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Warren Newfield CEO & Co-Chairman September 10, 2008 Coal in Botswana: Power, Fuel and Export.

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Presentation on theme: "Warren Newfield CEO & Co-Chairman September 10, 2008 Coal in Botswana: Power, Fuel and Export."— Presentation transcript:

1 Warren Newfield CEO & Co-Chairman September 10, 2008 Coal in Botswana: Power, Fuel and Export

2 2 This presentation contains certain “forward-looking statements”. All statements, other than statements of historical fact, that address activities, events or developments that CIC Energy Corp. (“CIC” or the “Company”) believes, expects or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements reflect the current internal projections, expectations or beliefs of CIC based on information currently available to CIC. Such forward-looking statements include, among other things, statements relating to the reconfigured first phase (“Phase One”) of the Mmamabula Energy Project (the “MEP”), the coal-to-hydrocarbons (“CTH”) Project and the Export Coal Project with respect to estimates and/or assumptions in respect of mineral resources, mineral resource qualities, targets, future production, goals, scheduling, objectives, plans and future economic, market and other conditions. Forward-looking statements are subject to significant risks and uncertainties and other factors that could cause actual results to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on CIC. Factors that could cause actual results or events to differ materially from current expectations include, but are not limited to: the failure of the Company to successfully design a viable reconfigured Phase One of the MEP, to complete a positive bankable feasibility study thereon and/or to negotiate and enter into a power purchase agreement with Eskom Holdings Limited (“Eskom”) and/or Botswana Power Corporation (“BPC”) and an EPC contract in respect thereof on terms acceptable to the Company and project lenders; volatility of and sensitivity to market prices for coal and prices (market or otherwise) for electricity; changes in anticipated demand for power in southern Africa; changes in equity markets; capital and operating costs varying significantly from estimates; environmental and safety risks, including increased regulatory burdens; failure to complete, or delays in completion of, positive feasibility and value chain studies on the CTH Project; failure to complete a positive pre-feasibility study on the transportation options concerning the Export Coal Project; failure to obtain a viable transportation solution to export coal and/or failure to enter into export coal purchase agreements; the grade, quality and recovery of coal which is mined varying from estimates (the mineral resource figures referred to in this presentation are estimates and no assurances can be given that the indicated levels of coal will be produced); inflation; changes in exchange rates; delays in the development of the reconfigured Phase One of the MEP, the CTH Project and/or the Export Coal Project caused by unavailability of equipment (or equipment failure), labour or supplies or limited capacity among EPC contractors (and resulting less attractive EPC contract terms being made available) or by climatic conditions, seismic activity, other natural phenomena or otherwise; risks relating to labour; unexpected geological or hydrological conditions; insufficient transportation and transmission capacity; geological and mechanical conditions; delays or failures in obtaining regulatory permits and/or licences (and renewals thereof) respecting mining, power generation and/or power transmission lines; the existence of undetected or unregistered interests or claims, whether in contract or tort, over the properties of CIC; availability of water and sorbent at cost effective prices; the failure of the Company to enter into transmission and other agreements required to facilitate the development, operation and financing of the reconfigured Phase One of the MEP, including with the Government of Botswana on favourable terms or at all; failure to raise additional funds (by way of debt and/or equity) on favourable terms to finance such development; inability to obtain requisite credit support from the Government of Botswana and/or the Government of South Africa; failure to enter into technology, intellectual property licensing and other agreements required to develop the CTH Project; changes in government regulations and policies, including tax and trade laws and policies; political risks arising from operating in Africa; lack of markets for the Company’s coal resources; or other factors (including development and operating risks). Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, CIC disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although CIC believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Mineral resource figures included in this presentation are estimates and no assurances can be given that the indicated levels of coal will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While CIC believes that the mineral resource estimates included in this presentation are well established, by their nature resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. The extent to which mineral resources may ultimately be reclassified as proven or probable reserves is dependent upon the demonstration of their profitable recovery. The evaluation of mineral reserves or resources is always influenced by economic and technological factors, which may change over time. No assurances can be given that any mineral resource estimate will ultimately be reclassified as proven or probable reserves. If CIC Energy’s mineral resource estimates for its coal properties are inaccurate or are reduced in the future, this could have a material adverse impact on CIC. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Measured and indicated resources are sufficiently well defined to allow geological and grade continuity to be reasonably assumed and permit the application of technical and economic parameters in assessing the economic viability of the resource. Inferred resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Inferred resources are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves as there is no certainty that mineral resources can be upgraded to mineral reserves through continued exploration. Forward Looking Statement

3 3 Tau Capital Corp. is a resource finance & services company with a strong track record in advising on the exploration and development of major projects in the resource and energy sectors. The Tau Group of Companies includes: CIC Energy Corp. TSX: ELC, BSE:CIC ENERGY Development of the Mmamabula coal resource for power generation, thermal coal exports and coal-to-hydrocarbons facility Platexco Inc. Sold to Impala Platinum (Implats) in 2000 for C$191 million AfriOre Limited Sold to Lonmin plc in January 2007 for approximately C$500 million Saber Energy Corp. (Private) Proposed Development of Gas Field and Power Station, Southern Africa In 2007 closed private placement of US$45M Talon Metals Corp. (Formerly BrazMin Corp.) TSX:TLO Precious and Base Metal Exploration Tau Capital Corp.

4 4 Mmamabula Energy Project (phased development) Coal-To-Hydrocarbons (CTH) Project Export Coal Project Power station and integrated coal mine 2012/13 Commercial Operations Coal gasification to produce fuels and chemicals 2014 Commercial Operations Mine, beneficiate and rail export coal to a port in Southern Africa 2014 Commercial Operations Mmamabula Energy Complex  CIC Energy Corp. commenced trading on the Toronto Stock Exchange in March 2006 and on the Botswana Stock Exchange in June 2006  The Company’s focus is the Mmamabula Energy Complex, which is located in southeastern Botswana

5 5 Botswana: An Economic Success Story Libya Algeria Marocco Niger Mali Mauritania Ivory Coast Guinea Senegal Sierra Leone Burkina Faso Equit. Guinea Lesotho Swaziland Tanzania Kenya R.R. B.B. Ethiopia Djibouti Eritrea Comores Sao Tome & Principe Chad Sudan Central African Rep. Nigeria Angola South Africa Botswana Egypt Cameroon Gabon Namibia Zimbabwe Zambia DRC Somalia Uganda Congo Mozambique Malawi Madagascar Ghana Benin Togo Sahara Liberia Tunisia Mauritius Source: Aon Group, Inc 2007 Low Medium-low Medium Medium-high High Political and Economic Risk  Political & Financial Stability Stable multi-party democracy GDP per capita of $US 5,580 Average GDP growth of 5% ( ) Significant foreign currency reserves  Favorable foreign investment climate No exchange controls Low tax rate  A2 Credit rating by Moody's  Australian Publication “Resource Stocks”: Rated Botswana as having the 7 th lowest country risk for mining globally (2007)  Transparency International: Rates Botswana as having one of the lowest corruption indexes in the world, 37 th out of 165 countries (2006)  Strong support by Government of Botswana (“GoB”) for development of Mmamabula coal resource, including meaningful fiscal incentives

6 6  The Project is located in Botswana’s Mmamabula Coal Field - the extension of South Africa’s Waterberg Coal Field  Waterberg contains in excess of 40% of South Africa’s coal reserves  Waterberg is host to Exxaro’s 19 Mtpa Grootegeluk coal mine and Eskom’s 3,690 MW (gross) Matimba power station  Waterberg is also host to Eskom’s recently approved approximately 4,800 MW (gross) Medupi power station currently under construction  Ideal location with proximity to South African power grid  Easy access to Botswana’s A1 highway, rail, power and water infrastructure Mmamabula Energy Complex Location

7 7  Significant baseload power generation capacity is required in Southern Africa to sustain GDP growth and to support energy-intensive private investment  Oil prices are soaring, while a petroleum refining shortfall is looming in South and Southern Africa – coal to hydrocarbons becomes an attractive option  Coal prices are increasing rapidly, both globally and in South Africa - strong incentive to export coal from the Mmamabula Coal Field Current coal prices (FOB Richards Bay), approx. US$150 per ton for delivery Q3/2008 and US$160 per ton for Q1/2009) South Africa Power Demand Scenarios (Source: Eskom) GDP growth p.a. Electricity growth p.a. Total capacity required Annual capacity required %1.4%11,772 MW620 MW 4.0%2.3%20,834 MW1,097 MW 5.0%3.2%32,257 MW1,698 MW 6.0%4.4%47,212 MW2,485 MW Mmamabula Business Case

8 MW Existing plant (2007) + Cahora BassaNew Eskom capacity (16,100 MW total)Demand (incl. p.a. (4.5%) New Eskom capacity includes: Return to service of 3 old coal stations: 3,471 MW (net) 2 x new coal stations (Medupi + Kuslie): 8,766 MW (net) 2 x OCGT plant (liquid fuel fired): 2,065 (net) Upgrade of one old coal station: 300 MW (net) 1 x pumped storage plant: 1,382 MW (net) 1 x wind power plant: 100 MW (net) South Africa Demand and Supply Balance

9 9 South African Power 15% Reserve Margin - after Eskom Capacity Expansion 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16, MW Deficit after New Eskom Projects (15% Reserve Margin) South African Power Deficit

10 10  Mmamabula previously explored by BP’s Coal Division, with a focus on coal exports at a time when Southern Africa had excess electrical generating capacity  The Company commenced an extensive exploration program at Mmamabula in 2005 – to date CIC Energy has drilled in excess of 174,000 metres in over 1,945 holes  Resources total approximately 3 billion tonnes (NI measured and indicated) 1 as of August 2008 and coal qualities indicate good power station feed, with raw calorific values (“CV”) of approximately 21 to 23 MJ/kg Exploration drilling program completed  Sufficient coal resource for Mmamabula Energy Project power station Coal-to-Hydrocarbons (“CTH”) Project Export Coal Project 1 Please see the technical reference on slide 18 of this presentation Mmamabula Overview

11 11 NI Mineral Resource Estimates announced August 2008 Mmamabula East and South

12 12  Key Memoranda of Understanding (“MoU”) signed: CIC-Eskom MoU, Inter-Governmental MoU, CIC-Government of Botswana MoU, Inter-Utility MoU  Completion of exploration drilling, development of geological models and completion of mine planning for the Mmamabula Coal Field  Good working relationship with Eskom and BPC and through mutual understanding on project structure and commercial terms and conditions  Good progress on independent power producer (“IPP”) and mining licenses  Environmental Impact Assessments on Mine, Power Plant and Transmission submitted to GoB  Electricity Supply Act and Mines and Minerals Act amendments to cater for MEP passed into law  Environmental approvals for new transmission infrastructure in South Africa  Positive interest from international and local financial markets MEP - Accomplishments

13 13  Select Engineering, Procurement & Construction (“EPC”) contractor and negotiate an EPC contract – anticipated prior to year end  Power Purchase Agreement with Eskom and/or BPC  Implementation Agreement with Government of Botswana  Issuance of Power Generation and Coal Mining Licenses  Complete Bankable Feasibility Study  Financial Close  Start of Construction  Commercial Operations MEP - Milestones to be Achieved

14 14  Large scale coal gasification and petrochemicals plant at Mmamabula Produce fuels and petrochemicals  Option on coal gasification technology has been secured with Shell  Feasibility studies completed Jacobs Engineering – gasification technology selection, methanol plant and manufacture of fuels Toyo Engineering – manufacture of fuels and/or fuel substitutes Lategan & Bouer and VGI - multi-product pipeline to South Africa  Wood Mackenzie initial market study completed  2 nd phase detailed value-chain study underway by Shell Global Solutions International (Complete in Q3 2008)  Commercial operations envisaged in 2014 Coal-to-Hydrocarbons Project

15 15  Exporting of seaborne traded A grade thermal coal from the Mmamabula Coal Field  Current coal prices are approx. $150/tonne FOB Richards Bay, South Africa  A pre-feasibility study on the rail and port options (Complete in Q3 2008)  Preferred rail route is west to a port in Namibia  An approximately 1,500 kilometer Trans Kalahari rail line would have to be constructed by a transportation consortium, which could include CIC Energy  CIC Energy would be one of the “anchor” offtakers for this new rail line  Commercial operations are envisaged for 2014 Export Coal Project

16 16 Cash (as at September 2008) C$100 M Shares issued 53.7 M Shares fully diluted 61.0 M Share Price (as at September 8, 2008 ) C$ week high C$18.15 Market Capitalization C$ 200 M TSX:ELC BSE:CIC ENERGY Financial Information

17 Thank You TSX:ELC BSE:CIC ENERGY Erica Belling VP Investor Relations (416) ext. 243

18 Appendices 1 Additional information with respect to Mmamabula is contained in a news release of August 14, 2008 a copy of which has been filed on SEDAR and may be accessed at Ms. Lesley Jeffrey is the “Qualified Person” for Mmamabula within the meaning of NI Ms. Jeffrey is employed by Bon-Terra, a subsidiary of CIC Energy.

19 19 Feasibility studies are being completed on the Mmamabula Energy Project, Coal-to- Hydrocarbons Project and Export Coal Project and total investment is more than US$100 million. Companies conducting various studies include:  Snowden – NI compliant resource estimates  Bon-Terra Mining* – Resource modeling & mine planning  Environmental Resources Managers and Digby Wells and Associates for Groundwater and Environmental Studies, and Gibb Africa for Surface Water Studies  Dowding, Reynard and Associates (Pty) Limited (“DRA”) – Mine beneficiation plant designs  Africon – Design of common infrastructure  Clifford Chance – Project Legal Counsel (International) Edward Nathan Sonnenberg (Local)  Lenders Legal Counsel, International: Shearman & Sterling, Local: Webber Wentzel Bowens  Jacobs Engineering, Toyo Engineering, Lategan & Bouer and VGI – Coal-to-Hydrocarbons Project  MRN Runge, DRA and Africon – Export coal mine design, beneficiation plants and rail and port designs * Bon-Terra Mining (Pty) Ltd. is a subsidiary of CIC Energy Corp. Mmamabula Energy Complex Feasibility Studies

20 20  CIC Energy to contribute its pro-rated share of equity funding  Project financing anticipated 80% debt – 20% equity  Expected sources of equity funding for CIC Energy Credit for related historic expenses Developers fee (% of project cost) Equity premium (ROE) Financing the MEP 100 %

21 21 Warren Newfield, Chief Executive Officer and Co-Chairman Gregory Kinross, President Tore Horvei, Chief Operations Officer (Projects) Edward Scholtz, Chief Operations Officer (Mining) Craig McLeary, Chief Financial Officer CIC Energy SA (Pty) Ltd Gibbs Johnson, General Counsel Jennifer Feinberg, Executive Vice President, Project Finance Anton Reiche, Executive Vice President, Project Implementation Pieter du Toit, Executive Vice President, Coal-to-Hydrocarbons Mike Page, Executive Vice President, Projects Dale Ter Haar, Head, Botswana Office CIC Energy has assembled a highly experienced mining & power station management & technical team Lead Advisors Jan de Beer, Project Manager - Power Plant BFS former CEO of Eskom Enterprises Arnot Hepburn, Transmission & Integration former Head of Transmission Planning for Eskom John Farr, Wellfield Consulting Services Louis Grobler, Project Manager – CTH, former Director of C & L Developments (PTY) Ltd. Mining Team Jock Nel, Operations Director Ronnie van Eeden, Commercial & Legal Director Dr. Nielen van der Merwe, Technical Director Mac van der Merwe, Coal Export Project Manager: Rail and Port Mike Dunn, Port Consultant Executive Management Team and Key Advisors

22 22 Warren Newfield, Co-Chairman (Canada)Chief Executive Officer, CIC Energy Corp. Reuel Khoza, Co-Chairman (South Africa)Chairman, Nedbank; Former Chairman, Eskom Gregory Kinross (South Africa) President, CIC Energy Corp. Blackie Marole (Botswana)Managing Director, Debswana Mandla Gantsho (South Africa) Vice President Operations, African Development Bank Len Konar (South Africa) Director, South African Reserve Bank Sandra Cowan (Canada) Partner and General Counsel, Edgestone Capital Partners E. Adrian Meyer (Barbados) Principal & Director, Cidel Bank & Trust Board of Directors

23 23 Two seams of interest: D1 Seam: approximate thickness: 6m Depth: approximately 72m Competent floor 1m coal left in roof for additional roof support M2 Seam: approximate thickness: 3m Depth: approximately 98m Competent roof and floor MAMMABULA STRATIGRAPHY SEAM THICKNESS (m) LITHOLOGY RECENT Unconsolidated Sand Grey Brown Mudstone Carbonaceous Mudstone and thin Coal Bands Sandstone Carbonaceous Mudstone and thin Coal Bands Sandstone Carbonaceous Mudstone and thin Coal Bands COAL Sandstone - M3 Coal Seam COAL Sandstone Siltstone with interbedded sandstone COAL Siltstone with interbedded sandstone Siltstone and Mudstone Sandstone Pre Karoo Quartzite UPPER ECCA LOWER ECCA DWYKA D1 Seam M2 Seam Siltstone Stratigraphic Column – Mmamabula East

24 24 D1 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated n/a Inferred n/a Average Note: * The level of sulphur emissions is currently planned to be reduced to below World Bank standards using partial washing in the mine and Flue Gas Desulphurisation (FGD) in the power plant M2 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated n/a Average Mookane Block, Mmamabula East M2 and D1 Raw Coal Qualities (source: Bon-Terra)

25 25 D1 Relative Density Volatiles (%) Inherent Moisture (%) Ash (%)CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated n/a Inferred n/a Average M2 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)** raw Sulphur (%)** total wash Measured Indicated n/a Inferred n/a Average Note: * The level of sulphur emissions is currently planned to be reduced to below World Bank standards using partial washing in the mine and FGD in the power plant Dovedale Block, Mmamabula East M2 and D1 Raw Coal Qualities (source: Bon-Terra)

26 26 D1 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated n/a Inferred n/a Average Note: * The level of sulphur emissions is currently planned to be reduced to below World Bank standards using partial washing in the mine and FGD in the power plant M2 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated n/a Average Serorome Block, Mmamabula East M2 and D1 Raw Coal Qualities (source: Bon-Terra)

27 27 D1 Relative Density Volatiles (%) Inherent Moisture (%) Ash (%)CV (MJ/kg) Sulphur (%)* raw Sulphur (%)* total wash Measured Indicated Inferred Average M2 Relative Density Volatiles (%) Inherent Moisture (%) Ash %CV (MJ/kg) Sulphur (%)** raw Sulphur (%)** total wash Measured Indicated Inferred Average Note: * The level of sulphur emissions is currently planned to be reduced to below World Bank standards using partial washing in the mine and FGD in the power plant Border Block, Mmamabula East M2 and D1 Raw Coal Qualities (source: Bon-Terra)

28 28 Coal Gasification Island Carbon Dioxide Electricity Steam/Heat Methanol Synthetic NG FT Liquid Fuels Oil Refineries Ammonia Petrochemicals Town Gas Urea Storage Saline Acquifers Shift Gasified coal produces synthesis gas (syngas) which can then be converted to a variety of downstream products, including fuels and petrochemicals. Hydrogen DME/Fuels Coal-to-Hydrocarbons Project

29 29 Rail and Port Conceptual Study: West Coast Routes Namibia Botswana Lunderitz port location Walvis Bay port location Export Coal Project

30 30 Transmission Solution Solutions created in partnership with Eskom and BPC Tight integration with Eskom and BPC networks in South Africa and Botswana Long-term solutions catering for future expansion

31 31 Dikgatlhong Dam (62 Mm 3 )* Letsibogo Dam (24 Mm 3 ) Shashe Dam (23 Mm 3 ) NSC1 Pipeline (360 km) Masama Wellfield (10 Mm 3 )* Mmamabula Energy Project NSC2 Pipeline (345 km)** Dikgatlhong Pipeline (75 km)* Selebi Phikwe Gaborone Kudumatse Area Lotsane Dam (6 Mm 3 )* * Planning / Development Thuni Dam (5 Mm 3 )* ** Proposed Bonwapitse Wellfield ( Mm³/a) Palla Road Wellfield (2.5 Mm 3 ) Maiphafela Wellfield (6Mm³/a) Botswana Water Sources


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