Equivalent of US$5,000,000 at the AUD denominated volume weighted average price (VWAP) at which the shares in ZYL traded on the Australian Securities Exchange (ASX) for the 30 day period prior to 14 December 2011, orii) the VWAP at which the shares in ZYL traded on the ASX for the 30 day period prior to the date of conclusion of the Formal Agreement, whichever is the higher amount; iii) If a secondary listing on the JSE has not occurred on or before the Second Payment Date, then ZYL will acquire the 39% Subscription Shares for a cash amount of US$24,200,000 escalated by 1% per month for each month settlement does not occur from 16 September 2011.
PG 21
KANGWANE CENTRAL - JOINT VENTURE STRUCTURE
Right to earn a 50.12% interest subject to spend commitments:
• ZYL to expend ZAR20 million (~A$3 million) over 12 months to complete a FS
• ZYL will invest ZAR30 million (~A$4.5 million) in equity for capital expenditure items in connection with mine development
• Loan of ZAR3.00 per tonne (~A$0.45 per tonne) of economically mineable coal (as demonstrated by the BFS) capped at ZAR100.5 million (~A$15.5 million) provided in two tranches repaid out of profits after an initial 3 year period of operations
• After selling 36.6Mt of anthracite, the original shareholders will receive a royalty of ZAR2/tonne for anthracite sold (~A$0.30/tonne) above 36.6Mt
KANGWANE SOUTHERN - JOINT VENTURE STRUCTURE
PG 22
Right to earn a 70% interest via
Initial payment of $500,000 to Prosperitas Capital on signature of the Share Sale Agreement
Subsequent payment of $500,000 to Prosperitas Capital on obtaining ZYL Shareholder Approval
Final payment of 3,472,000 fully paid shares in ZYL issued to Prosperitas Capital on acceptance of the Mining Right Application
ZYL’s medium term funding commitments will be to maintain the Mining Right in good standing with the Department of Mineral Resources and to complete a FS
PG 23
ANTHRACITE – HIGH CARBON & ENERGY, LOW MOISTURE
Low Rank Coal Hard Coal47% 53%
Peat/Bog Lignite Sub-Bituminous Bituminous Anthracite17% 30% 52% 1%
Thermal Metallurgical
Steam Coal Soft Coking Hard Coking
power generation power generation power generation iron and steel clean heatingcement manufacture cement manufacture smokeless fuelindustrial industrial anode paste
carbon source
USE
S%
OF
WO
RLD
RES
ERVE
S
Moisture Content of Coal
Carbon and Energy Content of CoalLOW
HIGH
Source: World Coal Association
PG 24
INVESTMENT OPPORTUNITY
For further information on investment opportunities in this emerging metallurgical coal producergo to www.zyllimited.com.au
or contact:
Dr Eric LilfordManaging Director
Telephone +61 8 9486 4036Facsimile +61 8 9486 4799Mobile +61 (0)424 757 452elilford@zyllimited.com.au
Bevan TarrattChairman / Director
Telephone +61 8 9486 4036Facsimile +61 8 9486 4799Mobile +61 (0)418 928 719btarratt@zyllimited.com.au
Ian BenningOperations Director
Telephone +27 87 350 2751Facsimile +27 11 245 9801Mobile +27 (0)837 028 221
ibenning@zyllimited.co.za
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