Company Presentation 1H 2013

(1)

1 PT Toba Bara Sejahtra Tbk ( Toba )

Company Presentation

(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)

3 Content

Operational & Financial Highlights

2

5 Corporate Profile

4 Operational & Marketing Profile

3 Business Overview

CSR & Environmental Highlights

(4)

4

(5)

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

• Strong growth profile

o

Produced 5.2 MM tons of coal in 2011 and grew to

produce around 5.6 MM tons of coal in 2012

o

_{Prime location provides the 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 our

total area has been explored

Revenue

(1)

Total: 147 MM Tonnes

Total: US$ 425 MM Total: US$ 30 MM Total: 236 MM Tonnes

Note: (1) Last Twelve Month analysis ~ Revenue and EBITDA

(6)

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

(7)

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

• A privately owned group founded in 2004 with interests in energy and plantations

• Its business segments are as follow:

–Energy:Owns 5 coal mining concessions through Toba and PT Kutai Energi. All of TS' mines are characterized by low production costs and favorable proximity to ports

–Oil & Gas: In the exploration phase of the 4,567 sq miles South East Madura Block through subsidiary E&P company PT Energi Mineral Langgeng

–Power Plant:Operates a 30 MW coal-fired power plant in Palu, Central Sulawesi and is developing a 120 MW greenfield power plant in Senipah, East Kalimantan

–Agribusiness: A 25% stake in a 12,000 ha palm oil plantation in East Kalimantan

• 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

(8)

8 Initial Public Offering

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)

(9)

9 2007

• IM commenced

production

2011

• TMU commenced

production

• Toba production

hit 5m tons

2008

• ABN commenced

production

• 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

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

(10)

10

(11)

Source: Company data

2007

2008

2009

2010

2011

2012

2013

TMU

Indomining

ABN

11 Solid Operating Track Record

0,8

MT = Million Tons

0,2

• Toba started exploration at ABN & IM in 2006 and at TMU in 2008

• Production grew at 65% CAGR from initial size of 800k in 2008 to 5.6 MT in 2012

• Toba focuses on

Continuous Production Growth

and this is supported by available infrastructure

capacity of

13 MT

of coal

• Additional

3 MT

of capacity is expected to be realized in 3-4Q13 to become total of

16 MT

• Production growth will be driven by TMU and Additional CAPEX will help it fuel growth

ABN IM TMU

Toba is transitioning from Greenfield into growing major player

Fo

re

ca

st

(12)

12 Prime Location Gives Significant Advantage in Cost

Samarinda

Mahakam River

Muara Jawa locations for all

3 mines

Furthest pit to jetty 25km | with closest one ~5km

3

Major city is less than 50

km

4

Close proximity transhipment

point & jetty

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

giving

significant operating leverage

vs other concessions in surrounding areas

Prime Location

TMU - IM Hauling Road

Balikpapan

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13

Coal Reserves Coal Resources

(MM Tons) Proved Probable

Total

Reserves Measured Indicated Inferred

Total

Reserves and resources upside from conversion of resources to reserves and further exploration of

concession areas

Notes:

1. Differences in totals are due to rounding off

2. The Runge Report for ABN was as of 31 December 2011, the PT SMG Consulting Report for IM was as of 1 January 2012 and the Marston Report for TMU was as of 31 October 2011

Total: 147 MM Tons Total: 236 MM Tons

Substantial Reserves and Resources

Support Production Expansion

(14)

14 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

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15 Business Overview

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16 Manage cash costs: Lower SR,

Shorten Dump Distance

Construct hauling road from

TMU to IM

Share current infrastructures :

CPP & Jetty & lower costs

Centralize fuel supply

Optimize sales through hedging

activities

Increase our reserves through

acquisition and exploration

Strategic Initiatives to Manage Changing Environment

Returning future

Profitability

Level

Strategic Initiatives / Response to Changing Coal Prices

1

2

3

4

5

(17)

17 Milestone 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

Sept’13

• New CPP at IM

expected to be

completed

• IM’s capacity

expected to increase

up to 6 MMTPA

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 in integrating its operation and infrastructure

capabilities

(18)

18 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 Business Strategies

(19)

19 Operational & Financial Highlights

(20)

Toba’s Operational Performance in 2Q

2013

Quarterly Production & Stripping Ratio (SR)

Thousand Tons

Production Summary

1Q13

2Q13

Change

Comment

Production

(Mn tons)

SR (x)

1.29

1.50

15.1

13.6

1.44

1.37 Sales volume in 1Q13 was slightly higher than in 2Q13

_{mainly due to inventory clearance accumulated from}

4Q12

-4.9%

16.6%

-9.9%

Q-o-Q production in 2Q13 increased by 16.6%

resulting from completion of pre-stripping at ABN and

TMU

SR fell due to completion of pre-stripping at ABN

Sales

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q2013 2Q2013

Production volume Stripping Ratio (SR)

• Production volume of 2.8

MMT in 1H 2013 was 44%

of our FY 2013 production

target

• To achieve FY target of

5.8MT-6.4MT,

TMU

is

expected

to

be

(21)

21 ABN Operational Performance

Production & Stripping Ratio

Thousand Tons

 Despite higher than anticipated rainfall delayed operational activities in 1H13, ABN still managed to increase production by 7.6% from 1Q13 to 2Q13

 ABN’s 2nd_{underpass is currently under construction and expected to be}

completed by 4Q13 with aim to lower OB dump distance

Operational Advantage & Focus

Short coal hauling

distance 4km Cap 10 mm ton/yearHigh Built Crusher

Barge Loading Jetty Loading Speed of up to

1,800 ton/hour

Under-pass: Capitalizing on Infra

Strength

PT Kutai Energi

884 1.078 1.224 1.225 925 995

(22)

22 IM Operational Performance



IM

’s

production in 2Q13 increased by 30% Q-o-Q, contributed by

higher production volume from border mining



On y-o-y basis, dump distance fell by ~1000m, decreased by 40%

Key Highlights

Production & Stripping Ratio

Thousand Tons

Operational Advantage & Focus

Short coal hauling dist. < 5km

CPP Ramp up to 6MM TPY

Conveyor for TMU & Others

Cross Border Mining with ABN

1

2

3

4 TMU

ABN

PT Kutai Energi

190 236 265 272 278 360

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013

(23)

23 TMU Operational Performance

Key Highlights

Production & Stripping Ratio

Thousand Tons

Operational Advantage & Focus

 TMU’sproduction in 2Q13 increased by 74% Q-o-Q, mainly due to strong contribution from recently-opened Block 4

 TMU’shauling road to IM was completed ahead of schedule in end-May 2013. To date, IM has been using IM’s CPP and jetty facilities for coal shipment  In June 2013, production reached 72,000 tons/month, rising 125% from 32,000

tons/month in January 2013. This level of productivity is expected to be maintained for the rest of year

16-17km Hauling Road to ABN is completed

Integrate CPP Ops with IM Mine operations

commenced at Block 4

1

2

3 ABN

IM

PT Kutai Energi

Note:

- - -

Hauling road

23 59 ₈₅ ₉₀ ₈₄ ₁₄₆

45,6x

14,4x

17,0x

10,8x 11,2x 12,7x

5x

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 Production volume Stripping Ratio

32 34

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13

(24)

24 Financial Performance YTD 2013

• In 2Q13

, SR was

lowered by 10%

, while

production increased

by 17%

...

• …resulting in

6%

decline in adj FOB

Vessel cash cost

• ASP slightly

rose by 3%

despite 8% Q-o-Q fall

in NEWC Index

…

Notes (a) FOB vessel cash costs: COGS, Selling Expenses, Royalty,excluding depreciation fixed assets and amortization of exploration and development

(b) Adj. FOB vessel cash costs: COGS, Selling Expenses, Royalty excluding depreciation fixed asset and amortization of exploration and development asset & without accounting for component of deferred striping cost

• …

EBITDA and Net

Income increased by

32% and 11%

respectively

1

2

3 TOBA

1Q 2013

2Q 2013

YTD 2013

Change %

Operation

Sales Volume

kton

1.435

1.367

2.802 -5%

Coal production

kton

1.287

1.500

2.787 17%

Stripping Ratio

x

15.1

13.6

14.3 -10%

NEWC Index

US$/ton

93.0

85.9

89.5 -8%

Per Ton Basis

ASP

US$/ton

66.4

68.1

67.2 3%

Net Income before Minority

Interest

US$'000

5,975

6,616

12,591

11%

Ratio

Gross Profit Margin

%

15.2%

17.9%

16.5%

18%

EBITDA Margin

%

10.0%

13.4%

11.7%

35%

(25)

25 Financial Performance

–

1H 2013 vs 1H 2012

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



Coal production grew 13% (yoy)

driven by TMU and border mining

at IM

(a)

1H 2012

1H 2013

Change %

Operation

Sales Volume

million ton

2.45

2.80

14.1 Coal Production

million ton

2.47

2.79

13.0 Striping Ratio

x

17.1

14.3 (16.4)

NEWC Index

US$/ton

105.3

89.5 (15.0)

Financials

Sales

US$ Million

202.86

188.10 (7.3%)

Gross Profit

US$ Million

35.90

31.10 (13.4%)

Operating Profit

US$ Million

25.11

17.82 (29.0%)

EBITDA

US$ Million

27.63

21.92 (20.7%)

Net Income

US$ Million

18.15

12.65 (30.3%)

Net Income after Minority

US$ Million

9.73

6.61 (32.1%)

Interest

Ratio

Gross Profit Margin

%

0.18

0.17 (6.6%)

EBITDA Margin

%

0.14

0.12 (14.4%)

Net Profit Margin

%

8.95

6.73 (24.8%)

Per Ton Basis

ASP

US$/ton

82.6

67.2 (18.6%)

FOB Vessel Cash Cost

US$/ton

67.6

55.0 (18.6%)



EBITDA declined 20.7%

attributable to 18.6% drop in ASP,

but compensated by lower

COGS and increased sales

volume



_{Toba’s 1H13 production achieved}

44% of 2013 highest production

target of 6.4 million tons



FOB vessel cash cost slashed by

18.6% yoy mainly due to lower

SR and shortened dump

(26)

26 Balance Sheet

• Total Assets as of June 2013 increased

by 13% from December 2012

• Cash and cash equivalent rose by 47%

compared to December 2012

• Shareholders Equity surged by 4% from

December 2012 to June 2013, reflecting

positive growth return

Balance Sheet

US$’000

Despite decreasing trend in Coal index price,

we have successfully grown total assets

through stronger equity base

Dec-12 Mar-13 Jun-13 Movement

(Jun'13 - Dec'12)

Cash and cash equivalents 36,307 60,348 53,289 47%

Total Net debt/Equity 44% 37% 48%

114

(27)

34

16

39

36

60

53

35 35

44

49

43

56

0 10 20 30 40 50 60 70

1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013

Cash

Debt

27 Debt and Cash Position

Net Debt Position

US$ Mn

2%

34%

6%

11%

Net Cash

3%

Net Debt to

Equity

(28)

28 CSR & Environmental Highlights

(29)

29

• Toba is continuously developing and implementing its corporate social responsibility programs

–

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

–

Providing health services to the local communities

–

Helping groups of farmers plant crops of vegetables and bamboo and assisting with land rehabilitation

–

Creating local employment opportunities by sourcing some of the

Company’s

site workforce from the

neighboring areas

Helping Farmers Plant Crops

Creating Educational Opportunities

Providing Health Services

(30)

2007

2008

2009

2010

2

0

1

1 Target

PROPER Gold Mining

Award in ABN & IM

30 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

Ranks as

one of Indonesia’s

Top 50 companies

(31)

31

(32)

32

• 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

TMU

ABN Jetty

ABN

Overview

Operations

Marketing

• 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

Note:

(33)

33

• 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