#1LCK LEIGH CREEK ENERGY Limited November 2017 Funded Through Demonstration. Poised For Growth Leigh Creek Energy Limited (ASX:LCK) 2017#2Leigh Creek Energy Disclaimer This presentation has been completed by Leigh Creek Energy Limited. It may contain forward looking statements that are subject to risk factors associated with the energy industry. It's believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of changes in underlying assumptions which could cause actual results or trends to differ, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling & production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal & regulatory developments, economic & financial market conditions in various countries & regions, political risks, project delay or advancement, approvals & cost estimates amongst other items, & the cumulative impact of items. This presentation may also contain non-IFRS measures that are unaudited, but are derived from & reconciled to the audited accounts. All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated. Mineral Resource Compliance Statement Estimates of Mineral Resources reported in this announcement were initially reported & released to the ASX on 8 Dec 2015. We are not aware of any new information or data that materially affects the information included in the 8 Dec 2015 announcement & all the material assumptions & technical parameters underpinning the estimates in that announcement continue to apply & have not materially changed. Gas Resources Compliance Statement Gas Resources reported in this announcement were initially reported & released to the ASX on 8 Jan 2016. We are not aware of any new information or data that materially affects the information included in the 8 Jan 2016 announcement & that all the material assumptions & technical parameters underpinning the estimates in that announcement continue to apply & have not materially changed. All estimates are based on the deterministic method for estimation of petroleum resources. LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK 2#3Table of Contents Section 1 Team Section 2 Market Opportunity Section 3 ISG Technology Section 4 Legal and Political Environment Section 5 LCK Project Status Section 6 LCK LEIGH CREEK ENERGY Corporate and Financial SOUTH www.lcke.com.au ASX: LCK 3 AUSTRALIA#4LCK - Experienced Executive Team The Team Justyn Peters Executive Chairman Phil Staveley CEO Mark Terry CFO Justin Haines COO Experience Justyn is a qualified lawyer and has many years' experience in the ISG industry and in senior management positions. Justyn's experience includes working in the mining industry, for industry representative bodies and for various state and federal environment departments and authorities. Phil is a qualified Accountant who has 30 years' experience working in the resources and oil & gas sectors. His roles have encompassed various finance, commercial and operational functions. He has spent the last 20 years in CFO/CEO roles in Australia, Asia and Latin America. Mark is a CPA with more than twenty years' experience in the management of financial and project matters in the mineral exploration and mining industry. He commenced his career with KPMG before holding a range of senior finance positions with Normandy Mining, Newmont Australia and Xstrata Zinc where he was Finance and Commercial Manager for Australian Operations. Broad experience across engineering and geological services. Most recently, worked as Technical Manager for Carbon Energy, successfully operating their ISG facility. Justin leads the Operations Team. LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK#5High Quality Operations Team The Team Justin Haines COO Experience Justin leads the Operations Team. Cristian Bolda Operations Manager Michelle Waters Environmental Approvals and Compliance Manager Geoff Borg Geoscience Manager Brenton Hill Senior Engineer Tom Mehrtens Project Coordinator LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA Background in delivering high value petroleum and infrastructure projects around the world, including senior management roles delivering petroleum facilities in the middle east, the Wheatstone LNG project in WA, and the APLNG gas field facilities in Queensland, as well as experience with power station upgrades and bioremediation plants. Experienced in mining projects across multiple commodities, from exploration to mine closure. Significant contaminated land, community and environmental approvals process skills. Experience with planning, managing and negotiating with regulators on groundwater investigations, risk assessments and remediation for petroleum projects. Mechanical Engineer with broad resources industry experience, skilled in mechanical and piping design, and all phases of delivery of multi-disciplinary projects. Responsible for the management of site activities and establishing systems of work. He displays strong leadership, use of initiative and ability to adapt. www.lcke.com.au ASX: LCK 5#6Market Opportunity Section 2 | LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK 6#7Expensive and Unreliable Power in SA The Australian National Electricity Market (NEM) is in turmoil, with South Australia at the epicentre. Prices have risen despite falling demand, averaging A$123/MWh in FY2017. Electricity Futures Price Quarterly ($/MWh) 160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 Vic Jul-16 Vic Jul-17 SA Jul-16 ⚫SA Jul-17 Current Dispatch: 17:40 $ 30.60 $-1000 49 61 549 $ 29.53 292 $ 25.20 $ 27.45 Grid stability is becoming an important concern due to: ■ Intermittent power ■ Renewable mandates and certificates ■ Withdrawal of both base-load and peak-load fossil supply LCK SOUTH LEIGH CREEK ENERGY AUSTRALIA www.lcke.com.au ASX: LCK The National Electricity Market on the day of the South Australian Blackout, 28 September 2016 7#8Regional demand for 500-900MW Leigh Creek Energy Project (LCEP) LCEP is near major energy consumers: ■ Olympic Dam (Cu/U) ■■Prominent Hill (Cu) ■ Carrapateena (Cu) ■Whyalla (Steel and Hydromet) ■■Port Pirie (Pb) ■ Central Eyre (Iron Ore) As well as the metropolitan demand centre in Adelaide. LCK LEIGH CREEK ENERGY SOUTH www.lcke.com.au ASX: LCK AUSTRALIA Prominent Hill Moomba Olympic Dam Port Augusta Port Pirie Whyalla Central Eyre Transmission Lines Gas Pipelines Adelaide 80#90 40 200 160 120 80 Sep-10 Gas prices rising, LNG exports driving demand SA Daily Gas Consumption for Power (TJ) and Price ($/GJ) SA Gas Price (RHS) Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 10.00 5000 8.00 6.00 4000 4.00 2.00 3000 0.00 2000 1000 Average Daily Gas Production (TJ) ■Roma ■ Other ■Moomba Otway Gas demand for electricity generation has fallen (until recently), but prices have more than doubled since 2014 to A$9/GJ in Adelaide. Other States are limiting supply of new gas. South Australia is the exception. о Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 ■Longford Further gas shortfalls are anticipated as the 3 LNG plants in QLD ramp up. 5,300TJpd is approx. 2,000PJpa - the Gladstone LNG terminals need that much on their own. LCK LEIGH CREEK ENERGY SOUTH ASX: LCK AUSTRALIA www.lcke.com.au#10Gas Economics and Federal Policy - Positive for LCK Gas prices historically $3-4/GJ Supply constraints and LNG demand = gas shortage Prices now $12-$15/GJ plus (anecdotally) Federal Government intervention "Australian Domestic Gas Security Mechanism" ADGSM allows federal government to intervene in the market by restricting gas exports and driving down prices LCK www.lcke.com.au SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY Josh Frydenberg, Federal Energy Minister, 20 July 2017, The Australian/Melbourne Institute's Economic and Social Outlook Conference "the goal (of the ADGSM) was to get contract prices close to "LNG netback" ... (to) about $8 to $10." 10#11The Leigh Creek Energy Solution Plentiful energy from in-situ gasification (ISG) of coal will permit, in a staged development, low cost domestic supply of: Electricity reliable baseload for SA - Natural Gas - into the East Coast system Further development - fertilisers and explosives LCK's primary focus is to provide a reliable energy supply to South Australia. 2,964 PJ Syngas Resource Syngas Production through ISG LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK Low cost baseload Electricity Natural Gas into pipeline 11#12LCEP - A Nationally Significant Resource Total Australian Economically Demonstrated Resources (PJ) LCEP 2,964 PJ = 2.6% of total gas resources in Australia Australia 113,193 PJ (on-shore and off-shore) Source: ABS, Australian Environmental Accounts, 2017 LCK LEIGH CREEK ENERGY www.lcke.com.au SOUTH ASX: LCK AUSTRALIA 12#13Right Market, Right Time, Right Place LCK The right market, the right time: Stability of energy supplies in crisis ■ Dramatically rising power and gas prices ■Long term supply constraints The right place: ■Ideal project location for ISG Strong local demand from major customers Legal and regulatory certainty in South Australia ■ Very supportive government SOUTH www.lcke.com.au ASX: LCK LEIGH CREEK ENERGY AUSTRALIA 13#14ISG Technology Section 3 | LCK www.lcke.com.au 14 SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY#15In-Situ Gasification (ISG) The ISG process converts coal to syngas underground and then brought to the surface. The syngas is processed and can be used in a number of ways: ■ Power ■ Pipeline gas ■ Ammonia products ■ Other Standard oilfield equipment is used in the process. LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK Coal Seam Air / Water Flow Inlet Well Outlet Well Overburden Concrete Well Casing- Drill hole Gasifier Chamber Not to Scale 15 Syngas Flow#16Commercial Facility Example LCK SOUTH LEIGH CREEK ENERGY AUSTRALIA www.lcke.com.au ASX: LCK Coal Seam Inlet Well -Outlet Well Overburden Concrete Well Casing- Drill hole Gasifier Chambor 16 Syngas Flow Not to Scale#17Syngas composition and uses ISG produces a syngas which contains a variety of components. The composition and energy content changes depending on whether the gasifier is Air-blown or Oxygen-blown. Oxygen-blown produces a richer gas but requires more capital. The main fuel components (1) are: ■ 3-15% Methane - CH 4 ■10-20% Carbon monoxide - CO ■ 20-35% Hydrogen - H₂ 12 GJ synthetic natural gas CH4 590 litres of ammonia H2 Coal 490 litres of methanol H2 CO2 CH4 CO H2 CO 1t LC Coal 15 GJ Syngas (1) HRL Process Modelling of ISG for Leigh Creek Coal, December 2015 LCK LEIGH CREEK ENERGY www.lcke.com.au SOUTH ASX: LCK AUSTRALIA 260 litres of liquid fuels CO H2 2 MWh electrical Syngas 17#18Worldwide experience of ISG Commercial Operations: ■ Angren, Uzbekistan: 60 years of operation ■ Eskom, Majuba, South Africa - co-firing power station with syngas North American Experience: 40 years of trials & demonstration ■Multiple sites, techniques, outcomes ■ Utilised standard oil-field Australian Experience: ■Linc Energy - demonstration facility operated for 11 years ■ Carbon Energy - demonstration facility operated for 5 years Carbon Energy Bloodwood Creek Project Queensland Government's Chief Scientist, Dr. Geoff Garrett AO, confirmed that Carbon Energy: ■Met the key recommendations of the government appointed Independent Scientific Panel (ISP). ■"It is clear that Carbon Energy has contributed to the collective understanding of UCG and the conditions. under which the operation is likely to be both safe and successful." ■Demonstrated safe and effective decommissioning and completing of a plan for rehabilitation which were independently reviewed by experts appointed by the DEHP. LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK 18#19Leigh Creek Coal Field - ideal for ISG Leigh Creek is an existing mine site. It produced coal for 60 years. Coal was supplied to the Port Augusta power station, 250km away. Ideal Location with existing infrastructure: ■Remote from major populations ■Self-contained groundwater system Power transmission lines ■Sealed road, airport, rail, water ■Major gas pipeline 125km away ■Township of Leigh Creek LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK 19#20Legal and Political Environment Section 4| LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK 20 20#21South Australia is an excellent jurisdiction South Australia consistently ranks near the top of the world's mining provinces as a place to do business. (1) ■Clear title and development pathway ■ISG is included in existing legislation Government support for Unconventional Gas Native Title process well understood ■ Highly skilled labour in need of employment Identified as the state which supported natural resource development the most. Leigh Creek Energy Project (LCEP) Darwin Brisbane Perth Sydney Adelaide Canberra Melbourne Hobart SA has a roadmap for unconventional gas, has encouraged a migration of gas companies into the state, and has established grants to assist in the proving of new resources. (1) Fraser Institute 2015 survey placed SA 10th out of 109 regions worldwide LCK LEIGH CREEK ENERGY www.lcke.com.au SOUTH ASX: LCK AUSTRALIA 21#22South Australian Government Support Jay Weatherill Premier Tom Koutsantonis Treasurer and SA Premier visit to Shanghai, China, April 11, 2016: Achievements highlighted by Weatherill included a heads of agreement signed by the Shanghai Electric Power Generation Group and Leigh Creek Energy Ltd to explore the joint development of a gas-fired power station in South Australia. "The agreement is positive for the Upper Spencer Gulf, providing hope for towns such as Port Augusta, Whyalla and the northern regional town of Leigh Creek," Weatherill said. Minister for Mineral Resources and Energy 29 April 2016: "I the Leigh Creek project remained subject to rigorous environmental impact assessments before it could progress further". "We have a very effective regulatory framework in SA and the merits of the LCK project will be assessed against that framework, not a political decision ..." 30 Aug 2016: Treasurer Tom Koutsantonis "I strongly believe that the approval or otherwise of gas exploration and extraction projects should be left to independent experts, rather than to politicians. We have the best regulatory systems in the world in this country and those systems should be trusted to protect the environment, the agriculture industry and communities. This decision is bad news for the National Electricity Market because new sources of supply of gas will continue to be constrained." He used the Victorian ban to once again position SA as "open for business" for the controversial extraction method. "I encourage any exploration companies affected by this decision to consider coming to South Australia, where the assessment and approval of projects is left to expert regulators". LCK www.lcke.com.au SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY 22#23LCK Project Status Section 5| LCK www.lcke.com.au SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY 23#24Gas and Coal Resources Coal resource: JORC 2012: 377 million tonnes inferred. (1) SYNGAS resource: SPE-PRMS: 2,964 PJ 2C. (2) Category SYNGAS Resource (PJ) 1C 2C 3C 2,748 2,964 3,303 Resources will likely convert from 2C to 2P Reserves once gas demonstration is completed in early 2018. Options include power production and/or natural gas production. Offering 25-50 years of production, depending on production profile. In the whole of Australia, the Economically Demonstrated Resources (EDR) totals is 113,193PJ. (3) LCEP = 2.6% of total gas resources in Australia (on-shore and off-shore) LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK (1) Refer ASX release dated December 8, 2015 (2) Refer ASX release dated January 8, 2016 (3) Source: ABS, Australian System of National Accounts, 30-Jun-2016 24#25ISG demonstration - Major De-Risking Event Demonstration will show community and Government that ISG can produce syngas: ■ Safely ■ With minimal impact to the environment Data obtained from demonstration allows: ■ Government to approve Commercial Project ■Development of safety and environmental controls ■ Optimisation of plant design ■ Operating costs discovery For a total spend of A$20m, it is anticipated that a major portion of the current 2C Contingent Syngas Resource could be converted to a 2P Syngas Reserve. Site Investigation COMPLETE Aboveground Plant Design Environmental Baseline Drilling Plant Fabrication Belowground Plant Design IN PROGRESS LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK Stakeholder Engagement EIR and SEO Preparation Regulatory Approvals Monitoring Well Installation PENDING PCD Plant Installation PCD Initiation PCD Operation 25#26Key PCD Engineering Contracts Awarded - Capital Applied Diesel Storage With Funding Secured, PCD fabrication is Generator underway: Water ✓ Outlet Well - Ottoway Tanks ✓ Gas Analyser Condensate Vessel ✓ Thermal Oxidiser ✓ Condensate Buffer Tanks ✓ Cold Vent ✓ Electrical & Data ✓ Diesel Storage Water Tanks Earthworks ○ Air Compression ○ Well Site Services - Gasco - Ottoway - - Gasco - ATSys - ABB Thermal Oxidiser Gas Analyser Cold Vent - Ottoway Condensate Condensate - Buffer Tanks Separation Vessel Outlet Well O Generator Petro Diamond - Westanks The Carbon Energy Demonstration Facility Injection Well - Bardrill - TBA - TBA - TBA Knock-out Pots Product Well LCK www.lcke.com.au SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY 26#27Successful Scoping Study Completed/PFS Commenced LCK completed a successful Scoping Study in January 2017. It covered a number of development cases for further processing of Syngas. The key elements were: Power generation case ranging from 150MW to 550MW Natural gas production case ranging from 20PJpa to 80PJpa. Conclusions: Cases for both power and natural gas are: Major portion of the current 2C Resource could be converted to a 2P Reserve Robust technically and financially Support advancing to the Pre-Feasibility Study (PFS) phase and PCD The LCK Board has approved the immediate commencement of a Pre-Feasibility Study on the LCEP. There are no guarantees that a specific option can be supported by the Company's current 2C Syngas Resource of 2,964PJ. LCK SOUTH www.lcke.com.au ASX: LCK AUSTRALIA LEIGH CREEK ENERGY 27#28Next steps for LCK 2015 2016 2017 2018 2019 2020 Appraisal Stage 1 Gas Demonstration Stage 2 Commercial ■ JORC 2012 resources ■ Gas certification ■ Site environmental characterisation Approvals ■ Construction ■ Cold and hot ◉ commissioning Syngas demonstration in Q1 2018 Update PRMS ■ Approvals ■ Construction ■ Cold & hot commissioning ■ Electricity and Syngas production (2020) ■ Plant expansions LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK 28#29Corporate & Financial Section 6 | LCK SOUTH www.lcke.com.au ASX: LCK 29 AUSTRALIA LEIGH CREEK ENERGY#30Capital Funding - to Completion of PCD Successfully Raised $21.85m in Equity (before fees) in March 2017 Sufficient funding to complete the PCD, which has budget of $20m Funds were received in four tranches - all early Average price = $0:147/share Independent Expert's Report by Grant Thornton valuation range of 24-42cps. Federal R&D tax offset on PCD Expenditure: Estimated expenditure on eligible activities totals A$21m (including spending in past years) implied cash rebate totalling $9m $6.5m R&D working capital finance facility Available tax losses of $55m LCK LEIGH CREEK ENERGY SOUTH AUSTRALIA www.lcke.com.au ASX: LCK 30#31LCK Corporate Summary LCK Capital Structure Top Shareholders # of Shares % Shares 415.9m China New Energy Group 136.3m 32.8 Options 42.4m Allied Resource Partners 103.8m 25.2 Market Cap @ A$0.14 A$ 58.2m CITIC Australia 17.2m 4.1 Cash A$ 16.0m HSBC Custody 8.2m 2.0 Debt drawn ($6.5m facility) A$ 0.0m Enterprise Value A$ 42.2m One Design Skiff & Sails 5.2m 1.2 EV/Resource (2C) A$/GJ 0.01 Top 20 301.7m 72.5 LCK www.lcke.com.au SOUTH ASX: LCK AUSTRALIA LEIGH CREEK ENERGY 31#32LCK is trading at an EV/Resource of $0:01/GJ EV/Resources (2C) (A$/GJ) Acquired Lattice Energy from Origin for $1,585m= $1:19GJ 1.60 1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 Average: $0:88/GJ 0.70 0.60 0.50 0.40 0.30 0.20 $0:01/GJ 0.10 0.00 Leigh Creek Energy 22,996644 Galilee Energy Blue Energy Senex Energy Strike Energy Central Petroleum Cooper Beach Energy Energy 2,508 984 1,213 112 144 452 2,224 PetaJoules LCK LEIGH CREEK ENERGY SOUTH www.lcke.com.au ASX: LCK AUSTRALIA 32#33Catalysts to Re-Rating It's all about the risk - Funding Government (environmental) approvals - Project execution Perceived risk issue - resolved by demonstrated progress LCK SOUTH AUSTRALIA LEIGH CREEK ENERGY www.lcke.com.au ASX: LCK 33#34Conclusion: Right Market, Right Time, Right Place LCK is ideally placed close to major South Australian (SA) energy consumers and infrastructure. LCK can provide a cost effective solution to an energy market in turmoil. LCK will provide: ■ Cost effective Electricity ■Reliability of supply ■ Supply to a natural gas market in shortage Key Points: ■ Spending ~A$20m to convert a major portion of 2,964 PJ (3tcf) of 2C Syngas into 2P Syngas ■Funding secured Major de-risking events in short term LCK: FUNDED THROUGH DEMONSTRATION and POISED FOR GROWTH LCK www.lcke.com.au SOUTH ASX: LCK LEIGH CREEK ENERGY AUSTRALIA 34