TSX-V: CAD Colonial Coal International Corporation Western Canadas
TSX-V: CAD Colonial Coal International Corporation Western Canadas Leading Coking Coal Developer December 2016 Investor Presentation Legal Disclaimers This presentation may contain forward-looking statements, and forward -looking information under applicable securities laws including managements expectations of future production, cash flow, and earnings. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks and uncertainties include, but are not limited to: the risks associated with the commodity industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price, price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Colonial Coal undertakes no duty to update any of the forward-looking information herein. The reader is cautioned not to place undue reliance on forward-looking statements. The scientific and technical information relating to the Huguenot property has been derived from the Huguenot Technical Report dated September 23, 2013, a copy of which will be filed on sedar.com under Colonial Coal International Corp., copies of the technical report will be made available to investors on request. The information contained in this document has not been reviewed or approved by the U.S. Securities and Exchange Commission or any provincial or state securities regulatory authority. Any representation to the contrary is unlawful. This document does not include a complete description of Colonial Coal or any offering. Any offer of securities Colonial Coal will be made only pursuant to a subscription agreement and the provisions of applicable law. Any securities to be offered for sale by Colonial Coal are not expected to be registered in the United States under the Securities Act or under any state securities laws. Cautionary Note to US Investors Concerning Resource Estimate: The resource estimates in this document were prepared in accordance with National Instrument 43-101, adopted by the Canadian Securities Administrators. The requirements of National Instrument 43-101 differ significantly from the requirements of the United States Securities and Exchange Commission (the SEC). In this document, we use the terms measured, indicated, and inferred resources. Although these terms are required and recognized in Canada, the SEC does not recognize them. The SEC permits US mining companies, in their filings with the SEC, to disclose only those mineral deposits that constitute reserves. Under United States standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally extracted at the time the determination is made. United States investors should not assume that all or any portion of a measured or indicated resource will ever be converted into reserves. Further, inferred resources have a great amount of uncertainty as to their existence and whether they can be mined economically or legally, and United States investors should not assume that inferred resources exist or can be legally or economically mined, or that they will ever be upgraded to a higher category. TSX-V: CAD www.ccoal.ca 2 Market Overview: Metallurgical Coal Company Overview: Colonial Coal Summary: Investment Highlights TSX-V: CAD www.ccoal.ca 3 Market Overview: Metallurgical Coal Met Coal Price Rally of 2016 Seaborne Hard Coking Coal Price Chart (US$/mt) Market Commentary The met coal price rally has broken a 5-year downturn as prices surged by more than 120% this year Coking Coal - 3-Month Contract (US$/mt) $190.0 $170.0 (US$/mt) $150.0 Coking coal prices up +120%
since January 2016 These factors have led China to rely more on foreign coal supply $130.0 $110.0 $90.0 China imported 24.3 million tonnes of coal in September 2016, up more than 33% compared to September 2015. Over the first 9 months of 2016, imports increased 15% to 180 million tonnes compared to the same period in 2015 Outside of China, macro strategists are anticipating sequentially stronger growth in 2017 and 2018 $70.0 TSX-V: CAD The rally was triggered by Beijings decision to reduce coal miner operating days from 330 to 276 in an effort to restructure the industry In addition, weather-related problems in China and Australia have caused disruptions to local mines and railways www.ccoal.ca 4 President-elect Donald Trump is expected to pursue a pro-growth agenda via broad adoption of infrastructure-friendly fiscal stimulus Market Overview: Metallurgical Coal Canadian coking coal miners are strategically positioned to supply Chinese excess demand TSX-V: CAD www.ccoal.ca 5 Market Overview: Metallurgical Coal Western Canadian Coal Miners are Poised to Supply Asian Markets 40 Met Coal Supply Western Canadian Coal Overview 20 No. of Operating Mines 30 15 20
10 10 5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Western Canada has vast coal resources including some of the worlds highest quality metallurgical coals ~21 Mt of met coal exports in 2012 ~26 Mt of met coal exports in 2015 20 N u m b e r o f O p e r a tin g M in e s S u p p ly (m illio n to n n e s ) Canadian Met Coal Supply by Project The region enjoys access to low-cost power, high-quality road and rail networks and major deep water seaports British Columbian ports provide the closest port of entry on the west coast of North America to Asia Western Canada has seen significant M&A activities in the met coal market. Walter Energy acquires Western Coal - $3.3bn Anglo American acquires 25% of Peace River Coal held by NEMI and Hillsborough - $166mm ($400m+) Xstrata(1) acquires First Coal and Lossan - $193mm Winsway and Marubeni jointly acquire Grande Cache
Coal -$1bn Xstrata(1) acquires Sukunka asset from Talisman Energy - $500mm JX Nippon acquires 25% in Xstrata(1) Coal BC JV $435mm 21 Access to East Asian Markets Tianjin 14.2 14.8 Shanghai 13.2 14.2 13.8 Prince Rupert Tokyo 10.6 24.3 British Columbia 14.4 To Shanghai 5,092 miles To Tokyo 4,280 miles 11.9 Kolkata 23.1 To Shanghai 4,642 miles To Tokyo 3,830 miles Dalian Korea Japan Kobe China 11.3 India Guangzhou Mumbai 25.2 26.4 15.0 22.8 24.0 Closer to Japan than Newcastle: Newcastle to Tokyo 4,284 miles 12.6
Pusan 12.7 16.3 Chennai Vancouver 13.0 00.0 Hong Kong 14.8 16.0 00.0 Shipping Days from Prince Rupert Shipping Days from Vancouver Source: AME, BC Ministry of Energy, Mines and Petroleum Resources Note: Shipping Days calculated at vessel speed of 15 knots TSX-V: CAD Note: Met coal includes all coals directed to metallurgical end markets (i.e. coking coals and PCI coals) 1. Now Glencore www.ccoal.ca 6 Market Overview: Metallurgical Coal Company Overview: Colonial Coal Summary: Investment Highlights TSX-V: CAD www.ccoal.ca 7 Company Overview: Colonial Coal Overview and Capitalization Company Overview Capitalization and Share Price Chart Colonial Coal International Corp. is a pure-play metallurgical coal development company Capital Structure Current Share Price (C$) $0.13 Basic Shares (000) 96,808 Market Cap
(C$000) $12,585 277.7 Mt of Measured & Indicated plus 119.2 Mt of Inferred resources of coking coal on the Huguenot property Add: Debt (C$000) $0 Less: Cash (C$000) $600 Targeting annual production of 3 5 Mt per annum from Huguenot Enterprise Value (C$000) $11,985 Great exploration upside in the region and strategically positioned to key infrastructure for Asian export market $0.25 Owns 100% interest in 2 resource-stage coal projects in the Peace River Coalfield of northeastern British Columbia Chairman and CEO David Austin co-built Western Coal, which was sold to Walter Energy for $3.3 billion in 2010 Volume Price 1.4 1.2 Dawson Creek $0.20 1 Chetwynd ALBERTA Fort Nelson Prince Rupert $0.15 Huguenot BRITISH COLUMBIA Flatbed Neptune Terminals Westshore Terminals TSX-V: CAD
0.6 $0.10 Huguenot 0.4 $0.05 Key Vancouver 0.8 Tumbler Ridge Flatbed 0.2 Project Coal Fields City CN Rail Roads $0.00 22-Nov-15 www.ccoal.ca 8 22-Feb-16 22-May-16 22-Aug-16 0 22-Nov-16 Company Overview: Colonial Coal Experienced Management and Board Management Team and Board of Directors David Austin Chairman, President & CEO Co-founder of Western Coal, NEMI and now CCIC 1 of 3 founders credited for taking Western Coal to production; Sold to Walter Energy for C$3.3 billion in 2010 Also credited for the exploration/development success and sale of Northern Energy and Mining Inc. (NEMI) to Anglo America for +$400mm William Filtness CFO Over 29 years experience as a director or officer of mining companies Former director of Lions Gate Metals Inc. and former CFO of Sprott Resources, South American Silver, and NEMI John Perry COO & Director Over 40 years experience as a geologist (over 35 years as a consultant): worked on many coal projects in northeastern BC, both as a consulting geologist and in senior corporate exploration management. Wayne Walters Director
Geological consultant and former director of Running Fox Resources and NEMI Tony Hammond Director Chairman and MD of Great Orme Mines and a former director of NEMI Ian Downie Director Professional negotiator with an established mediation and dispute resolution consulting company TSX-V: CAD www.ccoal.ca 9 Peace River Coalfield Belcourt (Walter / PRC (Anglo)) Roman ( PRC (Anglo) ) C&M Reserves : 57.00 Mt Resources: 171.2 Mt Target Production: 4 Mtpa Reserves : 25.8 Mt Resources: 6.5 Mt Target Production: 2-4 Mtpa 11 Brule (Conuma) - Producer Reserves: 16.6 Mt Resources: 28.0 Mt Target Production 1-2.0 Mtpa Saxon ( Walter / PRC (Anglo) ) 22 Historical Reserves : 76 Mt Resources: Resources: 185 Mt Target Production: 3 Mtpa 33 Huguenot (Colonial Coal) Suska (Glencore / Boreas) Resources: 397 Mt 44 Target Production: 3.5-5.0 Mtpa Resources: 103 Mt Mt. Duke (Teck) Trefi ( Trefi ) Historical Reserves: 281 Mt 55 Historical Resources: 90 Mt Murray River (HD Intl. Mining) Resources: 688 Mt
Company Huguenot Asset: Overview: One of the Largest Colonial Hard Coking CoalCoal Deposits in the Region Huguenot has a contained resource of 277.7 million tonnes of combined Measured and Indicated resources plus 119.2 million tonnes of Inferred resources, making it one of the largest deposits in the region Huguenot's metallurgical coal quality ranks as a premium metallurgical coking coal product Contains low sulfur and low phosphorus Similar coal quality to Anglo's nearby Trend mine (premium product exported to Asia) North Middle South Total Surface Resources Measured + Indicated (MT) 66.2 46.9 18.8 132.0 Inferred (MT) 0.0 0.5 0.0 0.5 Measured + Indicated (MT) 37.6 31.2 77.0 145.7 Inferred (MT) 86.8 1.6 30.2 118.7 Measured + Indicated
Anglo Pacific (Trefi) 70 70 Conuma (Wolverine) PRC (Anglo) (Trend) 51 45 Conuma (Willow Creek) Conuma (Brule) Company Overview: Colonial Coal Huguenot Project Overview (100% Interest) Project Location Project Summary Located adjacent to the proposed Belcourt South open pit (owned by Belcourt Saxon Coal Ltd. Anglo/Walter JV) Similar coal characteristics Amenable to open pit and underground mining 1.5% royalty FOB port Located ~120 road-km from Quintette and PRC load-outs Requires an 85 km rail (or combination of a rail and overland conveyor) to link with existing rail line as per Colonial Coals PEA Proposed production of clean coal from combined surface and underground mining operations averages approximately 3Mtpa, and ranges from 1.4 Mtpa to 5.9 Mtpa over 31 year LOM TSX-V: CAD www.ccoal.ca 12 Company Overview: Colonial Coal Huguenot Premium Coking Coal Characteristics Premium clean coal product with low ash, low sulfur, low phosphorus, and High FSI Weight averaged theoretical yield of 74% Clean Coal Quality Summary (dry basis) Seam Ash % VM % FC %
1.07 1.13 1.12 1.19 1.19 1.19 1.28 1.16 1.24 1.24 1.22 1.31 1.22 TSX-V: CAD www.ccoal.ca 13 Strategic Location With Significant Partnership Opportunities Sharing in the development of joint infrastructure (roads / rail) with other potential operators in the region would lower initial capital costs at Huguenot PEA contemplates a third party built railway used by other potential producers in the region 85 km rail spur (+/- overland conveyor) to connect the project to the existing main rail line If not built by an independent third party, the railway could be constructed on a shared basis with other coal producers and rail providers in the region. Huguenot is adjacent to the Belcourt Project (Anglo American / Walter Energy) Other nearby properties are owned by Teck Resources, Canadian Dehua, and Anglo American Rail access by other projects would reduce costs and provide practical benefits Development / operating costs would be distributed across all operators in the region for greater scale and lower per tonne cost While rail is the preferred mode of transportation in the region, trucking coal is viable but more expensive on a per tonne basis TSX-V: CAD Potential to Jointly Develop Shared Infrastructure www.ccoal.ca 14 Company Overview: Colonial Coal Flatbed Project Overview (100% Interest) Flatbed will be the Companys primary focus in 2017 Project Location
Project Summary Property adjacent to Trend and Quintette mines Potential for large tonnage deposit 100+ Mt coking coal resource target Property located 15 Km from Quintette load out Potential for a 3rd pipeline crossing of Rocky Mountains to bring further infrastructure into the area of the property Trend Plant Roman Pit Area Trend South Trend Extension Pit TSX-V: CAD www.ccoal.ca 15 Company Overview: Colonial Coal Available Rail and Port Capacity to Access Export Markets Production from Huguenot would be shipped by rail to export terminals on the west coast of British Columbia Canada Dawson Creek Chetwynd AB Rail lines out of the Peace River Coalfield are operated by a Class I Canadian carrier (CN Rail, largest railway company in Canada) and have available capacity to support future production from Huguenot Coal is hauled by rail approximately 1,000 km to the Ridley Terminal in Prince Rupert The Ridley Terminal is a deep water port with a total coal capacity of 30 mtpa (expansion completed 2014) One of the deepest, ice free natural harbours in the world 100% owned by the Government of Canada Capable of supporting capesize vessels (250,000 DWT) Peace River Coalfield Tumbler Ridge
85 km from rail loadout facility Flatbed Huguenot FORT NELSON HAY RIVER ALBERTA Ridley Terminals PRINCE RUPERT PRINCE GEORGE SASKATCHEWAN Flatbed FORT MCMURRAY Huguenot BRITISH COLUMBIA EDMONTON SASKATOON CALGARY Neptune Terminals Westshore Terminals VANCOUVER Infrastructure Port Facility / Coal Terminal CN Railway CP Railway TSX-V: CAD www.ccoal.ca 16 REGINA Coal Rank Bituminous Sub-bituminous Lignite Company Overview: Colonial Coal World Class Infrastructure Extensive Regional Infrastructure FORT NELSON Unencumbered Access to Export Markets HAY RIVER CN Rail provides access to Ridley Terminals ALBERT SASKATCHE FORT A MCMURRAY WAN Deep-water coal loading facilities at Ridley Terminals Current capacity 30 Mtpa
Recent Modification Project to increase capacity to 30 Mtpa Ridley Terminals PRINCE RUPERT PRINCE GEORGE BRITISH COLUMBI A EDMONTON No port or rail capacity constraints SASKATOON CALGARY Neptune Terminals Westshore Terminals VANCOUVER Infrastructure Port Facility / Coal Terminal CN Railway CP Railway REGINA Coal Rank Bituminous Sub-bituminous Lignite Western Canadian Coal Companies TSX-V: CAD www.ccoal.ca 17 Company Overview: Colonial Coal Investment Upside: Watson Island Tsimpsian Peninsula Prince Rupert Airport In 2012, Colonial Coal through its subsidiary Watson Island Development Corp. (Watco) entered into a MoU with Lax Kwalaams Band and Metlakatla First Nations (Coast Tsimshian Nation) for the formation of a JV for the potential acquisition of the Watson Island. 16 Kaien Island Digby Island The Coast Tsimshian Nation have an exclusive arrangement (Exclusivity Agreement) with the City of Prince Rupert to purchase Watson Island. Fairview Terminal Proposed Expansion
To Prince George 724 km To Edmonton 1,461 km To Vancouver 1,502 km 16 3 599 Prince Rupert Grain Ridley Terminals (Coal) 1 2 Port Edward Watson Island Ridley Island Watco has undertaken a feasibility investigation in relation to the development of the Watson Island. Kinahan Islands Watson Island is envisioned as a multi-product bulk commodity port and offers a potential and exciting solution to expand coal export capacity in British Columbia in light of increasing regional coal production Smith Island Watco is currently in litigation with the City of Prince Rupert in connection with the acquisition of Watson Island. 1 Ridley Terminals initial throughput capacity of 12 Mtpa 2 Expansion of Ridley Terminals to 30 Mtpa now complete 3 Potential site for establishment of a bulk terminal on Watson Island TSX-V: CAD Watco will compensate the City of Prince Rupert for actual land expenses in accordance with the terms of the Exclusivity Agreement www.ccoal.ca 18 Market Overview: Metallurgical Coal Company Overview: Colonial Coal Summary: Investment Highlights TSX-V: CAD www.ccoal.ca 19
Summary: Investment Highlights Unparalleled Investment Opportunity Invest in one of the largest deposits of premium quality hard coking coal in western Canada The only Canadian listed, publicly traded pure-play coking coal company in western Canada Targeted open pit and underground mineable resource of approximately 400 Mt at Huguenot Project (Huguenot) Potential for large tonnage deposit at Flatbed Project (Flatbed) in proximity to Trend and Quintette mines The only junior coal company in western Canada to have a stake in a port development project Recent MoU regarding potential development of port facility at Watson Island Gain exposure to one of the most active coal basins in a mining friendly jurisdiction with excellent infrastructure in place Recent acquisitions by Walter Energy (Walter), Anglo American (Anglo), Glencore, and Winsway/Marubeni amongst others and Conuma Capacity expanded at western Canadian coal ports Strategically located coal properties adjacent to major projects provide logical buyer and partnership opportunities Huguenot located between Anglos and Walters Belcourt Saxon JV project areas Flatbed located adjacent to Anglos Trend mine (currently under care and maintenance) and Tecks proposed Window open pit (Mt. Babcock, Quintette) Highly experienced management team with a proven track record in the Peace River Coalfield Highly capable management team with significant prior experience advancing other development projects to production in the region Provides exposure to long-term Asian growth story whilst staying invested in a safe jurisdiction Increasing demand for high quality coking coal driven by long-term Asian growth Western Canadian coal projects have cost-advantaged access to East Asian markets TSX-V: CAD www.ccoal.ca 20
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