#1TERRACOM FOCUS ON CASHFLOW & ORGANIC GROWTH INVESTOR UPDATE PRESENTATION APRIL 2017#2TERRACOM DISCLAIMER The information contained in this document ("Presentation") has been prepared by TerraCom Limited (the "Company"). This Presentation does not constitute an offer or invitation to any person to subscribe for or apply for any securities in the Company. This Presentation contains summary information of a general nature about TerraCom and its activities current as at 4 April 2017. It should be read with the Company's other periodic continuous disclosure announcements lodged with the ASX. While the information contained in this Presentation has been prepared in good faith, neither the Company or any of its shareholders, directors, officers, agents, employees or advisers give any representations or warranties (express or limited) as to the accuracy, reliability or completeness of the information in this presentation, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as 'information') and liability therefore is expressly disclaimed. Accordingly, to the full extent permitted by law, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or limited, contractual, tortious, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained in this Presentation or for any errors, omissions or misstatements or for any loss, however arising, from the use of this Presentation. This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained in this Presentation necessarily involve significant elements of subjective judgement, analysis and assumptions and each recipient should satisfy itself in relations to such matters. This Presentation may include certain statements that may be deemed 'forward-looking statements'. All statements in this Presentation that address future activities or events are forward-looking statements. Although the Company believes the expectations expressed in such forward- looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may vary materially. The Company does not represent, warrant or guarantee that the information in this Presentation is complete or accurate. To the maximum extent permitted by law, the Company and its directors and officers disclaim any responsibility to inform any recipient of this Presentation of any other matter that subsequently comes to its notice which may affect any of the information contained in this Presentation. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. 2 TERRACOM#3◉ OVERVIEW FY 2017 REPORT CARD Restructured balance sheet • Successfully replaced short term debt through the issue of 5-year interest only EuroClear traded bonds Restructured Board and Management Team Increased capability to deliver Rationalised and reduced corporate overheads Recommenced mining operations in Mongolia ⚫ Secured Kingho 5.5 year contract for ~7.5Mt of sales linked to seabourne indices underpinning restart Already shipped just under 100kt to date Blair Athol Thermal Coal Mine in Australia . e Executed agreements to secure the A$1 acquisition of Blair Athol (BA) thermal coal mine in Bowen Basin Secured State Indicative Approval from DNRM Minister and satisfied Conditions to facilitate Mining Lease transfer in April 2017 Mobilisation to commence by end April 2017 with BA mining and rehabilitation to recommence in June 2017 and first cargo assembled in late June 2017 TERRACOM 3#4OVERVIEW FY 2017 WORK IN PROGRESS Organic Expansion of BA in Australia • Complete work required to convert some of the BA 44Mt JORC 2012 resource# into reserve and extend the production profile beyond 7 years# Complete evaluations and secure most prospective satellite coal basins Organic Expansion of BNU Coking Coal Mine in Mongolia Complete infill exploration work to enable progressive opening of further pits along the Noyon Basin sub crop Indomet Hard Coking Coal Mine in Indonesia • Still in discussion to acquire operating hard coking coal mine in Central Kalimantan, Indonesia targeting completion in Q3 2017 # Note no change to this information from previous disclosures and see competent person statement at end of presentation 4 TERRACOM#5OVERVIEW FOCUS ON CASHFLOW AND GROWTH IN STRONG MARKET ✓ Independent coking coal and high quality thermal coal producer • Targeting production from 3 mines in 3 regions with a total target output rate of 5Mtpa* by end of 2017 and all mines are forecast to deliver strong positive cash flows Blair Athol Thermal Coal Mine in Australia# • A$1 acquisition of Blair Athol (BA) thermal coal mine in Bowen Basin, Australia completed and mining operations to commence in Q2 2017 BNU Hard Coking Coal Mine in Mongolia Successfully restarted BNU mining operations underpinned by 5.5yr coal offtake agreement for ~7.5Mt of sales linked to seabourne prices Indomet Hard Coking Coal Mine in Indonesia • In discussion to acquire operating hard coking coal mine in Central Kalimantan, Indonesia targeting completion in Q3 2017 Large JORC resource base* (excludes BA and Indomet) ⚫ 304 Mt JORC 2004 of coking and thermal coal in Mongolia • 2.1 Bt JORC 2004 of thermal and PCI coal in Australia ✓ Strong development pipeline Organic /Brownfields expansion from each of the 3 regional hubs through development of large surrounding resources Resilient balance sheet • After restructuring through the issuance of a 5-year interest-only EuroClear-traded bonds ✓ Strong Board and management team 3 Regions Operations in Australia, Mongolia & Indonesia A$1 Acquisition of Blair Athol thermal coal mine in Australia Cash Generating Capitalising on strong coal market targeting 5 Mtpa rate across 3 countries by end of 2017 >120 Years of combined management experience Note #: Blair Athol Mine acquisition is subject to relevant Queensland Government approvals Note *: no change to this information from previous disclosures and see competent person statement at end of presentation • Proven track record in building and operating coal mines TERRACOM 5#6MANAGEMENT TEAM +120 YEARS OF EXPERIENCE IN COAL Cameron McRae Executive Chairman Served a 28 year career at Rio Tinto, holding executive level positions in 5 countries. Cameron was CEO-President of Oyu Tolgoi (OT) copper-gold business in Mongolia and CEO of Richards Bay Minerals in South Africa. Michael Avery Executive Director Vice President, Corporate Development Michael has worked for blue chip mining companies Rio Tinto and BHP Billiton in operations both within Australia and internationally. Michael is a member of the Australian Institute of Mining and Metallurgy. David Stone Executive Director Vice President, Operations Over 25 years experience working for MIM/Xstrata, BHP and Anglo America. David has been responsible for several of Xstrata's mining complexes and Xstrata's underground operations globally. Nathan Boom CFO & Company Secretary 12 year career working at large multinationals such as Xstrata Coal and Tenova which has provided him with extensive exposure in finance, accounting and business restructuring. Sam Bowles Head of Operations Mongolia Sam has over 15 years of experience working in large scale coal mining operations in Australia and Mongolia. Prior to joining with TerraCom. Sam was COO of MMC and responsible for the operation of Mongolia's largest coal mining, processing and export business. Jonathon McCarthy Head of Operations Australia Jonathon has over 10 years of mining industry experience across Australia, Asia and North America. He has worked in several large scale open pit operations across multiples commodities with a strong focus on coal mining. TERRACOM#7AUSTRALIA BLAIR ATHOL MINE ACQUISITION AND RESTART ORGANIC EXPANSION OF BLAIR ATHOL EXPLORATION & DEVELOPMENT OF NORTHERN GALILEE PROJECT EXPLORATION & DEVELOPMENT OF SPRINGSURE PROJECT#8AUSTRALIA BLAIR ATHOL THERMAL COAL MINE (BA) ► Final stages of acquiring mothballed Blair Athol Mine^ in Australia for $1 which includes: World class mine infrastructure capable of supporting 12Mtpa including workshops, stores and offices Dragline and all mining plant and equipment required to deliver mining plans ► Rio Tinto providing A$80m cash for reclamation and Gov. of Qld confirmed this liability in Nov 2015 ► Mine plans to operate at 2Mtpa rate for 7 years# with mining operations recommencing in June 2017 and first coal sales in July 2017: Target product specification (ad) of 12.5% ash, 5,350kcal NAR and 0.31% TS ▸ 44Mt JORC 2012 Resource# providing potential for additional production from BA Positioned well on cost curve set to deliver strong margins ► Re-commissioning and working capital costs of BA fully funded from US$12m funding facility plus contractor working capital arrangements of A$11.6m ▸ Organic expansion potential to combine BA with neighbouring properties to give 30+ year life ^ Note Blair Athol Mine acquisition is subject to relevant Queensland Government approvals # Note no change to this information from previous disclosures and see competent person TERRACOM 80#97468000 m 7472000 m 7476000 m 7480000 m 7484000 m 1488000 m 1492000 m 496000 m 7512000 m 7516000 m 538000 m TERRACOM QUEENSLAND EXPANSION ORGANIC GROWTH FROM STRATEGICALLY LOCATED ASSETS 538000 m 542000 m 546000 m 550000 m 554000 m 558000 m 562000 m 566000 m 570000 m 574000 m Moorlands Basin Ken Logan Tertiary Basin Miclere Basin Blair Athol Basin Wolfgang Basin Clermont Basin Karin Basin TOWNSVILLE Port of Townsville Zone 1 Northern Galilee Hub BOWEN Northern Galilee Project Abbot Point CHARTERS TOWERS WINTON HUGHENDEN LONGREACH Zone 2- Central Bowen Hub MORANBAH Blair Athol Mine CLERMONT Port MACKAY Cities Rail Hay Point TerraCom Tenements EMERALD Sierra Project ROCKHAMPTON GLADSTONE Barney Point Springsure Project ROLLESTON Kolan Project Zone 3-Central Western Hub BUNDABERG 574000 m Map Information Date: Morday, 3 October 2016 Time: 2:53:57 PM Projection: AMG Zone 55, AGD 84 Created by: Ben W Smith File: BART_BASE_MAP_v2_New Po0.map 1472000 m 476000 m The BA acquisition revalues TerraCom's Australian portfolio through providing a hub for their development across major coal basins in Queensland including: Northern Galilee Project (1.9Bt JORC 2004# is large thermal resource with multi pit potential crossed by under-utilised rail and port system Springsure Project * (190Mt JORC 2004#) a high grade thermal/PCI resource adjacent to existing rail infrastructure with Bandanna's adjoining Fernlee Project (EPC1103) being acquired from liquidators adding further scale potential (currently going through Indicative Approval process. Note Springsure is 36% owned by TerraCom and Fernlee TERRACOM once completed is to be 100% owned by TerraCom 542000 m 10 km 546000 m 550000 m 554000 m 558000 m 562000 m 566000 m 570000 m TerraCom Resources Blair Athol Mine Surrounding Tenements Nearby Basins Blair Athol Mine Surrounding Basin # Note no change to this information from previous disclosures and see competent person#10MONGOLIA SOUTH GOBI COKING COAL ASSETS BNU COKING COAL MINE BNU CHPP DEVELOPMENT UVS COKING COAL AND POTASH/BRINES ASSETS MID GOBI THERMAL COAL ASSETS#11MONGOLIA BNU HARD COKING COAL MINE ► Operate, optimise and expand BNU coking coal operations in South Gobi Ramping up to 1.5Mtpa of sales* generating strong estimated margins ► Capitalise on softer but still strong HCC prices through 5.5 year offtake agreement linked to seaborne price indices ► BNU targeted washed product specification (db) is for a mid volatile hard coking coal: <10.5% Ash, 23% - 27% Volatile Matter, 0.3% 0.6% Total Sulphur, G Index 80-95, Y Index 22-26 - Construction to commence by end Q2 2017 on vendor-financed on site CHPP delivering improved margin ► Multi-pit expansion strategy with 50km of projected coal basin edge across the South Gobi tenements with 83Mt JORC 2004 Resource* Note*: no change to this information from previous disclosures and see competent person statement at end of presentation 11 TERRACOM#12SOUTH GOBI EXPANSION ORGANIC GROWTH THROUGH REGIONAL EXPANSION TERRA ENERGY KS Hinge KS North BNU West pit 13,780 BNU Pit 1 TERRA ENERGY 17163 BNU Pit 2 Javkhlant Ord BNU Mine Infrastructure CHPP Terra Haul Road 13780 South 17,162 Haul Road, Usukh Zoos Mak Ovoot tolgoi Sumber Bust L Terra Energy Cake Border Crossing South Gobi Operations & Projects Universal Transversa Mercator dona 47,48 WGS) 50 km Target Coal Basin Sub Crop Terra Energy LLC Multi Pit Strategy September 2016 Universal Transverse Mercator Zone 47,48 World Geodetic (WGS 84) Huvguun South 16.971 W Mongolia CHPP Terra Energy LLC South Gobi Project Multiple Pit Development + E 0 kilometers LEGEND .0000 Cont 12 TERRACOM#13MONGOLIA STRONG LOCAL EXPERIENCE AND ASSET PORTFOLIO Strong local history and experience operating in Mongolia since 2011 Large portfolio of Mining and Exploration Licences in strategic positions with links to large markets South Gobi Project (JORC 83Mt JORC 2004*) of hard coking coal ► Uvs Project prospective for Hard Coking Coal, Potash and associated brines (Lithium and Magnesium) in northern Mongolia close to Russian border Mid Gobi Project (JORC 221 Mt JORC 2004*) of thermal coal Legend 03-4 Quaternary C2-3 Huden formation with coal C18 Bal tolgoi formation Chr. Harmodel formation Cbr Barun termes formation Den Zun termes formation D2-31. Borhyngol formation D2ch. Hut Ulformation. Dr. Terdul formation 01-2 Handgatym golformation TERRA ENERGY LLC UVS PROJECT SECTION and TARGET COMMODITIES MI TERRA UVS PROJECT LOCATION OF SECTION THROUGH LICENCES COKING COAL TARGET 03-51ht Hat gol formation Fault Baruun Tsord Evaporite HALITE, SYLVITE Coal target Khuden coal mine Cora Cha 054 C CONT CONC NENA 10 Kilometers COLOURED CLAY TARGETS 03-51M HALITE, SYLVITE Potash MN MG BRING LEVEL 08 LL, K. H De, SR OLT BARRIERS, BRINE TRA 0 CLOSED BASIN CONTAINING EVAPORITE EDIMENT, BRINES AND COAL UVS LAKE C 00 Highly Saline Lake Precipitated Salts and Brines 5X Vertical Scale Note *: no change to this information from previous disclosures and see competent person statement at end of presentation 13 TERRACOM 13#14INDONESIA CENTRAL KALIMANTAN POTENTIAL ACQUISITION CASHFLOW POSITIVE COKING COAL MINE SIGNIFICANT EXPANSION POTENTIAL#15INDONESIA INDOMET HARD COKING COAL MINE ➤ Due diligence being conducted on an operational hard coking coal mine in Central Kalimantan (Indomet) with target acquisition completion in Q3 2017 - ►Should be immediately cash generative at time of completion with strong cash margins forecast ►Indomet advises that initial expectations is for 0.5 0.7 Mtpa production of hard coking coal with immediate opportunity to acquire neighbouring mine with fully developed port and road infrastructure and increase total production to 1.2 1.5 Mtpa with further organic expansion potential Located in Central Kalimantan approximately 28 km from the Barito River and close to Muara Teweh Township which is approximately 400km upstream of Taboneo Trans-shipment Port (2kt to 10kt Barges) ► Hard coking coal specification with medium VM, high fluidity, CSNS of 8-9 Simple low cost extraction; non complex resource with thick shallow seams Note: Indomet acquisition is subject to finalisation of due diligence completion of acquisition TERRACOM 15#16TERRACOM THANK YOU Cameron McRae Executive Chairman [email protected] Mick Avery Executive Director#17APPENDIX TERRACOM CORPORATE MORE INFORMATION AUSTRALIA MORE INFORMATION MONGOLIA MORE INFORMATION COMPETENT PERSONS STATEMENTS#18CORPORATE#19STRONG DEVELOPMENT PIPLELINE LARGE PORTFOLIO OF HIGH QUALITY ASSETS BEING PROGRESSED Exploration South Gobi Uvs Middle Gobi Sierra Northern Galilee Complex Springsure Development Blair Athol* Production BNU INDOMET# Kolan Note*: Blair Athol Mine acquisition is subject to relevant Queensland Government approvals Note #: Indomet is subject to finalisation of DD and completion of acquisition 19 TERRACOM#20DEBT RESTRUCTURING COMPLETE GIVES COMPANY CASHFLOW HEADROOM, STABILITY AND FLEXIBILITY Old Structure Amortising Notes US$55mn OCP Asia Convertible Notes US$5mn JP Morgan Working Capital & Related Facilities US$47mn Noble Group New Structure Secured Bond US$124mn face value (US$129mn from 30 June 2017) 5 years, interest-only (12.5% p.a.) Revenue share of 0.75% (Post BA) First interest payment 30 June 2017 Ability for TER to elect to PIK 50% Includes US$7mn of new funding Super Senior Notes US$17mn face value US$12mn repayable after 1 year due on 30 June 2017, US$5mn rolls into Secured Bond Interest 15% p.a. Convertible Notes US$5mn OCP Asia Acquired by new investors and converted to equity in January 2016 TERRACOM 20 20#21CAPITAL STRUCTURE MAJOR SHAREHOLDERS COMMITTED TO BUILDING VALUE Trading Summary (3 Apr 17) Share Price Performance ASX Code Share Price Shares TER A$0.032 2.7B Market Cap A$86.88M 0.04 0.03 | 0.02 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Price Ownership Summary (%) Other Share Holders 15% Financial Instruments Finance Instruments in Place Warrants Top 20 Share Holders From Australia 9% Top 20 Share Holders Outside Australia Options 76% OCP Asia hold 126,308,306 Detachable Warrants with an Exercise Price which is the lower of the Cross Listing Price and the Market Price and which expire on 28 February 2021 Fosters Stock Broking have 15,000,000 options with a strike price equal to $0.03 and with an expiry date of 31 August 2018 and 15,000,000 options with a strike price equal to $0.045 and with an expiry date of 31 August 2018. Convertible Notes Nil Outstanding TERRACOM 21 24#22AUSTRALIA#23BLAIR ATHOL COAL MINE ACQUISITION PROGRESSING THROUGH FINAL APPROVALS# ACQUISITION PRICE A$1 INCLUDES Dragline & mobile equipment TRANSACTION COMPLETION Target April 2017 QUICK RESTART Short mobilisation and commissioning period Acquisition of coal mine in care and maintenance Mine plan capable of delivering a 7 year mining life at 2Mtpa* Rio Tinto providing A$80mn for reclamation GoQ confirmed this liability in Nov 2015 History Site production peaked in 2009 with 11.3 Mt of coal exported in the year Placed on C&M by Rio Tinto when full production commenced at its neighboring Clermont mine Location C.20 km north west of Clermont in the Bowen Basin of Central Queensland, Australia Infrastructure and equipment Plant and equipment incl. Dragline for re-start remains on-site and included in $1 purchase price Mine infrastructure capable of supporting 12Mtpa includes workshops, stores and offices Plans to utilise nearby rail access infrastructure Further Expansion JORC 2012 Resource of 44Mt* Potential to extend into neighboring projects Note #: Blair Athol Mine acquisition is subject to relevant Queensland Government approvals Note *: No change to this information from previous disclosures and see competent person statement at end presentation 23 TERRACOM#24QUEENSLAND PROJECT PIPELINE STRATEGICALLY LOCATED ASSETS Zone 1 - Northern Galilee Hub Northern Galilee Project WINTON HUGHENDEN LONGREACH TOWNSVILLE Port of Townsville BOWEN Abbot Point CHARTERS TOWERS Zone 2 - Central Bowen Hub MORANBAH Blair Athol Mine CLERMONT MACKAY Port Cities Rail Hay Point EMERALD Sierra Project Springsure Project ROLLESTON Zone 3-Central Western Hub TerraCom Tenements ROCKHAMPTON GLADSTONE Note: Blair Athol Mine acquisition is subject to relevant Queensland Government approvals Barney Point Kolan Project BUNDABERG 24 TERRACOM#25QUEENSLAND PROJECT PIPELINE LARGE RESOURCE WITH SIGNIFICANT EXPANSION POTENTIAL Australian JORC Resource Table (excluding Blair Athol) JORC 2004 Resources (Mt) Tenement Measured Indicated Inferred Total Potential coal type Independent geologist Hughenden 133 1,076 1,209 Thermal MDM Clyde Park MDM/Palaris / 51 677 728 Thermal Xstract Kolan Coking MDM Springsure 43 148 191 Thermal/PCI MDM Pentland Thermal/PCI MDM Total 227 1,901 2,128 Source: TerraCom The information presented is available to view on TerraCom's website. TerraCom is not aware of any new information or data that materially affects the information included in the above table in relation to the estimates of Mineral Resources and confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. TERRACOM 25 25#26MONGOLIA#27SOUTH GOBI PROJECT NOYON BASIN - MULTIPLE MINING AND EXPLORATION LICENCES The South Gobi Project comprises contiguous mining and exploration licenses covering 696 sq km in the Noyon Coal Basin . c.850 km southwest of Ulaanbaatar 140 km from the Chinese border coal station of Ceke South Gobi Project JORC Resources* Total Measured Indicated Inferred North 15 Mt 9 Mt 3 Mt 27 Mt East 41 Mt 41 Mt 15 Mt 15 Mt Total 15 Mt 9 Mt 59 Mt 83Mt KS • Connects by road and rail to northern Chinese steel producers • Potential link to seaborne market There are currently three primary groups of mining licenses: • • North: 100% owned, comprising mining, pre mining and exploration licenses East: 83.9% owned, comprising mining and pre-mining licenses Khar Servegen (KS): 100% owned, comprising mining and exploration licences Location op ULAANBAATAR Major paved road (border to Narlin Sukhait 40kms, unpaved) Minor unpaved road Railway Railway approved by Government or being built MONGOLIA Middle Gobi Project Sabarahand Nur Shait South Gobi Project O Dalandadgad Taran Tolgol Oy Tolgot Tsagaan Tolgo Gants Mod Ceke Bay OO Baotou Eri Q Linha Chi Wuhel Sheny TonChine Bilway CHINA Erechot Jungar Shoutou Dallong Tar o Hugh Harbou BEING Pater BOHA GULF (to Pacific Ocean) 27 TERRACOM Note*: no change to this information from previous disclosures and see competent person statement at end of presentation#28SOUTH GOBI EXPANSION STRONG MULTI PIT EXPANSION STRATEGY IN NOYON BASIN South Gobi Project consists of tenements which cover most of north western extent of TERRA ENERGY the Noyon coal basin KS Hinge KS North BNU West pit BNU Pit 1 17.163 BNU Pit 2 Contains an estimated 50km of basin edge which contains near surface coal bearing stratigraphy ► Progressive development of a multiple shallow pit strategy Serviced by existing centrally located infrastructure 13,780 BNU Mine Infrastructure CHPP Terra Haul Road 13780 South Terra Energy LLC Multi Pit Strategy September 2016 Universal Transverse Mercator - Zone 47,48 World Geodetic (WGS 84) Haul Road Huvguun South 17,162 50 km Target Coal Basin Sub Crop 16,971 Legend Haul road from Pits to CHPP TE Haul road TE Mining license TE Exploration license Coal target areas W E 0 kilometers 28 TERRACOM#29SOUTH GOBI EXPANSION REGIONAL CONSOLIDATION ► Opportunity to consolidate the South Gobi region through development of operating and marketing arrangements with TERRA ENERGY 1,497 #291 Javkhlant Ord 20511 16,952 •Gurvantes 37 +Cevrei 16.461 12. Noyon Mongolia CHPP 17.162 Terra Energy LLC South Gobi Project Multiple Pit Development surrounding Mines and Projects Utilises TerraCom existing infrastructure including own coal haul road ► Applies TerraCom mining and market expertise Reduces costs in region through increased scale Usukh Zoos Mak Ovoot tolgoi 3,852 17.00 17317 5.450 Terra Energy 943 16.880 16,860 Soumber Biluut 9,449 9.442 18.971 5,264 Jargalant 17.014 Ceke Border Crossing South Gobi Operations & Projects Universal Transverse Mercator Zone 47,48 World Geodetic (WGS 84) 13,779 Zag Suuj 5,287 LEGEND Haul road from pits to CHPP SGS Mining Licenses TE Haul road SGS road TE Mining license TE Exploration license Mongolian Mining licenses SGS Exploration licenses SGS Coal fields Mongolian border Soum center TERRACOM 29 29#30BCM/hr Productivity 1,200 1,000 800 600 400 200 0 TERRA ENERGY BNU MINE WORLD CLASS OPERATION IN MONGOLIA Delivering not only Mongolian productivity records but world class productivity from its mining fleet Asset utilisation in Mongolia is higher than other major producing basins Have developed this capability in a systematic fashion to ensure repeatable results during expansion and development of its other assets Unit m3 mining cost performance is very competitive with global hard coking coal producers CAT6030 EXC CAT390 EXC Cat777D RD Global First Quartile productivity Annual operating hours Asset Utilisation 8,000 6,000 4,000 2,000 0 Note: Sourced from extensive internal analysis of best in country mining projects around the world Indonesia Australia Canada United States Mongolia TERRACOM Terra Energy 30#31BNU OPERATIONS STATUS ESTABLISHED NEW SUPPLY CHAIN AND REFINED MINE STRATEGY Mining operations were suspended in Q1 2016 due to depressed coal market, supply chain performance issues and full ROM coal stockpiles at BNU Mine. Mining operations recommenced in Q4 2016 with alternate supply chain established via the Kingho 5.5yr offtake agreement for ~7.5Mt of coal sales over the life of the contract and delivering the following: Underwrites a profitable Mongolian business unit establishing a platform from which further expansion and growth Has a pricing mechanism with linkages to the seaborne market with payment terms in USD in the form of 100% Irrevocable Letter of Credit issued by first class international bank Confirms the strong BNU coal brand in China and recognition of the value-in-use of this coal when compared to other HCC available in southern Mongolia and northern China Shifts the point of sale for BNU coal to minegate which removes Terra from the supply chain management in Mongolia and northern China allowing a focus on core competency of mining Whilst Kingho which is one of the largest transporters and users of coal in northern China will manage the supply chain from minegate to customers in Northern China - BNU Coal will be used primarily for Kingho Coking Plant feed Terra plan to develop multiple pits to better manage complex geology, coal quality variations and unit costs which when combined with on-site CHPP will deliver stable long term coal quantities and quality 31 TERRACOM#32BNU COAL QUALITY COAL QUALITY SUPERIOR TO OTHER PRODUCERS IN REGION BNU BNU MMC MMC Ceke SouthGobi SouthGobi Washed Raw Ganqimaodu Ganqimaodu 1/3 Coking (Targeted) (Targeted) Pit 3 Washed Pit 4 Raw Coal Product B Product F Ash (%)db <10.5 20 10.5 23 8-10 12.5 25 VM (%) db 23-27 24-26 I 28 26 30-33 36 36 + Sulfur (%) db 0.3-0.6 0.3-0.7 I <0.6 <0.6 <1.0 1.3 1.7 G Index 80-95 60-90 83 85 69 na na Y Index 22-26 19-24 | 16 16 9-11 na na 32 TERRACOM#33BNU CHPP TO BE CONSTRUCTED IN 2017 SIGNIFICANT YIELD, QUALITY AND COMMERCIAL BENEFITS Noyon Basin Coal Specification Issues Coal is soft and friable resulting in high proportion of fines The coal fines contains a large proportion of vitrinite and hence coking properties CHPP's in Mongolia or northern China cannot efficiently deal with this specification of coal Benefits of CHPP at BNU Improvement in yields of 3-6% due to CHPP designed specifically to deal with fines Avoids yield manipulation by third party CHPP operators Ability to claim 10% Mongolian VAT against operating costs Reduction in distribution / trucking costs Ability to expand and wash third party coal in the future Status Negotiating vendor finance options / 100% TER owned Approvals completed, construction to commence by end H1 2017 Specifications Phase 1 CHPP Raw feed 1.0-1.5 Mtpa Raw feed rate 200-250 tonnes/hr Minimum 6,000 hour p.a. run time Operate in extreme temperatures (-30 degrees to +40 degrees) Dual product Modular for future scalability and easily relocatable Delivers <10.5% ash product with ability to deliver higher ash / higher yield options 33 TERRACOM#34TRANSPORT INFRASTRUCTURE DEVELOPMENTS TERRA HAS BUILT ROAD TO CHINA June 2013, entered into a 20 year contract: • With the Mongolian government for the construction and use of wholly-owned haul road connecting BNU to the Chinese border at Ceke The road is accessible by all Terra assets located in the South Gobi project December 2013, the haulage road construction was completed July 2014, the Mongolian government awarded a haulage permit to Terra Future development: Currently converting road permit into a state concession agreement Will enable external investor / operator to be brought in to upgrade the road (bitumen sealing) and charge a toll 1632 HT 192 34 TERRACOM#35UVS PROJECT COKING COAL AND POTASH ASSETS IN NORTHERN MONGOLIA Uvs basin is prospective for coal, evapourite salts (potash), Uranium, associated brines and clays (Li and Mg) Mining of coking coal and potash occurs in neighbouring areas Located close to a 220Kw power line which runs from Russia into Mongolia The sealed Kyzyl Highway intersects the project area and runs to the Russian Border crossing at Borshoo Access into Russia then leads to railways which service Vladivostok port. There is also a planned future rail link to China proposed from the region Kemerovo Terra Energy LLC All Licences & Project Areas Ulangor Kyzyl Uvs Projects kilometres Scale: 1:9,251,000 Jiastay toron st'Ordinsky Russiausk Mongolia ayannongor Suchopata Daman Chatanga Terra Energy License World Cities Railways World Country Boundarys Major Coal Basins choybisan Ulaanbaatar onderaan ta Middle Gobi Projects Mandalgow Dorno Gobi Projects Sathap South Gobi Projects 500 China "Dalandzagad Legend Legend Q3-4. Quaternary C2-3hd. Huden formation with coal C1bt. Bal tolgoi formation.. C1hr. Harmodgol formation. Cibr. Baruun termes formation. D3zn. Zuun termes formation. D2-3br1. Borshyn gol formation. D2ch. Hushuut Uul formation. D2cr. Tserd Uul formation. D1-2hn. Handgaityn gol formation. TERRA ENERGY LLC UVS PROJECT SECTION and TARGET COMMODITIES 03-S1ht. Hat gol formation. Fault Baruun Tserd Evaporite pa D2ch2 C1br2 C1 01-2 D2ch1 03-51ht 10 Kilometers COKING COAL TARGET BARUUN TSERD TERRA UVS PROJECT LOCATION OF SECTION THROUGH LICENCES KHUDEN COAL MINE HALITE, SYLVITE Coal target coal mine Khuden D3zn HALITE, SYLVITE D2-30 C1bt Cibt Q3-4 C thri C1br2 D2-3br Potash D2cr Q4 C1h2 C1hr1 MNM C1hr2 03zn Cibri G1hr1 MN, MG Evapote Brine D1-2hn BRINE LEVEL D2ch Li, K, Naa Se, SR COLOURED CLAY TARGETS 03-S1ht D2cr C1br1 OLT BARRIERS, BRINE TRAP 03-51hi CLOSED BASIN CONTAINING EVAPORITE SEDIMENT, BRINES AND COAL UVS LAKE Explondonia Evaporation Uvs Lake Highly Saline Lake Precipitated Salts and Brines 5X Vertical Scale 35 TERRACOM#36MID GOBI PROJECT EXPLORATION TENEMENTS WITH SUBSTANTIAL THERMAL COAL RESOURCES Potential for large scale open cut operations to supply power producers in China and Mongolia Consists of two exploration licenses spanning 360 sq km in Mongolia's Dundgovi Province ► Located approximately 200 km south of Ulaanbaatar and just over 200 km west of the Mongolian railway grid, which offers a logistics route to China via the Erlianhaote border crossing Since acquiring the Mid Gobi Project in 2011, TerraCom has established JORC 2004 compliant coal resources of 221.4 Mt classed as Indicated and Inferred Quality testing to date suggests the coals to be a combination of mid and low rank thermal coal Mid Gobi Project - JORC Resources* Measured Indicated Inferred Total Mid Gobi 32 Mt 189 Mt 221 Mt Location Trans-Plong ULAANBAATAR MONGOLIA Middle Gobi Project Sabarahand CHINA Erenhot Tas-Plong Nur Shait South Gobi Project Dalandadd Tavan Tolgol Oyu Tolgoi Tsagaan Tolgol Gants Mod Bayan Obo Baotou Jining Cele M Erie Q W Linh (pard Ch arnaveg Wulher Shenmu The Chine Major paved road (border to Narlin Sukhait: 40kms, unpaved) Minor unpaved road Railway Railway approved by Government or being built Das Manchuria Hailmay Quebe BEING BOHA GULF to Pace Ocean Juncarr Dalong Shoahou Port Tunin o Hugh Hu Note *: no change to this information from previous disclosures and see competent person statement at end of presentation 36 TERRACOM#37TERRACOM COMPETENT PERSON STATEMENT Several JORC Resource estimates disclosed in this presentation were prepared and first disclosed under the JORC Code 2004. None have been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Clyde Park & Springsure Technical Information in this presentation on Clyde Park and Springsure resources (dated February 2012) and Springsure resources (dated November 2012) has been prepared by Kim Maloney who is a member of the Australasian Institute of Mining & Metallurgy. Kim has experience within the Central Queensland coal mines and has held various roles in these mine's Technical Services, including Exploration Geologist, Mine Geologist and Geology Superintendent. Kim is a Competent Person for coal as defined by the [JORC Code (2012)}. Kim is a Senior Resource Geologist, previously with Moultrie Geology. Her principal qualifications are a Bachelor of Science from James Cook University and a Masters of Business Administration (Human Resource Management) from the Central Queensland University. South Gobi North Technical information in this report in relation to coal quality and washability analysis of South Gobi Project and fluorite mineralisation on Mid Gobi Project has been compiled by Mr Peter Goodman, who is a Member of the Australasian Institute of Mining and Metallurgy (Member # 307830) and has had sufficient experience which is relevant to the style of mineralisation under consideration and to the activities which are being undertaken to qualify as a Competent Person as defined in the 2012 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Goodman is employed by Terra Energy LLC and consents to the inclusion of the matters based on his information in the form and context in which it appears. Mr Goodman has over 10 years experience in the processing of fluorite type deposits and over 20 years experience in the design and construction of coal processing facilities. The information provided by Salva Resources in this report to which this statement is attached that relates to Exploration Results is based on information compiled by Dr Aldo Van Heeswijck, who is a Member of The Australasian Institute of Mining and Metallurgy. Dr Van Heeswijck is employed by Salva Resources and 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 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Aldo Van Heeswijck consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. BNU North Technical information in this presentation that relates coal resource estimates for the BNU North Deposit is based on information compiled and reviewed by Mr Craig Williams, who is a member of the Australasian Institute of Mining & Metallurgy. Mr Williams, Principal Consultant - Geology and a fulltime employee of HDR | Salva, has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code (2012). Craig Williams consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. South Gobi, Middle Gobi & Hughenden Technical information in this presentation in relation to the exploration targets and JORC Resources for South Gobi, Middle Gobi, and Hughenden Projects has been compiled by Mr. Mark Biggs, previously Principal Geologist of Moultrie Database and Modelling. Mr Biggs now works for ROM Resources Pty Ltd, Mr. Biggs is a member of the Australasian Institute of Mining and Metallurgy and has over 25 years of experience relevant to the style and type of coal deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves (JORC) 2012. The resource information in this report is being released to the Australian Securities Exchange. Mark Biggs consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. Noyon Syncline / Khar Severgen Technical information in this presentation in relation to the exploration target tonnage range and coal resources of Noyon Syncline is based on information reviewed by Mr Troy Turner who is a member of the Australian Institute of Mining and Metallurgy and is a full time employee of Xenith Consulting Pty Ltd. Mr Turner is a qualified geologist and 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 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Turner consents to the inclusion in the report of the matters based on the information, in the form and context in which it appears. Blair Athol Resource and Reserves Technical information in this presentation in relation to the coal resources of Blair Athol is based on information reviewed by Mr Troy Turner who is a member of the Australian Institute of Mining and Metallurgy and is a full time employee of Xenith Consulting Pty Ltd. Mr Turner is a qualified geologist and 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 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Technical Information in this presentation in relation to Reserves for Blair Athol has been prepared by Mr John Cawte under the guidelines of the 2012 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code). Mr Turner and Mr Cawte consent to the inclusion in the report of the matters based on the information, in the form and context in which it appears. 37 TERRACOM