Company Presentation 2013 (Full Year)

(1)

1 PT Toba Bara Sejahtra Tbk ( Toba )

(2)

2 Disclaimer

These materials have been prepared by PT Toba Bara Sejahtra (the

“Company”)

.

These materials may contain statements that constitute forward-looking statements. These statements

include descriptions regarding the intent, belief or current expectations of the Company or its officers with

respect to the consolidated results of operations and financial condition of the Company. These statements

can be recognized by the use of words such as

“expects,” “plan,” “will,” “estimates,” “projects,” “intends,”

or

words of similar meaning. Such forward-looking statements are not guarantees of future performance and

involve risks and uncertainties, and actual results may differ from those in the forward-looking statements

as a result of various factors and assumptions. The Company has no obligation and does not undertake to

revise forward-looking statements to reflect future events or circumstances.

(3)

Content

Performance

Corporate Profile

Investment Highlights & Growth Strategies

Business Overview

2014 General Guidance

3

6

5

1

2

4

(4)

(5)

Toba specializes in thermal coal production and comprises three operating subsidiaries:

Adimitra

Baratama Nusantara (ABN), Indomining (IM) and Trisensa Mineral Utama (TMU

), which hold adjacent

concession areas located in East Kalimantan, Indonesia

Toba in Brief

Substantial and diversified thermal coal

reserves and resources

o

_{JORC-compliant proved and probable reserves of}

147 MM tons and measured, indicated and inferred

resources of 236 MM tons

o

_{Coal brands with calorific values ranging from}

4,700 - 5,800 Kcal / kg GAR

Reserves

%

Strong growth profile & upside potential

o

Produced 5.6 MM tons of coal in 2012 and grew to

produce around 6.5 MM tons of coal in 2013

o

_{Prime location provides operational cost edge to}

grow as a logistical & operational center for the area

o

Continued exploration effort to increase our Reserves

and Resources. Current reserves only account for 52%

of total area, hence vast area remains unexplored

Revenue

(1)

Total: 147 MM Tons

Total: US$ 422 Million Total: US$ 59 Million Total: 236 MM Tons

Note: (1) Revenue and EBITDA as per 2013 results

(6)

Notes:

1. Son of TS founder, Luhut B. Pandjaitan 2. Figures are rounded off

Ownership Structure

•20-year Production Operation Mining Permit ( IUPOP ) expiring in December 2029

•IUPOP was converted from Kuasa Pertambangan ( KP ) in 2009

• IUPOP expires in June 2013

• IUPOP was converted from KP in 2010

• IUPOP extension was completed in March 2013 (First out of 2 extensions: in 2023, with tenor of 10 years each)

•13-year IUPOP expires in December 2023

•IUPOP was converted from a KP in 2010

• Plantation permit expires in 2036

• 2,990 ha • 683 ha • 3,414 ha • 8,633 ha (Right to Use Land)

• Reserves: 117MT- JORC

• Resources: 156MT- JORC

• Reserve: 22 MT- JORC

• Resources: 37MT- JORC

• Reserves : 8 MT - JORC and additional 7 MT of internal estimate

• Resources: 43 MT- JORC

• Planted Area: 2,896 ha

License

Area

Davit Togar Pandjaitan(1) _{PT Bara Makmur Abadi}

PT Toba Sejahtra ( TS ) PT Sinergi Sukses Utama Roby Budi Prakoso

71.8% 0.8% 6.2% 5.1%

51.00% 99.99%(2)

Public

12.5%

Reserve

90.00%

(7)

Majority Shareholder

Toba believes it benefits from Toba

Sejahtra’

s experience in the Indonesian coal sector as well as its

leadership and experience

Controlling Shareholder with Established Track

Record

… Helmed by an Experienced Leader

• General (Ret.) Luhut B. Pandjaitan is the key shareholder and founder of Toba Sejahtra Group. He is currently the chairman of TS

• Mr. Luhut had a long and illustrious career in the civic service before turning to the commercial sector. Over the course of thirty years in the Army Special Forces, Mr. Luhut rose to become a four-star general

– In 1999, Mr. Luhut retired from the military service to serve as Ambassador for the Republic of Indonesia to Singapore

– In 2000, he was appointed Minister of Industry and Trade of the Republic of Indonesia

• Thereafter, Mr. Luhut applied his knowledge and leadership skills to establish TS in 2004, building it from the ground up into a major business group with interests in energy oil and gas, power and agribusiness

• PT Tritunggal Sentra Buana (Palm Oil)

(8)

2007

• IM commenced

production at

200k tons

2011

• TMU commenced production

• Toba production hit 5m tons

2008

• ABN commenced

production at 100k tons

• Toba underwent

operational adjustment due

to drop in coal market

2010

• TS acquired the remaining share for IM

from minority shareholder

• Toba acquired 51.0% of ABN, 52.5% of

TBE (IM

’

s shareholding company) and

51.0% of TMU

• Toba production hit 4m tons

Key Milestones since Inception

Strong track record of acquisitions, development of greenfield mines, rapid production ramp-up and

experience to adjust operation in a down-market

2007

2008

2009

2010

2011

2012

2013

2012

• Toba acquired the minorities

’

shares in TBE and TMU

• IPO/Listed on IDX, 6

th

_{July 2012}

• Eliminated overlapping issues with

plantation company (PKU)

2009

• ABN & IM production

reached 2m tons

2013

• IM successfully

extended IUPOP

until 2023

8 Listed on IDX

06 July 2012

Number of Shares Offered

210,681,000 shares or 10.47%

IPO Proceed

IDR 400,293,900,000

Anchor Investor

Baring Private Equity Asia (8% at IPO)

Ticker Code

TOBA

(9)

(10)

Samarinda

(total ~120 Km)

~65 Km

ABN

Kutai Energy

Adjacent

locations for

all 3 mines

TMU

ABN

Furthest pit to

jetty 25km | with

closest one ~5km

Major city is

less than 50

km

Close proximity

transhipment

point & jetty

Toba owns all infrastructures (coal processing plants, overland conveyors, and jetties), giving

significant operating leverage

vs other concessions in surrounding areas

Prime Location Gives Significant Cost Advantage (i)

Balikpapan

TMU - IM Hauling Road

~ 120 km

(11)

Prime Location Gives Significant Cost Advantage (ii)

Coal Chain Distance

(a)

In km

Toba’s transportation costs are low due to its close proximity to the Transshipment Point

Notes : (a) Weighted average distance based on respective production usage of each transportation facility (from pit to vessel) (b) Represent ABN & IM only

Source : Broker Reports

(b)

(12)

Note: Areas already explored

Vast Unexplored Areas and

Relatively Long Reserve Life

• Explored 3,704 of 7,087 hectares of concession areas

(52% of total concession area)

and drilled 3,512

boreholes as of 31 December 2011

• Additional

JORC

coal

reserves

and

resources

expected to be discovered, especially at TMU where

only

680 hectares

out

of

3,414

hectares

of

concession

(20% of TMU concession area)

have

only been explored

TMU

Source : Broker report

Toba’s reserve life of over 20 years compares

favorably with other listed peers

Toba’s Concessions

Reserve life ~ Industry Comparison

ABN

IM

TMU

(13)

2008 2009 2010 2011 2012 2013 2014e

TMU

IM

ABN

Yearly Coal Production

Mt : In Million Tons

Operational Data

• Production

volume

rose

significantly

from

only

800,000 tons in 2008 to 6.5 m

tons in 2013, booking CAGR

growth

of

41.5%

over

relatively short period of 5 yrs

• IM and TMU both contributed

to total

production’s

higher

volume growth of 40% and

200% respectively

• Stripping Ratio (SR) fell from

14.9x in 2012 to 13.4x in 2013

due to lowered mining costs

• TMU’s

production increased

from only 88,000 tons in 1Q13

to high of 414,000 tons in

4Q13

post

earlier-than-expected

completion

of

hauling road from TMU-IM via

ABN in 2Q13

2008 2009 2010 2011 2012 2013

Production Volume ('mn ton) 0.8 2.0 4.0 5.2 5.6 6.5

ABN 0.1 1.1 3.1 3.8 4.4 4.2 IM 0.7 0.9 1.0 1.4 1.0 1.4 TMU - - - 0.0 0.2 0.9

Stripping Ratio (x) 11.9 10.5 9.9 12.7 14.9 13.4

Cumulative Production

achievement >10 million

tons

Cumulative Production

Achievement >20

million tons

Solid Operating Track Record

5.6

(14)

Evolution of Quarterly FOB Cash Cost from 2012-2013

Significant decrease in FOB vessel cash cost from US$ 57 in 4Q12 to US$ 49.0/ton in 4Q13 stemmed

from lower mining cost (overburden removal and dump distance account for two of

Toba’s

major cost

components)

Quarterly FOB Vessel Cash Cost

In US$/ton

Notes:

Quarterly cash costs figures are audited

(1) FOB Vessel Cash Cost = COGS including royalty and selling expense –depreciation and amortization

(2) Adj. FOB vessel cash costs = COGS, including selling & marketing expense and royalty –depreciation & amortization of exploration & development and

excluding deferred stripping cost

14

67 69 60 57 55 55 ₅₃ ₄₉

13.6x _12.7x _12.7x

0x

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

FOB Vessel Cash Cost

(15)

(16)

Key Message during 2013



Maximizing productivity and

coal sales amid weak coal

industry

Proven production achievement

where in end of 2013 posted 6.5

million tons above from 2013

production target of 5.8

–

6.4 million tons



Undergoing continuous

efficiency program to

improve profitability and

competitiveness

A

series

of

projects

were

completed

throughout

2013

to

facilitate

efficiency

program, including

“hauling road”

and

“underpass”



Increasing financial

capability to foster corporate

growth

Good financial standings where

cash rose to US$ 63.3 million at

end-2013,

up

by

74.3%

from

December 2012, while supported

by available loan facilities from

internationally reputable banks



Supporting and actively

being involved in Corporate

Social Responsibility (CSR)

Actively

participating

in

the

development in CSR, and receiving

several mining proper awards in

2013

(17)

Key Milestones in 2013

2007

2008

2009

2010

2011

2012

• Hauling Road TMU

–

IM

completed ahead of

schedule

• TMU Production ready

for ramp up to 80 - 100 K

tons/month

May’13

Oct’13

• New CPP at IM nearing

completion

• IM’s capacity expected

to increase from 3 to 6

million TPA

Nov’13

• 2nd underpass

at ABN

completed

Apr’13

• TMU set up mine

operations in new

pit (block 4)

• Border-mining at

ABN & IM

commenced

Jan’13

• IM entered into

new Mining

Contract with

RPP for 5 years

Toba is on track to integrate its operation and infrastructure capabilities

………..

_Sep’13

_Dec’13

(18)

TMU

IM

ABN

TMU

Toba’s Concessions

Underpass Infrastructure

Loading Speed of 1,800 TPH High Built CPP Cap

10 MM TPY Hauling Road to IM

Mine Ops Commenced at Block 4

Short Coal Hauling Distance < 5km

CPP Ramp Up to 6MM TPY

Conveyor for TMU & Others

Short Coal Hauling Distance 4km

ABN

TMU

Toba has Developed Infrastructure & Exploration

Capabilities

INDOMINING

18

(19)

(20)

Toba’s Operational Performance in 4Q

2013

Quarterly Production & Stripping Ratio (SR)

Production in Million Tons

Production Summary

MT: Million Ton

2012

2013

Change

Comment

Sales Volume

Sales volume grew significantly in line with production

volume growth

SR continued to fall resulting from lower mining cost

• Production volume of

1.8 MT in 3Q13 and 1.9 MT in

4Q13 was attributable to

TMU’s

contribution

in

boosting overall growth via

on-going ramp up

20

5.6

6.5 Production volume grew significantly by 17.0% y-o-y

from 2012 to 2013 mainly driven by border mining at

IM and production ramp-up at TMU

16.1%

4Q'12 1Q'13 2Q'13 3Q'13 4Q'13

(21)

ABN Operational Performance

ABN

TMU

IM

PT Kutai Energi

Quarterly Production & Stripping Ratio

Production in Thousand Tons

1,225 936 995 1,188 1,101 12.6x 16.6x

14.2x 12.7x

13.1x

5x 10x 15x 20x

500 1,000 1,500

4Q12 1Q13 2Q13 3Q13 4Q13

Production volume (mt) Stripping ratio

Dump

distance (m) 1,723 1,719 1,864 1,843 1,779



Completed Infrastructure projects

(underpass and workshop) to increase production and improve

cost efficiency



Dump distance was lowered

gradually in 2013



3 Consecutive Years East Kalimantan

Green Proper

Mining Award

(22)

IM Operational Performance

TMU

ABN

PT Kutai Energi

22 Quarterly Production & Stripping Ratio

272 270 360 339 425

9.7x 11.2x

12.9x 14.7x 12.8x

0x 5x 10x 15x 20x

0 250 500

4Q12 1Q13 2Q13 3Q13 4Q13

Production volume (mt) Stripping ratio

Dump

distance (m) 2,284 1,698 1,662 1,728 1,570



Built new CPP, increasing additional 3 millions tpa to become total 6 millions tpa of capacity



Dump distance fell by 31.2% from 4Q12 to 4Q13



2 Consecutive Years East Kalimantan

Blue Proper

Mining Award

(23)

TMU Operational Performance

ABN

IM

PT Kutai Energi

Note:

- - -

Hauling road

85 88 147 275 420

10.8x 11.3x 12.7x _10.3x 11.1x

0

4Q12 1Q13 2Q13 3Q13 4Q13

Production Volume Stripping Ratio

88

1Q13 2Q13 3Q13 4Q13

TMU Significant Production Ramp-Up

After hauling road completion

May



TMU completed 17 km hauling road in May 2013

ahead of schedule to connect with ABN’s road

and IM’s infrastructure facilities (CPP and Jetty).

This newly streamlined logistics flow maximizes

infrastructure sharing between ABN, IM, and

TMU, resulting in TMU production ramp up and

much improved overall cost efficiency



In 2013, Toba booked the highest 4Q production

volume against previous 4Q volumes throughout

its corporate history at 1.9 mn tons, mainly

contributed by TMU’s drastic production ramp up

Key Highlights

Quarterly Production & Stripping Ratio

(24)

397

422

2012 2013

23

59

2012 2013

12

36

2012 2013

2013 Financial Highlights

Revenue

US$ million

EBITDA

US$ million

Net Income

(a) US$ million

Note: (a) Net Income before minority interest (b) Figures are audited



Although the weak global coal prices affected the

Company’s

overall ASP by 7.8% from US$ 72.2/ton in 2012 to

US$ 66.6/ton in 2013, Toba nevertheless demonstrated resilience by posting a stable 6.3% rise in revenue from

US$ 396.7 million in 2012 to US$ 421.8 million in 2013



EBITDA surged by a hefty 160.7% y-o-y from US$ 22.5 million in 2012 to US$ 58.6 million in 2013, resulting

from predominantly

Toba’s

successful strategy in expanding its sales volume, in addition to a combination of the

Company’s

on-going cost efficiency initiatives and improvement in sales and marketing



Toba booked total comprehensive income (after minority interest) of US$ 36.1 million, up by a stellar 201.1%

(25)

2012

2013

Change %

Per Ton Basis

ASP

US$/ton

72.2

66.2 -8.4%

Net Income before Minority

Interest

US$'M

12.0

36.1 201.1%

Free Cash Flow

US$'M

(47.3)

40.9 186.5%

Capex

US$'M

15.4

23.0 49.0%

Ratio

Gross Profit Margin

%

12.2%

18.9%

55.2%

EBITDA Margin

%

5.7%

13.9%

145.1%

Operating Profit Margin

%

5.3%

11.9%

122.9%

2013 Financial Performance

–

Higher EBITDA Margin

Note (a) Adj. FOB vessel cash costs: COGS, Royalty, Selling Expenses excluding depreciation and amortization

(b) Figures are audited



Coal production grew 16.6% yoy

driven by TMU production

ramp-up

(a)



Hence, EBITDA increased by

160.7% attributable to lower cash

cost and increased production by

-16.0% and 16.6% respectively



FOB vessel cash cost slashed by

16.0% yoy mainly due to lower

mining costs (lowered SR and

shortened dump distance)

(26)

Strong Balance Sheet

–

More Room to Grow



The

Company’s

assets stood at US$ 311.7 million in 2013 or up 19.2% from US$ 261.5 as per end-December

2012



Total Liabilities rose by 20.3% y-o-y to US$ 181.2 million in 2013 from US$ 150.6 million as per 31

st

_December

2012 and interest bearing debt expanded by 13.9% to US$ 55.9 million in 2013 from US$ 49.0 million as per

end of 2012



Total Equity in 2013 increased 17.6% to US$ 130.4 million from US$ 110.94 million as per end-2012, and this

was attributable to additional income for the period

Consolidated Balance Sheet

In Thousand US$

Net Debt Position

In Million US$

Net Debt

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Cash and cash equivalents Interest Bearing Debt

Net Cash

Dec-12

Dec-13

% Changes

Cash and cash equivalents

36,307

63,302

74%

(27)

Toba’s

Capex Realization in 2013



In 2013, Toba spent Capex of US$ 22,9 million, allocated mainly for:

• Land compensation,

• Construction of new CPP at Indomining,

• Additional vehicles, machineries and heavy equipment,

• Completion of coal hauling road from TMU to IM through ABN, and

• Second underpass construction at ABN



In 2013, targeted Capex was US$ 27,1 million, and Toba managed to only spend US$ 22,9

million to meet required investment. This resulted in potential savings and carry-forward of

US$ 4.2 million in Capex

In US$’000

5,394

22,970

27,100

5,230

4,319

3,456

1,807 528

2,236

0 5,000 10,000 15,000 20,000 25,000 30,000

CPP Land comp.Vehicles, machineries and heavy eqHauling road Underpass Exploration Others CAPEX YTD 2013CAPEX PLAN 2013

Note:

In-house Capex figures for the year ended 2013

(28)

South Korea

2011

2012

**2013*)**

Sales (million tons)

ABN

3.7

4.2

4.7 IM

1.8

1.1

1.4 TMU

-

0.2

0.7 2013 Sales and Marketing

–

Quality & Diversified Buyers

GAR 52 ABN 18%

GAR 56HS ABN 22%

GAR 56RS ABN 24% GAR 58LS IM

8% GAR 47 TMU

10%

Others 18%

Sales by Product

Note: * )This includes inter–subsidiaries sales

Note: Sales to export destinations ie. Vietnam, Thailand , Hong Kong, Malaysia and Japan each below 3%

Initiatives Undertaken:



Commenced building well-diversified customer base and export market coverage



Generated good quality sales backed by quality buyers and favorable terms of payment



Achieved tighter discount rate to reference market price with ASP of US$ 65-68/ton

(29)

0 20 40 60 80 100 120 140 160 180 200

2008 2009 2010 2011 2012 2013

US$ 62.5/t

US$ 50.1/t

US$ 65.5/t

US$ 91.3/t

US$ 72.2/t

US$ 66.2/t

Newcastle Index

Average Selling Price

Average Selling Price

(US$)

Source : Global Coal



Newcastle Index yearly average declined by 12.0% from US$ 96.9/ton in 2012 to US$ 85.3/ton in

2013

(30)

Strong Relationships with Multinational Customers

Major Customers

DRAGON ENERGY GROUP

Major customers provide the stable

business support for

Toba’s

marketing…

…

minimum marketing fees because

Toba handles our own marketing

internally

Toba’s

Marketing Operations



Central Marketing Operations of all 3

subsidiaries



Internally developed customer base

that allows Toba to have low marketing

costs



Balance mix of long term contracts,

short term and spot



Active participation in reputable

conference and trade shows to promote

Toba brand



Enhance marketing strategy to sell

directly to end-users

(31)

31 2014 Guidance

(32)

0.9

4Q2009 4Q2010 4Q2011 4Q2012 4Q2013

Toba’s Performance Guidance

Operation

2012

2013

Changes

2014E

Changes

Production Volume (million tons)

5.6

6.5 17.0%

7.2 –

7.8

10.0 –

20.0%

Stripping Ratio (x)

14.9

13.4 (10.0%)

12.9 –

13.3 (0.7%)

–

(3.7%)

Average Selling Price (ASP) (US$/ton)

72.5

66.6 (7.8%)

63.0 –

67.0 (4.3%)

–

(6.0%)

Coal Production 2008

–

2014

In Million Tons

2008 2009 2010 2011 2012 2013 2014e

TMU

IM

ABN

Notes: - All figures are rounded up to one decimal point

32

Highest 4Q production volume throughout corporate history

In million tons Above 2013

internal guidance of 5.8-6.4m

(33)

CAPEX in 2014



In 2014

, Toba targets

Capex at US$ 24,9

million

with the following allocations:

• Construction of Palm Oil Mills in PKU

• Land compensation at TMU,

• Conveyor at ABN,

• Additional heavy equipment at ABN and

IM,

• Exploration activities in 3 mines

Capex - ABN

Capex- IM

Capex - TMU

In US$’000 In US$’000 In US$’000

7,863

639 556

9,058

Land Clearance

Exploration Others Capex

828

Building Exploration Others Capex

2,235

Conveyor Heavy Equipment

Exploration Port Others Capex

Palm Oil Mills 38%

Allocates US$ US$ ~9million

Note:

(34)

34 CSR & Environmental Highlights

(35)



Providing health services to the local

communities

Toba is Committed to Being Responsible

Corporate Citizen



Creating educational opportunities for local

communities

including

renovating

schools, training teachers, providing

post-graduate

educational

assistance

and

creating a literacy program for adults and a

scholarship

program

for

school-aged

children



Creating local employment opportunities by

sourcing some of the

Company’s

site

workforce from the neighboring areas

Toba is continuously developing and implementing its corporate social responsibility programs



Helping groups of farmers plant crops of

vegetables and bamboo and assisting with

land rehabilitation

Creating Educational and Employment Opportunities

Providing Health Services

Supporting Farm Productivity

Toba is

Committed to

CSR, contributin

g ~US$ 300k

annually for

(36)

Local Media Publication on

ABN’s

CSR

ABN Awards Scholarships to Hundreds of

Elementary and High School Students

PT ABN Gives Free Medical Facilities, Milk, and

Fruits to 1,460 Children

PT ABN Builds Training Center for Local

Community

ABN

’s CSR

Successfully Develops Local

Women in Home Industry of Cassava Crackers

Production

“Kaltim Post, 15

th

April 2013”

“Kaltim Post,

31 st

_July

2013”

“Kaltim Post,

20 th

_June

2013”

“Kaltim Post,

10 th

_{October 2013}

”

(37)

2007

2008

2009

2010

2

0

1

1 Target

PROPER Mining Award for

ABN, IM, & TMU

Award and Recognition

ABN

East Kalimantan

PROPER Green

Mining Award

2012

2014

2011

Ernst and Young

Social

Entrepreneur of

the Year 2011

2013

Indomining

East Kalimantan

PROPER Blue

Mining Award

PT Toba Bara Sejahtra Tbk

Ranks as

one of Indonesia’s Top

50 companies

(38)

(39)

(40)

Toba’s coal quality

is in mid-upper

range

Source: Broker Reports

(41)

Toba’s

production growth is among the highest in the industry over the last 4 years

Production Growth Comparison 2009 - 2012

CAGR %

(42)

Executions and Achievements so far… (I)

Manage Cash Cost: lower SR &

dump distance

OPERATION

Achievement

Execution

Initiative

Construct Hauling Road from

TMU to IM

Share Existing Infrastructure

Adjusted mine plan in 3Q12 and

lowered dump distance despite

pre-stripping in 1Q13 at ABN

Construction commenced end-2012

and was scheduled for completion in

2Q13

TMU commenced infrastructure-sharing

using ABN’s road and IM’s CPP & Jetty

Provide Financing to IM

FINANCIAL

Optimize Sales through Hedging

Centralize Fuel Supply

Maximized current ideal capital structure

by using loan to finance new CPP

construction and land compensation

Made available hedging line with

notable financial institutions

Sourced constant bulk supply from

major fuel supplier to allow for good

monitoring of effective fuel usage

Secured 3-year US$ 15 mm term loan

from SCB at competitive lending rate

of LIBOR + applicable rate

No hedging has been utilized. Sold

~72% of 2013 sales volume using fixed

pricing, and securing cash

prepayments

Cash cost is on track to be

lowered ~US$8/t by FY13

Hauling road was completed in

May 2013, ahead of schedule

TMU’s underwent significant

production ramp-up from 88K tons

in 1Q13 to 414K in 4Q13



Sourced supply at competitive

price, while continuing to seek

other sources with better pricing



In Progress

Conduct Joint Mine Plan

Maximizing extraction of ~2 MT of

high quality coal reserve with low SR

ABN & IM commenced

joint-border mining end-2012

(43)

Executions and Achievements so far… (II)

Secure Sales Volume and

Maintain this Activity

continuously

COMMERCIAL

Achievement

Execution

Initiative

TOBA successfully sold and secured

~ 50-90% of targeted sales volume for

2013

Develop and Implement Corporate

Social Responsibility

CORPORATE SOCIAL RESPONSIBILITY / ENVIRONMENT

Achievement

Execution

Initiative

• Created Educational Program for

local Communities

• Provided health services to local

communities

• Created local employment

Proper Mining award in East

Kalimantan for ABN and IM

• ABN secured ~ 80-90% of 2013

targeted sales

• IM secured one-year contract

with one of its major customers

at competitive price

• TMU secured ~50%

prepayment from one of buyers

Enhance Marketing Expertise

TOBA negotiates directly with

logistics providers

Internal marketing team currently

handles sales activities

Maximize Cost Efficiency

Lower logistics cost (barging

costs) by 18% from 1Q13 to 2Q13



TOBA does not depend on third

party marketing agent

(44)

Integration of three

(3) mines

• Benchmarking and sharing between departments and functions

• Optimize and coordinate mine planning and logistics

• Centrally coordinate and streamline corporate finance, legal, human resource and CSR functions

• Joint mine plan and infrastructure sharing

1 Increase coal reserve

and resource

• Continue exploration activities to increase proven and probable reserves as only 52% has been explored to JORC standard

• Consider opportunities to acquire coal

concessions with significant reserves

3 Strengthen existing

and develop new

customer

relationships

• Supply a higher proportion of sales volume to end users, while maintaining relationships with existing coal traders

• Target customers in Japan, Taiwan, South Korea, China, Vietnam and Hong Kong, South East Asia and India

4 Continue to focus on

health and safety,

environmental track

record and

commitment to CSR

• Maintain and enhance high international operating standards, utilize automated mining methods to minimize accidents and enhance safety

• Foster community ties through development programs as well as job creation

5 Organically increase

coal production levels

• Expand coal production through increased production and mine development activities

• Strengthen

relationships with third party mining

contractors and work closely with them to improve their productivity

2 Toba’s

Business Strategies

Growing Reserves and Maintain Profitability at Different Cycles

(45)

• Current production capacity (31 December 2012):

– Crusher: 10 MM tonnes p.a.

– Conveyor: 10 MM tonnes p.a.

• Produces two varieties of blended thermal coal

– ABN 52: Marketed CV(1)_{of 5,200 kcal / kg GAR}

– ABN 55: Marketed CV of 5,500 kcal / kg GAR

– ABN 58 : Marketed CV of 5,800 kcal / kg GAR

• Substantially all of the owners of the land within ABN’s

concession area have been compensated and ABN has been granted the exclusive right to mine those areas

• Area: 2,990 ha

• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan

• Type of license: IUPOP

• Expiry date: 1 December 2029

• Commencement of production: September 2008

• 2012 production: 4.4 MM tonnes

• Mining consultant: PT Runge Indonesia

ABN: Coal Concession Overview

IM

• Historically sold between 50%-100% of its annual production through long-term (longer than 1 year) with coal trading companies

– The remainder were sold on the spot market

• Currently, IM sells coal to buyers based on fixed priced contracts up to one year, backed with pre-determined cash prepayments

(46)

• Current production capacity (31 December 2012):

– Crusher: 3.0 MM tonnes p.a.

– Conveyor: 4.5 MM tonnes p.a.

• Produced one variety of blended thermal coal “Indomining” with marketed CV(1)_{of 5,700 kcal / kg GAR in 2012}

– May produce additional varieties of blended thermal coal in the future

• Has compensated the majority all of the owners of the land within its concession area for their land and has been granted the exclusive right to mine those areas

• Area: 683 ha

• Location: Sanga-Sanga, Kutai Kartanegara, East Kalimantan

• Type of license: IUPOP

• Expiry date: IUPOP effective until 2023 and can be renewed for another 10 years

• Production commencement: August 2007

• 2012 production: 1 MM tonnes

• Mining consultant: PT SMG Consultants

IM: Coal Concession Overview

IM

TMU

Overview

Operations

Marketing

• Historically sold approximately 50% of its annual production through short-term (one year or shorter) contracts with coal trading companies

– Clients include Glencore, Flame, Peabody, Dragon, Aempire

• The remainder are sold on the spot market

• Currently, IM sells coal to buyers based on fixed priced contracts up to one year, backed with pre-determined cash prepayments